Announcement of Four Million US Dollars Loan for Livestock Development in Ecuador on May 23, 1967

1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3~6360 Bank Press Release No. 67/23 Subject: $4 milHpn loan for livestock Hay 23, 1967 development. in Ecuador The World Bank has approved a loan e~uivalent to $4 million for a livestock development program intended to lead to increased and more diversified agricul- tural production ~n Ecuador. The loan will help to finance the program's first stage, which win be ce-ncentrated on the production of beef cattle, both for dornestic consumption and for export. Under the project, modern techniques for the production. of beef cattle will be introduced and should prove of value in developing standards which could be adopted on a much wider scale in Ecuador in • the future • Bank of America National Trust and Savings Association, San Francisco has agreed to participate in the loan to the extent of $110,000 representing the first maturity which falls due on April 15, 1973. Ecuador is predominantly an agricultural country. The prin~ipal conunercial crops, bananas, coffee, and coco~i ~ccount for.SO% of total exports. In view of unstable world markets for these commodities, there is a vital need for divers:f.- fication. One way in which the ·Government intends to diversify is to expand the production of peef for which the demand is increasing both for export and for home consumption. The project being ~ssisted .by the Bank loan will b~ carried out iJ, the coastal .area which has about 8.1 million acres suitable for .agricul- ture. About two-thlrd~ of this acreage is alrea.dy in production, of which about 2.4 million acres ,-::\re in natural and improved pastures. Most of' this pastureland • is used for the production of beef but the land already in use cquld support much larger herds and the producti'vity of the animals could be improved •. Furthermore.,  - 2 - at least 1.2 million acres of unused land could be utilized for improved pastures for additional beef cattle production. The Bank loan will provide part of the funds needed for credits to about 240 • ranchers for inv~stments in land clearance, pasture renovation, fencing, water sup- plies, yards and dips, agricultural machinery, and high-quality breeding stock. On full development, in 12 years' time, the number of cattle on each farm participating in the project will more than double and the net cash profit per farm is expected to have increased neatly eightfold. Since some of the increased output will be ex- p0rted, this will also benefit Ecuador's foreign exchange earnings. In this stage, investments will be limited mainly to areas in the Guayas zone so that technical services can be adequately provided. and because of the high land potential, the proximity of markets and the existence of a good road network. The Government intends to undertake a detail~d study of the livestock industry which could serve as the basis for a further stage of th'e livestock development program. A consultant from the Food and Agriculture Organization of the United Nations (FAO) assisted in the appraisal of the project under the Bank/FAO Cooperative Pro- • gram. The coordination and supervision of the project will b~ carried out by a Project Commission composed of representatives from the National Planning Board, the Ministry of Agriculture, the Cdntral Bank, participating banks, and the Coastal Cattlemen's Assocj.ation. '.rhe Commission will appoint a Project Director who will have te,chnical responsibility for implementation of the project. Technical assist- ance to ranchers will be provided by qualified livestock technicians under the supervision of the Project Director; they will assist farmers in preparing develop- ment plans, will reconnnend plans to participating banks for loans, and supervise execution of the work for which loans are made. The total cost of the project is estimated at the equivalent of $608 million. This wHl be financed by the Bank loan, by participating banks and by the farmers themselves. The participating banks will lend farmers up to 80% of the cost of farm improvements, of which 60% will be provided by the Bank loan and 20% from the resources of the participating banks. In addition, participating banks will 111ake short-ter1n loans to farmers for working capital. A small part of the World Bank loan will be used f0r various technical services, including the growing of • seeds for pastures and related research. The loan, which will be made to the Government of Ecuador, will be for a term of 18 years and bear int~rest at the rate of 6% per annum. Amortization will begin on April 15,. 1973. ·