Cameroon - Semry Rice Project

RESTRICTED Repoit No. PA-103 Thb report is for cfficial u only by te Bak Grup and specificalay authorized orpnizations or prson It wmy not bo pubilitd, quoted or cited without Bak Group authoriation. The Dank Group dos not accp r Wty fr the awcrcgy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE SEMRY RICE PROJECT CAMER OON December 29, 1971 Agriculture Projects Department  CURRENCY EQUIVALENTS Except where otherwise stated all figures are quoted in US dollars (US$). The project cost estimate is shown in both US$ and CFA Francs (CFAF) of 1971. Currency Unit: CFA Franc - CFAF. US$1 - CFAF 278 CFAF - US$0.0036 CFAF 1,000,000 - US$3,600 WEIGHTS AND MEASURES - METRIC SYSTEM 1 hectare (ha) - 2.47 acres 1 kilometer (km) - 0.62 miles 1 meter (m) 3- 39.37 inches 1 cubic meter (m') - 35.31 cubic feet 1 millimeter - 0.039 inches ABBREVIATIONS FAC - Fonds d'Aide et de Cooperation - Development Agency of the Republic of France CCCE - Caisse Centrale pour la Cooperation Economique - Agency of the Republic of France. SEMRY - Societe d' Expansion et de Modernisation de la Riziculture de Yagoua - Autonomous Government owned Corporation IRAT - Istitut de Recherches Agronomiques Tropicales - Research Institute for Tropical Agriculture FISCAL YEAR July 1 to June 30  CAMEROON SENRY RICE PROJECT ATTACHME14T TO APPRAISAL REPORT PA-1 03 Amendment to Project Costs and Financing 1. The Appraisal Report PA-103 does not take into account the recent exchange rate changes. As a result of these changes, the foreign exchange costs of the project are likely to increase by the equivalent of US$200,000, raising the total to US$4.341 million. The cost table in paragraph 4.21 of the Appraisal Report requires the following amendments: (i) the foreign exchange component of the price contingency should be increased from US$457,000 to US$657,000, and (ii) the total project costs should be increased from US$7.396 to US$7.596 million. 2. A corresponding adjustment to the financing plan is shown below. It replaces the financing table in paragraph 4.22 of the Appraisal Report: Foreign Local Costs Exchange Costs Total Costs US$ US$ US$ Million % Million % Million % IDA 0.5 15 3.2 74 3.7 49 FAC 0.2 6 1.1 26 1.3 17 CCCE 1.1 33 - 1.1 14 Government 1.5 46 - 1.5 20 Total 3.3 100 4.3 100 7.6 100 3. In the above table the amount of the IDA Credit was increased by US$200,000, raising the total from US$3.5 million to US$3.7 million. This increase raises IDA's share of the foreign exchange financing from 71% to 74%, while it raises IDA's contribution to total project cost from 47% to 49%. The estimated disbursements of the Credit shown in Annex 8, table 2 require to be increased by about 3% per quarter. 4. The cost increase amounts to approximately 3.2% of the overall project costs. Its effect on the project's rate of return will not be significant. The possibility of future cost increases was examined by a sensitivity analysis (Annex 20, page 2 of the Appraisal Report). It was shown that a cost increase in the order of 10% would reduce the rate of return from 11% to 10.2%. January 7, 1972   CAMEROON SEMRY RICE PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ................................. i- I. INTRODUCTION ............................................1 II. BACKGROUND .............................................. 1 General ............................................1 Agricultural Sector ................................ 2 TII. THE PROJECT AREA ........................................ 3 rGeneral ............................................ 3 Climate ............................................ 3 Topography, Drainage and Soils ..................... 3 Irrigation Facilities and Other Services .... ....... 4 Research and Experiments ........................... 4 Farm Size and Farming Systems ...................... 5 Transportation ..................................... 5 IV. THE PROJECT ............................................. 5 Project Description ................................ 5 Project W4orks ...................................... 6 Logone Water Agreement ............................. 7 W4ater Supply, Demand and Quality ................... 7 Engineering Design and Construction Schedule ....... 8 Ecology and Health ................................. 8 Cost Estimates ..................................... 9 Financino .......................................... 10 SEMRY Financing Arrangements ........................ 11 Procurement ........................................ 11 Disbursements ...................................... 12 Accounts and Audits ................................ 12 V. ORGANIZATION .dND MANAGEMENT ............................. 12 Implementation of Project Works .................... 12 Consultants' Services .............................. 13 This report is based on the findings of an appraisal mission, composed of Messrs. A. Otten, J. Marinet and A. Meimaris (IDA) and assisted by Messrs. T. H. Boumendil (FAO/IBRD Cooperative Program) and A. L. Gram (environmental consultant).  -2- Page No. SEMRY Organization and Staffing Requirements ...... 13 Toukou Research Station ........................... 14 Agricultural Inputs and Credits ................... 14 Operation and Maintenance ...... .................. 15 Recovery of Costs ........ ........................ 15 VI. PRODUCTION, MARKET PROSPECTS AND OPERATING RETUTRNS .... 16 Production ....................................... 16 Prices ........................................... 16 Farmers' Benefits ................................. 17 Government Revenues .............................. 18 VII. BENEFITS AND JUSTIFICATION ............................. 1S VIII. AGREEMENTS REACHED AND RECOMMENDATION .................. 19 ANNEXES 1. Climatic Data 2. Soils 3. Civil Works 4. Water Supply and Demand 5. Construction Schedule 6. Evaluation of Schistosomiasis Problem 7. Cost Estimates 8. Estimated Schedules of Expenditures and Disbursements 9. List of Equipment 10. Organization Chart 11. Outline Terms of Reference for Consultants 12. SEMRY Personnel Development 13. Research Station Program 14. Operation and Maintenance Costs 15. Cropped Area, Yields and Production 16. Marketing and Price Structure 17. SEMRY Financial Estimates 18. Farm Budgets 19. Farm Labor Requirements 20. Internal Economic Return MAPS 1. Location Map 2. Project Map  CAMEROON SEMRY RICE PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a project for expanding irrigated rice production in Yagoua district, along the Logone River in northern Cameroon. The project would consist of: (a) reinforcement of the existing Logone dike and improvement of a parallel road; (b) construction of a new irrigation network to serve about 3,000 ha and rehabilitation of an existing 1,300 ha system; (c) construction of a rice mill and storage facilities to handle project production; and (d) procurement of equipment for on-farm development works and farm machinery. About 2,800 families alxeady farming in the area at a subsistence level would each receive an irrigated plot of about 1.5 ha to cultivate rice and would continue to farm lands with subsistence crops outside the project boundary. Production from the project would serve to reduce the national rice deficit and stimulate exports to nearby countries. ii. Rice consumption at 2.9 kg per capita is still low in Cameroon, but it is increasing rapidly, especially with the growth of the urban population. About 60% of total consumption is imported now and imports are increasing as local production is virtually stagnant. At the same time, some rice produced in the north is exported to Chad, Nigeria and the Central African Republic due to its location near these markets. Most of the domestically produced rice comes from the north, where expansion is limited by inadequate irrigation facilities. Little is grown in the south as other cash crops give a more favourable return to the farmer. Mi. Total project costs are estimated at US$7.4 million with a foreign exchange component of US$4.1 million or 56% of the total. French bilateral aid through its development agency, FAC, would finance US$1.3 million of which US$1.1 million would be for foreign exchange costs. The IDA credit of US$3.5 million would finance remaining foreign exchange costs (US$3.0 million) and 15% of total local currency expenditures (US$0.5 million). "Caisse Centrale de Cooperation Economique" (CCCE) would finance US$1.1 million of local currency expenditures. Remaining local costs of US$1.5 million would be covered by the Federal Government of Cameroon through budget appropriations.  - ii - iv. Project financing would be made available by Government to the project authority "Societe d' Expansion et de Modernization de la Riziculture de Yagoua" (SEMRY) on the following terms: (a) a grant of US$2.2 million; (b) an equity contribution amounting to US$1.4 million and (c) a loan amounting to US$3.8 million at 3.5% interest to be repaid over 35 years with 5 years grace period. v. Contracts for civil works, procurement of equipment and the rice mill totalling about US$4.6 million would be tendered through international competitive bidding. On-farm works of US$0.4 million would be carried out on force-account. Construction would be completed in three years and all project activities in five years. vi. Overall responsibility for the proJect would rest with SEMRY, an autonomous Government owned Corporation under the supervision of the Federal Ministry of Planning, which is already established in the project area and has operated satisfactorily the existing irrigation scheme and rice mill for 12 years. SEMRY's responsibility would include implementation of all project works, performance of operation and maintenance, provision of support- Lng services to farmers, and purchase, processing and marketing of all rice produced in the project area. Since SEMRY has no experience in engineering, :Lt would receive technical assistance from Government. In addition, an experienced consulting firm would be engaged to prepare tender documents and supervise construction of works. A senior official of the Federal Ministry of Planning has been appointed by decree as Government Commissioner to SEMRY and, in that capacity, would provide overall policy guidance and supervise project implementation. vii. The major benefit of the project would be the additional production cif 10,500 tons of rice annually which would cover nearly one-quarter of future domestic requirements as well as permit expanded exports. At full development of the project, in 1980, farmers' net cash incomes are expected to reach about US$240 per family or nearly four times the present level. The internal economic return from investment in the project would be 11%. viii. The project is suitable for an IDA credit of US$3.5 million equivalent. The borrower would be the Federal Government of Cameroon.  CAMEROON SEMRY RICE PROJECT I. INTRODUCTION 1.01 The Government of the Federal Republic of Cameroon has requested an IDA credit of US$3.5 million. The credit would assist in financing the construction of a 4,300 ha irrigation system for rice production in Yagoua district, along the Logone River in northern Cameroon. 1.02 The first project financed by the Bank Group in Cameroon's agricul- tural sector is the CAMDEV plantation project (490-CM) consisting of the development of about 17,000 ha of oil palm, rubber, tea and pepper. This project, financed with an IDA credit of US$11 million and a Bank loan of US$7 million, started in 1967 and will be completed in 1975. It is progressing satisfactorily with the IDA credit entirely disbursed. The second agricul- tural project, the SOPAME oil palm plantation (593-CM), was financed through a Bank loan of US$7.9 to develop about 9,000 ha of oil palm. It started in 1969 and is also progressing satisfactorily. 1.03 The proposed irrigation project would be the third Bank Group operation in the agricultural sector in Cameroon. Gravity irrigation has been used in the project area for 12 years, having been introduced before independence and continued afterwards with French bilateral assistance. The experience has demonstrated that farmers are responsive to the use of irri- gation and capable of growing rice for which markets exist both in Cameroon and in neighboring countries. The project was identified by the FAO/IBRD Cooperative Program in 1967 and prepared to feasibility stage by a consortium of three consulting firms, financed by the "Fonds d'Aide et de Cooperation" (FAC), the development aid agency of the French Government. The three year delay in preparation to feasibility stage is due in part to the time required for hydrological measurements and because a reconnaissance study was initially carried out before the feasibility study was commissioned. This report is based on the findings of an appraisal mission during January/February 1971, composed of Messrs. A. Otten, J. Marinet and A. Meimaris, who prepared this report with the assistance of Messrs. M. Altaf Hussain and D. Lomax. The mission was assisted in Cameroon by Mr. H. Boumendil from the FAO/IBRD Cooperative Program. Mr. A. L. Gram, an environmental consultant, visited the project areas in June 1971 to review the schistosomiasis problem. II. BACKGROUND General 2.01 The Federal Republic of Camer2on lies on the west coast of Central Africa and covers an area of 475,000 km . The country stretches over 1,500 km ranging from equatorial rain forests in the south to high-altitude plateau lands in the center and savannah areas in the north. The Republic is a  Federation between French speaking East Cameroon with four-fifths of the population, and English speaking West Cameroon. Its population, currently estimated at 5.8 million, is unevenly distributeJ with the highest concen- trations being in four areas: around Yaounde, the capital; around Douala, the major port; the coastal areas of the southwest; and, to a lesser extent, around Garoua in the north. Given the inadequate communications and transport facilities and the various ethnic origins and cultures of the inhabitants, regional differences in economic development are significant. In order to foster regional integration, the government has given high prioritv in its public investment planning to the transport sector. 2.02 Economic growth in the country has been fairly satisfactory in recent years; Gross Domestic Product (GDP) has grown at 5.3% per year ov r the 1965/66-1969/70 period, well above the annual population growth of 2-Ze, Per capita income was US$145 in 1969/70. Economic growth in this periocd was largely due to high prices for Cameroon's main export commodities (cotfee, cocoa). With the expected price decline for these commodities on the worid market, future growth will be less rapid. Agricultural Sector 2.03 Agriculture is the mainstay of the Cameroon economy, proviiing a livelihood for about 80% of the population and producing over 80% of Cameroon's exports. Because of the diverse climate, a large variety of crops are grown. Although plantation agriculture (cocoa, banana, coffee, sugar cane, tea, rubber, palm oil) is slowly gaining in importance, the bulk of agricul- tural production remains in the hands of small farmers who produce both cash and subsistence crops on farms ranging in size from 1 to 4 ha. More than 60% of total agricultural output is in the subsistence sector, and the average farmers' cash income per family is estimated at IJS$94 per annum. Average farmers' family cash income in the project area at present is substantially lower: around US$67 per annum. 2.04 Rice consumption in Cameroon is low in comparison with other African countries: about 17,000 tons per year or 2.9 kg per capita. Urban centers in the south are the main markets for rice. Urban population is increasing by 7% per year, and so is rice consumption, thereby following the trend in evidence in other African countries. Some 7,000 tons of rice are produced domestically, of which about 70% is grown in Yagoua district in Northern Cameroon. From this area 1,000 tons of rice are exported each year to nearby markets in the Central African Republic, Northern Nigeria and Chad. Cameroon imports far exceed exports however, as around 11,000 tons of rice are imported annually in the south to satisfy urban consumption. The proposed project would cover nearly one quarter of future domestic require- ments and also permit expanded future exports of rice (para 6.02 and 6.03). 2.05 The political organization of Cameroon entails a fairly complex administrative structure involving a Federal Government and two State Govern- ments: one for East Cameroon and one for West Cameroon. Although the Federal Government is gaining importance, responsibility for the formulation of  -3- agricultural policy still rests with the State Governments, which are in- sufficiently equipped for the task. There is no federal ministry of agriculture and projects in the agricultural sector involving external aid are handled by the federal Ministry of Planning. For want of suitable institutions, Government's involvement with the agricultural sector is limited to a few specific operations such as a cocoa rehabilitation scheme, development of plantations and a cotton production program. 2.06 Although the Government guarantees producer prices for rice and other main export crops through marketing boards, the bulk of production is sold through private channels. Cooperative marketing has remained localized having gained no importance as yet in the country as a whole. Credit to individual farmers is mostly given by private traders and not available through government-owned credit institutions except for closely supervised credit schemes ("Operations de productivite"). III. THE PROJECT AREA General 3.01 The project is in northern Cameroon along the west bank of the Logone River, which, at that point, forms the border with Chad (see Map 1). The river is a major tributary of the Chari River which feeds into Lake Chad. Because the plains south and southeast of this lake are flooded for more than five months each year, two dikes were built on opposite banks of the Logone to provide protection for part of the area. One starts at Yagoua in Cameroon and the other at Bongor in Chad; each is about 49 km long. Intake regulators permit gravity irrigation during high water stages. The site of the proposed project is behind the existing embankment on the Cameroon side of the river (see Map 2). Climate 3.02 Rainfall averages 850 mm annually in Yagoua and decreases slightly towards the north. There is a single rainy season that lasts from June to October, but its irregular starting time and the intermittent rainfall pattern at the beginning of the rice growing period from July to August have an adverse effect on crop yields. 3.03 The average annual temperature is 27C, with small seasonal variations. During December and January, however, daily temperatures vary widely with nights getting as cold as 10