Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4128- TUN TUNISIA STAFF APPRAISAL REPORT OF THE CENTRAL TUNISIA IRRIGATION PROJECT January 3, 1983 Europe, Middle East and North Africa Projects Department 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. CURRENCY EQUIVALENTS Currency Unit: Tunisian Dinar (D) US$1.00 = D .555 D 1.00 = US$1.80 WEIGHTS AND MEASURES Metric System ABBREVIATIONS BNT - National Bank of Tanisia (Banque Nationale de Tunisie) CRGR - Research Center of the Rural Construction Department (Centre de Recherche du Genie Rural) CRDA - Regional Agricultural Development Commission (Commissariat Regional du Developpement Agricole) DGPC - Central Highway Department of the Ministry of Equipment (Direction Generale des Ponts et Chaussees) DPC - Highway Department of the Ministry of Equipment - (Direction des Ponts et Chaussees) DERV - Training, Research and Extension Directorate (Direction de l'Enseignement, de la Recherche et de la Vulgarisation) DEGTH - Directorate for Hydraulic Study and Major Works (Direction des Etudes et Grands Travaux Hydrauliques) FOSDA - Agricultural Development Fund (Fonds Special de Developpement Agricole) INRAT - National Institute for Agricultural Research (Institut National de Recherche Agricole Tunisienne) OC - Cereal Distribution and Marketing Agency (Office des Cer4ales) OEP - National Livestock and Range Agency (Office de l'Elevage et des Paturages) OH - Vegetable Oil Agency (Office des Huiles) ODTC - Central Tunisia Development Agency (Office de Developpement de la Tunisie Centrale) OMIVAK - Kairouan Irrigation Development Agency (Office de Mise en Valeur de Kairouan) OMVVM - Medjerda Valley Development Agency (Office de Mise en Valeur de la Vallee de la Medjerda) STIL - Tunisian Company for Milk Industry (Societe Tunisienne de l'Industrie Laitiere) FOR OFFICIAL USE ONLY TUNISIA STAFF APPRAISAL REPORT OF THE CENTRAL TUNISIA IRRIGATION PROJECT Table of Contents Page No. I. Introduction 1 II. The Agricultural Sector Context 1 A. Place of Agriculture in the Economy I B. Agricultural Performance and Resource Allocations 2 C. Sector Issues Relevant to the Central Tunisia Irrigation Project 4 D. Bank Involvement in the Sector 6 .III. The Project Area 8 A. Location, Climate, and Land Resources 8 B. Water Resources 8 C. Population Revenue, Employment .and Social Organization 10 D. Land Use and Livestock 10 E. Agricultural Support Services 11 F. Infrastructure 13 G. Irrigation in Central Tunisia 14 H.. Constraints to the Full Development of Existing Irrigation Schemes 16 IV. The Project 17 A. Project Concept and Objectives 17 B. Summary Description of Project Components 19 C. Detailed Features of Project Components 20 D. Status of Engineering and Implementation Schedule 23 E. Project Costs 23 F. Financing 25 G. Procurement 25 H. Disbursements 27 This Report is-based on the findings of an appraisal mission in June 1982 composed of Messrs. N. Imboden (mission leader), C. Gois (Irrigation Engineer), F. Reeb (Agriculturalist), P. Long (Highways Engineer), Ms. W. Stickel (Economist), and Messrs. H. Attia (consultant), and F. Portieri (credit consultant). 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. V. Project Implementation 28 A. Project Management 28 B. Project Implementation Strategy 29 C. Execution of Project Works 32 D. Agricultural Support Services 33 E. Monitoring, Evaluation, Accounts, and Audit 35 VI. Benefits and Justification 37 A. Production 37 B. Marketing and Prices 39 C. Beneficiaries and Distribution of Benefits 40 D. Cost Recovery 42 E. Economic Analysis 44 VII. Agreements to be Reached and Recommendations 49 ANNEXES Annex 1: Project Costs - and Disbursements Table la: Project Component by Time 51 Table 1: Project Costs 52 Table 2: Estimated Schedule of Disbursement 57 Annex II: Procurement Procedures 58 Annex III: Execution of Works and Supply of Equipment 59 Annex IV: Selected Documents and Data Available in Project File 61 Map IBRD 16644 TUNISIA STAFF APPRAISAL REPORT OF THE CENTRAL TUNISIA IRRIGATION PROJECT I. Introduction 1.01 The proposed Project would help implement a coherent and sustainable water resources development policy in Central Tunisia and would have the following objectives: (i) increase agricultural production and farm incomes through a more intensive use of existing water resources; (ii) improve the regional distribution of revenues by increasing the productive capacity of a low income zone; and (iii) create employment opportunities through intensive agriculture. The Project would achieve its objectives through the rehabilitation of existing irrigation schemes, the construction of new small scale irrigation schemes, the rehabilitation of private wells, the strengthening of the Irrigation Development Authorities' (Offices) support services, and the organization of farmers into water users' associations. The Project was identified in the autumn of 1980 by a World Bank Identification Mission as a contribution to the Government's Sixth Plan objectives to decrease unemployment and regional imbalances through productive investments in neglected areas of Tunisia and was prepared by the Government of Tunisia with assistance of the FAO/IBRD cooperative program. II. The Agricultural Sector Context / A. Place of Agriculture in the Economy 2.01 Tunisia's 6.5 million population (1981) is growing annually at 2.5% and is almost half rural. GDP growth rate during the seventies has been high (about 7% p.a.) combined with a rapid improvement in per capita income, which reached US$1,420 in 1981, due to the rapid development: of manufacturing investments, substantial terms of trade gains (oil exports) and sound economic management. More recently the economy experienced a slowdown, in major part due to the worsening international environment. In 1981, real GDP growth rate declined to 5%, as the result of a sharp drop in petroleum and chemicals output and stagnation in the agricultural and textile sectors. Tunisia's main economic development issues concern productive employment creation, reduction of regional development inequalities, and structural adjustments required to prepare the economy for a smooth transition to the post-hydrocarbon era (demand management and domestic resource mobilization). 2.02 Despite the relatively good performance of Tunisia's agricultural sector (para. 2.05), agriculture's share in Tunisia's GDP has declined from 24% in 1960 to 13% in 1981. Similarly, agriculture's share in total employment has declined from 56% in 1960 to less than 35% in 1981 and its /1 Issues and performance of the Tunisian agricultural sector are analyzed in more detail in Report no. 3876-TUN: Agricultural Sector Survey, June 7, 1982. share of exports of goods from 572; in 1960 to less than 10% in 1981. The decline in the relative role of agriculture has been caused mainly by the more rapid growth of other sectors, particularly petroleum, manufacturing and tourism. B. Agricultural Performance and Resource Allocations Distribution of Agricultural Resources 2.03 Tunisia has a total land area of 16.4 million ha of which 8.4 million ha are suitable for agriculture and grazing. Forests and esparto grass cover 1.2 million ha, and 2.2 million ha are used for grazing. Of the 5 million ha of cultivable area, 34% are planted in cereals, 35% in fruit trees, 6% in forage crops, 2% in pulses, 3% in vegetables, 1% in industrial crops, and 21% is normally left fallow. Tunisia's ratio of irrigable land to arable land is very low (3.3% in 1977/80 compared with Morocco's 20%), reflecting scarcity of water resources. Tunisia has an irrigation potential of about 250,000 ha of which 160,000 ha are presently irrigable and about 120,000 ha effectively irrigated. Underutilization of irrigation water is a major issue in the irrigation subsector. 2.04 Tunisia can be divided into three agroclimatic zones. The Northern part (25% of Tunisia's land area) is the most fertile, receiving considerable rainfall (400-1,000 mm). The Central zone (15% of Tunisia) receives between 200 and 400 mm of rainfall. Rainfed agriculture is limited to fruit tree plantations (mostly olives), low yield cereals, and range. The Southern part, 60% of Tunisia, is a pre-desert zone receiving less than 200 mm of rainfall with extensive grazing and some irrigated agriculture. The unequal distribution of agricultural resources coupled with a concentration of industrial development in the Northern and Coastal regions has led to an unbalanced regional development in Tunisia. Agricultural Performance during the Fifth Development Plan (1977-81) 2.05 Government's objectives in the agricultural sector include the pursuit of food self-sufficiency (defined as a balanced commodity trade in agricultural products), increased rural employment and income generation, foreign exchange earnings and savings, and economic growth. Tunisia's investment effort in agriculture as a percentage of total investment (14%) corresponded to agriculture's share of value added (13%). Total investments in 1977/81 amounted to D 584 million, of which 45% Central Government, 18% public enterprises, and 37% private sector. Investments were concentrated in irrigation (44%), farm machinery (17%), and livestock (12%). Overall performance of the sector has been satisfactory: agricultural value added in constant 1972 prices increased at a rate of 2.9% per year in constant terms and average agricultural per capita income increased from US$173 in 1960/62 to US$380 in 1979, measured in 1979 IJS$. Expanded production resulted mostly from expansion of irrigated areas and from heavy investments in livestock and fruit trees. 2.06 The Government's objectives in employment and food self-sufficiency have not been attained: the impact of employment generating investments such as irrigation, livestock, and fru:it trees was off-set by employment replacing - 3 - investments in farm mechanization. The agricultural trade balance has worsened and the ratio of food imports to exports was 2.7 in 1981 compared to 2.2 in 1972, due to relative stagnation of exports, a rapid growth of imports, especially cereals, and a deterioration in the terms of trade of agricultural goods. Tunisia's rapid per capita income growth (5.5% p.a. between 1970 and 1980) combined with rapid population growth (2.5% p.a.) and the shift of tastes to higher value crops created a growth of demand in food, diverting exports to local consumption and increasing imports. The Proposed Five-Year Development Plan (1982-86) 2.07 The basic issues to be addressed in the coming years have not chdnged though the urgency of resolving key issues such as employment, and regional income distortions, as well as increased efficiency of investments has become greater due to a projected decline in the rate of economic growth and the necessity to adjust the economy to a post-hydrocarbon situation of lower investments. The Government attempts to achieve this adjustment through (i) shifting its investment strategy from large, highly capital intensive projects mostly in petroleum, mining and water resources to the promotion of employment opportunities in small and medium scale enterprises in agriculture, manufacturing, housing construction and other sectors; (ii) the creation of an appropriate policy environment for removing credit constraints for small enterprises and farmers, and by introducing realistic prices in particular concerning agricultural products; and (iii) export promotion by shifting away from overly protected and often highly capital intensive production for the domestic market towards more labor intensive exports. 2.08 The redistribution of investments in the proposed Five-Year Plan takes into account the proposed adjustments: (i) allocation of total investments in agriculture increases from 14% (1977-81) to 19% (1982-86), as agriculture has a relatively low capital intensity; and (ii) within agriculture, high capital intensive subsectors such as irrigation and farm machinery had their part in the investment budget cut from 43.6 and 17.3 in 1977-81 to 38.2% and 11.4% respectively in the new Plan. The part of labor intensive subsectors such as livestock and fruit tree plantations has increased from 12% and 8.5% respectively to 15.4% and 17.3% of total planned investments. This proposed resetting of priorities is crucially dependent on the absorptive capacity for projects in the more labor intensive sectors and subsectors, in particular as the majority of such investments will take the form of small and medium size projects and as 53% of the planned total is still to be identified in terms of precise projects. The Plan's investment targets can only be achieved if potential absorptive capacity bottlenecks, both in the technical sense as well as with regard to the more general policy framework can be overcome. The recently approved Technical Assistance Project (Loan 2197-TUN) would facilitate the preparation of high priority projects and lay the ground work for policy reforms. 2.09 The proposed Project would contribute to the Government's effort (i) to reallocate investments within agriculture from large scale water resources development to small scale irrigation; (ii) to increase efficiency of Government investments by improving the management and utilization of existing water resources; and (iii) to improve regional income distribution by investing in a relatively neglected area of Tunisia. - 4 - C. Sector Issues Relevant to the Central Tunisia Irrigation Project Irrigation Sector 2.10 Irrigation has contributed significantly to rapid growth of Tunisian agriculture. However, there are important constraints to the full exploitation of existing irrigation systems. Water provided in the large-scale irrigation perimeters is under-utilized. Causes are poor management of the public irrigation perimeters, the unwillingness of some farmers to use irrigation water fully because of land ownership disputes, absenteeism, and frequent problems with irrigation equipment and water availability. The Irrigation Offices 11 while efficient in the construction of irrigation schemes have been less so in their management. Their budgets often do not allow them to carry out proper operation and maintenance. Also contributing to poor operation and maintenance is the diversion of their limited staff resources to other activities, such as the distribution of credit, farm inputs, crop marketing, research and extension. 2.11 The agricultural development of existing irrigation perimeters is of the highest priority. The most important actions to be taken are (i) to introduce improved management systems for the public irrigation perimeters; (ii) to improve maintenance programs; (iii) to apply existing land reform legislation; (iv) to increase water charges to more nearly cover operation and maintenance costs; (v) to reduce the activities of the Irrigation Offices by involving the farmers and the private sector in the management of the irrigation schemes and in the provision of agricultural support services; and (vi) to extend agricultural support services to private shallow wells, which hitherto have been neglected. The proposed Project would assist the Government in implementing these actions. Prices and Subsidies. 2.12 In an effort to provide food at low cost to urban groups most agricultural prices are fixed by Government from the farm-gate to retail levels. To compensate producers, farm inputs are subsidized. In many cases farm-gate prices have been fixed artificially low (compared to world prices), discouraging production of food despite input subsidies. This has occurred for cereals, some industrial crops, olives, and wine grapes. Farm input subsidies benefit only a minority of farmers and have generally amounted to only a small percentage of farm input costs. The exceptions are irrigated crops (most fruit and vegetables), which are indirectly subsidized through artificially low input costs, particularly for irrigation water, while output prices are not effectively fixed. Subsidies tend to be provided for the most modern inputs (pure-bred cows rather than cross-bred, feed concentrate rather than other types of livestock feed, irrigation water, fertilizer, pesticides, etc). While this encourages use of these inputs it also causes some waste and excessive use of certain inputs by those farmers fortunate enough to obtain /1 Autonomous regional Government agencies responsible for managing irrigation infrastructure. the subsidies. The Government recognizes the resource allocation and income distribution effects of its present pricing and subsidy policies and is moving towards a pricing system that more closely reflects the real cost and benefits of the inputs and outputs to the economy. Some agricultural producer prices (milk and c-reals) have increased more rapidly than average price inflation and some subsidies such as subsidies on livestock feed have recently been drastically reduced. The Government is also following a policy of gradually increasing water charges until they reflect more closely the real cost of water (para. 6.20). The proposed Project would contribute to the Government's price and input subsidy policy by substantially increasing water charges and by assuring that input supplies and machinery services are provided efficiently and at cost to the farmers. Agricultural Marketing and Input Supply 2.13 In Tunisia, public marketing and input supply enterprises exist for cereals, pulses, olives, wine, meat, fertilizer, seed, and farm machinery. Several Government development authorities (Offices) participate in the collection of milk, fruit, and vegetables. All these institutions require improvements in their efficiency. They are slow to respond to market signals and to introduce cost-cutting efficiencies or consumer-satisfying innovations. Farm inputs are usually not available in the quantities required at the time required. Private marketing and input supplies are not permitted to legally compete with public enterprises for certain commodities (cereals, olive oil, high yield cereals, and fertilizers). For most other commodities, private marketing and input supply enterprises are closely regulated, and receive no technical assistance, nor credit. The exception to these problems are fruit and vegetables: fruit and vegetables are distributed internally through a well-established and competitive private market and are exported through highly developed profitable enterprises which are not submitted to significant Government control. 2.14 The proposed Project would improve the marketing of inputs and agricultural products through investments in marketing infrastructure, assistance to cooperatives to organize farm input supplies and marketing, the promotion of contracts between growers and processors and the improvement of the accounting and pricing system of the Offices' public input services. Land Tenure 2.15 Tunisia's land tenure system constrains the development of agriculture. Land distribution is highly skewed. Most farms are small (68% have less than 10 ha), and fragmented (70% have 2 or more separated parcels). Much of the farm land is owned by absentee landlords and cooperatives both of which often exploit the land poorly. There are large tracts of collectively owned land which are poorly managed, overgrazed by livestock, and on which topsoil is eroding as a result. Few farmers have land titles. There is no legal protection for tenant farmers which discourages them from investing in the land. Reform has been discussed for many years, but action has been slow and generally confined to the public irrigation perimeters where land consolidation has begun. The proposed Project would encourage land consolidation in existing irrigation perimeters, and would implement land reform regulations on new irrigation schemes before the start of irrigation. -6- Credit 2.16 Agricultural credit is provided primarily (80%) by the mostly Government-owned National Bank of Tunisia (BNT). Financing for agricultural credit is provided from BNT's own resources, rediscount facilities of the Central Bank, World Bank loans, Government funds, and bilateral sources. The Offices also provide short-term in-kind credit in irrigation perimeters (para. 3.19). Major credit issues include: low loan recovery; lack of agricultural staff at BNT; lack of land titles for most farms, preventing them from obtaining long-term credit; centralization of loan decisions, resulting in an excessively long approval process; lending norms for loans financed by Government funds which do not adequately reflect either the costs of investments and inputs or the ability of farmers to contribute equity; interest rates lower than inflation (current BNT interest rates are 6% for small farmers and cooperatives and 7% for commercial farmers while inflation was about 9% in 1981 and is projected at 10% for 1982, 9% for 1983 and 8% thereafter), and the small number of farmers, especially small-scale farmers, receiving credit. The Third Agricultural Credit Project is addressing priority credit problems (para. 2.19). In addition legislative action simplifying procedures for obtaining land titles has resulted in improvements in the provision of agricultural credit. The Government is planning to establish a specialized agricultural lending institution, but its precise role and effect on current institutional arrangements is yet to be defined. Extension and Research 2.17 Government's agricultural extension and research services do not function well. Numerous institutions have introduced autonomous or semi-autonomous extension systems for individual crops or regions. Some profitable new farm technologies have been introduced. However, most extension activities lack appropriate extension messages, provide contradictory advice to farmers, have no rigourous management systems, and have therefore little impact. In addition, extension agents tend not to be trained in communication. Agricultural research has introduced some important new technologies. However, it lacks clear priorities, staff, and is not sufficiently directed to provide solutions to practical problems. Research is too centralized and has little contact with extension services, thus lacking farmers' feedback on the application of research results. A master plan is being prepared as part of the Bank financed Technical Assistance Project to address these issues. 2.18 The proposed Project would strengthen extension and research capabilities in Central Tunisia. Its research and extension activities would implement the principles of research and extension to be elaborated in the proposed Bank financed Master Plan. D. Bank Involvement in the Sector 2.19 Bank Group lending for <agriculture in Tunisia started in 1967 and to date, twelve projects have been approved for a total of US$256.9 million of Bank/IDA funds. They include four irrigation projects: the Irrigation Rehabilitation Project in the Lower Medjerda and Nebhana areas (Loan 1068), the Sidi Salem Multipurpose Project (Loan 1431), the Southern Irrigation Project (Loan 1796), and the Medjerda/Nebhana Irrigation Development Project (Loan 2157), which was approved in May 1982; two Fisheries Projects (Credit 270, and Loan 1746), a Cooperative Farm Project (Loan 484/Credit 99), three Agricultural Credit Projects (Loan 779/Credit 263, Loan 1340, and Loan 1885), a Rural Development Project for the Northwest Region (Loan 1997), and a Grain Distribution and Storage Project (Loan 2052). The Bank is also supporting infrastructure and on-farm investments through two Rural Roads Projects (Loans 1601 and 2108). 2.20 Performance under these projects has been mixed, reflecting the institutional constraints in the sector. Implementation of the irrigation projects has been the most satisfactory; performance of the Irrigation Offices in the execution of construction works has been satisfactory and the Offices have demonstrated their ability to implement project works efficiently. On-farm development and the implementation of efficient farm support services have been slower to materialize, partly due to the priority given to construction works, and the non-involvement of farmers in the decisions concerning water distribution and operation of the systems. The first Rural Roads Project is progressing on schedule; the second is just getting underway. On the other hand, the First Fisheries Project was completed at the end of 1979 with considerable delays and low loan recoveries for boats. These problems were addressed under the Second Fisheries Project after agreement was reached on a strategy for improving recoveries, but performance in this area is still below expectations. The Cooperative Farm Project, which was designed to develop production cooperatives as part of a 10-year national program of agrarian reform, was delayed by technical, managerial and financial problems, and then, following the Government's abandonment of production cooperatives, was revised in 1970 and an amount of US$8.8 million was cancelled. The PPAR (No. 968 of January 8, 1976) indicated that at completion in 1973, most of the project objectives, namely improved productivity, production, worker incomes and institutional viability, were attained. However, the objective to eliminate subsistence farming, was not achieved. The First Agricultural Credit Project financed BNT lending for farm machinery, date palm plantations and dairy development and processing, but was not fully disbursed until 34 months after the original closing date because Bank Group funds were onlent at a higher interest rate than Government funds. The PPAR (No. 2497 of May 11, 1979) indicates that while the project achieved a good rate of return, mechanization did not yield the benefits expected, and dairy processing suffered major cost overruns. The interest rate problem was considered in the design of subsequent credit projects, which call for uniformity of lending terms for credit regardless of the financing source, but progress on this issue is below expectations. Under the Second Agricultural Credit Project, less attractive terms (higher interest rate and no investment subsidies) on BNT's subloans to commercial farmers in comparison with similar subloans extended with Government funds, and the lack of decentralization of BNT's subloan approval process caused disbursements to be slower than anticipated. The project is now nearly fully disbursed and will be closed on December 31, 1982, two years after the initial closing date. The Third Agricultural Credit Project, whose loan became effective in June 1981 is addressing priority credit problems: beside uniformity in lending terms regardless of the source of financing it requires BNT to increase agricultural staff, establish a staff training program, decentralize appraisal and approvals of small subloans to branch offices, and undertake annual reviews of the adequacy of its - 8 - agricultural interest rates compared to price inflation and make adequate proposals for their modification as necessary. Progress so far has been slow, although a decision has been made recently on decentralization of BNT's operations. Lessons from the above projects have been considered in the design of the proposed Project. III. The Project Area A. Location, Climate, and Land Resources 3.01 Central Tunisia consists of the three Governorates of Kasserine, Kairouan and Sidi Bouzid, and five districts of the Governorates of Siliana and Gafsa. It corresponds to an agro-climatological zone delimited in the North by the Saharan Atlas Ridge (which constitutes a climatological border) and in the South by the mountains of Gafsa. In the West, Central Tunisia borders on Algeria and in the East on the Sahel of Sousse and Sfax. Central Tunisia occupies 14% of the country's total land area and has an estimated population of 1.1 million (1980) or 16% of Tunisia's total population. 3.02 The Project area covers all of Central Tunisia with the exception of the Governorate of Sidi Bouzid!l involving some 18,000 km2 or 11% of Tunisia's total land area. The Project area can be divided into three zones: (i) the Piedmont and the Southern Plains of the Atlas ridge (the region of Thala); (ii) the high altitude steppes (600-1,000 m) of the North West (Kasserine, Feriana); and (iii) the low altitude steppes (100-500 m) in the East and South which correspond to the plains of Kairouan. Central Tunisa has a semi-arid to arid climate. The high altitude steppes and the piedmont have a continental climate with hot dry summers (39 CO) and cold winters with frost-danger from January to March. The low steppes have a more maritime climate with mean maxima of 330C in the summer and only occasional frost risks. Rainfall is irregular and ranges from 400 mm in the Northwest to 150 mm in the districts of Gafsa. Relatively cold winters, dry and hot summers, low and large variations in rainfall (in Kasserine annual rainfall varies between 147 and 615 mm for a mean annual rainfall of 324 mm) severely constrain development of rainfed agriculture. 3.03 The soils in Central Tunisia are very varied but are largely brown, of medium texture with little organic matter. They require special precautions to avoid soil erosion and water losses, but assure good drainage. Central Tunisia's natural vegetation, consists of alfa in the West, side brush and armoise in the plains. Land clearing has, to a large extent, destroyed perennial vegetative cover and replaced it by annual crops. B. Water Resources 3.04 Surface Water. The hydrographic network of the Central Tunisia comprises three main catchments, Oued Zeroud, Sidi Aid and Leben, covering some 12,000 km2. The plain of Kairouan is the flood zone of the Oueds Zeroud and Merguellil. These oueds have a total annual run-off of 200-400 MCM depending on the year. They have a torrential regime with sudden and large floods followed by long periods of no flow, leading to strong erosion and a /1 Investments in Sidi Bouzid would be financed under an IFAD financed Project under preparation. - 9 - heavy sediment load. Only a few of the oueds have a permanent flow and are used for irrigation (Kasserine, Feriana, Sbiba). 3.05 With this hydrological pattern, the control of surface water is difficult. The Master Pla/l of the Water Resources of Central Tunisia calls for the construction of 11 dams, of which two are already constructed (Nebhana and Sidi Saad) and one is under study (El Maouareb). The objective of these dams is flood control and the release of storage water for irrigation, water supply and aquifer recharge. Due to their flood regulation function, their guaranteed regulated flows are very small compared to the estimated total annual run off. In addition, the life expectancy of these dams is short due to the heavy sediment load. For these reasons, agricultural development potential on the basis of direct use of surface water is limited and ground water resources (controlled and recharged) provide much better prospects. 3.06 Ground Water. Ground water resources come from two kinds of aquifers: (i) the phreatic aquifer, at 10-20 m, exploited by shallow wells, and (ii) the deep aquifer (300-500 m deep) exploited by boreholes yielding about 50 l/s on average. These two aquifers are generally not separated by an impervious layer and have to be considered as interconnected from the point of view of water resources. On the basis of recent studies by the Directorate of Water and Soil Resources (DRES) the renewable ground water resources of Central Tunisia amount to about 300 MCM. 3.07 Water Quality. The salinity of both surface and ground water increases downstream. About 50% of the water resources have a salt content above 3 g/l and 80% above 1.5 g/l. Although water from deep aquifers never exceeds 3.5 g/l, surface and shallow aquifer water may go up to 5 g/l. Water quality in the aquifers exploited by the Project is good, always less than 1.5 g/l and often under 1 g/l. 3.08 Water Balance. Ground water use in Central Tunisia is estimated at about 215 MCM, of which agriculture accounts for 175 MCM and is lower than the exploitable potential of about 300 MCM. However, certain basins, in particular the Gammouda plain in Sidi Bouzid and to a lesser extent the plain of Kairouan, already show signs of overexploitation. Projections of water consumption for the year 2000 show that potential use could exceed the available renewable resources. There is a need for continuous monitoring of the ground water exploitation with particular attention to the water table and piezometric levels. 3.09 For each basin in the project area, an estimate of the water resources, present use, incremental water consumption due to the Project, other uses to the horizon year 2000 and the balance has been made (Annex V of Project File). The project would develop new water resources only where the long term water availability is assured. The situation of the Kairouan plain basin, presently fully exploited, would greatly improve with annual releases for aquifer recharge from the recently constructed Sidi Saad dam. In the Governorate of Kasserine two basins show potential water deficits, in /1 Ministry of Agriculture: "Plan Directeur de l'Utilisation des Eaux du Centre de la Tunisie" DEGTM; February 1977. - 10 - particular the Sbeitla aquifers. No new perimeters would be constructed there and rehabilitation would be limited to increased water use efficiency without increasing water off-take. C. Population Revenue, Employment and Social Organization 3.10 The population of Central Tunisia (excluding Sidi Bouzid) is estimated at 770,000 (1981). Population density is high (43 people per km2) compared to the resources; 85% of the population lives in rural areas and 80% in dispersed settlements. Poor land and water resources, high unemployment and a low level of public services, due to the dispersed nature of settlements, result in low standards of living for the population. The agricultural resources of the region do not provide sufficient income to farmers. Nearly all farmers have outside farm income either from jobs within the region or from temporary out-rnigration. Outside farm income accounts for 49% of total average income of rainfed farmers, 38% for farmers on public irrigaton schemes and 37% for farmers owning a private well. 3.11 Traditionally Central Tunisia has had a nomadic population, which integrated the use of the feed resources of Central Tunisia with those of the North through migration. Over the last 30 years the nomadic way of life has given way to sedentary exploitation. Nomadic herders have thus been transformed into sedentary farmers within one generation. Farming techniques, in particular water management, are therefore poorly mastered and explain the low yields obtained on irrigated land. D. Land Use and Livestock Land Use 3.12 The agricultural land use in the area in which the Project is situated is as follows: Gafsa Siliana Total Kairouan Kasserine North South % ---------------('000 ha)--------------- Rainfed crops 255 180 50 49 534 63 Fruit trees 163 54 43 11 271 32 Irrigated crops 32 7 4 2 45 5 Total Agricultural Land 450 241 97 62 850 100 The agricultural area of about 850,000 ha is mainly used for rainfed cereals for home consumption. The area cultivated with cereals has increased substantially over the last 50 years (from 50,000 to 400,000 ha for the three governorates) due to the encroachment of cereal cultivation on rangeland. Cereals are thus grown on land not normally suited for annual crops resulting in very low yields (3-400 kg/ha). Fruit tree plantations, practically non existent some 20 years ago, now cover 32% of the agricultural area and consist of olives, apricots, almonds and pistachios. Fruit production fluctuates widely with yearly rainfall variations. The irrigated area amounts to 5% of - ii - agricultural lands and is used mainly for vegetables and fruit trees (para 3.34). Grazing areas, mostly collective lands, originally covered the large majority of Central Tunisia, but today accounts for only 35% of the total area (620,000 ha). 3.13 Livestock. The reduction of rangeland due to cultivation has not led to a proportionate decline in the livestock population. Central Tunisia accounts for 32% of sheep, 22% of goats and 15% of cattle in Tunisia. Stock rates exceed fodder availability leading to poor animal performance, large fluctuations in herd sizes, overgrazing of the remaining range and large imports of fodder and feed from outside the region. Development of the livestock subsector would require the establishment of a herd and range management system that takes fully into account the breeding vocation of the area and the necessity to integrate rainfed breeding activities with fattening actions on the irrigated lands. The proposed Project would test such a livestock development model on a pilot basis and would improve the feed balance in the region by encouraging fodder production on irrigated lands. E. Agricultural Support Services The Regional Agricultural Development Commissariats (CRDA) 3.14 The CRDA represents the different services of the Ministry of Agriculture at the Provincial level. It is responsible for studies, statistics, credit evaluation and the coordination of agricultural development activities. The rigidity of its administrative structure does not permit the CRDA to implement projects and investments. For this reason the Government relies more and more on public enterprises and Offices to implement development projects and to provide farmers' services, thus liberating the CRDA of operational tasks in favor of its planning and coordination functions. The Offices 3.15 There are two development Offices (semi autonomous development agencies) in the Project zone: the Central Tunisia Development Agency (ODTC), headquarted in Kasserine and the Irrigation Office of Kairouan (OMIVAK) in Kairouan. The Offices have full authority to implement development projects within their jurisdiction. Their financial resources consist of revenues from services (water charges, input supply, marketing services) and of budgetary allocations. Although the law allows the Offices to be financially independent, they are heavily dependent on budgetary financing. 3.16 ODTC was created in 1979 to promote integrated rural development in Central Tunisia and is responsible for the planning, preparation and implementation of development works in the Governorates of Kasserine, Sidi Bouzid and in five districts of Gafsa and Siliana (para. 3.01). Its main responsibility is to encourage rational land use, to adapt land tenure structures to development requirements and to implement socioeconomic development works. ODTC is responsible for the development of water resources, the management of existing and new irrigation schemes and for agricultural support services. It is managed by a Director General under the guidance of a Board of Directors composed of representatives of the various Ministries concerned, the regional political authorities and farmers' - 12 - representatives. ODTC has a central directorate in Kasserine, responsible for overall planning and coordination, and regional directorates at the Governorate level. 3.17 OMIVAK's territorial jurisdiction is limited to the Governorate of Kairouan and to the irrigation subsector. OMIVAK is responsible for agricultural support services in the irrigation subsector and for the management of the PPI. Up to now, the recently created Office (1980) did not have the manpower and infrastructure necessary to fully execute its mandate and therefore concentrated its efforts on the public irrigation schemes. OMIVAK's management structure is similar to ODTC's: It has a Director General in Kairouan and five territorial subdivisions. The Project would provide this newly created Office with the necessary means and infrastructure to execute its mandate (para. 4.14). Extension and Research 3.18 The shortcomings of the present extension and research systems have been described in para. 2.16. The Project area is understaffed and lacks infrastructure. Extension, in particular for private tubewell farmers, is practically non-existent, as services are concentrated on the public irrigation schemes and as input distribution and machinery customer services receive priority. For fruit trees, research has identified high yield varieties and the research center of the Rural Construction Directorate of the Ministry of Agriculture (C.R.G.R.) has made substantial progress in knowledge of the effect of salinity on soils and yields. However, there exists no regional research center in Central Tunisia that investigates problems of irrigated crops and that defines extension messages for extension workers. The Project would address this issue (paras. 5.16-5.17). Input Distribution 3.19 High yield cereal seeds are distributed by the Cereals Office, fodder seeds and feed by the Livestock Office and inputs for the irrigation sector by the two Offices ODTC and OMIVAK. The difficulties of input distribution as described in the sector analysis (para. 2.12) apply also to this region. The difficulties are particularly serious in Central Tunisia due to inadequate access roads and the lack of distribution centers. The Project would provide the necessary infrastructure and encourage cooperatives and the private sector to enter input distribution (para. 5.19). 3.20 Machinery Services. The majority of machinery services are provided by the private sector. SONAM/L is not represented in Kasserine and provides limited services in Kairouan (15 tractors). The Offices have small mechanized units which provide some services. Availability of tractor services is not a problem in the Project area. However, land preparation is often done badly and improved seed bed preparation would increase yields substantially. The Project would introduce improved land preparation techniques and adapted /1 Office de Developpement de la Tunisie Centrale. /2 Socifte Nationale de Machinisme Agricole; a parastatal company responsible to provide tractor services to farmers. - 13 - machinery through the Offices so as to demonstrate to the farmers the benefits of improved land preparation (para. 5.21). Credit 3.21 Credit to farmers in the Project zone is provided by BNT (for investment and short-term) and the two Offices for short-term, in-kind credit. The BNT credit conditions are those discussed in para. 2.15. The Offices' short-term in-kind loans are interest-free, requiring the farmers to contribute not less than 20% of input values and to repay their loans at the end of the cropping season (6 months). Loan recovery has been unsatisfactory in the past (26% on average for 1971-77) but is improving (59% in 1980), and measures are presently under implementation to improve recovery. The in-kind credit system would be reformed under the Project (para. 5.19). Marketing 3.22 Except for small quantities of off-season tomatoes early apricots and artichokes which are exported, vegetables and fruits are sold for local consumption through wholesale markets in Kairouan, Sfax, Gabes and Tunis. A substantial amount of apricots and hot peppers, and to a lesser extent tomatoes, are sold to local processing plants, which however cover the larger part of their product requirements from outside the region due to insufficient regional supplies. 3.23 The larger farmers sell their produce directly to the processing plants or on the Kairouan, Sfax or Tunis wholesale markets through sales agents. Smaller farmers sell either on the village markets, through private transporters or to independent dealers at the farm level. Apricots and apples are often sold on the tree. Due to the large number of small pickup trucks in the region, transport for produce is available at competitive prices. Information on prices in various wholesale markets is readily available in the region and farmers with a large enough production do take advantage of price differentials in various markets. Smaller farmers who do not produce enough to hire transportation are dependent on prices received from sales agents. Prices of fruits and vegetables fluctuate and during peak production small farmers often have difficulties obtaining remunerative prices. The Project would address this problem through the creation of collection centers and through smoothing out the peaks and troughs of production in a given crop through improved information on marketing prospects (para. 5.20). 3.24 The large part of the milk produced in the Project area is sold by the farmers to private markets and milk collectors. The rest is sold to a private processing plant in Kairouan. The lack of an organized milk collection system has prevented farmers from increasing milk production despite a demand in consumption centers such as Kairouan. The Project would address this issue (para. 5.22). F. Infrastructure 3.25 The main road network in both Kairouan and Kasserine is paved and in good condition. Other roads generally have minimal improvements and most are unimproved tracks. The highest priority tracks are being improved, generally - 14 - to good gravel, all-weather standards under the Bank's Third and Fifth Highway Projects. The tracks serving the Project's farmers are of lower class, and the existing maintenance generally consists of a single passage of a grader. Most of the tracks are difficult to use or impassable during the rainy season. They would be improved under the Project. 3.26 Most villages in the Project zone have been electrified and have some improved drinking water supply, often related to the irrigation schemes. Nearly all PPIs and some private wells are or are therefore being electrified. G. Irrigation in Central Tunisia 3.27 About 44,000 ha are irrigated in the Project zone. Irrigation water resources development includes (i) Government developed public schemes called PPI (Perimetre Public Irrigue) where irrigation water is drawn from deep aquifers. There are some 51 PPIs in the Project area irrigating a total of 12,000 ha; (ii) private irrigation schemes known as PS (puits de surface or shallow wells) using phreatic water, numbering about 5,900 wells capable of irrigating some 24,000 ha; and (iii) publicly owned irrigation schemes or terres domaniales (8,000 ha) which are part of the public estate. The latter are relatively well managed public enterprises and are therefore not included in the proposed Project. The Public Irrigation Schemes (PPIs) 3.28 Most PPIs were developed in the sixties under the production cooperative system but since then, the irrigable land covered by them has been redistributed among previous land owners and agrarian reform beneficiaries. Overall management of the PPI, i.e. maintenance and operation of the irrigation infrastructure, collection of water charges and provision of services such as extension and input supply, is the responsibility of the public sector (paras 3.15-3.17). 3.29 The irrigation equipment: of the PPI consists of one or several boreholes at an average depth of 320 m with a yield of 20-60 l/s, a pumping station and a water distribution network with an average length of 40 m per irrigable ha. The large majority of these schemes irrigate an average of about 100 ha with a few schemes irrigating 300 to 1,700 ha. 3.30 Land Tenure. Land distribution in the PPI of the Project zone is fairly even, with the vast majority of landowners (92% in Kairouan, 98% in Kasserine) owning 5 ha or less. Holdings of less than 1 ha are common in Kairouan (30% of farmers) and in Kasserine 38% of farmers own less than 2 Ha. A small minority with large holdings account for a disproportionate share of land: in Kairouan 3% of farmers own 18% of the land and in Kasserine the top 2% own 10% of the land. However the largest group of farmers are medium-sized and own the majority of land. In Kairouan 62% of farmers have holdings from 1-5 ha accounting for 59% of land and in Kasserine 60% of farmers have from 2-5 ha accounting for 68% of the land. 3.31 Land tenure conditions vary widely in the Project area. Sharecropping is common in Kairouan, but rare in Kasserine where virtually none of the land or farmers are under sharecropping arrangements. - 15 - Sharecropping appears to be associated with large holdings: out of 15 perimeters in the Kairouan project area with land holdings exceeding 9 ha, ten had sharecropping practiced on over 25% of the land. 3.32 Fragmentation of holdings is a constraint to efficient farming and water distribution. A program of land consolidation including the issuing of ownership certificates or land titles began in 1980 under an agency created for land reform. Progress in issuing land titles is uneven in the two project zones. In Kairouan, an estimated 70% of land owners have received full title to their land, while in Kasserine/Gafsa, owners with either a full fledg2d land title or ownership certificates are the exception. While land titles or ownership' certificates are required for medium- and long-term credit, the lack of ownership documentation is no longer a serious problem for farmers, as ownership certificates can be readily issued on request. 3.33 Land ownership in PPIs is regulated by the Land Reform Law of 1963, as amended in 1971, and is based on four principles: (i) the obligation of farmers in each PPI to make a contribution toward the public sector investment based on the capital gain on the newly irrigable lands; (ii) limits on allowable sizes of land holdings within the PPI to encourage the development of viable farm units; (iii) consolidation of landholdings; and (iv) farmer's obligation to irrigate at least two-thirds of his surface area within two years of the start of irrigation. However, application of the agrarian reform legislation is not automatic for every irrigated perimeter. It is not applied in small irrigation perimeters, or where fragmentation or land distribution are not a problem. In the Governorate of Kairouan, for example, only 4 out of 37 perimeters have been subject to the agrarian reform legislation. The proposed Project would encourage land consolidation on existing perimeters and would assure that the land reform would be implemented on new irrigation schemes (para. 5.13). 3.34 Land Use and Cropping Pattern. At present, about 44% of the total irrigated area under the Project is under fruit trees; 27% under vegetables and 14% each under cereals and forage production amounting to an irrigation intensity of about 100%. Farmers in general follow a triannual rotation consisting of vegetables/forage/cereals. Fruit tree plantations are widely spaced and 28% of them are intercropped with vegetables. There is a slow, but steady evolution of the cropping pattern away from summer vegetables to increased forage and fruit production: (i) a lack of water during the summer favors fruit tree plantations, which require less water; and (ii) marketing risks of perishable vegetables and the severe feed shortage in the region have motivated farmers to switch to forage crops. 3.35 Water Use and Yields. Water availability is restricted by the low capacity of the tubewells and pumps, their age, and frequent interruptions in irrigation due to mechanical breakdowns in the system. Pumping hours are limited to some 1,500 hours/year resulting in a very low water yield (less than 2000 m3/ha) thus reducing the area which effectively can be irrigated to 30-40% of the equipped land. The Project, by increasing water use in the winter and by reducing water losses and interruptions would increase cropping intensity. Yields vary substantially from one irrigation scheme to another according to water availability and application. Yields are however far below potential. Average yields are 1.3 t/ha for cereals, 12 t/ha for tomatoes, 7 - 16 - t/ha for peppers and broad beans and 1.5-3 t/ha for olives. Better farmers grow double the average yields and technology exists to increase production substantially. Private Shallow Wells 3.36 The shallow private wells or puits de surface (PS) have been constructed by private farmers often with the assistance of the Government (15% subsidy) and more rarely with credit from BNT. There are 6,800 private wells under OMIVAK and 2,100 under ODTC (excluding Sidi Bouzid). Private well development is a recent phenomenon, which until lately has been uncontrolled, leading to overexploitation of certain aquifers (para. 3.08). Private wells are normally large diameter wells, 12 to 20 m deep and are often not cased. Only 47% of the shallow wells under ODTC and 73% within Kairouan are equipped with diesel or electric pumps, the remaining ones are animal powered or used for drinking water only. They yield an average 3-4 l/s and water is conveyed by seguias; furrow or basin irrigation is practiced. 3.37 Land and Water Use. Cropping patterns and rotation in private irrigation plots are similar to the PPI, with less emphasis on fruit trees and more forage crops. Water use is very intense and land for irrigation is used in rotation, farmers alternating irrigated crops with dryland farming. In general, water management on private irrigation plots is more efficient than on the PPIs, as farmers have full control over water. Yields are also somewhat higher, although production is still confined by the non-availability of advise and inputs. The Project would assist farmers in the Project zone (i) to increase the yields of existing wells where feasible; (ii) to increase water use efficiency; and (iii) to intensify production on the private plots. H. Constraints to the Full Development of Existing Irrigation Schemes Public Irrigation Schemes 3.38 Public irrigation schemes in the past have not been efficiently managed nor intensely cultivated. The reasons for the inefficient use and the absence of maintenance in the public small scale irrigation schemes are: (i) the irrigation schemes, constructed about 20 years ago, were designed and implemented without any involvement of the local population. The beneficiaries, at that time mostly semi-nomadic herders, were not interested in irrigation and often were forced by the Government to irrigate; (ii) the small scale schemes were managed by the Medjerda Office (OMVVM) in Tunis. The large number of schemes, their small size and the distance between the Office and the schemes made management of these schemes expensive, unresponsive and inefficient leading to a lack of maintenance and increasing breakdowns of long duration; (iii) low water charges, which do not cover operation and maintenance costs, did not provide incentives to farmers to use water efficiently and did not allow mobilization of the required resources to maintain the system; - 1 7 - (iv) insufficient water supply in relation to the area equipped, due to the adoption of a more water intensive cropping pattern than foreseen at design, and system breakdowns, lead to insecurity of water supply thus discouraging farmers to invest in more intensive production t 2hniques; in addition, inadequate criteria to manage water shortages lead to suboptimal results of irrigation; and (v) the non-application of land reform regulations resulted in inefficient farm sizes and in large absentee landownerships for some irrigation schemes. 3.39 Some of the above mentioned constraints have been removed. The population now is sedentary and has fully understood the benefits of irrigation as proven by the rapid expansion of private tubewells. The recent creation of two offices (OMIVAK and ODTC) permits a more efficient and responsive management of the schemes. Water charges have been increased substantially over the last few years (para. 6.19). However, these three developments are insufficient to assure efficient management: the schemes have sufficiently deteriorated so that without rehabilitation their efficient management cannot be assured; and farmers have lost confidence in the systems and are not willing to invest in them. The proposed Project would attempt to address these remaining issues. Private Shallow Well Development 3.40 Shallow aquifer water resources' exploitation has had a rapid development over the last few years through private investments in wells. Further uncontrolled water resources development is no longer possible as some aquifers are already overexploited. After this period of rapid development of the irrigated area and in view of the limitation of the water resources, it is essential (i) to closely monitor the aquifers and to limit any further development to the resources available in the various aquifers; (ii) to introduce improved water management techniques so as to increase the water use efficiency; and (iii) to intensify production so as to maximize returns to water which is the limiting factor in the region. The proposed Project would implement these actions. IV. The Project A. Project Concept and Objectives Project Rationale and Concept 4.01 The growing demand for food products from a rapidly increasing population, the lack of significant resources outside agriculture and the level of unemployment likely to accelerate rural-urban migration call for a rapid development of the agricultural sector in Central Tunisia. With the low and unpredictable rainfall prevailing in the region, intensification of rainfed agriculture is risky and limited, and increased output from fruit trees and fodder shrub plantations would be slow to materialize. Priority therefore needs to be given to irrigation development. - 18 - 4.02 In order to capitalize on previous investments and farmers' experience, priority would be given to the rehabilitation of the physical infrastructure in a number of selected PPIs offering good prospects for improvement; those where the major constraint toward increasing agricultural output appears to be of a social nature (land tenure, absenteeism, lack of farmers' interest, etc.) would be excluded from the physical rehabilitation program. A few new PPIs, justif:ied on grounds of the underexploitation of some of the aquifers, would also be included in the Project. 4.03 Taking into account the rapid multiplication of private wells and water constraints, Project support for private well development would aim at effective water use rather than additional exploitation of water. The proposed artificial recharge (para. 3.05) of some aquifers through run-off control presently being tested, may open up new development of the shallow aquifers in the future. However, the effects of those measures on the groundwater are not yet known and close monitoring of the aquifers is required before new exploitation can be safely undertaken. The Project would set up such a monitoring system for the Plain of Kairouan (para. 4.12). 4.04 Rehabilitation of the p'hysical infrastructure alone, however, would not be sufficient to achieve the development aimed for and needs to be accompanied by strengthening of ODTC and OMIVAK in the fields of extension, organization of farmers, machinery services for demonstration, marketing, input supply and adaptive research. 4.05 In view of the importance of sheep-rearing in the regional economy and the constraints imposed by the existing feed deficit, the Project would define on a pilot basis an integrated farming-livestock system based on increased irrigated forage production for sheep intensification, as well as improved range and herd management. Project Objectives 4.06 The Project aims at increasing agricultural production, farm incomes and employment possibilities in Central Tunisia, one of the least developed areas in Tunisia. These Project goals are fully consistent with the Tunisian development objectives of reduced regional'income discrepancies and employment creation. In addition, the Project would implement a coherent and sustainable water resources policy through the development of grass-root organizations capable of managing public irrigation schemes and through the support of private initiative to develop and use efficiently groundwater resources. 4.07 The Project would achieve these overall development objectives through: (i) the development of the groundwater resources where feasible; (ii) increased water use efficiency to maximize the benefits from the limited water resources available by improving water management; (iii) increased reliability of irrigation water supply through the strengthening of the Offices' management capabilities and the creation of water users' associations to better handle operation and maintenance of the irrigation systems; (iv) the enforcement of water charges whi'ch reflect, as much as possible, the real cost of water so as to assure water use efficiency and to mobilize financial resources for the efficient management of the schemes; and (v) an equitable - 19 - distribution of access to water so as to assure efficient and equitable use of the limited water resources of the region. B. Summary Description of Project Components 4.08 To achieve its overall objectives the Project would implement over a five-year period the following actions: (i) Development of Infrastructure: - rehabilitation of 37 PPIs totalling 4,700 ha located in Kairouan (28 PPIs: 3,200 ha), Kasserine (6 PPIs: 1,300 ha), and Gafsa North (3 PPIs: 200 ha) and falling under ODTC and OMIVAK responsibility; - creation of 5 new PPIs, 4 in Kasserine (345 ha) and one in Kairouan (210 ha) totalling 555 ha (equipped); - support for improvement of 1,600 existing private wells (PS) in the form of additional credit for well lining, pumping equipment, pipes, small reservoirs, etc; - rehabilitation of about 130 km of feeder roads. (ii) Institutional Development - strengthening of the central and regional administration of OMIVAK; the strengthening of the Offices' repair and maintenance units and the creation of a shallow well support unit in each office benefitting a total of 36,000 ha; - strengthening of the extension services of the two Offices, including the establishment of an applied research and extension support center in Kairouan, pilot mechanization units (2 in Kairouan and one in Kasserine), and the strengthening of marketing support centers; (iii) Support and Pilot Actions: - strengthening of animal production support services in the Project; - integration of the resources of the rainfed and irrigated subsectors in two pilot zones to test an integrated rainfed-irrigation livestock and feed resources development model; - promotion of credit and input supplies, in particular for the private shallow well farmers. - strengthening of services to monitor ground water resources. - 20 - C. Detailed Features of Project Components 4.09 Rehabilitation of 37 existing PPIs. Rehabilitation aims at diminishing water losses by increasing the overall efficiency of the distribution system from .40 to .60 thus increasing water availability by 35%. The Project would also allow increased pumping, in particular during the winter season, through replacements of boreholes and pumps, whenever water resources allow increased exploitation. The various rehabilitation works would increase the on-farm water availability from about 900 to 3,200 m3/ha. 4.10 Rehabilitation works, which would be implemented over 4 years, would include: (i) the electrification of 7 pumping stations, the acquisition of 11 electrical pumps, and 2 diesel motors and pumps, and the systematic installation of water meters; (ii) the financing of 2 boreholes to replace existing boreholes which have begun to show signs of diminishing yields; (iii) the construction of 9 reservoirs (250-500 m3) and the rehabilitation of 17 existing ones; (iv) the rehabilitation of the entire distribution system including relevelling of 85 km of canals, replacement of 27 km, repair of 10 km, as well as the lining of 49 km. of tertiary canals. The Project would repair or reconstruct some 700 hydraulic structures, as well as replace, as required, the hydromechanical equipment, and (v) on-farm works including land levelling on 1,700 ha, internal road rehabilitation (150 km) and the installation of windbreaks (210 kmn). Water losses per hectare vary widely, requiring a range of improvements; in the majority of perimeters costs are between D 1,000-2,000/ha. 4.11 Creation of New Irrigation Schemes. The Project would create, using aquifers presently underexploited, five new irrigation schemes totalling 555 ha: Henchir Jefna (210 ha), Ain Hdia (80 ha), Mzira I and II (96 ha), and Feriana (169 ha). Works include well drilling, pumping stations and equipment, the conveyance and regulation system, a low-pressure piped irrigation distribution network, as well as on-farm investments (drainage, land-levelling, windbreaks and internal roads). Ten new wells will be drilled (six on Henchir Jefna and four on Feriana, while wells have already been drilled in the others), to a depth of approximately 200 m and with a 25-cm diameter. These will be equipped with submerged electric pumps. The costs of these new schemes range from D 1,685/ha to D 3,885/ha. 4.12 Reserve Tubewells and Piezometers. The Project includes financing for seven reserve wells totalling 2,800 m which are expected to be needed to replace aging boreholes over the project period. The number of reserve wells to be included was determined on the basis of average replacements required per year in the past and the number of wells approaching the end of their expected useful life. The Project would also finance 20 additional piezometers in the plain of Kairouan to assist with the monitoring and evaluation of the development of the aquifers and the impact of the artificial recharging of the aquifers through releases from the Sidi Saad dam. 4.13 Rehabilitation of Feeder Roads. The Project includes the upgrading to all-weather standards of about 90 km of tracks in Kairouan and about 40 km in Kasserine. The roads would follow the existing tracks, with the minimum earthworks required to keep the piavement structure above water level. - 21 - Selected material for the running surface would be placed over a 5-meter width, about 200 mm deep depending on soil type. Costs will average from D 14,500 to D 20,000 (for N2 - level) and D 24,000 (for N3 - level) per kilometer depending on road width and nature of required improvements. 4.14 Strengthening of OMIVAK Central Workshop. The existing staff and equipment of the OMIVAK central workshop are already insufficient to meet the present demand. The project would provide funds to compensate for the present shortages and to guarantee proper services for the new equipment and irrigation development. The project would provide workshop tools and would reinforce the existing personnel with 17 additional staff (4 administrative and 13 technicians). 4.15 Extension Services. The Project would strengthen the extension services of OMIVAK and ODTC so as to achieve an average density of about one extension agent per 100 farmers. This would require the recruitment of 28 extension agents, the construction of 16 offices and 33 houses, as well as the acquisition of 6 cars and 49 motorcycles. Nine hundred and seventy demonstration plots would be established at the farm level with 85 pilot farmers. In addition, the Project would finance local training of extension agents, study trips abroad for engineers, and an evaluation and monitoring unit in each of the offices. 4.16 Applied Research and Extension Support Center. To improve the technical message of extension agents and to provide farmers access to regionally tested technological innovations the Project would construct, equip and staff an applied research support center. The station would be built in the OMIVAK project zone on irrigated land (20 ha) and would include buildings (1,200 m2), a nursery, laboratory equipment, irrigation equipment, and would be staffed by 7 agricultural engineers and 1 technical assistant who would also serve as subject matter specialists (para. 5.16). 4.17 Mechanization Units. The Project would finance 3 mechanized farming units (2 in Kairouan and 1 in Kasserine) totalling 25 tractor units to introduce appropriate equipment and to demonstrate the benefits of improved land preparation. 4.18 Input Supply and Credit. The Project would rationalize the input supply system of the two Offices, including the in-kind short-term credit provided by the Offices (para. 5.19). In addition, the Project would assure through BNT that credit is available for the acquisition of mobile pipes and reservoirs (590 wells), the replacement of motorpumps (590 wells) and the rehabilitation of 1,600 wells. Credit financing would also be available for the purchase of 50 tractors, and 1,000 cross-bred heifers. 4.19 Marketing Support. The Project would finance the equipment for three existing collection centers in Kasserine and the construction and equipment of two new ones in Kairouan. The Project would also strengthen the marketing - 22 - support services within OMIVAK and ODTC and would provide support services and training for the creation of marketing cooperatives. 4.20 Strengthening of the Repair and Maintenance Services. The Project would substantially strengthen the Offices' repair and maintenance services for irrigation schemes. The component would include the mobile equipment necessary to repair the pumps and breakdowns in the conveyance system, spare parts and provide for the recruilment of additional staff (4 technicians in each Office and unskilled labor). 4.21 Shallow Wells Support Units. The Project would establish a central PS support unit in each office and 7 mobile teams (4 in Kairouan and 3 in Kasserine) with the necessary equipment and vehicles to rehabilitate existing shallow wells (cleaning, deepening, lining). Based on a survey of rehabilitation requirements, it is expected that these 7 teams would rehabilitate 1,600 wells (out of a total of 5,900) during the life of the Project. 4.22 Livestock Support Services. The Project would participate in the financing of the VIth Plan's regional investment program for livestock in the Project zone. Investments would include (i) the construction and equipment of 3 veterinary stations, (ii) the construction of 11 dipping tanks, (iii) vehicles and equipment for 5 artificial insemination teams, and (iv) the construction, equipment, vehicles and staffing of two milk collection centers. 4.23 Pilot Scheme. The Project would finance a pilot scheme for testing the integration of irrigated agriculture with the rainfed resources. The scheme would consist of two pilot zones: one in Zafranaa III (5,500) ha and one in Oued Khetum (3,600 ha) involving about 1,000 farmers with a livestock herd consisting of about 1,300 cattle and 9,000 sheep. The objective of the pilot scheme is to define a viable livestock development model for Central Tunisia, which integrates the management of herds and feed resources of the rainfed and irrigated subsector, and thus fully exploits the complementarity of the breeding vocation of the range and the grazing areas managed by the forestry department with the fattening function of the irrigation subsector. The component would include range management including the construction of water points (2), dipping tanks (2), storage sheds (500 m2), offices (2) and houses (2), the staffing of the units (1 engineer and 2 technical assistants), and the necessary equipment and transport. 4.24 Technical Assistance. Technical assistance would be required for the organization of farmers, the establishment of a cost accounting system and for the financial management of the Offices, the pilot range component, marketing, input supply, cooperative organization, and on-farm water use efficiency. The Project would benefit from the technical assistance provided by various USAID-financed projects such as the range project (for the pilot scheme of integration of rainfed and irrigated agriculture), the small-scale irrigation project (for on-farm water use efficiency improvements), the Central Tunisia - 23 - Area Development Project (for the strengthening of ODTC), and the extension project (for the definition of extension messages in Kasserine). The Project would provide 24 m/m of long-term assistance for the organization of farmers and 34 m/m of short-term technical assistance for financial management, marketing, input supply, cooperatives and monitoring and evaluation, and financing for studies for future investments in the Project area. D. Status of Engineering and Implementation Schedule 4.25 Irrigation Infrastructure. Detailed designs for first year irrigation rehabilitation works and new irrigation schemes are completed. Construction of networks is not expected to start until Project Year 2. Tender documents would be prepared by the Offices under the supervision of the Rural Construction Directorate. It is expected that all irrigation works would be completed by the end of year 4 of the Project (Annex I). 4.26 Rehabilitation of Feeder Roads. Cost estimates for the feeder roads are based on preliminary designs of the proposed roads following design criteria established by the World Bank-financed rural roads projects (Loans 1601-TUN and 2108-TUN) and recent tender offers for construction of roads under those projects. The Studies Division of the Public Work Ministry has hired consultants to prepare detailed engineering incuding any necessary topographic surveys, hydrological studies and draft tender documents. Retroactive financing for the foreign exchange costs of the studies estimated at US$90,000 would be provided under the Project. Roads would be constructed during year 1 and 2 of the Project. E. Project Costs 4.27 Total Project costs for the 5-year implementation period, including establishment costs, taxes, duties and contingencies are estimated at D 24.3 million (US$43.8 million), of which 45% or US$19.5 million are foreign exchange.Costs include duties and taxes estimated at D 5.0 million (US$9.0 million). Cost estimates are expressed in November 1982 prices. Physical contingencies included in the Project cost estimates are 15% for civil works and irrigation equipment, and 10% for other equipment. Total physical contingencies amount to D 1.7 million (US$3.1 million). Price escalation has been estimated at 10% for 1982, 9% for 1983, 8% for 1984, and thereafter for local costs and at 4%, 6%, 7.5% and 7%, respectively, for foreign costs. The cost of consultant services, including support services, has been estimated at US$11,000 per man-month for short-term consultants and US$9,700 for long-term technical assistance. Overall contingencies would amount to D 5.6 million (US$10.0 million) or 30% of base costs. Cost estimates, including establishment costs, are summarized in the following table and showgn in detail in Annex I: - 24 - Project Cost Estimates /a Project Components Local Foreign Total Local Foreign Total D million ------ US$ million ----- A. OMIVAK Irrigation Rehabilitation 1.5 1.3 2.8 2.8 2.3 5.1 New Irrigation Schemes 0.5 0.7 1.1 0.9 1.1 2.0 On-farm Investments 1.0 1.0 2.0 1.8 1.8 3.6 Research and Extension 1.4 0.8 2.2 2.5 1.5 4.0 Roads and Buildings 1.3 0.8 2.1 1.5 1.5 3.7 Institutional Development & Technical Assistance 1.3 1.1 2.4 2.3 2.0 4.3 Total Base Costs: OMIVAK 6.9 5.7 12.6 12.5 10.2 22.7 Physical Contingencies 0.6 0.5 1.1 1.1 1.0 2.1 Price Contingencies 1.7 0.9 2.6 3.0 1.7 4.6 Total Project Costs: OMIVAK 9.2 7.1 16.3 16.6 12.9 29.4 B. ODTC Irrigation Rehabilitation 0.4 0.4 0.8 0.8 0.8 1.6 New Irrigation Schemes 0.8 0.9 1.7 1.5 1.6 3.1 On-Farm Investments 0.6 0.7 1.3 1.0 1.3 2.3 Research and Extension 0.5 0.3 0.8 0.9 0.5 1.4 Roads and Buildings 0.4 0.3 0.7 0.7 0.5 1.2 Institutional Development & Technical Assistance 0.5 0.3 0.8 0.8 0.5 1.4 Total Base Costs: ODTC 3.2 2.9 6.1 5.8 5.2 11.0 Physical Contingencies 0.3 0.3 0.6 0.5 0.5 1.1 Price Contingencies 0.8 0.5 1.2 1.4 0.9 2.2 Total Project costs: ODTC 4.3 3.7 7.9 7.7 6.6 14.3 COMBINED TOTAL BASE COSTS 10.1 8.6 18.7 18.3 15.4 33.7 Physical Contingencies 0.9 0.8 1.7 1.6 1.5 3.1 Price Contingencies 2.5 1.4 3.9 4.4 2.5 6.9 Front-end Fee on Bank Loan -. -0.1 0.1 TOTAL FINANCING REQUIREMENTS 13.5 10.8 24.3 24.3 19.5 43.8 /a Discrepancies in totals are due to rounding. - 25 - F. Financing 4.28 The proposed Bank loan of US$16.5 million to the Government of Tunisia would finance 100% of foreign exchange costs of the Project (excluding the agricul'ural credit component, which would be financed through the various credit lines available to BNT) and the front end fee of about US$0.1 million. The Bank loan would cover 38% of Project costs (48% of Project costs net of taxes). The following table shows financing sources for Project costs: Financing Sources Project Components IBRD BNT Beneficiaries Government Total (components) -------------- US $ million equivalent ------------- Irrigation Rehabilitation 4.2 - 0.5 4.0 8.7 New Irrigation Schemes 3.7 - 0.4 2.7 6.8 On-farm Investments - 4.8 1.9 0.7 7.4 Research and Extension 2.6 - - 4.5 7.1 Roads 2.3 - - 3.2 5.5 Buildings 0.3 - - 0.2 0.5 Institutional and Technical Assistance 3.3 - - 4.4 7.7 Front-End Fee 0.1 - - - 0.1 Total Financing Requirements 16.5 4.8 2.8 19.7 43.8 4.29 The proposed Bank loan would be for 17 years including four years of grace. The Government would allocate the proceeds of the loan to OMIVAK (US$9.6 million equivalent), ODTC (US$4.8 million), and to the Highways Department of the Ministry of Public Works (US$2.0 million) through their respective annual budgets. The Government would also cause BNT to provide investment credit to farmers and farmers' cooperatives (US$4.8 million), under terms and conditions acceptable to the Bank (i.e. under the same term and condition agreed for the ongoing BNT III line of credit - loan 1885-TUN). Assurances to this effect were obtained at negotations. Remaining Project costs (US$22.5 million) would be financed by the Government (US$19.7 million) and the beneficiaries (US$2.8 million). G. Procurement 4.30 Procurement would be carried out by the two Offices OMIVAK and ODTC and by the Roads Directorate of the Ministry of Public Works. Procurement contracts would be grouped as far as practical. Annex II lists contracts to be awarded, methods of procurement, authorities responsible for their processing and their likely types of suppliers. 4.31 International Competitive Bidding. Project equipment, including electromechanical equipment for pumping stations and tubewells, pressure regulators, pipes, meters, valves, operation and maintenance equipment, as well as equipment for collection centers, vehicles and agriculture machinery valued at about US$9.5 million including contingencies would be grouped in appropriate bidding packages and procured by ICB in accordance with Bank guidelines. When bulking is not feasible, equipment and vehicle contracts - 26 - which do not exceed the equivalent of US$150,000 each, and totalling no more than US$1.0 million in aggregrate for each Office, may be awarded on the basis of local competitive bidding procedures which are acceptable to the Bank. Qualifying domestic manufacturers will receive preference in bid evaluation of 15% or the prevailing import duty, whichever is lower. 4.32 Local Competitive Bidding. Project civil works concerning irrigation rehabilitation and construction of new schemes as well as offices, houses, stores, marketing centers, sheep dips and sheds would be executed in small lots, over a four-year period and would be scattered all over the Project area. They would not be of interest to foreign contractors and would be awarded on the basis of local competitive bidding (LCB) in accordance with procedures acceptable to the Bank. Contracts for feeder roads amounting to a total value of about US$3.9 million would also be awarded on the basis of LCB procedures, as experience with similar works under the two Rural Roads Projects (Loans 1601 and 2108) incdicates that such works will not generate bids from foreign firms not estab:Lished in the country because of the scattered nature of the works. Sufficient construction firms both local and foreign are established in Tunisia to assure competitive prices under LCB. The total amount of contracts to be awarded under LCB is expected to equal about US$14.8 million. 4.33 Other Procedures. Small dispersed civil works such as land-levelling, upgrading of internal tracks, drainage improvements, piezometers, and windbreak plantations valued at about US$1.6 million equivalent would not be suitable f-or contracting. They would be carried out by ODTC and OMIVAK by force account under standard Government procedures which are acceptable to the Bank. Semi circular and trapezoidal canals required in rehabilitation works, valued at about US$1.7 million including contingencies would be purchased from Jebel Ouest Industries, the original supplier and the sole present firm equipped to produce such canals. As new irrigation systems no longer use such canals, no other firm is expected to equip itself for Project needs. Purchase of these canals, would be executed through a negotiated contract. Contracts for electrification (US$1.5 million) would be negotiated with STEG, a public comnpany solely authorized to execute such works. 4.34 Contract Review. Bidding documents and contracts for works estimated to cost US$0.5 million equivalent or more and bidding packages for goods over US$250,000 would require prior approval of the Bank, as would final award of their respective contracts thus assuring prior review by the Bank of about 75% of total contract values. In addition, all negotiated contracts would be reviewed by the Bank before final award. The balance of contracts will be subject to Bank review after contract award. 4.35 Consultants for studies and technical assistance (US$1.2 million) with qualifications acceptable to the Bank would be appointed on terms and conditions satisfactory to the Bank, according to the Bank guidelines on use of consultants published in August 1981. 4.36 Assurances that the above procurement procedures would be followed were obtained at negotiations. - 27 - H. Disbursements 4.37 The proposed Bank loan of US$16.5 would be disbursed over 6 years and would finance: Category Amount Disbursement (us$) % A. Buildings 800,000 40% of total including Houses, Offices, Sheds, expendituires Workshops, Research Stations, Marketing Centers, Milk Collection Centers, and Other Project Works OMIVAK 650,000 ODTC 150,000 B. Irrigation Equipment and Civil Works 9,250,000 50% of local including Rehabilitations, New expenditures or Constructions, Deep Wells, Pumps 100% of foreign Hydrological equipment and expenditures Electrification, Windbreaks, Land-Levelling and Internal Roads OMIVAK 5,550,000 ODTC 3,700,000 C. Feeder Road Rehabilitation 2,000,000 40% of total expenditures D. Other Equipment and Vehicles 1,700,000 50% of local (including for irrigation operation expenditures or and maintenance) 100% of foreign OMIVAK 1,200,000 expenditures ODTC 500,000 E. Consultants 500,000 65% of local F. Roads Studies 100,000 expenditures or 100% of foreign G. Studies & Fellowships 300,000 expenditures OMIVAK 200,000 ODTC 100,000 H. Unallocated 1,727,171 I. Front-end Fee 122,829 TOTAL 16,500,000 4.38 Disbursements would be made after receipt of full documentation, except for works under force account (about US$1.6 million) for which disbursements would be made against certified statements of expenditures - 28 - (SOE). The SOE would be certified by OMIVAK and ODTC Project managers and supporting documentation retained by OMIVAK and ODTC and made available for inspection during Bank supervision missions. Provision has been made for the retroactive financing of up to US$90,000 for the final design of feeder roads. 4.39 An estimated schedule of disbursements is summarized below and detailed in Annex I: --------- Fiscal Years ----------------- Disbursements 1984 1985 1986 1987 1988 1989 ------------ US$ million ------------------ Annual 1.2 3.2 4.0 3.5 2.8 1.8 Cumulative 1.2 4.4 8.4 11.9 14.7 16.5 The schedule of disbursements is based on actual disbursements of Bank projects in Tunisia and EMENA agricultural disbursements adjusted to the specific characteristics of the P'roject. It is expected that disbursements for the Project would be faster than past averages; (i) Project authorities have helped prepare the Project: start-up of activities is therefore expected to be fast; (ii) tender documents for about 50% of all project costs would be available by Board presentation; (iii) the activities under the Project are not new to the executing agencies which have demonstrated in the past their ability to execute such works; (iv) a large part of the investments (over 70% of total expenditures) is expected to be completed by the end of year 4 of the Project. V. Project Implementation A. Project Management 5.01 The Ministry of Agriculture would have overall responsibility for the execution of the Project. Its Planning Department would coordinate and monitor Project activities, execute procurement actions for consultant services, and supervise the allocation of funds through approval of the budgets of the Offices. It would also coordinate with the Ministry of Public Works regarding the feeder roads component. 5.02 Project works would be executed by the two Offices OMIVAK and ODTC, and the Highway Department of the Ministry of Public Works. ODTC would be responsible for works in Kasserine and the five delegations of Siliana and Gafsa under its responsibility. ODTC has the necessary staff and infrastructure to execute the relatively modest work program proposed. Its operation and maintenance sections and agriculture support services would be strengthened under the Project. In addition, ODTC benefits from a USAID financed Project to strengthen its planning and implementation capacity (para. 4.24). OMIVAK, which would be responsible for project works in Kairouan (70% of total Project costs), has a technically competent core staff, but its infrastructure and staffing are not sufficient to carry out the proposed activities and would be strengthened under the Project. The Highways Department of the Ministry of Public Works would be in charge of feeder road - 29 - rehabilitation and maintenance. The Department has successfully implemented similar works under the two Highway Projects (para. 2.18) and has the necessary staff at the regional and national level to execute the works proposed under the Project. B. Project Implementation Strategy 5.03 A major objective of the Project is to implement a sustainable water resources development policy in Central Tunisia through the establishment of organizational arrangements for the efficient management and exploitation of water. To do so the Project would address the following three issues: (i) the organization of farmers into water users' associations and their participation in the management of the irrigation schemes, (ii) the organization of support services for PPIs and PS, and (iii) the financial management of the Offices. Farmers' Participation 5.04 The present non-involvement of the beneficiaries (para. 3.28)in management of irrigation schemes has the following consequences: (i) operation and maintenance tasks which could be more efficiently handled by the farmers are executed by the Offices at relatively high cost. Limited budgetary resources are thus used for maintenance rather than for major repairs leading to the gradual delapidation of the systems, (ii) farmers are not aware of the costs of operation and maintenance and are therefore reluctant to pay the corresponding water charges, (iii) breakdowns of the systems, by increasing farmers' risk, are a disincentive for farmers to intensify production. Low levels of inputs lead to low returns, not allowing farmers to pay the full price of water, (iv) Offices have only limited incentives to adapt their services to farmers' requirements or to provide them in a timely and efficient manner. 5.05 The legal basis for organizing farmers into water users' associations in Tunisia are decrees dating from 1933 ("Associations d'Interets Collectifs,"). Experience with these associations has not been good: their statutes do not respond to the requirements of active participation of farmers in modern irrigation schemes and they are not sufficiently flexible to be adapted to heterogenous situations. In order to prepare a legal framework adapted to the needs of the PPIs and based on experience the Project would promote de facto users' association, to be transformed, at the end of the Project, into de jure associations. 5.06 The de facto Associations. The Offices would, during construction works, promote the organization of the farmers into water users' associations. A committee consisting of representatives of farmers, the Office and of regional authorities would take all decisions concerning the rehabilitation works and proposed support services for agricultural development. The proposed contractual agreements (para. 5.08) would be discussed and prepared by these committees. Farmers' representatives would be elected among farmers tilling their own soil and any decisions by the committee would be discussed and ratified by the farmers of the irrigation scheme. These committees would gradually take on more and more - 30 - responsibilities for the management of the schemes according to needs and their abilities and would evolve into full-fledged water users' associations. Experience with the de facto associations would allow the preparation of a legal framework for such associations that is flexible and adaptable to the different situations found in irrigation schemes. The Offices would be responsible for preparing the farmers and their associations to progressively take over most of the management functions thus reducing their direct management role to one of technical backstopping, advice and control. Provision of technical assistance for that task would be included in the Project, and assurances were obtained at negotiations that a highly qualified specialist in grass-root institutions would be recruited by 31 December, 1983 (para. 4.24). 5.07 The Establishment of de jure Associations. It is expected that three to five years after the rehabilitation the farmers would have acquired the necessary experience and organization to participate in the management of the schemes and increased the intensity of production sufficiently to be able to pay for most of the costs of operation and maintenance. The de facto associations would then be transformed into de jure water users' associations. In order to ensure the availability of an adaptable framework for those associations assurances were obtained at negotiations that the Government would prepare and adopt on the basis of the experience with the de facto associations, a framework for those associations by December 31, 1986. Agreement Between The Offices and Farmers 5.08 An agreement defining the rights and obligations of the farmers and the Offices would be negotiated with the farmers or farmers' representatives and signed upon completion of rehabilitation works. The agreement would be endorsed by the regional authorities and the farmers' union ("Union Nationale des Agriculteurs Tunisiens) who would assure compliance with the stipulations. The major stipulations of these agreements have been discussed and agreed upon with representative farmers and Office authorities. Under these agreements the Offices would commit themselves (i) to fully rehabilitate the schemes, (ii) to define, in collaboration with the farmers water distribution and rotation, (iii) to provide extension services and inputs, (iv) to facilitate marketing of crops, (v) to guarantee the supply of water as determined in the water rotation agreement. The farmers would agree to the following responsibilities: (i) to comply with land consolidation proposals; (ii) to use irrigation water both in summer and winter; (iii) to participate in rehabilitation works with their labor; (iv) to pay the agreed upon water charges and to accept progressive increases until water charges cover operation and maintenance costs; (v) to protect and maintain the irrigation distribution system and on-farm investments. Farmers would execute minor repair works by themselves under the guidance of the Office. Major repairs would be executed by the Office against payment by the farmers; (vi) to repay credit obtained from various credit sources; (vii) to contribute to a fund to pay for major repairs; and (viii) to accept specific sanctions such as water - 31 - cut-offs in case of non compliance with the agreed upon obligations. Assurances were obtained at negotiations that proposed terms and conditions to be included in these contracts would be submitted for the Bank's review by September, 1984, and that agreements would be negotiated with the farmers upon completion of rehabilitation works on each perimeter and before the start of irrigation on the new perimeters. The Organization of Support Services 5.09 OMIVAK and ODTC are providing agricultural support services and intend to expand these activities (paras. 3.15-3.17). To avoid the creation of inefficient state monopolies and unnecessary involvement of the Office in activities which could be provided by the private sector, the following principles would guide the Offices' expansion of agricultural support servicest (i) the Offices would provide agricultural support services which the private sector cannot provide due to the nature of the services (extension and research); (ii) services required for efficient farming, but not readily available in the Project region would be provided by the Offices at cost in competition with the private sector; (iii) the Offices would set up a cost accounting system and separate autonomous accounts for self-financing services (para. 5.11); and (iv) the Offices would encourage the private sector or farmers' associations to progressively take over the services initially provided by the Offices. Financial Management 5.10 Financial Management of the Offices. The Offices provide a large number of services: some are supposed to be financially self-supporting (marketing services, machinery services, input supplies), others are partly subsidized (credit, water) and some are totally subsidized (extension services). The present financial management and accounting system do not permit the Offices to establish the real costs and receipts of the various activities. In addition, Government resource allocation to the Offices does not encourage business-like management of these services (para. 5.11). To assure efficient management and to establish fiscal accountability, the Project would: (i) establish a cost accounting system, which would establish the real cost of the various services; (ii.) establish a funding system for the Offices which would assure fiscal accountibility by using separate accounts for each activity, thus avoiding transfer of maintenance funds to cover the cost of inefficient services; and (iii) determine for each fiscal year the amount of water charges, the expected volume of water to be delivered, the resulting revenues and costs, and the deficits to be financed through budgetary allocations. Assurances were obtained at negotiations that (i) such an accounting system be established by December 31, 1984; (ii) the Government will propose for each new fiscal year a prospective budget for operation and maintenance of the schemes, which would include estimated costs of operation and maintenance of the schemes and expected revenues from water charges; and (iii) that budgetary funding for maintenance be included in the Offices' budgets under a specifically earmarked item, in amounts satisfactory to the Bank. - 32 - C. Execution of Project Works 5.11 Rehabilitation of Irrigation Schemes. The Central Directorate of Rural Construction (Genie Rural) in Tunis, which has already prepared the designs of the first year rehabilitation works, would be responsible for the preparation of final designs and bidding documents. The two Offices, OMIVAK and ODTC, would be responsible for bidding, bid evaluation, and supervision of works. For the implementation of works, the Offices would create committees and organize the farmers as described in para. 5.06. 5.12 Construction of New Irrigation Schemes. Final designs and tender documents are being prepared by consultants under the supervision of the Directorate of Rural Construction. Tendering and supervision of works would be executed by the two Offices. The economic and social viability of these new irrigation schemes is very sensitive to assumptions about uptake of irrigation and irrigation intensity. Past experience in Tunisia shows that small farms are substantially more efficient and intensive than large farms. In addition, limited water resources availability and non-recovery of a large part of investments require, for income distribution reasons, that benefits of irrigation schemes are distributed among as many farmers as economically and socially feasible. Existing land reform legislation foresees that maximum and minimum land holdings as well as the contribution of farmers to the investments be determined by a specific decree for each irrigation scheme. Application of the land reform law in the proposed irrigation schemes should not be difficult as land distribution is rather even and landownership is well defined. Assurances would be obtained at negotiations that (i) the land reform application decree would fix the maximum land holding and the farmers' contribution to the investments at levels acceptable to the Bank (the maximum land holding is expected to be about 5 ha per farmer and the farmer's contribution to amount to at least 5% of irrigation infrastructure investment based on a progressive scale); (ii) that the provisional delimitation of plots would be completed before the start of construction; and that (iii) an agreement concerning the rights and obligations of the beneficiaries acceptable to the Bank would be signed before the start-up of irrigation. Technical proposals concerning the draft decrees creating the new perimeters would be submitted for Bank review. Assurances were obtained that such decrees fixing land size and farmers' conbtribution at a level acceptable to the Bank would be adopted no later than January 31, 1985. 5.13 Operation and Maintenance of the Irrigation Schemes. After rehabilitation or construction, the farmers would, based on the contractual obligations signed at the start of the work (para. 5.08), be responsible for the operation and maintenance of the irrigation distribution network. The Offices would be fully responsible for the operation and maintenance of the pumping stations. The Offices would assure that farmers are maintaining the distribution system and if necessary would refuse to deliver water if the distribution system is in disrepair. At a later stage, responsibility for the pumping station would be transferred to the water users' association (para. 5.07). Annual costs of operation and maintenance are expected to average D 127/ha in Kairouan and D 110/ha in Kasserine. Costs will be slightly higher for the new perimeters, ranging from D 145 to 191 per hectare. - 33 - 5.14 Road Construction and Maintenance. Road construction and maintenance would be the responsibility of the Direction Generale des Ponts et Chaussees (DGPC) in the Ministry of Public Works. Roads would be constructed under unit price contracts, one lot for Kasserine and one for Kairouan. Construction supervisior would be assured by DGPC's regional offices, which are experienced in this type of work. The maintenance of the improved roads would be included in the work program of the "rural brigade" covering the area. Staff, equipment, and operating budgets were reviewed, and it was found that Project specific requirements could be absorbed in the general upgrading of the maintenance capacity of the two regional offices under the Bank financed Rural Roads Projects (para. 2.18). Assurances were obtained at negotiations that adequate funds for maintaining roads improved under the Project would be provided annually in the recurrent budget of DGPC. D. Agricultural Support Services 5.15 Extension (Annex X of Project File). Extension in the past has not been effective due to organizational reasons (para. 2.16) and the uncertaintity of water supplies (para. 3.38). The Project would reorganize and strengthen the extension service in order to achieve and maintain regular contact with farmers and a systematic supervision of the extension agents in the field according to an annual working schedule. It would also increase by 21 the number of extension agents and provide them with houses close to the farmers, transport, practical training, and technical support. Extension activities would be closely integrated with the rehabilitation works, the supply of inputs and credit and would use the de facto water users' associations as communication channels. Extension agents would visit farm groups on a regular basis, twice a month, on a regular day known to farmers and supervisors. They would assist farmers not only on technical matters, but would provide information on crop planning, marketing outlooks, water requirements, etc. The 28 additional extension agents would be recruited from the various training stations, which graduate sufficient extension agents for Tunisia's needs. They would benefit from annual two-week training sessions at the training station in Saida and they would attend monthly briefings and refresher courses, conducted in the field by the subject matter specialists of the applied research center according to a program established by the project management in respect to the type of crop and the growing season development. The Project authorities have agreed to follow these principles in carrying out extension under the Project. Once improved cultural practices are well-established under the Project and farmers' association are able to take over some input supply functions, it is expected that the number of extension agents could be reduced to limit the recurrent charges on the Government budget. 5.16 Research (Annex XIII of Project File). Research at the new applied research center would be action and problem solving oriented. The station program would focus on adapting cultural practices defined by INRAT at national level to the specific growing conditions in the Project area. Consequently the station's working program would be prepared in cooperation with INRAT until such time as a planned national research organization is established in Tunisia which would then integrate the station as a regional adaptive research center oriented toward problems of the Central Tunisia Zone. Problems identified by water users' associations and extension staff would be submitted to the center's management which would be responsible to carry out research works. The Center will operate with the extension service - 34 - to organize demonstrations of research results on farmers' fields and maintain a communication channel between farmers and research. The research center would carry out refresher courses in the field for extension agents prior to the crucial periods of the growing season. The center's specialists would also function as subject matter specialists for the extension agents. 5.17 The Pilot integration of rainfed and irrigation scheme would be implemented by the OMIVAK extension division in close collaboration with the Kairouan Forest Department, which is in charge of rangeland improvements and the Livestock Office which promotes fodder production and distribution (Annex XI of Project File). A detailed plan, defining participation of each institution in the various activities, would be agreed upon at negotiations. The results of the integration activities would be evaluated at mid-term, by September 30, 1985, so as to review and adjust the proposed activities. Assurances to this effect were obtained at negotiations. 5.18 Input Supplies and In-Kind Credit (Annex XV of Project File). The Offices would continue to distribute inputs, either against direct payment or on short-term credit whenever these services are not available from the private sector. Past performance of the Offices in this field has not been satisfactory (paras. 2.12, 3.09). To improve the efficiency of those parts of the input distribution system for which the Offices provide essential support at farmers' level a study would be carried out to determine either the necessary improvements of the existing system or development of the private share in supply and distribution of inputs. The Office would; (i) hire a management specialist to reorganize the distribution of inputs; (ii) concentrate input supplies on inputs which are not readily available; (iii) use the water users' association to determine the demand of services and install a system of prepayment for ordering inputs which are not readily available in Tunisia; (iv) organize the farmers to take over some of the functions of input supply on the basis of an updated assessment of the appropriateness of the current baLance between the private sector/Offices in input distribution; and (v) sell the inputs at the real cost of distribution. In-kind credit would be limited through the imposition of a ceiling and to inputs which require special incentives to promote their use. The agreement to be signed by the farmers and the Offices (para. 5.08) would specify sanctions in case of non-repayment of the loans. Assurances were obtained at negotiations that the Offices would, in coordination with the results of the input marketing study being carried out under the Bank-financed Technical Assistance Project, submit by June 30, 1985 a financing plan acceptable to the Bank for input distribution over ithe remaining years of the Project, and take any measures agreed between the Bank and the Offices to implement this plan thereafter. 5.19 Marketing Services (Annex XVII of Project File). The two Offices would (i) develop a marketing intelligence service and inform farmers, before planting, of potential marketing constraints based on an analysis of the intention to plant various crops; and (ii) assist water users' associations in the organization of marketing of their crops. The Offices would also operate, for a limited period, the collection centers and assist and train the cooperatives, which will take over the management of those centers. Assurances were obtained at negotiations (i) that the Offices will prepare an action plan defining the marketing strategy and support role for their marketing units by December 31, 1983; (ii) that they will operate the - 35 - collection centers and charge fees which will progressively cover their real costs of transport and running the centers; and (iii) that they will submit to the Bank for approval by June 30, 1986, a plan, including a timetable, for transferring the management of the collection centers to cooperatives or leasing them to private operators and will then promptly implement this plan. 5.20 Machinery Services (Annex XII of Project File). Improved seed bed preparation and cultivating techniques are major extension themes of the Project. To assure availability of appropriate farm machinery, the Project would finance machinery centers on a pilot basis. The centers would be managed by the Offices and services would be provided at cost. Costs to De charged to farmers would have to be higher than prices paid for private services. The pilot schemes would attempt to demonstrate that improved machinery services can be efficiently and profitably provided by the Offices and that farmers are willing to pay higher prices for better services. An expansion of such services, either by the Office, private farmers or cooperatives is foreseen, if the test proves successful. 5.21 Rehabilitation of Shallow Wells. Mobile teams attached to each Office will carry out rehabilitation works on shallow wells at farmers' request. The costs of these services will be charged to the farmers and credit will be available under existing credit lines from the BNT to finance these costs. The Offices will assist the farmers to prepare credit requests which will be reviewed by the regional credit committee under existing procedures. 5.22 Milk Collection Centers. Two pilot milk collection centers would be established in the OMIVAK region. The Office would manage these centers and farmers would be charged the costs of operating and maintaining the centers. The milk would be sold to an existing processing factory in Kairouan which has expressed its willingness to buy the milk from the offices. The Office, after achieving full and successful operation of the centers, would transfer the management of these centers to cooperatives on terms and conditions acceptable to the Bank. Assurances were obtained at negotiations that a plan to this effect would be submitted to the Bank by June 30, 1986 and then implemented. E. Monitoring, Evaluation., Accounts and Audit 5.23 Monitoring of inputs, activities and outputs of the Project would be executed by the two Offices. A special monitoring system for the extension service would be implemented by the Project. The new accounting system (para. 5.10) would provide the necessary information to determine the cost-effectiveness of various actions. Twelve man-months of short-term consultancy would be provided to Project management to help them determine (i) critical indicators to be monitored; (ii) a simple data collection system; and (iii) the aggregation and processing of the information. Two agro-economists would be hired (one in each office) to assist Project managers to lead the Evaluation and Monitoring Units and to analyze the information collected by the technical services. They would submit semi-annual reports to Project management on Project inputs, activities, external variables affecting Project - 36 - execution and on Project achievements. The reports would put particular emphasis on progress made in organizing farmers and in divesting the Offices of support activities (para. 5.09). Assurances were obtained at negotiations that the Offices hire a management information system specialist on terms and conditions acceptable to the Bank by December 31, 1983. 5.24 Reporting and Evaluation. Evaluation would be executed by consultants under the supervision of the Planning Directorate of the Ministry of Agriculture. They would set up a baseline farm level survey to determine: (i) the impact of the Project ona farm income; (ii) the distribution of benefits among farm beneficiaries; (iii) access of various farm groups to Project activities; (iv) progress in self-reliance of users' association. The two Project Directors (OMIVAK and ODTC) and the Director of Highways Department would submit semestrial progress reports to the Planning Directorate of the Ministry of Agriculture, which would analyze these reports and issue a concise issues report containing (i) a statement on progress of physical execution of Project activities; (ii) analysis of factors which favor and hinder Project execution and proposals of actions required; (iii) information on progress in achieving Project goals; and (iv) policy implications of the analysis for the national management of water resources in Central Tunisia. Summaries and analysis of the information, prepared in accordance with mutually agreed upon guidelines would be submitted to the Bank annually. The Ministry of Agriculture would prepare with the information provided by the Offices and DGPC a completion report, based on monitoring information and an analysis of the evaluation data, to be submitted to the Bank no later than six months after completion of the Project. Assurances to that effect were obtained at negotiations. Accounting and Auditing 5.25 The Offices and DGPC in charge of project implementation maintain budgets and accounts which are controlled by the Ministry of Finance. Government control of expenditures is relatively strict: financial controllers nominated by the Ministry of Plan and Finance provide for a continuous review,, as they must approve each expenditure and record all income transactions. The financial controllers must certify that accounts submitted by the Offices are consistent with expenditures approved and income received during the year. However, there is no verification of physical implementation of works. 5.26 The Offices' financial and accounting procedures would be strengthened under the Project to encourage efficient operations (para. 5.10). Assurances were obtained at negotiations that (i) the Offices and DPC would maintain separate accounts for Project expenditures; (ii) the Project accounts maintained by the Offices and DPC including separate accounts for collection centers, and certificates of expenditures used to obtain Bank disbursements, be audited annually by independent auditors acceptable to the Bank, according to guidelines agreed to by the Bank, and (iii) an audit report with a specific opinion on collection centers and on statement of expenditures be submitted to the Bank within nine months after the end of each fiscal year. - 37 - VI. Benefits and Justification A. Production 6.01 P-oduction increases would result from actions on public irrigation schemes, the rehabilitation of private wells, improved extension services and input supply as well as improved farm access. Production on Public Irrigation Schemes 6.02 Production increases on public irrigation schemes would result from intensification of cropping and modification in cropping patterns due to increased water availability and improved cultural practices. 6.03 Proposed Cropping Pattern. The additional water available (para. 4.09) would be allocated in the following way: (i) increased irrigation of existing tree crop plantations; (ii) increased area planted in perennial forage; (iii) increased winter crops, in particular forage, so as to take full advantage of water resources and to limit summer irrigation thus reducing the danger of salinity associated with the use of large volumes of water during the summer months. The resulting modifications in the proposed land use are given in the table para. 6.04. 6.04 Yield Developments and Production. Increased water availability and security (para. 4.09), an efficient extension service and input supply system and improved marketing conditions (para. 5.20) are expected to result in a substantial increase of input use and improved yields. Estimated yield increases are conservative: full development yields are already now being attained by progressive farmers in areas where sufficient water is available. A summary of average present and future yields as well as the increase of production on the public irrigation schemes are summarized in the following table: - 38 - Present Situation Full Development Area Yield Production Area Yield Production (ha) (t/ha) (t) (ha) (t/ha) (t) Fruit trees Olives 1,250 2.8 3,500 1,350 7.5 10,130 Apricots 340 4.5 1,530 400 9.0 3,600 Almonds 250 0.7 180 250 1.4 350 Other 240 8.0 1,930 260 12.0 3,080 Total 2,080 7,140 2,260 17,160 Summer vegetables Hot pepper 240 7.0 1,650 250 11.0 2,750 Tomatoes 120 11.7 1,350 190 20.0 3,780 Potatoes 20 12.0 240 70 18.0 1,300 Other 60 13.0 770 60 20.0 1,150 Mel./Water Melon 320 15.0 4,730 160 23.0 3,700 Total 760 8,740 730 12,700 Winter vegetables Broad beans 380 7.7 2,910 360 11.0 3,690 Others 150 13.0 1,950 350 20.0 7,000 Total 530 4,860 710 10,690 Forage Crops Vetchoat (dry) 160 4.5 730 330 6.5 2,150 Alfalfa 120 19.6 2,320 300 45.0 13,500 Sorgho 40 21.0 860 240 41.0 9,840 Barley 180 19.0 3,500 380 30.0 11,400 Total 510 7,410 1,250 36,890 Cereals 900 1.1 990 470 2.3 1,080 Industrial Crops - - - 120 2.0 230 Total 4,780 5,540 6.05 Total production of cereals would remain about constant (+9%) while fruit production would more than double (+140%) and forage would quadruple (+400%). - 39 - Production On Private Irrigation Schemes 6.06 The rehabilitation of 1,600 wells is expected to increase water availability by 20%. Improvement of the distribution systems on 1,200 plots through construction of reservoirs and the acquisition of distribution pipes would inrease water use efficiency and decrease water losses by about 15%. Improved support services are expected to increase yields by 15% over 5 years above what they would achieve otherwise for 60% of the 5,900 private well farmers. At full development the proposed actions would increase fruit production by 1,250 t fruits, vegetables by 22,830 t, watermelon/melon by 9,350 t, broad beans by 850 t, cereal by 370 t, fodder by 8,000 t. B. Marketing and Prices 6.07 Fruit and Vegetables. Since domestic demand for fruits and vegetables continues to be strong, the relatively modest increases in production to be generated under this project can be readily absorbed by the domestic market. Consumption projections proposed for the VI Plan show average rates of growth in domestic consumption from 3% per year for winter vegetables to around 5% per year for fruit crops. Production increases in this project fall slightly below these growth rates. 6.08 Overall rates of growth in production may be somewhat higher for individual crops, such as almonds and olives, if the ambitious production targets set for the VI Plan period are met. For these crops, no new plantations are planned under the project. While increased production from existing olive tree plantations in the project area is substantial (an estimated 6,800 t by 1987), this production will just offset the reduction of production in the Nehbana perimeters where over 2,500 ha of old plantations are projected to be uprooted to permit increased area in higher value off-season horticulture. The same substitution effect is expected to apply to vegetable production under the project, as seasonal production in other vegetable producing areas in the country is shifting into off-season production. 6.09 Fodder. Existing demand for fodder crops in the project area is expected to readily absorb the incremental production estimated at 3 million F.U. Project-generated fodder crops would be an attractive replacement for high-cost alternatives of feed concentrate and hay imported from Northern Tunisia. 6.10 Industrial Crops. Tunisia currently imports raw tobacco and cotton fiber to supply its domestic processing industries. The small local production would therefore find ready markets in substitution for imports. The Regie Nationale du Tabac will provide marketing services for tobacco produced in the project area, which will supply a new tobacco plant in Kairouan. Cotton will supply mills in Sousse, 60 km from Kairouan, and will be marketed through the Societe de Coton Tunisien, with the Offices assisting in the bulking of production and transport if needed. - 40 - C. Beneficiaries and Distribution of Benefits 6.11 Agricultural support components of the Project, such as marketing services, extension, research, and the strengthening of the Offices would benefit all farmers of the irrigated subsector in the Project zone estimated at about 12,000 farm families. Irrigation rehabilitation would benefit about 2,000 farmers on public irrigation schemes. About 350 farmers would benefit from new irrigation schemes and 5,900 families having private wells would benefit from the Offices' support actions for the development of private well production. The road component is expected to provide improved farm access for about 5,000 farm families and an estimated 1,000 farmers would benefit from the integrated rainfed/irrigation pilot projects. 6.12 Farmbudgets, to quantify financial costs and benefits of the proposed actions to the farmers, have been developed for different farm sizes and for the various actions proposed under the Project. They are based on the implementation of Project works and the adoption by farmers of a set of production techniques which have proven to be technically feasible and financially profitable (Annex XX of Project File). Farm models are based on detailed studies of the farmers in the Project area including: (i) a typology study which categorized farm parameters from an exhaustive survey of farmers on public irrigation schemes; (ii) a survey of land holdings and cropping pattern on lands to be irrigated by new irrigation schemes; (iii) a random sample survey of farmers in PPIs and using private wells; (iv) an exhaustive inventory of the state of private wells and of farmers' intentions concerning rehabilitation; and (v) information from regional technical staff on production potential, land use capability and production methods. 6.13 The changes in income, and financial rates of return, for the investments in private wells for indicative farms are: - 41 - Income Income Percentage Number Number without with income Farm Model of ha of farmers Project Project increase
Группа Всемирного банка · Staff Appraisal Report
Tunisia - Central Tunisia Irrigation Project
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