Morocco - Small- and Medium-scale Irrigation Project

Document of - The World Bank J FOR OFFICIAL USE ONLY Report No. 4197-MOR KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE SMALL AND MEDIUM SCALE IRRIGATION PRO. February 10, 1933 Europe, Middle East and North Africa Projects Department Agriculture II Division This document has a restricted distribution and may be usedl by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  I CURRENCY EQUIVALENTS Currency Unit = Dirham (DH) US$1 = DH 5.65 1/ DH 1 = US$o.1770 WEIGHTS AND MEASURES The metric system is used throughout this report FISCAL YEAR OF THE GOVERNMENT OF THE KINGDOM OF MOROCCO January 1 - December 31 1/ The Moroccan Dirham is floating. The rate of US$1 = DH 5.65 was average for 1982 and is used in this report. In November 1982 the rate was DH 6.15.  FOR OFFICIAL USE ONLY ACRONYMS AND ABREVIATIONS ASAP Associations syndicales agricoles privi.l6giges (Agricultural syndicates) CLCA Caisse locale de credit agricole (LocaL Agricultural Credit Bank) CMU Central Management Unit CMV Centre de mise en valeur (Agricultural Development Center) CNCA Caisse nationale de credit agricole (National Agricultural Credit Bank) CRCA Caisse regionale de credit agricole (Regional Agricultural Credit Bank) CT Centre de travaux (Work Center) DER Direction de l'equipement rural (Directorate of Rural Equipment) DPA Direction provinciale de l'agriculture (Provincial Directorate of Agriculture) FAO/CP Cooperative Programme of the Food and Agriculture Organization and the World Bank FERTIMA Societe de fabrication des engrais (Fertilizer Manufacturing Corporation) ICB International Competitive Bidding LCB Local Competitive Bidding LSI Large Scale Irrigation MARA Ministere de l'agriculture et de la reforme agraire (Ministry of Agriculture and Agrarian Reform) ME Ministere de l1'quipement (Ministry of Civil Works) MF Ministare des finances (Ministry of Finance) MI Ministere de l'interieur (Ministry of the Interior) OED Operations Evaluation Department of the World Bank O & M Operations and Maintenance This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ONE Office national d'4lectricite (National Electricity Office) ONICL Office national interprofessionnel des cereales et legumineuses (National Office of Cereals and Pulses) ORMVA Office r4gional de mise en valeur agricole (Regional Office of Agricultural Development) ORMVASM Office regional de mise en valeur agricole de Souss-Massa SMSI Small and Medium Scale Irrigation SONACOS Societe nationale de commercialisation des semences (National Seed Marketing Corporation)  (i) KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF CHE SMALL AND MEDIUM SCALE IRRIGATION PROJECT Table of Contents Page I. INTRODUCTION 1 A. Origin I B. The Agriculture Sector 1 II. THE SMALL AND MEDIUM SCALE IRRIGATION (SMSI) SUBSECTOR 4 A. Introduction 4 B. Types of SMSI Water Sources and the National SMSI Potential 5 C. Social and Institutional Obstacles to SMI Modernization 7 D. The Place of SMSI Projects in Morocco's Development Plan 10 III. THE PROJECT AREA 10 A. Ghiss 10 B. Middle Sebou 11 C. Chichaoua 11 D. Jemaa Sahim 12 E. Souss 12 F. Water Balance 13 IV. THE PROJECT 15 A. Objectives and Summary Description 15 B. Detailed Features 16 C. Status of Engineering Design and Schedule of Implementation 18 D. Cost Estimates 19 E. Financing 21 F. Procurement 22 G. Disbursements 23 H. Accounts and Audit 24 I. Environmental Effect 25 V. PROJECT IMPLEMENTATION 25 A. Organization and Management of Construction 25 B. Management of the Operation and Maintenance of Irrigation Systems 27 C. Preparatory Legal and Administrative Actions 28 D. Organization, Management, and Instituticonal Support of On-Farm Development 32 This report is based on the findings of an appraisal mission which visited Morocco in June 1982. The mission was composed o- Messrs. R.B. Palmer (mission leader), S. Darghouth (rural engineer), J. Doolette (agronomist), T. Baudon (economist), P. Pascon (consulting sociologist), and P. Pallas (consulting hydrologist).  (ii) Page VI. AGRICULTURAL PRODUCTION AND MARKETING 34 A. Present and Future Land-Use 34 B. Crop Yields and Production 36 C. Livestock Development 36 D. Marketing and Prices 38 VII. FARM MODEL BUDGETS AND COST RECOVERY 39 A. Farm Budgets 39 B. Cost Recovery 41 (i) Delimited Modern Perimeters 41 (ii) Traditional and Undelimited Modern Perimeters 44 VIII. BENEFITS, JUSTIFICATIONS, AND RISKS 47 A. Benefits and Beneficiaries 47 B. Economic Analysis 50 C. Sensitivity Analysis and Project Risks 52 IX. SUMMARY OF RECOMMENDATIONS AND LOAN CONDITIONS 54 ANNEXES ATTACHED TO APPRAISAL REPORT 1. List of Documents in Project File 56 2. Implementation Schedule 59 3. List of Contracts and Procurement Procedure 61 4. Summary Cost Estimates and Schedule of Expenditures 66 5. Other Tables: (a) Agricultural Development Support Services 70 (b) Livestock Component Support Services 71 (c) Land Use 72 (d) Crop Yields 73 (e) Crop and Livestock Incremental Production at Full Development 74 6. Disbursement Schedule 75 7. Organization Chart 76 8. Terms of Reference for Technical Assistance and Consultants: (a) On-farm Water Management 77 (b) Extension Planning Consultant 77 (c) Small-Scale Farm Equipment Study 78 MAPS No. IBRD 16646: Location of Sub-project Areas and Future SMSI Potential No. IBRD 16651: Ghiss Sub-project Area No. IBRD 16648: Middle Sebou Sub-project Area No. IBRD 16649: Chichaoua Sub-project Area No. IBRD 16650: Jemaa Sahim Sub-project Area No. IBRD 16647: Souss Sub-project Area  (iii) ANNEXES IN THE IMPLEMENTATION VOLUME 9. SMSI Subsector 10. Water Balance: Mobilization, Supply, and Demand 11. Detailed Description of Project Works 12. Detailed Cost Estimates 13. Land-Use and Intensification of Agriculture 14. Livestock Development 15. Farm Models 16. Markets, Marketing, Prices, and Agricultural Credit 17. Economic Analysis 18. Cost and Rent Recovery Analysis.   KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE SMALL AND MEDIUM SCALE IRRIGATION PROJECT I. INTRODUCT ION A. Origin 1.01 Following a Bank agricultural sector mission!/ in 1979 which recommended support for Morocco's efforts in irrigation rehabilitation and the development of small scale irrigation, a Bank mission in May 1980 made a preliminary identification of a group of small and medium scale irrigation (SMSI) projects representing both rehabilitation and new irrigation. All the projects chosen had already been included in the draft Five-Year National Development Plan (1981-1985). In November 1980 a joint FAO/CP-Bank identification mission visited Morocco, and l:he Government confirmed its interest in receiving Bank financing for an SMS'[ project and requested FAO/CP to assist the national staff in its preparation. The project was appraised ia June 1982. Apart from investment in five irrigation perimeters2/ covering a total area of 17,750 ha, the project would be used by the Moroccan Government as a vehicle to establish an institutional framework that will encourage more intensive land-use, improved on-farm practices, effective operation and maintenance of irrigation systems, and adequate and equitable cost recovery in SMSI perimeters both under the project and in the future; and prepare a second SMSI project. B. The Agriculture Sector 1.02 The Place of Agriculture in the Economy. Morocco's population is estimated at about 20 million (1980), with an annual growth rate of 2.9%. Some 60% of the population live in rural areas, and agriculture provides about 40% of total employment. Per capita GNP was US$790 in 1979, but about 45% of Moroccan families live at or below the estimated rural absolute poverty level of US$238 (1981) per capita.3/ Whilst the share of agricultural employment in the overall labor market is declining (along with the sector's share in GDP), absolute employment in agriculture is still increasing. 1.03 The value of agricultural output has grown at an average annual rate of 2.4% (in constant prices) for the past fifteen years, a lower rate than in the other sectors of the economy and less than the growth of demand for agricultural products, which has led to a rapid increase in imports. Agriculture contributed 13.4% to Morocco's GDP in 1978-1980, down from about 20% in 1968-1972 and 15% in 1973-1977. Cereals and pulses contributed 36%, livestock 33%, citrus 11%, vegetables 11%, industrial crops and forestry about 6% to the agricultural GDP in 1978-80. 1/ See Morocco Agricultural Sector Report 2667-MOR of May 2, 1980. 2/ The term "perimeter" is adopted from French usage and means a contiguous area or a group of neighboring areas under a unified irrigation system. 3/ Absolute poverty is defined as the income level below which a minimal nutritionally adequate diet plus essential non-food requirements are not affordable.  1.04 Agricultural exports accounted for 32.6% of the value of total exports in 1980, down from about 58% in 1971-73. Food products represented 86% of total agricultural exports in 1980, with fruits and vegetables accounting for about 50% of these food exports. Agricultural imports accounted for 27% of total imports in 1980, with bread wheat, sugar, and edible oils representing about 50% of these agricultural imports. Morocco has been a net importer of food since 1974. 1.05 Agricultural Performance. The agricultural trade balance deteriorated during the 1970's, with the ratio of exports to imports having declined to about 69% in 1980, down from about 128% at the beginning of the seventies. The average growth of agricultural imports in 1978-80 was 19.8% p.a. (in value), while agricultural exports expanded at 14.8% p.a. (in value) during the same period. Despite an improvement in the terms of trade in the late 70's, total agricultural exports in 1980 did not match the imports of basic foodstuffs (cereals, edible oils, sugar). 1.06 During the early part of the current Five-Year Development Plan period (1981-1985), the overall situation has been characterized by a very uneven performance among agricultural products and agricultural zones, as a result partly of severe drought conditions throughout much of the country and partly of price policy and Government promotional efforts. For those crops where price policy has not permitted farmers to obtain sufficient income (oil seeds, cotton, maize), or where farming practices have not been improved (cereals and pulses in non-irrigated areas),the Government's objective of increased production has met with limited or no success. Progress has been most rapid when prices have permitted net income per ha and per day from family labor to be attractive and where effective organization has permitted the introduction of modern farming techniques. The latter has generally been more frequent, and hence performance much better, for products grown under irrigation (sugarcane and a major share of the production of sugarbeets (75%), forage for transformation into milk (50%) and citrus (85%)). These results stem partly from the high priority given to large-scale irrigation in the public investment programs during the past fifteen years and the creation of regional agricultural development offices with wide supervisory responsibilities in the major irrigated areas. 1.07 Government Objectives and Strategy for Agricultural Sector. The Government's objectives for the agriculture sector are summarized in the 1981-1985 Plan as follows: (i) improvement of agricultural self-sufficiency through increased production of staple foods; (ii) increased agricultural exports through intensified production of off-season vegetables and fruit; (iii) reduction of social and regional income disparities through increased investment and employment creation in depressed areas; and (iv) more emphasis on processing and marketing of agricultural products. 1.08 The strategy proposed to achieve the objectives stated above includes: (i) increasing the share devoted to agriculture in the public investment program; (ii) increasing public investment in the rainfed sector and in small and medium scale irrigation schemes; (iii) pursuing a price policy which will ensure equitable returns to the farmer and stimulate import substitution for the basic foodstuffs; (iv) revising the Agricultural Investment Code; (v) promoting an adaptation of the land-ownership system to ensure rational and intensive use of resources; (vi) strengthening the planning and project preparation capabilities of the Ministry of Agriculture; and (vii) expanding the role and lending program of the National Agricultural Credit Bank (CNCA). These objectives and strategy are in line with the Bank's  - 3 - recommendations for the sector. The increased emiphasis in the Plan on small and medium scale irrigation reflects the recognition that this subsector has been relatively neglected in the past and offers an opportunity for substantial increases in agricultural production needed to meet unfulfilled demand in many regions as well as for relieving poverty among small holders. Annual investments in small and medium scale irrigation are projected to increase fivefold under the Plan. The subsector is discussed in some detail in Chapter II and in Annex 9. 1.09 Bank Involvement in the Agriculture Sector. Bank group lending for agriculture in Morocco began in 1965 and to date 17 projects have been undertaken and supported by US$567.0 million in Bank loans and US$24.0 million in IDA credits. They include five irrigation projects: Sidi Slimane (FY65, completed), Sebou I (FY70, completed), Souss Ground Water (FY75, completed), Doukkala I (FY76, completed), and Doukkala II (FY77). There also have been four agricultural credit projects (FY66, FY73, FY77, all completed, and FY79 ongoing), an agro-industries and flood control project (Sebou II, FY74), five rainfed agricultural development projects (Meknes FY75, Fes-Karia-Tissa FY78, Loukkos FY80, the Middle Atlas FY82, and Oulmis-Rommani FY83); one export- oriented project, the Vegetable Production and Marketing project (FY79), and one Forestry Project (FY82). 1.10 Performance of Bank-financed projects has generally been satisfactory. Performance in irrigation projects has been good cnce initial problems of land distribution, and organizational delays in const'ruction and procurement of irrigation equipment have been overcome. Inadequate cost recovery has been the major issue, but an increase in irrigation water charges of about 100% approved in 1980 and implementation of the proposals included in the present project are expected to provide a satisfactory resolution (see paras. 7.05- 7.15). The project performance audit report for the Sebou I project, submitted on June 21, 1982 (Report No. 3942), stresses the project's success in institution building and in providing infrastructure to achieve increases in the production of important irrigated crops. It also highlights the importance of successful extension work, timely allocation of funds to 0 & M, and collection of water charges, as well as the need to complete the land reform programs. The project performance audit report for the Doukkala I Irrigation project, submitted on September 24, 1982, stresses the project's success in providing an appropriate design for the irrigation system, effective land consolidation, a strong senior management, and adequate extension programs. The project was successfully completed, with water efficiency, crop production, cropping intensity, and the rate of return exceeding appraisal estimates. Performance of the four agricultural credit projects has been good. OED reports for three of them (Report 2543, June 15, 1979, Report 3248, December 23, 1980)1/ stress the contribution made by the loans to agricultural development, their success in establishing an efficient credit institution and the successful expansion of credit to small farmers. They also underline the importance of agriculturaL price policy, extension and input distribution for improved economic and financial performance of the credit loans. These issues are being addressed through Bank sector work. The Fourth Agricultural credit Project has recently run into liquidity problems because of the 1980-1981 drought which resulted in rescheduling of farmers' debts. Adequate measures to deal with these temporary problems have been taken. A fifth project to provide a line of credit to CNCA is currently under preparation and is scheduled to be appraised in early 1983. In the rainfed subsector, the first project (Meknes, FY75) experienced considerable delays in 1/ The First Agricultural Credit Project was reviewed in OED's Report on Agricultural credit Programs, Background Paper No. 4.  - 4 - implementation due to complicated land redistribution problems, poor preparation of project components, over-optimistic assessment of implementation targets, and inexperience in the organization and management of rural development projects. The Fes-Karia-Tissa Agriculture project (FY78) was designed to minimize organization and management problems encountered with Meknes, and the implementation of both the productive and the social components is generally satisfactory. The Loukkos project is progressing satisfactorily and the Middle Atlas and Forestry projects have made a good start. The Oulmes-Rommani project was approved by the Board in December 1982. 1.11 Lessons learned from these projects, both technical and institutional, have been taken into account in designing the proposed project. Start-up delays, experienced by most projects in Morocco, should be minimized as a result of early nomination of key personnel, availability before negotiations of first year designs and work plans, and the prompt allocation of financial resources for the start-up year. Project management problems should be minimized as a result of the proposed reliance on existing management structures and the establishment of national and provincial-level coordination committees, which have proven useful in the implementation of other Bank-financed projects. II. THE SMALL AND MEDIUM SCALE IRRIGATION SUBSECTOR A. Introduction 2.01 Background. In Morocco as elsewhere the differentiation between small and medium scale irrigation (SMSI) and large scale irrigation (LSI) has many facets. Large scale projects are generally new investments (rather than rehabilitation) and cover 10-20,000 ha or more. They involve major civil works for regulating and conveying water, modern distribution systems with geometric lay-outs, and land consolidation, and they are developed and managed by independent well-staffed regional agricultural development offices._/ LSI projects are designed to permit precise regulation of the rate of flow of irrigation water and the adoption of well-planned and intensive cultivation patterns. Morocco has nine LSI perimeters with a total potential of about 900,000 ha, of which about 560,000 ha have been completed, including portions of the Gharb (Sebou) and Doukkala perimeters financed respectively by Bank loans 643-MOR and 1201-MOR. In the SMSI subsector, projects range from a few ha to several thousand ha and fall into two main types: modern schemes, which are technically similar to large scale projects and involve land consolidation and construction of new irrigation networks; and traditional schemes, which do not involve land consolidation and have more rustic systems for water distribution that usually rely on traditional water rights. Both types of SMSI projects, but especially traditional ones, represent wide differences in the nature and reliability of water sources and pose a variety of social and institutional problems. These aspects are discussed in para. 2.03 and subsequent paragraphs, in Chapter V, and in Annex 9. According to very rough estimates, there are about 500,000 ha under irrigation in traditional SMSI areas, few of which have been improved or rehabilitated, and about 100,000 ha of rainfed areas with the potential for development as modern SMSI perimeters. 1/ Office r4gional de mise en valeur agricole (ORMVA), autonomous regional development agencies of the Ministry of Agriculture and Agrarian Reform, which have multidisciplinary responsibility for development of certain large-scale irrigation projects.  2.02 Modern SMSI Perimeters. These projects are introduced mainly in rainfed areas, with potential access to a secure source of water and where the absence of traditional irrigation arrangements and the prospects for major increases in income make the farmers more receptive to land consolidationr. Irrigation development costs fall in the range of DH 20-30,000 per ha (US$3,500-5,300 per ha). Benefits, while substantial, are in general lower than they are in LSI projects because small project size and location at greater distances from processing plants often preclude the introduction of high-profit industrial crops such as sugarbeets which have been successful in LSI projects. There exists, nevertheless, a significant potential for development of viable modern SMSI perimeters and two are included in the present project. 2.03 Traditional SMSI Perimeters. These projects are almost invariably developed in perimeters where irrigation has been practiced for centuries, usually on the basis of springs, resurgences, or river water diverted by small temporary dams rebuilt by farmers after each flood period. Water is distributed to farms on the basis of secular water rights through intricate networks of earth canals ("seguias") where water losses are generally high. In some cases, limited modernization investments (canal lining and installation of gates) made generations ago have become badly deteriorated. Farmers themselves carry out operation and naintenance, the latter only unevenly. Farms are predominantly small (0.2 to 3 ha) and highly fragmented. Improvement of these systems consists in constructing concrete intake structures, lining "seguias", installing permanent outlets, and leveling and draining where necessary. Rehabilitation costs average about DH 8-20,000 per ha (US$1,400-3,500 per ha). Substantial project benefits can normally accrue from reductions in water losses of up to 25-45% which permit higher yields and more intensive cropping of existing irrigated plots and sometimes an expansion of the irrigable area. As a result of lower costs, the economic rate of return is frequently higher than in modern SMSI projects. There is a major potential for rehabilitation of traditional perimeters in Morocco and three are included in this project. B. Types of SMSI Water Sources and the NTational SMSI Potential 2.04 The nature of the sources of water of an SMSI perimeter is usually the major determinant of both costs and benefits, and therefore the classification of sources is basic to SMSI investment planning. In Morocco, eight major types of existing or potential SMSI perimeters according to water source can be identified, of which five can normally support year-round irrigation and three are only intermittent. The former can be summarized as follows: (i) the banks of uncontrolled perennial water courses and of large perennial rivers upstream of dams. Irrigation is achieved by diversion of water courses and resurgences. An estimated 124,000 ha of this type are being irrigated along most of Morocco's major rivers; (ii) the low-lying terraces located in the meanders and ox-bows of rivers downstream of existing or proposed dams. This land can be irrigated by pumping water released from the dam into the river. An estimated 36,000 ha o- potential irrigation of this type exists, mainly along the middle reaches of the Sebou River and its tributaries above the flood plain, which is currently under development through LSI projects including Sebou I (Loan 643-MOR). A modern perimeter embracing a number of terraces of the Middle SEbou is included in the present project; (iii) small traditional perimeters located in the piedmont and fed by gravity from perennial springs through concrete lined canals and "seguias". A chain of these perimeters, totaling about 100,000 ha, stretches all along the piedmont of the Middle and High Atlas Mountains. This chain includes the  - 6 - Bittit perimeter of the Meknes project (Credit 555-MOR) and the Chichaoua perimeter, which forms part of the present project; (iv) perimeters irrigated by pumping groundwater through wells or tubewells. Several substantial aquifers exist capable of supporting actual and potential irrigation on about 96,000 ha. The Souss Groundwater project (Loan 1123-MOR) is a modern perimeter based on pumping from the Souss Valley aquifer. The Vegetable Production and Marketing project (Loan 1757-MOR) is financing greenhouse development based on pumping from the Souss and the Atlantic Coast aquifers. The present project includes a traditional perimeter in Souss which will be developed to shift its water source from uncertain resurgences to groundwater pumping; and (v) the small oases of the Sub-Saharan Desert regions. Since ancient times, these numerous oases have obtained their water from wells, drains, and more recently by groundwater pumping (about 50,000 ha). The intermittent types comprise the following: (i) areas of barley cropping based on occasional floodwaters of Saharan streams. These areas, which obtain sizeable harvests every five or ten years, are probably at the limit of the definition of SMSI irrigation (about 100,000 ha); (ii) small traditional perimeters based on gravity diversion of run-off from intermittent springs and water courses in the more arid southwest Atlas piedmont (about 26,000 ha); and (iii) areas of semi-arid lower piedmont cropping benefiting from occasional violent rainfall runoff. This form of irrigation based on rudimentary channeling of the runoff through plowed furrows and onto fragile terraces provides limited benefits on about 70,000 ha. 2.05 The following table summarizes the different types of SMSI perimeters by water source and region. See also Map No.IBRD 16646. Types of Actual and Potential SMSI Areas Perennial Intermittent Total River Sub Uncon- Terraces Saha- Piedmont Basin trolled Below Piedmont Aqui- ran Sahara Run- or Districts Streams Dams Springs fers Oases Floods off ----------------------------