Dahomey - Hinvi Agricultural Development Project

RETURN TO RSRCE REPORTS DESK 1|I I Q Report No. TO-615b WITHIN ONE WEEK This report was prepared for use within the Bank and its afflliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION DAHOMEY HINVI AGRICULTURAL DEVELOPMENT PROJECT February 3, 1969 Agriculture Projects Department  ksRmuJ Q'JIVAL: ; urrecy Unit CPA franc US$3. 24? 7 " 1 CPA? I I. mrLtmu CPA? US$ COM WEIGHTS PUD MEU:fES Metric Sv,--terr ABBIVITI01S AND ACRONYMS EESC D&rO e cnormic Cr'mnity FACt Fonds d'Aide at de Ctc Jerrt^c: FD . ropeeni de 4'.-;PPe." ffb: fresh fruit bunches 1IRAT T ttat de Recherciies Agrc*ncr.a1-e: Tropicales St des Cnltares Yivr4ereo IRCT: ThitV1.tt do f lezd;!s C Oton rt des Textiles Exotiques )IR 5Institut do Rechexrces potr Xeas Hlfle- et Oleagineux WAHDA: Societes tZc:2Sib- des dJl>es dii u,,y SONADERS Societe Nationalj ile Develppemaent Rural dui Dahomney  DAHOMEY HINVI AGRICULTURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMkARY .*.*.. . . . . . . . . . . . . . . I. INTRODUCTION .1 . . . . II. BACKGROUND INFORMATION 1. III. THE PROJECT AREA .. 3 IV. THE PROJECT...... 4 General Description and Objectives . . . . . . . . . . 4 Establishment of the Oil Palm Plantations . . . . . . . 5 Maintenance and Husbandry of the Oil Palms . . . . . . 5 Palm Oil Factory.. . 5 Annual Crop Areas.. ... 6 Livestock... 6 Maize Storage Silos.. .. . 7 Afforestation.. . 7 Villages... 7 Labor Requirements.. . 8 V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS . . . . . . . . 9 Cost Estimates. 9 Proposed Financing ..9 Disbursement and Procurement . . . . . . . . . . . . . 10 Audit . .11 VI. ORGANIZATION AND MANAGEMENT . . . . . . . . . . . . . ... 11 Authority Managing the Project . . . . . . . . . . . . 11 Cooperative Organization . . . . . . . . . . . . . . . 12 Processing and Marketing Project Production . . . . . . 13 VII. YIELDS, PRICES, PROJECT REVENUES AND BENEFITS TO COOPERATIVE MEMBERS . . . . . . . . . . . . . . . . . . . 14 Prices of Oil Palm Produce . . . . . . . . . . . . . . 14 Producer Price Stabilization Policy . . . . . . . . . . 15 Project Yields .................... 15 Project Revenues .................. . 16 Benefits to Cooperative Members . . . . . . . . . . . . 17 VII. BENEFITS AND JUSTIFICATION ............... . 17 IX. CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . 18 This report is based on the findings of a Bank Appraisal Mission to Dahomey in July 1967 composed of Messrs. M.M.M. Van Gent and D.J. Parsons (of the Bank) and Mr. M. Fenn (of FAO), updated in August 1968 by a Mission composed of Messrs. J. Willems and M. Hassid.  ANNEXES 1. National Production and Exports of Oil Palm Produce. 2. Physical Conditions in the Project Area. 3. Rotation for Annual Crop Areas. 4. Basic Data and Assumptions on Yields, Prices, Export Taxes and Labor Costs. Appendix A: Market Prospects for Palm Oil and Palm Kernels. Appendix B: Estimated Labor Requirements for Oil Palm Plantations. Appendix C: Palm Oil and Palm Kernel Forecast Selling Prices and Costs. Appendix D: Palm Produce: Forecast Total Production and Sales Revenue. 5. Project Development Costs. 6. Financing Proposals. Appendix A: List of Main Items of Foreign Exchange Costs. 7. Estimated Source and Disposition of Funds to ProJect Authority. 8. SONADER. Appendix A: Summary of Balance Sheets at December 31, 1964-1966. Appendix B: Organization Chart. 9. Staff and Training of Personnel. Appendix A: Staff Training Courses. 10. SNAHDA. Appendix A: Organization Chart. 11. Forecast Production for Sale from the Project. 12. Estimated Income for a Typical Cooperative Member in 1967 and 1980. 13. Estimated Economic Rate of Return. Map.  DAHOMEY HINVI AGRICULTURAL DEVELOPMENT PROJECT SUMMARY i. The Government of the Republic of Dahomey has requested an IDA credit to help finance agricultural development in South Dahomey. ii. Agriculture in Dahomey is based on the traditional system of shifting cultivation. In South Dahomey conditions are suitable for more in- tensive cultivation. Increased production of cash crops, but also of subsist- ence crops will make resources available for export, upon which the economy of Dahomey is heavily dependent. Palm oil and kernels are the main exports, mostly being produced from natural palms whose yields are low. Internal con- sumption of palm oil is increasing and exports are therefore declining. iii. In 1962, Government established SONADER (Societe Nationale pour le Developpement Rural du Dahomey), a para-statal authority charged with devel- oping agricultural production in Dahomey. SONADER is now responsible for all the oil palm development in the country. It is a completely Africanized organization which displays a high level of competence both at Head Office and in the field, and since 1962 has organized the planting of improved oil palms, on a cooperative basis, on some 13,000 hectares. iv. The project for which assistance is requested includes the estab- lishment of ten cooperatives which would cultivate a total of 6,000 ha of improved oil palms and 6,000 ha of annual crops, together with forests and livestock. v. The project would produce 10,000 tons of palm oil and 2,400 tons of kernels annually at maturity. In addition, 4,000 families would be organized in cooperatives, and would cultivate annual crops, under close guidance, to provide their own food requirements and surpluses of maize, groundnuts and cotton for cash sale. Increased timber and livestock production would also result. The project would yield a return to the economay of about 12%. vi. The estimated total cost of the project is CFAF 2,370 million (US$9.6 million) of which it is proposed that about half would be supplied by FAC (Fonds d'Aide et de Cooperation) and half by an IDA credit. The Govern- ment of Dahomey would contribute CFAF 96 million (US$0.4 million). Of foreign exchange requirements of about CFAF 1,087 million (US$4.4 million) some 65% would be financed by IDA and 35% by FAC. Project revenues would allow re- payment of the total investment over 15 years, following a grace period of 9 years. The project would be suitable for an IDA credit of US$4.6 million. The credit would be made to the Government of Dahomey, and would be on-lent by the latter to SONADER.   DAHOMEY HINVI AGRICULTURAL DEVELOPMENT PROJECT I. INTRODUCTION 1.01 In August 1966, the Government of the Republic of Dahomey asked the Association for assistance in financing an agricultural development project in the Hinvi area of South Dahomey. The project was prepared by the Societe Nationale pour le Developpement Rural du Dahomey (SONADER), and later modified with assistance from the FAO/IBRD Cooperative Program. In March 1967, a Bank preappraisal mission, consisting of Messrs. Rowe, Vigie, von Czernicki (con- sultant), and Bishop (FAO), reviewed the project and made suggestions for further clarification and improvements. In July 1967, the final report, pre- pared by SONADER, was handed to the Bank's appraisal mission in Dahamey. 1.02 This appraisal report is based on the findings of a Bank mission composed of Messrs. van Gent and Parsons (Bank) and Fenn (FAO) which visited Dahomey in July 1967. As joint financing by IDA, and Fonds d'Aide et de Cooperation (FAC) is contemplated, Bank/FAO staff have collaborated closely with the staff of FAC both in the preparation and appraisal of the project. Messrs. Vene and Julienne represented FAC on the appraisal. A mission con- sisting of Messrs. Willems and Hassid visited Dahamey in August 1968 to up- date this report. The long delay since original appraisal has been due to political circumstances in Dahomey which prevented IDA and FAC from proceeding further with the project until the end of summer 1968. II. BACKGROUND INFORMATION 2.01 Dahomey has a total land area of 11.3 million ha and a population of 2.4 million. Agriculture, still based on the traditional system of shift- ing cultivation and bush fallow, occupies an estimated 77% of the active male population and accounts for almost 50% of gross domestic product (GDP). 2.02 The Central and Northern administrative regions of Dahomey comprise about 90% of the land area, lie mainly in the savannah zone, and are sparsely cultivated. The Southern regions, with an average annual rainfall between 1,000 and 1,500 mm, are suitable for more intensive cultivation, and support more than half of the country's inhabitants. In this area, population pres- sure on farm land is becoming serious, and consequently levels of soil fertil- ity are falling. Exports of most crops, including oil palm produce, therefore, declined in recent years. An exception is Allen type cotton, which is being effectively developed in northern areas. 2.03 The industrial sector of the economy is very small, accounting for only 2