Algeria - Cheliff Irrigation Project

Do_imnt of The World Bank FOR OMCIAL USE ONLY Report ro. 6514-AL STAFF APPPRAISAL REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA CHELIFF IRRIGATION PROJECT April 1, 1987 Regional Projects Department Europe, Middle East and North Africa Regional Office Agriculture II Division 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 EQUVALENTS Currency Unit Dinar (DA) US$1.00 DA 4.7 DA 1.00 US$0.213 WEIGHTS AND MEASURES The metric system is used throughout this report. FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS BADR Banque de l'Agriculture et du Developpement Rural (Bank for Agricultural and Rural Development) DAD Delegation Agricole de Daira (Agricultural office of MAP at the DaYra level) DAP Direction de l'Agriculture et de la Peche de la Wilaya (Provincial Directorate for Agriculture and Fisheries) DAS Domaine agricole socialiste (Socialist Sector Farm) DGPI Direction des Grandes Perimetres Irrigues (Department of Irrigation and Drainage of MHEF) LSI Large-scale Irrigation MAP Ministere de l'Agriculture et de la Peche (Ministry of Agriculture and Fisheries) MHEF Ministere de l'Hydraulique, de l'Environnement et des Forets (Ministry of Hydraulics, Environment and Forests) OPI Office des Perimetres d'Irrigation (Regional Irrigation Authority) SDA Secteur de Developpement Agricole (Agricultural Development Service) SMSI Small and Medium-Scale Irrigation  FOR OFFCIAL US ONLY STAFF APPRAISAL REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA CHEI1FF IRRIGATION PROJECT LOAN AND PROJECT SUMMARY Bornower Government of Algeria AmAount US$94 million equivalent Terms 15 years including 3 years of grace, at the standard variable interest rate. Prosect Desor4dipti: The proposed Project has the following objectives: (a) at the local level: (i) to implement the first priority investment package for the development of the Cheliff river basin; and (ii) to safeguard and improve the income of the farmers and their families living in the subproject areas and improve social welfare by providing some basic infrastructure; (b) at the sector level: (i) to develop and implement new institutional arrangements to ensure adequate water management, operation and maintenance in the Cheliff river basin which, when replicated, would benefit all major irrigation in the country; and (ii) to develop and improve internal financing of O&M by increasing user charges to fully cover costs; and (c) at the national level, to develop efficiently irrigation potential in the country by expanding the large-scale irrigation areas presently used for irrigation by about 252. The Project would consist of (a) rehabilitation of existing irrigation infrastructure over 5,000 ha in Bas Cheliff; (b) construction of new irrigation systems over 8,000 ha in Haut Cheliff; (c) provision for equipment and vehicles for extension and O&M staff; (d) technical assistance for the supervision of works, for studies of further irrigation works in the Cheliff valley and for O&M; (e) training and recruitment of local staff; and (f) on-farm investments. The risk of slow project implementation which was experienced with a previous Project has been minimized by careful design of the procurement packages to facilitate efficient construction operations (large contracts). The risk of a slower buildup of benefits than the conservative estimate made has been minimized by introducing a strict monitoring system and remedial measures to be taken to improve agricultural performance if necessary. Thk lhas a rstrited distrbuton and may be ued by recipients only in the prformac of theiroffkW dutble Its centDts may no othefwise be discosed wihout World Sankauthoriution.  (ii) Estimated Proiect Costs: Local Forsiam Total (US$ million) - Civil works 44.9 45.0 89.9 Equipment and vehicles 5.1 14.7 19.8 Technical assistance, Training and studies 1.5 5.2 6.7 On-farm Investments 9.8 8.1 17.9 Incremental Recurrent costs 3.2 2.3 5.5 Total Base Costs 64.5 75.3 139.8 Physical contingencies 6.5 7.9 14.4 Price contingencies 20.2 11.2 31.4 Grand total'A 91.2 94.4 185.6 Financins Plan: Local Forei Total (US$ million) World Bank - 94.0 94.0 Government 32.6 - 32.6 Beneficiaries 7.5 - 7.5 BADR 17.0 - 17.0 Net Project Costs 57.1 94.0 151.1 Taxes and Duties 34.5 34.5 Total Project Costs 91.6 94.0 185.6 Estimated Disbursements: 1988 1989 1990 1991 1992 1993 1994 1995 _ ~~(i Tmil-lion)- Annual 2 5 12 16 19 16 15 9 Cumulative 2 7 19 35 54 70 85 94 Economic Rate of Return: The Cheliff Water Master Plan: 17X The Project: 15S Staff'Avpraisal Report: No. 6514-AL map No. IBRD 19879A /a Including US$ 34.5 million in taxes and duties.  (.ii) SrAFF APPRAISAL REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA CHELIFF IRRIGATION PROJECT Table of Contents PbRe No. I. INTRODUCTION . 1 II. TEE AGRICULTURAL SECTOR ............. ........... 2 A. Role of Agriculture in the Economy ....... ................. 2 B. Experience with Past Lending in the Sector * ............... 5 III. THE IRRIGATION SUBSECTOR ............... ........e.ee 6 A. General Performance .............. ........................ 6 B. Subsector Issues Relevant to the Project .................. 8 IV. THE PROJECT AREA ...................................... 11 A. The Cheliff Water Master Plan ............................. 11 B. Location, Climate and Soils ...................1........... 13 C. Land Tenure, Irrigation and Land Use ...................... 14 D. Water Demand and Resources ................................ 15 E. Agricultural Support Services and Institutions ............ 17 V* THE PROJECT ..... .......* .... . ... . . .. ...... . 20 A. Rationale for Bank Involvement and Project Objectives ..... 20 B. Suiary Project Description .... ................... 21 C. Detailed Features ........... .. ............................ 22 D. Status of Project Preparation ........... .................. 24 S. Cost Estimates .............. 25 F* Procurement .............. 27 G. Disbursement ............................................. 29 This report is based on the findings of an appraisal mission which visited Algeria in April-May 1986 composed of Mr. Darghouth (mission leader)-and Ms. Effron (Bank), Mr. Dumaset (FAO/CP). and Messrs. Abu Sharr and Feher (consultants).  (iv) Table of Contents (Cont'd) Page No. VI. ORGANIZATION AND MANAGEMENT ...................... 31 A. Project Organization ............... ...................... 31 B. Organisation for Operation and Maintenance ............... 33 C. Performance of the Socialist Farms ....................... 34 VII. BEN-FITS AND JUSTIFICATION ............. 35 A. General ................ .35 B. Land Use, Yields and Production ............36 C. Marketing and Prices 39 D. Farm Income and Poverty Alleviation .........41 E. Cost Recovery .........43 F. Environment Impact ........... 46 G. Economic Analysis . .46 H. Risks and Sensitivity Analysis 49 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS.............. 52 SUPPORTING TABLES Table 1. Project Cost Summary and Schedule of Expenditures .. 54 Table 2. Estimated Schedule of Disbursement of Bank Loan .... 56 Table 3. List of Equipment to be Procured under the Project . 57 Table 4. Cost and Rent Recovery .e...................... 58 Table 5. Selected Documents and Data Available in the Project File and Annexes in Implementation Volume ........ 59 CHARTS 1. Organization Chart of MEF .......... .. 60 2. Implementation Schedule 61 MAP IBRD.19879A  STAFF APPRAISAL REPORT DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA CHELW! IRIGATION PROJECT L INTRODUCTION 1.01 During the '970s, Algeria experienced high economic growth, with Gross Domestic Production (GDP), in constant prices, increasing by 7.2Z p.a. and GNP per capita more than doubling to US$1,930 in 1980. The evolution of the economy was characterized by strong investment growth (more than 151 p.a.), a aigh savings rate (about 38% of GDP), substantial growth in the hydrocarbon, industry and construction sectors, high employment creation and sustained regional development efforts. However, in addition to pressure on external and domestic financial resources, there were serious imbalances in the distribution of investment between industry and other sectors, especially the agricultural sector, during this period. As a result, the agricultural sector was unable to satisfy the rapidly increasing food consumption (6X p.a. from the mid 19609 to the late 1970s) and imports g ew sharply to fill the gap. This growing dependence on food imports caused the Government, in the context of the 1980-84 Economic Development Plan, to increase public investment and to introduce major reforms to improve performance of the agricultural sector. 1.02 These reforms included the promotion of private sector activity in agriculture and small- and medium-scale industries through selective credit and taxation measures, decentralizing and restructuring parastatal enterprises and state farms, introducing financial incentives to improve labor productivity and deregulating some agricultural m&rketing and prices. The reforms are being continued under the current 1985-89 Plan. 1.03 Among the measures taken to improve agricultural productivity are those aimed at the irrigation subsector which provides 402 of agricultural production. Programs are underway to expand the availability of irrigation water and to improve the efficiency of its use by extending and rehabilitating large-scale irrigation perimeters, expanding small- and medium-scale irrigation development, establishing institutions capable of ensuring adequate O&M, and improving cost recovery policy and mechanisms. The proposed project would contribute to these objectives by extending irrigation over new areas and improving the efficiency of existing irrigation works in the Cheliff river basin, and by improving O&M activities and cost recovery. The Project was identified during a Bank reconnaissance mission which visited Algeria in February 1985. It was prepared by the Government with assistance of the FAO/IBRD Cooperative Program in January 1986 and appraised in April-May 1986 by a mission composed of Mr. Darghouth (mission leader), Ms. Effron (Bank), Mr. Dumaxet (FAO/CP) and Messrs. Abu Sharr and Feher (consultants).  -2- EL THE AGRICULTURAL SECTOR A. Role of AMriculture in The Econom General Performance of the Sector 2.01 Algeria has a total land area of 238 million ha of which 48.5 million ha are suitable for agriculture and grazing. Forests and esparto grass cover 9 million ha and 32 million ha are used for grazing. Of the 7.5 million ha of cultivable area, 36S are planted in cereals, 8% in forage crops, 3S in vegetables, 22 in pulses, and 431 is normally left fallow. Algeria's ratio of irrigable land to arable land is very low (11% compared with Morocco's 191) reflecting scarcity of water resources. Algeria has an irrigation potential of about 800,000 ha of which about 400,000 ha are presently irrigable and about 310,000 ha effectively irrigated. Of the cultivable land, 4.7 million ha or 631 are under private farms and 2.8 million ha or 37S under socialist farms. 2.02 The rapidly growing "food gap" is a major current issue for Algeria. As a result of the rapid increase in population and per capita incomes, demand for food has grown faster than supply. Algeria's food self-suffiency ratio fell to 401 in 1984 from roughly 901 in 1962. This decline has been particularly severe for cereals, imports of which, after practically quadrupling during the 1970s, now meet almost two-thirds of the country's needs. At the same time, the volume of food exports (principally wine, fruits, and vegetables) fell by almost 901 during the last decade, representing only 3% of total imports at the end of the period, compared with 631 at the beginning. During the 1980-84 Plan period, Algeria had to spend almost 151 of its merchandise export earnings to import foodstuffs (cereals, dairy products, sugar, oil products, etc.). 2.03 The food gap has increased in spite of the respectable growth in the value added of the agricultural sector of about 41 per year since 1973-75. Most of the growth has occurred in the relatively high-value vegetables (7.41 per year) and fresh fruits (4.31 per year - other than citrus and grapes), which in any case are not imported, and in animal production (9.71 per year) where total consumption has grown even faster. Thus the high growth of these subsectors has not affected the food self-sufficiency of Algeria, while the performance of cereals and legumes has been stagnant and that of citrus fruit and wine grapes has been downward (-6% per year). It is the indifferent performance of cereals and poor performance of citrus and wine products that underlies the increase in food imports and the decrease in agricultural exports during this period. In spite of the overall increase in value added of agricultural production since 1973-75, the agricultural sector's contribution to Algeria's GDP has declined steadily from 161 in 1960 to about 6% in 1984. This decline reflects primarily the higher relative growth of other sectors, principally petroleum and, to a lesser extent, the manufacturing industry. 2.04 The uneven performance of the sector is partly because agriculture has to date been unable to achieve public investment program targets. The z9s:z  -3- effective share of agriculture in total public investment over the period 1975-84 amounted to about 4.51. In addition, the amounts allocated to investment in agriculture under successive development plans have been systematically under-implemented as a result of institutional, organizational and managerial constraints. The 61 allocation in the 1980-84 Plan has not been achieved and disbursements have fallen short of budgetary allocations. While purchase of equipment (tractors, agricultural equipment, farm machinery, equipment for crop growing under plastic) for the socialist sector and more recently for the private sector has been favored, little attention has been paid to modernization of agricultural infrastructure, equipment of irrigated areas, and facilities for stock raising. Investment in water resource development has been focussed on the construction of water storage works and facilities for the supply and distribution of water for household consumption. Improvements in the irrigation infrastructure have been delayed by a shortage of prepared projects, cumbersome procedures in contract awards, and an inefficient local construction industry. 2.05 For all crops, including those enjoying the most favorable conditions, yields remain low in comparison with other Mediterranean countries despite their increase in 1984-85. For most crops, average yields represent 50 to 70% of those in neighboring countries. Yields of most crops did not increase between 1980 and 1984 despite the increase in investment in agricultural equipment and inputs channeled to the sector, due largely to successive drought years. With greatly improved weather, greatly improved harvests were obtained in 1985 and 1986 and the effects of increased investment and reorganization in the sector are becoming apparent. Reforms Introdued During the 1980-84 Plan 2.06 With a view to ensuring optimum use of production capacities, maintaining and revitalizing agriculture and stemming rural depopulation, the Government introduced a series of reforms in the sector in the 1980-84 Economic Development Plan which have been gradually implemented over the last five years. Many of these reforms are consistent with recommendations made by the Bank in the 1981 Agricultural Sector Survey.L' The reforms have been primarily aimed at improvements in four areas: (a) performance of socialist sector farms; (b) support provided to the private sector farms; (c) organization of marketing; and (d) current marketing and pricing policy through deregulation. The reorganization of the socialist sector farms is a major sectoral issue directly relevant to the Project; it is treated in paras. 3.09 - 3.11. Progress in the three other aspects are discussed below. 2.07 Important steps have been taken to give a greater role to the private sector in agricultural production and services since 1981. This has resulted in the quantity of the major inputs (fertilizers and farm machinery equipment) distributed to the private farmers doubling over the last five years. The Bank for Agriculturl. and Rural Development (BADR) has put greater emphasis on lending for the private sector: loans to the private sector and the number of 1/ Algeria: Agricultural sector memorandum (Report No. 3593-AL), September 1981. 29g3g  -4- private farmer clients almost quadrupled between 1983 and 1985. For input supply, the role of the private retailers in distributing spare parts of agricultural machinery and in providing repair services is increasing. In addition, about 850,000 ha of state or. cooperative lands have been distributed to private farmers: 740,000 ha as a result of the restructuring of the self-managed socialist farms and the dismantling of the production former cooperatives (para. 3.09) and 110,000 ha distributed under a program started by Government in 1984 to encourage land reclamation and use in the southern and central regions of the country. Promotion of the private sector is also a major objective of the current 1985-89 Development Plan. 2.08 As part of the restructuring effort, marketina aaencies, both for inputs and outputs, have been placed on a more sound financial footing: their accumulated debts have been assumed by Government, additional capital in the form of both equity and loans have been provided and operating norms have been established for each marketing agency to monitor their performance. In addition, the Government has decentralized several national marketing agencies by setting up three regional Offices (East, Center, West) in place of the one centralized bureau to serve the needs of each respective region. For distribution of most seasonal inputs at a local level (district and province), Government services have been transferred to financially reorganized cooperatives. These cooperatives act as distribution agencies that depend on the national inputs marketing agency, ONAPSA (Office National des Approvisionnements et des Services Agricoles). The impact this restructuring will have on timely and adequate delivery of inputs and marketing of output and on improved financial performance remains to be seen but the early years since restructuring have shown some promise (para. 2.10). 2.09 The aricultural price and marketing system has been gradually deregulated since 1981. All producers, including those in the socialist sector, are now free to sell their products outside the state marketing agencies, except for cereals, pulses, edible oils and industrial crops. This has considerably strengthened the role of the private sector in the marketing of agricultural produce, at both wholesale and retail levels. As the prices paid by private traders are higher than those offered by official buyers, the function of the latter now appears to be essentially to absorb surplus production and keep regional supply and demand in balance. Since 1982, retail prices for perishable products have in practice been mostly deregulated and administered prices for cereals, pulses and wine have been increased substantially (40-802) and are now somewhat above border prices. Reeent Trendsand RemaniAng Constraints 2.10 Because the reform measures have been put into effect only recently, it is too early to assess their impact on the growth of agricultural production. The restructuring of the agricultural sector involved a considerable effort on the part of all the institutions involved (redeployment of personnel, establishment of new structures, reorganization of existing boards often performing varied functions). The structural changes introduced in the socialist production sector, the lack of experience among new supervisors, and problems in starting up the new input distribution systems 2Ss9g  hampered any immediate expansion in production whicb remained stagnant up to 1983/84, although agricultural growth was also greatly affected by a far below normal rainfall in 1981-1984. Production increased impressively, due to a combination of factors including good weather, in 1984/85. The major positive results that can be partially attributed to the Government reforms can be sumarized as follows: (a) after an intensive campaign to promote cereal production, cereal production in 1984/85, a year of favorable weather, sharply increased to its highest level ever of 3.1 M tons, which can be compared to 2.4 M tons in 1980, also a year of good weather; (b) following the deregulation of prices and maketing, there has been conticuous growth in production of vegetables (SS p.a.) and poultry products (132 p.a. for meat) since 1980; (c) the proportion of profitable socialist farms has increased from 20S to 30S; (d) the majority of cne marketing agencies were profitable in 1985; (e) the quantity of inputs marketed by the newly restructured marketing agencies increased substantially; fertilizer distribution, for example, increased by 36% between 1984 and 1985; and (f) the private sector has had access to additional land, more credit and more inputs (para. 2.07). 2.11 Despite these improvements, much remains to be done. Performance of the agricultural sector can still be greatly improved and major issues are: (a) shortages and untimely distribution of agricultural inputs and credit, particularly for the private sector; (b) inadequate research programs and extension services, particularly for the private sector, and insufficient staff training; (c) limited use of igrigation potential (para. 3.02); (d) inadequate incentives for workers in socialist farms to achieve higher productivity; (e) limited capacity of the agricultural sector to use the investment allocations and to implement projects; and (f) need for continued reform of the system for setting producer and input prices (including irrigation water). The irrigation subsector, even though it contributes about 40% of national production, has under-performed compared to its potential, because insufficient funds have been allocated for rehabilitation and management improvement and because institutional arrangements in place for using irrigation facilities efficiently are inadequate. The Bank has begun a dislogue with the Government that covers each .of these aspects, with particular focus on the first three topics. B. Experience with Past LendI In the Secto 2.12 Bank Group lending for Agriculture in Algeria started in 1974, and to date only three projects have been approved for a total of US$58 million of Bank funds. Performance under these three projects was mixed, reflecting the institutional constraints in the sector. The Technical Assistance - Rural Development Project (Loan 1159-AL) was completed in 1983 after considerable delays mainly due to lack of commitment, lack of coordination and poor supervision by Ministry of Agriculture. In spite of the delays, the Project partly met its objectives of analyzing the major constraints and designing and, in some cases, testing different approaches to rural development in Algeria. The Bas-Cheliff Irrigation Project (Loan 1802-AL) was 80% completed when the Government and the Bank decided to close the Loan in 1985, two years after the Closing Date foreseen at appraisal. Delays occurred after bidding when no offers or expressions of interest were received for the major civil 29,93  -6- works because of the very modest size of these works. The works were finally carried out by a local public sector enterprise. The project's physical works will be completed by the end of 1986 and project studies have provided an essential framework for the future development of the Cheliff river basin (paras. 4.01 - 4.04). The Meat Industry Project (Luan 1739-AL) was cancelled in 1983 at the Government's request, a few months after the Loan became effective. No reasons were given by the Government for this request. Experience gained during the implementation of the Bas Cheliff Project has been used in the design of the proposed project. The works have been packaged so that their sizs is such that larger, efficient contractors are likely to express interest in implementing these works. In addition, bidding for part of the major works has already started to ensure that procurement does not become a major source of delay. mI THE IRRGATION SUDSECTOR A. General Performance 3.01 Although some 40X of current agricultural production value is from the irrigated areas, the potential for increased production from existing irrigated areas and for development of new irrigation is still important. The estimates available show that the total area that can be irrigated is about 800,000 ha or 10.5S of total arable land (7.5 million ha) compared with only 310,000 ba presently actually irrigated. These include 180,000 ha (or 602) in the socialist farms and 130,000 ha (or 40%) in the private sector farms. Between Independence in 1962 and 1980 total irrigation area almost stagnated because the slow development of new irrigated areas was offset by the decline in the use of land equipped for irrigation. 3.02 The present use of existing irrigation infrastructure is low. The current irrigated land (310,000 ha) represents about 702 of the estimated 400,000 ha of land equipped for irrigation. The main reasons for the under-utilization of the irrigated systems reflect the lack of interest given to the irrigation sector before 1980 and are: (a) increased use of water to meet urban and industrial demand without coensurate investments in water development structures reducing, therefore, the amount of water available for irrigation; (b) insufficient investment programs for irrigation before 1980 causing: (i) limited rehabilitation of old irrigation systems; and (ii) lack of adequate drainage systems, which were considered unnecessary at the time of construction, causing serious soil salinization in many areas; and (c) lack of adequate maintenance of irrigation structures and equipment causing inefficient use of water for irrigation (para. 3.05). While the use of existing irrigation infrastructure, in particular in the large-scale perimeters, is low for the reasons stated above, the limited water available at the field level is fully used and primarily devoted to the most highly profitable crops, mainly vegetables and fruit trees which together cover 802 of the total irrigated area. 29933  -7- Prospeots for the Iritation Subsector 3.03 A major effort to boost the performance of the irrigation subsector started with the 1980-84 National Development Plan. Actual investment expenditures for water development increased from 850 million DA/year during the 1977-79 Plan to 2,420 million DA/year during the 1980-84 Plan, almost a twofold increase in constant terms. The most noticeable progress was made, however, in the mobilization of additional water resources by the construction of new dams and main infrastructure. Thus, in order to make up for the insufficiency of water supplies and enable existing schemes to be used more fully, nine dams have been commissioned since 1980 and twelve others are being constructed, while only three dams were constructed between 1962 and 1980. This has about doubled the annual surface water resources available for irrigation in Algeria and will make possible a much fuller use of existing irrigation facilities. However, Government performance in building the irrigation facilities to make full use of these newly mobilized water supplies has been hampered due to lack of engineering studies, delays in construction works, and inadequate supervisory capacity from Ministere de l'Hydraulique, de l'Snvironnement et des Forets (MHEF). As a result, the progress in developing irrigation over new lands during the 1980-84 Plan was lower than planned ('7,500 ha instead of 50,000 ha, an implementation rate of 752) and renovation of existing irrigation perimeters was even lower (10,000 ha out of 25,000 ha planned, an implementation rate of 40X). 3.04 Under the 1985-89 Plan, the Government continues to give an important role to the irrigation subsector as a key part of the effort to improve performance of the agricultural sector. The main objectives assigned for this subsector under this Plan are to: (a) continue mobilization of additional water resources by completing construction of the 12 on-going storage dams and initiating the construction of 17 others; (b) continue expansion and renovation works with the aim of putting under irrigation an additional 50,000 ha in the large-scale irrigation (LSI) areas and 25,000 ha in the small- and medium-scale irrigation (SMSI) areas; (c) intensify irrigation in the southern areas through drilling of tubewells; and (d) carry out a number of key studies with a particular emphasis on river basin water master plans of which the most important, the Cheliff Water Master Plan (paras. 4.01 - 4.04), has already been completed under the Bas Cheliff Irrigation Project financed by the Bank (under Loan 1802-AL). On the institutional side, the Government intends to improve O&M of existing irrigation areas, improve cost recovery, enhance the performance of the public construction companies, expand staff training programs, and complete water legislation. In view of recent budgetary constraints because of the drop in oil revenues, Government was asked to confirm to the Bank that sufficient priority would be given to the irrigation subsector to ensure project funding. Government has confirmed this and has submitted to the Bank details on the size and composition of the revised expenditure program for the irrigation sector for the 1985-87 period which clearly shows the importance given to irrigation in current policy. 29933  -8- B Subsector Iss1 Relevant to the ProJect Organization for Operation and Ma te 3.05 Operation and maintenance of irrigation schemes have been long neglected in Algeria resulting in a serious deterioration of the irrigation system. Operation and maintenance are the responsibility of MHEF field subdivisional units located in each irrigation district. These units have had little autonomy and have lacked qualified staff and financial resources for adequate O&M. Most of the 06M staff are experienced but are relatively discouraged by the poor condition of the networks. Practically all authority including awarding of contracts is centralized in the Ministry's Regional offices located in the provincial capitals which leads to inefficiencies in ongoing maintenance work. 3.06 The problem of O&M was raised in 1984 by the Bank, which urged the Government to take steps to enhance efficiency of OEM operations in the LSI perimeters like those in Cheliff, before financing any new projects in the subsector. Government responded by taking measures to address this issue: (a) in October 1985, two decrees were issued: onel' defining the roles and responsibilities and the othert' the statute of new autonomous Irrigation Authorities (OPI, Offices des Perimetres Irrigues) to be responsible for O&M in the country's LSI perimeters; (b) at the same time, four decrees were Issued for the creation of OPIs including one in the Cheliff River Valley encompassing the project area; (c) a study by international consultants on the detailed organization and management of the Cheliff OPI and financed by the French CCCEI" was started in March 1987; the findings of this study will be used to help set up the proper organization and management structures of the other OPIs throughout the country. The new OPIs will be state-owned enterprises with a separate legal entity and financial autonomy. Their Board of Directors will include representatives of local government as well as local farmers in the irrigation schemes. Through contractual agreements to be signed with the MHEF, OPIs will be made responsible for: (a) adequate water distribution among farmers; (b) operating and maintaining the irrigation and drainage systems under their control; (c) collecting water charges; and (d) providing assistance to farmers for on-farm water management. These recent actions undertaken by Government to create the conditions to permit improved O&M are a major step toward starting to resolve these problems in Algeria. The proposed project would include the necessary investments (equipment and vehicles) required to establish the Cheliff OPI and provide technical assistance to help put into effect the proposals of the study mentioned above on organization, management, and operations of the new Cheliff OPI (para. 5.07). C4s Recvr 3.07 Historically, cost recovery arrangements in Algeria have been unsatisfactory with only a small part of O&M mud capital costs raised from beneficiaries. No policy framework of irrigation cost recovery existed and 1/ Decree No. 85-260, dated October 29, 1985. 2/ Decree No. 85-261, dated October 29, 1985. 3/ CCCE- Caisse Centrale de la Coop6ration Economique. 2as*s  -9- water charges were kept low and were revised only once between 1972 and 1985. This bas resulted in inadequate budgeting of funds for 06M. However, substantial improvements in cost recovery policy were introduced in 1985: (a) in October 1985, Government issued a decreeL' defining the policy framework of cost recovery in the LSI perimeters. The main features of this policy are that: (i) water charges will continue to be based on a binominal rate structure including: a fixed annual levy, based on the nominal hydraulic capacity at the farm turnout gate applied on a per liter/second/hectare (li//ha) basis and a volumetric charge applied on a per m3 basis; the charge structure is supposed to encourage use of the irrigation network in particular for winter crops when water is plentiful; and (ii) the principle of recovering a proportion of capital costs was established; the decree did not specify how this would be done, although in practice the fixed annual levy mentioned above-and the on-farm itrigation works which are generally left to farmers' financing are meant to ensure farmers' contribution to capital cost recovery; (b) it was stated in the decree creating the OPIs (para. 3.06) that water charge revenues of the Offices should cover O& as well as the replacement costs of all hydroa-mchanical and electromechanical equipment; and (c) Government issued at the same date a joint ministerial order increasing the 1979 water charges, as follows: INCREASE IN WATER CHARGES (In Current Terms) 1979 1985 _ Fixed Levy Volumetric Charges Fixed Volumetric Increase Increase Perimeters Levy Charge Amount Over 1979 Amount Over 1979 (DA) (DA/m3) (DA) (2) (DA/mW) (2) Bounamoussa - - 200 (100) 0.17 (70) Haut Cheliff 100 0.10 200 (100) 0.15 (50) Bas Cheliff and others 100 0.08 150 ( 50) 0.12 (50) 1/ Decree No. 85-267 dated October 29, 1985. 2S9*X  -10- 3.08 However, although increased by more than 501 in current terms, water charges remained almost unchanged in constant terms and are still low: they currently cover less than 60% of operation and maintenance costs. At the same time, they also currently represent only a low percentage of the cost of produetion of the irrigated crops ranging, for example, in the proposed project area, from about 31 for the socialist farms to 62 for private farmers. They can be increased without seriously affecting farmers' revenues (para. 7.17). Because of the great scarcity of water, farmers know that if they do not pay the due charges, water will be delivered instead to those farmers who are ready to pay. Water charge collection rates are therefore good (they exceed 802). However, a current issue is that water charge receipts are transferred directly to the Treasury and there is therefore no assurance that collected funds will be made available to finance OUM requirements. The proposed project would include actions to introduce further improvements in cost recovery in the Cheliff perimeter (para. 7.15). Performance of Socials Sector Farms 3.09 At least 601 of the areas currently under irrigation and the bulk of new lands that could be developed in large schemes are formed by socialist sector farms. Because of their poor performance and low productivity in the past, reorganization of socialist farms became necessary and was started by Government in 1982. It was aimed at establishing farm enterprises that are technically efficient and financially viable. The program started with the implementation of land consolidation in the 2,100 self-managed farms and the 6,400 production cooperatives existing in the country and covered over 3.7 million ha. As a result of the restructuring of the former self-managed and cooperative farms: (a) close to 3,400 manageable production units (DAS)-' have been formed with an average size of 680 ha each (against 1,140 ha prior to restructuring), covering a total of 2.3 millions' ha of arable land; (b) production cooperatives have been dissolved because of their past failure; and (c) about 740,000 ha of land which could not be allocated to the DAS efficiently have been distributed to small private farmers as individual holdings. 3.10 In addition to this land consolidation program, the following major organizational changes have been introduced: (a) the DAS have been grouped together, 25 to 30 at r time, to be assisted by 108 technical advisory units (SDA, Se..teurs de developpement agricole) under the responsibility of agronomists assigned to assist the managers of the DAB; (b) DAS management units have been granted greater authority over farm level planning and operational and financial management. Government no longer imposes farm plans which are now established by the management unit councils in collaboration with their SDA; (c) a large number of engineers and technicians have been hired as farm managers of the restructured new DAS farms to replace unqualified personnel. These have become full members of the management units and have full decision making power in the planning and management of the farms. For most farms, qualified accountants have also been hired. At the 1/ DAS a domaines agricoles socialistes 2/ Total land owned if 2.8 million ha averaging 825 ha per farm. 2993Z  -11- same time most of the elderly workers have been encouraged, with some success, to retire; and (d) performance criteria and a monitoring system of the farms' operations has been established, the accounting system of the farms has been simplified and improved and strict auditing measures introduced. 3.11 Although it is too soon after the restructuring to form a firm judgment on its effectiveness in improving overall DAS performance, first signs are encouraging. The proportion of profitable DAS increased from 202 to 302 between 1984 and 1985, for example. For that part of the project covered by DAS, measures would be taken under the proposed project to ensure that any DAB benefitting from project works would be restructured to facilitate efficient use of these facilities and strict performance and profitability monitoring would be introduced (paxa. 6.12). N. THE PROJECT AREA A. he Cheiff Water Master Pla 4.01 The project area is the Cheliff river basin, which is situated 100 to 200 km south-east of Algiers. This river basin, which covers 44,500 kma, is the la:gest in the country and one which shows the greatest potential for development given the land and water resources presently unused. A Water Master Plan to complete the development of Cheliff was completed under the Bank financed Bas Cheliff Irrigation Project (Loan 1802-AL) in 1983-85. 4.02 Full development of the water resources of the Cheliff basin would provide for a total annual assured water supply of 870 Mm3 of which the total annual regulated surface flow would be about 545 Mm' and 325 Mm3 of ground water and unregulated Fsirface water. These waters have been allocated under the Master Plan giving priority to urban and individual use, as follows: PROJECTED WATER ALLOCATION IN THE CHELIFF VALLEY /a Domestic and Industrial Use Irrigation Oran Other Cities Total (million m3i) Haut Cheliff 215 46 261 Moyen Cheliff 225 - 22 247 Bas Cheliff 190 150 /b 22 362 Total 630 150 90 870 () (73) (17) (10) (100) /I Source: The Cheliff Water Master Plan Study prepared by SOGREAH/SNC. /b These waters would be transferred to Oran, located outside and downstream of the Cheliff Basin  -12- 4.03 Under the Master Plan, the potential for the improved use and development of the land and water resources of the Cheliff river basin to use these allocated water resources were studied and a priority investment program prepared for implementation. The development potential of the three parts of the river basin (Bas (Lower), Moyen (Middle), and Haut (Upper) Cheliff) was evaluated as follows: EVALUATED IRRIGATION DEVELOPMENT POTENTIAL IN CEELIFF VALLSY /a Haut Moyen Bas Cheliff Cheliff Cheliff Total (ha) -- At Present (1) Area Rquipped Newly equipped 16,300 - - 16,300 Old, deteriorated - 21,800 22,500 44.300 Subtotal 16,300 21,800 22,500 60,600 (2) Area PresentlY Irrigated 4,800 7,800 3,650 16,250 Pro2osed at Full Development Newly equipped 16,300 - - 16,300 To be rehabilitated - 17,600 9,300 /b 26,900 To be newly equipped 8.800 /c 4,000 10.000 22.800 Subtotal 25,100 21,600 19,300 66,000 /I Source: The Cheliff Water Master Plan Study Prepared by SOGREAH/SNC. /b Including 5,000 ha in the Bas Cheliff subproject area. /c Including 8,000 ha in the Haut Cheliff subproject area. 4.04 About 60,600 ha are presently equipped for irrigation; they include 16,300 ha new sprinkler schemes in Haut Cheliff completed in 1984/85 and 44,300 ha old surface irrigation schemes in Moyen and Bas Cheliff. Only 16,250 ha, or 27S, were irrigated in 1985 because of deterioration of the existing irrigation infrastructure, inadequate drainage in some areas and, more particularly, lack of developed water resources. The three dams  -13- completed in 1985s' are rot yet fully operational but, when filled, these dams will permit a further 20,000 ha to be irrigated. As recommended by the Master Plan, eight storage dams will finally be operational and a total of about 66,000 ha will be equipped and fully irrigated. Taking into account the investments made so far by the Government in the Cheliff Valley and by optimizing the use of all the land and water resources, the Master Plan has determined the optimal investment program, including: (a) the construction of the eighth reservoir damL' (the Sidi Mohamed Ben Taiba dam) '^cated on the Ebda river which is an upstream tributary of the Cheliff River (see map); (b) rehabilitation of about 26,900 ha or about 60% of the area of the existing deteriorated old schemes, and abandonment of the other equipped area; and (c) construction of new schemes over about 22,800 ha. Investments are proposed to be carried out over a period of eleven years. The proposed project would finance a first time-slice of this program involving the development and rehabilitation of irrigation systems in the upper and lower parts of the Cheliff Valley. B. Locaton, Climate and Soils 4.05 Within the Cheliff river basin, there would be two separate subproject areas where irrigation works will be carried out under the Project: one in the Haut Cheliff covering about 8,000 ha (about 30% of the new irrigation included in the Master Plan) and the other in the Bas Cheliff covering about 5,000 ha (about 20% of the rehabilitation work included in the Master Plan). The Haut Cheliff subproject area is located in the Ain Defla district (in Ain Defla Province) which is about 100 km southwest of Algiers and the Bas Cheliff subproject area is located in the Oued Rhiou district (in Relizane Province), about 70 km east of Amn Defla (see map). 4.06 The climate in the project area is characterized by cool wet winters followed by hot, dry summers. Dry periods extend over four months and the rainfall, averaging 414 mm in Bas Cheliff and 474 mm in Haut Cheliff, shows great variations from year to year. Average monthly temperatures vary widely from 9C in January to 29@C in August. Under these conditions, rainfed farming is limited to some winter crops (wheat, barley, vetch-oat). Irrigation is necessary for diversifying crops in winter, growing crops in summer and obtaining high yields. 4.07 While soils in Haut Cheliff are mostly deep, light and highly permeable and have high gradient, those in Bas Cheliff are heavy and less permeable. Soil capability analysis indicates no major problems for growing vegetables, fruits, and forage in the Haut Cheliff subproject area. Extensive soil, hydrological and topographic surveys undertaken in the Bas Cheliff district area since 1966 were completed and analyzed by consultants under the Water Master Plan studies. They determined that tile drainage is needed over 1/ At present, three storage dams are operational in the Cheliff River (the Ghrib, Fodda and Sidi Ben Ebda dams), three others completed in 1985 are being filled (the Sly, Harreza and Deurdeur dams) and one is being constructed (the Gargar dam) (see map). 2 9 9  -14- about 1,000 ha or 201 of the Bas Cheliff subproject area to ensure sustainable and profitable irrigation. C. land Tenure. bIration and Land Use 4.08 Land Tenure. About 752 of the subproject areas is under socialist farm (DAS) ownership and 251 under private farm ownership. Land tenure in the two subproject areas is as follows: LAND TENURE IN THE TWO SUBPROJECT AREAS Haut Choliff Bas Cheliff Tenure Total No. Per Farm Total No. Per Farm (ha) Farms (ha) (ha) Farms (ha) Socialist farms (DAS) 5,100 8 638.0 4,700 28 168 Private farms 2.900 704 4.1 310 138 2.2 Total 8,000 712 5,010 166 These areas include only those that will be irrigated under the Project. While almost all the private participating farmers' lands are fully within the irrigated areas, the socialist farms are only partly within the proposed irrigated area so that part of these farms would remain under rainfed agriculture. Socialist farms average a total of 820 ha in Haut Cheliff and 500 ha in Bas Cheliff. Private land distribution is characterized by the predominance of small farms. While farm sizes average 4.1 ha in Haut Cheliff and 2.2 ha in Bas Cheliff, 851 of the farm units have less than 2 ha in Raut Cheliff and less than 5 ha in Bas Cheliff. Current land distribution of private farms related to farm sizes is as follows: LAND DISTRIBUTION OF PROJECT PRIVATE FARMS Range of Size Haut Cheliff Bas Cheliff Farms Area (ha) Farms Area (ha) Nb 2 Total 2 Nb 2 Total X Less tian 2 ha 591 (84) n.a. n.a. 96 (69) 67 (23) 2 to 5 ha 84 (12) n.a. n.a. 22 (16) 76 (24) More than 5 ha 29 (_4) n.a. n.ea. 20 (15) 167 t53) Total 704 (100) 2,900 (100) 138 (100) 310 (100) 20*33  -15- 4.09 Present Land Use. At present, about 16% of the total subproject areas, or 2,130 ha, are already irrigated, including 1,760 ha in Bas Cheliff and 370 ha in Raut Cheliff. Irrigation in Haut Cheliff is made mainly through individual shallow wells, but also through tubewells and pumping from the Cheliff River. Irrigation in Bas Cheliff is made through the existing public surface irrigation scheme served by the Boukader diversion weir and main canals rehabilitated under the Bas Cheliff Project (Loan 1802-ALG). The distribution network, which was not included in the Bas Cheliff Project, was developed in 1936 and has exceeded its economic life. The elevated irrigation canals and outlets are deteriorated and drainage channels are silted up. This deterioration was exacerbated by inadequate operation and maintenance of the systems over the past 20 years. Because of insufficient water resources, irrigation is presently restricted to the summer crops (April-October) and rainfed crops are grown in winter. 4.10 Cropping patterns are currently characterized by the predominance of cereals (wheat, barley, oat) and legumes (vetch, beans) in the rainfed areas where fallow still occupies a certain portion (about 81 in Haut Cheliff and 131 in 8as Cheliff). In the areas already irrigated, vegetables are predominant, mainly potato, melon, watermelon, onion and cauliflower. Fruit trees are also grown, mainly citrus but also olive trees in Bas Cheliff. Due to strong demand for most fruit and vegetables in the country and the liberalization of the marketing system since 1982, farmers who grow irrigated crops currently obtain very high prices for most of their production (para. 2.09) and thus generate high revenues. Irrigated farming is consequently highly profitable. The net returns per hectare from irrigated vegetable production are high: they vary from US$2,000 for season tomato to US$12,000 for melons, and there is room for higher returns because current crop yields are low (para. 7.04) and farming techniques still inadequate. The use of improved seeds, fertilizers and pesticides are low, farming operations are not always undertaken on time due to delays in input distribution by some public marketing bureaus, farm machinery equipment is lacking, and technical staff is still lacking in most DAS in Bas Cheliff despite the increased technical staff at the DAS level in the country as whole since 1982 (para. 3.10). D. Water Demand and REsourtes 4.11 Water requirements at full development have been estimated for the climatic conditions prevailing in both subproject areas. Based on an average on-farm efficiency of 801 in Haut Cheliff and 701 in Bas Cheliff and on a conveyance distribution efficiency of 951 in Haut Cheliff (sprinkler irrigation system) and 801 in Bas Cheliff (canal and low-pressure pipe irrigation system), the annual diversion water requirements are estimated at 7 400 m3/ha or 59 Mm3 in Haut Cheliff and 10,600 m3/ha (including 1,560 m for leaching) or 53 Mm3 in Bas Cheliff. 4.12 The water resources development potential in the two subproject areas has been estimated by the studies undertaken under the Cheliff Water Master Plan. Water for the Haut Cheliff area would be pumped from the Cheliff river after releases from the Cheliff upstream dams which would also irrigate two upstream perimeters. The upstream dams include the Ghrib dam (annual 29931  -16- regulated flow, RF = 82 Mm3, constrsicted in 1936), the Deurdeur (RF = 44 Mm ) and the Harreza (RF 24 Mm3) dams commissioned in 1985 and the Sidi Mohamed Ben Taiba dam (RF a 56 Mm3) planned to be constructed in 1988-92 (see map). Preliminary designs of this dam have been completed under the Master Plan and detailed designs of this dam are currently underway. The two upstream perimeters are 16,300 ha in Khemis Meliana completed in 1984 and 800 ha along the Deurdeur river planned to be constructed in 1988/89. Before the Sidi Mohamed Ben Taiba dam is constructed, the demand for water in the subproject area would be met by releases from the currently existing dams after irrigation of the Khemis Meliana scheme. Starting in 1994, water regulated in the existing dams would become insufficient to meet the requirements of all Haut Cheliff perimeters (including the subproject area) and the Sidi Mohamed Ben Taiba dam is planned to be commissioned by then. In order to ensure that there are adequate water supplies for the Project in 1994 and beyond, Government has confirmed that funds for the construction of the Sidi Mohamed Ben Taiba dam as well as for the project works have been firmly scheduled in the Development Plan starting in 1987. In addition, the Government has assured that it would cause construction of the dam to be completed before September 30, 1993. Furthermore, it was agreed at negotiations that after December 31, 1988 no further disbursements would be made against Project infrastructure and equipment in Haut Cheliff unless the tender documents had been issued for the construction of the Sidi Mohamed Ben Taiba dam (para. 5.20). Water for the Bas Cheliff suborolect area would originate from unregulated flows of the Cheliff river diverted at the existing Boukader diversion weir rehabilitated under the Bas Cheliff Irrigation Project (1802-AL). In winter, part of the diverted flows would be used for irrigation, the other part is stored in the existing Merja Sidi Abed storage reservoir (see map). This reservoir has a capacity of 57 Mm3 and would provide a regulated volume of 48 Nm' per year or 901 of the irrigation requirements of the subproject area. Water stored in the reservoir would be delivered for irrigation during the low rainfall season (April to October) with the balance of the requirements coming from direct river diversion in the winter. Because of the importance of the upstream structures to the success of the Project, agreement was obtained at negotiations that Government would ensure routine safety inspection of all dams upstream of both Haut and Bas Cheliff subproject araas. 4.13 At full development, water balance in the Haut Cheliff and the Bas Cheliff subproject areas would be as follows: 2 9 9 3 E  -17- WATER BALANCE IN THE SUBPROJECT AREAS Subproject Requirements Resources Area Area (ha) Mm Dams Mm Haut Cheliff 8,000 59 Sidi Ben Taiba Reservoir 56 /a Unregulated Water 3 Total 59 Bas Cheliff 5,000 53 Nerja Sidi Abed Reservoir 48 /I Unregulated Water 5 Total 53 I. Representing volume of annual regulated flow with a return probability of 801. E. Agricultural Support Servkies andMtitutios 4.14 The wholesale supply of inputs and agricultural machinery in the Project area, as in the rest of Algeria, is the responsibility of specialized Government agencies (Offices). At a local lovel, distribution is mainly handled by specialized cooperatives although private sector traders are also licensed to sell these products. 4.15 Seeds, Plants and Seedlings. In the project area a certain number of DAS are contracted by the Coop6ratives des C6r6ales et des L6gumes Secs (CCLS) in Ain Defla and Relizane to multiply certified cereals and pulse seeds. The CCLS then collect, select, condition, and store the seeds. For vegetable seed production, the Union des Coop6ratives de Semences Maraicheres (UNICOSAM) organizes local production, although most seeds for potatoes and other vegetables are imported by the Office National des Approvisionnements et Services Agricoles (ONAPSA). At the local level, the Cooperatives Agricoles Specialis6es en Approvisionnements (CASSAP) in Ain Defla and Relizane handle the collection and distribution of vegetable seeds through their network of agents. Research Institutes which specialixe in various crops are responsible for overseeing the selection, testing, and adaptive trials of the appropriate varieties and in the case of cereals, for the seed certification as well. Timely delivery of adequate quantities of seed has not been a problem in the project area, although the poor quality of the vegetable seeds, which affects farmers throughout the country, is an issue and is being addressed on a national level under the current National Development Plan. 2999t  -18- 4.16 Fertilixers. Plant Protection Chemicalss Animal Feed and Veterinary Supplies. At the national level, ONAPSA is responsible for the distribution of all fertilizers and plant protection chemicals domestically produced and imported and for the import of pure-bred heifers. At a local level, the CASSAP and their agents and depots distribute these inputs. Animal feed and veterinary supplies are the responsibility of the Office National des Aliments du B6tail (ONAB) at a national level and the Coop6ratives de Services Specialisees en Elevage (COOPSSEL) at a local level. While the DAS in the project area have had no serious interruptions in the timely supply of needed inputs, the private farms, as elsewhere in the country, continue to have limited access to inputs. The situation Is improving, however, as the Government has been making an increased effort to supply the private sector with inputs and, in the past five years, an increased portion of fertilizer has gone to the private sector. In order to ensure that adequate attention is given by input agencies to the needs of the project area, the Government has agreed that it would cause input deliveries to the Project participants to be timely and in adequate quantities to meet demand. 4.17 Agricultural Eauipment and Machinery Services. The Office National du Mat6riel Agricole (ONAMA) has the monopoly on the distribution of all agricultural equipment, its after-sales service, repair work and supply of spare parts. The project area is served by the southern regional headquarters of this office at Ain Defla, and two agents in Relizane. As of 1986, several private agents have also been licensed to sell spare parta and do some repair work. Although the supply of agricultural equipment does not fully meet demand in the project area, Government has made progress in providing greater access over the years to the private sector. Agnidtural Credit 4.18 Since 1982 when the BADR was created from the Banque Nationale d'Alg6rie, all credit to the agricultural and rural sector has been channeled through the BADR. The BADR had, as of mid-1986, 31 regional offices at the provincial level and about 200 branch offices. In the project area, agricultural credit is handled by a regional office and about 15 branch offices and credit delivery to farmers has greatly expanded in recent years. 4.19 Lending to the DAS has, in the past, been virtually automatic, as the loans were implicitly guaranteed by Government. However, for DAS consistently making operating losses and unable to repay their loans, Government has now introduced financial discipline by allowing BADR to refuse credit to uncreditworthy clients. Lending to the private sector has certain constraints which involve problems of guarantees for long-term loans and reaching adequate numbers of small-scale farmers. Nevertheless, impressive efforts have been made to reach the private sector in the project area, including establishing mobile credit units accompanied by input distribution agents and since 1982 the number of private farmers receiving short-term credit in the two provinces of the project area increased from 324 in 1982 to about 3,500 in 1985. The issues of credit delivery are nationwide and are being discussed with Government under a separate operation. 29SIS  -19- 4.20 As of October 1, 1986, the terms of lending are aa follows: TERMS OF LENDING Repayment Period Grace Period Interest Rate Short-Term 12 - 14 months - 4.5 - 7.0% Medium-Term 7 years 0 - 2 years 4.0 - 7.0% Long-Term 8 - 12 years 0 - 4 years 3.0 - 6.02 The loans to the DAS are financed at 100% of the investment costs, while to the private sector the financing varies from 60 to 801. Extension ad Research 4.21 Extension. Extension is under the auspices of the Direction de l'agriculture et de la p$che de Wilaya (DAP) and is the responsibility of the Secteurs de d6veloppement agricole (SDA) for the DAS and of the D6l6gation agricole de Daira (DAD) for the private farmers. The SDA are responsible for: (a) giving technical and managerial advice on carrying out the investment and production plans; (b) serving as liaisons between research findings and DAS cropping activities; and (c) providing statistics on the production plans, input and equipment requirements, and financing plans of the DAS with the cooperatives and Offices and the credit committee". In the provinces of the project area four SDA cover a total of 98 DAS in Ain Defla and 2 SDA supervise 48 DAS in Relizane. Each SDA is staffed by three or four technical graduates specializing in different aspects of DAS production and management, and four or five technical assistants. In addition, an effort has been made to staff the DAS with technicians and competent mana ers, although satisfactory technical competence is still lacking in many DAS. In Haut Cheliff, the eight DAB in the subprosect area are well served by the SDA in Amn Defla. The total techeical staffing available is adequate, the relationship between the SDA staff and DAS staff seems good, and the SDA complement the technical deficiencies of the DAS and are active in the day to day activities of the DAS. In the Bas Pheliff subproject area, the SDA are not so well staffed, and the technical competence of both the SDA and the DAS is inadequate, which may partially explain the poor performance of these DAS, although the severe drought of the past four years has been the major factor. The Government plans to ensure that the SDA are strengthened to cover the 1/ The credit committee involves representatives of BADR, DAP and the provincial government; its job is to coordinate demand for credit with availability of inputs and equipment. 29933  -20- needs of the Project by recruitment of additional local staff and selected technical assistance (para. 5.07). 4.22 The DAD responsible for all extension activities suffer from inadequate staff and means. As a result, they limit their work to gathering information on the demand for inputs and equipment and put together agricultural statistics. In the project area, the DAD in Haut Cheliff has an agricultural technician and an agent at the provincial level and one or several technicians in each commune while in Bas Cheliff not all communes even have a technician. The ratio of technicians to private farmers in the project area varies from 1 to 2,000 to 1 to, 10,000 and is clearly inadequate to provide adequate assistance either for extension activities or in drawing up the important farm plans to qualify farmers for access to inputs and equipment. The Project would provide for recruitment of more qualified 8 aff at the DAD level (para. 5.07). 4.23 Research. Specialized research institutes are responsible for research and about 60 research stations are scattered throughout the country. In the project area, two research stations exist, one at Khemis Meliana now specializing in industrial crops and one at Remadena working on improvement of farming techniques under irrigation and on the improvement of saline soils. The industrial crops station has produced some potentially useful results, but most have been on crops that have proved uninteresting (results on sunflower and safflower have been disappointing and work on sugar beet and soya has been stopped). The research station at Hemadena is understaffed and research activities are minimal. SDA staff have also begun to do their own experimental work on cereal varieties and pulses because they feel that insufficient work on these crops is done locally. In addition, in 1983 a DAS of 520 ha in Haut Cheliff was converted into a pilot/demonstration farm involving a range of crops and a small herd of cattle. Demonstrations have been held for DAS farmers on the use of farm equipment (seed drills, tractors). Research country-wide suffers from dispersal of effort, under-staffing, and lack of organization; research in the project area reflects these weaknesses. While current research results available are adequate for the early years of project development, improvements will be required in the future and the Government is currently reviewing options for reorganizing and strengthening the research system under its current National Development Plan. V. THE PROJECT A. Ratioale for Bak Involvement and Prowe