Annual sector review : agriculture and rural development FY91

ANNUAL SECTOR REVIEW AGRICULTURE AND RURAL DEVELOPMENT FY91 WORLD BANK SECTOR AND OPERATIONS POLICY STAFF AGRICULTURE AND RURAL DEVELOPMENT DEPARTMENT DECEMBER 1991 FOREWORD For the past two years the Annual Sector Review has examined the performance of the Bank's lending for agriculture and rural development in the context of a strategic framework of policies, technology and natural resource management. While continuing the same trend, this year's review pays additional attention to three cross-cutting issues ofparticular relevance to agricultural lending. Following the usual review of trends and patterns in lending and sector work, the second chapter examines the impat on poverty alleviation of the Bank's agriculture and rural development lending portfolio. The third chapter reviews the Bank's efforts in supporting the development and dissemination of agricultural technology. The discussion in Chapter 4 examines the economic rationale for private sector provision of agricultural research and expansion, seed multiplication and distribution, and livestock health services. Following these three chapters, performance during 1991 in nine subsectors is reviewed and presented in Annex I. It is assumed that most readers will be interested in only some of these assessments. The subsectoral reviews contain detailed evaluations and recommendations that wilt be useful to operational staff involved in the design of new projects or supervision of on-going ones. As in previous years, our decision to distribute this review widely within the Bank reflects our earnest hope that it will contribute to improvements in the perfor- mance of agricultural and rural development lending operations as well as policy work. This report is the result of individual contributions by staff of the AgricUture and Rural Development Department, including three short-term consultants - Steven Jaffee, Rene Dankerlin and Peter Gordon. Barry Yatman took responsibility for providing all the data from the Bank's Management Information System and Carol Best processed several successive drafts of the review. A wide range of Bank staff gave useful insights and comments on early versions. Once again, Joost Polak edited the report and set it for final printing. Shem Migot-Adholla coordinated the entire exercise and was in charge of its production. Michel Petit Director Agriculture and Rural Development Department CONTENTS SUMMARY AND RECOMMENDATIONS INTRODUCTION 1 CHAPTER 1: TRENDS AND PATTERNS 2 CHAPTER 2: THE POVERTY IMPACT OF BANK AGRICULTURAL 8 LENDING CHAPTER 3: AGRICULTURAL TECHNOLOGY 13 CHAPTER 4: PRIVATIZATION OF AGRICULTURAL SERVICES 16 ANNEX 1: SUBSECTORAL PERFORMANCE AND PROSPECTS AREA DEVELOPMENT 1 AGRICULTURAL AoUSTMENT LENDING 3 AGRICULTURAL CREDIT 6 FISHERIES 10 FORESTRY 12 IRRIGATION AND DRAINAGE LIVESTOCK PERENNIAL AND HORTICULTURAL CROPS 23 RESEARCH AND EXTENSION 25 ANNEX II: TABLES Summary and Recommendations he FY91 Annual Sector lion. Africa had the largest number and extension - in which the food Review examines agricul of projects (19), followed by Asia (17), production effect is less direct. ture and rural development LAC (7), and EMENA (4). The Bank's firRt agricultural in the context of the strategic framo- Three activities dominated project exclusively targeting women work of policies, technology, and agricultural operations, accounting was approved for Cote DIvoire, and naturalresourcemanagementsetout for 27 of the 47 projects and 70 per- 27 of the 47 FY91 projects had inter- in the previous year's review. The cent of lending. They were irrigation ventions that supported women. Bank's increased attention to policy and draiLage (10 projects totalling Thirty-eight projects were listed as reform and institution building as a 26.4 percent of lending), sector lend- having poverty alleviation compo- basis for improving agricultural per- ing(9projects and23percentofloans), nents. formance is illustrated by the near and area development (6 projects and doubling of policy-based sector 20 percent of loans). Perennial and Economic and Sector Work: FY91's lend ing's share of total agricultural tree crops projects fell from 5 in FY90 56 economic and sector reports con- lendiag, and the growing institution- to only 1 in FY91, and free-standing tinued the reorientation begun in building focus of both agricultural forestry projects declined from 8 last year's work. The need for gov- credit and irrigation lending. projects and a lending share of 14.7 ernmentatoleavemicromanagement The Bank's support for agri- percent in FY90 to only one project tomarkets and focus instead onmac- cultural technology improvementand and 0.5 percent of lending in FY91; roeconomic functions was a domi- transfer continues to increase, and this decline is partially due to reti- nant theme. Institutional reform, there is also increasing interest in cence in promoting projects while the more effective public investmentpro- crop diversification in many of the newpolicywasstillbeingdetermined. grams, trade liberalization, food se- countries that have benefited from Another striking change was the rise curity, and the environmental conse- the Green Revolution. The focus on in the share of free-standing agricul- quences of agricultural development technology and natural resource tural credit projects from 5.9 to 15.3 were major subjects in sector work. management strategies has come to- percent of total agricultural lending. Weaknesses in developing country getherinthegrowingrealizationthat The composition of projects technology transfer systems re- cropland and forest resources must changes somewhatifaubsectoralcom- emerged as an important theme in be protected - and sometimes reha- ponents are aggregated. This aggre- FY91. bilitated - if productivity is to be gation shows irrigation and drainage maintained. as the largest subsector, claiming Poverty Alleviation This realization has led to a 28.8 percent of agricultural lending; significant increase in attention to sector adjustment lending is the sec- The discussion on poverty natural resources management in ond most important activity, at 21.3 alleviation (Chapter 2) shows that Bank agricultural initiatives. While percent, followed by credit, at 17.2 adequate analysis of program objec- the Forest Policy Paper was perhaps percent. Most other shifts in the rela- tives is difficult and inexact. Data in the most important FY91 initiative tive siguificance of subsectoral com- theBank' Management Information in this field, staff appraisal reports in ponents remain marginal. The pre- System is unreliable, and staff time all sectors show increasing regard dominance of irrigation and drain- - used to monitor performance on for the resource base that underpins age reflects a new national and re- program objectives - often does not long-term agricultural production, gional approachtothis subsectorthat reflect the information in staff ap- and four-fifths of the FY91 agricul- concentrates on widespread institu- praisalreports. Giventhe importance tural projects had environmental or tion building and rehabilitation to the Bank attaches to these objec- natural resource managementobjec- improve efficiency and significant tives, the forthcoming Operational tives. irrigation and drainage components Directive on poverty alleviation inseveral area developmentprojects. should insist that appraisal reports Trends and Patterns Most agricultural lending include clear statements of project addressed the Bank's special empha- andprogram objectives- andthatthe FY91 lendingfor agriculture sis areas relevant to the rural popu- MIS and appraisal reports should and rural development totaled $3.7 lation, particularly natural resource concur. billion in 47 projects, 16.3 percent of management, food production and Banr/IDA lending. While this dollar security, poverty alleviation, and Technology Development and amount is the Wighest since FY88, women in development. While only Transfer agriculture continued its decade-long 17 projects listed food production as decline as a share in overall Bank anobjective,theverynarrowcriteria In spite of increased atten- operations. The number of agricul- used count only projects whose direct tion in recent years, much needs to ture projects fell from 56 in FY90, incrvmental effect on production has be done toward the goal of improving while average project size increased been estimated in appraisal reports, technology development and trans* from $68 million in FY90 to $79 mil- omitting projects - such as research fer (Chapter 3). Technology develop- 1991 Agriculture Sector Review I ment is still largely focused on staple vices, even where the private sector tify whether progress is being grains and the Green Revolution plays a leading role. Thus, a blanket made toward subsidy indepen- breakthroughs of the 1970s. Re- strategy for the privatization of agri- dence, and whether further subsi- sources and research agendas are, cultural services may not be appro- dies are justified. however, increasingly focusing on priate. The appropriate mix of public smallerfarmers in rainfed and mixed and private activities will vary at Q New technologies that cai cropping systems. The Bank has been different stages of economic develop- add greatly to the effectiveness c active in promoting this evolution, ment. While the public sector may watermanagementinirrigationpmj bothbysupportingnationalresearch have to take the lead in the early ecte need to be adapted, tested, an and extension systems, and through stages, this role can later change to applied in the developing countries. continued and growing support for regulation and support. New-style irrigation projects require the international agricultural re- significant increases in supervision search centers. It has also increased Subsectoral Recommendations if Bank staff are to be effective in its support for biotechnological inno- assisting them to be successful. vations. Several subsectoral recom- mendations have emerged from this El The techr'cal aspects Privatization of Agricultural review of agricultural and rural de- fisheries projects should be balancec Services velopment in FY91. Two of them in- by the economic and sectoral back volve major subsectors - agricul- ground work needed to place fisher- The discussion of Privatiz- tural credit and irrigation- inwhich ies initiatives within national macro- ation of Agricultural Services (Chap- the character of Bank interventions economic and social frameworks. ter 4) examines the economic ratio- is undergoing rapid change aimed at There should be less reliance on con- nale for public sector provision of improvingperformancethathasbeen sultants to carry out supervision, as agricultl*al research and extension, found wanting in recent years. The this often leads to overly technical ad seed production and distribution, and other two involve subsectors that hoc solutions that do not take advan- livestock health and production ser- have received perhaps too little at- tage of the Bank's growing institu- vices. While there is wide scope for tention in Bank operations - fisher- tional knowledge. As recommended private sector participation in these ies and livestock. in last year's Annual Sector Review, fields, there are also areas with little an inerease in fisheries specialists is attraction for profit-seeking firms. E Agricultural cedit badly needed. In some such cases, farmer associa- interventions should strive to tions, NGOs, andotherorganizations improve managerial systems and OLivestockinstitutionbuil can substitute for the public sector as skills to make financial institutions ing, applied research to generate anc service delivery agents. capable of performing in competi- test technology, and its dissemina. Externalities, scale econo- tive environments rather than tion through improvedextensionser- mies, or moral hazard problems indi- relying on subsidies and frequent vices need more attention. Design- cate the need for some form of public bailouts. Routine assessments of ing livestock systems that make a sector participation - or interven- the dependence of financial institu- positive contribution to the environ- tionthroughtaxes, subsidies, orregu- tion on subsidies should be used ment should be a major focus of the lations - in many agricultural ser- more often to evaluate and quan- research agenda. 1991 Agriculture Sector Review II IntrodUction ast year's Annual Sector Review projections for FY92 show a downward ofthelnternational Rice Research Institutt set three strategic directions for trend to l.72billiontons ofstaple grains- in the Philippines and has become an in- strengthenin the Bank's support a2.3percentdecline. Thisprojecteddrop creasingfactorinirrigationprojectdesign. for developing-country agriculture. First, is within the normal range of yearly The Bank has made significant it recognized that agriculture, like other variation and is not, in itself, worrisome, strides over the past year in bringing economic sectors, depends for its Thereissomeconcern,however, thatthree attention tonaturalresourcesmanagement performance on supportive policies and decades of yield gains under the Green into its agricultural initiatives. The institutions. Farmers, for exampie, will Revolution may be slowing: the annual promulgation of a Forestry Policy Paper not learn aboutnew production-increasing yield growth for rice in Asia over 1972-81 was perhaps the most importantsingle ini- technologies unless research institutious was 2.6 percent; this fell to 1.5 percent tiativeinthisfieldinFY91.Staff appraisal develop and adapt them - and effective over 1982-88. reports in all sectors, however, show extension services promote them. And The Bank in FY91 paid increased increasing regard for designing projects farmers will only increase production in attention to the sector lending that is the that protect - or rehabilitate - the economically sound directions if policies key to its policy reform dialogue with resources that underpin long-term governing prices - of both inputs and the borrowing member countries. The number agricultural production. products they grow - reflect real values of sector loans rose from 7 in FY90 to 9 in The strategic approach set out last as determined by market forces. FY91,andsectorlending'sshareinoverall year has, thus, proven a workable Secondly, the strategy recognized a agricultural lending rose from 13.6 to 23 framework for guiding the Bank's need to make more technology available percent. Of equal importance, institutional agricultural initiatives. Ayear's experience tomoredeveloping-countryfarmers.There and policy reform became a much more has also, however, brought to the fore are two issues here: developing technology important element in both agricultural tensions inherent in the strategy. Thus, and testing and adapting it to meet the credit and irrigation lending. Detailed proper pricing of inputs - particularly needs of different farming groups, and descriptions of Yol operations in these thosesubjecttowidepricevariations,such bringing thesenewtechnologieseffectively and other subsectors will be found in An- aspetroleum-basedfertilizers-willsomie- to farmers. nex I. times place them beyond the reach of The third aspect of the Bank's The goal of improving technology p ;r farmers and reduce their incentives agricultural strategy recognizes agri- development and transfer continues to L- -theinvestmentsneededtoincrease culture'sdependenceonanaturalresource prove elusive. As set out in Chapter 3, pro, activity. A strong argument that base that is in many places endangered by which looks at technology in greater detail, allowing the market to determine theprices poverty thatdrives nations and theirfarmers technology deve-lopm.nt is still largely of agricultural produce continues the to mine their soil and forest resources by focused on staple grains and on extending, adjustment process by allowing farmers to practices that maximize short-term consolidating, and maintaining the Green pass costs o-2 to consumers. In practice, production. It posits a broader approach to Revolution breakthroughs of the 1970s. however, market imperfections and other agriculture that bears in mind the long- Resources and research agendas are, constraints - combined with the highly term effects of agricultural initiatives - however, increasingly focusing onsmaller alsk-averseprofilesofsmall farmers-often and seeks to repair the damage already farmers and rainfed and mixed cropping result in their exclusion from the growth done to fields, forests, and watersheds. systems. process. Conservation policies that curtail This year*s review looks at the The Bank has been active in the access of the landless withoutoffering performanceoftheBankanditsborrowing promoting this evolution, both by remunerative alternatives also face member countries in terms of the policy, supporting nationalresearchandextension difficulties. Such situations, in turn, can technology, and natural resources triad. systems, and through continued and have negative implications for the third The review takes place in the context of a growing support for the international leg of the strategic triad: farmers who heartening year for world agricultural agricultural research centers. It has also cannotaffordmore productive technology production. But record staple grain increased its support for biotechnological will continue to use agronomic practices production of 1.77 billion tons in FY91, innovations, that tend to lead to natural resow.e almost 5 percent higher than in FY90,' is Theinteractionbetweentechnology degradation. a one-year phenomenon that masks a and natural resource protection is, also, These tensions are inevitable in a number of challenges to developing- taking on new importance: there is new strategic approach to a field as difficult country agriculture and the World Bank's evidence that the yield gains that have and varied as agriculture and rural attempts to assist it. August 1991 driven the Green Revolution may be developmenLTheinceeasedattentionbeing declining because soil andwaterresources given naturalresourcemanagementshows 'United Sbates Department of Agdoulture have been degraded by overintensive use. that the strategy is capable of evolving as data and projections This issueisnowprominentonthe agenda understanding of the sector's needs 1991 Agriculture Sector Review I deepens. If there is a lesson to be lea*ned 1),followed1-ymorethoroughdiscussions technology (Chapter 3), and privatization from the FY91 experience, it is that the of three cross-cutting issues: poverty of agricultural services (Chapter 4). technology leg of the s.rategic triad now alleviation efforts in the agriculture and Profiles of FY91 operations in nine needs more attention. The sections that rural development portfolio (Chapter 2), subsectors, and tables showing FY91 follow discuss the trends and patterns in the Bank's work to support the devel- performance are presented in Annexes I FY91 lending and sector analysis (Chapter opment and dissemination of agricultural and II. Chapter 1: Trends and Patterns he FY91 lending portfolio for had the largest number of projects opment. The relative ranking of the agriculture and rural devel (19), followed by Asia (17), LAC (7), other three regions is exected to opment totaled $3.71 billion and EMENA (4) (Table 1-2). Re- remain as in the recent -tst: Asia in 47 projects, or 16.3 percent of total flecting the small size and limited leading, followed by .AC r ' Bank/IDA lending forthe year. While absorption capacity of many EMENA. Following past patterns, this dollar amount is only marginally African economies, however, high proportions of lending in Asi. lower than the preceding two years, average project size, at $26.6 andLAC were accounted forby single it continues agriculture's decade-long million, was the smallest of the countries: China with 47.6 percent decline its share of Bank operations. four regions, and it ranked third in and Mexico with 56.1 percent, re- The number of agriculture projects total lending, at $504.9 million. spectively. fell from 56 in FY90 to 47, while Asia, where projects averaged average projeit size increased to $79 $120.2 million, led in lending with Subsectoral Lending Distribw million from the $74 million recorded a total of $2.04 billion. LAC was tion: The most significant feature in inFY89 andFY90's $68 million (Table second, with $941.5 million in aggregate lending during FY91 was TABLE 1-1: AGRICULTURE AND BANKqIDA LENDING, FY87.FY9. (n constant FY91 US$ millions and as percentage) FY87 FWs FY89 FYM0 Fre. FYWe4 AVe. Bank/lDA lending 20,408.8 21,356.3 22,950.3 21,497.02 2,885.5 25,660.7 Agricultural lending 3,383.7 4,993.2 3,748.7 3,7986 3,707.3 49867 Percent agriculture 166 234 16.3 17.7 16.3 194 tio of agriculture projects 59 58 S1 58 47 67 Average project size 57A 89.2 73.5 67.* 78.9 73A 1-1). The share of agriculture in Bank lending, althoughthe region recorded the continued dominance of three lendinriri is projected to drop again in the highest size at $134 million. The subsectors, accounting for 25 of the FY92, then rise to more than 20 per- four projects in EMENA averaged 47projectsand70percentofallBanir/ cent in each of the next three years - $54.2 million, and total lending for IDA funds for agriculture and rural thoughprojectionsfortheouteryears the region was $216.8 million. development. The dominant sectors of the project planning cycles are Projections for the next five were irrigation and drainage (10 often unreliable. Even these levels years indicate that the number of projectstotalling26.4percentof lend- remain significantly lower ian the projects in EMENA is expected to ing),sectorlending(9projecteand23 high share of 29.3 percent recorded doublebetweenFY92andFY96. This percent of loans), and area develop- in FY86. development will return the trend in ment (6 projects anc 20 percent of regional distribution of lending to loans) (Table 1-3). Notable changes Regional Lending Distribution the pattern of the past, with Africa from the previous year were the fall For the third year in a row, Africa continuing to have the most numer- of perennial and tree crops projects ous but smallest projects and receiv- from 5 in FY90 to only one in FY91, lUnless othewise noted, all figures are In ingoveral the smallest share oflend- and the decline of free-standing for- current FY91 dollars ing for agriculture and rural devel- estry projects from 8 and a lending 1991 Agriculture Sector Review 2 TABLE1-2: REGIONAL DISTRIBUTION OF FY91 AGRICULTURAL LENDING AFRICA ASIA EMENA LAC Fiscal Years 91 0246 91 9246 91 9246 91 92-96 Projects 19 21 17 21 4 11 7 13 ( 40 22 36 31 8 16 14 20 Lending ($Millions) 504.9 757.9 2,044.1 2,412.9 216.8 986.1 941.5 1,386.0 (%) 13.6 13.7 55.1 433 5.8 17.8 25A 25.0 Average Project Size (Millions) 26.6 35.1 120.2 113.8 54.2 87.8 134.5 101.9 share of 14.7 percent in FY90 to only ture of FY91 lendingemerges if these irrigation went in 10 freenstanding one project and 0.5 percent of total I subsectoraL components are aggre- projects,theBankalsofundedirriga- endi- in FY91. But the fall in lend- gated, as shown in the last column of tion and drainage components in i restry is significant even if it Table 1-3. This aggregation shows major area developmentprojects. The I that forestry components irrigation and drainage as the larg- bulk of the funds was allocated to W&C% .grater' 1 15 other projects est subsector, claiming 28.8 percent projects in Asia (82 percent) while anld ai. anvuom nt and natural re- of agricultural lending when irriga- Africa received the lowest (0.5 per- source adjuEtment t --ation. The tion components are isolated from cent). decline in forestry ler-c ing in FY91 ie other project costs. Sector lending is partly due to -reticence in putting the second most important activity, Agricultural Lending and the forward forestry projects while a new (21.3 perent) followed by agricul- Bank's Areas of Special Empha- forest sector policy for Fiank cpera- tvraleredit(17.2percent).Mostother sts: The bulk of Bank/IDA lending tions was being designe, The share shifts in the relative significance of forthe agriculture sectorduringFY91 of research and extens'-i declined subsectoral oomponents remain mar- wa directed as in previous years from 10 projects and 7.4 .ercant o! ginal. toward addressing the Bank's areas total lending to 6 projects ard 5.3 The large increase in lending of special emphasis within the rural percent of londing. Another striking for irrigation and drainage - from areas. The objectives with immedi- change between the two years was 20.2 percent on the same component ate relevance to agricultural lending the near tripling of the share of free- basis in FY90 - reflects a new na- are poverty reduction (which is dis- standing agricultural credit from 5.9 tional and regional approach to this cussed in detail in Chapter 2), food to 15.1 percent. subsector that concentrates on wide security, women in development, en- Many agricultural projects spread institution building and re- vironmental conservation and natu- have components in several subsec- habilitation to improve efficiency. ral resource management. tore, however, and a truer pic- While the greater part of funding for Seventeen of the FY91 agri- TABLE 14: SUBSECTORAL DISTRIBION OF LENING FY81FYM (In Percentages) FYIMU FYe$$o FYo by Average Average FV90 FY9 Components c .bmector Agrloltura credit 14.5 15.2 8.9 1ki 17.2 Agriculture sector loan 7.0 17A 13. 230 21.3 Area development 22.1 IA 18.2 204 11.7 Flohes. A .8 1.2 .6 .9 Folstry 3 5.2 14.7 . 2.6 frrigation & Drainage 28.8 21.0 195 26A 28A9 Livestock 1.2 3.8 04 1.1 1.8 Pereni Crops 6.6 3A 10. A .5 Reear&Extenlon 4.3 5.8A 7 53 8.7 hOUer 114 11.0 S4 76 A:. TOTAL 100.0 1000 100.0 100.0 100.0 1991 Agriculture Sector Review 3 TABLE 1.4: FOOD PRODUCTION ORIENTATION OF FY91 AGRICULTURAL LENDING No. With Food % With Food Total Lending for % Lending for Projects Orientation Orientation Lending Food Projects Food Projects AFRICA 19 6 31.6 504.9 103.6 20.5 ASIA 17 8 47.1 2,0441 897.$ 43.9 EMENA 4 2 50.0 216.8 116.8 53.9 LAC 7 1 14.3 941.5 75.0 8.0 TOTAL 47 17 36.2 3,707.3 1,193.0 32.2 culture and rural development The project will cover the first two the pattern of previous years, projects listed fooa production as an years of an anticipated ongoing pro- marked regional variations in e objective (Table 1-4). This shows a gram to strengthen support services ronmental objectives of agriculL. decline from the level of the three for rural women by improving and lending are probably a reflection previous years. As in FY90, the food targetingextension services andpro- greater focus in FY91 projects on production orientation continued to viding educational opportunities. large irrigationrehabilitationprojects be strongest in Asia and LAC where Agricultural lendinginFY91 in Asia and crop production projects almost half the agricultural projects continued to demonstrate the Bank's in fragile agro-ecological areas in the and lending funds were allocated to increasing concern with the impor- LAC region. this objective. tance of integrating environmental In FY91, 27 of 47 agricul- concerns and sound resource man- Economic and Sector Work tural projects focused on women as agement principles in project design. participants or benefiriaries (Table Thirty-seven of the FY91 agricul- A review of the 56 economic 1-5). This continues a rising trend tural projects had environmental or and sector reports issued in FY91 from 16percentof FY88projects, and natural resource management objec- shows a continuation of many of the marks the first year in which a ma- tives, accounting for 79 percent of themes in last year's sector work. jority ofprojects has included Women total Bank/IDA lending for this area Institutional reform, reduced gov- in Development components. The of special emphasis. ernment intervention, and liberal- largest number of projects focusing Environmental objectives ized trade are principal themes o: on WID objectives were in Africa, 15 were most prominent in Asia wk re many of the documents. The envi of 18 (83 percent). Asia and LAC they were incorporated in 16 of 17 ronment, irrigation and water man- showed significant declines in WID projects, followed by EMENA (three agement, and food security were the focus, while EMENA's three projects out of four projects) and LAC (five out subjects of a number of reports. As in with interventions designed to help of seven projects). Africa had the the past, there was a significant vol- women were the first recorded in lowest number of projects targeting ume of sector work in the Africa that region. natural resource management or region. The overall caliber of the pa- Africa also undertook the environmental conservation. As a pers is high - the regularization of Bank's first agricultural project tar- proportion of lending, Asia and LAC the review process has helped im* geted exclusively toward women, the showed greater commitment to envi- prove report quality and the empha- Women in Development Pilot Sup- ronmental concerns. The smallest sis on strategy and policy aspects port Project, under which $2.2 mil- share of environmental lending was rather than technical angles of the lion was lent to Cote D'Ivoire's Min- displayed in projects in the Africa issues has returned. However, re- istry fortheAdvancementofWomen. and EMENA regions. Following ports on the environment tend to be TABLE 1-5: AGRICULTURE PROJECTS WITH SPECIFIC WOMEN INDEVEIDPMENT ACTIONS FY88 FY89 FY90 FY91 With WID With WID With WID With WID Projects Components Projects Components Projects . Components Projects Components AFRICA 22 6(27%) 23 16(23) 20 9(4) 18 15(83) ASIA 14 2(14%) 12 3(26) is 10(71) 16 8(50) EMENA 10 1(10%) 14 3(21) 9 4(44) 5 1(20) LAC 10 0(00%) 4 0(0) 9 0(0) 8 3(38) TOTAL 56 9(16%) 53 22(42) 51 23(45) 47 27(57) From an October 1991 survey by the Women in Development Division, PHR, that did not Include all agrioultural prijcte. 1991 Agriculture Sector Review 4 TABLE 14: PROJECTS INVOLVING NATURAL RESOURCE MANAGEMENT. FORESTRY, AND THE ENVIRONMENT (millions of cwnt dollars) With Natumi Resources Total Lending for Natural FY Projects Components Lending Resources Projects AFRICA 87 25 18 (72.0%) 5192 419.7 (80.8) 88 22 12 (54.5) 562.3 36S.0 (65.1) 89 21 15(71A) 754.8 413.0 (54.7) 90 23 13 (56.5) 997A 276.1 (27.7) 91 19 13 (68A) 50...i 279.5 (55.4) ASIA 87 15 12 (80.0) 817.7 .50.7 (67.3) 88 15 11 (73.3) 1,9663 863.3 (43A) 89 11 7 (63.6) 1,162.0 490.4 (42.2) 90 13 11 (84.6) 1,203.7 888.7 (73.8) 91 17 16 (94.1) 2,044.1 1,980.1 (96.0) EMENA 87 5 5(100.0) 398A 398.4 (100.0) 88 10 9 (90.0) 560.5 530.5 (94.6) 89 15 7 (46.7) 1,411A 366.4 (26.0) 90 9 7 (77.8) 599.3 349.3 (58.3) 91 4 3 (75.0) 216.8 115.8 (53.9) LAC 87 14 11 (78.8) 1,195.0 757.0 (63.3) 88 9 4 (44A) 1,404.8 482.0 (34.3) 89 4 2 (50.0) 161.8 134.0 (82.8) 90 11 10 (90.9) 855.7 755.7 (88.3) 91 7 5 (71.4) 941.5 638.5 (57.2) TOTAL FY91 47 37(79.0) 3,7073 2,914.9 (79.0) ess distinguished than the pool in Owing to the steady erosion of the ESW Toplcs: The emphasis of the ieral. Many of the reports cover- Bank's technical complement FY91 sector work in many ways con- -Africannations duringFY91 were in agriculture, the increasing vol. tinues the reorientation begun in last early stage of the review pro ume of sector work has required pro- year's work. Institutional reform, the cessandthereforehavenotbenefited gresuively greater reliance on out- commercialization of farming and as much from exI austive comments side personnel to fill critical skills improved incentives, parastatal re- as the pool in general. shortages. Consultants, andstaff sec- form and divestiture in the process- onded by NGOs and other interna- ing industries and agricultural es- nds i nResour.e Input toAgri- tional organizations, more frequently tates, more effective public invest- ural Sector 'Vork: FY91 staff are hindling the additional work ment programs - especially in irriga- ut to agricultura sector work has while . t by higher-level staff has tion and water management, trade tinued the steady rise seen since incr /..much more slowly overthe liberalization, food securityprograms 92, a period in which annual input pe .,ade.2 Although the increas- - and the environmental conse- 'most doubled, even though the in . :of outside personnel i stor quences of agricultural development agricultural lending has de- work may cause knowledge gaps are major subjects in sector work in real terms. African divi- when strategies become operational that have been addressed in each of Lons again tendered significantly overall, the more thorough under- the past two years. input (49 percent) than those of standingofin-countryconditionsrep- Weaknesses in developing- (28 percent), LAC (16 percent) resented by the rise in total sector country technology transfer systems EMENA(8percent).Theincreas- work input appears to be positive. re-emerged as an important theme attention given to Africa by the in FY91. Subjects included means to k and the relatively difficult en- By FY91, Bank staff Input had declined to upgrade research, extension and ag- ronment for sector work confront* 48%, compared with 72% In FY82, though ricultural education systems located ng staff in many African countries tol Input byh4evel staffir-momm in the public sector, and to stimulate nay account for this higher input. oe ts e private sector involvement through 1991 Agriculture Sector Review 5 deregulatioTjointventures andother quently in the rcportn. h. wever, a cial welfarc programs targeted to- means. number of -fapors also emphasize ward the poor and undernourished. In FY91, the macroeconomic selective eypaniox, of government To supplement these programs, half interface of agricultural policies also roles to suppori and re inforce private the reports advocate boosting overall rezeived increased - and needed - initiative.Expawionisadvocatedfor economic growth as the best means emphasis. These issues were previ- research/extension programs, build- to alleviate food insecurity. Delineat- ously addreqqedthrough country eco- ing infrastructure and managing ing a sound food policy and utrategy, nomic studies. Several FY91 agricul- natural resoure-s and the environ- and better monitoring and evalua- tural sector reports made a small but ment. tion of food shortages and bottle- encouraging start in addressing the These topiec were especially necks are aloo urged. interaction of sectoral and macro- emphasized in ecetor work to sup- Environment - Eight reports economic policieo, particularly in re- port decollectivization and the mar- conce-.trateontheenvironment(Car- spect to financial sector reform, the ket liberalizftion in countries such ibbean nations, Hungary, Rwanda, prioritization of public sector expen- as China, Conit-z and Eastern Eu- Sri Lanka, Turkey, Uruguay and ditures3, industrial policies for pro- rope, and economies in Africa. Yugoslavia) while 10 other papers cessing and agricultural-inputs in- Irrigation and Water Man- address the subject. More than half dustries, more efficient intersectoral agement - Five reports cover irza- tiese documents urge creation of resource transfers (real and finan- tion and water management I protected areas to conserve natural cial), and general reform of national (Brazil, Mali, Venezuela, India, ascurces andbiodiversity, andmany trade regimes and foreign exchange Mexicoand Indonesia)andeightother call for better management of for- pricing/allocation policies. reports addrest; the fubject. Continu- ests. Expanding research, including The recommendations of ing the general theme, these reports monitoring and data collec',ion ac- these reports addressed the nature stress institutional reform with an tivities, to a primary recomnenda- and sequencing of agricultural re- emphasis on privatization or devolu- tion as is devising policies to address forms thatcould both ease the shocks tion to local autlorities and users. the regulations, enforcement, and on rural incomes and agricultural Many of the rports advise improv- economic incentives that are related supplies stemming from macroeco- ing operations and maintenance of to environmental management. The nomic stabilization policies, and con- existing systems before developing eight reports listed above all discuss tribute to structursi adjustment pro- new irrigation .chemes. water pollution, in many cases in gramswithlonger-termdevelopment Technology Transfer - Al- conjunction with impact analysis on obj6ctives.AdominantthemeinFY91 though only two reports center on fisheries. Soil erosion andhazardous ii that governments need to reduce research and extension (Mexico and waste disposal are major topics as is their roles in micromanaging econo- Venezuela), 15 other reports encour- the effect of industry and infrastruc- mies and focus instead on macroeco- age improved research, extension, ture construction. The repercussions nomic functions. These solutions are and technology transfer programs. of thE3se problems on agriculture are often suggested during discussions Restructuring institutions isthemost a principal focus of four reports (Tur- of other important topics, indicating popularrecommendation. Privatizing key, Uruguay, CARICOM nations that inefficient or misguided govern- or delegating authority, removing and Rwanda). ment institutions are seen as the root redundancies and increasing link- Environment papers are al- cause of many other development ages between institutions, integrat- most three times as likely to be de- problems. ing crop and livestock re, iarch and scriptive than the overall pool, but Institutional Reform, Privati- involving farmers are mentioned as are better than average in support- zation and Trade - Nearly 80 percent recommendations for reforming re- ing their own recommendations with of the sector work recommendL *sti- searC/extension institutions. Many reference to more rigorous work of tutional changes; in many cases in- reports also point out how much fund- other international agencies. creased emphasis on the private see- ing from all sources has slipped for tor and freer trade are included in these programs in the past decade Charmcter of Reports: As in previ- these changes. Recommendatic , to and, recommend an immediate and ous years Africa received the most reduce government ownership o. )n- substantial increase in funding. attention in FY91 (44 perent of re- trol in production and marketing Food Security - Four reports ports), followed by Latin America (23 functions, to decrease regulations and focus on food security issues (Mo- percent), Asia (21 percent) and the controls on trade, investment, irriga- rocco, Nigeria, Tanzania and Mexico) EMENA nations (12 percent). The tion and pricing, and to reduce or and two others provide food security atten+ion given Latin America has eliminate subsidies are made fre- recommendations. Like those papers incre ad since 1989 when itreceived that address subjects such as the the least coverage. In an organiza- environment and natural resource tional context, all levels of the Bank 'Aiming, In general to increase the management, research/extension have been involved in producing see- complementarity of public expenditures programs, and infrastructure devel- tor work - each color of report repre- through Inmproved Incentives for primary opment, these documents recommend sents a relatively equal share (White producers and the deregulation of a greater government role in most (27 percent), Yellow (27 percent), agricultural marketing and trade. cases by urging establishment of so- Green (27 percent), Gray (19 per- 1991 Agriculture Sector Review 6 cent)), indicating that sector work is ers may merely reflect the region's crisis; reassess its stance in China developing in a balanced fashion.d recovery in soetor work production. giventheunexpectedpacewithwhich that nearly half the Bank's agricul- Second, govern-outt in Aft ica ap- economic and sectoral reforms were tural sector work is reviewed by the pearto be lss inclined to follow Bank renewed in FY91; and try to address governments. advice, which could also inhibit the political de-2lopments and the reor- The scope of the reports is advancement of reports for thaL, re- dering of economic policies that has also well balanced - 35 percent of the gionthrough the review cycletogreen been occurring throughout Africa. reports focus on the agi.ulture see- and gray covers. The relative scar- The magnitude of these tor as a whole, 37 percent focus on a city of Bank-government interaction events simply could not be antici- specific subsector, while 29 percent in sectorwork reduces the number of pated when agricultural sector work survey issues bcyond the styict pur-, opportunities to forge a consensus on programs for FY91 were being deter- view of agriculture. Furthermore, the strategy and policy required for mined, while the Bank's need for nearly 90 percent of the reports em- successful implementation of lend- rapid informational updates required phasize strategy or policy aspects of ing operations in Africa. thatlessformalvehiclesbeemployed, agriculture, which is vital to main- On the opposite end of tha even if quality might suffer a bit. taining the sector and policy knowl- spectrum, green and gray covers com- Principal among these alternative edge necessary for future operations. pose 81 percent of Asia's FY91 sector sources were reviews of programs for The FY89 Annual Review lamented work. Most of the renorts assess na- - gricultural development andreform that a majority of reports --ithatyear tions in which lending operations that were carried out in conjunction emphasLedthetechnicaVtechnology have existed for some time. with previously unprogrammed aspects of agricultural issues rather The countries in question Country Economic Studies (Roma- than the strategy and policy angles. have interactac' .v ,1 the Bank for nia), quick though thorough reviews The balance of scope and the healthy longerperiods of Lime, which usually of options and cons-aints in agricul- strategy/policy emphasis of FY91 sec- provides for greater Bank-govern- ture (Poland), and participation by tor work will benefit future lending ment understanding. This mutual agricultural sector staff from the operations. familiarity helps explain why Asian Bank in reconnaissance studies that The regulariza'.ion of the re- governments are more likely to par- were carried out jointly by several view process for sector work has im- ticipate in sector work. international agencies (USSR). In proved the caliber of the reports. The reports produced by LAC addition. considerably more staff re- Report quality improves as higher andEMENAforthe mostpartmirror sources appear to have been allo- organizational levels become in- those of the general sector work pool. catedto informal studies than inpast volved.Theproportionofreportsthat The primary deviation from form is years (e.g. working papers on rural are analytical in character rises at that EMENA produced a larger pro- enterprises in China, agricultural each level of organizational involve- portion of environmental reports, technology in Romania, rural finan- ment (White 35 percent, Yellow 50 whiah are broader in scope and tend cial markets in several countries, percent, Green 71 percent and Gray to be less analytical. dedicated reviews of agro-processing 100 percent). The extent of quantita- In years past, the Bank's industries, and the construction of tive modeling also increases (White policy-based research was largely rural social safety nets). 21 percent, Yellow 21 percent, Green grounded in the regional offices' an- The Bank also executed a 50 percent and Gray 60 percent). nual programs of formal sector stud- number of sectoral studies in FY91 Finally, the degree to which reports ies. Though these still constitute the thatwere financed underUNDPand consider strategy and policy dimen- main vehicle for underpinning the bilateral trust funds. Through the sions also escalates with the level of Bank's policy dialogue in agriculture, Bank's small-grantfacility, workwas institutional review (White 71 per- their significance as a centeroiece commissioned on agricultural and cent, Yellow 86 percent and Green 86 declined appreciably in recent years. rural development topics by several percent), with Gray cover reports This decline in the relstive developing-countryandinternational either exhibiting a strategy/policy contribution of formal sector studies NGOs. At the level of cross-country orientation (60 percent) or present- became quite evident in FY91, when investigations, the work program in ing the best of both worlds - signifi- the Bank had to assess quickly the PRE was enhanced considerably in cant discussion of technical issues impact of renewed insecurity in the FY91 throughthe start-upofreviews within an overall strategy and policy Middle East on the increasingly en- of privatization of agro-technology orientation (30 percent). ergy-dependent agricultural devel- services, the enhanced development The FY91 cohort of reports opment programs of its clientele. At of constructs to model and forecast exhibits variation among regions. the same time, the Bank had to de- trends in international agricultural Africa produced twice as many white vise operational programs in Central trade, and a multi-country survey of and yellow reports as it did green and and Eastern Europe, where events land reform policies in Central and gray. Sector work production in Af- continue to follow unexpected paths; Eastern Europe. As results become rica was hardest hit by the Bank's address major economic reforms in available, future Annual Reviews reorganization, disrupting ongoing Venezuela, Peru and the Southern mayhavetobeexpandedtohighlight work and postponing new starts. The Cone countries; adapt to the exigen- the contribution of these several ad- current glut of white and yellow cov. cies of India's financial and economic ditional information sources. 1991 Agriculture Sector Review 7 Chapter 2: The Poverty Impact Of Bank Agricultural Lending overty reduction has been a flects the share of staff time devoted ally more complex and time-consum- major development objective to its preparation. ing than working with established of the Bank since the early While this monitoring sys- groups and institutions. Because c 1970s, although poverty alleviation tem may seem straightforward, it is these anomalies, the discussion Ex strategies have varied in scope and .ot. In at least three projects - one low is more descriptive than ana- content as international conditions iited in the MIS as "core poverty" lytic. and priorities have changed. A major and the others as 'poverty related,* problem encountered in analyzing the word 'poverty" never appears in Emerging Trends and the poverty orientation of Bank lend- the ttaff appraisal reports, nor is Patterns ing in the agricultural sector is a thereanydescriptionofatargetgroup monitoring system that i% inherently of poor beneficiaries. In the 'core Table 2-1 presents ave- unclear - and in constant flux. The poverty" project only 10 percent of annualpovertyrelatedlendingB Bank has, over the years, fluctuated staffpreparationtimewasdevotedto wide and in agriculture over between quantitative and qualita- poverty alleviation. The two "pov- 89, and for FY90 and FY91. It tive measurements of the poverty erty related"projects listed 50 and 40 be interpretedcautiously; the pro, impact of its lending portfolio. At percent of staff time as poverty re- citedareallthoselistedintheM] present, projects and programs are lated - though the 40 percent figure either targeting poverty or pover categorized by progmm objectives, was reduced by half in a later MIS related. The dollar figures an one of which is poverty alleviation. A entry recorded after Board approval total amounts lent for those pro. project is termed a "core" or "tar- of the project. Conversely, several there is no way of disaggregai geted"poverty project if poverty alle- projects that list no poverty objective those portions that directly targe viation is listed in the MIS as its in the MIS clearly show a poverty oraffectedpovertygroups. Given primary objective. Targeted - or core focus in staff appraisal reports. above caveats, Table 2-1 should - projects are expected to include isolating even the potential beconstruedtodemonstratethatf specific mechanisms for identifying -overty impact of projects faces still percent of FY91 Bank lending I and reaching the poor, or the partici- otherproblems. Unless the appraisal agriculture and rural developmen pation of the poor in the project must report specifically discusses target was directed toward poverty allevia exceed the countrywide incidence of populations and the project amounts tion. Assuming consistency across poverty. Projects are"povertyrelated" and components directed toward the Bank, however, there is a stror if poverty alleviation is one of their them it is almost impossible to break implication that lending for agricu secondary objectives. Up to nine ob- out poverty targeting - or assess suc- ture is more than twice as pover jectivc - are allowed under the MIS ce- in meeting targets. Staff time is oriented as the Bank average acros system, and each objective is assigned not a trustworthy proxy; designing all three time periods. a weight between 0 and 100 that re- initiatives to assist the poor is usu- Table 2-2 presents a second TABLE 2-1: BANWIDE AND AGRICULTURAL POVERTY LENDING (endling In bllions of constant FY91 dolr) Pfery % Poverty Poverty % Po,e:' Projects Related Related Lending Related Reated BANK AS A WHOLE FY8S-89 Avg. 239 72 30.1 20 6.3 26.0 FY90 237 so 37. 215 7,' 32. FY91 2s 121 48. 26* 11.6 43.3 Aamcutmrne FY85-89 Avg. 60 . 57 4.5 2.5 58 FY90 56 34 60.7 3.7 2.5 67.5 FY91 47 3 So.3 3T 3.3 86.2 1991 Agriculture Sector Review 8 gion with the most severe poverty TABLE 2-2: PERCENTAGE OF STAFF TIME DEVOTEDTO POVERTY ALLEVIATION problems. Total SWfweeks % Stafume Poverty Lending by Staffweeks Spent on Poverty Spent on Pove"y Subsectors ANK AS A WHOLE Area Development: Four of the six FY91 projects classified as 85-89 Avg. 10,738.0 1,019.7 9.5 primarily area development projects - 10,472.9 1,399.9 13A used quantitative indicators to de. Y91 12,242A 1,89.5 153 fine poverty targetgroupsbyspecify- GRICULTURE SECTOR ing either the income level or the number of the poor to be targeted. 85-89 Avg. 2,686.8 6. 23.0 This helps define target groups more 2,741.8 762.2 27.8 clearly and prevent leakage. Because Y91 2,331.6 7186 30.a of the generally broad scope of area development projects, quantitative indicators also sharpen project focus, and provide criteria for monitoring performance during implementation way of looking at the Bank's poverty tion objectives. There were 25 strue* and its subsequent impact. effort in agriculture throughthepro- tural adjustment loane/credits con- have explicit components aimed at portion of staff time devoted to the taining agricultural components, 14 increasing the incomes of the rural objective of poverty alleviation. It is of which reported a poverty reduc- underemployedorlandless. The Mid* :ased on an aggregation of monthly tion objective in the MIS. The ap- Yangtze Agricultural Development imesheets on which staff are re- praisal reports for nine of the 10 Project ($64 million IDA) is devoted uired to divide their work by pro- agriculture projects and programs largely to planting fruit trees to cre- ram objectives. There are nine pro- that do not list poverty-reduction atejobopportunitiesfor 130,000fami- ,ram objectives, ranging from pov- objectives describe elements that lies in three of China's poorest prov- ,rty alleviation to public sector man- seem directedtowardalleviatingpov- ines. The Henan Agricultural Do- agement. The Bank's time-reporting erty. All but two of the 11 structural velopmentProject($110millionlDA), ratem requires staff to report each adjustmentprograms that do not list situated in one of the poorestparts of Lonth how each working hour was poverty objectives do, however, an- one of China's poorest provinces, is llocated in terms of those objectives. clude elements that could potentially expected to double the incomes of taff themselves see this allocation reduce poverty. some 630,000 poor farm families at process as difficult and inexact. full development. Both Chinese Again, these figures should Regional Distribution of projects establish linkage between be viewed as ind.eatie rather than Poverty Lending farming and agro-processing indus- definitive. As noted above, designing tries and non-farm marketes to pro- initiatives to aid the poor is often An examination of agricul- vide even greater opportunities for more difficult and time consuming tural lending for poverty by region - the poor. For example, the Henan than designing interventions of a again in terms of the percentage of project includes a micro-scale wicker - technical nature, or involving projects and associated lending at- nursery/basket-making component, gher-income groups that are likely tributable to projects that are either along with training in wicker pro- have more institutional support poverty targeted, or have a less than duction and quality basket-making dy in place. Once again, how- primary project objective of poverty toprovideeconomicopportunitiesfor ver, they show that in each of the alleviation-showsanaverageofabout 5,600 village women and 2,400 men. iree time periods the proportion of 62 percent of lending devoted to pov- The Mexican Decentraliza- taff time devoted to poverty in agri- erty targeted and poverty related tion and Regional Development culture was twice the Bank-wide av- projects over the three time periods Project ($350 million IBRD) targets erage. (Table 2-3). poorpopulations inthecountry's four The Executive Directors ap- Applying the stafweeks fil- poorest states under the proved 72 agriculture projects and tertothe FY91 cohort of agricultural government's new antipoverty Na- agriculture and structural adjust- projects (Table 2-4) shows that about tional Solidarity Prgram. Theproject ment programs in FY91, 52 of which a third of staff time was spent on focus on indigenous communities is are listed in the MIS as having pov- poverty alleviation. One notable ob- particularly notable, as these groups erty-reduction objectives. These in, servation in Tables 2-3 and 2-4 is the often suffer a higher incidence of cluded 47 investment, sector, and relatively small proportion of both poverty Than the general population, sector adjustment loan§(credits in lending and staff time devoted to and are often marginalized from na- agriculture, 38 of which the MIS poverty alleviation in Africa, the re- tional political and economic deci- records as having a poverty-reduc- 1991 Agriculture Sector Review 9 mentary investments, such as build- ing or upgrading rural roads to im- TABLE 2-3: AGRICULTURAL POVERTY LENDING BY REGION prove farmer access to marketing Poverty % Poverty Total Poverty % Poverty and distribution outlets. The Guayas Projects Projects Projects Lending Lending Lending Flood ControlProject inEcuador($59 million IBRD) and Philippine Com- AFRICA munal Irrigation II Project ($46.2 FY8549 Avg. 23 14 $1 5265 341.2 64 million IBRD) provide increasing FY90 23 14 61 997A 6U2 62 opportunities forpoorfarmersto gain FY91 19 13 Go 504 274 54 secure access to land through land ASIA entitlement. Small farmers also re- FY85-90 Avg. 17 12 71 1,502.1 1,0955 73 ceive inputs of food and cash crops FY90 13 12 9 1,203.7 1,193.7 98 The irrigation subsector is increas- FY91 17 16 94 2,044.1 1,96.1 96 ing its focus on farmer participation through water user associations, EMENA wh: .h can significantly enhance the FY85-9 Avg. 10 4 232U abi&ity ofpoorer farmers to earn more FY91 4 3 75 216.6 110.8 54 moome. Appraisal reports are largely LAC silent on the best practices for orga- FY85-90 Avg. 9 4 44 1,031.8 465.3 4 nizing irrigator associations and se- FY90 11 4 36 855.7 423.2 50 lectingtheirleaders. There issignifi- FY91 7 6 86 941.5 908.A 96 cant risk that larger farmers from socially dominant groups could con- trol these associations. Appropriate mechanisms to encourage the par- sion-making processes. The project ducer organizations or in on-farm ticipation of poorer farmers in water also includes comprehensive screen- demonstrations or trials. user associations should be incorpo- ing and monitoring mechanisms to Povertyreduction initiatives rated in the design of irrigation insure that it keeps its poverty focus. must often operate in socio-political projects. This includes setting poverty impact environments that are structured to Fisheries: Both FY91 fisher- as the primary criterion for selecting perpetuate the establishedorder, and ies projects have poverty alleviation subprojects. Area development by implication to preserve patterns components. The Yemen Fisheriei projects also focused on the poor by of distribution of wealth and power. IV Project ($13.2 million IDA) anc providing access to clean water sup- Those participating and assuming the Malawi Fisheries Developmeni ply to prevent debilitating parasitic leadership roles in grass-roote/com- Project ($8.8 million IDA) are tar- diseases in the Tamil Nadu Agricul- munity level organizations are often geted at very poor fishermen. The tural Development Project in India thebetter-off farmers. Unlessproject Malawi project also targets women ($20million IDA, $92.8million IBRD), design incorporates specifiemeasures fish sellers while the Yemeni project and by providing infrastructure to for ensuring representation of all is aimed at remote inland areas. Ia- allow the poor greater access to mar- socio-economic groups at the local cal fishcollection and processingsites kets in the Indian, Mexican, and Co. community level, they may serve to arenotbeingdirupted(Malawi) and lombian Rural Investment projects reinforce orworsenexisting inequali. women fish sellers can continue to ($75 million 1BRD). ties in rural communities. purchase fish at decentralized loca- Analysir of the technological Irrigation and Drainage: tions (small jetties on Lake Malawi). components of area development Seven of the 10 FY91 irrigation and Poorwomen inparticularcan benefit projects shows they were potentially drainage projects explicitly addressed from these projects. Micro-process- sustainable and used relatively poverty issues in their appraisal re- ing industries are being encouraged simple small-scale approaches. How- ports, although all 10 are expected to by providing smoking kilns to ever, the required technical assis. have antipoverty impacts. The de- Malawian women as an inexpensive tance does not always g iarantee par- sign and implementation of specific way of preserving fish. Other em- ticipaticnofthe poorestfarmers. With project activities in relation to pov- ployment opportunities are being the exception of the Mexican project, erty are much more detailed in irri- opened to women through medium- area development projects seem gation and drainage projects than in scale fish processing industries in weakest in addressing social and in- the area development subsector. Yemen. stitutional issues. The appraisal re- Several FY91 irrigation Agricultural Credit: Manyof ports say very little about sensitizing projects target small farmers and the Bank's FY91 free-standing agri- implementing institutions to the offer simple small to medium-scale cultural credit projects and credit needs of the poor, or assuringpartici- technologies, suchastubewells. Many components included poverty alle- pation by the poor in farmer or pro- irrigation projects include comple- viation among their goals. There are 1991 Agriculture Sector Review 10 TABLE 24: STAFF TIME SUPPORTING POVERTY IN AGRICULTURE PROJECTS, FY91 Poverty % Poverty Poverty. % Poverty Projects Projects Projects Stateeks Stalfeeks Work AFRICA 19 13 G8A 40 143.5 17.1 ASIA 17 1s 94.1 90 406.5 44.8 EMENA 4 3 7 a 201.5 57.0 21.8 LAC 7 6 8b.. 322.6 111.8 34.8 TOTAL 47 38 80.9 2,331.A 718.5 30.8 two free-standing credit projects and groups around transport and mar- add, as an adjunct, livestock and seven others withcreditcomponents. keting, home gardens, and vegetable fisheries research. Financing of re- Several projects, including all three and fruit cultivation. Literacy and search on the labor requirements for rojects in China and Indonasia, tar- numeracy programs are included in new crops varieties or for new breeds etedlow income regions. While credit the Congo project and the Mali Re- of livestock is negligible. This is dis- omponents in Benin, Bangladesh, search andExtensionProgram($24.4 turbing, as new farming technolo- ndia and Yemen set specific target- million IBRD) and efforts are being gies are being introduced that are ag criteria or other mechanisms to made to support the expansion of gradually stimulating transforma- assure funds would be made avail- hungry season crops in the Ghana tion from extensive production. able to the poor, other projects lacked Research and Extension Project ($22 Livestock* While both FY91 this specificity. Average subloan size, million IBRD). free-standing livestock projects list a proxy for the income levels of Crop research under the poverty reduction as an objective, subborrowers, andeligibility criteria Kenya Research and Extension there is little inthe appraisal reports based on income was missing from Project ($24.9 million IDA) targets to substantiate this designation. The most of the appraisals. arid and semi-arid areas while MadagascarLivestock Project ($19.8 Anumberofprojectsandcom- Mauritius Research and Extension million IDA) is classified as a tar- onents setthe goal of strengthening Project ($10 million IBRD) encour- getedpovertyprojectbecauseitsmain *operatives, which can enable poorer ages a diversified food/cashcrop strat- beneficiaries are expectedtobe small 'armers to pool their resources to egy rather than a commodity ap- dairy farmers. One focus of the hance their creditworthiness, yet proach. The Nigeria Research and Uganda livestock project ($21 mil- ormation is often lacking on how Extension Project ($78 million IDA) lion IDA) is on raising the productiv- is was to be done. The majority of recognizes the need for poor farmers ity of poor agro-pastoralists and ese projects may fail to meet their to have direct access to information, pastoralists by reducing the decline `,"ives, as they donotfully articu- and for researchers to consult farm- in livestock numbers from infectious the institutional and economic ing systems research teams. Remote diseases. neentives necessary to insure finan- areas with higher concentrations of In Uganda, mixed farming :ial sustainability. poor people are targeted under the smallholders and pastoralists are Research and Extension: Bolivia Research and Extension reported to own 90 percent of the 3.3 even of the 37 povrty-oriented Project ($21 million IDA). million head national herd. A large Y91 agricultural projets involved Extension projects targeting number of poor children would ben- research and extension or agricul- poverty still sometimes lack specific efit by better health as a result of tural services. Six were in Africa and procedures for reaching the poor or reduction of animal-borne diseases one in Latin America and the Carib- training extension workers to orga- such as trypanosomiasis and im- oean. These projects promoted the nize poorer farmer groups. Only one provement of nutrition through in- levelopment of tecmological pack- project design has built-in mecha- creased milk consumption. These s adapted to the needs of poor nisms for differentiating between represent indirect investments in rm households and several take socioeconomic groups among farm- human capital. It would provide for- e risk-averse nature of small-scale ers. Research generally continues to age trees close to homesteads to in- armers into account by focusing on be commodity andfarm-oriented, yet crease fuelwood supplies and give emonstrations in amall sections of in many regions there is a need to households access to fodder. While armers' fields. Extension will rely focus on more diverse agronomic and this may cut down women's labor organizational techniques that agro-pastoral systems. Research allocated to gathering fuelwood, the ow the poor not only to learn new projects lack systematic evaluations need to carry fodder to stall-fed live- _iques more easily but to spread of the impact of innovations on the stock is likely to increase labor de- sks by establishing production poor. Projects still have atendencyto mand for animal husbandry. 1991 AgrIculture Sector RevIew 11 OtherAgricultural Lending. port Pject ($2.2 million IBRD) is a tocompensate forau &djui.-entpro- Five other projects had poverty-re- human resources development gram that included civil service cut- duction as an MIS-listed objective. project to upgrade women's skills. backs. The Benin program included They included the mainly environ- Agricultural Sector Adjust- short-term actions to address areas mental Burkina Faso Environmen- ment Lendirg: Three of the four ag- of known social distress by financing tal Management Project ($16.5 mil- ricultural sector adjustment pro- critical health and educational sup- lion IDA), the India Andhra Pradesh grams in FY91 are listed as having plies; implementing a pilot labor-in- Cyclone Emergency Reconstruction poverty alleviation elements: Tanza- tensive public works program; and Project ($40 million IBRD, $170 mil- nia ($16.1 million IDA), the Philip- rehabilitating infrastructure essen- lion IDA), the Indonesia Yogyakarta pine ($158 million IBRD, $66 million tial to improved delivery of health Upland Area Development ($15.5 IDA), and Mexico ($400 million and education services. million IBRD), the Bangladesh Agri- IBRD). The Tanzanian program in- The six other African struc cultural Support Services Project($35 cludes a social action program under tural adjustment programs includel million IDA), and the St. Kitts and which local communities identify the financial studies to monitor the NevisAgriculturalDevelopmentSup- poor and allocate them work and fects of adjustment but did not hav port Project ($1.5 million IDA, $1.5 food; infrastructure refinements and specific plans to protect vulnerabl million IBRD). The Burkina Faso improved food marketing are ex- groups. Eventhe Comoros and Benin environmental project targeted 167 pected to reduce temporary localized programs, which did include such communities for assistance in design- instances of food insecurity. The Phil- plans, are not likely to prevent the ing and implementing community ippineprogramtargetsimpoverished worseningofpovertyduringthetran- land management plans, including uplands by introducing sustainable sitional period. In general, the tim- land-use planning for communal as- land-use practices including protec- ing of other protective measures is sets management in different agro- tion of watersheds using conserva- not mentioned. It is also difficult to ecological zones. The Andhra Pradesh tion-oriented farming techniques, gauge the length of this transition Emergency Reconstruction Project, woodlots, orchards and protective and whether resources to mitigate focused on hilly tribal areas and in- forests. The Mexicanprogram,which negative consequences will be ad- troduced NGOs to assist in tribal follows AGSAL I, will continue to equate. development initiatives and in fish- liberalize Mexican agricultural mar- The Sri Lanka structu- ing communities. kets and improve productive effi- adjustmentprogram($7millionlt The Indonesian Upland Area ciency through reforms in trade and emphasized refocusing and bettei Development Project targets 140 price policy and the regulatory envi- targeting of public expenditures on upland hamlets and villages. It com- ronment. Poverty alleviation will be nutrition, including a program for bines credit provided at commercial improved by better targeting of food young children and lactating moth- rates with grant components admin- and nutrition programs to benefit ers, andrural public works programs isteredby arural development agency poor and vulnerable households. to provide job for the poor. Indonesia with planning support from a re- Sectoradjustmentoperations ($250 million IBRD) has had an on- gional directorate. The Bangladesh increasingly include explicit mecha- going poverty reduction program agricultural support services project niams for identifying the poor. The aimed at increasing access of the increases women's access to employ- Mexican program provides income poor to key social services and pro- ment and markets through agro-busi- protection and targeted nutrition in- ductive resources. nesses and involves NGOs in gaining terventions through food price subsi- The structural adjustment women's participation. The staff ap- dies for the poor. The Philippine pro- program in Egypt ($300 million praisal report on the project in St. grams targets marginalized indig- IBRD) will compensate for an ex- Kitts and Nevis gives no indication of enous populations at the regional pected decline in per capita incomes a poverty alleviation component. level, while the Tanzania program by increasing access to training and AgriculturalSectorLending, includesthecommunity-leveltarget- social services. It is not clear, how- Two of the 37 agricultural poverty ing. ever, that this will be sufficient to pr>jects are sector loans, both in the StructuralAdjustmentLend- prevent a worsening of poverty. So- Africa Region. The Mozambique Ag- ing. Fourteen structural adjustment cial safety nets are better defined in ricultural Services Rehabilitation loanecredits with agricultural com- the Polish program ($300 million Project ($15.4 million, IDA) focuses ponents hadpovertyreduction goals, IBRD), whose main objective is to on a commodity approach within the eight in Africa, three inEMENA, and cushion the impact of market liberal- context ofacroppingsystem, byplant- two in Asia. Only two structural ad- ization and financial sector reform ingannual crops with mature cashew justmentprogramsinAfrica included programs through adequate unem- trees to meet food needs. There was specific social action programs to ployment benefits and employment insufficient information or. the abil- mitigate the impact of adjustment services, training, small-business ityofthe poortoengageinthisproject measures. One was in the Comoros creation, the development of a pro- to make an assessment of its poten- ($8 million IDA) where a severance gram of minimal social assistance tial impacton them. The Cote d'Ivoire package and a labor-intensive road and health policy reform. The Hun- Pilot Women in Development Sup- maintenance program were planned garian loan ($250 million IBRD) pro- 1991 Agriculture Sector Review 12 vides for continued spending on so- parent and the criteria used are re- in project documentation - both to cialprograms during the adjustment flected in project objectives and de- show the extent of the Bank's efforts period. sign, and in the accompanying de- and to allow monitoring and evalua- scriptive and analytical appraisals, tion of their results. The require- Conclusion there can be no reliable assessment ment is simple: a project or program of the poverty effects of Bank agricul- claiming to help the poor should say It is difficult to pinpoint the ture sector operations. All that can who those poor are - and how they are ?overty reduction components - or be said about the poverty alleviation to be helped. ;he likelihood of their effectiveness - focus of the FY91 cohort of agricul- Given the Bank's institu- n many agricultural projects. This tural sector projects is that, despite tional commitment to alleviate pov- iifficulty will continue until staff the encouraging numbers set out in erty it is important to adopt a coher- ippraisal reports explicitly address this report showing 51 of 72 agricul- ent quantified description of target :overty issues. An important lesson ture project, sector, and structural populations. Proxies furpoverty, such .merging from this review is that an adjustment operations as having a as infant mortality rates, may also be MS poverty designation, and accom- poverty focus, the potential impact useful in describing the poor. In gen- panying numeric values purporting on the poor remains unclear. eral, such health and nutrition indi- to reflect the amount of Bank staff The vast majority of the poor cators are also convenient monitor- resources devoted to poverty issues in the developing countries live and ing tools, and can serve as additional n project design and appraisal, do work in rural areas; they are the measures of project effectiveness. iot always correspond to the state- Bank's majorpoverty alleviation tar- These issues should be addressed in ments in appraisal reports. Unless get group. Clear statements of pov- the forthcoming Operational Direc- poverty reduction is made more trans- erty alleviation initiatives ore needed tive on poverty. ''hapter 3: Agricultural Technology ince its first agricultural loan histories of food shortages. Taking the Bank is committed to reach. in March 1948 - to Chile for the initial Green Revolution break- This situation is now chang- agricultural machinery - throughs, adapting them to local ing. The Green Revolution itself is roving agricultural technology to conditions, testing and disseminat- troubled by both technical and eco- e production has been an impor- ing the new techniques, and build- nomic facto.-s. On the technical side, focus of the World Bank's agri- ing the infrastructure - from irri- there are disturbing il-ications that .ture and rural development ini- gation canals to market roads - the yield growth curve may be flat- tives." needed to make increased produc- tening, or even turning downward. Since the late 1960s, much of tion widespread and reliable has While their findings are stillprelimi- his thrust has been concentrated on been a major and worthy task. nary, researchers atthe International eminating the major break- The preoccupation with the Rice Research Institute inthe Philip- .ughs of the Green Revolution, a Green Revolution and staple grains pines have found indications that of plant development andproduc- has, however, meant that less at- continued rice monocropping with - technologies that has massively tention was paid to other crops and increasing chemical inputs - the icreaseddeveloping-countryproduc- farming systems. While commer- essence of the Green Revolution - is f rice and wheat. There is much cial estate crops have continued to leading to land degradation and di- said for this focus on irrigated benefitfromtechnologicaladvances, minishing yields per unit of inputs. ce and wheat. Food security through many of which have come from the At the same time, the Green easedproduction of staple grains private sector, less research atten- Revolution technologies that proved been a correct priority for coun- tion has been given to subsistence so powerful in the irrigable fields of a and regions haunted by long farmers, rainfed agriculturalists, East and South Asia and some areas livestock keepers, andfarmer. grow- of LatinAmerica are proving increas- ing minor or mixed crops. ingly difficult and costly to adapt to The Bank has, howewe, been awao - Although these groups - other regions - particularly in Af- isingly In recent Yom - I which frquently have significant rica-that are water-short and lack- ology's catalytic errect cannot tak overlaps - are usually less critical ing in the administrative and techni- except In a context of corret polioles to overall economic strategy and cal infrastructure needed to deliver roe, adequate parillel Investments in food security than producers of irri- inputs and extension to large groups ucture, Input supply and marketing gated crops or export commodities, of farmers. ....s, and reasearch and extension. they include many of the very poor It is important to note that 1 Agriculture Sector Review 13 the seed-chemicals-irrigation tech- section on Research and Extension, initiatives is that the progressive nologicalpackagesofthe GreenRevo- this will progrosively be translated duction in the number of Bank to lution in Asia took nearly three de- into new research programs with the nical agriculture staff has erode cades to achieve wide dissemination international rsearch centers and institution's ability to analyze te among farmers, while the interna- direct involvement in national bio- nology needs and design mechanisms tional agricultural research centers technology research programs. Such toadaptandtransferthem inprojects. in Africa have been operational for nationalendeavorecanreallyonlybe The gap is seen as widening ever just over a decade. In Asia, the very successful, however, when they are further as new areas requiring tech- success of the Green Revolution has interfaced with already strong plant nical expertise - such as natur bred change. Staple grains are in breeding programs. resource management - draw i chronic oversupply, and prices are Agriculture in developing creasing attention. Concentrat on a long-term downward trend. Ag- countries differs from most other see- technical skills are now only found ricultural production is turning to- tors in that technology is largely pro- a few places in the Bank, most nota- ward higher-value crops, and there duced and disseminated by public bly the regional agricultural techni- is increasing demand forthe technol- sector entities ranging from interna- cal departments. ogy needed to bring about this diver- tional research centers to national The FY91 projects show feA sification. extension agencies. teohnological innovations, as mosi Bank support for technology, project activities are simple anc The Bank's Technology thus, includes such indirect activi- straightforward. Attaining high pro. Development and Transfer ties as its co-sponsoring of the Con- ductivity and crop diversification wil] Strategy sultative Group on International require more emphasis on techno- Agricultural Research and has a logical development and innovation Overall, these developments strong instit ution-building side intechnical designofprojects than in imply change in the technological through the revitalization of national the past. agenda for the World Bank and its researchandextensionsystems.Not- In irrigation, little effort borrowing member countries. The withstanding coynsiderable Bank in- being spent on the technical and en three-decade focus on staple grains, vestment in national agricultural gineering problems of irrigation. irrigation, and inputs is expanding research systems, many smaller new generation of irrigation tech as greater attention is being paid to countries still do not have adequate nologies that can add greatly to w other agro-ecological and cropping capacity for such work. This is one of ter management efficiency - at si systems. the reasons for the importance of nificant savings in water use a One other factor guiding this regional cooperation that is being cost and reductions in drainage p evolution is an increasingrealization explored in seve. a regions, particu- lems - is largely being ignore that the environment supporting ag- larly in SubSaharan Africa. irrigation project design. These te riculture has been endangered in The Bank has also been more nologies need to be adapted, testec many places by extractive processes directly involved intechnologytrans- and applied in the developing coun that essentially mine the soil for im- fer through project-level initiatives tries-particularlythose with greater mediate production at the cost of in irrigation, livestock, fisheries, and experience in older-generation s sustainability. Agriculturalists now other subsectors. tems. The alternative now l~ know that they must protect - and Technology transfer is an used in new Bank projects - a' in many cases rehabilitate - forests, important theme in FY91 agricul- rehabilitation using outdated watersheds, and fields if their pro- tural economic and sector work, and nology - has, despite low per- ductivity is not to plummet in the many country and regional studies are costs, a relatively low bene long run. focus on ways to upgrade public see- cost ratio. The picture is by no means tor research, extension and agricul- The Bank has, however, be completely bleak. The era of biotech- tural education systems and stimu- gun several initiatives in the paa nology has yet to reach the major late private sector involvement year. One important step toward foodcrops, but it is almost inevitable through dereguiationiJoint ventures increasing emphasis on irrigat that major new gains will be made and other means. These analyses of- technology was the Bank's establi through genetic manipulation in ad- ten recon-mend institutional restruc- ment in FY91 - in conjunction w vanced molecular biology laborato- turing, p ivatizing or delegating au- the UNDP and bilateral donors ries that will engineer genes likely to thority, removing redundancies and the International Program for T- greatly accelerate and augment increasing linkages between institu- nical Research in Irrigation a achievement in crop improvement tions. Some of the major reform pro- Drainage to encourage and assist programs. posals centeron integratingcrop and the development of technology During FY91, the Bank ar- livestock research and increasing use in the irrigated areas. ticulated its own position on the ex- farmer participation. IPTRID acts a broker and ploitation of biotechnology for agri- One theme that is constant provides direct assistance to coun cultural developmentpurposesinthe across both sector and subsectoral tries proposing research and train developingcountries.Asnotedinthe analyses of the Bank's technology ing on irrigation maintenance a 1991 Agriculture Sector Review 14 operation, salinity and sodicity and ing methods of tsetse control are be- agro-ecological regions and to deter- waterlogging. Successful operations ing introduced under the Uganda mine ways to improve availability of aave been undertaken in Egypt and Livestock Project. agricultural inputs such as seeds and Pakistan and staff have been sec- In animal breeding, the veterinary services, and promotion onded to the IPTRID secretariat by Tamil Nadu project will bring inmore of a proper division of labor between the Bank, and the governments of modern technology, through a greater private andpublic sectorsupport ser- France, Germany and Britain. use of frozen semen technology in vices. Forestry projects are begin- artificial insemination and the de- One of the AGR studies ex- ning to transfer relatively new tech- velopment of embryo transfer capa- amined the Bank's experience with niques utilizing genetically engi. bilities, and dairy development spe- the seeds subsector and the major neered clones and improved man- cialists in Africa have strongly advo- constraints to the development of agement practices to improve the cated introducing intermediate efficient and sustainable seed pro- Performance of tree plantation breeding technology using crossbred duction and supply systems in devel- projects, although the subsector's animals with simple artificial insemi- oping countries. The study examined )roader forest and watershed re- nation techniques, in conjunction the scope for enhancing the avail- source management agenda is still in with forage-based feeding and pro- ability of improved seeds to farmers its initial phases. cessing, and marketing. by looking at the private/public sec- While two of FY91 cohort of The Asia Technical Depart- tor mix within the organized seed forestry projects and components ment's Agricultural Division industry as well as the importance of entail newtechnology advances, both (ASTAG) is one such technology is- informal farmer-producer seed mul- are at the research, rather than op- land that has made concerted efforts tiplication and supply systems. erational, stage. In Kenya, forestry to promote critical "trigger"technolo- Declining crop production research is being expanded to cover gies that can serve as the basis for fromhigh-inputirrigatedagriculture ecosystem management, farm for- further advances. These initiatives and risks of resource degradation estry utilization, and energy produc- have included sponsoring the use of from the unwise use of marginal ar- tion from wood. An FY91 project in Vetiver grass in soil and water con- eas require special attention in fu- the Philippines will provide exten- servation and efforts to provide in- ture Bank projects. AGR and the sion services and establish mecha- formation on crop diversification in Environment Division are preparing aisms for small-scale community Southeast Asia. a compendium of technology options :ased resource management and live- ASTAG's work on irrigation for sustainable agriculture inthe sea- ihood projects using sustainable ag- systems management in India has sonably dry, warm tropics. ricultural techniques for upland become a core part of that country's AnotherAGRstudyisassess- populations. irrigation strategy and has been ing the prevalent farming systems The generation and testing transferred to other countries in- andtechnologiesused,adequacyand of new livestock technologies also cluding Indonesia and the Philip- potentialsof available improvedcroWt receives relatively little attention. pines. Overall, however, AGR sub- livestock technologies and identify- While research is included in almost sector specialists considerthe Bank's ing prospective new technologies for a third of the FY91 livestock projects, efforts in identifying new technologi- semi-arid subtropical ecologies. The the $16 million allocated to livestock cal trends or in introducing new tech- study focuses on North Africa, North research is far from adequate to nology into developing countries as Central China, Chile and Western bridge the major gap in adapted tech- inadequate. Argentina. nology required to improve livestock TheBankhas acceptedamore productivity and enhance its contri- Future Trends interactive role with regard to the )ution to environmental sustainabil- research programs of the interna- ty. Much of the thrust of in- tional agricultural research centers Most projects rely on well creased technology transfer and ad- by agreeing to execute UNDP-fi- known technologies, although inno- aptation has come through the re- nanced projects at IARCs. In FY91 vative fodder production technolo- search and extension subsector. AGR established a unit - financed im have been included in the Mada- Workingthrough SPAAR, the Bank's by UNDP - to assist in implement- ascar, Uganda and Tamil Nadu Africa Region has undertaken a study ing and monitoring 28 projects being rojects, which offer farmers a wide ofnational agricultural research sys- carried out by the international re- variety of choices in forage species, tems to seek ways in which regional search centers. AGR has also re- cultivation systems and uses. Seed research effo is can be developed. cruitedanagriculturalscientistwith production, which is critical, is sub- Initially the ro,gions selected are the expertise in biotechnology to provide contracted to farmers at an early Sahel and the SADDEC regions in support for regional lending in bio- stage. The same approach has also southern Africa. technology and further research in aeen successfully applied in the AGRhaslaunchedaseriesof thissphere,especiallytthroughUNDP Fourth Ethiopian Livestock Project. studies to identify potentialtechnolo- projects at the international agricul- In disease control, new non-pollut- gies for dissemination in different tural research centers. 1991 Agriculture Sector Review 15 CHAPTER 4: PRIVATIZATION OF AGRICULTURAL SERVICES ntil the 1980s, most devel information imperfections,whichcan tection over their new knowledge as oping countries and develop cause market failure. These charac- in the case of developing a hybrid menteconomistssawgovern- teristics influence the scope for pri- variety of a crop. Exclusion can also ments as the mainspring of growth vate sector participation and deter- be provided by patents, copyrights and assigned them a major if not mine whether there is an economic and trade secret laws. Marketing dominant role in shaping the devel- justification for government inter- techniques can be used to enhance opment of markets for agricultural vention in providing agricultural ser- consumer loyalty to products and products and inputs. Most World vices. The characteristics of agricul- enhance the stream of profits deriv- Bank activities suppo. Zed the public tural services that have a bearing on ing froman innovation embodied in a sector in mobilizing and directing the appropriate mix of public and physical product. In contrast, exclu- investments in agriculture and other private sector activities are illus- sionary mechanisms may yield in- sectors. Growing evidence that gov- trated below for agricultural re- sufficient appropriable benefits in ernment interventions in many ar- search, seed development, produc- such areas as basic and managerial eas were excessive and economically tion, and distribution, livestock ser- research due to the generic and non- harmful - and a better understand- vices, and agricultural extension. patentablenatureofresearchresults. ing of the private sector's potential In addition to the problem of contribution to economic growth - Characterization of Services appropriability, there are otherprob- have led to a re-examination of the lems associated with some forms of state's role in economic development. Agricultural Research: Agri- agricultural research that can in- The World Bank has played an im- cultural research covers a wide spec- hibit private investment or justify portant role in this change through trum of activities generating a broad government intervention. Some types glchal and regional studies of devel- range of innovations. Research may of research are inherently highly opment constraints, and sectoral ad- be basic or applied, and relate to the risky from technical or commercial justmentprograms that incorporated biological, chemical, mechanical, or standpoints, which can bias research provisions forremovingthemonopoly managerial aspects of agricultural toward less risky ventures, neglect- positionsofparastatalproduction and production. The output of these dif- ing areas of potential importance to trading enterprises and curtailing ferent forms of research is informa- national agricultural development. their government subsidies. tion that can be transmitted directly, Seed Development, Produc- One major theme in the or is embodied in physical items such tion, andDistribution:Improvedseed Bank'- private sector development as seeds, chemicals, or tractors. often involves eithernew crop variet- agenda is expanding private provi- The information generated ies whose genetic make-up provides sion of services, and there has been by agricultural research frequently potential for higher yield, improved increasing discussion, and initial haspublicgoodpropertiesinthatitis commodity quality, or seed of exist- operational work, on expanding the often difficult to exclude non-paying ing varieties with better properties. private sector's role in agriculture, consumers from access to and ben- A very important feature of seed sup- This chapter examines the economic efits from the information, and be. ply is that farmers can perform this rationales for private and public see* cause the use of this information by service themselves. Some types of tor provision of four major agricul- any one farmer frequently does not improvedseedsreproducethemselves tural support services: in agricul- diminish its value to others. Private andfarmerscanretainseedandstore tural research, seed production and firms may, thus, be unable to appro- it for use in future plantings. The distribution, livestock health and priate a significant proportion of the self-reproducingpropertyofseedlim- production services, and agricultural benefits deriving from the innova. its the extent of commercial market extension. tions they develop. Unless some type development, while giving farmers of an exclusion mechanism can be themselves a dominant role in seed Private vs. Public Provision applied, the benefits accruing to pri- multiplication and supply. The self- of Goods and Services vate researchers may be inadequate reproducing property of seed also to compensate them for their invest- exposes private enterprises to the Agricultural services differ ments. Consequently, they may not riskofoompetitorsoopyingtheirprod- considerably in their economic and invest in research, and society will ucts. These features create barriers technical characteristics. Some have lose the potential benefits of higher to private firms appropriating the public good properties (e.g., non-ex- agricultural productivity. benefits fromtheirseeddevelopment, cludability and non-rivalry); others There are several feasible multiplication and distribution ae- do not. Some give rise to significant exclusionmechanisms. Private firms tivities. externalities, economies of scale, and may have natural or biological pro- The problem of appropria- 1991 AgrIculture Sector Review 16 bility differs in degree across crops. eased animals, and movement re- Information has a number of It is most severe in the case of self- strictions.Livestockdiseasesarepre- characteristics that affect its supply pollinated crops, such as rice and vented from being transmitted to and demand. Firstly, the consump- wheat, whose harvested commodity humans through veterinary surveil- tionofinformationisfrequentlychar- is the same as the seed. It is relatively lance and control of animal products. acterizedby non-rivalry-one party's easy for farmers to reproduce these Livestockproduction services include use of the information does not di- seeds without loss of quality, and research and extension to improve minish its availability to others. Sec- farmers may only need to replace livestock husbandry and providing ond, some forms of information are seeds every five or more years to input supplies such as feeds and ar- easily transferrable and can diffuse maintain genetic and physical pu- tificial insemination. rapidly fromfarmerto farmer. Third, rity. Not only does varietal develop- Vaccines, semen for artificial the value of information may be very _Wnt work for self-pollinated crops insemination, feed, and veterinary difficult to determine before, or even ave strong public good properties, drugs are private goods; thus, their after, its application in production. - ut in the multiplication, processing, delivery can feasibly and optimally Fourth, information differs consider- and distribution of such seeds, pri- be undertaken by the private sector. ably in its complexity and specificity. vate and Tublic enterprises have to Clinicalcare,vaccination, diagnostic Thus, costs vary in its generation compete with farmers and commu- support, and vector control are also and transfer. nity-level seed exchange networks. private goods, although their con- Whetherthese properties are Profit margins for seed multiplica- sumption involves externalities: the a barrier or opportunity for private tion are very low, as the price of effectiveness of vaccination cam- sector suppliers depends upon the improved seed is normally closely paigns and vectorcontrol depends on role of information goods in the over- linked to that of the grain. Only un- the degree of coverage of the live- all activities of these organizations. der very special circumstances will stock population; non-compliance by For an organization whose primary commercial for-profit companies in- some farmers can jeopardize the profit-making activity is the sale of vest in this activity. whole program. Unless suc- -ter- information, the properties of non- The appropriability problem nalities are internalized, th, aay rivalry andeasy diffusion are serious is least severe for hybrid varieties, as be under-consumption or n son- problems inhibiting the organi- farmers cannot reproduce this seed sumption of these services by farm- zation's appropriation of benefits. It and maintain its gene components, ers. Veterinary surveillance is essen- may be very difficult to exclude non- and it is difficult for competing firms tially a public good; the benefits de- paying users of the information. to copy aproduct. Farmersmustpur- rived from it cannot be exclusively Information is also supplied chase seeds of hybrid varieties every appropriated by an individual live- by firms that derive income from the season to maintain yields. Unless stock farmer and are available to the supply of other services. Chemical controlled, production and trading whole community. Due to the free input suppliers or processorqfmar- margins for hybrid varieties are nor- riderproblem associated with its de- keters will attach the provision of mally much greater than for self- livery, there will be a tendency to- technical and other information to pollinated crop varieties. Incentives ward under-production or no pro- their primary activities to enhance for private sector participation are duction of this service when supply the profitability of these activities. strong. The scope for profitable seed decisions are profit-motivated. Ani- The non-rival and diffuse nature of development, multiplication, and dis- mal quarantine features strong ex- information is an advantage for such tribution activities is also high for ternalities in consumption given the firms, and the problem of valuing vegetable, fodder, and otherspecialty ease of disease transmission across information is of little consequence. crop seeds that farmers find costly animals. With drug quality control, The ability of the firms to appropri- and difficult to reproduce. While the information imperfections may con- ate benefits from their extension ac- cost of such seeds is very low com- strain marketexchange or adversely tivities will depend on farmer re- pared with the commercial value of affect consumer welfare. Veterinary sponse and the overall competitive the crops, profit margins for seed and productive extension services conditions forthe inputs orcommodi- producers and traders are normally maybeeitherprivateorpublic goods, ties in question. Table 4-1 shows the sufficient to stimulate investment. depending on the medium used and strength of incentives for the private LivestockHealthandProduc- theeasewithwhichinformationflows sector to provide different agricul- tion Services: Livestock health ser- to other farmers. tural services. For many of the ser- vices include curative and preven- Agricultural Extension: vicesthe incentives forprivate sector tive services, and veterinary phar- While agricultural extension encom- participation are potentially very maceuticals. Curative services pro- passes a wide range of activities, its strong, while for others these incen- vide veterinary care to sick animals, primary function is to provide infor- tives may be favorable under special while preventive services consist of mation to farmers. This may include market structure or operatingoondi- vaccination, vector control and eradi- advice on cultural practices, appro- tions, such as linkage to other profit- cation programs, and other disease priate use of purchased inputs, ad- making activities, or if exclusion monitoring and control measures vice on farm management, and mar- mechanisms are effective. Only for a uch as quarantines, disposal of dis- ket information, etc. fewof the services is the incentive for 991 Agriculture Sector Review 17 TABLE 4-1: INCENTIVES FOR PRIVATE SECTOR PARTICIPATION MoGerate Subsector Weak (Special Circumstances Only) Strong LIVESTOCK Veterinary Vector Control Clinoal Car Surveillance Quarantine Vacaine Production Drug Quality Control Vaccination Semen Production Artiflclal Insemination Vet Supply Production Vet Supply Distribution RsEARCH Basic Research Applied Managedal Applied Chemical & & Biological Reseech Managerial Reseairch EXTENSION Technical Information Technical Infomateion for Subsistence Crops for Coimmrala Crops Information on Inputs & Market Requirements SEED Self-polifnated Seed Mulplidation; Development of Hybrid & Variety Development Sef-pollinated seed SpecltyVariedes; Cert1fication Hybrd and Specialty Seed Multiplication; Specialty Seed Processing, Storage, & Distribution private sectorp. rticipation normally North America and Western Europe. North America and Western Europe. very weak, necessitating a dominant This participation is particularly sig- Private sector applied re- role for the public sector. nificant in the agricultural machin- search in many developing countries ery and chemical industries, where is dominated by subsidiaries or part- Public andPrivateParticipation: the innovations from basic research ners of multinational corporations. The Evidence often serve as inputs into technolo- Their extensive resources allow for Agricultural Research: A re. gies that are marketable and for high-level applied research activi- view of the structure of agricultural which returns are appropriable. ties and their international presence research systems world-wide shows There is greater participa- provides a channel through which that basic research is largely con- tion by the private sector in applied new orwell-established technologies ducted by the public sector, includ. research than in basic research in all can be introduced to developingcoun- ing institutes and universities. In countries. Nevertheless, in most de- tries. The importance of MNCs it countries with highly developed edu- veloping countries there is less pri- developing-country appliedresearc cational systems, such as North vate than public sector applied re- is particularly profound in the see America, Europe, and India, univer- search. This is especially true for all and chemical industries. sities play a leading role in basic fcrs of research in Africa and for Seed Development, Produe research; elsewhere, public institutes applied crop and livestock research tion, andDistribution: An analysis o perform basic research, if there is in many Asian and Latin American the institutional structure of see anyperformedatall. Manycountries countries. Outside of the chemicals sectors world-wide shows that the in Africa, Asia, and Latin America industry (where the private sector majority of all seed planted arounc rely heavily upon the basic research playsaleadingordominantrole), the the world is farmer produced anc performed by the international agri- private sector plays the lead role in saved. In developing countries, this cultural research centers. Private research only in a limited number of share is at least 80 percent and is basic research is not performed or is developingcountries,includingcrops considerably higher for staple food relatively insignificant in the major- researchinMalaysia,Argentina, and crops (e.g. rice, wheat, pulses, tu- ity of developing countries, although Peru, livestock research in Thailand bers) in many countries. Even in India, Venezuela, Brazil, and the and Peru, and agricultural machin advancedmarketeconomies,thep Philippines are importantexceptions. ery research in Algeria, Pakistan, portion of farmer-saved seed is hi Much more active private participa- andThailand. Private sector applied for many crops, especially sm tion in basic research is found in research is of major significance in grains. In most countries, commer- 1991 Agriculture Sector Review 18 !ial seed sales are dominated by hy- Very different institutional mies and Latin America), semen pro- )rid varieties and high-value crops patternsareobservidforhybridcrops duction and artificial insemination .g. vegetables, forage crops). and forspecialties such asvegetables are standard components of herd Forself-pollinatedcrops(e.g. and fodder crops. For such L-nps, management and their p: wvision rice andwheat)varietal development both varietal development and seed tends to be equally shared by the k is, as expected, dominated by multiplication(wherethey occur) are government and private sector or is public sector in nearly all coun- normally undertaken both by the exclusively private. The production es. In contrast, formal system public and private sectors with nei- (and distribution) ofveterinary drugs multiplication of commercial seeds of ther dominant. The processing, stor- in highly privatized and is dominated self-pollinated crops is undertaken age, and distributioa of such seeds is by several multinational corpora- primarily by farmers and coopera- either dominated by the private sec- tions. Veterinary surveillance, drug tive enterprises. In most developing tor or features mixed public and pri- quality control, and quarantine ser- countries, this production is done vate activities. vices are dominated by the public under contract with government In many developing coun- sector throughout the world. agencies because of the high risks tries, the emergent private sector Agricultural Extension: In and management problems associ- has concentrated its seed develop- the vastmajorityof developingcoun- ated with centralized seed multipli- ment, production, and marketing tries, agricultural extension systems cation. In advanced market econo- activities on a limited set of crops, are dominated by the public sector in mies and a limited number of devel. with most activity focused on hybrid terms of staff numbers, funding, and oping countries with more advanced maize and sorghum, vegetables, and donor support. Nevertheless, exten- seed industries (e.g. Mexico, Argen- selected oilseed and fodder crops. sion systems are multifaceted in ad- tina, Turkey, Zimbabwe, and Kenya), There has generally been negligible vanced market economies and in cooperatives and/or private firms participation in seed supply systems many developiLg countries. In addi- have played important roles in com- for major staple foods. The private tion to public organizations, agricul- mercial seed multiplication for self. sector has also tended to focus on tural information is supplied by pollinated crops. Several developing varieties suitable for higher poten- agribusiness companies, farmer as- countries (for example, Egypt, Indo- tial agricultural areas and target its sociations, NGOs, and consulting nesia,Turkey, Ethiopia, Nigeria)con- seed sales to the commercial farm firms. With the exception of the lat- tinue to have part or all commercial subsector. ter, the provision of information is seed production for self-pollinated Livestock Services: Although normally attached to other goods and crops taking place onlarge-scale, loss. the provision of clinical care, vaccine services. making state farms. production, artificial insemination, In many advanced market The processing, storage, and and veterinary drug production and economies, including the Nether- holesalingofcommercialwheatand distribution are private goods, gov- lands, Norway, Australia, France, ce seed is dominated by public sec- ernment participation in their deliv- and the United Kingdom, the private institutions in the majority of ery is extensive. In advanced market sector is the dominant supplier of -eloping countries, as these are economies and afewdevelopingeoun- extension services, with the mix be- usually commercially unattractive tries (e.g. Uruguay) clinical care is tween farmer associations, agribus- functions for the private sector. Ex- provided exclusively by the private iness firms, and consulting firms ceptions again lie in countries with sector; elsAwhere it is common for varying between countries. In these iore advanced seed systems, where the private sector to serve medium- countries there is a growing trend iese functions are handled by a com- to large-scale livestock enterprises, toward directly charging farmers for ination of public, cooperative, and while thegovernmentmeetsthe clini- advice. The private sector has dem- private enterprises. Retail seed sales cal needs of small-scale farmers. Vac- onstrated a comparative advantage are primarily handled by private or cines in most developing countries in providing specialized up to date cooperative entities, although in are produced bygovernmentresearch information in a flexible manner to many African, Asian, and Near East laboratories, especially in Africa and market-oriented producers. Strong countries governments sell seeds Asia. Vaccines are supplied exclu- competition in the markets for com- through rural finance programs and sively by private firms in advanced modities and farm inputs has stimu- agricultural/regional development marketeconomies, and in Botewana, lated agribusiness firms to supply projects. These public sector sales Morocco, Argentina, and Chile. technical and other information on a are typically at subsidized prices, In countries whose livestock complementary basis. sometimes below the costs of produc- sectors are in their early stages of In many developing coun- tion and delivery. The ability of pri- breed improvement (e.g. in Africa tries,private agribusiness firms have vate or cooperative firms to compete and Asia) semen production and arti- developed extension services as part withsuchaubsidizedsalesstems from ficial insemination are largely un- of contract farming schemes for in- thetypicallyuncertainqualityofgov- dertakenbythepublicsector,incoun- dustrial and export crops. This is ernment supplies and the provision tries with highly developed and tech- commonly found in Africa, Asia, and of additional support services by the nologicallyadvancedlivestockindus- Latin America for commodities such private firms. tries (e.g. advanced market econo- as tobacco, cotton, poultry, fruits and 1991 Agriculture Sector Review 19 vegetables. These extension services tion, and/or livestock health and pro- focus of technical and financial sup- have been developed by medium. duction services. Table 4-2 lists these portefforts.Inclusion of privati-zation large-scale foreign and local compa- projects, the agricultural services components within projects does ap- nies, as smaller companies are usu- supported and whether or not techni- pear to be increasing in recent years, ally unable to bear the expense of cal support and/or financing is di- especially in livestock services and training agents or supporting farmer rected toward privatizing these ser- seedproduction and distribution. For training and supervision. This type vices. example, nearly all the projects sup- of extension reaches only a small The table indicates that only porting seed production and distri- proportion of farmers in the develop- about one-fourth of the projects (8 of bution developed since 1988 (except ing - vorld. 31) include components geared to- those in China) have given some em- Private chemical and seed ward increasing the role of the pri- phasistoprivateE, ctordevelopment. companies also utilize small exten- vate or non-governmental sector in Nevertheless, the direct impact of sion teams when promoting their- providing the focal services. Another these private sector provisions has products in developing countries. In six projects contain conditions and/or been very limited due to problems in a more limited number of developing resources to expand the role of the channeling financial and technical countries, such as Mexico, Kenya, private or non-governmental sector support to private seed companies. and Thailand, specialized consulting in other activities, especially farm- firms provide advice to commercial levelproductionanddownstreampro- Conclusions and Implica- farmers. Private firms are almost ceasing and marketing. In these tions for Future Work never directly involved in providing projects, however, there are no com- technical or other information to sub- ponents supporting an expanded pri- In establishing the appropri- sisteNnce farmers, as they cannot ap- vate sector role in research, exten- ate roles for public and private see- propriate t.he benefits from potential sion, livestock, or seed-related ser- tors in the provision of agricultural productivity gains. Only where vices. services it is necessary to understand smallholder farmers provide s poten- Of the eightprojects with pro- the economic nature of each of these tial source of product supply or po- visions for an expanded private sec- services. In each case, the economic tential market outlet for purchased tor role in agricultural service sup- nature of the service determine inputs will private agribusiness ex- ply, only three - Benin Agricultural whether private delivery is feasible, tend information. Services Restructuring, Madagascar and whether private provision is In advanced market econo- Livestock Sector, and Uganda Live- likely to result in a socially optimal mies and some developing countries, stock Services - are focused on or level of supply. This analysis indi farmer associations provide techni- direct considerable resources to cates that there is wide scope for cal and other types of information to privatizing these services. In the private sector participation in many their members. Most farmer associa- Benin project, support is being given components of agricultural research, tions that provide extension services for privatizing government seed extension, livestock services, andseed include predominantly commercial farms, veterinary products distribu- production and distribution where farmers; some, usually supported by tion, and some animal health ser- the necessary technical skills and NGOs, include semi-subsistence and vices. The other two projects promote financial resources exist and where relatively resource-poor farmers. private veterinary practices. Four of components of the agricultural sec- Anothersource of agriculture-related the eightremaining projects only fea- tor have attained a relatively ad- information in many developing ture components to expand the role of vanced state of commercialization. countries is voluntary andothernon- NGOs in extension services in par- This analysis also indicates profit NGOs. Extension services are ticular project areas or for particular that there are several agricultural frequently integrated in the agricul- crops. Private for-profit firms are services for which there is very little tural and rural development projects neither direct participants nor direct scope forparticipation by profit-seek- ofNGOs, targeting particular groups targets in these projects. The remain- ing firms. In some such cases, farmer (e.g. famine-pronecommunities, refu- ing project, the Agricultural Support associL ions, NGCFs, etc., can substi- gees, women) or particular localities. Services Project in Bangladesh, fo- tute for the public sector and other Unlike the for-profit sector, some cuses on supporting public sector in- organizations as service delivery NGO programs provide information stitutions, although a condition is set agents. The presence of externali- to subsistence farmers operating in that private firms be legally permit- ties, scale economies, aid/or moral remote or low potential areas. ted to import and sell seeds. hazard problems for many agricul- In general, World Bank sup- tural services indicates the need for The Bank's FY91 Agricul- port for agricultural services contin- some form of public sectorparticipa- tural Services Portfolio ues to focus on developing or enhane- tion in their delivery, even where the ing the performance of public sector private sectwrplays a leadrole. Hence, In FY91 the World Bank ap- institutions. Alternative institutional a blanket strategy for the privat- proved 31 projects involving agricul- arrangements are being examined, ization of agricultural services is not tural research, agricultural exten- althoughinonlyaiminorityofprojects appropriate. sion, seed development and produc- arenon-governmentalinstitutionsthe While any supportforprivati- 1991 AgrIculture Sector Review 20 TABLE 44: AGRICUILVRAL SERVICES AND FY#1 OPERATION, COUNTRY PROJECT RELEVANT SERVICES PRIVAT2ATION OTHER SERVICES OP SERVICES? COMPONENTS (8 cf 31 Proje~t.) AFRICA Benin Agricultural Service Resruturing Reacw~h/Extmnsion/Seed j Yes Animal eath (Major Strtura Chang) Congo National Agricultural Extenöion Re~edbExlösn No Coto Olvolre Piot Women in Development Extension No Equatorial Guinea Crop Diverifteation and Agrio. Re*«o ~xtension No Crp Mark~tng Services Ghana Nateonal Agdultural Resarmh Research No Ghana Agrioultural Diversl~oation RsarchExtensfonx No Crop Production and Soedlings Maiketing - Kenya Agricultural Nation Extension 1I Extenkion No Madagascar Livestok Se1tor Lvestok Service. Ye» (Maor Structural Change) Malk AgrioulturaI Servfne Researh Extention No Mauritlus Agricultural Management + Services Resefrh/fExtnson No Animal Nealh Mozambique Agrio, Flehabiltation & Developeent Rcearh/Etenalon/Söednge No Crop Proe~sng and Marketing Nigeria Natlonal Ag~eultural eseareh Research No Uganda Agrioultural Sector Adjustment Re~earchExtmnsion No Coffe Proceaing and Marketing Uganda LIvetok Services Lvesek Service Yta (Major Structura Change) ASIA Bangladesh Agricultural Suppot Serves ReuarehjExtensfinf d Yes (Proveon fr Privat Sead impost) Dangladesh National Minor rrigation Extenslon Yes (NO moie} China Mid-Yangte R----ehfExtmnioa ed No China Rural Credit IV SaedISeadIng. No China Menan Agricultural Dmeepmnt nearchfExtesierSmd No China Irigated AgdE.ntenslS@atiou. Rksomwhadcnsin~Seed No india Andhm Pradeh Cyelon Emen y SdmNtoery Develo~pmnt No India Tami Nadu Agricullmral Deeopment Soedfden.In/AnImaI Nealth Yes (NO role 1* extenioni indonesla Yogykarta Upland eerhExtarilon/S.edtlng No Phiilppnes Communal irigation li ExtenaionSeedlng Yes (NO ta In extension Bri L;ak NaNlonal iriaeRhabigtWe. ExtnlnNo LATIN AMERICA Argentina Agro. Service~ & Insttutional ov. RossamhISeedfAimai Health No Bolvia Tehnology Deveont ResearcI#Extension Yo(NO r^il in extenson) Colombia AuralDvelopmentinvstment- RdsareigExt~eo No N 1O1s 1aheries de-mn P.cuador Quas Plood Control Raaeseat/Extension -No Mexio Doentrnlzatione Reina v . daesion No St,1(11 Agrleultual DevweopmentSupport ResertExteneion No SugarProesueng 1991 Agriculture Sector Review 21 zation of agricultural services must The appropriate mix of pub- ever, the potential for further assis- be selective, it is also important to lic and private activities will vary at tance in this line of activities is sub recognize the interdependence different stages of economic develop- stantial. A better understanding o among many services. For example, ment, where there are different de- the process of private sector develop applied crop research, seed produc- grees of market integration and agri- mentrelated to agriculture is needed tion and distribution, and extunsion cultural commercialization, different to expand the Bank's support for pri- are highly interdependent. When seed availabilities of skilledmanpowerand vatizing these services. Particularly production and agricultural exten- administrative capacity, and differ- important are understanding the sion is the focus of privatization ef- ent levels of agricultural technology. potentialcomplementaritiesbetween forts, coordination problems may In the early stagc. of economic devel- public and private activities, the im- emerge if agricultural research re- opment, the public sector may have pact of institutional changes on dy- mains in the public sector. Improved to take the lead in providing many namicefficiency anddistribution,and channels for farmers and private agricultural services; this role can the potential means by which techni- firms to articulate their research change to a more regulatory and sup- cal, financial, and other support can needs to public institutions will be port role in later stages of economic be channelled to private suppliers of necessary. and agricultural development. How- agricultural services. 1991 Agricu!ture Sector Review 22 ANNEX 1: SUBSECTORAL PERFORMANCE AND PROSPECTS This annex reports on the FY91 performance, major issues, and trends and prospects in the nine Agriculture and Rural Development subsectors. The presentation for each subsector begins with a table showing the major statistical developments in the subsector during FY91. While the presentation follows the MIS classification system for each subsector, a veral of the reports -particularly the area development and agricultural credit reports - also analyse pcoject data in the more relevant construct of subsectoral components aggregated across the agricultural lending program. The reports were prepared by AGR's subsectoral specialists. AREA DEVEP OPMENT AREA DEVELOPMENT LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No. of projects 6 6 11 15 9 8 9 Total agric. projects 47 60 67 70 82 58 67 Percentage projects 12.8 10.0 16A 21A 11.0 13.8 13A Lending 741.8 404.6 1269.6 1034.3 855.0 685.0 829.7 Tota agric. lending 3707.3 3814.6 5629.9 5161.9 7201.7 5032.6 5388.1 Percentage lending 20.0 10.6 22.6 20.0 11.9 11.6 16.5 Total lending Including components In other subsectors, FY 91: 432.2 Percentage agio. lending, Including components, FY91: 11.7 ESW FY91 (Staffweeks): 72.3 As a% of Total ESW: 2.5 The difficulty in defining what constitutes for the year. Area development projects continue to an area development project, pointed out in last decline in number although their parallel decline in year's review, has not yet been addressed satisfac- overall lending volume is somewhat marked this torily. If a minimally acceptable definition of area year by a single very large loan to Mexico. development specifies that it must at least involve The design of the latest cohort of area devel- several subsectoral and/or multi-sectoral activities, opment projects reflects several lessons from expe- then several of the projects included in this year's rience. Given the recurrent problems of institu- cohort have not been coded correctly, although part tional coordination pointed out by OED, the new of the confusion may result from the lack of suitable generation of area development projects relies ei- available coding alternatives. The single largest ther on already proven structures (Colombia's DRI loan to the subsector focused mainly on fiscal decen- program), or on providing incremental support to tralization, and one land titlingprojectwas coded as functioning systems of local government (China's area development, apparently on the grounds that Henan Agricultural and Mid-Yangtze Agricultural it sets the preconditions Yor follow-on area develop- Development Projects). ment projects. The renewed attention to institutional ca- Project components, however, referentirely pabilities is also reflected in the geographic distri- to mapping and surveying. Another area develop- bution of the projects. Significantly, more than half ment project in China focuses (86 percent of base of the projects identified by the 1990 OED report as costs) overwhelmingly on fruit planting, while the sufferingfrom severe institutional weaknesseswere remainder of the project consists essentially of mar- located in Africa. In FY91 there were no area ketfacilities forsellingthe fruit. Thesethreeprojects development projects in that region. Four projects account for 60 percent of area development lending were in Asia, while the remaining two were in Latin in FY91. America. With the exception of the Mexico project, FY91 Operation: Six area development projects where strengthening state and municipal institu- were approved during FY91. Totalling $741.8 mil- tions is a major project objective, implementing lion, they formed 20 percent of the sector's lending institutions forthis generation of area development 1991 Agriculture Sector Review 23 Annex 1: Subsectors projects have already demonstrated their ability to are disproportionately dependent. The heightened carry out planned project activities. emphasis on local participation is also expected to A second major shift is the increasing em- increase women's direct access to project benefits. phasis on undertaking area development by decen- tralizing decision making for activities more ap- Economic and Sector Work: Three parallel propriately carried out at the local or regional level. strands make up the bulk of the Bank's sector work The Mexico Decentralization and Regional Devel- on area development projects. opment Project is the most advanced example of an The first consists of improving regional planning integrated framework for promoting the decentrf'i- and implementation capabilities. This includes de- zation project decision making, especially for agri- veloping guidelines and criteria for public sector cultural extension and rural road maintenance sub- investments under area development projects, and projects. promoting mechanisms for more substantial in- There are several significant trends and volvement of beneficiaries in generating project innovations in the design of this cohort of area ideas and implementation mechanisms. development projects. The most notable is the re- The second strand supports the improved newed emphasis on poverty alleviation. In the Mexi- decentralized planning frameworks by promoting can Decentralization and Regional Development greater flexibility in resource management. Village Project for Disadvantaged States Project, for ex- funds, state development budgets, and revenue ample, impactonpoorpeople is the firstcriterion for sharing are three of the tools used to provide the identifyingsubprojects, andtheprojectincorporates financial resources needed to carry out local level explicit mechanisms to ensure that the focus on projects. Finally, investments increasingly concen- poverty is sustained throughout project implemen- trate on production improvements; areas such as tation. The Henan Agricultural Development project health or education may occur in parallel but under is sited in one of the poorest areas of one of China's separate projects. poorest provinces; problems with production, pro- cessing, and poverty are so pervasive thatconcerted Future Lending Program: While a large drop in action on several fronts is imperative for any one area development project lending to $404.6 million development effort to succeed. is projected for FY92, this seems to be a one-year The Mexico Decentralization Project in- phenomenon and the subsector is expected to reach cludes separately administered development funds an annual average of 9 projects and more than $800 for indigenous populations. Although indigenous million in lending in each of the succeeding three people are commonly excluded by virtue of their years. Projecting future lending in the subsector is sociocultural uniqueness from equitable access to complicated by continuing classification problems: local services, the indigenous development funds in the area development pipeline includes projects this project represent an important innovation for withadiversitythatrangesfromagriculturaleduca- addressing issues of indigenous peoples' develop- tion in Indian secondary schools to the proposed ment. multipurpose Xiaoliangdi Dam and IrrigationProject The new projects contain much more sub- in China. stantive analysis of their impacts on the environ- The pipeline also shows a change in empha- ment than do earlier ones. All of the projects in- sis in future area development projects as they add cluded specific actions to strengthen the environ- an increasing focus on environmental management mental regulatory and enforcement capabilities of to the traditional poverty alleviation and privati- project monitors. Several of the agricultural compo- zation core objectives. -'hus, two of the four FY92 nents include specific agreementsonbanningchemi- area development projects focus on environmental cal inputs with particularly harmful environmental management, as do five of 11 projects planned for impacts. FY93, while six of the 15 projects projected for FY94 Improved environmental screening for sub- will concentrate on environmental protection and projects is already reordering investment priorities, natural resource management. and as project's environmental capabilities increase, Area development projects will, thus, con- environmental planning and implementation will tinue to be an important facet of Bank lending for continue to improve. agriculture, and a key vehicle for alleviating pov- erty in rural areas. Innovative design approaches - Areas of Special Emphasis: Issues of women in fiscal decentralization, privatization, and increased development are increasingly addressed through local participation-can provide new opportunities area development project activities. to overcome the coordination problems that have In the Tamil Nadu project, for example, hobbled area development projects in the past. This women benefit directly through their involvement very innovation will, however, require close super- in extension activities and local level farm associa* vision of project implementation, supplemented by tions, and indirectly through the improvements to ongoing andthorough monitoring and evaluation of the common property resources on which women results. 1991 Agriculture Sector RevIew 24 Annex 1: Subsectors AGRICULTURAL SECTOR ADJUSTMENT LENDING AGRICULTURAL SECTOR ADJUSTMENT LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No. of projects 9 16 11 10 14 5 11 Total agic. projects 47 60 67 70 82 58 67 Percentage projects 19.1 26.7 16A 14.3 17.1 8.6 16A Lending 851.3 888.7 405.5 843A 1046.0 512.5 739.0 Total agric. lending 3707.3 3814.6 5629.9 5161.9 7201.7 5032.6 5368.1 Percentage lending 23.0 23.3 7.2 16.3 14.5 10.2 13.8 Total lending, Including components In other subsectors, FY 91: 789.3 Percentage agric. lending, Inoluding components, FY91: 21.3 ESW FY91 (Stafweeks): 747.3 As a % of total ESW: 26.2 Agricultural adjustment operations broad- million), one $224 million loan in Asia (Philippines) ened in FY91 as the Bank's policy dialogue con- andone$400millionloaninLatinAmerica(Mexico). tinued to move beyond market reform to take up The highest share of adjustment lending issues such as poverty alleviation, the environment, total agricultural lending was achieved in 1986, and and the efficiency of government. Several opera- lending in FY91 was at the third highest level since tions had measures oriented toward resource man- 1980, largely because of the relatively large loans to agement, and institution building, and raising pro- Mexico and the Philippines. ductivity levels. The wide yearly variation in adjustment The Mexican Agricultural SectoiVFood Se- lending has been noted in earlier reviews: agri- curity Project ($400 million IBRD), for instance, cultural sector lending varied from 6 percent to 25.7 supports a wide spectrum of changes in that coun- percent of total agricultural lending over FY86-91. try, from trade and price policy, to changes in the In FY91 adjustment loans account for 23 percent of role of the Ministry of Agricultural and Hydraulic agricultural lending, but this should drop to 7.2 Resources in formulating agricultural policy and percent in 1993. A major reason for this variation supporting new actions in the areas of food con- has been the increasing difficulty of adjustment sumption and nutrition policies. Mexico is already operations. As the discussion on structural ad- in the middle of a process of intense structural justment advances, the need to enlarge the scope of reform, largely sponsored by the government, and programs becomes evident. This is clearly illus- the Bank loan is but a component, although an trated by the composition of this year's loans, which important one, of that larger package. As stressed in cover a wide array of issues, from traditional mar- the two Reports on Adjustment Lending, this na- keting and producer incentives issues to food and tional commitment to reform is a crucial determi- nutrition policies,to environmental considerations. nant of success. There is little doubt that this loan is Two of the four sector adjustment opera- supporting reforms that are sustainable and deep. tions approved in FY91 are hybrid adjustment- Even though the remaining operations do investmentoperations.ThePhilippinesoperationis not have the breadth of the Mexican program, they entirely dedicated to environment and natural re- also deal effectively with a large set of issues and sources and the investment component ($58 mil- conditionalities that cut across sectors. For ex- lion) supports institutional strengthening and re- ample, the loan to Uganda directly targets interest gional community-based resource management ac- rates and, indirectly, through a requirement that tivities. In the other hybrid operation, Uganda, the coffee sector financing be made by private banks, investment component ($15 million) supports agri- monetary aggregates. This is an interesting charae- cultural research and technical assistance, research teristic of this operation that will facilitate the on land policy and institutional strengthening. achievement of the other changes sponsored by the Loans granted to African countries concen- loan. trate on reforms in the areas of marketing and FY91 Operations: There were four new producer incentives; the Philippines' loan is an sector adjustment loans and one addition to an environment/resource management operation and operation from last year (Tanzania), for total lend- the loan to Mexico includes price and trade reforms, ing of $815.1 million. Three loans, totalling $191.1 and a food security component. As in previous years, million, went to African countries (Tanzania, $16.1 some of the proposed reforms programs stop short of million; Kenya, $75 million, and Uganda, $100 full liberalization. In some instances instead of 1991 Agriculture Sector Review 25 Annex 1: Subsectors leading to market determined prices, the aim is to structure may be real impediments to a deeper move prices at levels closer to border prices, but still structural reform, but the risks that the reform under governmentcontrol. Inothercases,parastatals process will remain incomplete, or even backtrack, will retain a large role in the marketing process and are higher with this strategy. Continued support many actions require only the preparation of stud- from the Bank, commitment from the Government ies or agreements on further initiatives to be taken of Kenya, and internal political support for the after the lifetime of the loan. While this may be the reforms are required for the completion of the pro- only feasible alternative, it does raise questions cess. about the nature of the induced expectations formed The adjustment component of the loan to in the private sector and the long run view of the Uganda is to be disbursed in two tranches, the first adjustment. one of $50 million, upon effectiveness, and the second by October 1991. The program aims to facili- Conditionalities: The loan to Kenya has a compo- tate financial stabilization and to promote agricul- nent for sectoral management support ($8 million). tural growth and diversification. It requires that The remaining resources will be released in two private banks assume responsibility for financing equal tranches, the first upon credit effectiveness the coffee crop, which is currently done by the Bank and the second a year later. The adjustment pro- of Uganda. This aspect emphasizes the very strong gram aims to deepen policy reforms started in an links of this agricultural operation with the man- earlier adjustment operation and introduces new agement of macroeconomic policies, in particular initiatives in two other areas. The core of the pro- monetary policy. A condition for second tranche gram is to raise maize marketing efficiency and release is maintenance of a positive real interest increase incentives for smallholder producers, in- rate on commercial bank loans, including those for crease the availability of fertilizers to farmers, and coffee financing. to increase the efficiency of public expenditures, Uganda's Coffee Marketing Board, whose including the National Cereals and Produce Board export monopoly and coffee procurement monop- (NCPB). The fertilizer sector is now operating with sony have been abolished, will be restructured so decontrolled prices and the quota allocation system that it can operate cost effectively within a competi- for fertilizer imports has been eliminated. The ini- tive market system, although complete government tiatives in this area are geared to reduce the distor- divestiture willnotbe achieved during the program. tions of in-kind fertilizer aid and increase market Export licenses will be issued to at least two private information, sector entities, not counting cooperatives, and the The reforms in public expenditures, in addi- government will take actions to increase the share tion to the changes in NCPB, require the selection of exports by the private sector. of a core investment plan, a program for revising Uganda has also agreed to adopt an action user costs, identification of areas forprivatization of plan to tax coffee exports by mid-1992. This plan will services and improving the budgeting and expendi- change the current system, which taxes the differ- ture control system. The major maize marketing ence between the export price and the sum of the reforms are related to the operations of NCPB, fixed producer price and processing and marketing whose ultimate role should be in the areas of food margins to improve incentives to exporters without security and price stabilization. During the lifetime sacrificing government revenue. Meanwhile, as a of this operation, however, this objective will not be condition for second tranche release, the govern- attained. NCPB operations with minor crops and mentwill ensure that the fixed margins to exporters with beans will be discontinued; a reduction of are compatible with adequate incentives to attract required purchases by sifted maize millers from the private sector and allow exporters to raise NCPBto60percentwillberequiredandrestrictions working capital. To stop the decline in producer on maize movements will be reduced, and elimi- prices of traditional export crops, the government nated during 1992. Other program features include will also increase the share of export prices going to capacity-building in agriculture and assistance to cotton, tea, tobacco, and cocoa producers, and will vulnerablegroupsbydesigningandbeginningimple- carry out twice-yearly reviews and adjustments of mentation of a food security action plan, preparing producer prices. These measures are seen as in- a drought contingency and early warning, and termediate steps necessary before market based monitoring the impacts of adjustment, targeting prices can be determined. The investment compo- assistance to the losers during the adjustment pe- nent of the loan will strengthen activities that deal riod and monitoring the effects of economic reform with some of the underlying causes of lagging pri- programs through a household survey. vate sector response to the adjustment program, While significant steps are being taken to- including agricultural research and extension, ag- wards adjustment, NCPB will still have an impor- riculture sector planning, land policy research, cof- tant role in the maize market. This phased ap- fee subsector management, and project coordina- proach, however, is part of the Bank's strategy in tion and monitoring. The process of liberalization Kenya. Political constraints and the lack of infra- will not be completed within the lifetime of the loan. 1991 Agriculture Sector Review 26 Annex 1: Subsectors Continued follow up will be necessary to guarantee nutrients. It aims to provide the vulnerable popula- support for the reforms and the interest of the tion with enough purchasing power to obtain food private sector. Care should be exercised in issuing and inform and educate the population on how to export licenses for private sector participation, as make betteruse of available food.'The health system this may generate rent-seeking behavior ancVor will be used to identify beneficiaries of the program private monopolies or oligopolies to replace the and the private sector will deliver the food. government. The complexity of this operation arises from The adjustment component of the loan to the fact that it deals with a large set of issues that the Philippines aims to preserve or reestablish, run across the borders of various government agen- biological diversity and introduce sustainable land cies against the background of an improving, but by use practices. Reforms in incentive schemes and nomeans resolved, macroeconomic situation. More- legal and regulatory procedures are called for in the over, the forthcoming negotiations of a free trade adjustment component, while the investment com- agreement with the United States and Canada has, ponent aims at strengthening the central and local to a significant extent, reduced what could be public institutions managing and monitoring these achieved in reformingprice and trade policies under resources. Actions under the adjustment compo- the operation, specially for maize, which plays a nent include developing a system of integrated central role in the Mexican economy, and wheat. areas to protect biological diversity, introducing Government intervention in sugar, in spite of sub- user fees and improving law and regulation enforce- stantial progress alreadymade, will still be substan- ment related to forestry to discourage excessive tial. The phasing out of protection, which is now at logging, providing secure tenure rights and exten- about 80 percent, will depend on results of a study sion services in upland areas, and promoting small- of the sectorwhose results will be discussed with the scale resource management projects to encourage Bank before second tranche release. The Bank sustainable land practices. This project departs considers that five years is the maximum allowable from others financed in FY91 in the contents of the time for reducing protection. For wheat, the agree- adjustment program. It pushes quick-disbursing ment calls for a freeze in the level of nominal operations into a new direction. While there are no protection at the current level, and for maize the major conceptual obstacles to this, pure investment agreement with the government requires that the operations might be more effective in dealing with real dollar value not increase until the Spring- such issues. The conditionalities are mostly con- Summer 1992 crop. cerned with specific sector questions and do not deal The reforms contemplated under this op- with general policy distortions that, if present, eration are far-reaching and a large step forward in could contribute to over-exploitation of the Philip- Mexico's adjustment process. A large number of pines' natural resource base. markets will be entirely free, the trade regime in Perhaps the most complex operation in- agricultural goods has been liberalized and agricul- cluded in this year's package is the Mexican one. tural policy becomes independent of food consump- The operation supports policy reforms in trade and tion and nutrition policies. The depth of these re- price policy, in food consumption policy and the forms make backtracking, even if desired (which institutional transition of the Ministry of Agricul- does not seem to be position of the Mexican govern- ture and Hydraulic Resources from its highly inter- ment at this point), increasingly difficult and costly. ventionist role into a more policy-oriented agency. On price and trade policies, the operation will sup- Areas of Special Emphasis: Concerns with the port the elimination of government intervention in groups most vulnerable to the consequences of the producer prices of most agricultural commodities, adjustment process are present in most loans, albeit elimination ofconsumption subsidies, liberalization with different emphases and depths, as the descrip- of imports, elimination of price controls on pesti- tion above has indicated. This is in step with recom- cides and use of tariffs as a general mechanism for mendations of the Second Report on Adjustment protection of domestic production of pesticides, fer- Lending and reflects the efforts of Bank staff to deal tilizer and other agricultural inputs. with the social costs by structural reforms. The loan will support reforms in food con- Environmental conditionalities are present sumption and nutrition with the objective ofmaking in the loans to Mexico, Kenya, and the Philippines. agricultural policy independent of food consump- In the Uganda project, the environmental con- tion policies and making poverty alleviation pro- siderations are included in the investment compo- grams more cost effective and successful by increas- nent as part of the program for agricultural re- ing coverage and improving targeting of the poor search and extension. This reflects increased atten- population. The strategy relies on the elimination of tion on the part of Bank staff to this aspect. None- untargeted subsidies, provision of food supplements theless, it seems that we are not at the point yet of for those suffering from, or at risk of, malnutrition, denying the assessment made in last year's review and health interventions that prevent or treat para- listing environment as a fringe area of conditional- sitic and other diseases that generate waste of ity.' 1991 Agriculture Sector Review 27 Annex 1: Subsectors Future Lending Program: Lending for agricul- The only operation in Latin America was tural sector adjustment is projected to grow at a the Agricultural Adjustment Loan II for Mexico. slower pace than total lending for agriculture in the Many countries in this region continue to face years ahead, as indicated by the reduction of its severs macroeconomic imbalances, which make share to around 10 percent in 1996. Sector lending adjustment lendingdifficult. Mexico stands in sharp for FY92 is projected at $363 million. Proposed contrast to these countries; it has been following a African operations will deal with market and trade comprehensive adjustment of its economy and some reforms, social costs of adjustment and food secur- of the majorcauses of macroeconomic disequilibrium ity. A projected loan to Poland, one of the Eastern have been removed. The loan assists this country in European countries most advanced in its transition pursuing its strategy of freer trade and increased to a market economy, will involve market reform, private sector participation in agriculture. privatization issues and the formulation of a long The debate on structural adjustment in the term land policy to develop a land market and to Bank and outside has recognized most of the issues facilitate land consolidation. Concerns with the mentioned here, particularly with respect to the environment are present in all loans, even though operations in Africa. In some cases, howev,'&, re- in some instances the issues are addressed in sepa- forms remain superficial and easily reversible, and rate initiatives. will not, in fact change the structure of the economy As in FY90, this year's operations were or the policy regime. concentrated in the Africa Region. The core of the While these reforms may be seen as a re- adjustment program in that region, reflecting con- quired step towards achieving these goals, they fall straints facing the countries and, in part, the com- short of generating the incentives for long-run plexity of African economies, is distortions in pro- growth. The level of investment, a key variable in ducer prices and the marketing of a few key com- determining the growth prospects of a country, modities. In the Philippines the loan deals with a depends, among other things, on a sustainable relatively new area for structural adjustment, the supportive macroeconomic and policy environment. environment and natural resources management. This will require continued efforts by the Bank and Another operation supporting an environmental political commitment from governments if the re- project was approved in FY90 for Madagascar. form process is not to lose strength. AGRICULTURAL CREDIT AGRICULTURAL CREDIT LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No.ofprojects 4 4 3 3 5 10 5 Total agric. projects 47 60 67 70 82 58 67 Percentage projects 8.5 6.7 4.5 4J 6.1 17.2 7.S Lnding 558.5 259.1 525.1 150.0 850.0 1285.0 613.8 Total agric. lending 3707.3 3814.6 5629.9 5161.9 7201.7 5032.6 5368.1 Percentage lending 15.1 6.8 93 2.9 11.8 25.5 11A Total lending, including components In other subsectors, FY 91:637.8 Percentage agric. lending, including components, FY91t 17.2 ESW FY91 (Staffweeks)t 503 As a % of total ESWt 1.8 The World Bank's rural credit portfolio con. FY91 credit projects or components that stated tinued its evolution away from subsidized supply- specific spreads, the range went from 3.5 percent for driven credit operations in FY91. Twelve - of a India to 15.5 percent for Uganda. Projects in the total of 16 - credit project and project component Philippines and Poland had negotiable spreads that appraisal reports mandate positive real interest offered financial institutions greater flexibility in rates. The tendency toward raising onlending covering administrative costs and risks. Five of the spreads to cover the operating costs of rural finan- fixed-spread projects include annual reviews or cial institutions also continued, with an average periodic adjustments of onlending rates. financial spread of 6.8 percent in nominal terms for The positive real interest rates and wider projects that were defigned with predetermined spreads that are coming to characterize agricul- spreads - significant)y higher than the 3-4 percent tural credit lending reflect a late 1980s review of spreads typically found over 1980-88. For the six financial sector operations that found that subsi- 1991 Agriculture Sector Review 28 Annex 1: Subsectors dized credit programs usually failed to provide financial instit ution) capable of adequately perform- significant amounts of capital to the poor - while ing in competitive environments rather than rely- destroying the financial viability of lending institu- ingon subsidies and frequent bailouts. One tool that tions saddled with unremunerative interest rates should be used more often is routine assessments of and, often, distressingly high loan losses. Access to financial institution subsidy dependence to assess cheap donor funds inhibited domestic savings mobi- and quantify, as an integral part of financial report- lizationbyruralfinancialinstitutions.Theirdepen- ing, whether progress is being made towards sub- dence on subsidies to maintain operations was al* sidy in lependence, and whether any remaining most never evaluated, and their operations were subsidies are justified. often dependent on continuing subsidies from cen- At the project level, appraisals need to look tral governments or international donors. more explicitly at the creditworthiness of financial A 1990 Bank Task Force on Financial Sector intermediaries, and their ability to identify and Operations expressed great concernoverthe results provision against non-performing loans. More re- and performance of the Bank's financial sector and sources should be spent on institution building, intermediation operations. The task force's report particularly on establishing management informa- was followed by a draft Operational Directive - tion systems that improve analysis and reporting of issued in August 1990 - setting more rigorous loan losses. It is essential to make rural financial standards for financial sector and financial inter- institutions capable of making competent lending mediation operations. The draft directive's major and borrowing decisions without reliance on state recommendation was that financial sector opera- management or concessional funds. tions be framed within a financial sector strategy, and undertaken only in macroeconomic environ- FY91 Operations: Applying these more rigorous mentsconducivetorealizingtheirobjectives. Within criteria to rural credit systems and the credit- this framework, interest rates must be increased to worthiness of participating financial intermediar- market levels, targeted or directed credit lines dis- ies, has reduced the volume of rural credit lending couraged, and the causes that initially generated in recent years and caused several operations that special concessional terms removed. Adequate regu- would likely have been acceptable in previous years latory and supervisory frameworks must be estab- not to materialize. The Bank has refused, for in- lished, and participating financial intermediaries stance, to finance an agricultural credit scheme in are required to have sound financial structures. Bangladeshbecause of dismal financial performance Much remains to be done, however, to over- and the absence of adequate policies to ensure come the damage done to agricultural credit institu- better future performance. tions and programs in many developing countries There was also no free-standing agricul- by years of misguided policies in both agriculture tural credit lending in FY91 to Brazil, Mexico or and the financial sector. India, three countries that recently took up about The general performance of rural financial haht of Bank agricultural credit lending. The agri- markets also still leaves much to be desired. Efforts cultural credit systems in these countries lost much are needed to assure thatrural financial institutions of their equity and became substantial and continu- apply positive onlending interest rates high enough ous drains on public resources as a result of highly to cover non-subsidized, financial, administrative, negative real interest rates, inadequate indexation and risk costs. More progress needs to be made in in times of soaring inflation (Brazil, Mexico), or many countries to eliminate - or, at least, gradu- dismal I -n collection in a stable economy (India). ally reduce - legal ceilings on interest rates. Often Bank lendingfor agricultural credit in FY91 this will requ-'e policy changes that attack urban amounted to $619.9 million, a 13.1 percent drop bias directly instead of using subsidized rural credit from FY90 lending of $713 million, and 33 percent as a second best solution. below FY89's $917 million (all in constant FY90 Lettingmarkets determine interest rates- dollars). Lending for all three years was well below for savings as well as lending - can also greatly the FY80-88 average of $1,048 million. As a per- increase the scope for mobilizing rural savings. centage of Bank lending for agriculture, agricul- Only through a major effort to mobilize these say- tural credit lending was 26.8 percent on average for ings can rural financial institutions be cut free from FY80-88, 25.5 percent in FY89, 19.5 percent in 1990 the subsidy dependence and financial weakness and only 17.2 percent for FY91. As a percentage of inherent in concessional central bank discount fa- Bank lendingas awhole, agricultural credit lending cilities and obligatory bond purchases by other was 6.7 percent on average for 80-88, 4 percent in financial institutions. More work is also needed on 1989, 3.5 percent in 1990 and 2.8 percent in FY91. improving loan collection rates to ensure that lend- There were only three freestanding agricul- ing rates do not become prohibitive when they tural credit projects and 13 agricultural credit com- adequately cover all costs and risks. ponents within other agricultural projects. The free- Projects and subprojects should also strive standing projects - in the Philippines, and Poland, to improve managerial systems and skills to make and China - totalled $522.7 million or 82 percent of 1991 Agriculture Sector Review 29 Annex 1: Subsectors all agricultural credit lending. The average size of ticed by the successful BRI system, while the Ugan- loans with credit components was $46.4 million, dan project faces wide variations in the rate of --hile the average size of the credit components inflation (estimated at 29 percent a year). Of the 16 themselves was $9.0 million, 19 percent of the total projects and components, 12 planned to apply posi- value of the Bank's lending for the project. The tive interest rates. This continues the trend of average loan size was somewhat skewed by the moving away fromthe subsidized interestrates that presence of two large projects in China ($110 and characterized rural financial institution onlending $136 million) and a large emergency reconstruction rates from 1980 to 1988. Six of the FY91 projects project for the state of Andhra Pradesh in India recognized the importance of setting and periodi- ($265 million). Four of the projects with credit cally adjusting on-lending interest rates to better components were agricultural sector loans, two reflect market rates. were area development loans, two fisheries loans, Six projects - a slightly smaller proportion one an irrigation and drainage loan, and two were than inFY90-call formarketdeterminedonlending livestock loans. The remaining two projects were an rates. Freeing onlending interest rates in many Emergency Reconstruction Project that focused on countries represents a dramatic shift from the inter- replacing destroyed assets in areas of Andhra est rate ceiling regimes of earlier decades, but does Pradesh in India damaged by a cyclone and an not necessarily insure positive interest rates in the Agricultural Support Services Project in Bangladesh. future unless mechanisms to adjust interest rates Asia received the lion's share of agricultural frequently are introduced, because of often under- credit lending in FY91, with 7 of 16 projects, and 84 estimated inflation projections. On the other hand, percent of agricultural credit lending, compared projects are becoming more flexible and attuned to with its 55 percent of agricultural lending as a iocal social structures in the sorts of subloan secu- whole. Four large projects in China and the Philip- rity required by lenders. Traditional forms of collat- pines, in addition to a medium-sized project in eral and security, such as capital assets and land Bangladesh, are responsible for this hefty per- title, were only required in 3 of the 16 projects in centage. China alone, with three projects, received FY91 (Poland, Pakistan and Yemen). Six projects over 50 percent of agricultural credit lending. There allowed joint liability and group lending mecha- were no freestanding projects in Africa, which re- nisms. The Yogyakarta Uplands Project in Indone- ceived 1.4 percent of subsector lending through six sia used the social structure and authority of the credit components. By contrast, Africa received 13.6 village head to lower subloan transaction costs and percent of all Bank lending to agriculture. EMENA the time required to process loans provided through received 17.5 percent of credit lending, as compared hamlet revolving funds. to 5.8 percent of all lending to agriculture, largely Institution building also received increas- due to the $100 million loan to Poland. LatinAmerica ing attention in FY91. The Polish project aimed to and the Caribbean, which received 25 percent of all establish regional cooperative banks that would agricultural lending, had no agricultural credit function as commercial banks in providing coordi- lending in FY91. Africa's relatively large number of nating and refinancing services to cooperative banks, extremely small loans - averaging $13.4 million - and mobilizing savings and supplementing lending for agricultural credit components in FY91 reflects activities. In the Philippines, project funds provide a low absorptive capacity for rural credit. Much of Land Bank personnel with training in investment the lending to Africa in FY91 took the form of appraisal, inflation accounting, and monitoring. In structural or sector adjustment loans, which made Equatorial Guinea, Bank funds are being used to less available for agricultural credit lending. provide training in credit and savings operation for financial managers. In Ghana, training, computers The DesignofCreditProjects and Components: and vehicles are supplied to the Agricultural De- The three agricultural credit projects and 11 of the velopment Bank. The Rural Credit Development 13 agricultural credit components gave important Project in China provides training for bank person- roles as financial intermediaries to national agricul- nel, office equipment, aid in formulating lending tural development banks. Six of the project designs policies, auditing, and long-term planning. In incorporated commercial banks as financial inter- Bangladesh, the Bank is financing a foundation mediaries, while four had parastatal agencies as that will provide technical assistance and approve financial actors and two used credit cooperatives. loans for agricultural exports. Onlending rates continued their upward trend. One mechanismforreaching andmaintain- Thirteen appraisal reports mentioned the levels of ingfinancialviabilityisnegotiatedfinancial spreads on-lending interest rates, which ranged from a low that give lending institutions the flexibility to cover (in nominal terms) of 7-12.5 percent (Yemen and costs as key variables, such as inflation changes. Pakistan) to an upper limit of 44-50 percent (Indo- There seems to have been significant slippage on nesia and Uganda). The Indonesian case is based on this issue in FY91, as only 12 percent of projects had the positive experience of extending subloans with this feature - although they were large projects relatively high positive real interest rates, as prac- that accounted for over a third of lending volume - 1991 Agriculture Sector Review 30 Annex 1: Subsectors compared to 43 percent in FY90. FY91 projects and surements, age analysis of arrears and the amount project components also paid too little attention to of arrears that eventually end up as losses. None of the other side of rural credit: savings mobilization. the reports mentioned future studies on loan collec- Onlytwoprojectsemphasizepromotionofthismeans tion and arrears, although three-quarters of them of raising loanable funds locally. Poland's Agricul- highlighted institution building activities that may tural Development Project planned to mobilize say- address these critical financial management issues. ings through regional credit cooperatives, while the credit unions of Equatorial Guinea will serve in this Areas of Special Emphasts: Many projects in- capacity. Other projects, particularly the Philip- cluded provisions for strengthening financial inter- pines Rural Finance Project, expect increased say- mediation, although of the 15 projects for which ings mobilization based on policy changes and im- breakdowns of expenditures by program objectives proved management of the financial intermediary. are available, only 3 list it as a program objective. In Ruralcreditcomponentsoftenfailedtospell the Philippines, Ghana, Equatorial Guinea and out sub-borrower eligibility and subloan character- China (Rural Development IV), projects include istics. The freestanding projects clearly stated eligi- provisions for strengthening and training for na- bility requirements, while only 69 percent of the tional agricultural lending banks. Credit compo- credit components provide detailed descriptions of nents in many of the component projects are seen as these requirements. The stand-alone projects also means to accomplish goal in other subsectors - used the economic rate of return as a formal cri- such as cropping, livestock, or irrigation - rather terion for subloan approval in stark contrast to the than upgrading the performance and management components, in which only two out of 13 projects skills of rural financial institutions. Many of the employed this analysis. Seven appraisal reports projects included poverty alleviation among their r-entionedfinancial ratex of return as a criterion - goals or projected benefits. Of the 14 projects for butnotnecessarily a mandatory one foreligibility in whichbreakdowns ofexpendituresby program objec- reviewing sub-borrower projects. tives are available, 9 indicate that funds are allo- Adequate loan collection is often the main cated for poverty alleviation. Several projects, in- difference between a successful, self-sustainable cluding all 3 projects in China and the Indonesia rural financial institution and one that becomes a project, targeted low income regions. Some of the constant drain on governmentresources. The risk of other projects did not use specific targeting criteria nonpayment is alluded to in many of the appraisal or mechanisms to ensure that funds would actually reports, but the specific steps to be taken to monitor be made available to the poor. Exceptions to this subloans, collectrepaymentsandtracknon-perform- were agricultural credit components in Benin, ing loans are not adequately presented. Surpris- Bangladesh, India and Yemen. Average subloan ingly, past subloan repayment performance was not size - a proxy for the income levels of final bor- mentioned in conjunction with client selection in rowers - and eligibility criteria based on income, any of the 14 projects involving intermediaries that when criteria exist, were missing from most of the have been in operation for several years. appraisals. In some components it is altogether Annual loan collection rates and arrears as unclearwhetheracontributiontopoverty alleviation a percentage of loan portfolios wtae the financial is intended. Food security seems to be a goal of many ratios used in appraisal reports to assess loan ar- credit projects. While 7 of 14 projects allocated rears and the quality of the loan portfolio. Only two expenditures for food security, most of the ap- appraisal reports provided balance sheets and in- praisals predicted increased production of food- come statements (the Philippines and ChinWRural stuffs as a result of project activities. However, for Credit IV) that permit analysis of the loans past due some projects, the increases in food production are as a share of the total outstanding loun portfolio. intended for export, and for others, the increases Without these figures, it is not possible to assess the occur in the production of relatively expensive adequacy of loan loss provisioning, to price the loan sources of calories, like livestock. lose cost factor appropriately, to adjust the on- Almost all of the credit projects contain lending interest rate, or to measure a ruralfinancial training components. Components in Bangladesh, institution's financial results accurately - includ- Malawi, Yemen, and India contain components that ing its subsidy dependence. Since 14 of these specifically provide training and employment op- institutions are experienced financial inter- portunities for women. Only in India and Malawi mediaries, the amount of information presented on are credit components of projects even nominally arrears in the appraisals is inadequate. Designers earmarked to affect women, although the China of rural projects with credit components need to Rural Development IV project targeted sectors that focus more thoroughly on credit management and largely employ women). Only 4 of 14 projects list loan collection issues to make the creditworthiness Women in Development as a program objective for and financial performance of borrowing institutions which funds have been allocated. Additionally, some clear. The FY91 cohort of appraisal reports failed to with components targeted at women, do not list be specific on loan collection procedures and mea- Women in Development among their program ob- 1991 Aariculture Sector RevIew 31 Annex 1: Subsectors jectives. Projects in Poland, China (Rural Develop- numberof ongoing projects was smaller than in any ment IV), the Philippine a, Ghana, Equatorial Guinea year since FY85. This primarily reflects the amount and Yemen all contain training components for of time spent rigorously pre-appraising the various cooperative or participating bank staff. subprojects to be financed, mainly the China Rural Several projects, particularly the com- Credit IV and Poland projects. For agricultural ponents, emphasize resource management. Projects credit components, the average number of staffweeks in India(althoughnotthe credit component), Pakis. per project increased from 10.3 in FY90 to 12.6 in tan, and China (Henan Development) all emphasize FY91. This exceeded the average number of watermanagement.Otherprojectsemphasizerange- staffweeks spent in FY88-90, but was in keeping land and soil conservation. The two reports on with the number of staffweeks spent on credit fisheries projects both indicated that the projects components over FY85-87. included monitoring of the site for overfishing. Seven of the 14 projects for which program objec- Future Credit Lerding The sector review for tives are available list naturalresource management FY90 predicted that creditprojects would constitute as a program objective for which funding has been 16.1 percent of total agricultural lending, largely allocated. With respect to environmental protec- due to the projected approval of the Rural Develop- tion, a number of the projects pay attention to the ment IV Project in China and a large project in fact that they will be increasing the levels of pesti- Mexico. It also suggested that having such a high cides, insecticides and industrial waste in their proportion of credit projects was transitory, since targeted regions, usually emphasizing Bank guide- projections for FY92-94 were lower (7.4 percent on lines for agrochemicals and sometimes training average). Credit projects actually made up about components, but without a great deal of provision 15.4 percentof thetotal foragriculture in FY91. The forenforcementandmonitoring. Only 5of 14projects loan to Mexico is still pending, but this amount was for which program objective breakdowns are avail- made up by loans to the Philippines and Poland. able include an environmental program objective. Projects for Ghana, Bangladesh, Indonesia, and Many of the credit projects approved in Paraguay are all slated to go before the Board for FY91 include plans for both public sector initiatives approval in FY92. These pending loans total $249 and measures to increase the strength of the private million. sector. Seven of 14 projects list private sector reform The proposed Mexican project has slipped to as a program objective. Many projects couple train- FY93. The FY93 pipeline calls for $525.1 million in ing or restructuring of government agencies with agricultural credit lending. Projections for fiscal credit or technical assistance for the private sector. years 1994 and 1995 are $150 million and $850 Projects in Benin and Mozambique include provi- million, respectively. Projections indicate that Asia sions for streamlining government agencies by giv- will continue to dominate agricultural credit lend- ing credit to government personnel who are leaving ing. Bank projections for FY92 to FY96 indicate that to enter the private sector. Asia will receive 40 percent of the funds allotted for credit, Latin America and the Caribbean will re- Supervisiorn The average number of supervision ceive 30 percent, EMENA 18 percent and Africa 12 staffweeks per free-standing project increased in percent. Roughly equal numbers of projects are FY91 to 13.5 from 10.5 in FY90. The average num- planned for each region. No projections are avail- ber of staffweeks per project was larger and the able on agricultural credit components. FISHERIES FISHERIES LENDING AT A GLANCE FY91 FY92 Y93 FY94 95 FY96 W92.96 AVG. No.ofprjects 2 2 1 1 1 1 1 Totalagrie.pMJects 47 de 67 19 58 67 Percentage projects 4.3 33 1. 1A 1.2 1. 1S lAnding 22. 110 41.A St* 13.A 2&0 4 9 Total agrle. lending 3707.3 3814.6 5629. 5161.9 7201y $832A S3 Percentage lending .6 2.9 .7 1.0 4 .9 Total leanding, Including components in other subsectors, FY 9134. Percentagegri.- lending, lchading components, FY91st9 ESW FY91 (Stafteeks)i 17.1 As a$ of total ESW 0.6 1991 Agriculture Sector Review 32 Annex i. Subsectors The focus of fisheries lending has increas- - too often led to ad hoc overly technical solutions ingly turned to projects that support a more so- that did not take advantage of the Banks growing phisticated mix of project elements including re- institutional knowledge of the fisheries subsector. source management, control of post-harvest losses, environmentalcontrolsorrehabilitation, sociological FY91 Operations: Bank financing in FY91 for elements, aquaculture development, and inland fisheries lending totalled $76 million (including fisheries. These projects usually contain strong ele- fisheries research and credit for fisheries). There ments of infrastructure development and institu- were two freestanding fisheries projects of $8.8 tion building to strengthen local capacity in fisher- million(Malawi)and$13.2million(Vemen)amount- ies policy formulation, research and extension and ing to $22 million. There were 11 projects with project monitoring and evaluation. They have re- fisheries components totaling $54 million, of which search components that include sociological studies only three (two in China and one in India) included as well as more familiar fisheries research themes. components of $5 million or more. Fisheries projects also increasingly recognize the The Fourth Fisheries Project in Yemen importance of women in the fisheries sector, and builds on experience developed since the first fish- include components aimed at giving them the skills eries project was approved in 1972 for what was and opportunities needed to make a greater contri- then the Peoples Democratic Republic of Yemen. bution to the sector. The contribution fisheries can Preparation for the project included a sector review make to national economic growth is being increas- that focused on sector development polices and inglyrecognized inthe Bank's macroeconomic policy issues and provided the background for a major dialogues with member countries. dialogue with the government about the future of The Bank's FY91 fisheries program focused the subsector. The new project reflects this dia- largely on Africa. A Bank-led team with members logue, and its technical fish production and market- from the Icelandic government and FAO developed ing elements have been placed in an much improved a comprehensive fisheries management approach policy climate for restructuring state-owned enter- for West Africa as a framework for fisheries projects. prises and opening market access and the provision The team developed a detailed proposal to develop a of government services to private fishermen. regional Fisheries Monitoring Control and Surveil- The Yemenproject also recognizes thatfish- lance Program based on institutional cooperation ing takes place in a larger economic and social mechanisms developed by a number of coastal West context and devotes attention to the women who African states. Mauritania, Senegal, Gambia, and stay home while fishermen are at sea for extended Guinea-Bissau have agreedtoestablishacoordinat- periods. One set of project components provides ing unit that is expected to be the basis for a full- supportforadulteducation(literacy,primaryhealth, fledged regional monitoring program. home economics), vocational training (animal hus- An FAO study, made at the Bank's request, bandry, farming, fish processing, accounting), and of the aquaculture potential of four African coun- employment opportunities for women. tries (Ghana, Nigeria, Cote d1voire, and Malawi is The Malawi Fisheries Development Project expected to lead to aquaculture projects in those includes a strong institution building component countries. that will strengthen the Malawi Fisheries The Malawi fisheries development project Department's ability to carry out regulatory func- was preceded by a sector review, a process which is tions, staff training particularly for policy formula- becoming Lreasingly important as the Bank and tion, extension, monitoring and evaluation, and its borrowers realize most of the problems impeding enforcement of fisheries laws. It also has a research fisheries development are institutional or component designed to strengthen the ability of infrastructural, rather than simply technical. A staff to carry out fish stock assessment activities, study undertaken during the preparation of the design lake conservation and management pro- project on Lake Malawi also led to a well received grams, and design fish farming and mixed fish proposal on biodiversity for financing by the Global farming and agriculture models applicable to the Environment Facility. varied environments in the country. This reflects the lessons of earlier Bank- The project also contains a pilot program financed fisheries projects, which often performed designedto suppe-t income generatingactivities for poorly. Many of those projects concentrated overly women engaged in fish processing and marketing on the technical aspects of fisheries development activities. The program seeks to reduce the high without the economic and sectoral backgroundwork post-harvest losses due to spoilage. This component needed to place fisheries initiatives correctly within includes training, improved ice containers, improved ,,tional macroeconomic and social frameworks. fish smokingovens, workshops forwomenontechni- This experience also showed the importance of cal and business skill improvement, and credit for thorough supervision to identify problems early in fish storage and working capital. These activities project implementation, and that reliance on con- will be well grounded in socio-economic studies on sultants - usually under trust fund arrangements how best to deliver project services to women en- 1991 Agriculture Sector RevIew 33 Annex 1: Subsectors gaged in the fisheries sector, and women extension dirocted at cyclone emergency reconstruction of officers will receive special training in ways to w'twh the Bank financed $15 million for various better assist women fish traders and processors. fisheries reconstruction activities. Both projects address poverty issues by providing employment and low-cost protein sources through Future Leraing Program: Direct lending for their artisanal fisheries and domestic marketing fisheries is projected to increase in amount over the aspects. The Malawi project also supports next five fiscal years to an average of almost $46.9 privatizationthrough assistingthe newlyprivatized million - year. While this represents a significant national fishing company. increase over average lending of $29 million a year The two projects in China, Rural Credit IV, over IY87-91, the number of free-standing projects and Henan Agricultural Development, contained remains extremely small considering fisheries' po- large rural credit components for aquaculture deve- tential - one project each for four years, and only lopment of which the Bank financed $28.5 million two projects in FY92. No data is available on likely and $5 million respectively. The project in India is project components during this period. FORESTRY FORESTRY LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No.ofprojects 1 6 5 8 9 7 7 Total agric. projects 47 60 67 70 82 58 67 Percentage projects 2.1 10.0 7.5 11A 11. 12.1 10A Lending 19.9 293.0 168.0 619.0 571.0 345.5 397.6 Total agric. lending 37073 3814.6 5629.9 5161. 7201.7 5032.6 5368.1 Percentage lending .5 7.7 3.0 118 7. 6.9 7A Total lending, including components in other subsectors, FY 91: 97.4 Percentage agri. lending, including components, FY91: 2.6 ESW FY91(Staftweeks)i 4164 As a % of total ESW 14.6 The Bank's prime forestry achievement in port the creation of additional forest resources. FY91 was the formulation of a Forest Policy Paper. Particularemphasis hasbeen giventotropi- The Bank's intention to help arrest the destruction cal moist forests, as they have a great influence on of tropical moist forests is set out in its major policy global climate and biological diversity. Also, they statement, that the Bank "will not under any cir- are the most fragile in that their soils are easily cumstances"finance commercial logging in primary degraded once deforested, and even if reforestation tropical moist forests. In addition, the policy paper or selective falling of trees is attempted, experience states that the financing of infrastructure projects suggests that their initial ecosystems cannot be such as roads, dams, or mines that might lead to loss fully renewed or sustained. of virgin primary forests will be subject to rigorous To relieve the fundamental pressures on environmental assessments. forests over the long term, the Bank will continue to The Policy Paper identifies two key chal- supportpoverty alleviation andpopulation policies, lenges: slowing the alarming rates of deforestation forest zoningandregulation, changingprivate incen- - 17 to 20 million hectares, about 1 percent of tives, andmaking certain that careful environmen- tropical forests, are lost each year - and ensuring tal assessments precede public investments. In its adequate planting of new trees to meet the growing efforts directly related to the forestry sector, namely demand for fuelwood in developing countries. The aid coordination, country dialogue, sector work, Bank intends to move vigorously to promote con- and lending, the Bank will focus on international servation of natural forests and sustainable devel- cooperation, supportingtechnical assistance, inter- opment of managed forestry resources. It will sup- national forestry research, and providing financial port international efforts and legal instruments to resources. promote forest conservation, assist governments in Policy reform and institutional strengthen- policy reform and institutional strengthening, sup- ing will also be focal points in assisting govern- port initiatives that preserve forest areas, and sup- ments to identify and rectify market and policy 1991 Agriculture Sector Review 34 Annex 1: Subsectors failures that encourage deforestation and inhibit Total lending for freestanding projects and sustainable land use. components was about $300 million, less than half The Bank will support resource expansion the FY90 figure. Last year's projected lending pro- and intensification of the production of important gram called for sev-n freestanding projects in FY91, forest products and services by poor rural house- amounting to $453 million. The decline in lending holds and communities and preserving intact forest this year was partly due to reticence in putting areas, supporting initiatives to expand forest areas forward forestry projects until the forest policy allocated as parks and reserves and instituting paper had been finalized. Country difficulties (Su- effective management and enforcement in new and dan, Pakistan) also contributed the reduction in existing areas. Special attention will be given to the lending. However, this year saw an increase in the 20 countries that account for 85 percent of tropical number of projects with forestry components and moist forests and where forests arm seriously threat- this trend is likely to continue. ened by environmental degradation and destruc- Two projects, although they have different tion. thrusts, have common elements that illustrate the The paper stresses that in all countries, and new approaches being taken to forest development. for all types of forests, sector lending operations will The Philippine forestry project focuses on protect- distinguish between projects that are clearly en- ing biodiversity, while the project in Kenya centers vironmentally protective - such as reforestation of on helping the government better manage its for- degraded lands - or are small farmer oriented, estry resources. such as farm and social forestry, and other forestry Both projects take sectoral approaches to operations, such as commercial plantations. The addressing forestry problems and involve both the first two types will be considered on the basis of their private sector and NGOs in forest management - own social, economic and environmental grounds. including inventories and plans for prerving for- Other forestry operations will only be undertaken est areas of importance. They call for revising forest subject to government commitment to sustainable concession fees and royalties that are often too low andconservation-oriented forestry. Finally the policy to capture the full rent potential of forest resources paper stresses that the international community and providing extension services to local people to must support developing countries in achieving encourage sustainable management of forest re- their own goals in managing forest resources and in sources. providing ways in which the existence of global costs Both projects take long-term views of forest and benefits from forests can be better incorporated sector development; and include policy reform and into incentive structures for local action. All four development of new forest policies. regions are reviewing their forest strategies in the The Forestry Development Project is the light of the new policy paper and expect to prepare fourth Kenyan forestry project financed by the strategy papers in FY92. World Bank since 1969. This project is the first to address forestry problems in a nationwide program. FY91 Operations: During FY91 the Bank financed The project's objectives are to enhance conservation one freestanding forestry project in Kenya (For- and protection of indigenous forest resources, al- estry Development, $19.9 million); the Philippine leviate a growing fuelwood deficiency, to improve Environment and Natural Resources SectorAdjust- industrial timberproduction, and establish a frame- ment (IBRD $158 million and IDA $166 million), is work for the subsector's long-term development. Its also discussed here as it primarily concerns forestry principal components are farm forestry extension; development. The Bank also funded forestry compo- indigenous forest management and conservation; nents in 15 projects: Burkina Faso (Environmental industrial plantations development; strengthening Management, $6.4 million); Burundi (Energy Sec- and streamlining forestry institutions, including tor Rehabilitation, $1.0 million); C6te d1voire forestry education and research; and a forestry (Women in Development Pilot Support); Mali (Agri- master plan. The project makes innovative use of cultural Services, $2.0 million); Togo (Fourth Struc- pilot projects in diverse ecosystems for farm forestry tural Adjustment); Uganda (Agricultural Sector and indigenous forest management and conserva- Adjustment); China (Henan Agricultural Develop- tion. NGOs are involved in many of its farm forestry ment); China (Irrigated Agricultural Intensifica- activities and will assist in making inventories and tion, $14.3million); India (Tamil Nadu Agricultural socioeconomic studies in consultation with local Development, $19.7 million); Indonesia (Provincial people in natural forests. The Kenya project also Irrigated Agriculture Development, $0.5 million); encourages private sector involvement in industrial Sri Lanka (Irrigation Rehabilitation, $1.0 million); forestry while strengthening the system of royalty Argentina (Agricultural Services and Institutional collection from industrial plantations. Its research Development, $1.7 million); Colombia (Rural Devel- component branches into new areas such as ecosys- opment Investment, $4.5 M); Honduras (Social In- tem management, social and economic issues in vestment Fund); and Mexico (Decentralizatione-id farm forestry utilization, and energy production Program Development). from wood. 1991 Agriculture Sector Review 35 Annex 1: Subsectors The Philippines Environment and Natural have an impact on women in poor households. Resources Sector Adjustment Project is a hybrid Women's groups would be the principal target of operation that deals with rural resource manage- extension work. The time women spend collecting ment issues. The project consists of a sector adjust- fuelwood and income generation are two issues that ment program for policy and institutional reform, will be addressed. It is expected that both the Kenya and an investment component for implementation and Philippines projects will enhance the en- of the new policies. Its overall objective is to pre- vironment through tree planting, soil conservation, serve, and reestablish where possible, what re- and preservation of biologically diverse areas. Spe- mains of biodiversity, and introduce sustainable cific components within the projects give the rural land use practices in upland forest areas subject to poor opportunities to increase their incomes. The degradation by squatters and illegal logging opera- Philippines project has a component for promoting tors. The sector adjustment program will imple- sustainable agriculture techniques among upland ment major reforms in the incentive, legislative and farmers, while the Kenya project promotes farm regulatory structures governing management of forestry. Through components in extension and forests and soils on public lands. These include technical assistance in small-scale rural agriculture surveys to determine areas to be set aside for pres- managed by the local people themselves, both pro- ervation and implementing effective management jects should increase food production. Other com- systems for these areas. ponents strengthen public institutions. The government will also impose heavier The Philippines project calls for changes in user fees for loggers and enforce compliance with legislation, while the Kenyaprojectpromotestrain- loggingregulations and provide secure tenure rights ing. Both projects have roles for the private sector. to encourage sustainable use of the resources. Small Secure tenure and devolution of property rights is a scale community based resource management and strong component of the Philippines project, and livelihood projects using sustainable -ricultural NGOs will have significant involvement in both techniques for upland populations will receive in- projects. Privatization of industrial plantations in tensified extension services. The investment com- Kenya, and sharing of logging concessions in Phil- ponent will complement the sector adjustment pro- ippines are other examples. The Philippine project's gram by strengthening the central and local public main thrust is natural resource management. The institutions to manage andmonitorthese resources indigenous forest management and conservation through components that include training, research, component of the Kenya project also deals with this and long-term planning. activity. The project has a number of innovative features, including the establishment of an Inte- Sector Work: There was a significant increase in grated Protected Areas System that ranks and forestry sector work in FY91 and this will continue prioritizes sites that represent different ecosystems into FY92. In Africa, sector studies were under- for preservation and management. Another new taken in Nigeria, Zimbabwe, Zaire, Ethiopia and feature is joint venture timber production sharing Kenya. In Asia sector work was carried out in agreements between government and private log- Indonesia, India, Malaysia, Laos, and Papua New gers that involve competitive bidding for conces- Guinea. In Latin America sector work was under- sions, mandate full rent recovery, and provide close taken in Chile, and Costa Rica. In EMENA sector monitoring and enforcement of concession leasing work is underway in Algeria, Egypt, Morocco, Pakis- agreements with higher reforestation and environ- tan, Poland, Tunisia, and Turkey. The OED review mental fees and stumpage charges. of completed forestry projects highlighted the need The project also provides for the needs of for more comprehensive forestry sector work in the local residents - some of whom are indigenous future and this has been strongly supported in the groups-by introducingsecure tenure instruments Forestry Policy Paper. Just over 10 percent of for- on public land u.at are heritable, transferable, and estry projects experienced cost overruns during the renewable and delineatingthe ancestral landclaims FY86-91 period, and cost underruns were of the of indigenous groups and transferring forest man- same order. Since FY86 and through FY91 over 80 agement to them. Forest land management agree- percent of forestry projects under supervision have ments will provide local people a substantial rare been rated 2 or above and supervision has averaged of benefits at maturity of reforestation and sustain- over 9 staffweeks per project. able management of reforested areas. Their partici- pation in the decision making process will be as- 1uture Lending Program: The FY92 pipeline sured by giving them control of funds and decisions projects seven projects in forestry or with major for community-based projects at local level, a pro- forestry components, anchored by a proposed $182 cess in which NGOS will be involved. million loan to India to improve forests in Maharashtra State and a $45.6 million loan to Areas of Special Emphasis: The Kenya project's Pakistanforan EnvironmentandNatural Resources component for farm forestry extension will clearly Project. There would be smaller projects in Benin 1991 Agriculture Sector Review 36 Annex 1: Subsectors ($15.1million),Bangladesh($30million),Haiti($26.1 ronmental management continues to become less million), Laos ($10 million), and India, West Bengal distinct- which is in keeping with the thrust of the ($39.0 million), and Algeria ($30.0 million) for a Forestry Policy Paper, but raises definitional prob- total lending of $332.2 million, about 15 percent lems in evaluating the growth of initiatives in the higher than FY91. subsector. Forest industry projects and energy Projectedlendingrisearapidlyoverthe next projects focusing on fuelwood or charcoal are also two years - to 11 projects for$215.4 million in FY93 not counted in the forestry total. Taking a broader and 12 projects for $604 million in FY94, then falls view that incorporates these projects, it seems likely back a bit to 14 projects for $511.1 million in FY95. that the Bank President's target of tripling late The dividing line between forestry/environment 1980s lending for forestry by the early 1990s is projects andwatershed, natural resources andenvi- likely to be reached. IRRIGATION AND DRAINAGE IRRIGATION AND DRAINAGE LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No.ofrpmjects 1 10 13 17 14 11 13 Total agric. projects 47 60 61 70 82 58 67 Percentage projects 213 16.7 19A 243 17.1 19.0 19A Lending 98A 1073.7 16343 1469.2 1791. 1195.0 1432.8 Total agric. lending 37073 3814.6 56299 5161.9 7291.7 5032.6 5368.1 Percentage lending 26A 28.1 29.0 28J 24.9 23.7 26.7 Total lendIag including components in other submetrs, FY 91: 190 Percentage agric. lending, including components FY91t 28.8 ESW FY91(Staftweeks)s 234. As a % of total ESWt 8.1 The Bank's FY91 support for irrigation and ity wommitment and the competence to deliver drainage programs continued its evolution toward satisfactory service to users. Newly established lower-cost rehabilitation and institutional strength- water user associations are often fragile, and can ening to improve the operations and maintenance of break down quickly. Indifference toward water irrigation systems. Irrigation anddrainage interven- charges can form rapidly in systems where irriga- tionswere increasinglynationalorregional in scope. tion service is not reliable. The long-term impact of While average loan size has increased markedly adhoc low-costmeasurestorehabilitate antiquated, from $62 million in 1974-86 to $100 million in FY91, sometimes dilapidated irrigation systems is still average investment cost per hectare fell to $390, uncertain. about a tenth the average cost for developing new Evaluations of the relatively few projects areas. that took this approach in earlier years show that ThisnewregionaVnationalapproachfocuses they often performed as poorly as more traditional on institutional development and minimal improve- new construction projects. The key issues seem to be ments to physical infrastructure - rather than verycareful appraisal andfrequentandtightsuper- building new irrigation systems or extending old vision of very scattered works. It is also important ones. These "new style" projects reflect both the that project design assures that most of the ex- Bank's increased emphasis on institution building, panded O&M budget does not find its way into staff declining opportunities for new irrigation projects salaries and other recurrent costs rather than the as the land frontier shrinks, andareactionto strong equipment and training needed to significantly criticism in the past few years from OED reviews of improve operations. There is, however, still little project performance in the irrigation subsector. evidence that very low cost interventions can have It is still too early, however, to assess the a meaningful effect on water-use efficiency - and medium- and long-term effectiveness of these provide an acceptable rate of return. projects, as very few of them have yet been subject In FY91, irrigation and drainage was again to PCR or PPAR review. Institutional development the largest agricultural subsector. Its share repre- in the irrigation subsector - especially creation of sented 26.4 percent of the total lending program for effective water users associations, collection of wa- agriculture, and 29.0 percent of the program ex- ter charges and active farmer participation - is a cluding agriculture sector loans. slow process that requires strong irrigation author- While the volume of Bank lending for irriga- 1991 Agriculture Sector Review 37 Annex 1: Subsectors tion and drainage is progressively returning to the loans to nationaVregional sector loans reflects the level reached in the mid- 1980s, there is little indica- Bank's recent focus on strengthening state and tion yet that this has been accompanied by an regional institutions, which requires a broader ap- improvement in project performance. OED's an. proach than traditional project loans. It is also, to nual review of irrigation projects audited in 1990 - some extent, a reaction t. the apparent decline in of projects approved through 1980 - shows a con- traditional project performance documented by the tinued decline in performance from 80 percent for OED project performance audit reports and annual the projects evaluated before 1988 to 60 percent in reviews. An increasing number of loans also reflect 1988 and 46 and 43 percent in 1989 and 1990. This the Bank's new emphasis on sectoral reform and decline in project performance is partly attributable concentrate on organizational, policy, and financial to falling world commodity prices; but there is reforms to improve institutions and reduce finan- strong evidence that much of it was causedby overly cial burdens on governments. This approach began optimistic assessment of production benefits at both in 1987 withthe National Water Managementproject project appraisal and completion. in India, and continued with the irrigation support project in the Philippines and the Irrigation Subsec- Lending to India vs. Total Irrigation Lending tor project in Indonesia in 1988. (1950-90) Much greater attention is now being given 6000 $ millions to subsector level institutions and their structure, in contrast to the earlier, narrower, focus solely on project implementation units. However, there is 4000 Total Irrigation some concern about this rapid move towards these Lending new style projects. Few of these projects have yet 3000 been audited by the Operations Evaluation Depart- 2000 ment. A draft audit report on two projects in an Asian country in which about $120 million was 1000 India invested in rehabilitating, upgrading and extend- 0a . ingmedium-scale systems nationwide and strength- Lm a ' C n Meningthe national irrigation agency's capacity found L 11 , b that: Ln~~ ~ LO LC cc" 00systems operations seem to be close to the basic minimum practiced hfam the project. ...Although O&M expenditures are close to projected levels, indications are that more The OED reviews seem to be having an than 80 percent of them are personnel ex- effect, and production increase forecasts - and pensesandthatthepersonnelinvolvedspent PCR assessments - over the past three or four most of their time collecting irrigation ser- years seem more forthright and realistic than in the vices fees rather than in technical O&M past. POR evaluators also seem nowto have a better functions. ... Agriculture results of the two understanding of crucial relationship between wa- projects were disappointing. Recalculation ter management and agriculture production. OED's of economic rates of return are negative for very critical findings may not, in fact, reflect a both projects. The imprved level of man- significant decline in performance since their an- damentwassiplyaunrlitirexpect- nual reviews started; the likelihood, instead, is that tion* the real change is in the rigor of evaluations and Another audit report on a new style project that irrigation performance has been poor for the involving construction and operational improve- past two decades. Impact analysis studies of earlier ments at 24 medium-ecale irrigation projects at projects that were judged satisfactory is beginning scattered locations in another country, concludes to show that many of them also performed poorly. that project achievements at completion fall well The poor recent performance record is also below appraisal expectation and were unsatisfac- strongly affected by the irrigation and drainage tory. The audit report elaborates on the inadequa- portfolio in one country (India), which received the cies of project preparation and the disproportionate largest share of lending (45 percent) for the subsec- size and scope of the project in relation to the tor over 1982-87. The percentage of success in capability ofthe implementing agencies. The report projects evaluated in 1990 increases from 43 per- emphasizes the managerial difficulties in dealing cent to 52 percent if one excludes the five projects in with a large number of subprojects. However, while India-which were all found unsatisfactory. Irriga- the concentration or. institutional issues is of great tion lending to India has been greatly reduced over importance, there are two significant dangers, espe- 1987-91, falling to an average 22 percent of the cially given the geographically dispersed nature of irrigatioz/drainage portfolio. irrigation projects. The rapid move from conventional project In the first place, too little effort is being 1991 Agriculture Sector Review 38 Annex 1: Subsectors spent on the technical and engineering problems of staffweeks. While regional staff have made consid- irrigation. A new generation of irrigation tech- erable efforts in overseeing new-style projects, deal- nologies that can add greatly to water management ing with widely dispersed projects and new in- efficiency - at significant savings in water use and stitutional levels requires a much more hands-on cost and reductions in drainage problems - has approach if Bank staff are to be effective in assisting received little attention in Bank-financed projects. projects to be successful. And the supervision work- These technologies need to be adapted, tested, and load will likely grow larger. An exceptionally large applied in the developing countries. The alternative irrigation and drainage sector loan ($1.46 billion) is now largely used in new Bank projects - ad hoe included in the FY92 lending program. Given the rehabilitation using outdated technol-)gy - has, project's wide geographic area and multitude of despite low per-hectare costs, a relatively low cost- activities, appraisal staff have estimated that it will require upwards of 100 staffweeks of annual su- pervision. FY91 Operations: Bank lending for irrigation and A MODEL IRRIGATION PROJECT IN CHINA drainage components in all agriculture projects duringFY91 was$1,069.5million,or28.8percentof The North China Plain Agricultural Project lending for the agriculture sector. The bulk ($980 demonstrates the impact careful planning and early million) of this funding represented 10 free-stand- participation by all parties can have on the success ingprojects. Incurrentterms, this is only 10percent of an irrigation project. The FY82 project, financed below average free-standing irrigation and drain* by a $54 million IDA credit, raised cropping intensity age lending over 1980-1986 and 33 percent above from 138 to 163 percent and had an ex post the $735 million lent in FY90. Of the 10 free- economic rate of return of 56 percent. standing projects, five are primarily irrigation While the project involved little technical projects, three are basically irrigation and drainage innovation, it paid careful attention to ensuring that projects, one a flood control and drainage project, the techniques used were both-well tested locally and one a dam safety project. and understood and accepted by farmers in The Bank also financed seven irrigatioW Shandong,.Anhui, and Henan provinces. Village drainage project components, four of them major. ~andognshi and faena pariciaeI These were area development projects in Henan and township officials and farmers paripated in province and in the Mid Yang-Tse in China, a major planning and designing project activities from the poverty alleviation project in the four most disad- earliest stages. A highly decentralized project . vantaged states of Mexico, and a cyclone emergency management structure gave the leading role to project in Andhra Pradesh in India. The total cost of county-level project management organizations. irrigation components in these project components Project beneficiaries took part In building is estimated at about $352 million. In FY91, the earthworks and water control structures, which highest proportion of irrigation funds went to Asia gave them a sense of project "ownership." (82 percent), and the lowest to Africa (0.5 percent), The project was used as a prototype for the which had no free-standing project. This regional FY91 Irrigated Agriculture Intensification Project, distribution is similar to that in 1973-85, during which will Improve irrigation and drainage in another which Asia received the major share of irrigation 1.16 million ha in the three provinces, lending. The regional distribution of lending in FY90, during which the major proportion of funds went to Latin America, was unusual and reflected a temporary halt in irrigatioWdrainage lending to India, which averaged $495 million during 1980-86. benefit ratio. Finding appropriate applications of Lendingfor irrigation and drainage inFY91 these technologies requires applied research and is concentrated in the five countries that have strong commitment from implementing agencies to traditionally dominated Bank assistance for this overcome technological conservatism in countries subsector: China, India, Bangladesh, Indonesia and with well established traditions. Mexico is an excel- Pakistan. These five countries accounted for 86 lent example of a country where there is rapid percent of irrigation lending ($845 million for free- progress in adopting new technologies - thanks to standing projects and $112 million for project com- the strong interest of the high level government ponents) in FY91 and 7 out of 10 projects. Two other officials. free-standing projects are located in Asia (Philip- Secondly, thenew-style projects require sig- pines and Sri Lanka) and only one in Latin America nificant increases in supervision, which are gener- (Ecuador).Thetrendtowardlargerloantoasmaller ally not being allocated: staff-weeks of supervision number of countries that started in the mid-1980s averaged 12.0 in FY91, slightly above FY90's 11.8 continued in FY91. Overthe 13yearperiod 1974-86, staffweeks, but below the FY86-90 average of 12.8 an average of 18 projects was approved by the 1991 Agriculture Sector Review 39 Annex 1: Subsectors Board, with a peak of 24 in FY82 for 15 countries. sensitive to incremental production benefits that Since then the yearly average number of projects are difficult to estimate. has fallen to nine. The average cost of free-standing projects increased 18 percent, from $146 million Areas of Secial Emphasis: All 10 FY91 projects over 1980-84 to $172 million in FY91, reflecting a included serious discussionsof theirenvironmental turn away from smaller projects, particularly in aspects. Four of the projects had special en- Africa. vironmental components designed to improve hu- The most strikingaspect of FY91 irrigation/ mans health or wildlife habitats. Notable en- drainage lending is the national or regional scope of vironmental components involved a long-term study all projects but one - a flood control and drainage of mangrove management in the Ecuador project; project in Ecuador, which is for a well-defined area. protection of the environment, property and life in The shift towards sector loans covering a region or the Indian dam safety project; a program to mini- entire nation has increased since the Bank's reorga- mize environmental impacts during construction of nization. The new-style projects are seen as more infrastructure in Sri Lanka; special erosion and cost-effective in terms of preparation as they pro- siltationcontrolprovisionsinthe Philippines, China vide a mechanism for larger transfers of money. and Sri Lanka; environmental awareness training This approach has been welcomed in some recipient in Sri Lanka; measures to control salt water intru- countries that want to avoid concentrating limited sion in Bangladesh; and waterlogging and salinity funds on narrow geographic areas. These geographi- control in the Pakistan and China Projects. cally dispersed projects are of two basic types. Most Poverty alleviation was a major focus of the follow a pattern of second-phase projects begun in FY91 loans for irrigation. As a result of the low-cost, the early 1980s to complete, expand, or rehabilitate wide area approach adopted for the cohort of FY91 medium and small projects. projects, an exceptionally large number of families One of the most illustrative examples ofthis whose per capita income is below national or re- new style project is the $350 million Decentraliza- gional averages will benefit from the projects. Over tion and Regional Development Project in Mexico 90percentof the about5millionbeneficiaryfamilies which provides $36 million to build and rehabilitate are in the Asia region. While all 10 projects are small irrigation schemes in the four poorest states of expected to have positive antipoverty effects, only the country. The innovative feature introduced in seven of the 10 projects treated poverty alleviation the project is a rapid appraisal system for subproject thoroughly in appraisal reports; the issue was barely selection, which includes poverty criteria. Techni- notedintheotherthree. Povertyalleviationwasthe cal feasibility norms and standards are established main focus of the Decentralization Project in Mexico. by state agencies independent of the source of fi- Nine of the 10 projects included special nancing. To mitigate the risks of misappropriation provisions for training. Most training components of money, the project will strengthen existing safe- included all levels involved in project efforts, from guards and build new ones into project selection farmers through government specialists. An en- monitoring, evaluation and audit. vironmental training program was included in the Three of the FY91 projects (including the agricultural developmentproject for Henan, China. area development project in China) focused on im- As in FY90, the creation of water user proving and expanding existing schemes: China associations is one of the main objectives of most (1,422,000 ha), Indonesia (273,000 ha); fourprojects FY91 projects. The purpose is to involve the farmers on rehabilitation and improvement of water deliv- in all phases of the project cycle, including planning ery facilities (tubewell and water courses) without design and construction. Special attention is given expansion of irrigated lands (Pakistan; 1,567,000 to small scale systems (below 500 ha) in Indonesia ha); Sri Lanka (37,500 ha) and Philippines (15,000 and the Philippines, which will be turned overto the ha). associations. In all cases, the conventional approach Two projects in Bangladesh provide for ir- consisting in the creation of small WUAs having rigation development over 725,000 ha through in- responsibility for O&M activities at the tertiary or stallation of deep and shalow tubewells and low-lift quaternary level has been adopted. There is no pumps. The project in Ecuador provides for flood example in the cohort of FY91 projects of the ap- control and drainage over an area of 170,000 ha. The proach, used mainly in Latin American countries, of Dam Safety project in India will reduce the risks creating associations at project or secondary level against losses of life and property. and having farmers hire managers and staff to The projected rates of return for FY91 operate and manage the system for them. This projects range from 15 to about 50 percent (for the interesting and effective approach is the most im- twoprojectsinBangladesh), andaverage25percent portant institutional development of the proposed which is far above the ERR of the projects recently FY92 Mexico subsector loan, which will transfer completed and audited by OED. These high rates of management of 1.5 million ha of large scale systems return are due to the low per-hectare investment to water user associations. costs of the FY91 cohort of projects, and are highly Two projects give increased attention to the 1991 Agriculture Sector Review 40 Annex 1: Subsectors role of women in irrigation and drainage projects. sector work in FY91 continued the Irrigation Sector Underthe Indonesia project, special structures will Review in India begun in 1990 and now being be provided to minimize women's journeys between discussed with the government. India has been the fields and villages and for washing. The interest of major recipient of irrigation lending with 46 ir- women will also be considered when schemes are rigation projects approved representing US$ 4.8 transferred from the construction stage to routine billion of IDA/IBRD resources (28 percent of Bank operation and maintenance, especially for the small lending for irrigation). Irrigated farming is a major schemes that will be turned over to water user component of Indian agriculture, accounting for associations. Data collection and analysis for pur- about 55 percent of agriculture output. Neverthe- poses of monitoring of project impact, will be broken less, a number of difficulties have been encountered down by gender employment benefits generated by in implementing irrigation investments resulting the project. The project in the Philippines presents in increasing investment costs, decliningcostrecov- the increasing role of women in that country, where ery and concerns with the quality of construction 60 percent of community organization members are and adequacy of maintenance. Productivity of irri- women and an increasing number of women hold gated land is also of concern. Environmental and official positions in irrigation associations. Norefer- social issues range from the ecological impacts of ence to this subject is made in the other eight irrigation to the rehabilitation and settlements of projects. families displaced by construction of irrigation in- frastructure. Technological Research and Innovation: The The sector review addresses issues of im- FY91 projects show few technological innovations, proving productivity and sustainability in the sub- as most project activities are simple and straightfor- sector through technical and management innova- ward. Five projects include research components, tions, improving institutional and financial perfor- led by the two projects in China. Although research mance, and environmental and resettlement issues. for irrigation and drainage in the three provinces of It also examines the need for management reforms the North China plain is considered adequate, the and proposes strategies and choices for future de- project provides for researchto coveroperations and velopment. An irrigation subsector review was also maintenance aspects and water saving techniques; carried out in Venezuela where no commensurate topics proposed include low pressure pipe irrigation rise in agriculture was found despite considerable systems, automation system control for tubewell investments using national resources over the last operation, major irrigation structures; demonstra- 30 years. This review of experience and approaches tioz/extension on use of precast elements for on- to irrigation and drainage development served as a farm irrigation infrastructure, and optimization of prelude to an irrigation component now in the FY92 systems layout to improve efficiency. The Henan pipeline. Sector work is also in progress in Mali and Agricultural Development Project will also support Nigeria, which have good irrigation potential but research on topics such as water saving techniques, require a review of performance and issues before conjunctive use of surface and groundwater, water identification of new investment possibilities. In management for waterlogging and salinity control Mali promotion of private investments in irrigation and aquifer recharge techniques. is now recognized as necessary to ongoing efforts to Two other projects include area specific rehabilitate publicly managed systems. Project-ori- research andmonitoringon items such as chemistry ented sector work is also in progress in Mexico and of shallow groundwater, rice growing on difficult Indonesia. The Mexican study examines cost recov- soils. Interestingly, there are nopilotcomponentsin ery issues in connection with a proposed FY92 the free-standing projects, but a research and ex- sector loan in Mexico, while a water resources tension project in Mauritius includes three pilot/ institution study in Indonesia will support the pro- small scale operation covering about 300 hectares to posed FY92 Irrigation Subsector II loan in Indone- test the economic and technical feasibility of low- sia and contribute to the major water resources cost approaches to surface irrigation and greater policy paper under preparation. farmer participation ($2.7 million). The importance given to technological re- FUture Lending Program: Ten free-standing ir- search in Bank projects is expected to increase in rigation and drainage projects amounting to about the coming years through the support of the In- $1,073.7 million are listed in the FY92 lending ternational Program for Technological Research for program. As in FY90, Latin America is programmed Irrigation and Drainage (IPTRID). Attaining high to receive the highest share ($450 million or 42 productivity and crop diversification will require pez 3ent) followed by Asia and EMENA (about $377 more emphasis on technological development and and$310 million, or35 and22percent, respectively) innovation in tecLnical design of projects than in and distantly Africa ($10 million, or 1 percent). The the past. FY92 program is dominated by two major proposed nationwide subsector loans, one to Mexico and an- Economic and Sector Work: The most important other one to Indonesia, which would be a follow up 1991 Agriculture Sector RevIew 41 Annex 1: Subsectors to the first Irrigation Subsector Project approved in program for irrigation and drainage is programmed FY88. Two important projects proposed for FY92 to average around $11.4 billion. Based on past would provide for development of irrigation in well experience, lending projections for irrigation are defined areas of two main borrowers, one in Punjab, very volatile and given the yet unidentified nature Pakistan to prevent waterlogging through water of most operations it is likely that lending will conservancy measures ($106 million) and one in the remein inthe range of $1,000-1,500 million until the Tarim Province of China ($125 million). The lending mid-1990s. LIVESTOCK LIVESTOCK LENDING AT A GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-96 AVG. No.ofprojects 2 0 1 1 0 2 0 Total agric. projects 47 60 67 70 82 58 67 Percentage projects 43 0.0 1.5 1A 0.0 3.4 0.0 Lending 40.8 .0 40.0 60.0 0.0 175.0 55.0 Total agric. lending 37073 3814.6 5629.9 5161.9 7201.7 5032.6 5368.1 Percentage lending 1.1 0.0 .7 1.2 0. 3.5 1.0 Total lending, including components In other subsectors. FY 91r 67A Percentage agric. lending, including components, FY91: 1.8 ESW FY91 (Stafneeke)3 27.5 As a % of total ESW I.0 After a sharp decline in FY90, livestock economic rates of return of 16 and 13 percent, lending in FY91 returned to the level of the late projects in Africa have not lived up to expectations. 1980s and continued to focus on priority areas. The African projects suffered frow macroeconomic Strengthening veterinary, livestock extension and constraints, notably price cont.ols for dairy prod- research systems - and increasing private sector ucts, overvalued exchange ratea and trade policies participation - were major focal points, as were that failed to protect producers against dumping of smallholder dairy development and smalistock de- meat. They were also hampered by inappropriate velopment. The environmental aspects of livestock technology - often introduced with inadequate development drew increasing attention, as did understanding of local conditions - and weak gov- women's role in livestock production. The perfor- ernment institutions, notably in the pastoral areas. mance rating of the ongoing livestock portfolio im- The increased concern with the environment has proved considerably, in spite of limited staff re- also raised new questions regarding the role of sources. The limited sector work carried out in FY91 livestock in environmental degradation. supports these priority areas. The future lending Long-term and sustainable livestock project program is expected to remain at the FY91 level, performance can only be achieved if attention is and will continue to focus on institution building given toestablishingappropriate economic environ- and smallholder production. ments. Livestock producers need rational and sup- Production of red meat in the developing portive macroeconomic frameworks - that include world over 1962-1988 grew at an annual rate of 2.4 environmental costs- as much asentrepreneurs in percent, compared with only 1.9 percent in the any other agricultural subsector. Institution build- developed world. Even in Africa, red meat produc- ing, applied research to generate and test technol- tion grew over this period at an annual rate of 1.7 ogy, and its dissemination through improved exten- percent, faster than the 1.3 percent annual growth sion services also need more attention. Designing for crop products. The importance that farmers in livestock systems that make a positive contribution the developingworld attach to the indirectcontribu- to the environment should be a major focus of the tions of livestock to agricultural growth undoubt- research agenda. edly is one of the main reasons for this relatively The lending and sector work programs fo- good performance. Thus, meat and milk production cused increasingly on these issues in FY91. Institu- grows aon the back" of t e need for more power, tion buildingreceived more attentionthan inprevi- organic fertilizer, cash to purchase agricultural ous years, as more than two-thirds of the FY91 inputs and food security. cohort of livestock interventions had components While livestock projects in East Asia and dealing with improving livestock extension ser- LatinAmericaperformedwell,with average ex-post vices. Privatizing veterinary care and organizing 1991 Agriculture Sector Review 42 Annex 1: Subsectors producer associations - essential aspects of sus- important area. Of the funds targeted to the devel- tainable institutional development-were included opment of specific species, 45 percent was ear- in projects in Benin, Madagascar, and Uganda. marked for the development of sheep, goats, and Livestock projects increasingly focus on dairy and pigs and poultry. While most projects rely on well smallholder production - Madagascar, Uganda, known technologies, innovative technologies are and several of the Chinaprojectsareexamples-for used for fodder production in the Madagascar, which appropriate technology is available, rather Uganda and Tamil Nadu projects, where farmers than the extensive beef ranching that once charac- are offered a wide variety of choices in forage spe- terized the Bank's livestock subsector assistance. cies, cultivation systems and uses, and the critical The generation and testing of new livestock seed production is subcontracted to farmers at an technologies still does not receive sufficient atten- early stage. This approach was very successfully tion. While research is included in almost a third of applied in the Fourth Ethiopian Livestock Project. the FY91 projects, the $16 million allocated to In disease control, new non-polluting methods of livestock research is far from adequate to bridge the tsetse control are being introduced underthe Uganda major gap in adapted technology required to im- Livestock Project. In breeding, the Tamil Nadu prove livestock productivity and enhance its contri- project brings in more modern technology, through bution to environmental sustainability. a greater use of frozen semen technology in artificial Macroeconomic measures designed to im- insemination and the development of embryo trans- prove the incentive framework for producers in- fer capabilities. cluded protection against unfair competition from dairy products provided under food aid (Madagas- Areas of Special Emphasis: FY91 livestock pro- car) and from dumped meat (Benin). Projects in jectsandcomponentsgaveconsiderableattentionto Benin, India, Madagascar, and Uganda promoted institution building and promotion of the private institutional sustainability by increasing cost re- sector is a feature of all projects and components covery for veterinary services. that provide animal health care services. The in- creasing focus on smallstock and small dairy de- FY91 Operations: The FY91 program included velopment means that more benefits accrue to two livestock-only projects and 15 project compo- women, who keep most of the small and dairy stock nents for total livestock lending of $394 million. in the developing world. The Henan project in This returned the level of Bank lending for livestock China gives special attention to the role of women in to that of the late 1980s after a sharp decline in development. FY90, when only 12 livestock project component The increased focus on smallatock and were approved at a total cost of $212 million, and smallholder dairy is also an important contribution there -A are no freestanding projects. Fifty percent of to poverty alleviation, as these require smaller project costs in FY91 were allocated to livestock investments at the farm level, and provide a regular interventions in Asia, followed by Africa and LAC income. Several projects with livestock components with 18 percent each, and EMENA with 14 percent. (Mexico Decentralization and Regional Develop- Just over half the funds allocated for live- ment Project, the China Agricultural Credit and stock lending were channeled through credit insti- Henan Projects and the Madagascar and Uganda tutions, especially through the Fourth Agricultural livestock projects) give particular attention to this Credit and the Henan Agricultural Development aspect. projects in China. There were 11 livestock research Considerable care has been taken to avoid and extension projects and components, with the the potentially negative environmental effects of projects in Benin, Kenya, Mali, and Madagascar livestock development. Thus, innovative nonpol- focusingonintegratingcropandlivestockextension luting methods are used for tsetse control in the services into unified extension services. Six projects Uganda project, and studies and pilot applications focus on animal health improvement, both at the on improved grazing management are foreseen in public and the private level, notably the Argentine the Benin Agricultural Services and Madagascar Agricultural Servicet and the Tamil Nadu Agricul- Livestock Projects. Sector work in Brazil (Key policy tural Development projects at the public level and issues in the Livestock Sector), reviewed the legal the Madagascar and Uganda Livestock projects and and economic incentive framework in the Amazon the Benin Agricultural Services Project at the pri- area of Brazil, and made recommendations on how vate level. to correct the distortions that lead to unsustainable Smallholderdairydevelopmentalsoreceived cattle ranching in that area. The sector program considerable attention. Dairy development and for- needs, however, to devote greater attention to find- age production fcr dairy received 27 percent of the ing means to use livestock as a positive contributor allocated funds, and a large part of the 22 percent to sustainable agriculture, as a source for power, allocated to the improvement in animal health and organic fertilizer and food security. production services is also expected to benefit dairy development. Small stock development is another Economic and Sector Work: Livestock sector 1991 Agriculture Sector Review 43 Annex 1: Subsectors work received only 27.5 staffweeks in FY91 -one after a dip in performance rating in FY90, when percent of the total staff resources spent on agricul- the average performance was 2.45. Only one turalsectorwork. Mostof that sectorwork consisted proje,t (Somalia Animal Health Project) obtained of regional studies that examined livestock policy a 4 rating, and this was due to the internal strife and project thrusts. Africa Region sector studies in that country. reviewed experiences in dairy development, strongly advocating the use of intermediate technology in Future Lending Program: The Bank's future breeding using cross bred animals with simple fresh lending program for FY92-96 contains 4 free-stand- semen artificial insemination techniques, forage- ing projects, with projected Bank/IDA lenCLAng of based feeding and processing, and marketing. AGR $275 million. In addition, it can be expected that the also examined alternative animal health care sys- level of project components remain at about the tems, highlighting positive experiences with policy same level and that the total level of livestock reforms - notably cost recovery - and grass root lending will at least be maintained. Most of the veterinary auxiliaries, and emphasizing the need to proposed projects continue last year's focus on develop these early successes within comprehen- privatizing animal health care (Cote d'Ivoire and sive frameworks that include public and private Nigeria) and dairy production (Kenya and Nigeria). veterinary professional and producer groups and It can be expected that increased attention will be private auxiliaries. A study on pastoral associations given to smallstock development in the proposed andresource managementwillbepublished shortly. Cote d'Ivoire and Nigeria Livestock Projects and The only country study focused on Brazil, also in livestock components in China. highlighting the country's comparative advantage Thefutureprogramstillhasimportantgaps, in beef production, examining the incentive frame- however. Little attention seems to be given to work for cattle ranching in the Amazon region and strengtheningnational livestock research institutes recommending alternative actions. The study also for applied research tasks, in spite of the widely reviewed support services, especially for animal recognized need for appropriate technology at that health. level. More attention is required for livestock devel- As the table below shows the average opment in Eastern Europe. The East European supervision load of livestock specialists - includ- livestock sector is a mainstay of agricultural devel- ing the three livestock economists, who fre- opment in those countries, providing 50 percent of quently have non-livestock related tasks - is 3 agricultural GDP. livestock-only and 18 component projects. This is The subsector is under heavy stress, and clearly a heavy load, compared with an average of substantial adjustments are necessary; much more 2.5 freestanding projects per irrigation engineer. sectorshouldbe undertaken to findways to respond The recent increase sector staffing that added to these needs. The positive contribution livestock three livestock specialists in FY91-92 will be can make to resource conservation and sustainable important for improving supervision. The perfor- agriculture is also still largely neglected in the mance ratings for livestock-only and component Bank's livestock sector work. Specifically, support projec;s is 2.0, similar to the rating of the overall for pastoral institution-building for resource man- agricultural portfolio. For the stand-alone live- agement in the dry areas, started quite promisingly stock projects, this is a return to normal levels in several countries in the Sahel and North Africa in SUPERVISION OF LIVESTOCK PROlECTS, FY91 PROJECTS UNDER SUPERVISION Ivestock Ivestock lIvestock Project Cost Speelalists only Components (S Millions) AFRICA So 13 40 367 ASIA * 3 25 1,'s EMENA 1 0 30 1,416 LAC 1 2. 13 815 TOTAL. 6 1Los. 3,656 * Iacludeatmh staff members recited as economists, but with Ivetock peciallt tmning in addition to their economic skillt 1991 Agriculture Sector Review 44 Annex 1: Subsectors the early 1980s, needs to be continued. This is a pose trees for both soil conservation and fodder long-term process that requires consistent support, production. A number of countries and regions with which is currently not reflected in the Bank's project soil degradation problems and rising per capita or sector work pipeline. incomes - such as China, India and North Africa - In areas with higher agricultural potential, are experiencing strong increased demand for milk there are opportunities to intensify stock raising and meat, and are thus at a stage that sustainable and better integrate it into total farming systems, pasture development can be combined for erosion particularly by using pastures and multiple pur- control and increased livestock production. PERENNIAL AND HORTICULTURAL CROPS PERENNIAL CROPS LENDING ATA GLANCE FY91 FY92 FY93 FY94 FY95 FY96 FY92-6 AVG. No.ofprojects 1 2 5 1 2 2 2 Total agdc. projects 47 60 67 70 82 58 67 Percentage projects 2.1 3.3 7.5 1A 2A 3A 30 Lending 16.5 123.0 260.1 200.0 190.0 190.0 192. Total agric, lending 37073 3814.6 5629.9 5161.9 7201.7 50326 5366.1 Percentage lending A 3.2 4.0 3.9 2.A 3.6 3.6 Total lending, Including components In other subsectors, FY 91:19.6 Percentage agdo. lending, Including components. FY91:.5 ESW FY91 (Staffweeks): 60.3 As a % of total ESW: 2.1 "lost perennial and horticultural crops are macroeconomic and infrastructural frameworks relative.y high-value export commodities that in- even more important to their success than that of crease developing country foreign exchange earn- domestically traded agricultural products. Thus, ings while increasing the incomes of farmers - the perennial and horticultural subsector is often mostly smallholders. They play an important role in one of the early focal points of policy reforms affect- agricultural diversification programs, and their ing agriculture. At the macroeconomic level it is processingoften involves agroindustrial components necessary to remove trade barriers that hinder that provide off-farm jobs in rural areas. The bulk of export marketing of perennial crops by establishing perennial crops are high-volume estate crops such appropriate exchange rates, import andexport regu- as rubber and edible oils, although fruits and other lations, quality control and taxation. perishables have become an increasing share. Hor- An efficient production-to-market chain is ticultural crops - from vegetables to cut flowers - essential if perennial and horticultural crops are to are often extremely high-value and usually aimed reach their earning potentials. la many developing at niche markets. countries government agencies and parastatals in- The relative sophistication of perennial and volved in this process are inefficient; restructuring horticultural cropping endeavors makes them diffi- government control and regulatory functions, and cult to disaggregate from the credit, area develop- privatizing processing and marketing responsibili- ment, and agroindustrial projects of which they are ties is essential. Market forecasting methodologies often a part. In FY91, for instance, there was only must also be improved to assist farmers in correct one freestanding project in the subsector - the decision making. At the production level, security of $16.5 million Ghana Agricultural Diversification landtenureisparamountforestablishingandmain- Ptoject-but 21 otherprojects supported perennial taining perennial crops, as farmers must have the crops by providing credit (almost $200 million) or incentives and security needed to undertake long- facilities for storage, processing, or marketing sys- term investments. Access to medium- and long- tems and physical structures, research, extension, term credit is also crucial, as well as access to studies, or policy reforms. Lending for the subsector improved technologies. for the past six years has averaged 2.9 percent of Projects involving perennial and horticul- agricultural lending, which falls to 1.6 percent if tural crops are increasingly addressing the need to FY90, which had an unusually large number of provide credit, correct policy distortions, restruc- projects approved (5), is excluded. ture parastatals to respond to market forces, and The export nature of most perennial and strengthen the production-to-market chain. Six of tree crop enterprises makes proper national the eightFY91 projects withperennial crops compo- 1991 Agriculture Sector Review 45 Annex 1: Subsectors nents, included covenants aimedat improving cedit components covering the production of a range of systems. Four included covenants promoting `- crops including horticultural crops in the amount of proved pricing systems and privatization. Thz , 7 $137.1 million. the projects have covenants requiring parastatAl Several environmentally oriented agricul- restructuring, and three promote privatizatio. ture projects have included in their agroforestry Covenants requiring changes in export and trade components an option to plant fruit trees that pro- policies, andsubsidieswere included intwoprojects mote soil quality as well as providing increased each. Only two projects contained provisions to income for farmers. improve land tenure. Three of the projects (Ghana Agricultural Diversification, Mozambique Agricul- EconomicandSector Work: Although there were ture Rehabilitation and Development, and China no FY91 sector reports specifically targeted to the Mid-Yangtze Agriculture Development) address the perennial/horticultural crops subsector, five coun- entire chain from production, storage/processing to try reports addressed the subsector as part of their marketing with components specifically earmarked overall review ofthe agriculture sector. These were: for the perennial crops sector. Burundi Private Sector Development in Agricul- The $16.5 million Ghana Agricultural Di- ture, Rwanda Agricultural Strategy Review, Sri versification Project was the only freestanding Pe- Lanka Strategic Issues in the Development of Sri rennial Crops project this past fiscal year. Its main Lanka's Agricultural Sector, Kingdom of Tonga objective is to promote private-sector led growth - Agriculture Sector Strategy Review, and the West- and export earnings - through non-cocoa tree em Samoa Agricultural Sector Strategy Review. crops and horticultural crops (oil palm, rubber, The Burundi Private Sector Development Report coffee, pineapple) within the framework of Ghana's providedthebackgroundetudy foraproposedproject, agricultural diversification strategy. the Burundi Private and Agroindustrial Sector The projectfocuses on the smallholderpopu- Project. The Rwanda Agricultural Strategy Review lation by promoting increased oil palm planting, is to be followed up by separate coffee and tea sector introducing smallholder rubber, and rehabilitating studies. There is also a Sector study on Coconut and replacing coffee trees. The project provides Issues and Options planned for FY94 in Sri Lanka. support for these commodities through research, extension, improvedroads,oilpalmprocessingmills Supervliton An average of 14.2 staffweeks was andpilot smoked sheet rubberprocessingunits, and spent supervising the 29 ongoing freestanding pe- support to private marketing agents as well as a rennia]Vhorticultural crops projects in FY91. This study of export markets. In addition the project compares to the agriculture sector's average of 13.4 promotes price reforms, privatization of input dis- staftweeks per project and the Bank's average of tribution and cost recovery from parastatal input 11.6. Asia had the highest number of average sales. A study will also .e undertaken to aesas the staffweeks - 17.2, followed by LAC with 16.1 and feasibility of selling parastatal- financed loans to Africa with 11.2. Historically, perennial crops have private financial institutions. averaged slightly under the agriculture sector aver- In FY91 seven other projects provided di- age coefficient. The supervision coefficient for the rect support ($0.5 million plus an additional $197.8 perennial crops subsector was higher in FY91 than million in on-lending credit for a total of $198.3 it had been since the 1970s. Asia's unusually high million additional support to perennial crops devel- supervision levels largely reflect the 57 staffweeks opment) to increase production, storage, processing accorded the Sri Lanka Fourth Tree Crops Project and marketing of perennial crops in the Mozambi- -excluding this project drops the region's average que Agriculture Rehabilitation and Development, to 13.3 staffweeks. Uganda Agriculture Sector Adjustment Credit, In- The average numberofstaffweekssupervis- diaAndhra Pradesh Cyclone EmergencyReconstruc- ing projects with perennial crop' components was tion Project, and three China projects: Mid-Yangtze 14.1, with Africa having the highest coefficient, Agriculture Development Project, Rural Credit IV, 21.0, followed by Asia (14.0), EMENA ( 11.4), and and Henan Agricultural Development. IAC (8.6). The high coefficient in Africa can be Another 10 provided indirect support in the attributed to the Cameroon Cocoa Rehabilitation form of research, extension, studies and policy re- and Nigeria Multi States Area Development III forms. Of the seven projects providing direct sup- projects, which each had over 40 staffweeks of port to perennial crops, three also included crop supervision. The Cameroon project is experiencing production, storage, processingandmarketingoom- problems with legal covenants and technical assis- ponentatotalling$22.5millionthatincludedhorticul- tance while Nigeria, although it is performing well, tural crops. Four additional projects - Equatorial requires extra coordination due to its size. Guinea Crop Diversification and Agricultural Ser- Twenty-two percent of perenniahorticul- vices, China Irrigated Agricultural Intensification, tural crops projects andprojects with components in China Henan Agricultural Development and Co- the subsector have poor (17) or very poor (3) overall lombia Rural Development Investment - included performance ratings, although only 6 free-standing 1991 Agriculture Sector Review 46 Annex 1: Subsectors projects were rated 3 and none were rated 4. This is affectedproject performance, the government's pro- slightly above the average for all FY91 agricultural gram reduced demand for Bank-financed support projects--oftwhich20percentareratedpoororvery such that on 56 percent of the cocoa rehabilitation, poor. The performance problems largely reflect the 62 percent of the cocoa replanting, and 31 percent of export orientation of perennial/horticultural crops: the coffee replanting credit was disbursed. the subsector is one of the most export-oriented in The Yugoslavia Third Agricultural Devel- agriculture, and therefore more subject to market opment Project was implemented in parallel with, fluctuations and trade barriers than most other and intended to zoordinate with, a Bank SAL that subsectors. The necessity for most tree and horticul- called for adjustments toward positive real interest tural crop products to compete in world markets rates. The wording in the agriculture project cov- also amplifies the effect of internal distortions, such enants covering interest rate adjustments in tan- as overvalued exchange rates. dem with the SAL policy reforms was unclear, PORs and audits produced in FY91 high- which resulted in a prolonged debate with govern- light unstable export market prices and failing ment over the rates to be charged. In the end, the financial situations in the borrowing countries as agriculturalproject's interestedrateswere adjusted the major contributors to performance shortfalls. to 30.8 percent, resulting in reduced demand for Provision of credit was another contributor to failed project credit. Due to increased inflation and de- expectations. In one the Brazil NW Region Inte- flated producer prices, the fruit farmers also by- grated Rural Development Pncject, credit was not passed the agroindustries in order to obtain higher provided because the government had a subsidized prices elsewhere. Credit is often a critical factor in credit program running in parallel and no provision this subsector, especially for tree crops with long was made for credit in the project. gestation periods, and project designers should as- The Dominican Republic Cocoa and Coffee sure that mechanisms to provide properly priced Development Project provided credit for establish- credit are in place when projects begin. ing and rehabilitating those crops and related acti- vities. During implementation the government be- Future Lending Program: The future lending gan its own parallel - subsidized - rehabilitation program for the perennial/horticultural crops sub- program for those two crops, diverting staff re- sector predicts an average of 2 projects a year sources in the implementation agency and under- utilizing approximately 3.0 percent of Banr/IDA mining the project's interest rate reform objective. resources for Agricilture. Of the 12 projects in the Although other factors, notably the institutional proposed lending program, eight are programmed performance of the financial intermediary, also in Asia, and two each in Africa and Latin America. RESEARCH AND EXTENSION RESEARCH AND EXTENGION LENDINGAT A VLANCE Vyg1 FYAR FY98 FYW FY95 PVS6 FY02-W AVG. N.oeprojects 7 5 . 14 4 7 rtalagdo.protects 47 6a 6? 7o as as6 a Peosentage pmoesa 14.9 as 9.0 6.5 1.1 8.9 10A Londi- A6ee 2175 405.o 270k eiA 170.3 344.8 Yetafagdoetending 3707. - 38145 562 9 e1612 7201.7 0325 526.1 .et1naga lending 8.3 5% 72 5.2 9.- -A 6A 1o2nt lendisg tooluding componentse aoersuors, FY"w1: 3205 Percentageagd.iending Includingeoomponent, FYt:8. kSWFYt(Stlleeks): 2627 A. .a %.of tol .SW. The land frontier is rapidly closing in many uion services have the responsibility to provide, on parts of the world, leaving yield increases as the anequitable basis, information on appropriate tech- prime means of increasing production, raising liv- nology to the farming community and to keep re- ing standards and providing employment in rural search workers and policy makers aware of farmer areas. The role of national and international re- problems and production constraints. search institutions in generaing the technology for The Bank has taken significant steps in the this is readily apparent; public and private exten- past year to strengthen its approach to a research 1991 Agriculture Sector Review 47 Annex 1: Subsectors system that is widely seen as lagging in producing and potential of available improved crop/livestock relevant new technologies to meet farmer needs. technologies and prospective new technologies. The Criticisms of the work programs at the interna- study focuses on North Africa, North Central China, tional agricultural research centers (IARCs) is Chile and Western Argentina. AGR has also re- mounting, and there is a growing perception that cruited an agricultural scientist with expertise in the needs of the poorer nations and low-input agri- biotechnology to provide support for regional lend- culturally suboptimal areas have not received ad- ing in biotechnology and guide the Bank's future equate attention, especially in Africa. Clearly there involvement in the many facets of this branch of is a shortage of appropriate technology for such science. The Bank has accepted a more interactive environments. Except for sponsoring the use of role with regard to the research programs of the Vetiver grass in soil and water conservation and [ARCs by agreeing to execute UNDP-financed some efforts to provide information on crop diversi- projects at [ARCs. fication in Southeast Asia, the Bank has done little to identify new technological trends or help intro- Trends: Although the sample size is small several duce new technology into developing countries. The trends are becoming apparent in the Bank's project- realization ofthis weakness has led to several initia- level approach to research and extension. Research tives in the last year. projects increasingly emphasize the need to im- In conjunction with the UNDPand bilateral prove the management of research and the identifi- donors, the Bank established the International Pro- cation of national research priorities. Steps are gram for Technical Research in Irrigation and Drain- being taken to encourage private enterprise within age to encourage and assist in the development of national research and extension systems, either technology for use in the irrigated areas. IPTRID through farmer cooperative movements and exten- acts a broker and provides direct assistance to sionapprc Achesusingthemedia(Kenya)orthrough countries proposing research and training on irri- involving the private sector is research programs gation maintenance and operation, salinity and (Bolivia). The Mauritius project includes studies to sodicity and waterlogging. Successful operations determine the role of agribusiness in the economy. have been undertaken in Egypt and Pakistan and Projectsalsoseektocontainorreduce staff numbers staff have been seconded to the IPTRID secretariat by retrenchment (Bolivia) or retraining staff for by the Bank, and the governments of France, Ger- new roles (Congo, Kenya). many and Britain. Links between research and extension are Working through SPAAR the Bank's Africa being improved by moving to farming systems ap- Region has undertaken a study of national agricul- proaches in which diagnostic surveys and on-farm tural research centers to seek ways in which re- trials programs are the joint responsibility of scien- gional research efforts can be developed. Initially tist, extension worker and farmers (Kenya, Congo). the regions selected are the Sahel and the SADDEC Extension and research services are seeking to region in southern Africa. AGR itself has launched involve farmers as an early stage in the design of a series of studies to identify potential technologies research programs and extension campaigns. Dur- for dissemination in different agroecological re- ing the year financing was approved for 27 projects gions and determine ways to improve availability of and sector adjustment loans that were at least agricultural inputs such as seeds, veterinary ser- partially directed toward agricultural research and vices, and promote private sector support services. extension. In addition the status of these subsectors One study reviewed Bank experience with was reviewed in eight sector studies. the seeds subsector and the major constraints to the development of efficient and sustainable seed pro- FY91 LendingProgram: DuringFY91 seven free- duction and supply systems in developing coun- standing agricultural research and extension tries. It is concerned with enhancing the availabil- projects were approved by the Board. All but one ity of improved seeds to farmers by looking at the (Bolivia) were in the African region. The lending in private/public sector mix within the organized seed support of these projects amounted to $197.8 mil- industry and the importance of informal farmer- lion. The projects in Bolivia, Ghana and Nigeria producer seed multiplication and supply systems. were concerned primarily with developing overall Declining crop production from high-input irri- national agricultural research services. Conversely gated agriculture and risks of resource degradation the other projects are mainly extension projects but from the unwise use of marginal areas require with provision for improving research-extension special attention in future Bank projects. AGR and linkages or facilities supporting other agricultural the Environment Division are preparing a compen- services, including training and manpower devel- dium of technology options for sustainable agricul- opment. These projects are usually second-phase ture in the seasonably dry warm tropics. efforts following either pilot projects or other full- Another AGR study assesses the prevalent scale projects in restricted geographical areas. All farming systems and technologies used in semi-arid extension projects continue to follow the guiding subtropical ecologies, and examines the adequacy principles of the Training and Visit system adapted 1991 Agriculture sector Review 48 Annex 1: Subsectors in minor ways to the conditions of the countries fee, pineapples), Mozambique Agricultural Reha- concerned. bilitation and Development project (a national In addition to the free-standing projects, cashew research program is to be developed under research and estension components are included in the project), Argentina Agricultural Services and 22 agricultur-J development projects. These cover a Institutional Development Project (wool, biotech- wide range oi bsectors from fisheries to forestry nology, post-harvest physiology and forest planta- and the components are usually designed to provide tion management). Support for fisheries and aquac- technology or information dissemination procedures ulture research was included in the Malawi Fisher- for a commodity or area that is the focus of the ies Development project and in the Fourth Fisheries development project. Project in Yemen. Adaptive research on livestock The total value of Bank lending for these feed and pastures was included in the Madagascar projects amounted to $2.17 billion. Support under Livestock Sector Project together with support for the projects for extension and research amounted to extension through farmer associations. Commod- $279 million and $234 million, of which the Bank ity-directed extension activities were included in financed$145millionand$157millionrespectively. the Kenya Farm Forestry Extension Project in Three of these projects were financed by additontosupportforresearchonthemanagement structural adjustment or hybrid loans. Each re- of natural ecosystems. The project aims to remove quired policy reforms as a precursor to project from the extension service the responsibility for the investments. In Uganda this required establishing supply of seedlings and permit a concentration on an autonomous national research organization to be technical advice which would complement the gen- followed by the financing of priority research and eral advice received from the Ministry of Agricul- extension activities through 'Head Start" sub- ture. About 10 pilot extension activities would be projects. The PhilippinesEnvironment andNatural integrated, three new areas added and training Resources Sector Adjustment Project recognized intensified. that residents in upland areas were permanent The area development projects identified inhabitants and required the setting up of a policy specific research topics for the regions concerned. framework for those areas that includes extension Virus indexing for citrus was an important topic for and contractual arrangements for involving NGOs. China Mid-Yangtze Agricultural Development The Equatorial Guinea project aims to integrate the project and livestock feed, animal breeding, sus- projects supported by other agencies and set up a tainable farming systems and aquaculture in the national extension service based on T&V concepts China Henan Agricultural Development Project. and promoting the involvement of small farmer Each of these establishes science and technology organizations. Appliedresearchwouldbesupported committees of technical specialists to advise and on crop diversification and on the export cocoa crop. oversee the programs and the Henan project in- Research and extension components were cludes supportfor agrotechnical centers to facilitate included in irrigation projects for China, Sri Lanka, demonstrations of useful technologies such as inte- Indonesia, Bangladesh and Pakistan. The Irrigated grated pest management, corn hybrids and soybean Agricultural Intensification Project in China in- varieties. cluded support for the Chinese extension system In Indonesia research is required on the based on county agrotechnical extension centers upland watersheds in the Yogyakarta Upland De- and adaptive research at provincial research sta- velopment Project in order to test soil stabilization tions and universities. It is one of the few projects techniques. Extensionwill provide on-farmtechnol- calling for substantial increases in staff numbers. ogy displays that will lay out an array of technology The other projects support adaptive research on options from which the farmers will be able to problem soils by extension agents (Indonesia), dem- choose. In the Agricultural Development Project: onstrations of pumping techniques and the use of Tamil Nadu in India the T&V system will be en- mass media and seminars as awareness techniques largedtoreach more women farmers and broadened in extension (Bangladesh). The third on-farm Wa- to cover crops other than cereals. The project will ter Management Project in Pakistan includes sup- encourage the use of mass media techniques in port for demonstration of water management and extension, the involvement of farmer groups and irrigation agronomy at demonstration centers and on-farm demonstrations in addition to support to the establishment of Irrigation Agronomy Field theheadquartersbysettingupamanagementinfor- Teams to provide extension advice in conjunction mation system. with the established extension service. The Na- Projects in Colombia and Mexico are de- tional Irrigation Rehabilitation Project in Sri Lanka signed to use the sub-project approach, through also includes demonstration of improved cropping which investments that are in accordance with the technology through farmer organizations and sets zonal development plans are channeled to exten- up an Irrigation Research Management Unit. sion and research through rural communities that Research on commodities was supported in are responsible for sub-project content and design. the Ghana Agricultural Diversification Project (cof- The agricultural services projects in 1991 Agriculture Sector RevIew 49 Annex I: Subsectors Bangladesh and Benin include large extension com- financial support is required and efforts are need to ponents. In Bangladesh technology transfer is seen encourage private sector research efforts. asabigproblemandtheprojecthasasoneofitsaims The Agricultural Sector Strategy Review the improvement of the cost effectiveness of the for the Central African Republic presents an inter- extension service. Staff number will be reduced and esting comparison with Zimbabwe. Both research replaced with outreach techniques. District techni- and extension services are fragmented and limited cal committees will be established, mass media in their spread of responsibilities. Research has not campaigns used and simple meeting houses con- recognized real farmer constraints or analyzed ex- structed in order to encourage farmer-extension isting farming practices. Extension is involved worker interaction. mainly with input distribution, staff quality is low On-farm demonstrations and monthly field and the service is not cost-effective. Proposals are days will be financed and contacts maintained with made for multi-skilled research teams, devellp- the NGOs. The Benin project most clearly seeks to ment of new technologies, coordination of research involve farmers and farmer organizations in defin- efforts and establishing a National Agronomy Re- ing work programs and accepts farmer accomplish- search Institute. A Central Technical Support Unit ments as a measure of extension success rather is proposed for input distribution and extension than the number of contacts made. The basic prin- based on the most appropriate principles of T&V. ciples of T&V will be used but the components of on- Some other sector reviews, such as the Agricultural farm Research, farm level tests and, demonstration Sector Strategy Reviews for Western Samoa and the plots would be expanded and the extension workers Kingdom of Tonga include only minor comments on would concentrate on soil fertility, crop livestock the research and extension systems, in the cases in integration and participatory training. Staff num- point calling for an introduction of a farming sys- bers will be kept low with as much responsibility as tems approach to extension and research. possible transferred to associations or commercial organizations. The main role of the state would be to Supervision: The supervision reports of ongoing ensure that all farmers are provided with extension. research and extension programs have frequently commented upon project managemeat, funding, Economic and Sector Work: Only the Agricul- research/extension linkages and staffing. In a wide tural Technology Sector Review for Mexico focused range of countries (e.g. Brazil, Zimbabwe, Nepal, primarilyontheagriculturalresearchandextension Pakistan, Indonesia, Morocco, Sudan, Colombia) subsectors. The report provides a complete analysis funds and budgets have been cut to the point where of both services and draws attention to the need for projects have been adversely affected. Management greater efforts in the rainfed and tropical areas and policy problems have in some cases prevented which are less able to adapt technology imported the implementation of measures taken by the Bank from industrialized countries. Overrecent years the to ensure that funds flow quickly. impact of research on production has been limited This is especiallytrue in the management of as a result of under-investment and the small areas special accounts and revolving funds, the concept under irrigation that could benefit from advanced and management of which seem in many cases not technology. Problems of inadequate public funding to be fully understood by the ministries of finance have constrainedresearch efforts andprivate sector concerned. Management and planning in many research has not developed adequately in the tropi- countries continues to be poor and impede the cal South. The effect on the extension service has implementation of properly structured extension been to reduce the staff by two-thirds. This trend programs and the identification of priorities in needs to be reversed, with more staff posted to the research programs. tropics. Management of the system and staff train- Low salaries and poor promotional and ca- ing need to be improved. reer prospects have affected the quality of the re- However the subsectors were reviewed to search being conducted and there has been unac- varying degrees in some of the general agricultural ceptably high staff turnover as qualified techni- sector work. In these reports the problems and cians seek higher-paying positions elsewhere. The constraints facing subsectors were discussed and general inertia has delayed the start up of projects proposals made forremedial actions. The Zimbabwe in India, Yemen, Turkey, Brazil and Pakistan. With Agricultural Sector Memorandum drew attention some exceptions (e.g. Sri Lanka) where there have to the past excellence of the research system and the been security problems, most reports have indi- continued growth uf the extension service as it cated an improvement in research-extension link- provided more and more for the Communal Areas. ages regardless of the extension system employed Recommendations were made for greater attention (e.g. Egypt, China, Yemen, Turkey. Although there to the needs of women farmers, and for increased are often delays initially, training programs, espe- research on agricultural production systems in the eially those arranged overseas are usually imple- dryer areas, livestock nutrition, labor saving de- mented satisfactorily. vices andmeansofincreasingfarmincomes. Greater An analysis of data for FY91 shows that 1991 Agriculture Sector Review s Annex 1: Subsectors there has been a significant increase in the alloca- freestanding projects are scheduled for appraisal in tion of staff time to research and extension projects, FY92 and the number in later years averages seven. especially since FY90. From FY85 to FY90 staff time The amount lent will of course vary between years increased from 1,571 to 2,109 staffweeks, but leapt depending on the presence or absence of the tradi- to 4,115 staffweeks in FY91. Most of this input was tionally large borrowers in the subsectors. In FY92 provided by Bank staff (1,704 staffweeks), but there the total amount lent will be about twice that in has been an associated increased use of both con- FY91 because of large projects proposed for Turkey sultants and special positions provided through and Mexico (a standby for FY92). It is difficult to FAO and trust funds. estimate the amount of support that will be included Since FY88 the proportion of staff time in other agricultural development projects, but given devoted to project preparation has decreased, but the number of projects that are described as agricul- that for supervision has increased. It amounted to tural services projects, it is reasonable to expect the 2,412 staffweeks in FY91, which was about 59 lending level to be approximately equal to that of percent of the staff time allocated. Most of this time FY91. was providedby Bank staff(1,704 staffweeks). These changes in staff time allocation are not readily Trends In Research and Extension: Investment explainable, especially as the portfolio of research in, and development of, agricultural research and and extension projects has been gradually declining extension services in developing countries often re- (11 projects in FY90 andonly 7 in FY91), and similar quires substantial institutioaal changes that can- increases in staff use are apparent in other sectors. notbe brought about quickly, especially in countries The allocations of staff resources in the where political, economic and civil instability have forestry, agricultural and perennial crop sectors resulted in the near destruction of infrastructure. A more than doublpd between FY90 and FY91. As- long-term commitment is needed not only from the suming that Bank staff numbers have remained national policy and senior decision makers but also static, it would seem that there has been an overall from aid agencies, such as the Bank, that have transfer of staff time from other sectors into agricul- undertaken to rehabilitate and strengthen these ture. There is no readily available information on services. Future trends will include an extension of the skills of those transferred, nor on their technical the project period and deeper involvement in re- competence in agriculture. The increasing impor- search and extension management. tance of supervision will be welcomed by the agri- The interlinkage of the extension, research cultural technicians, many of whom recognize the and training subsectors is well recognized. Various technical assistance implicitinthe supervision func- means of promotingthese linkages have been incor- tion. This increased supervision coefficient may porated in projects that have addressed each sub- well have been a reaction to poor performance of sector individually, but the need to further research and extension projects over recent years, strengthen these activities and the need for even and provided that properly trained staff are avail- closer integration will lead the Bank into more able, an improvement in project performance may "agricultural services" projects in the future. be expected. The problems of developing research and extension capacity in Africa have been insurmount- Areas of Special Emphasis: The needs of women able, both by the Bank and other donor agencies. farmers in agricultural development are recognized New initiatives need to be developed, tested and in most of the extension projects, and actions aimed applied in practice. The approach of SPAAR in its at providing for their needs are included as part of "Framework for Action" programs aimed at ad- project design. In projects, such as those in China dressing the problems of setting up regional re- (Henan) and India (Tamil Nadu) the efforts to reach search efforts in selected agroecological areas, of- women farmers and extension workers form a sub- fers a means of coordinating the actions of donors, stantial part of the project. In FY91 a pilot pro)ect not only in the identification and planning of re- was approved in Cote D'Ivoire, that was entirely search projects but also in providing adequate funds devoted to the needs of women farmers. The rural for operating expenses. outreach program in this project uses the concept of Theresearch andextension services in many T&V but with adaptation to a multifunctional role. developingcountries dependon the IARCs forbackup The Ministry for the Advancement of Women will support. The range of support available will be use the project to bridge the gap between the tradi- extended in coming years by the incorporation into tional extension services and the needs of women the CGIAR system of additional centers dealing farmers. If successful, this pilot effort could well set with forestry, bananas, fisheries and irrigation a framework for future investments by the Bank in management. The Bank should explore ways of support of women in agriculture. becoming more involved with the CGIAR Centers Future LendingProgram: The volume of lending and increasing the input of the staff of the centers in for research and extension is not expected to rise helpingto alleviate the constraints facingproducers substantially over the next three or four years. Five in Bank projects. More research and extension 1991 Agriculture Sector Review 51 Annex 1: Subsectors efforts will be needed on the problems of resource nity lands. Finally, as the more advanced develop- management and environmental protection. This ing countries begin to produce higher-valued com- has already begun in projects such as the Burkina modities for local and export markets, more re- Faso Environmental Management Project, which search efforts will be needed on post-harvest tech- sets up a scheme for local management of commu- nology, agroprocessing and biotechnology. 1991 Agriculture Sector RevIew 52 Annex 1: Subsectors ANNEX II: TABLES 53 ANNEX TABLE 1: AGRICULTURE PROJECTS APPROVED IN FY9t WITH TOTAL PROJECT COSTS AND BANK/IDA LENDING IN US$MILLIONS Bank/ Bank IDA IDA Total Region Project Loans Credits Lending Costa Project Affica Burkina Faso Eavironmental management .0 16.5 16.5 25.2 Congo Not. agric. ext. & adaptive reseam~ 15.8 .0 15.8 21.7 Equatorial Guinea Crop diver & agric. services .0 6.3 6.3 18.0 Ghana Agric. divern (troe orope) .0 16.5 16.5 22.4 Agde. research .0 22.0 22.0 29.5 Kenya Agric. nati. ox. i .0 24.9 24.9 47.9 Forest devolop=m .0 19.9 19.9 83.8 Age. sector adjust. 11 .0 75.0 75.0 176.8 Madagascar Livock .0 19.8 19.8 38.6 Malawi Fisheries dov. .0 8.8 8.8 15.5 Mali Agric. services .0 24.4 24.4 27.1 Mauritius Agric. service 10.0 .0 10.0 18.1 Mozanbique Agric. rehab. & Dov. .0 15.4 15.4 17.8 Nigeria Agric. research .0 78.0 78.0 104.1 Benin Agrie. services .0 12.3 12.3 29.6 Cote d'Ivoire Pilot womna in dcv. support 2.2 .0 2.2 3.6 Tanzania Agric. adjustmnt .0 16.1 16.1 16.1 Uganda Livestock .0 21.0 21.0 24.7 Agro. sector adj. credit .0 100.0 100.0 101.6 TOTAL FOR AFRICA 28.0 476.9 504.9 822.1 åik Bangladesh Shallow ubewell & 1-lift pump .0 75.0 75.0 126.7 Agric. support brvices .0 35.0 35.0 59.4 Nat' minor irrigation .0 54.0 54.0 171.1 China Mid-Yangze agric. dov. .0 64.0 64.0 136.9 Rural crdit IV 75.0 200.0 275.0 550.0 Henan agric. dcv. .0 110.0 110.0 196.0 Irrig. agric. intenaification 147.1 187.9 335.0 593.0 india Dam safety 23.0 130.0 153.0 196.8 Agr. dov. I (TN) 20.0 92.8 112.8 133.3 Ap. cyclone etmergancy reon. pro. 40.0 170.0 210.0 298.7 Indonesia Yogyakatta upland area dov. 15.5 .0 15.5 25.1 Prov. irr. agri. dov. 125.0 .0 125.0 215.4 Philippine Ru~al flance 150.0 .0 150.0 203.5 Ev. & nat. res. mg&. (SECAL) 158.0 66.0 224.0 369.0 Comnnhl irrig. a 46.2 .0 46.2 64.4 Sri Lanka rrig. rehab. .0 29.6 29.6 49.8 Thailand Land tiing 1[ 30.0 .0 30.0 73.0 TOTAL FOR ASIA 829.8 1214.3 2044.1 3462.1 Pa~rien Scarp tran. fl .0 20.0 20.0 48.5 On-fam water ngq. M 36.3 47.3 83.6 155.5 Poland Agire. døv. 100.0 .0 100.0 180.2 Republi of Yemn Fiseries IV .0 13.2 13.2 39.8 TOTAL FOR EMENA 136.3 80 216.8 424.0 Argentina Agrim. ervices & ina. døv. 33. .0 33.5 82.7 Bolivia Tchnology dev. .0 21.0 21.0 29.8 Colobia Rsural dov. inve . 75.0 .0 75.0 250.1 ecuador Guayaa 8'd endl 59.0 .0 59.0 97.5 Mexico Agric. mector/kood security 400.0 .0 400.0 600.0 Decenrainn & regI dov. 350.0 .0 350.0 1362.7 St.1lu/Novia Agri. Dv. Suppot 1.5 1.5 3.0 4.3 TOTAL FOR LAC 919.0 22. 941.5 2427.1 TOTAL FOR ALL REGIONS 1,913.1 1,794.2 3,707.3 7,135.2 1991 Agrioultur Selr Raview 54 Ana 1: Tah~u ANNEX TABLE 2: BANK/IDA LENDING BY SECTOR FOR FY91 IN US$ MILLIONS Bank/IDA % Total Sector Lending Bank Lending Agriculture 3,707.3 16.3 Education 2,251.7 9.9 Energy 1,899.2 8.4 IDF 2,687.1 11.8 Industry 1,358.7 6.0 Non-sector specific 2,821.9 12.4 Population 1,567.6 6.9 Power 1,344.0 5.9 Public sector management 641.7 2.8 Technical assistance 197.7 .9 Telecommunications 339.8 1.5 Transportation 1,388.0 6.1 Urban development 1,255.4 5.5 W/S & SEWERAGE 1,225.4 5.4 TOTAL 22,685.5 100.0 19 AgdouMar Sedo ReviW 55 AnnA I: Table ANNEX TABLE 3: AGRICULTURE LENDING BY PRIMARY PROGRAM OBJECTIVE, FY91 Agr. Irrig. Res. Agr. Sector Agro- Area and Perennial and Credit Loan Ind. Dev. Fisheries Forestry Dmge Livestock Other Crops Ext. TOTAL Adjustment and debt 0 3 0 0 0 0 0 1 0 0 0 4 Poverty reduction 1 1 0 4 0 0 4 0 1 0 1 12 Human resource 0 1 0 0 0 0 0 0 1 0 1 3 Private & public sector 1 1 1 1 0 0 2 0 0 0 0 6 Financial intermediary 1 0 0 0 0 0 0 0 0 0 0 1 Environment and forestry 0 1 0 0 0 1 0 0 1 0 0 3 Natural resources 1 2 0 1 2 0 4 1 1 1 5 18 Infrastructure and urban development 0 0 0 0 0 0 0 0 0 0 0 0 Economic management 0 0 0 0 0 0 0 0 0 0 0 0 Not coded 0 0 0 0 0 0 0 0 0 0 0 0 Number of projects 4 9 1 6 2 1 10 2 4 1 7 47 1991 Agdulture Sector Review 56 Anne U: Tables ANNEX TABLE 4: DISTRIBUTION OF ESTIMATED ECONOMIC RATE OF RETURN OF AGRICULTURAL PROJECTSS APPROVED IN FY8I-91 E&oomic Rate of Returg Not FY Applicable/ Below Above % Avemge Available 20% 20-29% 30-39% 40-49% 50% 81-85 20.62 28.25 32.49 10.73 3.11 4.80 86 37.70 14.75 40.98 4.92 1.64 0.00 87 32.76 37.93 13.79 12.07 1.72 1.72 88 35.71 23.21 21.43 12.50 1.79 5.36 89 41.18 23.53 23.53 7.84 0.00 3.92 90 48.21 16.07 19.64 12.50 3.57 0.00 91 57.45 12.77 14.89 8.51 4.26 2.13 1991 Agrloulture Sector Review 57 Annex I: Tables ANNEX TABLE 5: NUMBER OF PROJECTS WITH COST OVER-/UNDER-RUNS IN AGRICULTURE, FY86-90 FYS6 FY87 FY88 FY89 FY90 FY91 No. W/ No. W/ No. W/ No. W/ No. W/ No. Wi No. W/ No. W/ No. W/ No. W/ No. W/ Na W/ No. Ca Cou No. Com Codl No. Cou Com No. Cost Ca No. Com Con No. Cos Cou at Onr Umir of Ofr- Under of Over Under of Oer Under- of Over Under of Ove- U~r- Pi* h Ro ic Rn R=m c R=n Ru= Pr~e Rum Ru Pjc R=n Rus je Rum R=m crod 42 3 10 33 0 4 30 1 4 32 1 4 28 1 2 27 2 3 use~ rlm 24 2 5 25 2 9 27 3 6 34 2 8 34 2 5 35 2 5 A indemisy 36 2 11 35 3 8 28 2 10 32 2 11 32 2 8 29 2 6 AM. Dnlmu 167 12 65 163 13 66 167 16 52 162 16 57 156 18 56 129 15 41 Pled 13 3 4 15 3 2 13 4 1 ll 4 1 11 5 1 10 3 0 Pa~Ity 41 3 6 42 6 7 42 3 4 45 6 6 50 6 6 48 6 6 & d~ 154 25 47 144 23 48 130 17 40 121 20 38 116 21 34 107 20 24 U~ 22 2 7 23 1 5 23 0 6 26 1 5 20 1 5 19 1 4 O7 0 2 7 0 2 10 1 2 12 1 1 12 1 2 15 1 3 caF 43 2 23 43 4 19 34 3 8 34 2 13 34 2 11 29 2 8 Ra~ a EK~ 46 1 13 48 1 8 48 1 13 54 1 15 61 2 17 60 3 11 Un~dsiss 6 0 2 7 l 0 6 1 1 6 0 1 5 0 1 5 0 1 TOTAL de 5 195 M 85 57 178 558 sa 147 569 56 160 559 61 148 513 57 fi2 1991 Aguicadm. Setor Rew 58 Anm x D: Taba ANNEX TABLE 6: OVERALL RATINGS OF ARD PROJECTS, FY86-91 Project FY86 FY87 FY88 FY89 FY90 FY91 Rating % % % % % % Not applicable 0 0 0 0 0 0 Not rated 1 1 0 3 2 2 1 rating 24 19 19 20 18 16 2 rating 50 58 64 59 54 54 3 rating 17 16 14 13 20 22 4rating 5 3 2 2 3 4 TOTAL 97 97 99 97 97 98 Note: Not applicable was introduced into the system in FY89. Rating 4 was not introduced into system until FY86. Rating 1 indicates overall project performance is good. Rating 2 indicates overall project performance is satisfactory. Rating 3 indicates overall project performance is poor, but management action not anticipated. Rating 4 indicates overall project pefformance is very poor and requires management action. 1991 Agdoulture Sector Review 59 Annex II: Tables ANNEX TABLE 7: NUMBER OF PROJECTS BY AVAILABILITY OF FUNDS RATING BY REGION Project Region Rating FY85 FY86 FY87 FY88 FY89 FY90 FY91 Africa Not applicable 0 0 0 0 4 0 0 Not rated 10 6 11 0 11 7 7 Rating 1 54 92 93 102 82 84 64 Rating 2 72 48 50 47 54 58 58 Rating 3 28 20 20 23 27 34 45 Rating 4 0 8 12 14 13 11 13 Total for Africa 164 174 186 186 191 194 185 Asia Not applicable 0 0 0 0 0 0 1 Not rated 4 0 0 0 7 5 2 Rating 1 139 122 111 103 97 9k 79 Rating 2 69 76 76 71 66 55 52 Rating 3 22 28 21 18 17 21 22 Rating 4 0 6 4 2 3 3 2 Total for Asia 234 232 212 194 190 175 158 EMENA Not applicable 0 0 0 0 1 1 0 Not rated 4 5 3 0 2 3 2 Rating 1 64 67 62 62 55 54 46 Rating 2 24 31 27 18 30 27 23 Rating 3 6 4 12 13 11 15 17 Rating 4 0 2 1 1 1 1 2 Total for EMENA 98 109 10S 94 1000 101 90 LAC Not rated 2 4 0 0 0 1 4 Rating 1 26 28 27 21 23 24 24 Rating 2 50 15 32 27 31 30 27 Rating 3 18 20 19 34 32 27 21 Rating 4 0 19 4 2 2 7 4 Total FOR LAC 96 86 82 84 88 89 80 TOTAL FOR ALL REGIONS 592 601 585 SS8 569 559 513 1991 Agrloultum Sector Rview 60 AnneK U: Tables ANNEX TABLE 8: AVERAGE STAFFWEEKS SPENT ON SUPERVISION FOR ARD PROJECTS FY85-91 al FY85 FY86 FY87 FY88 FY89 FY90 FY91 Avg. Avg. Avg. Avg. Avg. Avg. Avg. No. of Staff No. of Staff No. of Staff No. of Staff- No. of Staff- No. of Staff- No. of Staff Region Pwjects Weeks Prjects W s Projects Weeks Projects Weeks Projects Weeks Projects Weeks Project Weeks Africa 164 12.0 174 11.9 186 12.1 186 10.9 191 10.3 194 13.6 185 15.9 Asia 234 13.1 232 14.4 212 15.0 194 15.4 190 13.3 175 13.1 158 17.3 Emena 98 13.8 109 14.5 105 12.7 94 12.9 100 11.4 101 11.3 90 11.2 LAC 96 10.4 86 11.8 82 13.7 84 11.1 88 7.9 89 8.9 80 10.3 TOTAL 592 12.S 601 13.3 585 13.5 558 12.8 569 11.1 559 12.3 513 14.6 al Includes consultants' and local staff time. 1991 Agriculture Sector Review 61 Annex II: Tables Siddayao, Ms. Corazon M. EDIFI m 5015 (1