Announcement of Mexico to Borrow One Hundred Thirty-Eight Million Four Hundred Thousand for Agricultural Development in Tamaulipas State on July 2, 1982

FOR IMMEDIA T.E RELEASE. · ~ , eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 83/2 Contact: Melhem Salman July 2, 1982 (202) 477-5328 MEXICO TO BORROW $138.4 MILLION FOR AGRICULTURAL DEVELOPMENT IN TAMAULIPAS STATE Mexico will improve the productivity of small farmers in rainfed agricultural areas with the assistance of the World Bank. A $138.4 million loan will be made to Nacional Financiera, S.A. (National Developme~t Bank) with the guarantee of the United Mexican States. The loan will support a $350.7 million project aimed at increasing crop production, mainly sorghum, and providing agricultural support facilities in the San Fernando Rainfed District of Tamaulipas state in the northeastern part of the country. The project will increase employment opportunities in the area, and will benefit some 17~000 families, including 8,200 families to be settled under a land redistribution scheme. Over the past decade, sorghum has become an important commodity in the Mexican economy, and annual demand for the grain is increasing rapidly. Although sorghum • production has doubled, the country has to import the grain to meet· the demand. To assist the government's objective of increasing food production, the project will improve productivity on some 240,000 hectares already under sorghum. An additional 164,500 hectares will be cultivated. Poor drainage, inadequate control of flooding, and the lack of suitable roads have affected the area's potential for agricultural development. To remedy this, the project will construct a surface drainage network of about 880 kilometers and 390 kilometers of shallow drainage ditches. Project works also include the construction of three operation centers, maintenance workshops, and agricultural research and training centers. In addition, the project includes a study for future development of grain movement and storage and a feasibility study for a second stage rainfed development project in an area south of San Fernando in Tamaulipas state. The loan is the second made by the Bank exclusively for rainfed areas and is in line with the government's increased emphasis on ii"proving the productivity of farmers in such areas; the first, a loan of $280 million, was made in 1981. The $138.4 million loan is for 15 years, including three years of grace, with interest at 11.6% a year. It also carries an annual commitment charge of 0.75% on undisbursed balances and includes a front-end fee of 1.5% on the amount of the loan. In the past 10 years, the World Bank has approved 18 rural development and • agricultural loans amounting to $2,265 million to Mexicoo Of this amount, irrigation projects have accounted for $654 million, while rural development projects have received $455 million in loans. NOTE: Money figures are expressed in U.S. dollar equivalents.