Turkey - Second Agricultural Extension and Applied Research Project

Document of The World Bank FOR OFFICIAL USE ONLY Z7A/ 3 / 7 7 Report No. P-5184-TU MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$63.0 MILLION TO THE GOVERNMENT OF TURKEY FOR A SECOND AGRICULTURAL EXTENSION AND APPLIED RESEARCH PROJECT FEBRUARY 22, 1990 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 Ba,,k authorization.  CURRENCY EOUIVALENTS (May 1989) US$1 - Turkish Lira (TL)2,100 TLI = US$0.0005 TLl,000,000 = US$476 WEIGHTS AND MEASURES (Metric System) Metric Unit British/US Equivalent 1 millimeter (mm) 0.039 inch (in) 1 meter (m) 30.37 inches (in) 1 kilometer (km) 0.62 miles (m) 1 hectare (ha) 2.47 acres (ac) 1 square kilometer (km2) 0.386 square miles (sq.mi) 1 liter (1) 0.264 US gallons (US gal) 1 kilogram (kg) 2.205 pounds (lbs) 1 metric ton (m ton) 2205 pounds (lbs) ABBREVIATIONS AEARP - Agricultural Extension and Applied Research Project (Ln. 2405-1U) CDRS - General Directorate of Rural Services GOT - Government of Turkey MAFRA - Ministry of Agriculture, Forestry and Rural Affairs FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY TURKEY SECOND AGRICULTURAL EXTENSION AND APPLIED RESEARCH PROJECT LOAN AND PROJECT SUMMARY Borrower: Government of Turkey Beneficiary: Ministry of Agriculture, ForestLy and Rural Affairs (MAFRA) Amount: US$63.0 million equivalent Terms: Seventeen years, including a five-year grace period, at the Bank's standard variable interest rate Financing Plan: GOT US$82.4 million IBRD US063.0 million Total USS145.4 million Economic Rate of Return: Not applicable Staff Appraisal Report: Report No. 8192-TU IBRD 22041 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its cointents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMYNDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TURKEY FOR A SECOND AGRICULTURAL EXTENSION AND APPLIED RESEARCH PROJECT 1. The following memorandum and recommenda.:ion on a proposed loan to the Republic of Turkey for US$63.0 million equivalent is submitted for approval. The proposed loan would have a term of 17 years, including a five- year grace period, and the Bank's standard variable interest rate, and would help finance a Second Agricultural Extension and Applied Research Project. 2. Background. Turkish agriculture's share of total GDP has declined from 34% in 19C5 to about 17% in 1988 due mainly to rapid industrialization. Nevertheless it still generates over 20% of export earnings while providinv about 50% of civilian employment. While official statistics show agricultural GDP growth averaging 3.1% per year during 1980-1987, opportunities to increase income and exports of the sector have not been fully exploited. Thus, agric,ilture has managed to keep pace with population growth, but, crop yield growth rates are declining, especially for wheat and barley. Such continued declines could clearly affect Turkey's competitiveness in the production of various agricultural commodities and reduce its ability to exploit its present comparative advantage in producing these commodities. Inadequate farmer technical know-how has been noted particularly as a contributing factor to limiting the benefits from completed irrigation projects, where farmers need to adopt new farming techniques and revised cropping patterns to take full advantage of water availability. As the Government of Turkey (GOT) has increased its irrigated area by 240,000 ha over the last five years, and proposes to increase it by about a further 675,000 ha over the next five to eight years, it is most important that farmers adopt cropping practices and patterns which maximize the returns from these investments. Turkey's livestock industry, which contributes about 33% of total Agricultural Gross Domestic Product, is characterized by low productivity with milk yields and beef carcass weights considerably below those of East European countries of similar income levels. Increasing population densities and intensity of land use have considerably degraeed Turkey's agricultural resource base. Cropping of steep slopes, excessive grazing of natural pastures and overcutting of forests has damaged soil resources and led to massive erosion. Excessive use of fertilizers and pesticides has polluted water supplies and contaminated food production. Future productivity gains will become increasingly dependent on improved technical support services such as applied research, extension, veterinary and plant protection to boost yields per unit area. Improved extension and research are also necessary to formulate and implement sustainable solutions to reducing and eventually reversing the considerable degradation of Turkey's agricultural resource base. 3. In 1984, under the Agricultural Extension and Applied Research Project (AEARP) (Loan 2405-TU), GOT initiated in 18 provinces (out of 71) its progrem for upgrading provincial extension services nationwide. This project would be the second phase of the program and would introduce improved extension services to an additional 19 provinces. Despite a slow start because of a major reorganization in MAFRA during 1984 to 1986, AEARP is having a major impact in improving production methods and farmer knowledge of improved technology.  a 2 - 4. Rtionalg for Bank l.olvemt, The project forms an integral part of the Bank'" agricultural sector development strategy and expandg the ongoing program of Ammistance to agricultural extension and othe'r eochnioal supDort services. BAsed in part upon the succeos of the improved extension methodology adopted under the Corum-Cankiri Rural Development Project (Loan 1130.TU), GOT decided to adopt similar iiothodology on a phased basin nationwide, starting with 18 provinces under AEARP. In the Bank's experionce upgrading extension services taken considerable time, and up to 15 years of financial, technical and supervisory support may be required. Given the alose collaboration between GOT and the Bank in the design of improvements in extension methodology, continued Bank asisteance is desirable to support and eventually help bring to fruition the institutional changes required so that the extension servicea can effectively assist farmers in upgrading their technology throtughout the country. 5, Prolect Oblectives. The project's objectives are to: (a) foster increased productivity and agricul.tural incomes in the project area by improving the flow of information concerning their needs and problems from farmers to MAFRA's extension/research services, and the transmission of improved, appropriate technology which is economically and environmentally sustainable through the extension services to farmers; (b) contributo to institution building and strengthening of MAYRA's extension/research services, including hiring extension workers to meet the needs of women engaged in agriculture; and (c) test on a pilot basis use of mobile veterinary clinics to improve animal heaith services. 6. Prolect Descriptio.n The project would strengthen the extension services in 19 provinces, support 14 research institutes which would backstop the project area extension services, initiate pilot programs to train women engaged in agriculture and introduce mobile veterinary clinics to improve the availability of animal health services in the villages. To improve extension services and initiate the pilot training program for women, the project would provide: (a) staff houuing, offices and training halls in the villages and county towns to foster increased personal contact between extension staff and farmers; (b) vehicles and motorcycles, audio-visual, office, demonstration and pest surveillance equipment, and scientific books and journals to mobilize extension staff and assist them in their work; (c) additional agricultural engineers to provide expertise in agricultural economics and extension methodology/training, female extension workers to provide training to women farmers, and drivers to chauffeur the additional vehicles; (d) training (overseas and local) and technical assistance for extension staff, farmer study tours, and annual funds for incremental staff salaries and allowances, vehicle and equipment operation and maintenance, and new construction upkeep. To support the research institutes the project would provide:  - 3 - (a) training facilities and minor renovations to increase the institutes' training capabilities; (b) vehicles, and audio-visual, office, laboratory and field equipment plus scientific books and journals; and (c) additional research specialists, overseas and local training !or research staff, and annual funds for incremental staff salaries and allowances, vehicle and equipment operation (including drivers) and maintenance, and new construction upkeep. To initiate the pilot program to improve the availability of animal health services in the villages, the project would provide and suitably equip vehicles to be used as mobile veterinary clinics and provide veterinary supplies, additional drivers and annual funds for operating and maintenance costs. The project would also provide funds to prepare the next phase of GOT's program to upgrade provincial extension services. 7. During implementation the project would develop strong linkages between extension, research and farmers; formulate responses to the needs of homogeneous categories of farmers; and monitor farmers' uptake and reactions to extension recommendations. Research-based recommindations communicated to the farmers through the extension service would also help reduce the degradation of Turkey's environment and agricultural resources. The project, to be carried out over seven years, has an estimated total cost of US$145.4 million equivalent, with a foreign exchange component of US$75.1 million (52%). The Bank loan of US$63 million would finance 43% of project costs, or 84% of foreign exchange costs. Schedule A shows a breakdown of costs and the financing plan, while Schedule B shows amounts and methods of procurement and of disbursements, and the disbursement schedule. Schedules C and D respectively, give a timetable of key project processing events and the status of Bank Group operations in Turkey. A map is also attached, as well as the Staff Appraisal Report, No. 8192-TU dated February 22, 1990. 8. Agreed Actions. At negotiations agreement was reached with GOT on the following: (a) MAFRA would engage internationally recruited consultants to assist in preparing the next phase of GOT's program to upgrade provincial extension services; (b) MAFRA would engage local economic institutes or agricultural universities to evaluate the project's long-term impact; (d) by October 31, 1990, MAFRA's General Directorate of Rural Services (GDRS) would appoint a full-time architect engineer to assist in supervising the civil works which GDRS staff would visit regularly; (d) by October 31, 199 , for each region in the project area, MAFRA would establish a Regional Coordinating Committee; (e) MAFRA and the Bank would jointly assess project 4mfiplementation towards the end of the project's first two implementation years; and (g) MAFRA and the Bank wouid jointly undertake a mid-term review of the project some three and a half years after the start of project implementation. The signing of contracts between MAFRA and consultant firms for the supply of technical assistance to help implement the project including providing training services would be a condition of disbursement exceeding $5.0 million equivalent for vehicles, equipment, and civil works (including $4.0 million from the Special Account).  - 4 - 9. Aenefits. The project would upgrade and strengthen the provincial extension senrice's capabilities to diagnose farmers' productivity problems and to extend improved, appropriate technology to solve them. This would result in: (a) increased crop and livestock production and improved utilization of irrigation investments; (b) improved quality and health of crops and livestock; (c) expanded agricultural exports, especially from Mediterranean provinces; and (d) reduced spraying costs in cotton and horticultural crops. The project would emphasize economically and environmentally sustainable technology which would help to renew and preserve Turkey's agricultural resource base, and reduce contamination of food and pollution of water. It would also evaluate methods of training women in improved methods of agricultural production which would eventually lead to larger programs in this important area and contribute considerably to productivity increases. 10. Risks. Main risks include farmers possibly not adopting improved technology, budgetary shortfalls, inadequate training, slow vehicle procurement and civil works construction, and ineffective project management. Diagnostic studies should result in a better appreciation of farmers' needs and problems so that the research/extension recommendations are more readily acceptable to them. Funding constraints would be lessened by limiting new staff recruitment and, through detailed extension program planning, promoting a more efficient utilization of available staff. A skillgap analysis should result in the designing of more suitable training programs. Early preparation of bidding documents should speed procurement. Project manEgement is to be strengthened by appropriate staff training, supplemented by consultants, and coordination committees which would assist project management. 11. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Attachments Washington, D.C. February 22, 1990 By Ernest Stern  19HEDULL A BROND AGRICULTURL MEXTNSION aNb APPLIED RESEARCH PRgEC EstimAted goasa and F'inancing Plan Estimated CQts A Lal Tsnotal *--..* (US$ million) -. . Extension 47.9 48.7 96.6 Research .8 .0 Q Total Baseline Costs 51.7 55.7 107.4 Physical Contingencies 6.7 6.7 13.4 Price Contingencies 11.9 12.7 24.6 Total Project -Cost .LL LA Includes US$3.1 million taxes and duties. Einancing P^n LROAI ForeZign Total -(--... (US$ million--...... GOT 70.3 12.1 82.4 IBRD - 63.0 63.0 Total 70.3 75.1 145.4  SCHEDULE B Page 1 TURKEY SECOND AGRICULTURAL EXTENSION AND APPLIED RESEARCH PROJECT Procurement Metized and Disbursements (US$ millior) /a Procurement Method Total Proiect Element ICB LCB Other NA / Cost Civil Works - 87.5 - - 87.5 (21.9) (21.9) Vehicles 10.5 - - - 10.5 (9.5) (9.5) Machinery, Equipment, 3.8 - 2.3 - 6.1 and books (3.4) (1.9) (5.3) MB U .1... __- .. I f - 1 . _ .S* WL. L.... ^ S. - Overseas Training - - 14.5 - 14.5 (14.5) (14.5) Local Training - - 0.8 - 0.8 Technical Assistance - - 1.3 - 1.3 (1.3) (1.3) Incremental Salaries - - - 7.9 7.9 and allowances (4.0) (4.0) Other Incremental - - 15.6 - 15.6 Operating Costs (6.5)/c (6.5)/c Total 14.3 87.5 35.7 7.9 145.4 (12.9) (21.9) (24.2) (4.0) (63.0) /a Includes taxes, duties and contingencies. Figures in parentheses are the respective amounts the Bank loan would finance. /b Procurement procedures are not applicable. /c Bank finance limited to incremental operating costs for field trials, farmer demonstrations, and operation and maintenance of vehicles procured under the project.  9CHY,XILE Page 2 C