Tanzania - Pyrethrum Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7044 PROJECT COMPLETION REPORT TANZANIA PYRETHRUM PROJECT (CREDIT 1007-TA) December 16, 1987 Africa Regional Office 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.  ABBREVIATIONS 1. APO - Assistant Prcduction Officer 2. EEC - European Economic Community 3. GOT - Government of Tanzania 4. IDA - International Development Association 5. IRADEP - Iringa Region Agricultural Development Project 6. IERR - International Economic Rate of Return 7. KILIMO - Ministry of Agriculture and Livestock Development. Synonmously used with MALD 8. MALD - Ministry of Agriculture and Livestock Development 9. MDB - Marketing Development Bureau 10. MOW - Ministry of Works 11. NADP - National Agricultural Development Project 12. NIP - National Institute of Productivity 13. NIT - National Institute of Transport 14. PCR - Project Completion Report 15. PPMB - Project Preparation and Monitoring Bureau 16. PS - Principal Secretary 17. PYRAD - Pyrethrum Area Development 18. RDD - Regional Development Director 19. PIMU - Road Improvement and Maintenance Unit 20. RMEA - Regional Mission for Eastern Africa 21. SAR - Staff Appraisal Report (of the World Bank) 22. TECO - Tanganyika Extract Company 23. TPB - Tanganyika Pyrethrum Board 24. UAC - Uyole Agricultural Centre 25. Ujenzi - Ministry of Works  FOR OMFICIAL USE ONLY THE WORLD BANK Washington. DC 204 3 3 USA ONce of OnectvC(wenefal December 16, 1987 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Tanzania Pyrethrum Project (Credit 1007-TA) Attached, for information, is a copy of a report entitled "Project Completion Report on Tanzania Pyrethrum Project (Credit 1007-TA)" prepared by the Borrower, together with an Overview Memorandum by the Africa Regional Office. Further evaluation of this project by the Operations Evaluation Department has not been made. Attachment 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.  ! .,>~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ i~ ~ ~ ~ k  FOR OFFCIAL USE ONLY PROJECT COPITO REPORT FR TANZANIA - PYRETHRUH PROJECT (CREDIT 1007 - TA TABLE OF CONTENTS Page No. Preface .......................... .. I Basic Data Sheet .............. ..... .......... tt Evaluation Summary ...... Iv Project Performance Overview Memorandum 1. INTRODUCTION .1.... . I I II. REASONS FOR PROJECT FAILURE .2.... ....... . 2 III. LESSONS To BE LEARNED . .................................. 7 Project Completion Report I. InODUCTION.1 .................................. 1 II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL .. .. 2 Ill. PROJECT IMPLEMENTATION ................................. 10 IV. OPERATING PERFORMANCE . ................................. 27 V. FINANCIAL PERFORNANCE ... ........................ . 31 VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT .............. 32 VII. FINANCIAL AND ECONOMIC RE-EVALUATION ................... -35 VIII. WORLD BANK/IDA PERFORMANCE ............................. 36 IX. CONCLUSIONS ............ ..... 37 ANNEX TABLES 1. Dried Pyrethrum Flower Production (Tons): 1965/66 - 1985/86 38 2. Pyrethrtm and Maize Producer vrices: 1966/67 - 1979/80 . .. 39 3. Road Improvement and Maintenance Programme: Progress Report 40 4. R(U: Funds Disbursements and Expenditures 1980/81 - 1985/86 42 5. Disburseamens (as at April 30, 1986) .......................... 43 6. GOT Development Budget Allocations for Implementation of the Project ...................................................... 44 7. ?roject Actual Expenditures vs Appraisal Costs ..... .... 45 8. Producer Prices for Dried Pyrethrum Prices, ' 1979/80 - 1985/86 ......................... ............ "48 9. Mafinga Pyrethrum Extract Plant: Some Details of Performance 1982/83 - 1985/86 ........................ 49 10. TPB Profit and Loss Accounts 1980/81 1985/86 (Appraisal Estimptes) .................. 51 11. TPB Frofit and Loss Accounts 1980/81 - 1985/86 (Actual) . 52 12. TPB Balance Sheets 1980/81 - 1985/86: Appraisal (Estimates) and Actual .... .... .. ................. ... 53 13. Tanzania Crude Extract Export Unit Values .................... 54 14. Comments from Ministry of Communication and Works 55 Map IBRD 19829 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.  ~1/ 91~~l  -I-.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PROJECT COMPLETION REPORT TANZANIA - PYRETHRUM PROJECT (CREDIT 1007-TA) PREFACE This is the Project Completion Report (PCR) of the Pyrethrum Project in Tanzania, for which Credit 1007-TA in the amount of US$10.0 million was approved on April 17, 1980. The Credit was closed as scheduled on December 31, 1985; an unused balance of US$5.1 million was cancelled. The date of final disbursement was September 9, 1986. The PCR was prepared by the Tanganyika Pyrethrum Board in cooperation with Uyole Agricultural Center, Ministry of Agricultural and Livestock Development and Ministry of Communications and Works. The Project Performance Overview Memorandum attached to the PCR was prepared by the Bank's Regional Mission, Eastern and Southe-n Africa. The PCR and Overview Memorandum are based in part on a review of the Staff Appraisal Report (No. 2749b-TA) dated March 20, 1980, the President's Report (No. P-2754-TA) dated March 31, 1980, the Credit Agreement of October 24, 1980; correspondence and information as contained in files at the Tanganyika Pyrechrum Board offices in Iringa, Njombe and Mbeya, Ministry of Agriculture and Livestock Development, Road Improvement and Maintenance Unit (Mbeya), Uyole Agricultural Center (Mbeya) and Ministry of Communications and Works; correspondence with the Borrower; internal Bank memoranda on project issues as contained in relevant Bank files; as well as interviews with officials both in the Bank and in Tanzania who have been associated with the project. A copy of the draft report was sent to the Bo.rower on July 22, 1987 for comments. The Borrower's Ministry of Agriculture and the Pyrethrum Board have Indicated that they have no comment. The Ministry of Communication and Works has made comments regarding the factors that affected the progress on road works; these comments have been incorporated in the PCR and attached thereto as Annex 14. This project has not been subjected to an audit by OED.  ~~~~~~~~KtJ~~~~~~~~~~~~~~~~~~~  - ii - PROJECT COMPLETION REPORT rANZANIA - PYRETHRUM PROJECT (CREDIT 1007 - TA) BASIC DATA SHEET KEY PROJECT DATA Actual or Actual as % Appraisal Estimated of Appraisal Estimate Actual Estimates Total Project Cost (US$ million) 13.2 9.1 a/ 69 Credit Amount (US$ million) 10.0 10.0 100 Disbursed (US$ millb)n) 10.0 4.9 49 Cancelled (US$ million) - 5.1 - Date Board Approval - 04/22/80 - Credit Agreement Date - 10/24/80 - Date Effectiveness 01/23/81 04/20/81 133 b/ Date Physical Components Completed 06/86 06/86 100 b/ Proportion Then Completed (X) 100 55 Closing Date 12/31/85 12/31/85 100 b/ Economic Rate of Return (%) 17 negative Financial Rate of Return (x) 8 negative Institutional Performance - marginal Technical Performance - marginal Number of Direct Beneficiaries (families) 37,000 28,000 76 IMPORTANT DATES Appraisal 04/79 04-05/79 Negotiaticns 02/80 02/16/80 Board Approval 04/80 04/22/80 Signing of Credit Agreement 06/80 10/24/80 Effectiveness 01/23/81 04/20/81 Closing 12/31/85 09/30/86 STAFF INPUT c/ FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 TOTAL Preappraisal 20.9 - - - - - - 20.9 Appraisal 51.4 33.3 - - - - - - 84.7 Negotiations - 6.0 - - - - - - 6.0 Supervision - 5.3 16.7 29.5 14.9 14.4 20.2 7.9 109.0 Other 1.6 C.8 - - - - - - 2.4 TOTAL 73.9 45.5 16.7 29.5 14.9 14.4 20.2 7.9 223.0 CUMULATIVE DISBURSEMENTS FY81 FY82 FY83 FY84 FY85 FY86 FY87 Appraisal Estimate (US$ million) 0.3 2.6 5.0 7.4 9.3 10.0 10.0 Actual (US$ million) - 1.4 3.2 3.7 4.3 4.8 4.9 Actual as % of Estimate - 54 64 50 46 48 49 Date of Final Disbursement September 9, 1986  -- i ii - MISSION DATA Perfor- Date No. of Mandays Speciallzatior Report mance Mission (mo/yr.) Persons in Field Represented d/ Date Ratinge/ Appra4sa' 4-5/79 6 1S9 a,h,c,d,e 03/120/80 - Stuporvis!on I 6/80 3 t a,h,c 06/26/80 2 Slipervision 11 1(J/8() 2 18 b,d 12/08/80 2 Si pervis 4n TII 6/81 1 10 b 09/02/81 3 SuipervisIon IV 1/82 I 33 h,d 03/31/82 3 Supervision V 3/82 1 13 e 05/28/82 - qupervision VI 6/82 2 24 h,c 08/12/82 3 iupervision VIT 2/83 1 i( c 03/10/83 3 f/ Supervision VIII 2/83 1 4 e 03/17/83 - Stupervisionr IX 10/83 1 9 c 11/10/83 3 Supervision X 5/84 2 22 c 06/05/84 3 SupervIsion XI 11/84 1 11 e 11/27/84 - f/ Supervision XII 1/85 1 4 c 02/08/85 - SupervlsIon XTTI 5/85 2 20 c,d 06/04/85 3 Supervision XIV 2/86 1 6 c 02/27/86 4 OTHER PROJECT DATA Borrower: Government of Tanzania Executi.ng Agencies: Tanganyika Pyrethrum Board (TPB) Uyole Agricultural Center (UAC) Ministry of Works (MOW) Fiscal Year of the Borrower: Appraisal Year Average USS1.00 = Tsh 8.2 Intervening Years Average US$1.00 = Tsh 11.6 Completion Year Average USS1.00 = Tsh 24.7 Follow-on Project: None a/ Estimated on basis of incomplete data (see para. 3.60 of PCR and Annex, Tahle 7). h/ Calculated in terms of months from date of Board approval. c/ Input as staff weeks. Source: World Bank PlannIng and Budgeting Department. d/ a - economist; b = agricultural economist; c = financial analyst; d - agriculturalist/agronomist; e - highway engineer e/ I = Prohlem-free or minor problems; 2 = Moderate problems; 3 = Major problems. f/ MissIon reviewed only project's roads component, and issued a Back-to-Office report. g/ M'ssIon reviewed only preparation of action plan for the pyrethrum industry, and issued a Back-to-Office report.  - iv - PROJECT COMPLETION REPORI TANZANIA - PYRETHRVM PROJECT (CREDIT 1007-TA) EVALUATION SUMMARY Introduction Pyrethrum ranks as the eight foreign exchange earner In Tanzania. It is a smailholder industry based in the Southern Highlands, where it provides a source of income for about 26,000 families. Pyrethrum production In Tanzania rose from the late 1950s through the 1960s with production peaking at 6,000 tons In 1966/67. Thereafter, a period of decline followed. However, by 1976 when the project was identified, it was thought that pyrethrum production could be a mechanism for increasing the incomes of growers in the Southern Highlands under NADP I. On the world scene, world production of pyrethrum flowers rose in the early 1970s peaking at 22,500 tons in 1974/75. Thereafter, production declined, reaching a trough in 1979/80 by which time production was about 11,000 ton, due to adverse climate and increased competition from other crops In producing countries. This led to unsatisfied world demand and price rise. Objectives The project was the first World Bank Group supported project for the Tanzania pyrethrum Industry, including support for the Tanganyika Pyrethrum Board. The project aimed at raising the cash incomes of smallholder pyrethrum growers in the highlands of Iringa and Mbeya regions, by assisting these farmers to expand their output of dried pyrethrum flowers, through the provision of planting materials and improved research, extension, marketing and road transport services. Technical assistance was also provided to strengthen TPB and UAC. Preparation of the project was completed during February 1979, appraisal took place in April/May 1979 and negotiations were held in February 1980. The Credit Agreement was signed in October 1980. Implementation Experience and Results At the time of project preparation, appraisal and negotiation (1979-1980), optimism abounded, regarding the prospects of the industry. Even without project investments, it was expected that with the new higher farmgate prices announced for 1979/80 season, production would start recovering through new plantings and higher average yields, from the then prevailing low levels. Through stimulating farmer interest and coupled with EEC support of a pyrethrum development program, it was expected that the area under the crop woulld expand from its 1978/79 - 1979/80 level of about 8,400 ha to 13,400 ha by 1983/84 onwards (60% increase). Yields  wouO i i se fr m a:n e t fmn,ted avr rage of 20? kg/ha to a st..h'be level of 235 vg/ba vi thin a vear, and total' production of dried flowers woultd rise over a pPrnod of f vye vears (1979/80 - 1984/85 ) from 2,050 tonils to 3, 201) tons ()h c i:rt'zsLe) , stahl .s ng at aruou2d 3, 100 tcons hy year 2'000. However, * I-i t ot (