Turkey - Agricultural Research Project

Document of The World Bank FOR OFFICIAL USE ONLY MIICROFICHE COPY Report No. 9890-TU Type: (SAR) ReportNo.9890-TU GASSNER / X32072 / H5071/ EMlAG STAFF APPRAISAL REPORT TURKEY AGRICULTURAL RESEARCH PROJECT April 9, 1992 Agriculture Operations Division Country Department 1 Europe and Central Asia This document has a restricted distibution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Carren..y Unit = Turkish Lira (TL) AVERAGE EXCHANGE RATES (Turkish Lira per US$) 1988 1989 1990 1991 1992(Feb.) 1421 2121 2608 4160 5700 WEIGHTS AND MEASURES Metric System PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AEARP - Agricultural Extension and Applied Research Projects AERI - Agricultural Economic Research Institute APK - Research, Planning and Coordination Bureaus of MARA and MOF ASAL - Agricultural Sector Adjustment Loan CGIAR - Consultative Group for International Agricultural Research CIAT - International Center for Tropical Agriculturel Research CIMMYT - International Center for Maize & Wheat Improvement Research CIP - International Center for Potato Research FAO - Food and Agricultural Organization GDAR - General Directorate of Agricultural Research GDOF - General Directorate of Forestry GDOS - General Directorate of Organizational and Supporting Services GDPI - General Directorate of Project and Implementation (Renamed in GDPD - August 1991 as General Directorate of Agricultural Production and Development [GDPD]) GDPC - General Directorate of Protection and Control GDRS - General Directorate of Rural Services HCRD - High Council for Research and Development MAFRA - Ministry of Agriculture, Forestry and Rural Affairs MARA - Ministry of Agriculture and Rural Affairs MOF - Ministry of Forestry LCB - Local Competitive Bidding ICARDA - International Center for Agricultural Research in Dry Areas ICB - International Competitive Bidding ICRISAT - International Center for Research in Semiarid Tropics IRRI - International Rice Research Institute TUBITAK - Scientific and Technical Research Organization of Turkey YOK - Higher Education Board TURKEY - FISCAL YEAR January 1 to December 31  FOR OFmICIAL USE ONLY TUIRKEY AGRICULTURAL RESEARCH PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. Loan and Project Summary . . . . . . . . . . . . . . . . . () I. PROJECT AND SECTOR BACKGROUND . . . . . . . . . . . . . . . 1 A. Introduction . . . . . . . . . . . . . . . . . . . . . . 1 B. Agricultural Sector . . . . . . . . . . . . . . . . . . 1 C. Bank Group Lending for Agriculture . . . . . . . . . . . 5 II. AGRICULTURAL RESEARCH IN TURKEY . . . . . . . . . . . . . . 7 A. General . . . . . . . . . . . . . . . . . . . . . . . . 7 B. Organization of MARA Agricultural Research . . . . . . . 8 C. Rationale for Bank Involvement . . . . . . . . . . . . . 13 III. THE PROJETg . . . . . . . . . . . . . . . . . . . . . . . . 15 A. Project Objectives . . . . . . . . . . . . . . . . . . . 15 B. Summary Description . . . . . . . . . . . . . . . . . . 15 C. Project Details . . . . . . . . . . . . . . . . . . . . 16 D. Cost Estimates . . . . . . . . . . . . . . . . . . . . . 22 E. Procurement . . . . . . . . . . . . . . . . . . . . . . 23 F. Disbursements . . . . . . . . . . . . . . . . . . . . . 25 G. Accounts and Audits . . . . . . . . . . . . . . . . . . 26 H. Project Supervision . . . . . . . ... . . . . . . . . . 26 IV. ORGANIZATION AND MANAGEMENT . . . . . . . . . . . . . . . . 27 V. BENEFITS. JUSTIFICATION AND RISKS . . . . . . . . . . . . . 30 A. Benefits and Justification . . . . . . . . . . . . . . . 30 B. Environmental Effects . . . . . . . . . . . . . . . . . 31 C. Risks . . . . . . . . . . . . . . . . . . . . . . . . . 31 VI. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS . . . . . . . 31 This report is based on the findings of an appraisal mission which visited Turkey in June 1991. Mission members included Messrs./Mmes. H.P. Gassner (Mission Leader), K. Somel (part time), N. Mattson and N. Durutan (IBRD) and S.R. Freiberg, H. Floyd, J. Glenn, D. Johnston, R. Etheredge (Consultants). A postappraisal mission comprising of Messrs. A. Ablasser, H. Akhavan and S. Freiberg visited Turkey in January/February 1992. This document has a restricted distribution and may be used by recipients only in the performance Of their offcial duties. Its contents may not otherwise be disolosed without World Bank authorization.  - 2- Table of Contents (cont'd) ANNEXES ANNEX 1 Project Cost Estimates Table 1 & 2 - Summary and Project Components Expenditures by Year Table 3 & 4 - Annual Project Expenditures Including Contingencies Table 5 - Estimated Schedule of Disbursements Table 6 - Proposed Allocation of Loan Funds Table 7 - Training Abroad Program Table 8 - Consultants' Services ANNEX 2 Institutional Strengthening A. Research Organization and Management B. Institutional Strengthening Component APPENDIX 1 Research Master Plan Terms of Reference APPENDIX 2 Technical Assistance Terms of Refererce APPENDIX 3 Agricultural Economics Research Institute ANNEX 3 Farming Systems Research PROJECT IMPLEMENTATION FILE ANNEX 4 Production and Protection Research ANNEX 5 Animal and Forage Production Research ANNEX 6 Soil and Water Management Research ANNEX 7 Forestry Research ANNEX 8 Civil Works and Cost Assumptions CHARTS 1. Implementation Schedule 2. GDAR Organization IAkP IBRD No. 23282R -- Turkey Agricultural Research Project  (i) TURKEY AGRICULTURAL RESEARCH PROJECT STAFF APPRAISAL REPORT LOAN AND PROJECT SUMMARY Borxowor,3r Rspublic of Turkey. Beneficiaries: Ministry of Agriculture and Rural Affairs (MARA) and Ministry of Forestry (MOF) Amount: US$ 55.0 million equivalent. Terms: Seventeen years, with a five-year grace period, at the Bank's standard variable interest rate. Proiect Oblectives: The project would support Government efforts to strengthen MARA and MOF agricultural and forestry research services to provide appropriate technologies for solving farmers' problems and raising their incomes, with a concentration of effort on the less developed regions of eastern and southeastern Turkey. Proiect The project would strengthen: (i) the research capabi- Descrioti2n lities of institutions developing technology suitable for eastern and southeastern Turkey; (ii) national research programs in the areas of erosion control/soil conservation, soil fertility, pesticide management, residue control, and farming systems research; (iii) research planning, budgeting and monitoring systems; and (iv) capacity for testing food products for conformity to pesticide and hormone residue regulations; and would establish an Agricultural Economic Research Institute (AERI). The project would include civil works (laboratories, offices, workshops, staff housing), laboratory and field equipment, vehicles, staff training, incremental vehicle and equipment operating costs and technical assistance. Bnefits *nt To remain competitive and to develop new markets and Risks: products, Turkish agriculture must become more efficient both in the modern and traditional smallholder subsectors. The proposed project would strengthen Turkey's ability for developing and testing a continuing stream of improved agricultural practices, leading to increases in productivity and farmer incomes as well as more sustainable agricultural practices. Concentration  (ii) on research benefiting the less developed regions of Turkey is justified both for social/equity reasons and because of large irrigation investments currently underway in these areas. Programs to improve research planning, budgeting and monitoring would increase the efficiency of the system and its responsiveness to farmer requirements. The new AERI would provide policymakers with information on the costs and benefits of various policy options, as well as improved information on agricultural investment priorities, trade opportunities, and human resource issues in rural areas. Risks include: (i) insufficient funding by Government in the face of budget constraints; and (ii) inadequate control of research coordination and management of priorities leading to inefficient research or new technologies inadequately adapted for farmer requirements. The second risk is being addressed by project supported efforts to improve research planning and budgeting systems, and research/extension and farmer links. The first risk was addressed by reducing the project size in line with estimates of financial capacity. The recent decision to create a new General Directorate of Agricultural Research (GDAR) is an indication of the Government's increased commitment to the importance of strengthening agricultural research. Finally, two research and project effectiveness assessments provide opportunities for making any required adjustments based upon implementation experience.  (lil) Costs. Financinit and Disbursement Summary Estimated Project Costs: XFo=eign %Total Components Local Foreign Total Excbange Base Costs ------US$ million------ Institutional Strengthening 2.7 7.9 10.6 74.5 15.5 Farming Systems 0.2 1.3 1.5 90.1 2.2 Crops 10.1 12.5 22.6 55.3 33.0 Livestock 2.6 6.7 9.3 72.0 13.5 Soil & Water 1.9 10 2 12.1 84.3 17.7 Forestry 0.6 5.0 5.6 89.3 8.2 Integrated Pest Management 1.0 3.5 4.5 76.9 6.6 Residue Control 0.4 1.9 2.3 80.7 3.3 Total Baseline Costs 19.5 49.0 68.5 71.5 100.0 Physical contingencies 1.5 2.2 3.7 60.4 5.4 Price contingencies 3.8 5.4 69.7 7.9 TOTAL PROJECT COSTS 22.6 aJ 55.O 77.6 70.1 113.4 Financing Plan: Percentage of Proiect Total F.E. Local Foreign Total Costs Costs ------US$ million----- Government 22.6/a - 22.6 29.0 0.0 IBRD 0.0 55.0 55.0 71.0 100.0 TOTAL 26.6 51.0 77.6 100.0 100.0 Estimated Completion Date: December 31, 1999 Estimated IBRD Disbursements: IBRD Fiscal Year 93 94 95 96 97 98 99 00 -- --------------(US$ million,------------------ Annual 9.0 15.5 13.5 8.5 4.0 2.5 1.5 0.5 Cumulative 9.0 24.5 38.0 46.5 50.5 53.0 54.5 55.0 MA&: IBRD 23282R - Turkey Agricultural Research Project a/ Includes USS 6.3 million taxes  STAFF APPRAISAL REPORT TURKEY AGRICULTURAL RESEARCIJ PROJECT 1. PROJECT AND SECTOR BACKGROUND A. Introduction 1.01 The Government of Turkey (GOT) plans to strengthen its agricultural research services to better serve its farming community and has requested the World Bank to assist in financing a project to achieve its objective. A World Bank Mission agreed with GOT on possible components of such a project with an emphasis on strengthening agricultural research capacity to benefit the less developed regions of the country and particularly the eastern and southeastern regions. Furthermore, a few research programs of high priority would also be included on a nationwide basis. 1.02 Under the Agricultural Sector Adjustment Loan (2585-TU) the AGRAR Consulting firm and nine Turkish specialists conducted a review of the former Ministry of Agriculture, Forestry and Rural Affairs' "Agricultural Research Activities" and issued a report in December 1989. This report was the basis for an FAO/IBRD Cooperative Program Mission visit to Turkey in June 1990 and the issuance of a preparation "Agricultural Research Project" report dated August 24, 1990 which was submitted to GOT for its approval. A subsequent World Bank Preappraisal Mission agreed with GOT in April 1991 on the various project components suitable for consideration by a Bank Appraisal Mission which visited in June 1991. Final arrangements were discussed with GOT by a Postappraisal Mission in February 1992. B. Agricultural Sector 1.03 Turkey has nearly 28 million hectares of cultivated land. Signifi- cantly, Turkey not only is self sufficient in food but also has large net exports of agriculturat products. Although declining in relative importance, the agricul- tural sector in recent years (1985-88) generated about 16% of total GDP and averaged about 21% of export earnings. In addition, clothing and textiles (based largely on domestic agricultural raw materials) represented 37% of exports in 1990, while other industries based upon agricultural raw materials generated about 16% of exports. About half the labor force in Turkey is engaged in agricul- tural pursuits, with crops contributing 56%, animal products 32%, forestry 7% and fisheries 4% of income. 1.04 Nearly 42 million hectares are considered agricultural land and its land use is as follows:  - 2 - Agricultural Land Use in Turkey Area Percent of (Million ha) Area I. Cultivated Land 1. Field CroDs Cereals 13.8 50 Pulses 2.1 8 Industrial crops 1.3 4 Oil seeds 1.0 4 Tubers 0.3 1 Subtotal 18.5 67 2. Horticultural CroRs Fruit 1.5 6 Vegetable 0.6 2 Vineyards 0.6 2 Olives 0.9 3 Subtotal 3.6 13 3. Fallow 5.6 20 Total Cultivated Land 27.7 100 II. Pasture and Meadows 14.2 Total Agricultural Land 41.9 Source: Statistical Yearbook, 1987 Of some 22 million ha in field and horticultural crops, about 3.2 million ha are irrigated, with a substantial expansion (about 1.7 mil.lion ha) planned for this decade with the construction of irrigation works on the Euphrates River. 1.05 Turkey occupies an area of about 78 million ha under diverse geo- climatic conditions which permits the production of a wide range of crops and livestock. Its western and coastal regiois (Mediterranean, Aegean, Black Sea) have the most favorable climate and are the most developed agriculturally. The central, eastern and southeastern Anatolia regions have lower rainfall and progressively harsher winter conditions as one travels eastward. Central Anatolia is the main cereal growing region, while mountainous eastern Anacolia has sparse cereal production in the valleys and livestock which graze the mountain psetures in summer and are housed in winter. 1.06 Livestock is a major resource in Turkey with some 15 million head of cattle and buffalo, 44 million sheep and 17 million goats and 64 million poultry. Commercial poultry production is increasingly important. Apiculture and sericulture are growing in importance as sources of income for rural people. In lower income areas, mainly in the eastern provinces, livestock herds are maintained under low input/low output conditions, with much of the pastures and rangelands degraded. Furthermore, severe winters in these provinces limit the growing season and many of the animals suffer considerable feed deficit for four to six months of the year which is only partially offset by crop residues and  3 conserved forages. Turkey's livestock yields (i.e., milk per cow and beef per carcass) are similar to those in Central Asia's grazing based regions and well below those in Eastern European countries of similar income levels. In recent years some 50,000 head of exotic cattle have been imported as part of a major breeding program tc increase milk production through genetic improvement. Holstein, Brown Swiss and Simental heifers and bulls have been distributed throughout the country to farmers and to establish bull centers. The results of this program are mixed, with problems arising from an inadequate supply of high quality animal feed and a lack of appropriate animal husbandry management practices. A strengthened livestock research program is essential to improved animal nutrition, increased forage and pasture production, improved livestock management and herd upgrading. 1.07 Mixed farming is the predominant system of agricultural operations in Turkey and accounts for about 86% of all holdings. In the climatically favorable areas of the Mediterranean and Aegean coastal areas, as many as three crops can be grown with irrigation, whereas only one crop can be grown in the harsher, rain deficit areas of Central and Eastern Anatolia. 1.08 As demand for food has increased due to population growth and export opportunities, more pasture land has been brought into cultivation. This has resulted in shifting grazing to marginal and forested land, overgrazing and degradation of pasture quality with concomitant loss of ground cover and erosion. Furthermore, as grazing rights on pasture and rangeland are usually communal, problems related to the management of these grazing resources are difficult to overcome. Thus environmental problems are becoming closely associated with livestock production. 1.09 Forestry. About 20.2 million ha of land in Turkey, or about one fourth of Turkey, is still forested area of which about 56% are degraded or unpro- ductive, due in part to arson and illegal grazing. In 1945, all forests were nationalized. Amendments in 1987 allowed some categories of private forests (estimated at 1% of forested areas). In addition, farmers have been encouraged to grow poplars and other fast growing trees, particularly on farm borders. About 17,000 villages with a population of 9.4 million reside within or adjacent to the forests and rely on the forest land for fuel and for grazing their livestock including collection of browse for stall feeding. Key priorities are: (i) reduction of erosion damage and rehabilitation of eroded areas, including development of programs to encourage forest villagers to assist in safeguarding such areas; and (ii) improvement of productivity to meet rising demand for forest products. 1.10 Development Objectives. The main agricultural sector dsvelopment objectives of the GOT are to: (s) modernize production techniques to raise productivity, yield and farmer income; (b) maintain food requirements of a growing population; and (c) promote agricultural exports. 1.11 Strategies. A wide range of structural reforms throughout the economy has been adopted by the GOT since 1980 representing a marked diversion from previous policies which emphasized centralized controls. The major thrust of the new policies was to promote greater reliance on the private sector and market forces for increased efficiency and growth. Although key changes were introduced in industrial and macroeconomic policy, progress on agricultural policy was more limited, although still of importance. The private sector was encouraged to take  a more important role in input distribution, regulatory restrictions were loosened and input subsidies were reduced. In line with its sectoral objectives, government strategy has emphasized improving agricultural productivity through expanding irrigated areas and import of exotic livestock breeds, strengthening its technical support to farmers through improved extension and better extension/research linkages and encouraging the increased use of agricultural inputs and improved seeds. At the same time, however, agricultural research has been weakoned by limited funding and growth of private sector opportunities outside research for agricultural scientists. 1.12 Despite the shift in agricultural strategies described above, major macroeconomic disturbances in 1979/80 resulted in ar initial sharp decline in agricultural growth rates in 1980 and 1981. However, from 1983 through 1988 agricultural growth rates averaged 4.9% per annum and kept pace with Turkey's impressive aggregate economic ou-put and income growth. After a severe drought in 1989, agricultural GDP dropped sharply and only in 1990 returned to 1988 levels. Moreover, there are underlying signs of a weakening agricultural performance including a lessening in the rate of agricultural commodity yield increases. 1.13 Although Turkey has a comparative advantage in the production of such crops as wheat, barley, cotton, tobacco, sunflower seeds, olive oil and melons, its crop yields are significantly belo- its potential and crop yield growth rates are behind many of its competitors. Yields of wheat remained static during the 1980s at a national average of 1.9 t/ha, with Central Anatolia yielding 2.2 t/ha, the Mediterranean region 2.8 t/ha and Eastern Anatolia at only 1.0 t/ha. Unless Turkey accelerates progress in developing and adopting improved technology, there is concern that it will lose opportunities for profitably exporting crops and competing successfully against imports. Inadequately supported research, weak extension services, inappropriate irrigated farming techniques, and agricultural resource degradation all contribute to a reduction in productivity growth. 1.14 Agricultural Resource: Base Dearadation. Intensive land use and increasing population have substantially degraded Turkey's agricultural resource base. Excessive grazing of natural pastures, cropping of steep fragile slopes and denuding of forested areas have led to massive erosion and damaged soil resources. Streams, lakes and groundwater have been polluted by excessive and improper use of fertilizers and pesticides which has resulted in food and water contamination and has on occasion resulted in the loss of livestock. Agricultural research will be essential in formulating sustainable solutions for reversing this degradation, particularly through integrated pest management practices and rangeland and watershed rehabilitation. 1.15 Bank's Agricultural Strategy. Agricultural lending by the Bank to the GOT has aimed at increasing output productivity, exports and rural employment, and supporting and promoting the necessary policy and institutional reforms in the sector. Strategy by the Bank has included: (a) supporting institutional reform and particularly technical support services of research and extension, establishing a sectoral planning capability, improving irrigation agencies' implementation capabilities and reforming government enterprises involved in agricultural marketing and input supply;  - 5 - (b) rationalizing the public sector investment program, particularly in irrigation, with greater emphasis on quick gestating projects; (c) expanding the credit s8pply, especially for medium and small farrm holdings, together with increasing the efficiency of credit institutions and i&proving financial sector policies to encourage greater private investment in the sector; (d) reducing subsidies and price supports to promote increased use of market forces, interest rate reform and increased involvement of the private sector in marketing agricultural inputs and products; and (e) foreign trade liberalization, including deregulating exports and imports. 1.16 If Turkey is to meet its agricultural sector objectives, it must expand and accelerate its ongoing programs to: (a) improve technical support services and especially agricultural research; (b) develop a stronger and more effective network of financial intermediation services and institutions providing increased agricultural credit; (c) accelerate completion of economically justified irrigation projects and improve efficiency of irrigated land use; and (d) increase the efficiency of its agricultural marketing systems. Concomitantly, GOT should continue the deregu. i-ion of the agricultural sector, by removing export levies, phasing out input subsidies and reducing costly purchase and storage price support operations. C. Bank Group Lending For Agriculture 1.17 As of December 1991, the Bank Group has supported 26 agricultural proJects in Turkey of which 20 are closed and 6 are being implemented. These include the following loans which became effective since 1980: Livestock V Project Loan 1862-TU Second Fruit and Vegetable Project Loan 1967-TU Erzurum Rural Development Project Loan 2094-TU Agricultural Credit II Project Loan 2318-TU Agricultural Extension and Applied Res. Project Loan 2405-TU IAEE Irrigation Project Loan 2433-TU Agricultural Sector Adjustment Loan Loan 2585-TU Drainage and On-Farm Development Project Loan 2663-TU Agroindustry Project Loan 3077-TU Agricultural Credit III Project Loan 3090-TU Second Agricultural Ext. & Applied Res. Project Loan 3177-TU These eleven projects were designed to increase production and institutional development (livestock, fruits and vegetables and rural levelopment), strengthen credit institutions and expand agricultural credit, improve irrigation systems, upgrade and strengthen agricultural extension in 39 of Turkey's 73 provinces, and improve and expand processing of agricultural produce by focussing on restructuring existing enterprises and developing and/or strengthening technical, financial and marketing institutions in the private sector. The Agricultural Sector Adjustment Loan emphasized: (i) ending the parastatal monopoly on  - 6 - fertilizer distribution and imports and phasing out of the fertilizer subsidy; (ii) liberalization of seed pricing and distribution; (iii) efficiency improvements in State Economic Enterprises (SEEs) involved in seed production and fertilizer and seed distribution; (iv) improved allocation of irrigation investment through preparation of an irrigation investment plan and implement- ation of an agreed core program for completion of drainage and on-farm development works; and (v) improved capacity for sectoral planning and analysis in the Ministry of Agriculture and Rural Affairs (MARA)L' 1.18. Research Components. Limited funds were made available in some of the above listed projects for agricultural research, primarily to assist the Extension Services in subjects appropriate to the project in question. Under the Fruit and Vegetable II Project, funds were made available to strengthen citrus research oriented to solving farmers' problems. In the Erzurum Rural Development Project, funds were allocated to strengthening the Regional Rural Services Research Institute and, to a lesser extent, the Eastern Anatolia Research Institute, to provide information to the extension services on improved wheat varieties, soil analyses and fertilizer requirements. Under the Agricul- tural Extension and Applied Research Project (AEARP), significant progress has been made in the 18 project provinces in improving linkages between extension and research through involving five res-arch institutes in training extension staff and receiving feedback on farmers concerns from the extension service, through monthly workshops and other provincial and regional meetings. Some new equipment was provided for participating institutions. Similar programs to strengthen extension/research linkages are included under the second AEARP approved in March 1990. The first AEARP included also a limited program to construct new research facilities in the project area. Most of this program was not undertaken since the reorganization of research activities and reallocation of responsibilities among research institutions was only completed in 1987, and design and construction of new facilities could not have taken place without major extensions of the loan closing date. Both of these projects were limited to applied research needed to service the extension programs in the project areas and neither of them attempted to tackle the more general issues of the national agricultural research program. The Agricultural Sector Adjustment Loan (ASAL) provided for a review of the priority needs for strengthening MARA's agricultural research system which could serve as the basis for future Bank assistance in a free standing Agricultural Research Project. 1.19 Proiect Performance Audit Reports. The Operations Evaluation Department (OED) of the Bank has issued four project performance audit reports (PPARs) on five Bank-assisted projects in Turkey which established agricultural extension units. These are: Seyhan Irrigation Stage II Loan/Credit 587/143-TU, PPAR No.2747 Irrigation Rehab. & Completion Credit 281-TU, PPAR No.3515 Fruit & Vegetable Export Loan/Credit 762/257-TU, PPAR No.4265 Ceyhan-Aslantas Multipurpose and Loan/Credit 883/360-TU v The former Ministry of Agriculture, Forestry and Rural Affairs (HAFRA) was split in 1991 to create a separate Ministry of Forestry (MOF). For ease of reference, MARA will be used throughout this report, even when referring to the ministerial structure before the split, whereas MAFRA will be used when referring specifically to the pre-1991 organization.  -7- Corum-Cankiri Rural Development Loan 1130-TU, PPAR No.6756 Second Fruit & Vegetable Loan 1967-TU, PPAR No.8885 The OED also issued an Impact Evaluation Report No. 5745, ten years after completion of the Seyhan Irrigation Project State II (Loan/Cridit 587/143-TU). One of the major lessons of these reports is the need to have strong linkages between extension and research and the urgency of having a flow of improved technology packages developed by research to enable extension to impact effectively on farmers productivity and incomes. 1.20 In general, the irrigation projects proved to have a greater impact than was projected at time of appraisal. Yields and cropping intensities increased faster and reached a higher level than anticipated and significant increases in farmer incomes and improved living standards were evident. However, project closing was delayed by several years due to planning weaknesses and construction delays and highlighted the need for engineering designs for irrigation infrastructure prior to project approval and synchronizing construction schedules with the cropping calendar and which has been incorporated in later irrigation projects. The first extension T&V system initiated with Bank funds was in the Seyhan Irrigation project. However, it was only when Government noted the significant impact of T&V on rainfed agriculture in the Corum Cankiri Rural Development (CCRD) Project that they fully adopted the system for other provinces in Turkey. Since the CCRD project involved many different agencies and government ministries, coordination was difficult and a main lesson was the need for measures to ensure inter-agency coordination, planning and monitoring. Many lessons learned with the CCRD project were taken into account in the subsequent Erzurum Rural Development Project. 1.21 The livestock projects were only marginally successful and achieved much less than the development target set at appraisal. Emphasis on imported dairy cattle appeared unwarranted and supervised credit with local cattle finally occurred in 60% of the subloans. Furthermore, the artificial insemination program by the public sector proved too inefficient and expensive in both investment and recurrent expenditures. Livestock programs operated in an inadequate clearly defined livestock development strategy and it is evident that such a strategy needs to be devised before considering further lending in this subsector. Difficulties were also encountered in the Fruit and Vegetable or Credit and Agroindustries projects. Both projects were limited by the agricultural bank not making improved technology a condition of lending. The bulk of the supervised credit was utilized by small farmers in the more developed west and south and relatively little flowed to the much poorer center and east. 11. AGRICULTURAL RESEARCH IN TURKEY A. General 2.01 Most agricultural research in Turkey is conducted by the public sector and primarily in the Ministry of Agriculture and Rural Affairs (MARA) and the Ministry of Forestry (MOF). Other public sector agricultural research is performed by the state enterprises of tea (CAYKUR), tobacco (TEKEL) and sugar beets (SEKER). The Scientific and Technical Research Organization of Turkey (TUBITAK) funds some agricultural research projects in specific fields which they  wish to support. The Atomic Energy Association of Turkey in its Center for Nuclear Research uses nuclear techniques for plant breeding, plant protection, soil fertility, food conservation and animal health research. 2.02 Agricultural faculties conduct some research especially at Ankara, Ege and Cukurova Universities, including agricultural economics at Middle East Technical University and Haeettepe University, but are constrained by budgetary limitations and teaching responsibilities. Cukurova University at Adana is conducting some research in the Southeastern Anatolia region with funding (which terminates in 1992) from the Southeastern Anatolia Project (GAP). In the private sector, research is concerned with adaptive trials by private seed companies of varieties developed elsewhere, such as hybrid maize, sunflower, soybeans, sorghum, rape and vegetables. The private sector frequently contracts with MARA research stations for testing their varieties under different conditions throughout Turkey. Important agricultural research is reviewed and discussed also at the Soil Science Society of Turkey, Phytopathology Society of Turkey and Culture Technique Society of Turkey. B. Organization of MARA Agricultural Research 2.03 The reorganization of the Ministry of Agriculture, Forestry and Rural Affairs (MAFRA) in 1984 led to the division of research among five General Directorates as follows: (a) General Directorate of Projects and Implementation (GDPI)' in 38 institutes including field crops (6), horticultural crops (12), livestock/aquaculture (8), regional research (8), & irrigation (1); (b) General Directorate of Protection and Control (GDPC) - in 14 institutes including plant protection (4), veterinary (9), and food/feed control (1); (c) General Directorate of Rural Services (GDRS) - in 11 institutes including central soil-and fertilizer research (1) and regional (10); (d) General Directorate of Forestry (GDOF) - in an institute of central forestry research and one in poplar and other rapid growing trees; (e) General Directorate of Organization and Support Services (GDOS) - 2 institutes in handicraft and leather research. 2.04 In August 1991, forestry and its research entities were transferred into a reconstituted Ministry of Forestry (MOF), and within the remaining Ministry of Agriculture and Rural Affairs (MARA) a new General Directorate of Agricultural Research (GDAR) was established. Prior to the Ministerial reorgani- zation in 1984 several reorganizations occurred which affected research operations. Public sector agricultural research was fragmented to an unusual extent with soil, water and fertilizer research on irrigated lands being U Renamed in August 1991 as General Directorate of Agricultural Production and Development.  conducted within a Ministry of Village Affairs separate from the Ministry of Agriculture and Forestry. Much greater focus was given by the GOT to agricul- tural research on crLI., forages and livestock, which for a ten year period (1971-1981) was grouped within a separate General Directorate of Agricultural Research (GDAR). It was during this period that major technological advances were developed which resulted in doubling of wheat yields and introduction of improved higher yielding varieties of a number of field and Morticultural crops. GDAR was abolished in 1981 and merged with extension in an enlarged General Directorate of Agricultural Affairs (GDAA) which lasted until December 1983. At that time a major government change abolished the Ministry of Village Affairs and its activities were merged into an enlarged Ministry of Agriculture, Forestry and Rural Affairs (MAFRA). The GDAA was then abolished as well as the General Directorate of Plant Protection and Quarantine and the General Directorate of Veterinary Services and the GDPI, GDPC and GDOS were established. Furthermore, these new General Directorates (GDs) were given only advisory authority over the research institutes associated with them as described in para 2.03 and line authority was passed to the Provincial Director of Agriculture for the province in which each research institute was located. This led to a demoralized research environment with Provincial Directors often using equipment from the institutes to carry out their own field work to the detriment of research experimentation. A number of highly qualified research scientists resigned to join the private sector. Some subsequent actions have been taken to strengthen the role of the GDs in coordinating the activities of the research institutions under their jurisdiction, reducing the ability of Provincial Directors to reallocate resources from their intended purposes. 2.05 A High Council for Research and Development (HCRD) was established within MAFRA by ministerial decree in 1987 in an attempt to ameliorate the situation and continues to operate in MARA. Its functions are to define targets and priorities for long-term research policies; define target areas for investment in accordance with research and development plans and programs; and examine and evaluate manpower training and training locations of the research establishments of MARA. The HCRD is supposed to meet annually but additional meetings can be called by the Chairman, who is the Minister of MARA. Other members include the Undersecretary and relevant assistant undersecretaries, the general directors of the service units (GDPD, GDPC and GDOS), affiliated GDs such as GDRS, representatives of the Ministries of Forestry, Finance and Customs, Industry and Commerce, State Planning Organization (SPO), Higher Education Board (YOK), Scientific and Technical Research Organization of Turkey (TUBITAK), agricultural bank (TCZB) and invited scientists from universities and other agencies and Directors of MARA's research institutes. 2.06 The Secretariat of the HCRD is the Research, Planning and Coordination Board (APK) of MARA. APK has authority to coordinate research among the general directorates of MARA (GDAR, GDRS and GDOS). In addition, APK also has authority to coordinate relations with non-ministerial and international organizations and to examine proposals to be carried out jointly. The concerned GDs (GDAR, GDRS) have national working groups which meet annually to review previous findings and to recommend the research programs for the following year. APK, in its secretariat function, compiles these annual research programs for approval by HCRD. The recommended programs are then submitted to SPO for final approval after MARA recommends appropriate budgetary allocations. Some strengthening of APK will be necessary to enable it to carry out its activities more effectively.  - 10 - 2.07 Staff ina. The personnel of the Research Institutes (as of 1991) is in excess of eight thousand of which 176 have Ph.D. and 453 Masters degrees and 550 Agricultural Engineers (B.Sc. equivalent) and 449 technicians. This results in an unsatisfactory ratio of 0.5 technician per university graduate. In practice, however, many of the Agricultural Engineers are generally young and inexperienced and without adequate knowledge of research methodology and are mainly involved in the execution of trials together with the technicians. Administrative staff number 768, support staff: are 1130 and laborers account for 4,840 or about 58% of total staff. The preponderance of administrative, support and field staff are to accommodate production activities in addition to research programs. Responsi- bilities for basic seed production as well as other crop and livestock production absorb considerable staff resources. Future staff development should concentrate on recruitment of research and technical staff at the expense of support staff and laborers. 2.08 Research staff morale is low and constitutes a major restraint to the development of agricultural research. University staff at a comparable level to MARA researchers are paid nearly double and have higher status, better working conditions and housing. MARA research staff stability has been limited due to frequent transfers to other positions within or outside the MARA research system, regardless of the research programs underway, and without consulting the Institute's Director or the concerned staff. Institute Directors also have no say in the recruitment of new staff in their Institutes. Furthermore, the regu- lations which formerly provided a career structure in research have become dormant. Opportunity for improvement in status and salary is often bound to assuming administrative and managerial responsibilities. These constraints are magnified in the less developed regions where living conditions are much harsher than in Central and Western Turkey and where, until recently, no added compen- sation was offered to staff willing to settle under these conditions. The situation for MOF researchers is similar, although less severe and without the problems of frequent transfers. Recruitment of staff native to their respective regions could help alleviate staffing problems. 2.09 Budgets. MARA research Institutes receive their funding from three different sources: (a) Ministry of Finance for salaries; (b) MARA for the investments and operating expenditures; and (c) Research Institutes revolving funds from a portion of revenues accrued from sales of produce and from services to a given maximum beyond which such revenues are returned to Treasury. Revolving funds are increasingly important for the functioning of the Institutes because of increasing Government budget constraints resulting in decreased budget allocations for the agricultural research subsector. This has resulted in greater attention being given to production activities at the expense of research activities. MOF research institutes have a similar situation except that they receive a portion of revenues from the MOF revolving fund from sales of forestry products. 2.10 The 1990 budget for MARA and MOF research institutes combined amounted to TL 66.8 billion (US$ 25.7 million at TL 2600=US$1). This is about 0.2% of agricultural GDP which is far below the Bank suggested rate of 1% of agricultural GDP and far below countries with a similar level of development. Agricultural research as a share of agricultural GDP actually declined by some 15% from 1980. Thus, it is clear that GOT needs to increase its financing of agricultural research, particularly in the Eastern and Southeastern regions to approach a more reasonable percentage of agricultural GDP. Recurrent costs (TL 33.5 billion) or  - 11 - about 50% of the total budget are mainly for salaries with only 14% allocated for operating expenditures. Inadequate funding of operating expenditures is often a major constraint for operating viable research programs. Incrementality in the research budget should provide for more adequate operating expenditures. 2.11 Research Programs. Projects are organized into overall research programs. There are, however, no generalized procedures for introducing new projects. Since contacts between research and extension have, in general, been haphazard, research projects tend to be generated by researchers themselves, with little guarantee that they will answer key field problems facing the farmers. The situation has improved in the area of the Bank supported Agricultural Extension and Applied Research Project (AEARP) where regular institutionalized contacts between researchers from the five research institutes and extensionists providing services in the 18 provinces of the project have led to improved user- oriented research. Similar extension and research links are to be introduced in the 21 provinces of the Second AEARP. 2.12 Proposals formulated for projects by researchers are first reviewed by the research committee of the Institute in question. Each proposal is then reviewed by a working group of researchers in the particular discipline from different regions of the country and finally decided upon by the High Council of Research and Development (HCRD). 2.13 The management of the research programs has been somewhat different in the former GDPI from the other GDs. Some 540 projects are organized into 32 commodity research programs, each of which is under a national coordinator residing at the lead research institute. Each national commodity research program may involve several research institutes in different agro-ecological zones and it is the task of the national coordinator to coordinate the annual research work program. Such coordination also involves, at least in principle, research work on the commodity undertaken by institutes in other GDs. For example, wheat programs involve pesticide research by GDPC and fertilizer research by GDRS. However, the authority and influence of the research coordi- nator has weakened in recent years, particularly with regard to institutes in other GDs. In an effort to overcome this problem, the Directors of the lead research institutes have been designated as the national coordinators, but this has not improved the situation. A few similar coordinating groups are operating in the other GDs, but expansion of this system would seem advantageous for facilitating coordination amongst the institutes working on a common problem. 2.14 Crop Research. The programs cover all major aspects of crop development with a strong emphasis on variety development, while cultural practices have been researched to a more limited extent. Main successes are the development of improved winter cereal varieties for the central and western plains of Turkey, of vegetables for the intensive coastal areas and of cotton. Technology development for the less developed eastern and southeastern areas has been neglected. 2.15 Livestock Research. Livestock research has received much less attention than crop research and little resources have been given to important programs such as animal nutrition, management and pasture improvement.  - 12 - 2.16 Soil/Irrigation Research. Research programs under GDRS on irrigation and drainage have provided a solid basis for the implementation activities of the General Directorate, especially in the irrigation schemes in western Turkey. Soil conservation and hydrology research programs have gathered a wealth of data and recommendations but had little impact on the implementation of water shed management and erosion control activities. 2.17 Farmin2 System and Farm Management Research. Little attention has been given in the past to these research programs which were, in general, limited to the assessment of the profitability of developed technologies. 2.18 Economic and Marketing Research. No systematic research is presently underway in economic and marketing research. This needs to be remedied to assist Turkey to compete effectively for market share of exports and to develop appropriate policies affecting its agricultural sector. 2.19 Forestry Research. There is a long tradition of forestry research in Turkey. Achievements are particularly noteworthy in the field of introduction and development of poplar and other fast growing tree species. 2.20 Regional AsRects of Aaricultural Research. The activities in agricultural research are heavily concentrated in the four most developed regions of the country, namely, Central North (Ankara), Aegean, Marmara and Mediterranean. These four regions hold some 80% of research staff and some 75% of the research budget, while only limited resources are devoted to research activities in the less developed areas of eastern and southeastern Turkey. Consequently, little area specific research results are available for the eastern and southeastern regions and there is an urgent need to rectify the situation through the intensification of agricultural research in these areas. 2.21 International and Institutional Linkaees. A number of MARA research institutes have contacts or cooperative arrangements with or receive support from international research organizations. Financial support for these arrangements comes mainly from the Bank supported AEARP. In the past, excellent contacts were made through the bilateral assistance program of the Agency for International Development with the Rockefeller Foundation and Oregon State University which was instrumental in developing an effective national wheat improvement program. Presently, good contacts and cooperation have been established with the CGIAR international research institutes of CIMMYT, ICARDA, ICRISAT, CIP, IRRI and CIAT. 2.22 Research/Extension Linkages. Farm level research/extension Linkages were introduced in the national Wheat Training and Research Project in 1969. On a broader scale, they were expanded through the first AEARP in the 18 provinces of the project area and are planned to be introduced in another 21 provinces through AEARP II. They are based on a close cooperation between the provincial agricultural offices and research institutes located in the project area. They include: (a) establishment of a Research-Extension Liaison Department in each of the Research Institutes; (b) regular training of Subject Matter Specialists (SMSs) in the Research Institutes; (c) participdtion of research staff in SMSs workshops; (d) participation of research staff in an initial diagnostic survey in all provinces in the project area of AEARP II; (e) conduct of on-farm trials together with the extension service; and (f) integration of research results into appropriate recommendations for different categories of farmers.  - 13 - 2.23 Constraints. Main constraints for an effective development of agricultural research are detailed in Annexes 2 & 3 and Annexes 4-7 to be found in the Project Implementation File. They have included: (a) ineffective priority setting for planning, programming, budgeting, monitoring and evaluation stemming from inadequate policy guidance and APK's lack of expertise to act as Secretariat in the performance of these functions including the coordination of all research in MARA; (b) the overall fragmentation of the former MAFRA's agricultural research with its 67 research institutes in 4 General Directorates and with partly overlapping responsibilities (e.g. crop, livestock and fisheries research in GDPI; soil, water and fertilizer research in GDRS; plant and animal diseases and food control research in GDPC; and forestry research in the former General Directorate of Forestry); (c) low staff morale due to inadequate schemes of service compared with other Turkish institutions and comparable positions (universities) and frequent transfer of research personnel to other locations within and outside of MARA's research activities; and (d) concentration of research activities, personnel and facilities in the more developed regions of Turkey to the neglect of research in the less developed regions, especially in eastern and southeastern Anatolia. C. Rationale for Bank Involvement 2.24 The project would conform to the Bank's agricultural sector development strategy and provides for strengthening of agricultural research capabilities to develop improved technologies needed for Turkey to achieve its stated goals in this sector for providing food, increased rural incomes, employment and export earnings. Since Turkey is faced with a rapidly growing population (2.3% p.a.) and limited availability for increasing cultivable land, increased productivity must derive from existing farmland areas. Furthermore, with the rise in dietary standards, increased production of livestock products, fruits and vegetables will be required. Increased productivity per unit area of land will be essential and research must be expanded to provide the improved technologies needed. 2.25 Design Considerations. Under the Bank's Agricultural Sector Adjustment Loan (2585-TU) of 1985, funds were provided for an in-depth agricultural research study. Following years of debate, the former MAFRA commissioned a more limited study which was completed in December 1989 by AGRAR Consultants and nine Turkish specialists. The report recommended a further reorganization of the agricultural research system including the reestablishment of a General Directorate of Agricultural Research (GDAR) in charge of research programming and coordination and the regionalization of research through the establishment of 11 Regional Research Institutes and down-grading of the remaining institutes to Research Sections of the Regional Research Institutes. Another possibility described would have been the formation of a semi-autonomous Agricultural Research Organization reporting to the Minister of Agriculture but with sufficient eutonomy to set approved staff regulations for promotions, salaries and staff  - 14 - incentives. It might have been similar to siuch organizations established in Indonesia and Brazil. While such suggestions were supported in principle by many MARA officials, they would have required new legislation and were considered politically infeasible. 2.26 In June 1991, Parliament authorized for a period of 10 months the Ministries of Government to initiate structural reforms of their activities without requiring Parliament's approval. In August 1991, the Council of Ministers approved the reestablishment of GDAR and the reestablishment of a Ministry of Forestry (MOF). The soil and water research institutes remain in the GDRS and responsible to its own APK which remains separate from MARA's APK. GDAP, absorbed the research institutes formerly in GDPI, GDPC and GDOS. The research institutes in the former GDOF have been transferred to the new Forestry ministry. GDAR has assumed the functions of APK in providing effective planning, programming, budgeting, coordination and monitoring of research for the institutes under its jurisdiction. APK retains its overall responsibility for planning and budgeting of ministerial activities. The establishment of GDAR, consolidating functions previously in several GD's and Bureaus and with research, planning and coordination responsibilities, represents a significant organizational improvement. 2.27 Presently, the role and authority of the national commodity research program coordinators has deteriorated and de facto research in MARA is conducted mainly on an institute rather than a program basis. Past experience (e.g. the national wheat research program) has demonstrated the usefulness of a multi- disciplinary approach and of research teams with representatives from Institutes from different General Directorates. While merging the main activities into GDAR reduces the problem, interdisciplinary coordination problems remain. 2.28 Research to develop appropriate technology for the eastern and southeastern regions of Turkey, where agro-ecological conditions are difficult, has a high priority, since existing research is inadequate to the needs of the regions, and the relative poverty of the population of these regions gives importance to devising appropriate strategies for their development. In addition, significant irrigation developments in southeast Turkey are to be completed in the next few years, giving increased urgency to developing appropriate technologies for the area. Improved capability in regional adaptive research, supported and complemented by commodity research institutes for undertaking more basic research problems affecting these areas, will be required for developing appropriate technologies for these regions. 2.29 The degradation of the agricultural resource base is increasingly of concern to the GOT. Increased population densities and intensity of land use have led to cropping on steep slopes, excessive grazing of natural pasture and forests, while excessive use of pesticides and fertilizers has damaged streams, lakes and groundwater and contaminated food. Soil fertility, erosion control/ soil conservation and integrated pest management and residue controls research are of high prioritv and will be included in the strengthening of research in MARA and MOF. 2.30 Surprisingly, for a country as developed as Turkey, MARA has no macro- or micro-economic research unit or institute to conduct economic research on such matters as land use and production policies; producer and input prices and investment policies; export opportunities, marketing and trade policies and their  - 15 - effect on farm income and employment. Such a unit or institute will be essential for MARA and GOT decision makers to develop sour.d policies affecting the agricultural sector. 111. THE PROJECT A. ProJect OCblectives 3.01 The proposed project is intended to support the Government's efforts to strengthen the ability of MARA's and MOF's agricultural and forestry research services to provide appropriate technologies for solving Turkish farmers' problems and raising their incomes. More specifically, the objectives include: (a) developing technologies suitable for the less developed regions of eastern and southeastern Turkey; (b) strengthening selected high-priority national research programs because of their relevance beyond the less developed regions; sc) contributing to institution building of MARA's and MOF's agricultural and forestry research services; (d) establishing an economics and policy research capability for agriculture; and (e) strengthening MARA's capacity for testing food products so as to enforce pesticide and hormone residue regulations. B. Summary Description 3.02 The largest component of the project would consist of investments to strengthen research programs of importance to the less developed regions of eastern and southeastern Turkey. This would include not only research institutes located in these regions but also lead institutions in other parts of Turkey responsible for coordinating research programs of importance to these regions. The research areas supported would include nine crop research programs, five livestock programs, four forestry programs, and programs in irrigation and drainage. While selected for their importance to eastern and southeastern Turkey, the results of these research programs would also be expected to provide benefits to farmers in other parts of Turkey. A few additional priority research programs have been selected for strengthening on a national basis, in view of their importance for the overall agricultural sector in Turkey. These include farming systems research, erosion control and soil conservation, soil fertility, integrated pest management, and residue control. In addition, while not strictly agricultural research, the MARA laboratories enforcing pesticide and hormone residue regulations would be strengthened and limited support would be provided for laboratories providing livestock disease diagnostic services for eastern Turkey.  - 16 - 3.03 A major emphasis of the project would be the strengthening of MARA's capacity for prioritizing and coordinating research programs including improvements to carry out research planning, budgeting, monitoring and evaluation functions. This would be facilitated by the recent establishment of a General Directorate of Agricultural Research (GDAR). This new GD would also prepare a long-term research master plan and expand on a management information system expected to be initiated in the project areas of the first and second AEARP so as to link all research institutes to provide needed data to decision makers. 3.04 The project would also establish an Agricultural Economic Research Irstitute (AERI) to provide MARA with macro and micro economic analyses concerning agriculture's role and performance and information on marketing, production and technical matters. 3.05 The project would be executed over a period of seven years and would include civil works (laboratories, offices, workshops, staff housing), laboratory and field equipment, vehicles, training of research and research management staff, incremental operating costs for vehicles and equipment, and technical assistance. C. Prolect Details Institutional Strengthening 3.06 A General Directorate of Agricultural Research (GDAR) has been established under a decree effective August 9, 1991, to provide for successful coordination, programming, evaluation and monitoring of agricultural research in MARA and to assure the successful implementation of the project. A General Director with some experience in agricultural research was appointed in September 1991. An indicative plan was agreed for adequately staffing GDAR headquarters. While the currently proposed project was prepared on an ad hoc basis by a team of consultants and Turkish experts, there is a need to make such planning and prioritizing a normal part of MARA and MOF regular activities. Accordingly, the new GDAR would also be in charge of coordinating the preparation, under the project, of a long term master agricultural research plan for MARA, which would be updated annually. The master plan would also include recommendations on improvement in research staff career structure, training programs, and staff incentives. The goal of the master plan is not the preparation of a single document, but rather the institutionalization of a planning and budgeting system which could be operated independently of consultants by the end of the project period. It was agreed that the initial master plan would be completed by October 31, 1994. GDAR would also be provided with funds to complete a nationwide research management information system which would be implemented in close cooperation with TUBITAK's planned technology information center. GDAR would be provided with training to accomplish these new functions, technical assistance, equipment, transport and incremental operating costs. The forestry research component of the project would be coordinated by the APK of MOF and implemented by the Forestry Research Institute and the Poplar and Fast Growing Trees Species Research Institute and their subsidiaries. Project support may be extended, in agreement with the Bank, to the ten regional forestry research institutes currently in the process of being established. An indicative plan was agreed for staffing Forestry's APK to handle the responsibilities under the project.  - 17 - 3.07 Agricultural Economics Research Institute (AERI). An AERI would be established to conduct research in answering key questions regarding the role of agriculture in the economy and the implementation of this role including: land use and production policies; technology policies; producer prices; inputs and investment incentives policies; public investment policies; and export opportunities, marketing and trade policies and their effects on farm income and employment. AERI would work closely with researchers at the GDAR research institutes on research methods, would provide cooperation on specific projects, and would organize training and seminars to impart a socio-economic dimension to commodity, regional and farming systems research. It would be located in existing facilities in the Yenimahalle section of Ankara and report to the Minister and Undersecretary of MARA through APK. It was agreed that AERI would be established by October 31, 1993. Priority Research Programs For The Less Developed Regions 3.08 Crop Research Programs (9). Research programs would be carried out on cereals, food legumes, cotton, second crops for irrigated areas, fruit, pistachio, grapes, vegetables and genetic resources. Subprograms for crops would include the areas of plant breeding, agronomy, plant protection, technology and economics. Plant breeding would include cross breeding, selection, preliminary yield trials, multi-location trials at and off research stations and basic seed production. The subprogram of agronomy would include improvement of cultural practices to maximize the genetic potential of the plant varieties. The plant protection subprogram would include resistance breeding and the development of integrated pest and disease control methods. The subprogram on technology would include biotechnology and biological engineering to develop desirable characteristics for improving crop quality and conservation of produce. It could include genetical manipulation to impact on higher yield, low or no fertilizer input, pathogen and insect resistance, improved nutritional quality and/or drought or saline tolerance. The economics subprogram would concentrate on the profitability of the proposed technologies on farm incomes within a farming system approach. In total, 154 projects would be implemented at 13 Research Institutes of which five are located in the less developed regions and the other eight would serve as lead/supporting institutes located in other areas. Other Research Institutes would collaborate in the plant protection subprograms and the Rural Services Research Institutes would assist in questions of fertilization and mechanization. 3.09 Livestock Research Proerams (5). The research programs on livestock would include large ruminants; small ruminants; fodder and pasture; apiculture and sericulture; and inland fisheries. Each livestock research program has four subprogram components of nutrition, management, breeding and health. The programs include 43 research projects to be implemented in six Livestock Research Institutes and six Animal Health Research Institutes. The nutrition research subprogram aims at determining the supplementary nutritional requirements of animals and at increasing the profitability of animal production by a rational use of on-farm inputs. The management research subprogram includes rangeland rehabilitation, stocking densities and animal housing. The breeding research subprogram would have as its ob4ective the establishment of purebred indigenous animal resources to maintain genetic diversity and would develop performance recording systems for ruminants and determine the role of exotic breeding in Turkey. The health research subprogram would include the development of farm  - 18 - level prevention and control programs for major animal diseases, the improvement of the efficiency of national disease control programs and the determination of linkages between pollution and fish production. Limited support would also be provided for laboratories providing livestock disease diagnostic services for eastern Turkey. It was agreed that an additional 1,000 ha of land, suitable for range and pasture trials and demonstrations, woull1 be made available to the Eastern Anatolia Agricultural Research Institute, by the transfer no later than April 30, 1993 of two parcels of land from the State Farm of Gule in Kars province and the State Farm of Kazim Karabekir in Igdir province. 3.10 Irrigation and Drainage Research Program (1). The research program would determine the water requirements of crops, the reclamation criteria for saline, sodic and boron affected soils and identify water saving irrigation methods adapted to crops. The research program would be conducted in the Sanliurfa and Erzurum Regional Rural Services Research Institutes. 3.11 Forestry Research Programs (4). The four research programs include silviculture, forest management and forest protection; major and minor forest products; community forestry (including sociological and economic research); and erosion control and soil conservatiin. An important research program of the forestry research institutes would be the development of agroforestry and silvipastoral systems. The silviculture/forest management/forest protection research program would include nursery techniques, establishment techniques, species and provenance trials, shelter belt investigations, poplar and willow cultivation, improvement of degraded oak coppice, natural regeneration of Pinus sylvestris and forest protection. The research program on major and minor forest products would focus on timber testing, utilization of wood waste and investi- gationi' on medicinal, aromatic and other plants. The watershed research program would be conducted in close cooperation with the national soil conservation program. Priority National Research Programs 3.12 Farming Systems Research (FSR) Program. This new research program would be initiated on a pilot basis in the less developed regions by the two Regional Research Institutes at Erzurum and Diyarbakir and the Regional Rural Services Research Institute at Sanliurfa. It would also be initiated by the Research Institute at Eskisehir. The main purpose of this research, to be carried out by FSR teams at each institute, collaborating with researchers, extensionists, and farmers, would be to evaluate existing farming systems; evaluate the natural resource base and the socio-economic environment; identify problems which limit or affect stability of production; conduct research on new or improved practices, system or subsystem components; evaluate new or improved practices; and assess the benefits of improved technology systems. It was agreed that the establishment of four new farming systems research teams, i.e, at the research institutes in Diyarbakir, Erzurum, Eskisehir and Sanliurfa, would take place no later than April 30, 1993. 3.13 Erosion Control and Soil Conservation Research Program. This research program would be carried out by the 10 Regional Rural Services Research Institutes. The research would include: developing hydrological models for small agricultural watersheds; studying the effect of strip cropping and stabilization methods on soil and water conservation; determining the effects of different  - 19 - cultivation systems on yields, erosion and moisture conservation projects; and studying social issues in soil conservation. 3.14 Soil Fertility Research Program. This research program would be conducted by the Soil and Fertilizer Research Institute in Ankara and its 10 Regional Rural Services Research Institutes in close collaboration with the various crop research programs of Crops Research Institutes. The research would include: determination of the economic rate, time and method of fertilizer application; calibration of soils in view of fertilizer recommendations; determination of the micro-element status of Turkish soils; and rhizobium population studies on different soil types. 3.15 Integrated Pest Management (IPM) Research Program. This program would be implemented by all the Plant Protection Research Institutes and Departments of Plant Protection at Yalova, Antalya, Samsun and Erzincan Research Institutes. Research would include: developing and applying biotechnical methods in pest control; biological control of citrus pests and mass production of natural predators; and introducing IPM in crops with a high usage rate of pesticides, especially on vegetables, cotton, apple, potatoes and maize. 3.16 Residue Control Research Pro2ram. This program is primarily a laboratory activity which aims at efficiently monitoring residues of pesticides, fertilizer, and growth regulators in field and horticultural crops; heavy metals and residue of veterinary and agricultural drugs in animal products; and residues of packing materials in food. This research program would be implemented in four Plant Protection Research Institutes for control of residues in crops, at the Food Research Institute and the two Regional Research Institutes for control of residues in animal products and food. 3.17 MARA published in 1990 new regulations limiting pesticide and hormone residues in food products. The regional food control laboratory in Ankara has also been strengthened to enable it to carry out MARA's mandate to enforce such residue regulations for domestic and exported food products. However, capacity needs to be created to enable GDAR to carry out similar residue analysis work in the other major production centers of Turkey. Under the project such regional laboratory facilities for residue testing would be established in Adana, Antalya, Gaziantep and Istanbul. Overseas training of laboratory staff and technical assistance would also be provided. Staffing and Major Investnents 3.18 Implementation of the programs described in para 3.06-3.17 will require additional scientific and technical personnel; training; technical assistance; facilities; equipment; transport; and incremental operating costs. 3.19 Staff. Research and technical staff will be required for the research institutes carrying out the programs supported under the project, and for establishing the GDAR and Agricultural Economic Research Institute. An estimated 317 research staff and 436 technical staff would be hired under the project to accomplish the goals outlined above.  - 20 - 3.20 Training. The most important aspect of sustained and long-term viable agricultural research operations is the development of the human resources. Turkish scientific and technical staff would be trained both long term to receive advanced degrees and also short term. It would include 45 trained to the Ph.D level (15 local and 30 abroad), and 110 to the Master degree level. There would also be short term training abroad (1,069 months) for scientific staff and technical staff including trips to attend and/or present papers at scientific meetings, seminars and conferences (Annex 1, Table 7). Language training will also be provided to those going for advanced degree training abroad. In-country training of 839 months will also be provided including attendance at seminars. 3.21 Consultants' Services. The project would provide for long term technical assistance for two research programs which are non-existent (farming systems research) or weak (livestock research) and where external expertise could expedite the strengthening of these activities. Short term technical assistance would be provided to assist the other research programs, particularly where an internationally renowned scientist would assist in the specific research program or project, and to assist in carrying out two research program effectiveness assessments (para 4.06). Consultant service would also be required to strengthen GDAR in the program budgeting, monitoring and evaluation methodologies, including the preparation of the Master Research Plan and in establishing a management information system. Some technical assistance would also be needed for the establishment of the Agricultural Economics Research Institute. Also, consultants assistance would be provided to assist in administering the overseas training programs described in para 3.20 above. The project has budgeted for 30 months of long term external assistance and 134 months for short term external assistance (including consultants for external reviews). See details in Annex 1, Table 8. 3.22 An internationally recruited firm of co.,sultants would be contracted to provide consultancies in livestock research (10 staff months-sm), farming systems (22 sm), strengthening GDAR in research budgeting, monitoring, evaluation and preparing a Master Research Plan and establishing a management information system (33 sm), providing short and long term consultancies (109 sm) for the six different research programs and for establishing the AERI, and assistance in administering the Ph.D, M.Sc and short-term training abroad in suitable foreign universities and programs. It was agreed that such a contract would be signed by no later than April 30, 1993. 3.23 Research Grants. A fund of US$ 4.0 million equivalent would be provided for research grants to provide awards to outstanding researchers within MARA and MOF which have contributed to the Turkish economy or are conducting research with high promise. It would also provide grants to conduct agricul- tural, soils and water or forestry research to complement ongoing adaptive research. Eligible researchers would include those at MARA and MOF research institutes and at Universities conducting such research. Eligible items for funding research grants would include reseatch merit awards, contractual studies, equipment and supplies, travel, visits to other institutions and such other items as agreed to between the GOT and the Bank. It was agreed that both MARA and MOF would each appoint a committee headed by the General Director of Agricultural Research and by the Director of the Research Department, respectively. In addition, each committee would comprise of two experts from their respective  - 21 - ministries, two representatives for the Universities and one representative from TUBITAK. Furthermore,terms of reference for the committees would be prepared as to criteria and eligibility for issuing awards and grants as agreed with the Bank 3.24 Facilities. In order to accommodate strengthened research activities and the required staff, facilities would need to be expanded, modified or repaired as follows: 10,517 e2 for rehabilitation or renovation of existing facilities; 128 houses for lodging in rural areas; 662 en for laboratories; 885 en for offices; and 6,559 e2 for miscellaneous construction including warehouses, storage sheds, experimental animal buildings and greenhouses. In addition, about 9,900 en would be for construction of a research complex at Kazan (to substitute for GDAR's Field Crops Central Research Institute at Lodumlu which is being overtaken by urban expansion and loss of land for research trials). 3.25 Equipment and Transport. Laboratory, field and office equipment would be provided to strengthen the research program activities and for the operations of the new GDAR and AERI. This would include computers for the new research management information system which will be expanded from the program initiated under AEARPs so as to link all research institutes in MARA. Some 174 vehicles, including trucks and tractors, would be provided as additional or as replacement for existing vehicles. 3.26 Recurrent Costs. MARA and MOF have agreed to staff its institutes in accordance with estimates and schedules described in this Report and its Annexes. Such staffing has not been included as incremental costs in the project. Costs for incremental operating expenditures for vehicles and research equipment has been included in the project and calculated as equivalent to 20% annually of the initial vehicle and equipment purchase price of which it is proposed to reimburse 50% from the World Bank loan. The Bank loan share of US$ 2.9 million is justifiea as it is a small component for seven years and covers only a portion of foreign exchange (58%) for fuel and spare parts crucial for carrying out the project research programs. It was agreed that adequate recurrent funds for project supported research would be provided during the project period and after project completion. 3.27 Monitorinz and Evaluation. GDAR would organize and implement monitoring and analysis of project activities. It would be assisted by the APK of GDRS and by GDPD's Department of Externally Financed Projects in collecting information and assessing the effectiveness of project activities. The APK for the MOF would organize and implement monitoring and analysis of project activities for forestry research. 3.28 Monitoring would bp instituted in order to provide research managers with information for making sound internal project management decisions. Project activities would be monitored and evaluated as to: (a) project inputs (research staff, equipment, transport, facilities); (b) project outputs (research programs, staff trained); (c) project effects (improved varieties and practices developed, released, and farmer adoption); and (d) project long-term impact (increased productivity and farmer income). Technical assistance would be provided to establishing monitoring and evaluation procedures.  - 22 - 0. Cost Estimates 3.29 Total estimated project cost is USS 77.6 million, of which USS 55.0 million is the foreign exchange component. Project costs are expressed in June 1991 prices, and exclude customs duties but include VAT (value added tax) payments and other taxes estimated at USS 6.3 million. Base cost estimates were derived from recent costs for: agricultural research operations in MARA; facilities construction in Turkey; procurement of equipment and transport; training programs locally and abroad; and technical assistance. Contract quantities for facilities construction are based on standard GOT designs. The cost estimates include allowances for physical contingencies of 10% for civil works, v'hicles, equipment, and library and information services. Additionally, price contingencies which allow for foreign and domestic price escalation during implementation (9.5% of base cost plus physical contingencies) based on Bank projections for the Manufacturing Unit Value Index for Turkey's main trading partners at various rates averaging 3.2% per year from 1992 through 1998. Changes in Turkish exchange rates are expected to compensate for the differentials between Turkey's domestic inflation rate and those of its trading partners. 3.30 Project Costs are summarized in Table 3.1, while Annex 1, Tables 1 through 4 present the information in more detail. Table 3.1: PROJECT COST SUMMARY %Foreign %Total Local Foreign Total Exchange Base Costs -------US$ million------ A. Institutional Strengthening 2.7 7.9 10.6 74.5 15.5 B. Farming Systems 0.2 1.3 1.5 90.1 2.2 C. Crops 10.1 12.5 22.6 55.3 33.0 D. Livestock 2.6 6.7 9.3 72.0 13.5 E. Soil & Water 1.9 10.2 12.1 84.3 17.7 F. Forestry 0.6 5.0 5.6 89.3 8.2 G. Integrated Pest Management 1.0 3.5 4.5 76.9 6.6 H. Residue Control 0.4 1.9 2.3 80.7 3.3 Total BASELINE COSTS 19.5 49.0 68.5 71.5 100.0 Physical contingencies 1.5 2.2 3.7 60.4 5.4 Price contingencies 1.6 3.8 5.4 69.7 7.9 Total PROJECT COSTS 22.6 55.0 77.6 70.1 113.4  - 23 - Financing 3.31 The proposed financing plan is shown in Table 3.2. The proposed IBRD loan of US$ 55.0 million would finance about 70% of project costs and cover 100% of foreign exchange costs. GOT would provide the balance of the project funds (about US$ 22.6 million) to project implementing agencies out of annual budget appropriations. Table 3.2: Project Financing Plan (US$ million) Category GOT IBRD Total Civil Works 14.2 7.7 21.9 Vehicles 0.8 4.9 5.7 Research Farm Equipment 0.4 2.7 3.1 Scientific Equipment 1.0 7.3 8.3 Office Equipment 0.3 0.4 0.7 Library & Info.Services 0.5 3.5 4.0 Training 2.2 14.1 16.3 Consultants' Services 0.3 7.5 7.8 Research Grants - 4.0 4.0 Incremental Operational Costs 2.9 2.9 5.8 Total 22.6 l 55.0 77.6 ;La Includes US$ 6.3 million estimated taxes. 3.32 Funds have been allocated in the 1992 budget for financing the investments and operations planned for that year of project implementation. E. Procurement 3.33 Procurement arrangements for the project are summarized in Table 3.3 followed by a description of arrangements respecting civil works and goods.  - 24 - Table 3.3: Procurement Method and Disbursements (US$ Million) A/ Procurement Procedure Project Component ICB LCB Other NA / Total Cost Civil Works 10.0 11.9 21.9 ( 3.5) ( 4.2) ( 7.7) Vehicles 5.7 5.7 (4.9) (4.9) Farm & Scientific Equipment 8.9 2.5 11.4 (7.8) (2.2) (10.0) Office Equipment 0.7 0.7 (0.4) (0.4) Library & Information Services 4.0 4.0 (3.5) (3.5) Training 16.3 16.3 (14.1) (14.1) Consultants' Services 7.8 7.8 (7.5) (7.5) Research Grants 4.0 4.0 (4.0) (4.0) Incremental Operational Costs 5.8 5.8 (2.9) (2.9) Total 24.6 11.9 35.3 5.8 77.6 (16.2) ( 4.2) (31.7) (2.9) (55.0) A/ Includes taxes and contingencies. Figures in parenthesis are the amounts financed by the IBRD loan. hi Procurement procedures not applicable. 3.34 Civil Works (US$ 21.9 million). The construction of a research facility at Kazan for the Central Field Crops Research Institute (US$10.0 million) would be contracted through ICB procedures. This new facility would replace facilities presently on the outskirts of Ankara being overtaken by urbanization and loss of land for experimental field research. Other buildings to be constructed under the project (US$ 11.9 million) would consist of civil works of little interest to international bidders because of their small size or scattered locations and accordingly contractors would be selected through LCB. It would include staff housing at research institute locations outside of large urban areas; and additional offices, laboratories, greenhouses, worksheds and barns. Turkish LCB procedures are generally consistent with the need for economy and efficiency in the execution of the project, and procurement under the project would follow a format agreed under earlier projects regarding use of LCB  - 25 - procedures. Works would be packaged into contracts of at least (i) US$ 150,000, or (ii) the minimum value required for supervision by the Ministry of Public Works, whichever is larger. 3.35 Goods. Vehicles (US$ 5.7 million) and research farm and scientific equipment (US$ 11.4 million) will be bulked wherever possible and procured following IBRD international competitive bidding (ICB) guidelines. A preference limited to 15% of the c.i.f. bid price or the actual customs duty applicable to non-exempt importers, whichever is lower, would be extended to qualified local manufacturers in the evaluation of bids. Machinery and other goods and equipment needed at different places and in small quantities costing less than USS 75,000 for each contract and not to exceed a total of US$7.5 million, could be procured through shopping involving at least three price quotations. In addition, scientific books and journals (US$ 2.0 million) may be purchased directly from the suppliers. 3.36 Consultants would be recruited in accordance with IBRD Guidelines for the Use of Consultants to provide technical assistance (US$ 7.8 million). Arrangements (including candidates' qualifications, choice of training insti- tutions and training programs) for training (US$ 16.3 million) would be subject to IBRD approval. Project items in the category of incremental recurrent costs (US$ 5.8 million, which includes vehicle and scientific equipment operating and maintenance costs) would be procured following normal GOT procedures. 3.37 Contracts for US$ 1,000,000 equivalent or more for both civil works and goods would require IBRD review of documentation before tendering and award, and this would cover some 50% of the value of the works and 75% of the goods. Other contracts would be subject to selective post-award review. F. Disbursements 3.38 The project is expected to be completed in about seven years and the loan to be disbursed over a period of approximately seven and a half years, or by June 30, 1999. However, the Closing Date (December 31, 1999) and the estimated disbursement schedule (Annex 1, Table 5) have been extended by an additional year to be consistent with the actual disbursement profiles for the first Agricultural Extension and Applied Research Project, the Erzurum Rural Development Project, and the Corum-Cankiri Rural Development Project, which were disbursed over approximately similar periods. This is still about one year less than the standard disbursement profile for all Turkish agricultural projects, including irrigation and other subsectors, but is consistent with the last three projects covering agricultural extension and applied research or rural development. 3.39 IBRD would disburse loan funds at the following.rates for these items:  - 26 - Category Percent to be Financed (1) Civil works 45% (2) Vehicles and equipment, 100% of foreign expenditures; books and periodicals 100% of local expenditures (ex-factory cost) and 90% of local expenditures for other items procured locally (3) Training 100% (4) Consultants' Services 100% (5) Research grants 100% (6) Incremental operating 50% cost for vehicles and research equipment 3.40 Disbursements would be made against statements of expenditures for incremental operating costs, civil works contracts below US$ 1.0 million equivalent, goods procured through direct purchases or prudent shopping, and training locally and abroad. Implementing agencies would retain supporting documentation for these items for review by IBRD and external auditors. Annex 1, Table 6 shows the allocation of Loan Funds to the different disbursement categories. 3.41 GOT would establish a special account at the Central Bank to facilitate implementation of the project into which it would deposit USS 3.0 million of loan funds. This account would be opened in accordance with arrangements for existing Bank assisted projects, and would be used for most disbursements except those in excess of US$1.0 million. G. Accounts and Audits 3.42 GDAR will prepare detailed reports on MARA project expenditures and the APK of MOF on forestry research expenditures under the project on a semiannual basis. Such statements of expenditures would be submitted within two months of completion of each semiannual period, i.e. by March 1 and September 1 of each year. In addition, an annual audit would be carried out by the Treasury inspectors, including specific reference to, and comments on, SOEs and supporting documents and disbursements from the special account (para 3.40), and submitted to the Bank within nine months of the end of each fiscal year. It was agreed with GOT that implementing agencies would follow these auditing practices. H. Project Supervision 3.43 Two Bank supervision missions per year during seven years of implementation would be required to adequately review implementation of the complex project. More extensive supervision would be required during the first  - 27 - two years of the project during which time: (i) GDAR, AERI and FSR teams would be established and organized; (ii) the initial master research plan would be prepared; (iii) progress on priority research programs in agriculture and forestry would be reviewed; (iv) MIS would be established; (v) the training program would be initiated; (vi) technical assistance would be made operational; and (vii) initial experience of GDAR staff with procurement would be obtained. In year three, discussion of the first research effectiveness assessment (para 4.06) will add to supervision time. Each supervision mission should include research organization and management and crops and soils expertise and about half of the missions should include livestock and forestry specialists. In the latter four years of the project, supervision time could be reduced. Estimatel staff weeks for supervision would be about 20 in years one through three of the project and 16 during years four through seven. IV. ORGANIZATION AND MANAGEMENT 4.01 Project Implementation. Most project activities would be carried out by the General Directorate of Agricultural Research (GDAR) in MARA and by the two forestry research institutes and the APK in the Ministry of Forestry (MOF). GDAR and the APK of MOF would be responsible for overall coordination, reporting, monitoring and evaluation of the project. Coordination of project activities would be monitored by a Steering Committee to be headed by the Undersecretary of MARA with representation from MARA of the GDAR, GDRS, GDPD and APK and from MOF. The Steering Committee will meet as frequently as required. The High Council of Research and Development (HCRD) of MARA will meet annually to review and approve research programs and budgets prepared by the Research Working Groups for each commodity and discipline. APX will continue to act as the Secretariat for the HCRD. It is the intent that MOF will be invited to attend the HCRD meetings. 4.02 GDAR's capability to coordinate and direct research in MARA has been strengthened by the appointment of a General Director with some research and administrative experience. The General Director is being assisted by two Deputy General Directors and five Department Directors for Breeding and Improvement; Animal Health, Plant Protection, Food and Feed, Coordination and Evaluation; and a Section of Administration and Financial Matters. Since all crops, livestock and fisheries are in one large department of Breeding and Improvement, GDAR has agreed to divide the Department in one for Plant Breeding and Improvement and another for Animal and Fisheries Breeding and Improvement. Chart 1 illustrates the organization arrangement for GDAR. 4.03 The new GDAR has responsibility for preparing, by two years after loan effectiveness, a 10-year Research Master Plan for MARA with five-year detailed budgets and indicative budgets for the outer five years. The Research Master Plan would be submitted to the HCRD for approval. The Research Master Plan would be updated annually. A similar Research Master Plan would be prepared by the strengthened APK of MOF for forestry research and submitted to an executive committee appointed by the Undersecretary of MOF for approval. Annex 2 outlines proposed Terms of Reference and schedule for preparing a 10-year Research Master Plan, which would be agreed to at negotiations. The GDAR would also be directly responsible for implementing the Components for establishment of a national research management information system.  - 28 - 4.04 Most procurement of civil works and equipment would be handled by GDAR of MARA and the APK of MOF. However, for vehicles and some types of equipment used by all research institutes, substantial savings would be expected for larger orders covering the needs of MARA and MOF. Accordingly, coordination of tendering for such joint orders will be handled by GDAR. However, while GDAR is gaining experience, assistance would be provided by the Department of Externally Financed Projects of GDPD since this directorate has the most experience with Bank procurement procedures. 4.05 The GDAR would be responsible for hiring a firm of consultants to: (i) assist in improving research budgeting, monitoring and evaluation and in preparation of the Research Master Plan; and (ii) to coordinate overseas training. The GDAR would also hire consultants (probably under separate contracts) for assistance in design and implementation of the research information system component and for assisting in the initial operations of AERI. With regard to the training component, the Research Institutes would be responsible for developing the initial proposals for their staff which would be reviewed and approved by the GDAR (and APK of MOF) for consistency with overall research staff training plans approved by HCRD. GDAR and APK of MOF would be responsible for developing proposals for training of their own headquarters staffs. 4.06 Research System and Proiect Effectiveness Assessments. As the reorganization of agricultural research is a complex undertaking, with lessons to be learned based upon initial experience and experience of comparable organizations in other countries, a review of the functioning of the agricultural research systems would be completed within 30 months after project effectiveness. It would be carried out by a joint committee of MARA, MOF and internationally recruited consultants. Following such assessment, a joint MARA, MOF and Bank mission would review the report and discuss its findings and recommendations to determine any changes desirable to achieve project objectives. At the same time, the staffing, equipment and facilities to be provided under the project would be reviewed and adjusted based upon implementation experience and Government budgetary constraints. A similar review using international consultants would be completed within 60 months after project effectiveness, followed by discussions a:nd adjustments in the project by a MARA/MOF/BANK team. This could also become the basis for initiating preparation of a second research project. It was agreed that the preparation of the research effectiveness assessments would occur no later than April 30, 1995 and October 31, 1997, in accordance with terms of reference acceptable to the Bank, followed by discussion with the Bank of the findings and implications of the reports and of implementation exper,ence in terms of desirable adjustments in the project. Beyond, the project period, periodic joint reviews with international consultants should be continued at least every three years to incorporate the benefits of international experience into Turkey's research planning and evaluation systems. 4.07 Research Program Working GrouDs. In accordance with MARA's Ministerial Decree, working groups would operate on research programs on field crops, horticulture, livestock, aquaculture, food technology, soil and water resources. Research on a program basis needs to involve scientists from different institutes to achieve a multi-disciplinary approach. Each working group would be staffed by key scientists in the particular field as well as directors of related institutes, heads of related sections, project coordinators, and where appropriate, representatives of general directorates, universities, provincial  - 29 - dizectorates, private sector and related groups such as TUBITAK. Annually, each working group would review last year's activities and propose the coming year's activities. It would outline detailed proposed research projects for each program, staffing and training requirements, capital and operating budgets. Such detailed research programs would be submitted to GDAR and APK of MOF in sufficient time for review before presenting the overall annual plan to their respective ministries for approval. 4.08 Each research program would be led under the supervision of a national coordinator who would normally reside at the lead research institute, and would coordinate and monitor the annual research program which may include several institutes in different agro-ecological zones and would propose the activities for the coming year to the concerned research working group. It was agreed that reactivation will occur of the national commodity research program approach and for research program working groups. 4.09 Research Institution Reviews. It was agreed that in order to improve the functioning of the research system, a multi-disciplinary team of at least two research scientists (from MARA and the universities) and one extension official would visit each major MARA research institution at least once every two years and report its findings and areas for desirable improvements. Funds to provide training for carrying out such assessments and to support such visits would be included under the project. 4.10 Research Incentive Structure. Progress on research salary scales is likely to be limited in the near future, given overall budgetary constraints affecting civil service salary levels. However, important improvements in research staff morale and in the attractiveness of careers in agricultural research can still be achieved. As a first step, it was agreed to renew implementation of existing (but dormant) research staff career structure regulations, governing inter alia, training and promotion opportunities, minimum permissible requirements for key positions and security of tenure for adequate performers. In addition, provisions under the project for staff training, staff housing and improved facilities in eastern and south-eastern Turkey, access to professional journals, and improved funding of operating costs will all benefit research staff morale. Perhaps most importantly, the creation of the GDAR is an indication of the Government's increased recognition of the importance of agricultural research, creating an atmosphere where researchers again feel valued and respected. It is recommended that ways and means be explored to: (i) give greater authority to institute directors in the selection of institute staff; and (ii) give preference to recruitment of candidates who are natives of the region where the institute is located. The research master plan (Annex 2, Appendix 1) would include a review of research staff incentives and recommendations for further improvements in career structure and other incentives. 4.11 Measures to Strengthen Research/Farmer Links. As noted in uara 2.23, in the areas of the ongoing AEARP projects, arrangements have been iigreed for strengthening research-extension-farmer linkages. It was agreed that project research institutions in areas of strengthened extension activities would continue such arrangements (as outlined in para. 2.23) even after completion of the externally financed projects. Project supported institutions would also be expected to conduct at least one farmer field day per year, with farmers and representation of farmers' union invited to visit the research institutions to discuss their problems. In AEARP II provinces, research staff are to participate  - 30 - with extension staff in area diagnostic studies, bringing staff in close contact with the farming community. To the extent feasible, such diagnostic studies would be encouraged in other parts of the country. The GDAR would designate staff to provide information on research findings of practical value to farmers through extension workers and to the media. V. BENEFITS, JUSTIFICATION AND RISKS A. Benefits and Justification 5.01 Agricultural research can directly influence only a small number of the factors determining agricultural productivity, such as variety, input use, extension and crop and livestock management practices. The application of these factors is in turn influenced by pricing policies, marketing opportunities and household level socio-economic factors. Benefits from agricultural research are, therefore, complementary. Yet, when effective, agricultural research appropriate to the ecological conditions provides the basis for agricultural policies and practices leading to higher quality and productivity. Six elements of agricultural research are of particular importance: breeding high yielding and disease resistant varieties of crops, trees and livestock adapted to the different ecological regions; development of new production techniques; carrying out adaptive research to optimize and develop the use of production technologies appropriate to the socio-economic environment of the farmers; maintenance of animal health; maintenance of soil fertility; and conservation of a healthy environment. 5.02 The existing low output of almost all crops and livestock in eastern and southeastern Turkey clearly needs attention if the potential for increased productivity and for exports, especially to the Middle East, is to be realized. Furthermore, the development of appropriate technology packages is urgently needed for a rational use of the large irrigation areas which will become available in the next decade in southeastern Anatolia. Given the sheer size of the areas involved, even small improvements in yield would generate substantial benefits from such developments. It would be expected that improved adaptive research efforts would produce production practices suited to the particular conditions of the widely varying agro-ecological regions under study. An important input of the Agricultural Research Project would be the establishment of farming systems research programs in four regions of Turkey in order to determine the economic as well as technical opportunities and constraints at the farm level which should lead to better recommendations as to cropping and livestock production patterns and more efficient input regimes, leading to increased production and farmer incomes. 5.03 It is difficult to quantity benefits from agricultural research in precise terms because of the uncertainties in outcome of results. Nevertheless, numerous worldwide studies have demonstrated that well conceived and effectively conducted research can produce substantial benefits, often in excess of a 35% internal rate of return on investment.  - 31 - B. Environmental Effects 5.04 The proposed project has been placed in environmental screening category C/D under the provisions of Operational Directive 4.00, Annex A. Environmental benefits can be expected from the forestry, soil conservation, soil fertility research programs and the two plant protection programs of integrated pest management (IPM) and residue control. The forestry and soil conservation program would help to maintain and/or improve the natural resource base. The soil fertility program and the IPM program would develop technology to reduce application of fertilizer and pesticides. This is of particular importance in some areas in western and southern Turkey where excessive use of fertilizer and plant protection chemicals has led to an alarming increase in pollution of ground and surface waters and to *nacceptable levels of residues in agricultural produce. The residue research and control programs would contribute to reducing such incidence. C. Risks 5.05 The main project risks include new technology being inadequately adapted for different categories of farmers and not effectively accepted. Risks also include inadequate commitment by GOT to the project, leading to budgetary shortfalls, inadequate training of project research staff, delayed recruitment of incremental research, technical and administrative staff, slow procurement of vehicles, laboratory and field equipment, delays in construction of civil works, and lack of effective coordination and management. The reestablishment of GDAR and measures agreed under the project to strengthen its ability to coordinate MARA's research through planning, programming, budgeting, monitoring and evaluation should go far to limit inadequate adaptive technology, duplication of efforts and inefficient use of limited financial resources. It is also an indication of the Government's increased commitment to the importance of strengthening agricultural research. While the creation of GDAR also creates some risks during the period of transition, the availability of the Department of Externally Financed Projects, GDPD, well experienced with Bank procedures, to act as a back-up as required should alleviate this problem. The preparation and annual updating of a 10-year Master Research Plan for MARA and by the APK of MOF shou.ld provide Government decision makers with the necessary data for forward planning and justification for budgetary commitment. Finally, the two research and project effectiveness assessments would provide opportunities for making any required adjustments based upon implementation experience. VI. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS 6.01 During negotiations agreement was reached with GOT on the following points:  - 32 - (a) an indicative plan and schedule for strengthening staffing of GDAR beadquarters to enable it to undertake responsibility for coordination of all MARA research, including planning, programming, budgeting, monitoring, and evaluation and for strengthening staffing of the APK of MOF to enable it to undertake similar responbibilities for forestry research (paras 3.06 and 4.02); (b) the preparation of an annually updated 10-year Master Research Plan (under an agreed schedule and TOR) with the initial master plan completed by October 31, 1994 (paras 3.06 and 4.03); (c) establishment of an Agricultural Economics Research Institute no later than October 31, 1993 (para. 3.07); (d) arrangements would be made by no later than April 30, 1993 for provision of 1,000 ha of land for pasture research in Erzurum (para 3.09); (e) the terms of reference and the establishment of four new farming systems research teams in the regional research institutes in Diyarbakir, Erzurum, and Eskisehir, and the GDRS research institute in Sanliurfa by no later than April 30, 1993 (para 3.12); (f) engagement of internationally recruited consultants with qualifications acceptable to the Bank to assist in administering the training program abroad; strengthening of GDA-Rs research capabilities in the areas outlined in (a) above; initiating farming systems research; the establishment of the AERI; and assisting the various research programs as required by April 30, 1993 (para 3.22); (g) preparation by MARA and MOF assisted by consultants of research effectiveness assessments not later than April 30, 1995 and October 31, 1997, in accordance with terms of reference acceptable to the Bank, and discussion with the Bank of the findings and implications of the report and of implementation experience in terms of desirable adjustments in the project (para 4.06); (h) reactivation of the national commodity research program approach and arrangements for research program working groups (para 4.07 and 4.08) and commencement of biannual reviews of each MARA research institution (para 4.09) and measures for strengthening research/farmer links (para 4.11); and (i) renewed implementation of research staff career structure regulations (para 4.10). 6.02 With the above agreements, the project is suitable for an IBRD Loan of US$ 55.0 million equivalent at the Bank's standard variable interest rate, for a period of 17 years with a five-year grace period. The Borrower would be the Government of Turkey.  TURKEY AGRICULTURAL RESEARCH PROJECT Project Components by Year Base Costs Total . ....... .......... ..... ...... ... .... . . .. ........... ... .. 1992 1993 1994 1996 1996 1997 1996 USS0 A. Irstitutional Strength'n 28.0 2113.0 2325.2 2061.3 1653.8 1370.8 1010.0 10582.0 S. Crops 62.6 6478.1 689.5 6078.5 1612.5 994.2 496.6 22617.0 C. Livestock 25.2 1289.3 1854.7 3384.1 2004.4 514.3 143.4 9245.4 D. Farming Systems 7 .0 261.5 407.7 327.9 178.9 161.9 73.9 1485.6 E. Soil & Water Ngt. 28.0 1866.2 2903.7 3066.7 1988.5 1312.2 883.1 12048.5 F. Forestry 64.5 782.9 1188.5 1315.2 1076.9 847.2 297.3 5572.5 6. Resfdue Control 0.0 590.1 806.2 499.0 204.7 147.0 86.6 2333.8 H. integrated Pest Ngt. 15.0 1022.2 1227.9 953.7 859.9 400.0 49.0 4527.8 Total BASELINE COSTS 297.2 14403.3 17608.4 17706.3 9f79.8 SM.5 3040.1 68412.7 Physical Contingencies 8.0 901.8 1042.2 1050.1 462.6 232.1 30.8 3727.7 Price Contingencies 0.0 145.4 725.0 15S8.5 1301.4 1033.0 672.1 5435.5 .. .._.......... . ........................................... ............................... Total PROJECT COSTS 305.3 1S450.5 19315.6 20314.9 11343.7 7042.7 3743.1 77575.9 Taxes 11.1 1321.8 1606.0 1706.3 871.9 535.9 219.9 6272.9 Foreign Exchawge 196.5 10288.6 13429.5 13721.4 8653.1 S810.5 2951.4 55051.1 3/121992 15:51S I F-'  TUEY AGRICULTURAL RESEARCI PROJECT USSOOO Sumary Accoumts by Year Base Costs Foreign Exchange 1992 1993 1994 15 199 1997 1998 Total X Amxat I. IiVESTMENT COSTS ................... A. Civil Uorks 0.0 5265.4 5748.1 6234.5 1537.6 74.5 7.8 18867.9 35.0 6603.8 B. Vehicles 0.0 1804.2 1848.6 836.2 394.6 53.5 17.5 4954.6 86.8 4300.2 C. Research Farm Equiprent 0.0 261.6 653.9 653.9 523.1 392.4 130.8 2615.7 87.5 2288.7 D. Scientific Equipment 0.0 681.7 1022.6 2045.2 1706.3 1368.4 11.0 6835.2 87.5 5980.8 E. Office Equipment 32.5 165.0 165.0 97.5 75.0 67.5 20.0 622.5 60.0 373.5 F. Library 8 Info. Services 48.0 840.5 984.0 633.5 389.0 365.0 121.0 3381.0 87.5 2958.4 G. Training 142.7 4011.5 5280.2 4954.6 2559.1 1303.8 672.1 18924.1 89.4 16911.4 H. Technical Assistance 74.0 999.9 1161.9 1328.9 1376.9 1116.4 1023.9 7081.9 69.4 4914.1 ........ --....---.--.-.-..-.--.-..--.----------.----..-.---.--.-..-..-.. ---. -- -----------------. Total INVESTMENT COSTS 297.2 14029.8 16864.3 16784.3 8561.7 4741.5 2004.1 63282.9 70.1 44330.9 It. RECURRENT COSTS 1. Inc. Operationat Costs 1. Vehicles 0.0 372.0 735.1 912.1 1008.1 1026.0 1026.0 5079.3 86.6 4398.5 2. Scientific Equipment 0.0 1.5 9.0 10.0 10.0 10.0 10.0 50.5 87.5 44.2 Sub-total 0.0 373.5 744.1 922.1 1018.1 1036.0 1036.0 5129.8 86.6 4442.7 Total BASELINE COSTS- 297.2 14403.3 17608.4 17706.3 9579.8 5777.5 3040.1 68412.7 71.3 48m.6 Physical Contingencies 8.0 901.8 1042.2 1050.1 462.6 232.1 30.8 3727.7 60.4 2250.S Price Contingencies 0.0 145.4 725.0 1558.S 1301.4 1033.0 672.1 5435.5 74.1 4027.0 Total PROJECT COSTS 305.3 15450.5 19375.6 20314.9 11343.7 7042.7 3743.1 77575.9 71.0 55051.1 Taxes I1.1 1321.8 1606.0 1706.3 871.9 535.9 219.9 6272.9 0.0 0.0 Foreign Exchange 196.5 10288.6 13429.5 13721.4 8653.1 5810.5 2951.4 55051.1 100.0 55051.1 .......... .................. __.................................. ..... .........__.. ................. .................................... ............ ..........__.................... .. ..... 3/12/1992 15:52 iIo ID0 I- It'  TURKEY AGRICULTURAL RESEARCH PROJECT Summary Accounts by Year Totals Including Contingencies USSOO0 1992 1993 1994 1995 1996 1997 1998 Total 1. INVESTMENT COSTS A. Civil Works 0.0 5846.9 6568.6 7427.8 1910.6 96.1 10.5 21860.5 B. Vehicles 0.0 2003.5 2112.5 996.2 490.3 69.0 23.5 5695.0 C. Research Farm Equipment 0.0 290.5 747.3 779.1 650.0 505.8 175.4 3148.0 0. Scientific Equipment 0.0 757.b 1168.6 2436.6 2120.2 1764.0 14.7 8261.2 E. Office Equipment 35.7 183.2 188.6 116.2 93.2 87.0 26.8 730.7 F. Library & Info. Services 52.8 933.3 1124.5 754.8 483.4 470.5 162.2 3981.5 G. Training 142.7 4049.6 5485.5 5366.3 2890.7 1527.9 819.2 20282.0 H. Technical Assistance 74.0 1009.4 1207.1 1439.3 1555.3 1308.3 1248.0 7841.4 Total INVESTHENT COSTS 305.3 15073.5 18602.6 19316.2 10193.7 5828.6 2480.3 71800.2 11. RECURRENT COSTS A. Inc. Operational Costs 1. Vehicles 0.0 375.5 763.7 987.9 1138.8 1202.4 1250.6 5718.8 2. Scientific Equipment 0.0 1.5 9.3 10.8 11.3 11.7 12.2 56.9 1 Sub-Total 0.0 377.0 m7.1 998.7 1150.0 1214.1 1262.7 5775.7 t