Report No. 1064a-IN

Appraisal of National Seed Proiect IndiaMay 17, 1976 9 t /tSouth Asia Projects DepartmentGeneral Agriculture Division

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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INDIA

NATIONAL SEED PROJECT

CURRENCY EQUIVALENTS

US$ 1 = R 8.75R 1 = US$0.11R 1 million (M) = US$114,286

WEIGHTS AND MEASURES

Metric Units are used.

1 Metric ton (m ton) = 1,000 Kilograms (kg)I Quintal (qtl) = 100 kilograms1 Hectare (ha) = 2.47 acres

INDIAN FISCAL YEAR

April 1 - March 31

FOR OFFICUIL USE ONLY

INDIA

NATIONAL SEED' PROJECT

Abbreviations

ARDC - Agricultural Refinance and Development CorporationCSC - Central Seed CommitteeCSCB - Central Seed Certification BoardGOAP - Government of Andhra PradeshGOH - Government of Haryana

GOI - Government of India

GOM - Government of MaharashtraGOP - Government of PunjabHYV - High Yielding VarietyICAR - Indian Council of Agricultural ResearchICDP - Integrated Cotton Development ProjectNSC - National Seed CorporationNSDC - National Seed Development CouncilPMMC - Project Management and Monitoring CommitteeSFCI - State Farms Corporation of IndiaSSC - State Seed CorporationSSCA - State Seed Certification Agency

Glossary

Breeder seed - seed of high genetic purity, produced by the plant breeder.Foundation seed- progeny of breeder seed (or of first generation foundation

seed), produced to statutory quality control standards.Certified seed - progeny of foundation seed, produced to statutory quality

control standrds.

Kharif season - monsoon season (May - October).Rabi season - dry season (November - April).

This document hu a restricted distribution and may be used by recipients only in the performanceof their oMcial duties. Its contents may not otherwise be disclosed without World hnk authorization.

INDIA

NATIONAL SEED PROJECT

Table of Contents

Page No.

SUMMARY AND CONCLUSIONS .......................... i-iii

I. INTRODUCTION -............... .. . .. ..... . 1

II. BACKGROUND ...................... o.. ...... f..i 1

A. General ..............* ...............o . . . ........... 1-

B. Seed Industry .... .o.... . .. . . . .. . . ...... ....... . . .. . 1

III. NATIONAL SEED PROGRAM ... o .... .... ...... .... ..... 3

IV. THE PROJECT ........ . .-... .. .. . .. . ....o......o ..o.o.o.o. .... 4

A. Project Area ... . .-.-. . . . ....... . .. . -. . .. .-........ 4B. Detailed Features .. .... ............-.. oo.. 4

C. Cost Estimates ................. ...... ... ..... 12D. Proposed Financing . ....... ....... o.-.-...... . . . . . . 14

E. Procurement ......... .. . .. . . .. . ...... .-- . ..... .. . 15F. Disbursements ... ... .....-. . .. . . . .. ....... . ..... .-. 16

V. ORGANIZATION AND MANAGEMENT ................... o-o 17

A. Project Institutions .... -.. -.............. 17B. Credit ........--.. *.......... ................ 19C. Accounting and Audit ... 4. ..................... 20

VlI. MARKETING o .... o.oooo .................... -o..o.-.o..... 20

A. Demand ............. 000..0.0..*.................. 000 .000 20B. Pricing ... o-- ... .. -..... ............. 21

C. Distribution ... ...................... -.... .oo ....... .o.. 21D. Promotion ... ................................. 22

VII. OPERATING RESULTS AND ECONOMIC JUSTIFICATION ..... 22

A. Operating Results ... .*..*.. ... . . 22B. Economic Justification ....... . ......... 23

VIII. RECOMMENDATIONS .-... .......-..... o.................. 25

This report is based on the findings of an appraisal mission which visitedIndia from October through November 1975. The mission was composed ofMessrs F. Thornley, A.K. Seth, I. Harvey, (Bank), D. Kayron (CP) andP. Berg, J.C. Delouche, F. N. Norden, J.M. Poehlman (Consultants). MessrsA. Seager (Bank) and A. Boyd (Consultant) also assisted part time.

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ANNEXES

1. Plant Breeding, Breeder and Foundation Seed Production andSeed Technology Research

2. Farm and Related Development3. Processing4. Private Sector5. Quality Control6. Technical Assistance and Training7. Project Costs and Financing Plan8. Disbursement Schedule9. Organization and Management (Implementation Schedule)10. Lending Operations11. Marketing12. Financial and Economic Analyses

MAP

INDIA

NATIONAL SEED PROJECT

SUMMARY AND CONCLUSIONS

i. Agriculture is the backbone of the Indian economy - accounting for45% of GNP, 70% of employment and producing the raw material for the majorexport commodities. Agricultural growth will depend on increased produc-tivity - since there is little new land to cultivate - and one crucial elementis the spread of improved crop varieties through an efficient seed industry.

ii. Seed demand at present is strong, unsatisfied and expected to con-tinue expanding. However the present structure of the seed industry is un-satisfactory. Government of India has therefore prepared a National SeedProgram to restructure the industry and improve the quantity and quality ofseed produced.

iii. The proposed project would be the first phase in the implementationof the National Seed Program. It would be the second Bank Group project tosupport India's seed industry. The first, the Tarai Seeds Project (IN-614),has been successful and Tarai experience has been a significant factor inthe development of proposals for this project.

iv. The project would be concerned mainly with major cereal crops andcotton, the latter as an essential complement to the IDA financed 610-INIntegrated Cotton Development Project (ICDP). Cereal seed output would beincreased by about 73,000 m ton; 60% of present output. Cotton seed pro-duction, negligible now, would be 14,000 m ton.

V. State Seed Corporations (SSC) would be established in Andhra Pradesh,Haryana, Maharashtra and Punjab - regions of comparative advantage for seedproduction - to produce, process and market certified seed. This would begrown by SSC shareholding farmers in compact areas around large scale pro-cessing plants. Agricultural Universities would have prime responsibilityfor producing foundation and breeder seed - close association of Universityscientists is expected to achieve necessary quality improvements in theseearly, critical, generations in the seed multiplication chain. IndependentState Seed Certification Agencies (SSCA) would be established and seed test-ing laboratories expanded to provide quality control services. The projectwould also support the expansion of private sector seed companies to main-tain competitive balance in the industry.

vi. The National Seed Corporation (NSC), hitherto the country's majorseed producer and certification agency, would gradually divest itself ofthese functions to become a service agency. Main responsibilities would beinterstate marketing; operation of a reserve stock scheme; foundation seedproduction; collaboration with the Indian Council of Agricultural Research(ICAR) on coordination of breeder seed production; and design of, and pro-curement for, processing plants. Through cross representation between NSCand SSC Boards, NSC would be the main forum for coordination of seed industrydevelopment.

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vii. Limited technical assistance, 28 man months, would be providedto assist with processing plant design, development of seed technologyresearch, reorientation of NSC marketing activity, and improvement ofSCA management.

viii. Project costs over a five year disbursement period are estimatedat US$52.7 M including US$11.1 M foreign exchange. Main investments wouldbe: processing plants; land and irrigation development and machinery forlarge scale seed farms; University facilities for seed technology researchand breeder and foundation seed production units; buildings, equipment andvehicles for quality control agencies; buildings and equipment for privatesector processors; seed stores; reserve stocks; incremental permanent work-ing capital for SSC and private sector companies; and training and technicalassistance.

ix. A Bank loan to GOI of US$25.0 M is proposed to cover 50% of projectcosts net of duties and taxes, equivalent to foreign exchange and about 34% oflocal costs. Bank funds for research and breeder seed production by Univer-sities, farm development by agricultural universities, quality control, irri-gation canal remodelling, and training and technical assistance (US$6.85 M)would be channeled by GOI through ICAR, State Governments,the Central SeedCertification Board, Government of Haryana and NSC respectively. All otherBank funds (US$18.15 M) would be channeled by GOI, through the AgriculturalRefinance and Development Corporation and commercial banks, for on-lending toinstitutional borrowers on prevailing terms and conditions, which are satis-factory to the Bank. The balance of project costs would be met by GOI(US$12.6 M); State Governments (US$4.2 M); ARDC and commercial banks(US$4.35 M): and sub-borrowers (US$6.6 M).

x. Major items of seed processing and laboratory equipment and farmmachinery (US$15.1 M) would be procured on the basis of international com-petitive bidding in accordance with Bank guidelines. Contracts for minoritems of equipment, not exceeding US$50,000 each, would be let after com-petitive bidding advertised locally and in accordance with local procedureswhich are satisfactory to the Bank. Urgent purchase of minor equipment, to avalue of US$1.0 M, would be by prudent shopping, and, to speed implementation,it is proposed that equipment appropriately procured, to a value of US$0.5 M,be eligible for retroactive financing. Procurement for the private sector(US$3.4 M) would be left to customer choice. Individual purchases would betoo small, varied and widespread to permit bulking for competitive bidding.Contracts for civil works, buildings and furnishing (US$16.5 M), would be letafter competitive bidding advertilised locally, since individual items aresmall and scattered over a wide area. An exception would be canal remodel-ling in Haryana which would be carried out by force account (US$2.4 M). Thework would be frequently interrupted and delayed to minimize disruption ofwater supplies and would therefore not attract contractors. Vehicles(US$1.1 M) would also be procured on the basis of competitive bidding adver-tised locally since only a few would be purchased spread over the project pe-riod. Motorcycles (US$0.5 M) would be owned by staff and would be purchased

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according to their preference direct from dealers. Employment of consultantsand overseas training (US$0.3 M) would be on terms and conditions satis-factory to the Bank. The balance of project costs (US$10.4 M) would coverreserve stocks, permanent working capital and operating costs not involvingprocurement.

xi. The main project benefit would be increased crop yields of seedusers. Projected annual incremental cereal production at full developmentwould be wheat 200,000 m ton, paddy 170,000 m ton, maize 95,000 m ton,sorghum 200,000 m ton and pearl millet 250,000 m ton. Total value would beUS$145 M per year. Because most project cotton seed would be an input tothe ICDP it has been valued at the input price used in ICDP rate of returncalculations. On this basis cotton seed output would be worth US$3.7 Mper year. It is estimated that 3 M farmers would benefit from the use ofproject seed. In addition about 14,000 man years of seasonal employmentwould be created for harvesting. The project has an estimated economicrate of return of 65%.

xii. The project is considered suitable for a Bank loan of US$25.0 M,with a maturity of 20 years, including 5 years of grace. The borrowerwould be GOI.

INDIA

NATIONAL SEED PROJECT

I. INTRODUCTION

1.01 The Government of India (GOI) has requested World Bank finance fora National Seed Project estimated to cost a total of US$52.7 M. This would bethe second Bank Group project to support development of India's seed industry.The first, the Tarai Seeds Project (614-IN, 1969) has been successful.The experience of the Tarai Development Corporation, which has a reputationfor producing quality seed, has been a significant factor in the developmentof proposals for the project.

1.02 The project was prepared by a GOI working group based on NationalSeed Corporation (NSC) personnel, assisted by staff of the Bank's New DelhiOffice. Assistance was also provided by both the FAO/WB Cooperative Program(CP) and Bank headquarters staff. This report is based on the findings of anappraisal mission comprising Messrs. F. Thornley, A. K. Seth, I. Harvey (Bank),D. Kayran (CP) and P. H. Berg, J. C. Delouche, F. Norden and J. M. Poehlman(Consultants) which visited India in October/November 1975. The mission wasassisted part-time by Messrs. A. Seager (Bank) and A. H. Boyd (Consultant).

II. BACKGROUND

A. General

2.01 India's 603 M population is growing at 2.3% per year; per capitaincome (US$115 in 1975) at 1.4%. About 70% of the employed population isengaged in agriculture, which accounts for about 45% of GNP and produces theraw material for the major export commodities: jute, tea, leather, cottongoods and cashews.

2.02 The current ten year growth rate in agriculture is about 3%. Com-pared with previous decades increases in yield have contributed more togrowth than increases in cropped area. The higher yields have resulted fromthe use of seed of high-yielding varieties (HYV) together with more intensiveuse of the complementary inputs, in particular fertilizer, pesticides andirrigation.

B. Seed Industry

2.03 HYV resulted from plant breeding breakthroughs starting in theearly sixties. Before that the seed industry was little developed. Theprivate sector produced small quantities of high value flower and vegetableseed. The public sector attempted to disseminate improved seed from small,Government run farms located in each Community Development Block, with

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little success. The difficulties of managing so diffuse a scheme resulted inpoor quality seed and imbalance in supply and demand.

2.04 The release of India's first maize hybrids in 1961 was followedby hybrids of sorghum and pearl millet, then by high yielding dwarf ricevarieties and finally by the high yielding dwarf wheats. All were highly

responsive to higher input use, gave greater profits, and created a strong

demand for quality seed.

2.05 In response there was a rapid growth of private sector seed com-panies. In the public sector, GOI, recognizing that a wide scatter of smallBlock seed farms was inappropriate to the technological needs of hybrid seedproduction, decided to create a central seed organization. GOI also decidedto promote legislation to establish quality control. Thus in 1963 theNational Seed Corporation (NSC) was established and in 1966 a Seeds Act was

passed. NSC was charged to promote seed industry development, from produc-

tion through processing, storage and marketing, and to establish a system ofquality control.

2.06 Through the mid sixties seed output expanded rapidly - the cert-ified area from 360 ha to 35,000 ha between 1963-64 and 1968-69. This wasmainly in the private sector, with the Bank supported Tarai Development

Corporation (TDC) a late comer in the field (para 1.0). During this periodNSC was concerned mainly with foundation seed production and, after the

passing of the Seed Act in 1966, with seed certification.

2.07 Unfortunately demand for seed grew more slowly than expected. Inthe self-pollinated crops - wheat and rice - farmer retention and farmerto farmer transfer accounted for much of the seed used; some of the HYVwere inferior in grain quality to traditional types and thus lost favor.

Substantial overproduction occurred and large stocks accumulated with StateGovernments. Thus 1968-1971 was a period of retrenchment. Many privatecompanies withdrew from seed production, several went into liquidation.

2.08 Demand began to pick up in 1971-72, but the industry lacked theresources and confidence to meet it. NSC stepped in and developed a program

which in 1974/75 produced 73,000 tons of seed (about 50% of national out-put), making NSC by far the largest seed producer in the country. Seed wasproduced almost entirely through contracts with progressive farmers. A

feature of this NSC program was the introduction of scientific seed process-ing. Previously seed had little or no processing, to the detriment of

quality.

2.09 During the period of retrenchment State Governments curtailedproduction and only a few have since revived this activity, some using

contract growers others using large departmental farms. The small Block

farms are now seldom used. The seed is not usually certified and is gen-erally sold at little more than grain price as part of extension programs.

2.10 Because of the considerable changes in the seed industry duringthe sixties, and to facilitate planning, GOI decided to undertake a com-

prehensive survey of seed industry development. A Seed Review Team was

established and reported on the industry in depth in 1968 1/. A furtherreview was conducted by the National Commission on Agriculture in 1971.Based on their findings, and the encouraging experience with the Tarai Pro-ject, GOI decided to reorganize and expand the seed industry. In February,1975 a working group was established, based on NSC personnel, to prepareproposals for a National Seed Program.

III. THE NATIONAL SEED PROGRAM

3.01 Agricultural growth, basic to economic growth in India, will dependon greater productivity - since there is little new land to cultivate. Thekey to greater productivity is the spread of improved crop varieties. Qualityseed is therefore an input essential to the continued development of Indianagriculture. Seed demand at present is strong, unsatisfied, and expectedto continue expanding. To meet this demand, and to overcome past problems- inadequate quantities and quality of breeder and foundation seed, in-adequate quality control, and imbalance in supply and demand - a nationallycoordinated seed development program is necessary.

3.02 The National Seed Program would support all facets of seed produc-tion, from breeder and foundation seed production through certified seed pro-duction, processing, storage and marketing. At the time of appraisal eightStates had been identified as program participants. Several other Stateshave expressed interest but their role has yet to be defined. It is vitalthis be done quickly since it affects the Apportionment of market sharesamongst States. The need is recognized and will be addressed by the con-tinuing operation of the working group.

3.03 A major feature of the Program would be the establishment of StateSeed Corporations (SSC), similar to the Tarai Development Corporation, withmodern processing plants, to take over the production role which NSC hadperformed by default. SSC would be created in regions with a comparativeadvantage for producing particular crops. Each crop would be produced by morethan one SSC, to ensure competition and safeguard production. Seed would beproduced in compact areas around each plant by growers with a shareholding inthe SSC. This would contrast markedly with the past NSC pattern of scatteredproduction by contract. The new approach would improve efficiency in qualitycontrol, supervision and transport. Quality is also expected to benefit fromthe vested interest shareholder growers would have in seed industry success.

3.04 Breeder seed production would be coordinated by the Indian Councilfor Agricultural Research (ICAR), and facilities improved to increase outputand quality. Foundation seed production would be coordinated by NSC, againwith support for improved production. Agricultural Universities would beassigned a major role in breeder and foundation seed production. Closeinvolvement of plant breeders, and other scientists, in the seed industryshould go far toward achieving quality improvements.

3.05 NSC would coordinate interstate seed marketing which would helpharmonize supply and demand. NSC would also establish seed stores to

1/ Government of India, Seed Review Team Report, 1968.

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improve distribution and help maintain seed quality in the marketing chain.A reserve stock scheme would be operated by NSC, to buffer supply/demand

imbalances.

3.06 Independent State Seed Certification Agencies would be developedor strengthened in producing States to ensure the quality of foundation andcertified seed. Special arrangements would be made to monitor breederseed quality 1/.

IV. THE PROJECT

4.01 The project would be the first phase in the development of theNational Seed Program. It would cover four States: Andhra Pradesh, Haryana,Maharashtra and Punjab. It would also provide assistance to NSC, to improvestorage and marketing and for vegetable seed production, and to Universities- through ICAR - to improve breeder seed production and create or improve seedtechnology research capabilities. Production of certified seed of the majorcereals would increase by 73,000 m ton, about 60% of present national output,(wheat 34,500, rice 9,600, maize, sorghum and pearl millet 29,000). Cert-ified cotton seed production, negligible now, would be 14,000 m ton.

A. Project Area (Map 11967)

4.02 Selection of phase one States was based on: the preparedness oftheir proposals; their present and proposed importance as producers of majorcrop seed and, except for Andhra Pradesh, the need to produce certifiedcotton seed as an essential input to the Integrated Cotton DevelopmentProject (610 IN).

4.03 Within States project areas were selected because they were aboveaverage in productivity. All have a good proportion under irrigation. Theyhave good internal and external communications and, in three of the States,they are centers of NSC production and processing activity and thus have anucleus of experienced seed producers and some processing capacity. InMaharashtra there is no processing capacity in the project areas of use to theSSC and a bridging operation would be particularly important (para 4.19).With the exception of Andhra Pradesh the Agricultural Universities are in, oradjacent to, project areas. In Andhra Pradesh the merits of the area selectedoutweigh the disadvantage of distance from the University.

B. Detailed Features

4.04 The project would:

1/ Breeder seed is not normally subject to certification.

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- improve breeder and foundation seed production;

- develop three large scale farms for certified seedproduction;

- remodel canals supplying irrigation water to largeproject farms in Haryana;

- establish and equip SSC;

- support expansion of private sector seed operations;

- expand seed storage capacity and establish a reserve stock;

- expand quality control facilities;

- provide equipment for the expansion of NSC's vegetable seedoperation;

- develop seed technology research; and

- provide training and technical assistance.

Breeder Seed Production 1/

4.05 The project would improve facilities for breeder seed productionat 20 Agricultural Universities and ICAR Institutes. ICAR would coordinatebreeder seed production and determine the particular investment needs of eachinstitution, designating a senior official to be responsible for this task.Suitable assurances to this effect were given by GOI.

4.06 Responsibility for the production of breeder seed of each varietywould be with the originating breeder or, failing that, the institution.Institutions receiving project support would establish production unitsequipped and staffed to specialize in breeder seed production 2/. Thiswould relieve breeders of non-scientific tasks but they would be responsiblefor breeder seed quality. To further safeguard quality, breeder seed plotswould be examined by officials representing ICAR, NSC, the State SeedCertification Agency and the breeder. Grow out tests would be performed oneach seed lot.

4.07 To prevent supply/demand imbalance in this most critical generation,a 50% stock would be carried over each season in controlled environment stor-age. Details of proposals to improve breeder seed production are at Annex 1.

1/ See glossary for definitions of breeder, foundation and certified seed.

2/ At Universities producing breeder and foundation seed, one seed pro-duction unit would be responsible for both.

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Foundation Seed Production

4.08 The NSC would estimate demand and coordinate production of found-

ation seed of varieties of all India importance; SSC would be responsible

for regional varieties. To insure against inadequate supplies, foundation

seed would be included in a reserve stock scheme. Major responsibility

for foundation seed production would rest with the Agricultural Universities.

Where their land was insufficient, seed supply would be supplemented from

other institutions with large farms, such as the State Farms Corporation of

India (SFCI). All foundation seed would be subject to certification by State

Seed Certification Agencies. Grow-out tests would be performed on each

lot.

4.09 The project would develop University units 1/ for foundation seed

production, processing and storage. Main investments would be for improve-

ments to irrigation, land development, tractors and machinery, seed process-

ing equipment and buildings. Details for seed production and processing are

at Annex I and for farm development at Annex 2. Farm development proposals

were not based on detailed farm plans; it would therefore be a condition of

disbursement against University farm development costs that farm plans, satis-

factory to the Bank, had been prepared.

4.10 Both Andhra Pradesh and Punjab Agricultural Universities lack land

for foundation seed production. The State Governments agreed to transfer

additional land to them and it would be a condition of disbursement, against

the Andhra Pradesh and Punjab components of the project, that land satis-

factory to the Bank had been transferred.

Certified Seed Production

4.11 SSC would organize certified seed production through shareholding

farmers - mainly small scale private farmers. The fewer operational holdings

involved in seed production the better - the work of seed corporations and

quality control agencies would be simplified and costs reduced - however,

there are few large farms in project areas. The compact area approach to

seed production would be adopted to reduce, as far as possible, the inherent

inefficiencies of many, small producers.

4.12 Large Farm Development. In the Haryana and Punjab project areas

there are three large farms suitable for seed production. These would be

developed mainly for certified seed production, but also to provide a reserve

capacity for foundation seed. Two of the farms are operated by SFCI; the

other is presently owned by the Haryana Seeds Development Corporation

(HSDC) - which would become the Haryana SSC. An assurance was obtained, that

the HSDC farm would be transferred to the Haryana Land Development Corpora-

tion. Operation of a farm would unnecessarily complicate HSDC's manage-

ment; also, since other SSC do not operate farms, it could interfere with

1/ At Universities producing breeder and foundation seed, one seed produc-

tion unit would be responsible for both.

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interstate cohesion on policy issues. On-farm investments would be similarto those for University farms (para. 4.09). Details are at Annex 2. As withUniversity farms it would be a condition of disbursement that farm planssatisfactory to the Bank had been prepared.

4.13 Irrigation Canal Remodeling. The two large farms in Haryana adjointhe University Farm. All three are part of a large block of Governmentowned land to which irrigation water is supplied by the Bhakra canal system.Present supply is inadequate. However in 1977 a canal linking the Beas andSutlej river systems will be completed. More water would then be availablein the Bhakra canal system. It is proposed to increase the capacity of thecanals serving the above block to increase seed production and make it morecertain. Details are in Annex 2.

Seed Processing

4.14 SSC would be responsible for seed processing. They would take oversuitable NSC processing facilities and construct new plants as follows:

Nominal Capacity 1/ 2/Location (tons) Main Crops

Andhra Pradesh - Eluru 10,000 rice, maize, sorghum- Nizamabad 5,000 pearl millet, sorghum, maize

Haryana - Hissar 1,000 cotton- Sirsa 5,000 cotton, wheat- Thanesar 10,000 wheat, rice

Maharashtra - Akola (5,000) 5,000 (cotton), sorghum, pearlmillet, maize, jute

- Parbhani (2,500) 5,000 (cotton), sorghum, pearlmillet, maize, jute

Punjab - Jullundur 5,000 wheat, rice- Ludhiana 5,000 wheat, rice- Mukstar 5,000 cotton, wheat

1/ The capacity of a processing unit would vary with location - climatedetermining processing season - and crop mix. Nominal capacitiesassume: wheat, 100 day season, 2 shift working.

2/ At Sirsa and Mukstar cotton and wheat seasons are different thereforesome facilities would be shared, in Maharashtra the crops compete andcotton would need a processing line separate from cereals.

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4.15 Cereal plants would be developed around a 5,000 ton nominal capa-city module. This would be designed and constructed to permit expansionwith minimal disruption and sites must be adequate to allow this; require-ments are indicated in Annex 3.

4.16 Cotton seed plant design would not be modular. The choice oftechnology for cotton seed processing is problematic. The ideal would beacid delinting. However capital and operating costs of acid plants arehigh and management problems great. With no operational experience avail-able it would be imprudent to launch completely into large scale acid delint-ing. Under the project most cotton processing would therefore be based onmechanical delinting. However, 1,000 m ton acid plants would be establishedat Hissar and Akola to gain operating experience. The seed technologyunits to be developed at the Universities (para 4.34) would monitor plantperformance and experiment with alternate technologies. Gins would be pro-vided at the cotton plants in Haryana and Punjab but not in Maharashtra,where ginning capacity is adequate.

4.17 In addition to cotton and cereal plants, 5,000 ton cold stores forcertified potato seed would be constructed in Haryana and Punjab. Cold stor-age is essential to maintain quality of seed potatoes which must be heldthrough the hot summer months. Details of processing plant designs andcosts are at Annex 3.

4.18 SSC would contract with NSC for plant design, preparation of tenderdocuments and procurement and installation of equipment. This arrangementwould be embodied in the NSC/SSC agreements (para 5.05). Tendering andsupervision of civil works contracts would be handled by SSC or, if theydesired, by NSC. Since cotton seed processing and the proposed cereal plantdesigns, are new to NSC, technical assistance would be provided for earlydesign work (para 4.36). It would be a condition of disbursement againstprocessing plant costs that the design of each cotton plant, and of the 5,000ton and 10,000 ton cereal plant modules, had been approved by the Bank.

4.19 New processing plants would come on stream in April-June 1978 (seeproject implementation schedule, Annex 9). By then lack of processing capa-city would constrain seed output. Existing plant capacities would thereforebe temporarily increased by adding equipment purchased under the project.Most of the equipment would subsequently be transferred to the new plants.Design needs would be negligible and procurement would be rapid 1/. Detailsof these proposals are at Annex 3.

Seed Storage

4.20 Stores would be constructed at three points in the distributionchain: transit stores, bulk distribution depots and the processing plant.

1/ It is proposed that the equipment be financed retro-actively if theequipment can be purchased before loan signing (para 4.41).

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Transit stores would be located in consumption areas to service dealers;about 64 stores with a total capacity of 11,500 m ton would be constructed.In general, they would be owned by State Warehousing Corporations (SWC) andleased to NSC; where SWC did not operate, they would be owned by NSC. Designswould be approved by the Central Warehousing Corporation (CWC) (para 5.12).

4.21 To ensure timely availability of seed in consumption areas fivebulk stores (total capacity 34,000 tons) would be constructed in climaticallysuitable areas. They would be designed and constructed by CWC for lease toNSC. The remaining storage, equal to about 50% of seasonal throughput, wouldbe an integral part of each processing plant.

4.22 Reserve Stock Scheme. Natural hazards - weather and diseaseepidemics - would continue to cause marked fluctuations in seed supply anddemand. To buffer seed users and new seed corporations against their effects,a reserve stock scheme would be created for foundation and certified seed ofmajor cereals. The scheme would be operated by NSC. Reserve stocks of found-ation seed would be held at production point in agreement with producinginstitutions; stocks would be 10% for wheat and rice and 50% for cerealhybrids. Certified stocks would be held at suitable processing plants, inagreement with SSC, since holdover stocks should be untreated. Storage downstream from plants could lead to expensive condemnation or rehandling ofstocks. Amounts held would be: rice 2%, wheat 3%, hybrid cereals 10%.Details of storage proposals, plant and ex-plant, are at Annexes 3 and 11respectively.

The Private Sector

4.23 India's seed industry has a well established private sector. Itis particularly strong in cereal hybrids (over 50% of national output),vegetable and flower seed. The sector has established a foothold in theexport market with high value seed requiring large labor inputs in production.The project would support the continued expansion of the private sector tomaintain the public/private sector balance and thus maintain the spur ofcompetition.

4.24 Support for all relevant activity, from plant breeding through toprocessing and storage, would be eligible for project financing. Unlike thepublic sector, investment proposals would not be uniform. Individual pro-posals would be financed through, and subject to the appraisal of, com-mercial banking channels. In addition, it would be a condition of disburse-ment against any proposal that it had been subject to the technical scrutinyof NSC.

4.25 In the past the private sector has been subjected to varyingdegrees of discrimination by State Governments in favor of their own opera-tions. Assurances were obtained that the private sector would be treatedequally with the public sector with respect to: supplies of foundation seed;access to quality control services; access to variety trials; and seed

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movement. The private sector project participants would be represented on

all major institutions involved in the project and therefore able to voice

concern should discrimination occur. Details of the private sector and

proposed project support are at Annex 4.

Quality Control

4.26 Rigid quality control at every stage of seed production would be

critical to project success. Seed certification would be undertaken by

independent State Seed Certification Agencies (SCA) registered under the

Societies Registration Act of 1960. At present Andhra Pradesh and Maharashtra

have certification agencies in their Agriculture Departments. Haryana and

Punjab have notified NSC as their certification agency. Independent agencies

have been registered under the Societies Act, in accordance with a memoranda

of association satisfactory to the Bank.

4.27 The project would finance the investments needed to develop the

SCA, including operating deficits during the project period. After two or

three years the SCA should be self supporting. Details of estimated capital

and operating costs and revenues are at Annex 5.

4.28 To coordinate seed certification at the national level, and to

ensure interstate uniformity of operation, GOI has established a Central

Seed Certification Board, with composition satisfactory to the Bank.

4.29 A seed testing service is rquired to determine compliance with

the regulatory aspects of the Seeds Act. One well staffed and equipped seed

testing laboratory in each State would be adequate. The project would

establish or improve laboratories in three States; Maharashtra has an ade-

quate laboratory. GOI operates a Central Seed Testing Laboratory which would

act as referee in disputes. It would also continue to develop and standardize

seed testing procedures and to monitor performance of State laboratories.

4.30 Little progress has been made in implementing the regulatory as-

pects of the Seeds Act. GOI is now considering a proposal to assist States

establish independent agencies, to enforce minimum quality standards under

the Fertilizers Control Order and Insecticides Act in addition to the Seeds

Act. Assurances were obtained that, pending creation of new Agencies,

States would intensify seed inspection under present arrangements, until

at least 50% of dealerships handling certified or "truthfully labelled" 1/seed were being inspected annually.

4.31 Assurances were obtained that for cotton seed production State

Governments would designate and enforce appropriate one variety communities

and gins. Necessary legislation exists but has not been implemented.

4.32 SSC would monitor quality throughout their own operations and each

would establish a small quality control section (details in Annex 5).

1/ As defined in the Seeds Act.

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NSC Vegetable Seed

4.33 Expansion of vegetable seed output is justified in the face ofincreasing demand (Annex 11) and the desirability of increasing vegetableconsumption (a low 40 gm/day/head against a GOI target of 280 gm). Vegetableseed production is more complicated than seed production of major cropsand transfer of responsibility to SSC would unduly burden management duringtheir formative years. NSC would therefore expand its vegetable seed opera-tions by establishing small processing plants in seven producing areas. Seedwould then be concentrated at two of these, Delhi and Hyderabad, which wouldalso be equipped with packaging lines and controlled environment storage.Details of proposed investments are in Annex 3.

Seed Technology Research

4.34 Applied, problem solving seed technology research is essential tothe development and increased efficiency of the seed industry. The projectwould support the development of inter disciplinary (inter departmental)programs at the Andhra Pradesh, Haryana and Punjab Agricultural Universitiesand at the Akola and Parbhani Agricultural Universities in Maharashtra.Given the anticipated nature and volume of work this would be more effectivethan creation of separate seed technology departments. Project support wouldcover investment costs and operating costs through the project period. There-after it would be possible to finance seed technology research from the re-search funds provided by SSC (para 7.04). Details of proposals, includingappropriate lines of research, and cost estimates are in Annex 1.

Training

4.35 Training would be required on a considerable scale to provide theskilled staff necessary for an expanding industry. Much of this would beon-the-job training. However some formal training would be required and isincluded in the project. NSC and the Tarai Development Corporation would playimportant roles in training SSC staff. Short overseas study tours would beprovided for key staff from NSC, SSC, Certification Agencies and Seed TestingLaboratories and one candidate would be sent from each of the five universitiesdeveloping a seed technology program for advanced degree training overseas.Details of training proposals and costs are at Annex 6.

Technical Assistance

4.36 Technical assistance would be limited. A consultant would beengaged to help Universities design seed technology research programs. NSCengineers would require short-term assistance with processing plant design,particularly for cotton plants with which there is no Indian experience, butalso with cereal and vegetable seed plants, since scale and equipment rangewould be greater than before. State Seed Certification Agencies need help to

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develop administrative procedures commensurate with greatly expanded activity,and NSC's marketing department would be supported by consultant services tore-direct efforts from distribution to promotion, to establish training pro-grams to that end and to assist with seed demand surveys. Assurances wereobtained that consultants would be employed in consultation with, and onterms and conditions satisfactory to, the Bank. Details of technical assist-ance proposals and costs are in Annex 6.

C. Cost Estimates

4.37 Eotal project costs, over five years, would be Rs 461 M (US$52.7 M)of which about US$11.1 M would be foreign exchange. Details of project costs,*ummarized on page 13, are in Annex 7. Estimates are based on projectedziid-1976 prices. Physical and price contingencies, amounting to 4% and 12%respectively of project cost, have been applied as follows:

physical - 5% for SSC, quality control and foundation seedinvestments;

- 10% for large farm development, because detailedplans were lacking;

- 20% for breeder and vegetable seed operations,because proposed sites are scattered and not allwere fully appraised; and

- 25% for canal remodelling - completion of detailedenginefring may reveal limited lining necessary.

price - on iLvil works 8' in 1976 and 10% thereafter;

- ott local equipment 7% throughout; and

- on foreign equipment 10% in 1976, 8% in 1977-79and 7% thereafter.

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----Thousand Rupees----- --Thousand US Dollars--Category Local Foreign Total Local Foreign Total

SSC Processing Plants 95,755 37,050 132,805 10,940 4,235 15,173

Large Farm Development 39,715 11,880 51,645 4,600 1,300 5,900

State AgricultureUniversitiesBreeder & FoundationSeed Units 20,310 9,000 29,310 2,320 1,030 3,350Seed TechnologyResearch Units 3,720 815 4,535 430 90 520Sub-Total 24,030 9,815 33,845 2,750 1,120 3,870

Quality Control 6,475 2,045 8,520 740 235 975

Private SectorProcessorsResearch & Extension 4,720 830 5,550 540 95 635Processing Plants 35,770 9,930 45,700 4,085 1,135 5,220Sub-Total 40,990 10,760 51,250 4,625 1,230 5,855

NSC Vegetable Seed Unit 3,035 2,800 5,835 345 320 655

Bulk & Transit Storage 20,005 3,500 23,505 2,285 400 2,685

Training & TechnicalAssistance 915 1,700 2,615 105 195 300

Incremental WorkingCapital 33,500 - 33,500 3,830 - 3,830

Reserve Stocks 39,335 - 39,335 4,495 - 4,495

Total BeforeContingencies 303,305 79,350 382,855 34,715 9,035 43,750

Contingencies:

- Physical 15,545 4,500 20,045 1,780 515 2,295- Price 43,350 12,750 58,100 5,105 1,550 6,655Sub-Total 60,895 17,250 78,145 6,885 2,065 8,950

Total Project Cost /a 364,200 96,800 461,000 41,600 11,100 52,700

/a Excluding small tractors reserved for local procurement (R 4.1 M) butincluding duties and taxes (R 23.5 M).

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D. Proposed Financing

4.38 The project financing plan would be:

----------------- Thousand US dollars-----------------Project

State ARDC/ Partici- %

GOI Govts. banks pants 1/ Bank Total Bank

Processing Facilities

SSC 1,640 1,910 1,520 1,910 11,230 18,210 62

NSC - - 40 260 590 890 65

Sub-total 1,640 1,910 1,560 2,170 11,820 19,100 62

Large Farm Development

Institutional farms 1,220 - 620 120 2,950 4,910 60

Canal remodelling - 1,090 - - 1,630 2,720 60

Sub-total 1,220 1,090 620 120 4,580 7,630 60

Agricultural Universities

Equipment & Facilities 1,690 - - - 2,720 4,410 62

Seed technologyresearch operations 280 - - - - 280 -

Sub-total 1,970 - - - 2,720 4,690 58

Quality Control

Equipment & Facilities 400 - - - 640 1,040 62

SCA operating deficits 60 - - - - 60 -Sub-total 460 - - - 640 1,100 58

Private Sector Processors - - 1,840 2,050 2,950 6,840 43

Bulk & Transit Storage 970 - 330 - 1,950 3,250 60

Training & TechnicalAssistance - - - - 340 340 100

Incremental SSC/PSPWorking Capital 1,020 1,160 - 2,260 - 4,440 -

Reserve Stocks 5,310 - - - - 5,310 -

Total (US$ Thousands) 12,590 4,160 4,350 6,600 25,000 2/ 52,700 47.5

Percent of Total 24 8 8 12.5 47.5 100

1/ Seed growers, NSC, private sector processors, Haryana Land Development

Corporation.2/ 50% of project cost, excluding duties and taxes.

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4.39 The proposed Bank loan of US$25.0 M, covering 50% of project cost,excluding duties & taxes, would be to GOI. It would have a maturity of 20years, including 5 years of grace. It would cover all foreign exchange costs(US$11.1 M) and about 34% of local costs. Bank funds for research and breederseed production by Agricultural Universities, farm development by Agricul-tural Universities quality control, training and technical assistance, andcanal remodelling would be channelled by GOI through ICAR, State Governments,CSCB, NSC and GOH respectively, (US$6.85 M). All other Bank funds (US$18.15 M)would be channelled by GOI through ARDC and participating commercial banks toinstitutional borrowers. Details of the proposed financing plan and flowof funds are at Annex 7. The financing plan was agreed with GOI, State Govern-ments and ARDC during negotiations.

4.40 GOI's contribution (US$12.6 M) would finance about 24% of projectcosts. It would cover GOI contributions to (i) SSC share capital (throughNSC), (ii) SFCI and CWC equity to borrow from banks for farm development andseed stores, (iii) ICAR for breeder and foundation seed units and seed tech-nology research, (iv) CSCB for quality control investments, (v) GOH for canalremodelling, and (vi) NSC for maintenance of reserve stocks (vii) Agricul-tural Universities for land development. State Government contributions(US$4.2 M) would finance 8% of project costs and cover their contributionto SSC share capital and for canal remodelling. Participant contributions(US$6.6 M) would finance about 12.5% of project costs as equity for process-ing plants, farm development and working capital. ARDC and commercial bankswould finance the remaining 8% of project costs (US$4.3 M) as loans to par-ticipating institutions. In addition, the banks would finance the seasonalworking capital needs of the SSC, NSC, and private sector processors undertheir normal operations.

E. Procurement

4.41 Procurement would be coordinated by the Project Monitoring andManagement Committee (para 5.03). Major items of seed processing and labor-atory equipment and farm machinery 1/ (US$15.1 M) would be procured on thebasis of international competitive bidding in accordance with Bank guide-lines. Because of the many, widely dispersed institutions involved it wouldnot be practicable to bulk the procurement of all the above. Contracts forminor items of equipment, not exceeding US$50,000 each would therefore belet after competitive bidding advertised locally and in accordance with localprocedures which are satisfactory to the Bank. Urgent purchase of minorequipment, by prudent shopping, to a total value of US$1.0 M, would also beaccepted and, to speed implementation, it is proposed that equipment appro-priately procured after November 1, 1975, to a value of US$0.5 M, be eligiblefor retroactive financing.

1/ GOI has decided to reserve procurement on tractors of domesticmanufacture - below 65 HP. These have been excluded from projectcosts in the determination of the loan amount.

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4.42 Procurement for the private sector (US$3.4 M) would be left tocustomer choice. Individual purchases would be too small, varied and wide-spread to permit bulking for competitive bidding. The equipment requiredis widely available and competitively priced. Items to be imported would,if necessary, be procured with NSC assistance.

4.43 Bulking would not be practicable for civil works, buildings andfurnishings (US$16.5 M), since individual items are small and scatteredover a wide area. Contracts would be let after competitive bidding adver-tised locally. An exception would be canal remodelling in Haryana which wouldbe carried out by force account (US$2.4 M). The work would be frequentlyinterrupted and delayed to minimize disruption of water supplies and wouldtherefore not attract contractors. Vehicles (US$1.1 M) would also be procuredon the basis of competitive bidding advertised locally since only a few wouldbe purchased spread over the project period. Motorcycles (US$0.5 M) would beowned by staff, not as institutional fleets, and would be purchased accordingto their preference direct from dealers. Employment of consultants andoverseas training (US$0.3 M) would be on terms and conditions satisfactoryto the Bank. The balance of project costs (US$10.4 M) would consist ofreserve stocks, permanent working capital and operating costs not involvingprocurement.

4.44 Assurances were obtained that for contracts in excess of US$200,000draft tender documents and bid evaluations would be submitted for Bank reviewbefore being acted upon.

F. Disbursements

4.45 Disbursements under the loan would extend over five years for:

(a) 100% of foreign expenditures for imported seed processingand laboratory equipment and farm machinery;

(b) 100% of ex-factory cost for locally procured equipment andvehicles;

(c) 60% of expenditures for civil works and related engineering;

(d) 100% of costs of overseas training and technical assistance; and

(e) 70% of ARDC refinancing of commercial bank loans to privatesector processors.

Disbursements against a,b,c and d would be fully documented, disbursementsagainst e would be made against certified statements of expenditure the docu-mentation for which would be retained by ARDC and available for inspectionduring project supervision. A schedule of estimated disbursements is atAnnex 8.

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V. ORGANIZATION AND MANAGEMENT

A. Project Institutions

5.01 Institutional change would be a key feature of the National SeedProgram. NSC would divest itself of production and processing to concentrateon marketing and service functions. SSCA would be established to take overquality control from NSC. Agricultural Universities would be closely integra-ted into the program to improve breeder and foundation seed quality. Projectinstitutions are discussed in detail in Annex 9.

National Seed Development Council

5.02 At a time of institutional change and rapid expansion in the seedindustry, continuing policy guidance would be essential to GOI and StateGovernments. This would be provided by the National Seed Development (NSDC),already established by GOI.

Project Management and Monitoring Committee

5.03 Implementation of this multi-faceted project would require con-siderable coordination. A Project Management and Monitoring Committee (PMMC)would be created for this purpose chaired by the GOI, Secretary for Agricul-ture. PMMC would monitor and coordinate project activity, including procure-ment, and would report progress to Government and the Bank. GOI has estab-lished the PMMC, with composition and powers satisfactory to the Bank.

National Seeds Corporation

5.04 NSC is presently the backbone of the Indian seed industry and wouldcontinue to play a pivotal role in the development of the National Seed Pro-gram. Particularly important functions would be:

(a) equity participation in SSC and active guidance andassistance in their development;

(b) interstate marketing and demand estimation;

(c) coordination of foundation seed production;

(d) provision of technical services to the seed industry; and

(e) operation of a reserve stock scheme.

NSC/SSC relationships would be embodied in agreements satisfactory to the Bank.An important element of NSC's equity contributions to SSC would be the transferof suitable existing NSC processing plants. It would be a condition of Loaneffectiveness that arrangements satisfactory to the Bank had been arrivedat regarding plant transfers.

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State Seed Corporations (SSC)

5.05 SSC would be established under the Companies Act, 1956 with articlesof association, and according to an NSC/SSC agreement, satisfactory to theBank. Assurances were obtained that the articles and agreements would not bechanged without consultation with the Bank. SSC capital - of which 75% wouldbe in equity and 25% in preference shares - would be subscribed by StateGovernments, NSC and seed growers in the proportion 35:30:35. Preferenceshares would be held equally by State Governments and NSC and carry cumula-tive rights to an 11% dividend. At least 20% of State Governments equityshares would be held by Agricultural Universities. The purchase for cash bythe States and NSC of equity shares worth Rs 500,000 each of SSC would be acondition of Loan Effectiveness.

5.06 Each SSC would be managed by an 11-member Board (except in Maharash-tra where, because of the participation of three Universities, membershipwould be 15). It would include NSC (2), participating bank (1), State Govern-ment (4), and seed growers (4). The Board would be chaired by the AgriculturalProduction Commissioner/Secretary of Agriculture or the Vice Chancellor ofthe Agricultural University. The Managing Director, responsible for day-to-day operations, would be appointed by the State Government, on the recommen-dation of the Board and with GOI concurrence.

5.07 SSC would be organized in four divisions under the ManagingDirector:

Production - seed production, grower relations andfield quality control (see below);

Processing - processing and storage;

Marketing - intrastate marketing and demand assessment,liaison with NSC on interstate sales, andoverall responsibility for quality controlusing Production Division staff for fieldinspections; and

Accounting - finance, accounting and audit.Finance

5.08 SSC would be run on commercial lines in accordance with financialpolicies satisfactory to the Bank (Annex 9). These would be agreed duringnegotiations. To operate efficiently they must have good staff, which wouldrequire attractive personnel policies. Recruitment for non-clerical gradeswould be based on India-wide selection. Salaries would be based on NSC scalesfor similar positions, which are satisfactory. Continuity in the post ofManaging Director would be important in the formative years of the SSC.Managing Directors would therefore not normally be changed in less than twoyears. Deputations from NSC or Government institutions would be limited toone term of one year, after which staff would join the permanent SSC cadre

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or return to their original posts. SSC would carry out annual performancereviews for all staff and salary administration would be flexible to rewardgood performance. Suitable clauses were introduced in the NSC/SSC agree-ments to cover the foregoing financial and personnel issues.

Project Implementation

5.09 A detailed schedule to reach Loan effectiveness is at Chart IV,Annex 9. This is being followed by Governments and NSC. A full projectimplementation schedule, agreed during negotiations, is at Chart V, Annex 8.Detailed schedules would be prepared for each project component as a part offinancing proposals to commercial banks.

B. Credit

Medium Term Credit

5.10 Project participants requiring medium-term credit would be:NSC; SSC; Central Warehousing Corporation (CWC); Universities, SFCI andHaryana Land Development Corporation (for large farm development); andprivate sector seed companies.

5.11 Participating commercial banks would be selected by the ARDC, inconsultation with borrowers. It would be a condition of Loan Effectivenessthat lending arrangments between GOI/ARDC and ARDC/commercial banks, satis-factory to the Bank 1/ had been completed. Proposals for processing plants,farm development and seed stores would be subject to participating bank/ARDCappraisal. Large farm development proposals would be based on detailed farmplans satisfactory to the Bank. Proposals for seed stores would be preparedor checked by the CWC. Private seed companies would apply for loans to thebank of their choice from a shortlist established by ARDC. NSC's engineeringservices would be available to provide technical guidance. All proposalswould be subject to NSC technical scrutiny. At negotiations, ARDC agreed tocomplete lending arrangements for SSC by 1 August 1976 and for all otherproject borrowers, except private sector processors, by 31 December 1976.

5.12 Proposed lending terms and conditions are detailed at Annex 10.Minimum interest rates would be: sub-borrowers 11%, commercial banks 8%,ARDC 7%. These are in line with current rates in the agricultural sector.The margins are reasonable in relation to the risks involved and the needfor appraisal and supervision of individual loans.

5.13 Loans to seed growers for farm development would be eligible forrefinancing under ongoing credit projects 2/ and are not included in projectcosts.

1/ As defined in the agreed minutes of negotiations.

2/ ARDC Project, Credit 540-IN.

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Short-Term Credit

5.14 Seed processors would need large amounts of working capital, mainlyto finance inventory. About 25% would be financed from equity, the balancewould be obtained from banks under their normal commercial operations. Itwould be vital that processors always had access to adequate credit forinventory financing. Assurances were obtained from ARDC that it wouldperiodically review with SSC and participating banks the availability ofworking capital to ensure (i) adequate financing of the seasonal workingcapital needs of the NSC, SSC and private sector, to maintan seed inventory;and (ii) that similar terms and conditions would apply to the working capitalborrowings of all processors. The Project Monitoring and Management Com-mittee (para 5.03) would advise GOI regarding any difficulties faced by seedprocessors in securing adequate working capital.

5.15 Crop credit is channelled mainly through the cooperative bankingsystem. Seed growers would need additional credit to finance the incrementalcosts of seed production. Present credit limits relate to commercial crops.Assurances were given by State Governments that crop credit limits would bereviewed with SSC and adjusted as necessary for seed production. To providea short term credit source to creditworthy growers who do not have access tocooperatives, an assurance would be sought from banks (through the ARDC/bankagreements) that they would endeavor to meet the short term credit needs ofSSC growers. In such cases SSC would provide a loan collection service tobanks, from. seed crop proceeds, thus minimizing risk.

C. Accounting and Audit

5.16 SSC would establish accounting, audit and stores procedures inaccordance with commercial practice. Cost accounting would guide operationalefficiencies. Internal auditing would be initiated in the third year of oper-ation. SSC accounts would be audited by commercial auditors. SSC account-ing practices would accord with provisions in the SSC Articles satisfactoryto the Bank. NSC, ARDC, SFCI and CWC accounts are audited by the AuditorGeneral of India in a manner satisfactory to the Bank. All institutions usingproject funds would maintain separate project accounts and annual auditedaccouts which would be available to the Bank during project supervision.

VI. MARKETING

A. Demand

6.01 Seed demand data are inadequate. In the recent past demand ex-ceeded supply, but by how much and at what rate it is growing are conjec-tural. Bank demand estimates are at Annex 11. Under any reasonable set of

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assumptions the project would not cause supply to exceed demand. Howeverfor future development - appraisal of a second phase project is scheduled forthe second half of 1976 - better demand data are essential and a demand surveyhas been initiated. Results are expected to be available by July, 1976.Terms of reference for the survey are at Annex 11.

6.02 NSC would be responsible for making demand projections on which tobase production programs. For interstate marketing these would be based onfeedback from NSC's regional offices and dealership system. For intrastatetrade they would be based on SSC information similarly obtained. It is alsoproposed that the initial demand survey (para 6.01) be updated bienniallywith assistance from marketing consultants. An assurance to this effectwas given by GOI.

B. Pricing

6.03 The overriding criterion in price setting would be SSC financialviability. Prices would normally be set on the basis of costs plus reasonableprofit margins. However movement and trading of rice and wheat grain are con-trolled, resulting in price distortions. Grain surplus area prices are low,deficit area prices are high. Seed would be produced in surplus areas - whichwould have a comparative advantage for producing the crop. It would be soldon a dual price basis. Interstate sales to grain deficit areas would be atprices sufficient to prevent seed being eaten; these would be set by NSC.Seed would not sell in desired quantities in producing areas, at deficit areaprices, because the seed:grain price ratio would be prohibitive. Seed priceswould therefore be set lower in producing areas. SSC would set these pricessince they would relate to intrastate sales; levels would be governed bytwo factors. First, maintaining SSC financial viability as discussed in para7.04; second, to ensure equity of seed buyer treatment the seed:grain priceratio in producing areas would not be less than in deficit areas. Pricingpolicy would be embodied in NSC/SSC agreements, which would be satisfactoryto the Bank.

6.04 The major component of the retail seed price is the cost of rawseed. This is too high; farmers are paid excessive incentives for seedproduction. Over the project period raw seed procurement prices would bereduced, leading to reduced retail prices. Target procurement prices areat Annex 12. NSC and SSC would operate on a service charge basis thus thecost of processing and handling would be minimized.

C. Distribution

6.05 Dealership systems would be established aiming eventually at fourdealers per Development Block, 20,000 on an all-India basis - about oneper 25 villages. The cooperative system would provide the bulk of dealers

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in conformity with GOI policy. This is logical since cooperatives are themajor distributors of complementary inputs such as fertilizers and insect-icides. However NSC and SSC must be free to appoint dealers on the basisof efficiency and assurances to this effect were given by GOI and StateGovernments. Storage plans (para 4.20) would also help timely and efficientdistribution.

D. Promotion

6.06 In the past NSC's marketing effort has focused mainly on distrib-ution. In future, as seed supply approaches demand, and to make the valueof better seed more widely known, more aggressive sales promotion would benecessary. NSC's marketing organization would be restructured to include,inter alia,a market development section. This would plan promotion, undertakenational campaigns through the mass media, and develop advertising materials.It would support both NSC regional offices, which would conduct local pro-motion efforts, and SSC with their responsibility for intrastate sales.Details on marketing proposals are at Annex 11.

VII. OPERATING RESULTS AND ECONOMIC JUSTIFICATION

A. Operating Results

7.01 Financial return calculations and cash flows are at Annex 12.

7.02 Seed Growers. Comparisons of the costs of commercial and seed cropproduction shows that the lower seed premiums which would be offered togrowers under the project would be sufficiently attractive.

7.03 Large Farms. The financial return to investment in large farmdevelopment is estimated to be 22% on the basis of a model of the SFCI HissarFarm. This assumes certified seed production. The cash flow indicates thatthe farms could service necessary borrowings on a 1:1 debt:equity ratio.Despite the modest return and debt service capacity inclusion of these farmsin the project is justified to provide a safety margin of controllableproduction capacity. Tarai experience indicates this to be necessary sinceshareholder growers do not always take up production of particular varietiesat the rate desired.

7.04 SSC. The estimated financial return to fixed investment in SSCdevelopment is 30% after tax (50% before tax) based on the Andhra Pradesh SSCmodel. Projected seed prices are 20-30% lower than those now prevailing anddemonstrate the scope for lowering prices to increase seed consumption. OtherSSC would have similar cash flows and give comparable results. SSC would sub-mit detailed cash flows to participating commercial banks/ARDC prior to

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obtaining loans, and these would be available to the Bank. SSC articles, whichwould be subject to Bank approval, would include suitable clauses to ensureadequacy of financial reserves held by the SSC. Appropriate reserves arediscussed in Annex 12. The major uncertainty facing the SSC is sales volume,governed by demand price interaction. However, variable costs constitute sucha large proportion of sales price (82%) that financial return is relativelyinsensitive to volume. The Andhra Pradesh SSC cash flow shows that SSC wouldbe able to service debts at commercial interest rates and terms, pay 11%dividend on preferred shares and from year 2, pay a 1% bonus to seed growers,equivalent to a 10% dividend on share capital. In addition, from year >

onwards, SSC would provide about Rs 100,000 annually to a Research Fund tosupport problem specific seed technology research.

7.05 NSC. Assessing the likely viability of NSC in its new role isdifficult. There are two chief dangers. The first is that NSC would beleft with too large a staff as its responsibilities changed. Every effortwould be made to place staff in the emergent institutions but there would beno guarantee. The second is that NSC, which has been accused of profiteeringin the past, would now charge too little to cover its service operations.This is more amenable to solution but would demand accurate cost accounting toallay client suspicions (mainly SSC).

7.06 NSC's present cash flow projections assume continued staffing atpresent levels and a buildup of National Seed Program output to about300,000 m tons by 1980/81. On this basis NSC could cover its interstatemarketing operations with a 5% service charge. Demand estimation for thisservice is difficult (para 6.01). However assuming a minimum seed output by1980/81 of about 220,000 m ton, an initial service charge on interstatesales of about 7%, reducing to 5% as output increases, would be necessary tocover NSC marketing costs. This would be reasonable compared to the presentmarketing cost of about 11% on much lower turnover. NSC's vegetable seed unitwould be a financially viable operation with a financial rate of returnexceeding 50%. NSC's other activities would also operate profitably.

7.07 The viability of NSC is critical to project success. An assurancewas given by GOI that the charges for each NSC service would be regularlyreviewed with the Bank and adjusted as necessary to cover operating cost.

B. Economic Justification

7.08 Project economic benefits - excluding large farm development,treated separately below - would stem from the incremental production dueto the use of improved seed. Projected annual incremental cereal productionat full development (year 9) would be: wheat 200,000 m ton, paddy 170,000 mton, maize 95,000 m ton, sorghum 200,000 m ton and pearl millet 250,000 m ton.Total value would be R 1270 M (US$145 M) per year. There are no data by whichto estimate the yield impact of vegetable and potato seed. However, theseare financially attractive to produce. This, and the dietary importance ofthese crops, implies their production to be economically justified.

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7.09 The assumptions for computing the economic rate of return are inAnnex 12. Incremental grain production resulting from project seed use isestimated in two ways. For self-pollinated crops, it is conservativelyassumed that the project certified seed would service areas already under HYV,but seeded to commercial grain. Yield impact on the area served directly byproject seed is assumed to decline over four years averaging 150 kg/ha/yearand 120 kg/ha/year for wheat and paddy respectively. The only additionalcost associated with the use of improved seed would be for harvesting.Benefits from farmer to farmer exchange of subsequent generations producedfrom project seed, are not quantified, though they would be significant. Forhybrid seed, which has to be replaced annually, it is assumed that all pro-ject seed would expand the HYV area. A yield increase of 500-900 kg/hawould be achieved by the shift from traditional (low technology) to new(high technology) farming. The latter is based on a package of inputs ofwhich seed is but one. It is impossible to determine empirically the pro-portion of yield increment due to each element of the input package. Theassumption used here, that 25% of the yield impact is due to seed, isbelieved conservative. Fertilizer and pesticides which, with seed, formthe input package are costed at market prices, which are close to equiv-alent international price.

7.10 Projected 1980 farmgate prices have been used to value incrementalgrain production due to project hybrid seed. Wheat and paddy are subjectto interstate movement restriction and hence domestic prices are distorted.They are therefore valued at projected international CIF prices. Since most ofthe cotton seed would be used in the Integrated Cotton Development Project(Credit 610-IN), its value has been taken as the economic input price assumedin the economic analysis for ICDP - which has an estimated economic rate ofover 100%.

7.11 Benefits from the reserve stock scheme have not been separatelyquantified. However assuming that reserve stocks would be used every secondyear, because of a national or regional calamity, the scheme would be justi-fied. Reserve stocks would be used to sow areas which would otherwise beunsown, sown late or, at best, be sown with inferior material. Benefitswould therefore be greater than for normal seed and at least sufficient tooffset the 50% increase in investment costs (operating costs would be aboutthe same).

7.12 Incremental farm labor, used mainly at peak activity times, isincluded at market price, as is skilled and semi-skilled labor for processingplants.

7.13 Based on the above assumptions, the estimated economic rate ofreturn is 65%; it remains satisfactory when various alternative assumptionsare tested. It is relatively insensitive to the level of investment costs,dropping to 55% when investment costs are increased 25%. When operatingcosts are increased by 25% it falls to 58% and if benefits are reduced by 25%it falls to 45%. The project is thus economically justified under any real-istic set of assumptions. Details of the economic analysis are at Annex 12.

- 25 -

7.14 Large farm development, though beneficial, is not critical toproject success and has, therefore, been evaluated separately. The economicrate of return, using the assumptions described above, is 17%. Details areat Annex 12.

7.15 The area benefiting from project cereal seed, would be 6.2 M ha. Theseed would be used nationwide and it is estimated that about 3 million farmerswould benefit. Since small farmers suffer most from supply constraints andhigh prices, with improved seed supplies and reduced prices under the projectsmall farmers would benefit substantially from the project. About 14,000manyears of seasonal employment would be created for harvesting and the SSCand SSCA to be created would provide direct employment to about 800 people.

VIII. RECOMMENDATIONS

8.01 During negotiations, agreement was reached on the following majorpoints:

(a) ICAR would coordinate breeder seed production and determinethe investment needs of producing institutions, designatinga senior official to be responsible for these tasks (4.05);

(b) private sector seed companies would be treated equally withthe public sector on the issues detailed in para 4.25 (GOIand State Governments);

(c) seed inspection would be intensified to cover annually atleast 50% of dealerships handling certified or truthfullylabelled seed (4.30) (State Governments);

(d) in cotton seed producing areas one-variety communities andgins, satisfactory to the Bank, would be notified and enforced(4.31) (GOH, GOM, GOP);

(e) Agricultural Universities would support the establishment of aninterdisciplinary program among departments for applied seedtechnology research (4.34) (State Governments);

(f) consultants would be employed in consultation with, and onterms and conditions acceptable to, the Bank (4.36) (GOI);

(g) SSC would adopt financial and personnel policies as outlinedin para 5.08 (State Governments); and

(h) NSC would conduct biennial seed demand surveys (6.02) (GOI);

8.02 Agreement was also reached on the following conditions of LoanEffectiveness:

- 26 -

(a) NSC and SSC had made arrangements for processing plant trans-fers satisfactory to the Bank (5.04) (GOI and State Governments);and

(b) State Governments and NSC has purchased for cash, equity sharesworth Rs 500,000 each of SSC (5.05) (GOI and State Governments);

(c) agreements between GOI and ARDC, and lending arrangementsbetween the ARDC and commercial banks, satisfactory tothe Bank, had been completed (5.11) (GOI).

8.03 The following conditions of disbursement were agreed:

(a) against any project cost for a State, until that State hasestablished its SSC with Articles of Association satis-factory to the Bank, and caused its SSC to sign anagreement with NSC satisfactory to the Bank (5.05);

(b) against the cost of large farm development, that farm planssatisfactory to the Bank had been prepared (4.09, 4.12);

(c) against any project cost in Andhra Pradesh and Punjabthat sufficient land satisfactory to the Bank had beentransferred to the Agricultural Universities (4.11);

(d) against processing plant costs, that the design of each cottonplant and of the 5,000 and 10,000 ton cereal plant modules hadbeen approved by the Bank (4.18); and

(e) against project costs for private sector seed companies, thattheir proposals had been subject to the technical scrutiny ofNSC (4.24).

8.04 It is recommended that up to US$0.5 M be made available for retro-active financing of expenditures, after November 1, 1975, on appropriatelyprocured equipment and civil works (4.41).

8.05 With these conditions and assurances the project would be suitablefor a Bank loan of US$25.0 M, with a maturity of 20 years including 5 years ofgrace. The borrower would be GOI.

ANNEX 1Page 1

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation Seed Productionand Seed Technology Research

I. Plant Breeding

Introduction

1. Plant breeding research in India is conducted at 11 Indian Councilfor Agricultural Research (ICAR) Institutes (Table 1) and 25 AgriculturalUniversities (Table 2). Most of it is financed from ICAR sources supplemen-ted in the case of the Universities by State funds. Support for cotton re-search will be provided under the Integrated Cotton Development Project tobe part-financed by IDA.

2. To coordinate breeding research among various institutions, 23All-India Coordinated Research Projects concerned with food, commercialand horticultural crops 1/ have been established under the aegis of ICAR.These projects include supervision of uniform varietal nursery trials ofelite strains on a national or regional basis, dissemination of researchresults, and the release of improved "All-India" varieties, local varie-ties are released by the State Agricultural Universities.

3. Recently, the International Crop Research Institute for theSemi-Arid Tropics (ICRISAT) was established at Hyderabad, Andhra Pradesh.ICRISAT will serve as a world center for improving genetic potential ofpearl millet, sorghum, pigeon pea and chick-pea and its materials willbe available to Indian breeders.

4. Major contributions to the production of food and fiber in Indiahave been made since the early sixties through the introduction, develop-ment, and release of high-yielding varieties of wheat and rice and ofhybrids of maize, pearl millet, sorghum and cotton (HYV). The widespreadadoption of HYV has served as a catalyst to improve other practices,particularly fertilizer use, irrigation, and plant protection.

5. The available HYV of the major crops are a satisfactory base onwhich to develop the seed industry. However, recent variety releases have

1/ Rice, wheat, barley, maize, sorghum, millets, pulses, forage crops,sugarcane, sugarbeet, cotton, jute, oilseeds, soybeans, tobacco,fruits, tuber crops, potato, vegetables, medicinal and aromatic plants,floriculture, spices and cashewnut, coconut and arecanut.

ANNEX 1Page 2

for the most part lacked the impact of those of the sixties. A successfulNational Seed Project (NSP) would depend on an expanding cultivator interestin improved seed. This will require, inter alia, a continuing flow of im-proved varieties which can only come from aggressive and productive breedingprograms in all major crops.

Plant Breeding in NSP States 1/

6. The Punjab Agricultural University (PAU) has one of the strongestplant breeding departments in India. It has active breeding programs onmany crops, with particular strength in wheat, pearl millet, pulses andoilseeds. Important variety releases include C306, Kalyansona 221, andPV18 wheats; hybrid pearl millets PHB-1, PHB-10, and PHB-14; C104 gram;ML-1 mung; and E-27 and J-35 cottons. Research on wheat is conducted atLudhiana; rice at Kapurthala; and cotton at Ludhiana, Faridkot and Abohar.

7. Plant breeding research in Haryana is conducted at the HaryanaAgricultural University (HAU) and its branch stations. Major contribu-tions have been C214 and C130 gram varietries, Versha mung, C304 hookatobacco and Parkash mustard. A new wheat variety, WH147, was released in1975 as a potential replacement for the Kalyansona variety. In addition,breeding research is being conducted on pearl millet, cotton, oilseeds,pulses, forages and other crops.

8. The Andhra Pradesh Agricultural University (APAU) conducts breedingresearch on rice, sorghum, maize, pearl and other millets, pulses, oil-seeds and other minor crops. Efforts are augmented by presence on the campusof the All-India Coordinated Rice Improvement Project (AICSIP) and the All-India Coordinated Sorghum Improvement Project (AICSIP). AICRIP maintains thelargest sorghum germ plasm collection in the world (over 16,000 accessions).

9. Variety releases from APAU include Mashuri and Hamsa rice, Mahalaxmicotton, Godavari finger millet, Vijay pearl millet composite, Kadiri 741groundnut, Madhira mung, and others. Rice varieties released from AICRIPinclude Jaya, Sona, and a new slender-grain variety RP-14. Extensive researchis in progress at AICRIP on brown plant hopper and gallmidge resistance inrice. AICRIP is currently producing breeder seed of All-India rice varietiesfor NSC's foundation seed program.

10. In Maharashtra, three of the State's four Agricultural Univer-sities would participate in the National Seeds Project: Akola, Parbhaniand Rahuri. Their breeding programs are strongest in cotton, sorghum, andpigeon pea. The hybrid cotton breeding is innovative and may lead to apotential for hybrid cottonseed export. The cotton research will be furtherdeveloped through the Integrated Cotton Development Project. Two sorghum

1/ Andhra Pradesh, Haryana, Maharashtra and Punjab.

ANNEX 1Page 3

hybrids, CH57 and CH58 have been approved by the ICAR workshop for releasein 1975-76.

Recommendations

11. Further progress in Indian agriculture will greatly depend ona continuing supply of HYV. So will the viability of the seed industry.Despite the large resources employed, plant breeding output has not main-tained the momentum of the sixties. Improved performance calls mainlyfor a better directed effort and better use of, rather than great increaseof, resources. For this reason, the project would not include investmentproposals in plant breeding research.

12. ICAR should, to a greater extent than at present, relate theallocation of resources for breeding programs to their performance. TheNational Seed Corporation (NSC) with its access to national market data,would be able to identify those varieties having real value as measuredin the market place. In addition to normal promotional work NSC wouldpublicize the successes of breeders/breeding institutions in order tospur further efforts.

II. Breeder Seed Production I/ 2/

Present Situation

12. There has been inadequate recognition of the fact that plantbreeding per se is pointless. To be productive it must fuel a seedmultiplication chain. Breeder and foundation generations, for whichthe research establishment must have prime responsibility, are criticallinks in his chain. They have been neglected. Production of high-qualitycertified seed has often been limited by insufficient or poor quality ofbreeder and foundation seed. Inferior quality in the early generationsalso adds to the cost of production through increased roguing and loweryields - hence price - of certified seed. Generally plant breeders werenot given adequate resources for breeder seed production. Most so-calledbreeder seed was not produced by the original breeder or research station;it was produced elsewhere without checks to ensure trueness to type andwas breeder seed in name only. This practice can lead to the loss ofvarietal identity and should be stopped. To overcome the constraints

1/ Breeder seed is the original and recurring stock of seed or vegeta-tively propagating material produced and controlled by the breeder(or his successors) that developed the variety. Breeder seed pro-vides the source for the production of foundation seed.

2/ Improvements to cotton breeder seed production will be funded underthe Integrated Cotton Development Project and are not discussed here.

ANNEX 1Page 4

requires additional resources for production, and centralized coordina-tion, to match the geographically wide demand for breeder seed of eachvariety with the (normally) single source. The very limited quantityof breeder seed purchased by NSC in 1975-76 from only 8 institutionsis shown in Table 3.

Project Proposals

14. Organization of Breeder Seed Production. The breeder who evolvedthe variety, or his successor, should be responsible for variety maintenanceand production of breeder seed. Exceptions should be made only where demandoutstrips the breeder's productive capacity, or where a variety is importedfrom outside India and then with arrangements to ensure trueness to type.Coordination of the production of breeder seed, of varieties released by theAll-India Coordinated Crop Improvement Committees, would be the responsibilityof ICAR working from demand projections for foundation seed formulated byNSC. ICAR would designate a senior official, to be solely responsible forthis task. Breeder seed of local varieties would be produced by the Agri-cultural Universities on demand from the State Seed Corporations and privategrowers. Institutions receiving project support for breeder seed productionwould establish units equipped and staffed to specialize in the productionand processing of breeder seed 1/. Greater skills and resources would thusbe employed, and the breeder would be relieved of many non-scientific tasks(which he did at best perfunctorily). However, the breeder would remainsolely responsible for breeder seed quality.

15. Procedures for Breeder Seed Production. For self-pollinated cropsat least 500, and preferably 1,500 to 2,000, progeny rows would be grown.Progeny rows containing off-types would be removed before harvest; presentpractice is more lax and seed of off-types is inadvertently mixed with goodseed. The use of threshing floors is now a common cause of variety mixing.This would be eliminated by progeny row threshing in the field, using asmall, mobile (Vogel-type) thresher, with bagging and labeling direct fromthe thresher..

16. If the breeder seed from the progeny rows were insufficient, afurther increase, not to exceed one generation, would be made by bulkplanting progeny seed and vigorously roguing out off-type plants. The seedthus harvested would still be breeder seed since its production would havebeen monitored by the responsible plant breeder.

17. In hybrids the inbreds would be maintained by selfing or sib-pollination, except for the male-sterile A-lines which would be maintainedby pollinating from a fertile counterpart.

18. Breeder seed of composites of maize, sorghum, or millet wouldbe produced with full sib-pollination, or by open-pollination in isolation.Recognizable off-types and diseased plants would be rogued out before pollen

1/ At institutions producing both breeder and foundation seed the sameunit would be responsible for both.

ANNEX 1Page 5

shedding; however, care would be taken to avoid mass selection for specificcharacteristics since this practice may lead to a genetic shift in the popu-lation. Genetic shift may also result from growing breeder seed in differentenvironments. The latter would be partially avoided by producing and storinga quantity of the original composite in a refrigerated area and utilizing itat regular intervals to start a new breeder seed increase.

19. Breeder seed production in potatoes would involve checking indivi-dual tubers and their progenies for freedom from viruses. The breeder seedstocks would then be increased in the field during the season when aphidpopulations were lowest. Potato researchers have developed a satisfactorytechnique.

20. Quality control I/ of breeder seed would be monitored by a commit-tee comprising representatives of NSC, ICAR, the State Certification Agencyand the breeder. Samples from every lot of breeder seed would be subject togrow-out tests by the producing institution. In addition to being a qualitycontrol aid, these tests would spotlight seed lots liable to give trouble atthe foundation seed stage.

21. Demand projections would stem directly from the certified seed pro-grams determined by NSC and State Seed Corporations (SSC). Because of thelong lead times involved prediction inaccuracies would be large. In additiondemand/supply imbalances could occur because of poor harvest or quality con-trol failure. To safeguard against risks controlled environment storagewould be provided for a carry-over stock of about 50% of annual needs. Inassessing breeder seed demand the private sector would be fully catered for.

22. Project Investments. The project would support breeder seed pro-grams in 20 institutions at 25 locations (Table 4). These include 6 ICARInstitutes (7 locations), 6 Agricultural Universities (10 locations) inStates in the first phase of the NSP, and 8 Agricultural Universities (8 lo-cations) to be included in later phases. Details of project support forbreeder seed production are given in Table 5. The investments, estimatedto cost Rs 15 M (US$1.7 M) would provide:

(a) special farm equipment including seed drills, Vogel-typethreshers, plant or ear threshers, spraying and dustingequipment;

(b) small-scale seed processing equipment;

(c) processing and storage buildings (Figures 1 and 2);and

(d) special equipment for potatoes at Jullunder.

Investment proposals would be subject to change within general guidelines asthe project progresses. ICAR would determine the needs of each institution

1/ See also Annex 5.

ANNEX 1Page 6

relative to the expansion of breeder seed demand. No institution wouldreceive support until it was required to produce breeder seed for theNSP.

23. Funds for the breeder seed program would be provided by GOI asgrants to ICAR and thence as grants to participating Universities and

Research Stations. Because of the lead time required for the expansionof breeder seed production, retroactive financing would be provided forpriority items of equipment purchased before credit signing.

III. Foundation Seed Production 1/ 2/

Present Situation

24. Currently foundation seed is produced almost exclusively byNSC using breeder seed purchased from ICAR Institutes or the Agricul-tural Universities. However, the supply of high-quality foundationseed has been insufficient due to inadequate quality and quantitiesof breeder seed and inadequate quality control of the foundation seed.The small quantities of foundation seed produced under contract byprivate farmers were not always of acceptable quality.

25. Large amounts of seed, purported to be foundation seed, have alsobeen grown at the Agricultural Universities. However, most of this seed wasdistributed to farmers in "minikits", or supplied to Agricultural Departments,who in turn distributed it to cultivators. Little was used to produce certi-fied seed.

Project Proposals

26. Organization for Production of Foundation Seed. Under theproject, demand estimation and coordination of foundation seed productionof All-India varieties would be the responsibility of NSC. Estimates offoundation seed requirements of local varieties would be developed bythe respective SSC. In both cases the demand from private sector pro-ducers would be fully catered for. In the event of overall shortage theprivate sector would be treated on par with other users.

27. Under the NSP the Universities would have first responsibilityfor foundation seed production. It is a key element of NSP policy that

1/ Foundation seed is produced from breeder seed and provides the sourcefor production of certified seed. Foundation seed may be increasedin one stage, or more than one stage, if purity is maintained.

2/ Improvements to cotton foundation seed production will be fundedunder the Integrated Cotton Development Project and are not dis-cussed here.

ANNEX 1Page 7

the Universities be fully integrated into the seed industry. This wouldincrease the breeders' exposure to seed users; increasing breeder re-sponsibility and accountability should improve seed quality through themultiplication chain. To assist the breeders, and to develop the skillsnecessary for foundation seed production, a special foundation seedproduction unit would be created at each participating University 1/.

28. To the extent that Universities lacked land to fully meet founda-tion seed demand the balance would be produced by State Farms Corporationof India (SFCI) and NSC farms and, in Haryana, by the Haryana Seeds Devel-opment Corporation (HSDC) farm. All foundation seed farms require addi-tional facilities to improve and expand their output and these would beprovided under the project.

29. Under the proposed scheme, NSC would guarantee purchase of allfoundation seed, for All-India varieties, that it requests Universities (andother institutions) to produce. This quantity would be based on NSC'sassessment of certified seed requirements for intrastate and interstateuse. The purchase guarantee would not apply to local varieties producedfor intrastate use only. Because demand and production are not accuratelypredictable a GOI-financed reserve stock scheme would be operated forfoundation seed as for certified seed. (Annex 11). Stocks maintainedwould be 50% for hybrids (maize, sorghum, pearl millet) and 10% for self-pollinated crops (mainly wheat and paddy). The latter are less of a riskbecause, in an emergency, certified seed can be upgraded.

30. Foundation Seed Production Procedures. Foundation seed of self-pollinated crops (wheat, rice, barley, pulses, etc.) and composites (maize,millet, sorghum) would be increased from breeder seed under appropriateisolation. Foundation seed of hybrids would be produced from parentinbred lines under appropriate isolation. With hybrids of sorghum and pearlmillet the male-sterile parent A-line would be produced by crossing withits male-fertile counterpart. A second stage of increase from breeder seedwould be needed where the seed demand for a particular variety is large; thiswill occur particularly in wheat. Rigorous roguing of all seed productionfields is required. Cost of roguing foundation seed fields will be reducedif purity of breeder seed is high, as expected under the project; likewisehigh purity of foundation seed would reduce presently excessive roguingcosts in certified seed fields, a factor in high seed prices.

31. Quality control 2/ would be provided by (a) official certifica-tion of all foundation seed fields, (b) inspections made by the originatingbreeder, and (c) grow-out tests on all foundation seed lots by the StateSeed Certification Agency. The grow-out tests would serve as both post-control tests for the foundation seed and pre-control tests for certified

1/ At Universities producing both breeder and foundation seed oneproduction unit would handle both.

2/ See also Annex 5.

ANNEX 1Page 8

seed lots. The latter would materially assist quality control in certifiedseed. Both private and public sector foundation seed producers would besubject to the same quality control procedures.

32. Project investments of Rs 18 M (US$2 M) would improve foundationseed production facilities on the farms of six Universities in the fourparticipating States. Main investment items would be:

(a) processing and storage buildings;

(b) equipment for conditioned storages; and

(c) processing equipment.

These are detailed and costed at Table 6. The University farms also requireirrigation and land development and additional cultivation machinery. Theseneeds would be met under the project but are discussed separately in Annex 2.

33. NSC would provide consultancy services to the Universities in thesame way as to SSC. Procurement for University buildings and equipmentwould also follow the SSC pattern with processing equipment being bulkedwith that of SSC. (Annex 3).

34. The Universities would operate their seed programs as commercialventures. Development funds would be obtained from commercial banks atnormal rates. To operate profitably the Universities would sell foundationseed at about 20% above the ruling certified seed growers' price for thecrop, the rate being negotiated with NSC.

IV. Seed Technology Research

Introduction

35. The National Seed Project would require a continuing input ofapplied research information to solve the many difficulties and problemsthat have surfaced or can be expected. It must be emphasized that the re-search needed is of the applied, problem-solving and developmental types. Itshould be focused on, and relevant to, the objectives of the seed project, i.e.production and supply of adequate quantities of quality seed to the Indianfarmer, at an economical price. Considering the many problems, in seed produc-tion, processing, storage and usage, that presently constrain seed industryefficiency, academic, non-mission oriented seed research cannot be justified.Ample research of this type is underway in the developed countries and theresults are available and useful in India.

Present Situation

36. There is very little seed research underway in India at presentand much of it is not especially relevant to actual or potential problems

ANNEX 1Page 9

in seed industry operations. Information needed for seed industry devel-opment is often unavailable. For example: there are no data on the yieldadvantage of industry-produced seed as compared to farmer-saved seed ofthe same variety; repeatedly it is stated - by officials connected with theseed industry - that seed cannot be produced in a certain region or statebecause of climatic conditions, yet there are no data to support this conte-tion; and technical information on drying and storage needs in seed opera-tions is deficient.

Project Proposasls

37. The proposals advanced by the Agricultural Universities in theproject States were inextricably mixed with breeder and foundation seedproduction and/or overly oriented toward their academic teaching mission.In most cases establishment of a wholly new department was envisioned. Seedtechnology research should be separated from the breeder seed operations; itshould be primarily focused on actual research with teaching relegated toa secondary role; and it should be organized as an interdisciplinary program,rather than as a separate discipline or department. The following projectproposals and recommendations are consistent with this view.

38. Punjab Agricultural University (PAU) has the best seed researchprogram of the Universities which would participate in the project. Theprogram is essentially in the Department of Agricultural Engineering andis concerned mainly with seed drying, handling and storage, and processingto a limited degree.

39. Seed technology research at PAU would be reorganized as an inter-disciplinary program, cooperative among the Departments of Agronomy (PlantBreeding), Botany, Horticulture and Agricultural Engineering. A coordina-tor and senior research officer would be appointed and staff assigned fromthe various departments to the interdisciplinary program. Additional of-fices and laboratories would be constructed and equipped to house the programactivities. Supporting staff would be employed. Investment costs, staffingand operational costs for establishment of the unit are given in Table 7.

40. Seed research at PAU would be of broad scope. It would developneeded information--on physiological, pathological, bio-engineering, andquality control aspects of seed operations--that would permit resolution ofchronic problems generally confronting the seed industry. Developmentalwork would also be undertaken to identify suitable alternatives to presenthigh-energy requiring drying and storage technology. Research areas thatwould be addressed include:

- relation between seed quality and crop performance;

- solar drying;

- mechanical damage inflicted to seed during harvest,processing and handling;

ANNEX IPage 10

development of flame delinting procedures for cotton-seed;

influence of bulk storage construction and material(concrete and steel) on storability;

- prevalence and significance of seed borne micro-organisms; and

- control systems for storage insects

41. Haryana Agricultural University (HAU). The cropping system andclimatic conditions in Haryana are similar to those in Punjab. Completeduplication of efforts in seed research cannot be justified. Accordingly,a smaller seed research unit is proposed for HAU (Table 7). It would beorganized as an interdisciplinary program among the Departments of Agronomyand Botany. The program would emphasize the following areas:

- seed testing methods and interpretation;

- quality control techniques and systems;

- seed development and maturation of cool season crops;

- fluctuations in seed moisture contents during storage;

- field deterioration and insect damage to cottonseed; and

- effect of seed quality on stand establishment.

42. Andhra Pradesh Agricultural University (APAU). A major seed re-search unit is proposed for APAU (Table 7). It would be organized as aninterdisciplinary program among the Departments of Agronomy, Botany andAgricultural Engineering. Major research emphasis would be given torice seed production, harvesting, drying, processing and storage, duringboth the rabi and kharif seasons. Secondary emphasis would be given toproblems related to hybrid seeds.

43. Akola Agricultural University (Maharashtra). A major seed re-search unit is also proposed for Akola. This unit would be interdisciplina-ry among the Departments of Agronomy, Botany and Agricultural Engineering(Table 7). Major research emphasis would be given to cotton seed production,harvesting, ginning, delinting, cleaning, treating and storage. Some areasin need of research attention are:

- relation of time of harvest (picking) to qualityin cottonseed;

ANNEX 1Page 11

- comparison of saw and roller gins as to extent ofseed damage;

- most satisfactory procedures for handling and storingof cottonseed after ginning;

- relative merits and economics of alternative delintingprocedure;

- influence of ginning, bulk handling and delinting pro-_cedures on storage life of cottonseed; and

- development of flame delinting procedures.

44. Parbhani Agricultural University (Maharashtra). A smaller inter-disciplinary seed research program is proposed for Parbhani (Table 7).It would be cooperative between the Departments of Agronomy and Botany.Emphasis would be given to seed testing research, and to research on allaspects of production, drying, processing and storage of hybrid sorghum,maize and pearl millet seed.

Training

45. Development of progressive and productive seed research units asproposed would require staff with in-depth training in seed-related researchtechniques and procedures. This type of training can be best be accomplishedthrough a graduate study program, in an established seed technology curriculum,in one of the developed countries. The project would therefore provide fi-nance for one candidate from each of the Universities to undertake an advanceddegree program in the US, Europe or Australia (see also Annex 6).

ANNEX ITable 1

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation Seed Productionand Seed Technology Research

ICAR Research Institutes Engaged in Plant Breeding Research

1. IARI - Indian Agricultural Research Institute, New Delhi

2. CRRI - Central Rice Research Institute, Cuttack, Orissa

3. JARI - Jute Agricultural Research Institute, Barrackpore, W.B.

4. IHR - Institute of Horticultural Research, Bangalore, Karnataka

5. CPRI - Central Potato Research Institute, Simla, H.P.

6. IGFRI - Indian Grassland and Fodder Research Institute, Jhansi,U.P.

7. CTCRI - Central Tuber Crops Research Institute, Tivandrum, Kerala

8. SBI - Sugarcane Breeding Institute, Coimbatore, T.N.

9. CTRI - Central Tobacco Research Institute, Rajahamundry, A.P.

10. IRC - ICAR Research Complex, Shillong, Megghalaya

11. CICR - Central Institute for Cotton Research, Nagpur, Maharashtra(new in Fifth Plan)

ANNEX 1Table 3Page 1

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation Seed Productionand Seed Technology Research

Breeder Seed Obtained by NSC in 1975-76

Crop Variety Quantity (kg) Source

Wheat Sonalika 5,000 IARI, KarnalMalvika 3,300 IARI, KarnalShera 1,000 IARI, KarnalHD-2122 120 IARI, KarnalHD-4530 88 IARI, KarnalHP-1102 195 IARI, Karnal

Total 9,703

Rice IR-8 1,280 AICRIP, HyderabadRatna 1,270 AICRIP, HyderabadBala 1,020 AICRIP, HyderabadSona 990 AICRIP, HyderabadIR-20 710 AICRIP, HyderabadJaya 700 AICRIP, HyderabadCauvery 660 AICRIP, Hyderabad

Total 6,630

Barley DL-70 1,195 IARI, New DelhiK-125 1,020 CAUAT, Kanpur

Total 2,215

Oat Kent 300 IARI, Karnal

Gram H-208 1,700 HAU, HissarC-235 1,600 IARI, KarnalC-214 800 HAU, HissarPant G-110 800 GBPUAT, Pantnagar

Total 4,900

ANNEX ITable 2

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation Seed Productionand Seed Technology Research

Agricultural Universities

1. GBPUAT Govind Ballabh Pant University of Agriculture and TechnologyPantnagar (U.P.)

2. PAU Punjab Agricultural University, Chandigarh3. UU University of Udaipur, Udaipur (Rajasthan)4. OUAT Orissa University of Agriculture and Technology,

Bhubaneswar5. APAU Andhra Pradesh Agricultural University, Hyderabad6. UAS University of Agricultural Sciences, Bangalore (Karnataka)7. JVLVV Jawaharlal Nehru Krishi Vishwa Vidyalaya (West Bengal)8. BCKVV Bidhan Chandra Krishi Vishwa Vidyalaya, (West Bengal)9. KKV Konkan Krishi Vidyapeeth, Dapoli (Maharashtra)10. MPKV Mahatma Phule Krishi Vidyapeeth, Akola (Maharashtra)11. PKV Punjababrao Krishi Vidyapeeth, Akola (Maharashtra)12. AAU Assam Agricultural University, Jorhat13. HAU Haryana Agricultural University, Hissar14. RAU Rajendra Agricultural University, Pusa (Bihar)15. KAU Kerala Agricultural University, Mannuthy (Kerala)16. HPU Himachal Pradesh University (Agricultural Complex), Simla17. TNAU Tamil Nadu Agricultural Univerity, Coimbatore (Tamil Nadu)18. MKV Marathwada Krishi Vidyapeeth, Parbhani (Maharashtra)19. GAU Gujarat Agricultural University20. SMAU Sadiq Memorial Agricultural University, Srinagar (J & K)21. ISARI Indian Agricultural Research Institute, New Delhi22. CSAUAT Chandra Shekar Azad University of Agriculture and

Technology, Kanpur (U.P.)23. NDAPVK Narendra Deva Avam Prodyogik Vishwa Vidalaya Faizabad (U.P.)24. BHU Benares Hindu University (U.P.)25. ARSUU Agricultural Research Station, University of Udaipur

(Rajasthan)

ANNEX 1Table 3Page 2

Crop Variety Quantity (kg) Source

Pea EC-33866 330 IARI, New Delhi

Lentil Pant L-408 50 GBPUAT, PantnagarPant L-209 300 GBPUAT, Pantnagar

Total 350

Arhar T-21 80 CAUAT, KanpurP. Ageti 98 IARI, Delhi

Total 178

Urad T-9 80 CAUAT, KanpurS-1 79 IARI, New Delhi

Total 159

Moong S-8 35.5 IARI, New Delhi

Cowpea C-152 24 IARI, New Delhi

Berseem Diploid 300 IARI, KarnalDiploid 1,500 HAU, HaryanaDiploid 500 RFRS, Hissar

Total 2,300

Forage Sorghum Pusa Chari 100 IARI, New Delhi

Rape andMustard Pusa Kalyani 100 CAUAT, Kanpur

Varuna 100 PAU, LudhianaTorta 40 PAU, LudhianaSel-A 240 PAU, Ludhiana

480

ANNEX 1Table 4Page 1

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation Seed Productionand Seed Technology Research

Institlitions That Will Receive Assistance forBreeder Seed Production

Institution Location Crops

1. ICAR Research Institutes for Production of Breeder Seed

IARI Karnal, Haryana Wheat, barley, oats,maize, pulses, oilseeds,vegetables

IARI Katrain, H.P. Pulses, vegetable

CPRI Jullunder, Punjab Potatoes

AICRIP (will becombined withAPAU) Rajendranagar, A.P. Rice

CRRI Cuttack, Orissa Rice

JARI Barrackpur, W.B. Jute

IHR Bangalore, Karnataka Vegetables

IGFRI Jhansi, U.P. Forages

2. Agricultural Universities in Phase One States

PAU Ludhiana, Punjab Processing and storage only

PAU Mattewara Farm Wheat, barley, maize, pearlmillet, pulses, oilseeds,fodders, minor millets,vegetables

PNU Kapurthala Farm Rice

IAU Hissar, Haryana Wheat, rice, pearl millet,cotton, pulses, oilseedsfodders, tobacco, vegetables

ANNEX 1Table 4Page 2

Institutions That Will Receive Assistance forBreeder Seed Production

Institution Location Crops

APAU/AICRIP Rajendranagar, A.P. Rice, sorghum, pearlmillet, maize, pulses,oilseeds, cotton, millets,vegetables

PKV Akola, Maharashtra Cotton, sorghum, pearlmillet, pulses, oilseeds

PKV Niphad, Maharashtra Wheat

MKV Parbhani, Maharashtra Sorghum, pearl millet,pluses, oilseeds

MKV Badnapur, Maharashtra Pulses

MPKV Rahuri, Maharashtra Sorghum, forages, oilseeds,rice, cotton

3. Agricultural Universities Outside Phase One States

GBPUAT Pantnagar, U.P. Wheat, barley, maize,pulses, oilseeds, vegetables

BHU Varanasi, U.P. Wheat

CSAUAT Kanpur, U.P. Wheat, barley, pulses,oilseeds

TNAU Coimbatore, T.N. Sorghum, pulses, oilseeds,millets, forage crops, cotton

UAS Bangalore, Karnataka Pulses, oilseeds, millets,vegetables

JNKV Jabalpur, M.P. Wheat, pulses, oilseeds,millets, forages, vegetables

GAU Jammagar, Gujarat Sorghum, pulses, oilseeds,millets.

ANNEX 1Table 5a

INDIA

NATIONAL SEED PROJECT

Plant Breeding, Breeder and Foundation SeedProduction and Seed Technology Research

Breeder Seed - Investment Costs Summary'/

Total Foreign PhasingCosts Exchange Year 1 Year 2 Year 3

Rs '000 0 0 Rs 'I00 - - - - s'0 -

Farm Machinery 1,900 35 665 1,000 900

Buildings 4,228 15 634 2,228 2,000

Cooling, DehumidifyingEquipnent 3,520 40 1,408 1,520 2,000

Processing and StorageEquipment 2,730 40 1,092 1,400 1,330

12.378 3,799 1,000 6,048 5,330

Physical Contingencies 2,300 690 800 1,500

Total Investmaent Costs -Breeder Seed 14,678 4,489 1,000 6,848 6,830

1/ Further detail in Tables 5b, c and d.

I NDIA

NATIONiL SEED PROJ9CT

Breeder Seed - Investment Cost at Universities in Phase I States

Punjab Haryana Andhra Pradesh Naharashtra

Mai C us Mattewarm Farm KartnLla Farm Main Campus Main CaTpus Akola C u Akola-Niphad A C R ahuri Ca wsam RIOOO PI oo R'OOO R'OOO Pt,O 0~~ ROO RXooo -- VIooo-

Far-m Machinery

Seed drill 10 10 10 10 10Sprayer 5 5 5 5 5Thresher (Vogel type) 30 30 30 60 30 30 30

Thresher (single plant) 15 15 15 30 15 15 154WD and trailer 50 50 50Small tools and miscellaneous 50 20 Sc 50 50 20 20

Sub-total 160 65 160 205 110 65 do

Buildings

Processing hall 160 160 160 100 100 loOStore 216 216 216 100 100 100Threshing floor 20 20 20 20 20 ao

Sub-total 396 20 396 396 220 220 200

gooling. Dehumidiflying Fquipment

Lir corditioner/dehumidifler 75 75 75 50 50 50Refrigerator 100 100 100 65 65 65Generator 60 60 60 60 60 60

Sun-tutal 235 235 235 175 175 175

Pfroc±ul and Storage Equipment

Drie 35 35 35 353Laboratory size cleaner 30 30 30 30 30 30Air blast cleaner 15 15 15 15 15 15Shelving cabinets, etc. 30 30 30 20 20 20

Sub-total 110 110 110 100 100 100

Physical Contingencies 69 111 17 180 lg 121 13 115 95

Total Costs 414 667 102 1,081 1,135 726 7l 690 570

March 22, 1976

ANNEX ITable 5c

INDIA

NATICNAL SEMD PROJECT

Breeder Seed - Investment Costs at UnivereitiesAl Outside Phase I States

Uttar Pradesh Rajasthan Tamil Nadu Karnataka Madhya Pradesh GujaratBHU CSAUAT ARSUU TNAU UAS JNKVV CAU

Fann Machinery

Seed drill 10 10 10 10 10 10Sprayer 5 5 5 5 5 5Thresher (Vogel type) 30 30 30 30 30 30 30Thresher (single plant) 15 15 15 15 15 15 154WD and trailer - - - - - -Small tools and miscellaneous 20 20 20 20 20 20 20

Subtotal 80 80 80 65 80 80 80

Buildings

Processing hall lQ0 100 100 100S tore 100 100 100 100Threshing floor 20 20 20 20 20 20

Subtotal 220 220 220 20 20 220

Cooling, Dehumidifying Ecquiprment

Air conditioner/dehumidifier 50 5o 50 50Refrigerator 65 65 65 65Generator 60 60 60 60

Subtotal 175 175 175 175

Processing and Storage Equipment

Dryer 35 35 35 35Laboratory-size cleaner 30 30 30 30Air blast cleaner 15 15 15 15Shelving, cabinets, etc. 20 20 20 20

Subtotal 100 100 100 100

Physical Contingencies 115 115 115 13 20 20 115

Total Costs 690 690 690 78 120 120 690

1/ Full names at Table 2.

ANNEX 1Table 5d

NATION&L SEED PROJECT

Breeder Seed - Investment Costs at ICAR Instituted

IARI IARI CRRI JARI IAR IGFU CPaIKarnal Katrain Cut tack Barrackpu Bangalore Jhansi Jullundar

Farm Machinerr

Seed drill 10 10 10 10Sprayer 5 5 5 5Thresher (Vogel type) 30 30 30 30 30Thresher (single plant) 15 15 15 154WD and trailer 50 2/Small tools ani miscellaneous 20 20 20 20 20 LO 7

Sub-total 70 80 65 65 80 80 70

Bduidjiva

Processing hall 100 100 300 100 100 2002Store 100 100 100 100 100 200Threshirg floor 20 20 20

Sub-total 220 200 200 220 220 4D0

Cooling, dehumidifying equipment,

Air conditioner/dehumidifier 75 50 50 50 50 50 240Refrigerator 100 65 65 65 65 65Generator 60 60 60 60 60 60 240

Sub-total 235 175 175 175 175 175 4dO

Processirn and Storage Equipment

Drier 35 35 35 35 35 35Laboratory size cleaner 30 30 30 30 30 30Air blast cleaner 15 15 15 15 15 15Shelvirg cabinets etc. 20 20 20 20 20 20

Sub-total 100 100 100 100 100 100 u00-

Physical Contirgencies 80 115 108 108 115 -15 235

Total Costs L8 5 690 648 648 690 690 22d5

F Eall names at Table 1./ Potato digger ain planter.

3/ Glasshouse, light and temperature controlled.Ultra centrifuge, potato grader, deep freeze and refrigerator.

IflDIA

NATIONAL SEED PNJEC?

Pl.Ant Breeding, Breeder anid Foundation Seed Productioen and Seed Tecbnlooy Research

Fouondation Seed - lnv~estinnt Ceets

Haryan Andhra Pradeeh M4aharashtraUnit Pw.uieb AerietortagL Universit:r Agricultural Aericultoro Uniersity Acriuatre1 Universities Overal Fnreign Forel gn Phasing Cost Nettewara Rpr arigr potaaTtal University 1*ocaintion in2 Total Akola Pacultwa:UniversnuitTi ta Total Exchange Exchange Year 1 Year 2 Year, 3 Year~ 4

Unit R oRO No R ' 000 No R 'OO N.R000 ND RI OW0 R'OC DROO No R'000 No R0000 No R0000 No R ICOO No R0000 No R'OOR000 NoI90000900 RO % RI 000

Buildings

Procooing Hall H 375 600 225 - 600 225 600 225 675 600 225 600 225 600 225 4 150 600 225 600 225 600 225 675 2,025 15 304.Store, non

insulated N 375 800 300 - - 1.00 150 1.50 600 3001400 1501400 150- 3001.00 1501400 1501400 150 4.501,500 15 225Store, insulated N 625 1.0 250 1.00 250 1.00 250 200 125 875 4.00 250 200 1.25 200 125 - 250 200 125 200 125 200 125 375 1.5 20 350

Sob-total 775 250 4.75 500 2,000 775 500 500 1,000o 500 500 500 1,500 5,275 775 2,500 2,000

Air Conditi OningNiuipuont L .S. 125 125 125 g0 1.65 125 90 90 180 90 90 90 270 1,01.0 50 520 - 700 31.0

Seed Processing 2/Xquipaent get 700,000 1 700 1 700 1 700 1 700 2.600 1 8.- 1 700 1 700 11.1400 1 700 1 700 1 700 2100 7.130 55 3.2 64.03,000 3,500

Sub-total 1,600 1,075 1,300 1,290 5,265 1,71.0 1,290 1,290 2,560 1,290 1,290 1,290 3,870 13,1.55 5,326

Fees to NSO (iS%).V 21.0 160 195 195 790 260 195 195 390 195 195 195 585 2,0251 215 930 0

jnolCntingenciesbuil1cdings and

equipmenut) 80 55 65 65 265 65 65 65 130 65 65 65 195 675 4.0 270 500 175

Iepwt Daties (40% on) 140 11.0 11.0 140 560 1,~2/ 1410 11.0 260 11.0 14.0 11.0 1.20 1.450 - a 600- 2

Total Investment Coot -Foundation Seed 2,000 1,4.30 1,700C 1,690 6,88o 2,275 1,690 1,690 3,380 1,690 1,690 1,690 5,070 17,605 5,596 1,780 7,730 7,920 175

*Cleaner .dVl indent 1.5 t/hr 106,000Bucket elevator 10 t/hr 32' 16,000Bucket elevator 10 t/hr 241. 12,000

*Uravity separator 61,500*Treater - slurry type 61,100aWeigher - bagger 9,900*Seeing mAchine-portable 12,000*Corn dhuele 56,000

Special separator 2,500Silo/drying bin 200 t 139,000

(with dcivil mrks)Heater for ds7yr 38,000Vacuum cleaner 10,700Coapresor 13,1.00Spares 10% 60.900

700,000

aCustom duty 0 1.0% 11.40,000

I/ lides 3 t/br cleaner 8 8236,000 instad of 1it i/hr cleaner.

I/ For desig, procurement en,' comed-nio.ing osrv-s..

INI

NATIONAL SESD PROJECT

Seed Technology, Researcb - ProJect Costs

Andhra Haryana Maharashtra Putnjab Forrgn FarI'gn Fl at meUnit Urit Cost Pradesh Akola P&bbhanL Total acchange 'hchange !, 1 lear 2 ear 3 lear 4

R No. R'OOO No. R'OOO No. R0OOO No. R'OOO MD. R'OOo RIOOO % R1000 ROOO R'OOO R'OOo R'OO

Investment Costs

Laboratory and office N2

600 350 210 - 300 180 150 90 380 228 708 - 708 - -Research equipment LS - 240 160 310 160 250 1,120 70 784 80 690 350 -Office equipment i.3 - 15 10 15 15 15 70 10 40 20 -Laboratory and office furniture is - 40 15 40 40 40 175 15 130 30 -Vehicle No 50,000 1 50 - 1 50 - 1 50 150 25 37 - 150 - -Motorcycle No 7,000 - 1 7 - 1 7 - 14 25 3 7 7 - -

isecellanmous IS - 30 10 30 20 17 107 _ 5 60 42

Sub-total 585 202 625 332 600 2,344 824 117 1,785 1442

Operating Costs

Seed research of1'icer andcoordinitor Man year 18,000 4 72 4 72 4 72 4 72 4 72 360 90.0 90.0 90.0 90.0

Assistant seed research officers 12,000 14 168 8 96 14 168 7 84 14 168 684 108.0 192.0 192.0 192.0Research assistants 6,600 14 92.4 8 52.6 14 92.4 7 46.2 114 92.4 376.2 59.4 105.6 105.6 105.6Lab ani field attendants 0 4,800 114 67.2 8 38.4 14 67.2 7 33.6 14 67.2 273.6 43.2 76.8 76.8 76.8Steno typist " 5,600 6 33.6 4 22.4 6 33.6 4 22.4 6 33.6 1145.6 28.0 28.0 44.8 44.8Travel allmwarme lay 15 300 4.5 200 3 300 4.5 200 3 300 4.5 19.5 3.5 4.0 6.0 6.0Vehicle operation 1,000 miles 1,030 30 30 - 30 30 - 30 30 90 - 20.0 30.0 40.0Motor cycle operation 1,000 miles 400 - 30 12 - 30 12 - - 24 3.0 6.0 6.0 9.0Supplies, utilities ani

services iS 33 36 33 28 47 177 28.0 34.0 32.0 83.0Equipment repair and

maintenance LS 9 8 9 6 9 41 _ - 3.0 15.0 23.0

Sub-total (rourLied) 510 341 510 307 524 2.192 363.0 560.0 598.0 670.0

Total Project Costs (rounded) 1,095 543 1,135 639 iL,24 4,536 18 824 480 2,345 1,0140 t70

Ha,eh 22. 976

INDIANATIONAL SEED PROJECT

BUILDING FOR PROCESSING AND STORAGE: BREEDERS SEED

AREA -,

LEGEND E

A. Refrigerated area (t, C, 40% RH) E

8. Airconditioned area (1 50

C, 40% RH)

C. Not finished or cleaned material

D. Threshers & cleaning machinesE. Diesel-electric generatorF. Dryer SECTIONAL ELEV. AT JJG. Anti-chamber

p 30m J p 15m 5m

C

D G A E

C

PLAN I_F_I|_ 1 2m 3m

World Bank-15646 8?

INDIANATIONAL SEED PROJECT

DRYER FOR SMALL LOTS OF BREEDER SEED

6mm Movable Partition Walls of Plywvood

L -SECTION -10mm Iron Rods

10mm ¢ Rods

0 X t T1lI11211111121~~~~~~~~~I t I t Il:lllD:lll1lll

0.6m 1OOm |.OOm |.OOm m 1 .OOm 1.00m 1.Om 1 .OOm 1 .OOm

X -SECTION 8.00m

PLAN

World Bank-15647

H.

ANNEX 2Page 1

INDIA

NATIONAL SEED PROJECT

Farm and Related Development

University Farm Development

1. In the past the seed industry has suffered from shortages andpoor quality foundation and breeder seed. It is therefore a major elementof seed industry development policy that Agricultural Universities beintegrated into the National Seed Program in order to ensure supplies ofan adequate quantity and quality of seed of these critical generations.In order to permit the Universities to fulfil this role the project woulddevelop University farms. Included would be: the Hissar farm of the HaryanaAgricultural University (HAU) and the campus farms of the Akola, Parbhani andRahuri Agricultural Universities in Maharashtra.

2. Neither Punjab (PAU) nor Andhra Pradesh Agricultural University(APAU) has adequate land to meet its foundation seed target. Duringappraisal, State Governments agreed that they would be given additionalland. In Punjab it was agreed that the Agricultural Department's Matte-wara farm would be transferred to PAU. In Andhra Pradesh several Agricul-tural Department farms would be technically suitable for foundation seedproduction but all are up to 240 km from APAU and therefore difficult tosupervise. It was therefore decided to try to locate suitable Government landnearer to Hyderabad. Failing this Departmental farms would be transferred.Selection of land for transfer to APAU would be finalized in consultation withthe Bank.

3. The extent and nature of the development required varies consider-ably between farms. The proposed investments are detailed at Table 1. Mainitems are: wells, land development, farm machinery and buildings. In AndhraPradesh, Haryana and Punjab the available (or proposed) areas to be developedwould be required to meet short-term demand for foundation seed. In Maharashtra,the developed areas would exceed short-term needs for foundation seed; pendingexpansion of demand the Universities would also produce certified seed. Largescale operations would be of particular advantage in Maharashtra where themain seed crops would be cereal hybrids and cotton, which present the biggestisolation problems. Furthermore, the Maharashtra project areas do not havethe concentration of existing seed growers found in other project areas.Certified seed production on University farms would therefore serve as abuffer pending build-up of production from shareholding farmers.

4. The Universities would undertake their seed operations on acommercial basis obtaining development loans from commercial banks onnormal terms (Annex 10). The Universities' equity contributions wouldbe supplied as necessary by the respective State Governments.

ANNEX 2Page 2

5. Procurement of large tractors not produced in India (65 HP andover) and farm machinery would be handled in bulk by NSC following ICB pro-cedures. Small tractor procurement has been reserved by GOI and would beexcluded from project financing. Building and land development would beundertaken by the Universities themselves or on contract after competitivebidding advertised locally. The small size and wide scatter of worksprecludes ICB.

6. The standard of management on the Univesity farms is adequate andjustifies the proposed investments. Standing crops, including seed crops,were good at the time of appraisal. However, in order to optimize developmentand management, and to justify loan requests to banks, detailed farm plansare necessary and would be prepared (para 15). The estimated financial andeconomic returns to investment in large farm development, based on a model forthe State Farm Corporation of India (SFCI) Hissar farm (para 9), are 21% and17%, respectively (Annex 12).

SFCI Farm Development

7. NSP policy recognizes that where suitable large farms exist they canproduce seed more efficiently than large numbers of small growers. For thisreason it is intended that SFCI--a company wholly owned by GOI--which operates12 farms covering 34,800 ha in 9 States, play an important role in the develop-ment of the seed industry.

8. Until recently SFCI was poorly managed and most of its farms performedbadly. This was in part due to the inadequate calibre of farm management butmore particularly to the lack of adequate guidance from SFCI headquarters.However SFCI now shares a new chairman with NSC. He is putting together aheadquarters team which is expected to give closer supervision to farm manage-ment and development. Several members of this team have been recruited and aclosely monitored system of management by objective has been institutedtogether with an incentive bonus system. Already improvements in farm opera-tions and the pace and quality of development are to be seen.

9. However, much remains to be done. The farms are underdevelopedand under capitalized. All need additional irrigation water and landdevelopment. All have a very poor range of farm machinery, much of it atthe end of its useful life. Timely cultural operations are thus impossible,to the detriment of productivity. Most of the farms require additionalbuildings for efficient operation. Under the project it is proposed todevelop two SFCI farms, Ladhowal in Punjab and Hissar iniHaryana. Bothare located in project areas close to University farms. They could thus sup-plement foundation seed production should this be necessary.

10. The investments proposed would be similar to those of the Universityfarms. Details are at Table 1. Both farms are on light sandy soils. On-farm irrigation efficiency would improve significantly through land levelling

ANNEX 2Page 3

and improvements to conveyance systems (field efficiency from 50% to 65%, con-veyance efficiency from 75% to 85%). The Ladhowal farm has excellent ground-water potential which would be developed. The Hissar farm has no groundwaterpotential but would benefit from increased quantities of canal water when theBeas-Sutlej link canal is completed and the capacity of the canal systemserving the farm has been enlarged (para 18). Virtually the entire machinerycomplement would be replaced under the project.

11. The farms would obtain development loans from commercial banks onstandard terms. Equity capital would be provided by SFCI supplemented asrequired by GOI. Procurement would be handled in the manner describedfor Univesity farms (para 5).

12. With the management changes being introduced, the proposed invest-ments are justified. However, as with the University farms, detailed farmplans have yet to be prepared. Their preparation would be a condition ofdisbursement against SFCI farm development. The estimated return to theproposed investments is the same as for University farms (para 6).

HSDC Farm Development

13. HSDC will become the Haryana SSC. It now operates a 575 ha farmadjacent to the RAU and SFCI farms at Hissar. During appraisal the StateGovernment agreed that the farm would be transferred to the Haryana Agro-Industries Corporation since it is National Seed Program policy that SSCnot operate farms.

14. Since the farm forms part of a contiguous block with the HAU andSFCI farms, is served by the canal system to be improved (para 18), andis of good potential and well managed, it would be developed under theproject. Proposed investments would be similar to those of the other largefarms, particularly SFCI's Hissar Farm. They are detailed at Table 1. Finan-cing and procurement arrangements would also be similar. A farm plan wouldbe required as a condition of disbursement. The anticipated return to invest-ment is the same as for University and SFCI farms (para 6).

Large Farm Planning

15. Detailed farm plans had not been prepared for the large farms pro-posed for development under the project. Plans would be,necessary to justifyloan requests to banks, to implement development properly and as a managementtool. The need for plans was accepted by concerned officials. The projectpreparation working group has been asked to prepare a program for the pre-paration of farm plans, including the allocation of planning responsibility,and to submit the first plan(s) to the Bank for comment before negotiations.It would be a condition of disbursement against investment in each farmthat a plan satisfactory to the Bank had been prepared.

ANNEX 2Page 4

Irrigation Canal Remodelling

16. The Hissar area is entirely dependent on canal water for irrigation.Inadequate water supply is the area's greatest production constraint, thepresent allocation is 0.4 1/sec/ha commanded for 7 days out of each 24. (Ineach rotation 1 day is lost as turnover time). This is totally inadequate.In the past it permitted the SFCI farm to practice sub-optimal irrigationon only 1,000 ha out of a cultivable area of 2,500 ha. An improved manage-ment practice has recently been introduced which would further reduce thearea irrigated but is expected to give the same production (greater yields)at less cost. The situation on the HSDC farm is similar. (The HAU farm hasa special allocation giving it water 14 days out of 24.)

17. To some extent the shortage of water could be alleviated by im-proving on-farm efficiency of water use. This could be done by land level-ling and channel lining, both included in the farm development program.Even then water would still constrain production.

18. However, by June 1977 a link canal is expected to be completedbetween the Beas and Sutlej rivers. This would make additional water availa-ble to the area sufficient to raise allocations to about 0.7 l/sec/ha commanded.In order to convey the additional water the capacity of the canal system mustbe increased. This would be done under the project. Details of canal worksand their cost are at Tables 2.

19. The canal system to be enlarged would serve an area of 8,000 ha.In addition to the farms of concern to the project - the SFCI, HAU andHSDC farms covering 5,200 ha - two other farms, a Government Livestock Farmand a Tractor Training Center, would unavoidably benefit from the develop-ment. In general canal lining would not be justified. However, a ratherhigh physical contingency has been allowed on canal improvement costs.This is intended to cover small sections of lining which may be warrantedwhere canals pass through particularly permeable strata. The economic re-turn to investment in canal remodeling is estimated to be 17%. This hasbeen calculated by including the pro rata share of costs in the SFCI HissarFarm model. (Annex 12).

20. For the proposed canal remodeling work to be of interest to con-tractors it would have to be let as one contract. This is not consideredfeasible because of the problems associated with organizing work programs soas to minimize disruption to irrigation schedules. Works would thereforebe carried out by force account.

UlOL,L 15 P8DJ5CT

lao .,, Related ha elo nt

Avmfte AIAI.- H.7- P.Ioeatm,teso aso 2018 F.Ira.. _i, on le F80l

AVog Aodhra 8a.iyaea Dnhaaahr iv Pon3ah SF}F o, Unlt Prade-h Akole P rbor Rahuri NattOse Ropr t .1 Hry PunJab R.a *otel ordgn FYordgn Phag

o_t Cost SO ha h. O ha 3000 h. 1200 ha 2500 ha 340 h. 675 ha 2900 ha 1180 ha 600 ha Co.t Yd.40 n hg ge Ter I YeZrN t e 3 Year b

_ Mo. it-30 No. R'000 No. ROooY No. R'000 MD. R'OOO No. _R,000 N. Rl000 we £1300 Mo. R'0JO MD. R'000 R'000 J 300 R'C000 WODO It-ODD E!GO.

Irrigatiot31.11, No~~~~~V 50,000 6 300 12 600 15 750 1,650 20 130 750 900

Tasks No 100,SO 7 3 2 200 200 rg - 150 50Motors and elsctrification

of .,U. No 5,ooO 2d 11.0 Ib 20 30 70 70

l.,d de.1oPelo-t q.,pne7tTreotor 90 HP No 200,000 1 200 4 d10 2 1.00 2 .o 4 8b00 4 800 2 .00 3,800 60 1,540 1,600 Ia

2 00_ .IOOD

Scrap.r 1.3

No 50,ooo 2 100 1 50 1 5° 2 100 2 100 1 50 450 60 275 250 200la,s pIase No 25,000 1 25 2 50 1 25 1 25 2 50 2 50 1 25 250 25 75 150 100L.ad leeller No 25,000 1 25 2 50 1 25 1 25 2 50 2 50 1 25 250 25 75 1X5 100Motor gradsr No 300,000 1 300 1 300 1 300 900 50 15D 600 300

lWAn dor.-lolt by .ontraot Icno s, 750 750 250 250 700 250 2,950 ns - 950 1,000 1,000

Con,qWsnce/drainag. syst-s - [V a 750 .50 550 660 600 3.600 1,800 960 9,370 - g _ 2,500 3,870 3,000

Culti-ati.n equip ntTractor 70 HP No 150,000 2 300 12 1,8O0 5 750 3 450 3,300 60 1,55 1,650 1,650Sr.ctor 80-50 HP o 50o,oo0 10 500 6 300 4 200 2 100 4 200 6 300 21 1,200 10 5O0 6 300 3,600 50 1,800 1,200 1,200 1,200Ipl-nt-/tools - lowsu 500 200 50 25 50 100 750 400 250 2,325 30 920 800 8G0 7250bine harvsters No 300,000 2 600 2 600 2 600 1 300 2,100 60 o40 2,100

Truck - large No 150,000 1 150 150 150 150 600 10 2Lo 600Tr ck - s_11 No 80,000 1 dO 80 hO 30 80

Spo for quip,t (20%) _I Sp 200 330 340 155 8o0 80 1,l1O 900 360 3,685 50 1,820 1,200 1265 1,200

hl,dt.-s - lup a 500 100 200 300 750 500 300 2,650 15 1,020 500 800 8G0 550

S.b-toto., 3,730 2,530 2,790 1,1d8 2,060 2,180 1,750 31,11O 7,500 ,1.20 38,300 10,600 11,170 16,320 8,060 2,750

Phxsical coot1.e-oriso Soup s. 750 - 420 180 310 220 - 560 375 3bO 3,155 35 1.000 - - 2.000 1,155

Tot.l. b,1.80 2,530 3,210 1,360 2,390 2,bO0 1.750 11,700 7,875 3,760 .1,.55 11,600 11,170 16,320 10,060 3,905

Total, net of l.0-50 HP tractor. 37,855 9,800 9,970 15,120 8,860 3,905

I/ The Rop.r, Kapurthdlaa d Naraieggrh f-r. of PAU.

1SUC operates 1,000 ha but only the 600 ha ootalguos sitb t 0 AUcd 7SFCI fa ut Hi.iar orld bhe de-elopedThe fr .old be tranoferred to Agro-Indsotelt Corpo &atio.

/ Oittod frO. project co.t beas pro.urret reered.

March 22. 1976

INDIA

NiTIONiL SEED PEIOJET

Faru and Related Derdq_nt

CanaleLengthageLrhart--h Disro-k ' cha-rg--e --- &--r-t- vor --T----- - -- -------- ---C-OST CSO-S r-s Present Proposed Preliunary (LS) Land (Ha) Rqgulatars(L1) Bridpea (lb) Syphosw (IS) Outlets (N.) artork (IS) iscellaneos (IS) total

H M3/Sec M

3/Sec M3 000 No R'000 R'000 No RON 'O R'ODO No RODO RBOO R'000 11'000

rarm Minor 3,477 0.93 1.35 8 4 - 10 3 60 130 17 51 12 267Balsamani Sub Branch 31,720 15.75 16.17 185 5 100 a 160 2,300 40 60 352 - 2,977Rana Distributary 32,940 6.20 7.45 76 5 _ 150 12 240 1,100 66 66 128 - 1,689Barwala Branch 42,578 31.16 32.85 1,316 5 26 737 480 21 1,050 - 5 25 2,503 - 4,800SaUy Minor 11, 660 1.63 2.26 30 4 7 201 20 8 240 - 16 32 46 - 543Balak Minor 30,347 4.22 5.23 105 5 35 998 20 9 180 - 23 46 166 - 1,415Sarsaud Distributary d,137 5.01 6.02 27 5 - 15 2 80 600 9 18 43 - 761Pabra Sub Branch 11,187 11.08 12.09 31 5 - 300 5 150 - 20 60 63 - 578Sirsa Branch(RD388,500

to 342,000) 14,162 12.63 13.64 14 3 - 10 - - 5 15 25 5 58Sirsa Branch(RD342,000

to 316,000) 6.710 48.52 51.20 74 5 6 174 100 - 6oO - 149 5 1.033

Sub-totals 192,938 46 2,110 1,205 2,160 4,730 373 3,487 10 14,121

Tear 1 I 2 Ysar 3

Total Cost of Works - R lh,121,000

Overhead Costs - 20% R 2.8264.00

R 16,945,000 965 10,400 5,600

Physical Contirgency R4.236.ooc 236 2,600 1,400

Total Cost of Canal Remodelling R 21,1dl,000 1,181 13,000 7,000

1/ ls,oh sum.

ANNEX 3

Patme 1

INDIA

NATIONAL SEED PROJECT

Processing

1. The proposed National Seed Project would increase State Seed Corpo-ration (SSC) processing capacity, for cereals in all participating States,and for cotton in all except Andhra Pradesh. Cereal processing is ongoingand would be expanded; cotton seed processing would be new and somewhat lessstraightforward. The project would also increase National Seed Corporation(NSC) vegetable seed processing, also an on-going activity. The private sectoris discussed separately (Annex 4).

Cereal Seed Processing 1/

2. An estimate of national demand for seed of major cereal crops ispresented at Annex 11. It is based on inadequate data and is therefore in-tentionally conservative. A demand survey has been started to provideimproved data. This should be available when the second phase of theNational Seed Program is appraised. The objective of this first phase pro-ject (embracing Andhra Pradesh, Haryana, Punjab, Maharashtra) would be toprovide capacity to process cereal seed to meet the estimated incrementaldemand through 1978/79. Growth in demand after that time could be met byadditional capacity provided under a second phase project 2/. Table 1 showsproposed project output through 1980-81. The allocation of cereal seed pro-duction amongst States is based on:

(i) comparative regional advantage for production ofparticular crops;

(ii) balanced diversification of the production base - togive a risk hedge based on viable corporate operations;and

(iii) some balancing of inter-seasonal throughput.

3. The plants currently owned by NSC and State Governments would be un-able to process either the quantity or the quality of seed to be produced underthe project. New plant capacity would be required in each State. Bridgingcapacity would be needed to meet demand from 1976-77 until new plants become

1/ The cereal seed processing equipment would also be used to process seedof a range of other crops (pulses, oilseeds, Jute, fodder). Seed quan-tities would be small and have negligible influence on capacity ordesign and are ignored.

2/ GOI's National Seed Program will be appraised in phases. A second phaseappraisal is schedule for second half of 1976.

ANNEX 3Page 2

operational in 1978-79. Thus under the project the plant capacity neces-sary to process output would comprise (i) existing plants; (ii) upgradedplants; and (iii) new plants. Details of plant capacities are at Table 2.

Plant Capacity

4. The annual throughput of a seed processing plant depends on manyvariables, for example:

- the length and number of the processing seasons;

- the characteristics of the crops being processed;

- the number of seed lots being processed that need toretain their identify by crop, variety, or grower;

- the instantaneous capacity of machines and conveyingsystems;

- the number of shifts worked;

- the amount and availability of buffer storage within theprocess; and

- the intake drying capacity for crops that cannot be storeduntil they are dried (e.g. paddy).

The project would provide new processing plants of 5,000 m ton and 10,000 mton nominal seasonal capacity (para 9). The actual annual throughput of eachexisting and new plant would vary with plant location and has been calculatedfor the planned volume and mix of crops (Table 1).

Existing Processing Capacity

5. Processing capacity exists both inside and outside project areas.During the transition, from scattered NSC contracted production to productionby SSC shareholders in compact areas, all would be used. However, by the endof the project period, about 1980, only plants in project areas would be inregular use.

6. The existing plants were planned for the production of small quan-tities of primarily foundation seed. As demand for certified seed rose, pro-duction was increased mainly by installing higher capacity equipment piece-meal. Most plant sites are now unsatisfactory, with limited space for ex-pansion, restriced access by road and rail, and buildings not purposedesigned. The maximum production available from these existing plants hasbeen estimated from current operating data 1/ 2/ and is shown at Table 2.

1/ Operating assumptions: (i) three shift working; (ii) 20 hrs/day machineavailability; and (iii) maximum machine throughputs.

2/ Operating assumptions used in the design of the new plants are more con-servative. Throughput and quality are inversely related and old plantshave been over producing because of shortage of capacity.

ANNEX 3Page 3

Some would be phased out because they lie well outside project areas (para 5).For the rest it is premature to plan their disposal. This should be donewhen operational experience is available for all plants, old and new, andfor the production efficiency of different project areas.

Bridging Processing Capacity

7. Completely new plants could not be brought on stream before early1978. (Project Implementation Schedule, Annex 9). A bridging operationwould therefore be undertaken to supplement existing processing capacity.A simple range of equipment would be purchased and located - for the mostpart temporarily - at existing plants. Because the range of equipment pro-posed is limited, seed quality would not be up to the standard expected ofthe proposed new plants. It would however be adequate as a temporary ex-pedient. Because only a limited range of equipment would be purchased therewould be negligible design requirements, specifications would be simple, andprocurement could be swift. Retroactive financing is therefore proposed forbridging equipment. Details of the equipment, its cost, temporary locationand eventual disposition - mainly to the new plants - are at Tables 3 and 4.

New Processing Plants

8. Siting. The following criteria were applied in choosing proposedsites for the new plants:

- central to the project area to minimize haulagedistance and facilitate SSC-grower contact;

- good access by road and, where possible, by rail;

- a site area of at least 3 ha for plant and warehousing;

- suitable ground conditions for plant construction andflood avoidance;

- available housing and schools for plant staff; and

- avoidance of noise and dust emission nuisance toresidential areas.

9. Capacities. Two plant sizes of nominal seasonal capacities of5,000 and 10,000 m ton/season are proposed. Actual throughputs woulddiffer significantly from these nominal capacities (para 4). The choiceof only two plant sizes would allow flexibility to phase expansion, pro-vide common types and sizes of machinery, simplify the design work of NSCand SSC, allow common spares for all NSC/SSC plants and simplify the train-ing of operatives and plant management.

10. The choice of 5,000 m ton/season nominal capacity is set by thenominal seasonal capacity 1/ of available high capacity air screen cleaners

1/ Operating assumptions are: (i) 60 day wheat season; (ii) 2 shiftworking.

ANNEX 3Page 4

(3 m ton/hr). For operating security, two such machines would be used inthe 5,000 m ton plant, however three would suffice in the 10,000 m ton plant.

11. 5,000 to 10,000 m ton per season is an acceptable nominal Apacityrange for reasons of access, management of large plants, seed handlinglogistics and the dispersion of processing capacity. Economies of scalealone are insufficient to justify plants bigger than 5,000 m ton. Process-ing costs represent from 5% to 15% of retail seed prices. Economies ofscale would reduce the retail price only marginally 11.

12. Plant Design and Costs. Proposed plant design is based on thenucleus module of 5,000 m ton nominal capacity. Plant layout would be suchthat (i) expansion from 5,000 to 10,000 m ton could be accomodated withoutdisturbing processing in the nucleus module; (ii) maximum use could be madeof common facilities.

13. The principal alternative designs considered were (i) a horizontalflow plant and (ii) a vertical flow (multi-story) plant. For reasons oflower capital costs, similar operating costs, greater flexibility, opera-tional simplicity, Indian experience (Tarai) and the expressed preferencesof NSC staff, the horizontal flow plant was selected as more appropriate toIndia's seed industry. A seed flow diagram is at Figure 1.

14. To use capacity efficiently seed lots should be as large as pos-sible. Neighboring growers' fields would be planted with the same foundationseed lot to give larger effective certification units. Samples would betaken at harvest 2/ before delivery to the plant, and suitable farmers' lotswould be bulked at the plant intake. Seed lots would be resampled at theweighbridge and tested for germination and cleaning losses, to determine thebasis for payments. For hybrids the ears would be sorted on the farmer'sdrying/threshing floor. Growers would be encouraged to use on-farm shellers.Depending on weather, final drying would be either on-farm or in-plant.

15. Processing machinery would be of standard manufacture. Internalbag transport would be by small hand carts 3/. Drying, and part of the stor-age capacity, would be provided by 200 m ton silo-dryers ventilated byportable heaters - one per two silos. Buffer and surge storage capacitywould be installed to smooth flow over 24 hours. Warehouse and silo storagewould accomodate 50% of a season's production, the balance would enter thedistribution chain (Annex 11) 4/. Warehouses would be in 1,500 m ton

1/ From economies of scale, retail prices for wheat could be: 5,000 m ton- 100%; 10,000 m ton - 99%; and 20,000 m ton - 97.5%.

2/ Tests may be either (i) visual or (ii) germination (full or tetrazolium).

3/ Design would permit the use of fork lifts but they are not justifiedat present wage rates.

4/ At some plants there would be additional storage capacity for thereserve stock scheme (Annex 11). Cold stores for potato seed would beincluded in Punjab and Haryana.

ANNEX 3Page 5

capacity modules to reduce fire risk and to simplify fumigation. Processingbuildings at 5,000 m ton plants would be large enough to house equipment for10,000 m ton nominal capacity. Additional silos, machinery, and warehousingwould be installed as capacity was increased. Combined cotton and cerealseed processing plants would use some common equipment and buildings.

16. Investment costs for the two modules are shown at Table 5; operatingcosts and proposed staffing pattern at Tables 6 and 7 respectively.

17. Design and Procurement. SSC would contract with NSC for plantdesign, preparation of tender documents and procurement and installation ofequipment. Tendering and supervision of civil works contracts would behandled by SSC or, if they desired, by NSC on their behalf.

18. NSC has an engineering section with considerable design capability.However, they have no experience in designing cereal plants of the size orwith the range of equipment proposed. They have no experience of cottonseed processing. A consultant(s) would therefore be financed under the pro-ject to assist NSC prepare designs for the two cereal plant modules and forthe cotton plants. Details are at Annex 6. The designs would be submittedto the Bank for review before tendering commenced.

19. All equipment would be procured on the basis of internationalcompetitive bidding. Civil works contracts would be let after competitivebidding advertized locally. Individual works would be small and widelyscattered and thus unlikely to attract international firms.

Cotton Seed Processing

Introduction

20. India plants about 25% of the world's cotton area. Production,however, is only about 10% of total world production. Although productionper unit area is low, cotton and cotton by-products contribute importantlyto the Indian economy. Cotton production and related industries are alsomajor employers of labor. The many problems besetting the cotton industryin India are analyzed and discussed in the appraisal report of the IntegratedCotton Development Project (ICDP) (World Bank Report No. 933-IN, September 15,1975).

21. Less than 3% of the cotton area in India is planted with genetic-ally pure seed. Further, improved varieties developed through on-goingresearch have not spread as rapidly as desirable, mainly because of thelack of a system for multiplying, processing and distributing seed. Thecotton seed component of the project would interface directly with theICDP and be complementary to it.

Present Situation

22. Of the four States in the project, only Maharashtra has asignificant program for the multiplication and distribution of cotton

ANNEX 3Page 6

seed of improved varieties. This system primarily involves identification of"pure" cotton stands, some field inspections, gin clean-up, collecting anddistribution of gin-run seed. There is no processing, cleaning or treating.

23. The major cotton seed problems in India are: varietal mixtures atginneries; poor germination caused by immaturity, field deterioration andthe pink boll worm; and poor physical quality due to lack of any delinting orcleaning. Some of the deficiencies in the Indian cotton industry would beaddressed by the ICDP. However full benefits from these efforts could notbe realized unless the production and supply of cotton seed, to the Indiancotton farmer, is improved. The project proposals below are directed towardthese ends.

Cotton Seed Proposals

24. General Quality Control Procedures. Varietal mixing of cotton seedoccurs primarily at the ginneries. Project States - Haryana, Maharashtra andPunjab - have legislation which permits the establishment of one-variety gin-neries and one-variety communities, but it is not used. For this project andthe ICDP to succeed, implementation of the legislation would be necessary.(A covenant to this effect is included in the ICDP Credit Agreement). Pro-ject States would therefore be required to establish one-variety communitiesand ginneries of sufficient area and capacity at the locations and with theseed outputs given in Table 8. Seed certification coupled with one-varietycommunities and ginneries offers the best means of maintaining and assuringvarietal purity. Provisions for developing a certification system for thequantities of seed proposed in this project are described in Annex 5.

25. Delinting. Improvements in the physical, and to some extent thephysiological, quality of cotton seed are impossible without some type ofdelinting, to remove part or all of the linters which prevent the free flowof seed necessary for cleaning and grading. There are two basic methods ofdelinting: mechanical delinting - a reginning process with special lintersaw gins - that removes one-half to two-thirds of the linters; and aciddelinting which utilizes acid (sulfuric) or acid gas to dissolve the linters,leaving the seed in a smooth and free flowing condition. In some cottonproducing areas, mechanical delinting is followed by one or more flame de-lintings (seed dropped through an intense flame) to singe off loose lintersand further improve flow characteristics. Partial removal of the linters,by mechanical delinting/flame delinting, improves flow sufficiently forcleaning with a basic air and screen cleaner, but not sufficiently fordensity separations on a gravity table. Acid delinted seed - linterscompletely removed - can be cleaned, sized, gravity graded, etc., in thesame manner as maize, sorghum or other kinds of smooth, free flowing seed.

26. The acid delinting process would be most effective in improvingthe quality of cotton seed in India. Gravity grading would remove boththe immature and pink boll worm damaged seed, thus greatly improvinggermination. Furthermore, acid delinting effectively controls any remain-ing pink boll worms and fumigation would not be necessary. However theacid process is difficult. The technology is not standardized and little

ANNEX 3Page 7

data is available on its adaptability to various production and climaticzones. A high level of operational and technical management is requiredbecause the "margin of safety" in terms of seed injury is not wide. Use ofacid (concentrated) also poses safety problems for the personnel involved.Considerable quantities of concentrated sulfuric acid are also required (1 tonacid to 2-1/2 to 3 tons of seed) adding considerably to processing costs.

27. Another problem demands caution before the widespread introductionof the technology into India. The wet acid process produces an effluent,the safe disposal of which is difficult. For every ton of seed, about0.6-0.8 m ton of acid and dissolved linters and 3,000 gallons of wash andneutralization water are produced. Acid delinting of 1,000 m ton of seed,would produce about 3 million gallons of effluent, or 400,000 cu. ft.Dumping the effluent into a stream or river would create serious pollution.The usual solution is to collect the effluent in a lagoon where it will bedisposed of by percolation and evaporation leaving an acidic sludge. Alagoon one hectare in size and about 5-6 ft. deep would be required fordelinting of 1,000 m ton of seed in one season. If percolation and evapora-tion were not sufficient to dry up the lagoon, the following season'soperation would require additional lagoon storage. The lagoon must besited so that percolation is not damaging.

28. Because of the many problems, acid delinting plants are proposedat only two sites - Hissar and Akola. They would serve as "pilot" units.If the problems can be satisfactorily resolved, the plant components couldprobably be copied in India at a much reduced cost for other sites.

29. The main delinting method proposed is machine delinting. A singleor "mill" cut, which removes about 5% by weight of linters (leaving about5-7% linters by weight on the seed), would be used, rather than the "1st and2nd cuts" ordinarily used in cotton seed oil extraction operations, becauseof the severity of mechanical injury to the seed from the 2nd close cut.After delinting the seed would be cleaned with an air and screen cleaner(special 'feed hopper to handle mechanically delinted cotton seed is neces-sary), treated and packaged.

30. Following machine delinting with flaming (flame delinting) wouldresult in a much better physical condition. Flame delinters, however, arenot standardized and those in operation use natural or L-P gas. Researchshould be undertaken in India to develop a satisfactory flame delinterusing furnace or fuel oil. This should be possible because good oil-firedburners for direct-fired dryers are already being manufactured. Appliedresearch in this area is recommended in the seed technology researchproposals in Annex 1.

31. Punjab Proposals. A 3200 m ton (clean seed) cotton seed operationis proposed for the Mukstar area. The operation would consist of a saw-ginginnery - adequate for about 15,000 bales/yr - universal density press, bulkstorage warehousing with partial aeration for conditioning and storage ofgin-run seed before delinting, a four stand machine delinting plant, a

ANNEX 3Page 8

processing plant (also adequate for 5,000 m ton of wheat in rabi season) andconveying, loading and unloading accessories. The processing/packaging com-ponent is similar to the 5,000 m ton cereal module, except that the number ofsilos would be reduced from 10 to 4 and the flat storage warehouse would bedesigned for aeration of bulk cotton seed and fumigation of both cotton seedand wheat in bags.

32. Pending the release of an improved variety (plant breeding would besupported by the ICDP) the Mukstar plant would serve for two varieties ofcotton - an early maturing variety and a late maturing variety. The plantwould be thoroughly cleaned before changing varieties. (Processing of twovarieties of different maturities is consistent with quality control proposalsat para 24).

33. Haryana Proposals. For the Sirsa area a combination cotton/wheatoperation is proposed, similar to that at Mukstar but sized to handle 2,500 mton of cotton. Pending release of a new variety this would be 320 F.

34. The Hissar facility proposed would handle one variety of cotton,initially H14. A small ginnery is provided (3 stands) but the volume(2200. bales) is not large enough to justify acquisition of a bale press.Acid delinting is proposed. The nominal capacity would be about 1.5 m ton/hr.However, initially there would be considerable down time. Nevertheless, theplant should do at least 800 - 1000 m ton/season, which is higher than theprogrammed target (700 m ton). A one hectare lagoon, 5 ft. deep, is pro-posed for effluent disposal. Water for washing and neutralization would beprovided by a tubewell and holding tank. The water in Hissar area issaline and unfit for irrigation but it would be satisfactory for washingand neutralization of acid delinted seed.

35. The cleaning/grading unit of the plant would have an air-screencleaner with matched capacity gravity table for density grading of thecotton seed. Fumigation of the acid delinted seed for pink boll workwould not be necessary. However, it may be required to control weevilsthat attack acid delinted seed and would therefore be catered for in plantdesign. Acid delinted seed should be treated with a fungicide, and perhapsa systematic insecticide, and necessary equipment would be provided.

36. Maharashtra Proposals. The Parbhani facility would handle seedof desi cotton. Ginning would be done on designated existing gins, withseed transported to the new plant. Since seed would be in sacks, a pneumatichandling system is not proposed. An aeration system for "problem" lots wouldbe provided. Delinting would be in a 4-stand linter gin. After delinting theseed would be conveyed via auger conveyor to the processing unit where itwould be cleaned with air-screen cleaner, treated and packaged.

37. The cotton harvest coincides with that of hybrid cereals there-fore major economies of combined use are not possible. However, the plantcould be used to a limited extent on rabi crops such as wheat.

ANNEX 3Page 9

38. A combination machine and acid delinting facility is proposedat Akola. Acid delinting would be on a pilot scale. Information and ex-perience is simply not available to justify a larger risk than a 1000 m tonpilot operation. The most likely problem is, of course, effluent disposal.The plant could handle two varieties - one machine delinted, and one aciddelinted - with thorough clean-up before changing variety. A one hectareeffluent disposal lagoon, 5 ft. deep, is proposed. A tubewell, or other watersource sufficient to provide a minimum of 5-6,000 gph, would be needed.Machine delinted seed would be fumigated in bags in the warehouse. Aciddelinted seed would be fumigated only as needed to control storage pests.

39. Investment Costs for cotton seed processing equipment are atTable 9. Operating costs are at Table 6. Design and Procurement would behandled by NSC as described above (para 17) for cereals.

Training

40. Lack of experience in cotton seed operations requires that at leastone agronomist or agricultural engineer be programmed for 1-2 months trainingin cotton seed processing and handling in a country with a modern cotton seedindustry. Training is costed in Annex 6.

NSC Vegetable Seed Processing

Background

41. NSC began vegetable seed production in 1964, to provide additionalcompetition to private sector producers, and to improve price stability. By1974/75 NSC produced 800 m ton of seed of 60 varieties of 28 species. Thereare no data on national production but NSC's share is estimated to be about10%. However, the NSC share of good quality seed is much greater.

42. Estimating vegetable seed demand is even more problematic than forcereals, since there are virtually no data (Annex 11). However it is assumedthat sales volume would be increased by 50%, to about 12,000 m ton, over theproject period. NSC plans to increase its production and market share to2,800 m ton and 23% respectively. This is considered feasible since NSCseed would be good quality and would increasingly be of improved varieties- much of the private sector vegetable seed produced is of poor quality andtraditional varieties.

43. Because vegetable seed production and processing are more com-plicated than for cereals, and volume is low, expansion of vegetable seedproduction should be undertaken by NSC. Transfer of responsibility forvegetable seed to SSC during their formative years would unduly burdenmanagement.

ANNEX 3Page 10

Project Proposals

44. NSC vegetable seed production would be concentrated in seven areasselected for their suitability for particular crops. They are:

Area Crop

1. Andhra Pradesh, Hyderabad Bhindi, F. Beans, Chillies, Brinjal,Bitter Gourd, Cowpea, Guar, Amaranthus

2. Himachal Pradesh - Solan Cauliflower, Cabbage, Radish, Capsicumand Kelpe

3. Karnataka, Bangalore Tomato, Gourds

4. Kashmir Cabbage, Beet, Turnip, Radish, Carrot,Spinach, Capsicum and Sugarbeet

5. Maharashtra - Jalgaon Onion, Dolichos, Bhindi

6. Punjab - Jullundur Radish, Carrot, Turnip, Palak, Methi,Peas, Bhindi, Cauliflower early andmedium

7. Uttar Pradesh - Bareilly Peas, Palak, Methi, Radish, Carrot,Tomato, Cauliflower early and medium

45. In order to minimize transport and handling costs it is proposedthat processing be done in two stages. Preliminary processing would bedone at simple plants located in each production area. These would be lowcapacity plants because over half of NSC's vegetable seed output would beof large seeded crops such as peas. These could be processed on con-ventional machinery at cereal seed plants on a custom basis. Investment inadditional capacity for these crops would not be warranted.

46. Final processing, packaging and storage would be at two more com-prehensively equipped centers at Delhi and Hyderabad. The latter would havedrying facilites capable of reducing moisture content to the 5-6% level neces-sary to ensure good shelf life. Conditioned storage would also be built toensure viability of stocks. To handle the increased throughput it is pro-posed to install small automatic packaging lines at the two main centers.This appears justified and has been included in cost estimates. However, thetype of equipment to install, and the most appropriate packaging material,needs further study. Provision is therefore included for a consultant toassist NSC in the design of the two main vegetable seed plants. Details ofproposed investments and costs are at Table 10. Consultants' costs are atAnnex 6.

ANNEX 3Table 1

INDIA

NATIONAL SEED PROJECT

Processing

Planned Seed Production 1975-81-(in '000 tons)

1974-7 5 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81(Actual)

PUNJAB

Wheat 7.8 10 12.5 15 19 23 25.5Paddy 1.4 1.4 1.6 1.9 2.1 2.3 2.5Hybrids 0.1 0 0 0 0 0 0Cotton -> - - - 2.0 3.2 3.2

HARYANA

Wheat 6.3 10 13.5 17 22 26 29.0Paddy 1.7 1.7 2.0 2.3 2.6 2.8 3.0Hybrids 0 0 0 0 0 0 0Cotton - - - - 2.0 3.0 3.0

ANIHRA PRA]ESH

Wheat 0 0 0 0 0 0 0Paddy 10.8 10.8 12.5 1)4.2 15.5 16.8 18.oHybrids 8.8 9.D 10.4 11.8 13 14 14

MAHARASHTRA

Wheat 0 0 0 0 0 0 0Paddy 0 0 0 0 0 0 0Hybrids 0.8 1.1 2.2 3.3 4.6 6.1 8.0Cotton 0 0 0 0 4.5 7.5 7.5

Total Phase I StatesProduction:

Wheat 14.1 20 26 32 41 49 54.5Paddy 13.9 13.9 16.1 18.4 20.2 21.9 23.5Hybrids 9.7 10.1 12.6 15.1 17.6 20.1 22.0Cotton - - - - .5 13.7 13.7

1/ Each SSC would produce a wider range of crops than indicated but cropsminor to the State would not influence plant capacity and are ignored.

ANNEX_3Table 2

INDIA

NATIONAL SEED PROJECT

Processing

Seed Processing Plant Nominal Capacities(in '000 m ton)

1976/77Existing 1980/81

1975/76 Plus 1978/79 TotalLocation Existing Interim New Plants Project

PUNJAB

Jullundur 4.0 6.5 5.0 9,0Ludhiana 0 0 5.0 7.5 2/Makstar 0 0 (Cereals 5.0 5.0

(Cotton 3.2 3.2Mandegobindgar 4.0 6.5 4 h.0Bhatinda 2.5 5.o _ 0

Annual Actual/Projected /Production - Cereals 11.4 16.9- 28.0

- Cotton - - - 3.2

HARYANA

Thanespar 0 0 10.0 10.0Sirsa 0 0 (Cereals 5.0 5.0

(Cotton 2.5 2.5Karnal 4.0 6.5 0 4.0Hissar 5.0 5.0 (Cereals 5.0 5.0

(Cotton .5 .5Yamunanagar 5.0 7.5 0 5.0

Annual Actual/Projected 1JProduction - Cereals 11.7 19.3 - 32.0

- Cotton - - - 3.0

ANDHRA PRADE;i

Nizamnabad 2.0 2.0 5.0 5.0Eluru 0 0 10.0 10.0Tanuku 5.0 7.5 0 5.0Vijayawada 4.0 4.o 0 4.oHyderabad 3.5 3.5 0 0

Annual Actual/Projected /Production - Cereals 19.8 26.o - - 32.0

MAHARASHTRA

Parbhani 0 2.5 (Cereals 5.0 5.0(Cotton 2.5 2.5

Akola 0 0 (Cereals 5.0 5.0(Cotton 5.0 5.0

Annual Actual/Projected 3/Production - Cereals o.8 5.4 - 8.0

- Cotton - - - 7.5

1/ Production projected for 1977/78.2/ Includes 2.5 transferred from Bhatinda3/ Production from small units.

INDIA

NATIONAL SEED PROJECT

Processing

Interim Capacity 1976-1978 - Equipment and Disposition

1/ Sewing Drying PortableCleaner-' Treater Bagger Machine Silo Heater Relocate 1978

PUNJAB:

Jullundur 1 1 1 1 - - To new Jullundur plant.Mandegobindgar 1 1 1 - To new Ludhiana plantBhatinda 1 1 1 1 - - To new Mukstar plant.

HARYANA:

Karnal 1 1 1 1 - - To new Thanesar plantYamunanagar 1 1 1 1 - Remain at Yamunanagar.

ANDHRA PRADESH:Drying silos remain at Tanuka

Tanuku 1 1 1 1 4 Other equipment to newNizamabad or Eluru plants.

MAHARASHTRA:

Parbhani 1 1 1 1 - - To new Parbhani plant.

Total required 7 7 7 7 4

F -- LJ

1/ 3 tons per hour capacity. CD

2/ Paddy capacity 800 tons/season/silo.

ANNEX3

INDIA

NATIONAL SEED PROJECT

Processing

Interim Capacity - Investment Costs(Rs'OOO)

Unit ForeignItem Cost No. Total Exchange

* Cleaners 236 7 1,652 95

* Treaters 61 7 427 95

* Baggers 10 7 70 95

* &awing machines 27 7 189 95

Drying - silos 139 4 556 15

- heaters 38 4 152 35

Spares (1C%) 236 5°

Assembly (174) 533

Import duty (40% on *) 935

Total 4,75o 50

ANNEX 3mu Table s

NATIONAL SBUD PROJECT

P80CE88S

CAP1SAL COSTS FOR PLANES OF 5.000 AND 10.000 M TONS 8ITON4L SE4A0SAL CAPACITY

11 - 5.000 I Ton ----- _____ ----------10 00O M T o n----------------------------

unit Cot uIber of Units Total Cost % For- Thanbar of Units Total Coat % Foreign

(R. 000) (Rs. 000) sign (ls. 000) Exchange

1. Plant Site 52/ba 3ha 156 3 ba 156

2. Buildinas

Intake Pit 27.3 1 27.3 2 54.6

Intaka Souae 258 1 258 1 258

Silos - 20 million & Foundations 139 10 1,390 20 2,780

Proceesing Building 742 1 742 1 742

Warehouse 1,500 a tone 588 1 588 2 1,180

Workshop 73 1 103

Laboratory 105 1 is"

Offices 73 101

Roads 42 51.6

Fencins 124 _ 124

Sub-Total 2/ 3,420 5,51

Architect's Fea (8%) 270 _ 444

Sub-Total 3,690 15 6,000 15

3. Machinery

Horl-ontal Conveyors

40 N tons/hr x 30M 86.7 1 86.7 30 21/ 173 30

40 M tons/hr with tripper x 55M 188 1 188 30 2- 376 30

40Mtons/hr x 5M 158 1 158 30 2i' 316 30

20 M tons/hr x 20M 57.8 1 57.8 30 1 57.8 30

20 K tone/hr x 26M 74.9 1 74.9 30 1 74.9 30

20 Mtons/hr with tripper x 30K 103 1 103 30 1 103 30

Bucket Elevators

40 M tons/hr x 17M 47.1 1 47.1 35 .2 94.2 35

20 M tont/hr x 17M 30.0 2 60 35 2 60 35

10 M tons/hr x 11 M 16.0 6 96 35 9 144 35

2JSCalper - 20 ton/hr 80.1 1 80.1 95 2 160 95

Sheller - 20 M ton/br2

! 56.1 1 56.1 95 1 56.1 95

bAster 38.0 5 190 30 10 380 30

Surge Bins - 10 M tons 2/ 11.0 14 154 30 20 220 30

Air-screen cleaners with indentEdcylinder. - 3 M ton/thr 236 2 472 95 3 708 95

Gravity Cleaner - 1.5 M tons/hr 61.5 2 123 95 2 123 95

Treater - wet2/ 61.1 1 61.1 95 3 183 95

dry 21 34.8 2 69.6 95 3 104 95

Bagger-weighec- 9.9 2 19.8 95 4 39.6 95

Sawing Machins2/ 27.3 2 54.6 95 4 109 95

Bag carts .3 20 6 10 30 9 10

Bag Conveyor 23.2 3 69.6 30 4 92.8 30

Sub-Total 2.227 ,583

4. Other Eau.iymnt

Vacuum Cleaner 10.7 1 10.7 25 2 21.4 25

Bag Clean r 21.4 1 21.4 25 2 42.8 25

Weigh Bridge - 20 M tons 105 1 105 30 1 105 30

Diesel Generator 166 1 166 30 1 166 30

D.st Extraction & Cyclones 565 1 565 30 1,066 30

Screening Bing 17.1 2 34.2 30 2 34.2 30

Transformer Station - 1 130 40 1 150 40

Workshop Toole & Equipment - - 87.6 20 - 87.6 20

Car 33.1 1 33.1 25 1 33.1 25

Light Truck 88.2 1 88.2 25 1 88.2 25

Fire Fighting Equipsent - 78 30 - 105 30

Co.pressor 13.4 1 13.4 40 2 26.8 40

Laboratory Equipment - - 134 30 - 134 30

Sub-Total 1,467 2,080

5. Spares (101 of equipment) 368 25 569 25

6. Installation & Assmbly (171,) 645 992

7. Total 8.553 22 13,380 22

8. Import Duties 340 _ 540

9. Total with Duties 8,893 22 13,920 22

1/ Costs are FUR at sit..2/ Iten sub ect to import duty (40% cif)

INDIA

NATIONAL SEED PROJECT

SEED PROCESSINGOPERATING COSTS-/

(Rs.fton of Seed) 3

------------------------------------- Cotton-----___________________________________- -------------- ----------------------- ------ --Gin Run Seed ------------- -

Wheat Paddy Hybrid Acid Delinting Mechanical Deliuting Acid Delinting Mechanical Delinting

DIRECT

1. Processing Materials 150 150 200 490 190 420 1202. Electricity 6 8 10 50 50 30 30

3. Other Utilities 1 1 1 2 1 2 14. Yuel Oil 15 30 25 15 - 15 -

5. Certification Materials 10 20 30 30 20 30 20

LABOR 18 18 26 78 41 42 15

SUPERVISION IN PLANT 26 26 26 26 26 26 26

MAINTENANCE

1. Machinery and Equipment 5% 5% 5% 10% 5% 10% 5%2. Plant Buildings 2k%/ 2a% 2k% 3k4% 2k% 34% 2k%

11 Based on NSC/TDC experience, adjusted for project areas and facilities.

21 Intake being either gin-run Seed or kapas to be ginned before seed delinting; delinting is either acid or mechanical.

,All

ANNEX 3Table 7

INDIA

NATIONAL SEED PROJECT

Cereals Processing Plant Staffing Pattern V/

Rs. Per10,000 Ton 5,000 Ton Month 1/

Plant Superintendent/Engineer 1 1 2,000

Establishment Assistant 1 - 800

Accounts Officer 1 - 1,000

Account Assistant 1 1 6toRecords Keeper 2 1 500

Shift Supervisor - -

Foreman Intake 3/ 1 - 800Foreman Processing and Drying - 2 2 800Foreman Warehouse 3/ 1 1 800Shift Mechanics 4 4 800

- Labor Non-seasonal(permanent) 10 6 300- Labor Intake 5/man-months/yr. 240 120 200- Labor Processing man-months/yr 150 100 200- Labor Warehouse man-months/yr 100 70 200- Labor General man-months/yr. 40 40 200

Quality Control Shpervisor 1 1 1,200

Seed Analyst 2 1 800Typist 1 1 400Drivers 3 2 300Watchmen 2 2 200Attendants 4 2 200

1/ For typical processing plant only. (see footnote 5 for hybrids)A cotton seed processing line based on kapas would require additional12 man years labor in a cotton ginning/baling section; when intake isgin run seed, labor needs in processing would be marginally lower.

2/ Seed production officers would assume these positions during theprocessing season.

3/ Seed production assistants would provide at least 8 foremen positions.~I/ Excluding benefits, about 40%.&'/ 100% additional for hybrid processing.

ANNEX3Table 8

INDIA

NATIONAL SEED PROJECT

Summary of Cotton Seed Proposals

Punjab Haryana MaharashtraItem Mukstar Sirsa Hissar Akola Parbhani

Clean seed m ton 3,200 2,500 500 5°000 2,500Gin-run seed m ton 4,500 3,500 700 7,000 3,500Bales 14,400 11,300 2,200 - -

Ginnery (saw type) 6 stands 6 stands 3 stands 3/ 3/Universal press yes yes no 4/ - -Delinting:- Machine 4 stands 4 stands - 6 stands 4 stands- Acid (wet process) - - 700 m ton - 1,000 m tonAerated storage for

cotton seed yes yes yes yes yes

Pneumatic loading,unloading, bulk seed yes yes yes no 6/ no 6/

Processing cotton yes yes yes yes yesProcessing wheat m ton 5,000 5,000 - - -

Fumigation Fumigation in warehouse after bagging

1/ Includes complementary handling of 5,000 m ton wheat seed in Mukstar andSirsa facilities.

2/ Assumes 30% loss due to rejections, linter removal, and clean-out.

3/ Existing ginneries will be designated as one variety in Akola andParbhani areas; only gin-run seed handled.

4/ Bale volume too small to justify press; pressing will be done elsewhere.

5/ Parbhani is programmed for machine delinting 2,500 m ton gin-run seed; andacid delinting 1,000 m ton in pilot operation.

6/ Gin-run seed at Akola and Parbhani will arrive in sacks. No bulk loadingand unloading equipment is required.

MUl1

NATiONaL 5132 P10J3CT

Seed Proeosins

Invoetamt Costs of Cotton And Cotto.wbeat Processing Plants

Unit Ponjb ab . Haan Kabartra Foreign FortgnUnit Cost Ihkstar 5irea Hissr- kola Parbbani Total achang.e Exchange

R No. R'000 No. R' 000 No. Ro000 No. No. Rt' O R'o0O S Rj 0

Sites and Civil Norio

Plant site Ha. 50.0 3 153.O 3 153.o 5 253.0 3 250.0 5 15o.oIntake pit No. 26.5 1 26.5 1 26.5 - 25.0 - - - 25.0Intake pit bousing 0.6 400 250.0 400 240.0 - _ _ _ _ _Silos, drying, including

foundatiOn Do. 135.0 - - - -Processing building K2 1.0 720 720.0 720 720.0 (in delinhing) 500 (in delinting)500.0lork shop K2 0.3 400 120.0 400 120.0 200 6o.0 200 60.o 200 60.0

Office and laboratorybuilding K2 0.5 500 250.0 500 250.0 400 200.0 500 250.0 400 200.0

Kaays and storage shed K2 ,.1 2,000 i0oo.o 2,020 500.0 600 152. - - -

ainning & preas building K2 .5 600 40sjo Bo 400.0 600 00.0Seed storage warehouses IC 0.0 20,0O 1,920.0 1)P00 1,440.0 1,200 960.0 3,200 2,560.0 1,600 1,440.0Baled cotton stcrage W 0.2 300 60.0 300 60.0 100 20.0 - - - -

Delinting buildirg K2 0.5 600 300.0 600 300.0 o00 400.0 1,400 700.0 Boo 400.°goods - _ 50.0 - 50.0 50.0 50.0 50.0Tercing _ _ _ 120.0 _ 120.0 - 200.0 200.0 120.0Effluent disposal pit

(1 ha x Sft) No. - - _ _ _ 1 100.0 1 100.0Architect's feo (dS) 3342.0 214.0 334.0 235.0

Sub-total 5,136.0 4,618.0 2,899.0 4,504o. 3,180.0 20,337 15 3,050

Nachinery

Ginnery, saw-gin type-l/ 1,600.0 1,DOO.0 800.0 - - - - 4,000 30 1,200Bale press V No. 900.0 1 900.00 1 900.0 - - _ - _ _ 1, 8O 95 1,710

K chine .elirting:P numatic shaker/cleansr No. 05.0 - 65.0 1 65.0 - - 1 65.o 1 65.0 260 30 7dLister gins No. 50.0 4 200.0 4 200.0 - - 6 300.0 4 200.0 900 30 270

- Spars saw cylinders No. 15.0 1 15.0 1 15.O - - 1 15.O 1 15.0 00 30 1d- Conveying system LS 87.5 87.5 - 111.0 67.5 373.5 30 112- Oo_er No. 160.0 1 160.0 1 lbOOo - * 1 160.0 1 160.0 640 95 boa- ilectricals - - 50.0 - 50.0 - - - 75.0 - 50.0 225 10 23_ Crating and shipping 5.0 50.0 60.0 50.0 a2o - --ossmbly and _ _ 103.0 - 103.0 - _ - 130.0 - 1D.0 439

installation (17ii)SOt-toc 730.0 730.0 916.0 731. 3,107 1,109

-vid delintings31- Plant (2 * torn/hr) 1,060 - _ _ - 1 1,060 - - 1 1,060 2,120 95 2,D14- sectricals Set 87.o - _ - 1 87.0 - - 1 87.0 174 10 17- Heavy sheet metal,

spouting and ducting Set 30.0 - - - - 1 30.0 - - 1 30.0 nO 10 oHea vywnll, 500 gal.

tark, to deliver cid 1 5.O - - - - 1 5.0 - - 1 5.0 10 10 I- Heavy w11, ,ODO gal.

acid storage tack 0 5O.o - - _ - 1 50.0 - - 1 50.0 130 1J 1J- Tubewell and water tart 1 100.0 - _ _ - 1 100.0 - - 1 100.0 200 10 27_ Meta platforming arn

workirg bins Set 30.0 - - - - 1 30.0 - - 1 30.0 60 10 6- Spore parta (10%) - - - - - 195 - _ - 195 390 10 ;9

Assfebly ondintafllation (17½ S) - - - - - 340 - - - 340 odo -

S.mo-t.tl1 1,897 1,497 3,794 2,11,

Cotton seed aeration,conveying end unloadingequpmient - - 300 300 214 110.0 77.0 1,;x06 55 SS?

Cotton and wheat seed cleaningtreating and pakradng:

- Oonveyors/elevatore - - 715 715 - 270 270 1,970 30 591- Scalper (m tor/br) . No. 78.0 1 78.0 1 78.0 M - 1 7d.0 - 234 95 222- Heater/ian lor

drying bins No. 4.0 4 160.0 4 160.3 - - 320 30 96- Serge bins No. 10.0 10 100.0 10 100.0 - - 4 40.0 4 40.0 2dO 30 d4

- Air & sorsen cleamnr 4/ No. 210.0 2 420.0 2 420.0 1 210.0 2 420.0 2 420.0 1,690 95 1,d00- Indent cylinder No. 72.0 1 72.0 1 72.0 - - - - - 144 95 136- Gravity table No. 60.0 2 120.0 2 120.0 1 60.3 - - 1 oO.O 360 95 s42- Treater, slurry No. 60.0 2 120.0 2 120.0 1 60.0 2 120.0 2 120.0 54.0 95 513- Bager-wedgher No. 15.0 2 30.0 2 30.0 1 lS.O 2 30.0 2 30.0 135 9; 128-ag closr N.. 26.0 2 52.0 2 52.o 1 26.0 2 52.00 234 222- Spare sewng heas No. 16.0 1 16.0 1 16.0 1 16.0 1 16.0 1 16.0 d0 91 76- bag trucks (4-wheel) No. 0.3 15 4.5 15 4.5 10 3.0 20 6.0 15 4.S 22.5 1i 2- Bag conveyor No. 21.0 3 63.0 63.3 2 12.0 ' 63.0 3 61.0 294 25 74- dighbridge (20 s ton) No. 105.0 1 105.0 1 105.o 1 125.0 1 105.0 1 105.0 525 25 130- Diesel generator No. 165.0 1 165.0 1 165.0 1 165.0 1 165.0 1 165.0 625 30 250- Aspiration systa

0/outside cyclones - - - 300.0 - 300.0 - 300.0 - 300.0 oc.,) 1,500 25 375- Screening bins No. 15.0 2 30.0 2 30.0 1 15.0 2 3.0 2 30.0 135 30 40- Transformer station - - - 500.00 - 500,0 - 3000 - Oi.0 J-3.0 1,900 40 o7- Jocous claanvr No. 13.5 2 2D.1 2 20.0 1 10.0 2 20.0 2 20.0 90 25 2S- bag cleaner No. 2 .0 1 20.0 1 20 .0) 1 21.0 1 20.0 2 40.0 120 25 30- Utility vehi le No. 50.0 2 100.0 2 100.0 1 50.0 2 100.o 2 100.0 450 2D 11)- Light truck No. 60.0 1 60.o 1 00.0 1 0.0 1 60. 1 dO.0 410u 25 100- Hotorcycle No. 7.0 2 14.0 2 ?4.D 2 14.0 2 14.0 2 14.U 70 25 lo- Fire & -aety equiprent - - - 100.0 - 100.0 - 120.0 - 1o0.0 - 100.) 500 JO 150- Coeprsssor, air No. 13.0 2 26.0 2 26.u 1 1j.0 2 26.0 1 l'.0 105 40 LO- Spare oPrtc (5%) - - - 170.0 - 170., - t0 - l1 - 117 655- Assesbly ao

inctollation (17.5%) - 600 - 600 - 2MO - 412 - 410 2.302

-ub-total 4,1d0 4,180 1,9o4 2,665 2,670 16,079 .,125

o-al Ccost 12,646 12,328 7,774 .o.00 45Fs55 50,12 1s,600

3asec on turn-key cost estists psrsded by lonal company.Bale turnout is toe smell at Hissar to justify press; facilities at Akola and Parbhani do not include ginneries.Ahid telinting plant inludes intake pit and comeyor, al1 needed elevators (plastic buckets, acid resistant belting),vealpor with speciea hopper for handling gin ran seed, acid delinting and wash machine, drain auger, vibrating tray dryer and Ieoter.;-aper and air ani screen machine ust hae separate hopper for feeding sechahnially dlinted cottonseed. Grain seed hopper silloc work, and cottonseed hopper will not work wall for grain seed. Two interchangeable hopper% are requirso.

AM=E 3

INDIA

NATION&L SEED PROJECT

Investment Costs - NSC Vegetable Seed Operation

Foreign Fcr i gnUnit Unit Cost Total Cost Ebchange &change Year 1 Tear 2 Tear 3

R No. ROOO % RI000 R'000 RE000 .R'000

Processing Plants

Clipper * No 34,60o 7 242 95 230Fine cleaner * No 81,000 7 567 95 540Indented cylinder * No 65,000 7 455 95 430Gravity separator * No 113,600 7 795 95 755Accessories (screens,

handling equipment,etc) * IS 25,000 7 175 95 165Associated minor civil works 1S 100,000 7 700 - _

Packing and Storage

Packaging line iS 400,000 2 800 30 240Air conditioning LS 400,000 2 o00 30 240Associated minor civil works LS 200,000 2 400 -

.,ub-total 4,934 2,600 2,934 2,000

Customs Duty (40% on imports * ) 900 - 500 40o

Physical Contingency (20%) 1.160 550 68o 480

Total Investment Cost 6,994 3,150 4,114 2,880

J)~~~~~~~~~~~~~~~~~~~~.

__ S <EED -. - _ _

0000~~~~~~

;~~~~~~~~~~~ --1 -- E- -= -

4-- -- - - -- -- - - -

4~~~~~~~~~~~~~~~~ I

3 hr>:QAi-O0000

t1s 1 -------

2 j 1 1 ; * |

m l| | | t-~~-~~ ~~~~~~~ ~--L + ? 1 +I

1 2{ n| + . …

'~~~~

X2NNY

ANNEX 4Page 1

INDIA

NATIONAL SEED PROJECT

Private Sector

A. Background

1. Private sector involvement in the seed industry dates back to thelate 19th century. However up to the 1960s it was narrowly based, focusingalmost exclusively on vegetable and flower seed. With the release of hybridand HYV cereals in the sixties, private sector operations were expandedrapidly in pursuit of the easy profits which resulted from the high pricesfarmers were prepared to pay for the new seed. The area of certified seednationwide grew from 360 ha to 35,000 ha between 1963-64 and 1968-69. Muchof this expansion was in the private sector.

2. However the boom was short lived. By the late sixties supply ex-ceeded demand and many companies withdrew from seed production or went intoliquidation. Most affected were companies dealing in the self-pollenatedcrops, wheat and rice. With these crops, unlike hybrids, the initial demandlevel was not sustained because- farmers could retain their own seed; farmer-to-farmer exchange was also common. The early seventies was a period of con-solidation, followed by further rapid expansion though not at the pace of thesixties.

B. Present Situation

3. To assist in project preparation the Agricultural Finance Corpora-tion (AFC) made a survey of the private sector. The survey indicates thatprivate sector producers can be grouped in four strata:

(a) the small individual grower producing seed onfamily land for a very localized market. Thereare probably 1 - 2,000 of these;

(b) the small producer or producer's associationgrowing seed on 120-200 ha either by contractor on members' land. Marketing is restrictedto adjacent districts. There are perhaps 250of these units, many not more than 2-3 years old;

(c) the medium producer or producer's associationgrowing 1,000-1,500 ha of seed. Production isusually by contract and may be spread overseveral areas and crops in different States.The seed is usually processed through a simpleplant. Marketing is fairly wide-spread. Thereare about 30 such units, most of which have beenin existence for several years; and

ANNEX 4Page 2

(d) the large scale seed company producing up to 2,500 haof seed on contract. There are about six such units.They have a fairly sophisticated operation, employingscientific personnel and procedures.

4. The estimated output of the main crops produced by the privatesector in 1974/75 was:

% of National

Crops Production/-(M ton) Production

Maize 7,400 40Sorghum /2 8,000 90Pearl millet /2 9,250 70Cotton /2 1,800 100Vegetables 7,900 90+

/1 Includes non-certified seed./2 Mainly hybrid seed.

C. Project Proposals

5. From the above it can be seen that the private sector plays acritically important role in the production of seed of hybrid cereals, hybridcotton and vegetables. It is proposed that the project support the continuedexpansion of the private sector to maintain a reasonable public/privatesector balance and hence the spur of competition. Inclusion of the privatesector in the project would help safeguard it from the discrimination it hasperiodically suffered from Governments in the past. This included impededseed movement and inadequate access to: breeder and foundation seed, certifi-cation services, official variety trials, and credit.

6. The project would assist producers in the three largest size groups- 3 large, 10 medium and 25 small - the fourth group operates on too small ascale to warrant support. All relevant activity, from plant breeding throughprocessing and storage, would be eligible for project financing.

7. Investment models for the three producer groups were prepared,by the Working Group, based on the AFC survey data. In addition a moreelaborate investment proposal was prepared by one of the large companieswith AFC assistance. These are the basis for project proposals and costestimates. However, unlike the public sector there would be no uniformityof investment proposals. Thus this component of the project would lend itselfto a credit project approach. Individual proposals would be financed through,and subject to the scrutiny of, commercial banking channels. In addition allproposals would be subject to the technical scrutiny of NSC. NSC's engineeringservices would be available to give technical guidance to private producers.

ANNEX 4Page 3

8. Cash flows and rate of return calculations are not presentedseparately for the private sector since they would be similar to thoseof SSC. Diseconomies of scale in the private sector would be offset bylower overhead costs. Commercial bank and NSC scrutiny would ensurethe soundness of proposals accepted for inclusion in the project.

9. Procurement for the private sector would be left to customerchoice. Individual purchases would be too small, varied and wide spreadto permit bulking for competitive bidding. Most of the equipment wouldbe small scale, of the types manufactured in India, and which are com-petitively priced. However, any private producer would be eligible toparticipate in the NSC executed bulk procurement should he desire to do so.Details of project proposals and costs are at Table 1.

IIA

INTIONUL SW PFUWT

Private Sector - Investmnt Costs

Small Corpanies (25) Conies (10) z Total Foreign Fcr 'gnCo. Cost Proj ject Cost C t o sCo ost Proc Cost Yroject Cost cbange lkhang. rear 2 Year 3 Year 4

R'OOO R'OOO R'OOO R'OOO R'OOO Roo0_ R'I000 RI000 RIOO0 R'OOO '$000

Research and ktension

Larml purcnase 625 1,875 1,875 - 563 937 375Land development 175 525 525 15 75 158 262 105Buildings 250 750 750 15 110 225 375 150Slijpment 100 300 300 4 0 120 90 150 60Vehicles 700 2,100 2,100 25 5 630 1,050 420

Sub-total 830

Processing Plantel/

Lard purchase 50 150 150 - - 45 75 30Buildizgs 150 3,750 700 7,000 2,000 6,ooo 16,750 - - 5,025 8,375 3,350Equipment 200 5,000 500 5,0o0 O4,000 12,000 22,000 LO 8,800 6,600 11o,0o 4,400Vehicles 50 1,250 200 2,000 - - 3,250 25 810 975 1,625 650Mliscellaneous 50 1,250 100 1000 450D 1.300 3550 - _ 1.065 1,775 7.10

Total Investment Costs 450 11,250 1,500 15,000 8,350 25,000 51,250 21 10,440 15,376 25,624 10,250

1/ Nominal capacities per companW are: small 1 x 500 x ton, medium 2 x 750 m ton, large 2 x 2,500 m ton.

ANNEX 5Page 1

INDIA

NATIONAL SEED PROJECT

Quality Control

Introduction

1. National Seed Project success would depend, inter alia, onrigorous quality control throughout all phases of seed multiplication, pro-duction, processing, and marketing, to ensure that the genetic, physiologi-cal and physical qualities of the seed are maintained so that they willperform well in the farmer's field. Quality control has three importantaspects: establishment of minimum seed quality standards; formulation andimplementation of a system and procedures for achieving and maintainingthese; and a method to identify the causes of quality problems and theirremedy.

Present Situation

2. India has already taken the major steps toward the establishmentof an effective seed quality control program. The Seeds Act was passed in1966. The Rules required for implementing the Act were formulated andpromulgated in 1968. Basically the Act prohibits the marketing of seed,of notified varieties, which do not meet minimum standards for purity andgermination as prescribed by the Central Seed Committee established underthe Act. In addition to determining which varieties shall be notified, theCentral Seed Committee acts as the principal advisor to GOI on implementa-tion and enforcement of the Act, and all other seed matters.

3. The Seeds Act provided for the establishment of State seed testinglaboratories. Many States have established and notified an official seedtesting laboratory. Others, however, have chosen to notify the NSC labora-tory as the official laboratory for their State. Of the four project States,Maharashtra and Andra Pradesh have well established, notified seed testinglaboratories, although those in Andhra Pradesh need substantial assistance.The Punjab has a notified seed testing laboratory on the PAU campus, but itis essentially inoperative due to lack of staff, space, equipment, and atesting program. Haryana has a small seed testing unit at HAU, but it isinconsequential. GOI runs a Central Seed Testing laboratory to serve as areferee in disputes and to check performance of State laboratories.

4. In terms of quality control, the most important and far-reachingprovisions of the Seeds Act and Rules relate to seed certification. Underthe Act each State is empowered to establish a seed certif[cation agency,for the purpose of providing a quality control service to seed producers,and a third party guarantee of the quality of each seed lot. Certifica-tion is voluntary and applicable only to notified varieties. 'vlininum

ANNEX 5Page 2

standards for certified seed, and inspection procedures, have been promul-gated by the Central Seeds Committee. Eight States have established seedcertification agencies. They include Andhra Pradesh and Maharashtra.Punjab and Haryana have notified the NSC as their official seed certificationagency.

5. Despite the existence of sound, enabling legislation few Stateshave made adequate progress in seed quality control and market regulation.Recognizing this GOI has sanctioned a scheme to provide financial assistanceto States to establish independent Certification Agencies. A Central SeedCertification Board is to be constituted to coordinate certification pro-grams to ensure interstate uniformity of standards and procedures. TheStates' sector of the Fifth Plan includes provision to strengthen State seedtesting laboratories. Finally GOI is considering a proposal to assist Statesestablish independent control and regulatory agencies. These would enforceminimum standards and labeling provisions of the Seeds Act, the FertilizersControl Order and the Insecticides Act.

6. Deficiencies in quality control procedures have caused substan-tial problems in the seed industry. Breeder and foundation seed have notalways been of highest quality, thus contributing to roguing problems andrejections at the certified seed class level. Testing laboratories have notbeen able to render the prompt and accurate services required in a progres-sive seed industry. In some cases, standards and rules which were workableand effective in the early stages of seed industry development, have becomecumbersome and act as a constraint on operational efficiency. Thus thoughthe present situation is far more favorable than it would be in most devel-oping countries, much remains to be done to develop quality control agencieswith capabilities commensurate with seed industry development targets.

A. Project Proposals

Varietal Release and Notification

7. Established varietal release policies and procedures are adequate.Both the Central and State Varietal Release Committees, however, should es-tablish mechanisms for declaring varieties obsolete (de-notification) whenthey are replaced by superior varieties of similar adaptability. Privatebreeders are developing new varieties and these will be submitted to theVarietal Release Committees and Central Seed Committee for considerationof notification. These varieties should be considered on their merits withno discrimination with regard to source.

Breeder Seed

8. Breeder seed production is discussed in Annex 1. However, sincethe quality of breeder seed has been a source of recurring problems in theseed industry, the following recommendations pertaining to quality controlare made:

ANNEX 5Page 3

(1) The originating breeder should describe the varietyas accurately as possible. Particular attention shouldbe given to detailing those characteristics useful tofield and seed inspectors in identifying varieties. Thedescription should not just encompass average characteris-tics but should also establish the limits of variabilityof the principal characteristics, and describe all realvariants (off-types) and their incidence in the population.

(2) Varietal maintenance and trueness-to-variety of breederseed should be closely monitored by a committee comprisingthe breeder and representatives from ICAR, NSC, and thefoundation seed and Certification Agencies from the Statein which the breeder seed are produced.

(3) ICAR should maintain in cold storage an authenic stock(1-2 kg.) of notified varieties to serve as a reference forquality control of breeder seed production. The releasinginstitution should also maintain a stock of authenicatedbreeder seed in cold storage to serve as a duplicate andimmediately available reference.

Foundation Seed

9. The essential task of the seed programs is to multiply breederseed up to the quantity required for large scale seed production while main-taining the highest standards of varietal purity. Use of high qualityfoundation seed virtually eliminates seed production problems related tovarietal impurity. Rigorous precautions, therefore, must be taken tomaintain varietal purity during foundation seed production. Precautionsinclude: careful selection of land; isolation as required; thorough clean-up of all harvesting, drying, cleaning and packaging equipment and storagefacilities; and maintenance of complete and accurate records on each lotof foundation seed produced.

10. To ensure highest quality of foundation seed, the followingactions are recommended:

(1) Each foundation seed unit should formulate and implementpolicies and procedures for maintaining varietal purityof the species of seed handled. No deviation frompolicies or procedures should be tolerated.

(2) The originating breeder or his replacement should berequested to periodically visit foundation seed pro-duction fields and make such inspections as he deemsnecessary.

(3) All foundation seed production should be under officialseed certification and subjected to periodic inspectionby the most experienced inspectors of the CertificationAgency.

ANNEX 5Page 4

(4) Post-control field trials should be made on all foundationseed lots produced to determine varietal purity. Theseplots should observed by the originating breeder and cer-tification inspectors as well as by foundation seed per-sonnel. Foundation seed post-control plots will alsoserve as "pre-controls" for certified seed production.Problem lots can usually be identified in advance ofregular certified class inspection and actions takenaccordingly.

State Seed Corporations

11. The SSC would be the major seed producers in project States.Although the seed would be produced under certification the SSC would notrely entirely on certification for quality control. Each would establishits own internal quality control program. A quality control section wouldbe established at SSC headquarters. To ensure objectivity it would be inthe Marketing Division since this would not be responsible for seed handling,hence could not effect quality. The section would formulate and implementquality control procedures applicable to all operations - production throughdistribution. It would have a small laboratory at headquarters. In additionsub-units would be established at processing plants, they would also beequipped with testing laboratories. For field work staff of the ProductionDivision would be used but procedures and quality control administrationwould remain with the Quality Control Section of the Marketing Division.Costs of headquarters laboratories are included in SSC investments at Annex12, plant laboratories are costed with plants at Annex 4.

Seed Certification

12. Seed certification services have not yet been organized in Haryanaand Punjab; certification agencies are operative in Andhra Pradesh and Maha-rashtra within the State Department of Agriculture. Haryana and Punjab wouldestablish, staff, and equip State Seed Certification Agencies (SSCA). Theywould be registered under the Societies Registration Act of 1960. Afterorganization, the SSCA would be officially notified as provided for in theSeeds Act. The certification agencies in Andhra Pradesh and Maharashtrawould be re-organized and also registered under the 1960 Act. Each SSCAwould have a central headquarters and several field stations (usually two).The latter would be located in the compact areas. The Agency would stationat least two inspectors at each major processing center to make necessaryinspections and control the packaging and tagging of seed. These inspectorswould work closely with the quality control units of the SSC.

13. After establishment and re-organization, each SSCA would initiatean in-service training program in cooperation with NSC and the State Agri-cultural University. The varietal evaluation plots of the Agricultural Uni-versity and the post control plots of the foundation seed program would beused for training in varietal identification and general field inspectionprocedures.

ANNEX 5Page 5

14. The Agencies would cooperate with foundation seed programs in postcontrol trials of all foundation seed lots, which would also serve as pre-control plots for certified seed. They would also institute post controltrials of certified seed lots selected at random up to 20% of the totalnumber of lots certified. These post control trials could be carried outon Agricultural University farms under a memorandum of agreement.

15. Certification regulations and standards must be realistic andreflect the growth and modernization of India's seed industry. Processorswould be allowed to bulk seed of different growers that are of the samevariety and from the same lot of foundation seed so as to permit efficien-cies in processing operations. The minimum standards for certification andinspection procedures adopted by each Agency would meet or exceed those es-tablished by the Central Seed Committee. The testing of seed, as requiredfor certification, would be done by the State Seed Testing Laboratory undera memorandum of agreement establishing testing priority and fee.

16. GOI has agreed to create the Central Seed Certification Board (CSCB)with composition satisfactory to the Bank, before negotiations (para 5). Itwould be responsible for coordinating the work of the State Seed CertificationAgencies and monitoring operations to ensure uniformity of standards, rulesand procedures.

17. SSCA Agency investment costs are shown at Table 1. A typical Agencystaffing pattern is at Table 2. Anticipated operating costs and revenues areat Tables 3-6. The Agencies would operate at a deficit for one or two yearsuntil work volume increased; these deficits would be covered by the project.

Seed Testing

18. Efficient and accurate seed testing is vital to quality control ina seed industry. Well staffed and equipped laboratories are required to pro-vide the three essential testing services: for the Certification Agency; forfarmers and non-certified seed producers; and for seed control to determinecompliance with labeling requirements prescribed in the Seeds Act. Usuallyone good laboratory per State would suffice.

19. Haryana would construct, staff, equip and notify a seed testinglaboratory. The Punjab Laboratory at PAU would be renovated, expanded, re-equipped and adequately staffed. The two laboratories in Andhra Pradeshwould be re-organized so that the laboratory at Tadepalligudem became anoutstation sub-ordinate to the laboratory at Rajendranagar. The two wouldbe renovated, expanded, re-equipped and adequately staffed.

20. The State seed testing laboratories would give priority to testsfor the Certification Agencies. The seasonally excess testing capacitywould be used to expand testing for enforcement of the labeling provisionsof the Seeds Act, and to step up testing of farmer saved seed. The CentralSeed Testing Laboratory would continue to develop and standardize seed test-ing procedures and monitor the performance of the State laboratories.

ANNEX 5Page 6

21. Investment costs for establishing and/or strengthening seed test-ing laboratories are given in Table 7.

Training

22. India is fortunate to have a small cadre of well trained seed spe-cialists. These would be used to maximum advantage to train the greatlyexpanded staffs envisioned in the project. Much of the training requiredcan be given in India, especially by NSC and at TDC. A few key individuals,however, would be programmed for observational tours of pertinent seed facil-ities and agencies in the developed countries. Details are at Annex 6.

Technical Assistance

23. Present recording and accounting procedures are not adequate forthe planned certification work load of SSCA. Improved procedures are neces-sary to safeguard quality control per se and for cost control to maintainfinancial viability. A consultant would be provided, through CSCB, to assistSSCA develop improved procedures. Proposed terms of reference and costs areat Annex 6.

INDIA

NATIONAL SEED PROJECT

QUALITY CONTROL1/

PSCA: INVESTMENTS(Rs.000)

____________________-YEAR-----------------------------____1_-___- -----2------ ------3 ------4----- % Foreign

Unit Unit Cost No. Rs. No. Rs. No. Rs. No. Rs. Total Exchange

A. HEADQUARTERS

2Office building M 0.6 - - 370 222 - - - - 222Garage M

20.35 _ _ 40 14 - - - - 14

Site and services (15% of bldg. - -- - 35 - - - - 35cost)

Office equipment - - - 30 - 20 - 20 - - 70Label and tag printer No. 55 _ - 2 110 1 55 - - 165 70Vehicle w/trailer No. 60 1 60 - - - - - - 60 25Car No. 30 1 30 - - 1 30 - - 60 25Motorcycles No. 7 1 7 - - 1 7 - - 14 25Architect's fee (8%) _- - 19 _- - - 19

Subtotal 127 420 112 - 659 20

2/B. FIELD OFFICES-

Office equipment - - - 15 - 15 - 10 - - 40Inspection and sampling equipment Set 0.5 20 10 - - 16 8 8 4 21.5Vehicle w/trailer No. 60 1 60 1 60 - - - - 120 25Motorcycle (1/inspector)- No. 7 20 140 - - 15 105 8 56 301 25

Subtotal 225 75 123 60 483 20

C. BASE COST 352 495 235 60 1,142 20

Contingencies:

Physical 18 25 11 3 57 20Price 7 45 32 15 99 30

TOTAL PSCA INVESTMENTS 377 565 278 78 1,298 21

1/ For Punjab; For other SCAs, major difference would be number of motorcycles; about 50 for Haryana, 75 for Andhra Pradesh and 105 for Maharashtra.2/ Two field offices.3/ Total costs for Haryana are Rs.1.36M, for Andhra Pradesh Rs.1.55M, and for Maharashtra Rs. 1.8M, taking into ac.:ount additional motorcycles.

ANNEX 5Table 2

INDIA

NATIONAL SEED PROJECT

Quality Control

SGA: Staffing Pattern-/

Annual- - - - - Year - - - - - Cost1 2 3 4 5 (Rs.OOO)

Headquarters

Director 1 1 1 1 1 28Chief Inspector 1 1 1 1 1 21Senior Seed Officer 1 1 1 1 1 16Field & Seed Inspectors 1 1 2 2 2 12Accounts Officer 1 1 1 1 1 14Senior Clerk 1 1 2 2 2 8Steno Typist 2 2 3 3 3 6Driver 1 2 2 2 2 5Watchmen and Attendants 2 2 3 4 4 4

Field Offices

Seed Officers 1/ 1 2 2 2 2 16Field & Seed Inspectors- - - - - - 12Sehior Clerk 1 2 2 2 2 8Steno Typist 2 4 4 4 4 6Driver 1 2 2 2 2 5Watchmen and Attendants 2 4 4 4 4 4

Total Annual Cost (Rs.OOO) 172 228 258 261 261(excluding seed

inspectors)

1/ For typical SCA; main difference between SCA would be in the numberof seed inspectors. In year 5 Andhra Pradesh would have 75; Haryana51; Maharashtra 105; Punjab 43 (one inspector per 225 ha hybrids or300 ha self-pollinated crops)',

ANNEX5

INDIA Table 3

NATIONAL SEED PROJECT

QUALITY CONTROL

APSCA: OPERATING COSTS & REVENUES(Re. 000)

_ ___________________---YEAR&-----------------------i/ Conatant Mid 1976 Prices

l(kYr) 2 3 4 5 6ff

A. OPERATING COSTS2/

Salaries:

Staff Salaries 80 172 228 260 260 260Field & Seed Inspec-

tors 250 560 675 765 825 9003/

Office Rental & Supplies 15 37 42 35 35 35Certification Supplies4/ 30 90 105 115 120 130Travel Allowance5/ 40 95 105 130 140 150Vehicle Operation andMaintenance6/ 30 65 75 90 110 120

Pre and Post Control PlotWork7/ - - 4 6 6 7

Utilities & Services 5 10 18 25 28 28

Total Operating Costs 450 1,030 1,252 1,426 1,524 1,630

B. REVENUES

1. Certification Fees:

a) Paddy 60 200 265 290 315 340b) Hybrids 200 815 945 1,020 1,080 1,120

2. Tags, label sales 50 225 260 285 300 320

Total Revenues 310 1,240 1,470 1,595 1,695 1,780

C. OPERATING SURPLUS(DEFICIT) (140) 210 218 169 171 150

D. PROJECT COST TO COVERDEFICIT 140

Physical Contingencies 10Z 1510 /

Price Contingencies 5

APSCA Operating Deficitin Project Costs 160

1/ Year 1 includes last half of 1976 and thus revenues are for kharif seed crop certification only.2/ Salaries, from Table 2, excluding inspectors salaries which are SCA specific; APSCA, by

year 5, has 75 field and seed inspectors.3/ After year 2, SCA stops renting except for field offices.4/ Tags, seed tables and forms @ Rs. 4/ton.5/ 125 days/inspector/yr. @ Rs. 15/day; plus 100 days for HQ staff.6/ Jeep at Rs.1/mile for 5,000 miles; and motorcycle @ Rs. 0.3 per mile for 4,000 miles.7/ Rs. 2,000/ha for about 2-4 ha annually.8/ Rs. 50/ha for cereals and cotton; Rs. 80/ha for hybrid s, vegetables, potatoes. Mostly SSC

growers, but 10'/ additional for others in (b). Only paddy, jowar, bajra and maize areconsidered here.

9/ Rs. 10/ton.10/ At 7% p.a.

Table 14

INDIA

NATIONAL SEED PROJECT

QUALITY CONTROL

HSCA: OPERATING COSTS & REVENUES(Re. 000)

----------------------YEAR---------------------------1/ Constant Mid 1976 Prices

l(0yru 2 3 4 5 6ff

A. OPERATING COSTS2'

Salaries:

Staff Salaries 80 172 228 258 260 260

Field & Seed Inspectors 80 240 350 445 540 6103/

Office Rental & Supplies 15 38 35 35 35 35

Certification Supplies4/ 6 70 70 150 185 223

Travel Allowance5/ 15 42 45 75 90 100

Vehicle Operation andMaintenance6/ 15 35 45 66 80 91

Pre and Post Control PlotWork7/ - - 4 6 7 8

Utilities & Services 4 13 18 25 28 28

Total Operating Costs 215 610 795 1,060 1,225 1,355

B. REVENUES8/

1. Certification Fees:

a) Cereals & Cotton 30 430 690 890 1,010 1,080

b) Hybrids, potato andothers - 40 100 180 200 220

9/2. Tags, label sales 17 190 250 295 325 350

Total Revenues 47 660 1,040 1,365 1,535 1,650

C. OPERATING SURPLUS (DEFICIT) (168) 50 245 305 310 295

D. PROJECT COST TO COVER DEFICIT 168

Physical Contingencies 1O7/ 1710/

Price Contingencies 6

HSCA Operating Deficit inProject Costs 191

1/ Year 1 includes last half of 1976 and thus revenues are for kharif seed crop certification only.

2/ Salaries, from Table 2, excluding inspectors salaries which are SCA specific;HSCA, by year 5, has 51 field and seed inspectors,

3/ After year 2, SCA stops renting except for field offices.

4/ Tags, seed tables and forms @ Rs. 4/ton.5/ 125 days/inspector/yr. @ Rs. 15/day; plus 100 days for HQ staff.6/ Jeep at Rs. 1/mile for 5,000 miles; and motorcycle @ Rs. 0.3 per mile for 4,000 miles.7/ Rs. 2,000/ha for about 2-4 ha annually.8/ Rs. 50/ha for cereals and cotton; Rs. 80/ha for hybrids , vegetables, potatoes. Mostly SSC

growers, but 101 additional for 6thers in (b). Only wheat, paddy and cotton areconsidered here.

9/ Rs 10/ton.10/ At 7% p.a.

March 22, 1976

INDIA ANNEX 5

NATIONAL SEED PROJECT Table

QUALITY CONTROL1/

MSCA: OPERATING COSTS & REVENUES(Rs. 000)

--------------------------- YEAR--------__-_________2/ Constant Mid 1976 Prices

2 3 4 5 6ff

A. OPERATING COSTS

Salaries:

Staff Salaries 30 80 80 90 95 95Field & Seed Inspectors 70 275 510 775 850 950

4/Office Rental & Supplies 10 30 35 35 35 35Certification Supplies5t 5 25 45 50 55 60Travel Allowance6/ 35 110 140 180 190 200Vehicle Operation and

Naintenance7/ 30 80 110 140 150 150Pre and Post Control Plot

Work8/ - - 4 6 6 8Utilities & Services 5 10 18 25 28 28

Total Operating Costs 185 610 942 1,301 1,409 1,526

B. REVENUES9l

1. Certification Fees:

a) Cotton 150 355 515 750 750 750b) Hybrids 95 310 320 625 720 800

10/2. Tags, label sales 30 65 110 135 145 150

Total Revenues 275 730 1,145 1,510 1,615 1,700

C. OPERATING SURPLUS (DEFICIT) 90 120 203 209 206 174

D. PROJECT COST TO COVER DEFICIT 0.0

11 MSCA preproject has about 30,000 ha of certification activity; this analysis is only tostudy the impact of the project.

21 Year 1 includes last half of 1976 and thus revenues are for kharif seed crop.certificationonly.

1 Salaries, from Table 2, for field staff only; these exclude inspectors salaries which areSCA specific; MSCA by year 5 would need additional 100 field inspectors.

4/ After year 2, SCA stops renting except for field offices.5/ Tags, seed tables and forms @ Rs. 4/ton.61 125 days/inspectorlyr @ Rs. 15/day; plus 100 days for HQ staff.7/ Jeep at Rs.l/mile for 5,000 miles; and motorcycle @ Rs. 0.3 per mile for 4,000 miles.8/ Rs. 2,000/ha for about 2-4 ha annually.9/ Rs. 50/ha for cereals and cotton; Rs. 80/ha for hybrids, vegetables, potatoes. Mostly SSC

growers, but 107. additional for others in (b). Only wheat, paddy, potato, cotton areconsidered here.

10/ Rs. 10/ton.

INDIA ANNEX 5Table6

NATIONAL SEED PROJECT

QUALITY CONTROL

PSCA: OPERATING COSTS & REVENUES(Rs. 000)

----------------- YEAR---------------------------1/ Constant Mid 1976 Prices

1(4yr) 2 3 4 5 6ff

A. OPERATING COSTS

Salaries:

Staff Salaries 80 172 228 258 260 260Field & Seed Inspectors 80 240 240 428 468 516

3/Office Rental & Suppli 4e 15 37 42 35 35 35Certification Supglies- 8 74 77 137 160 185Travel Allowance- 15 42 45 75 85 85Vehicle Operation and

Maintenance 6/ 10 35 46 64 73 78Pre and Post Control PlotWork 7/ - - 4 6 6 8Utilities & Services 4 10 18 25 28 28

Total Operating Costs 212 610 700 1,028 1,115 1, 195

B. REVENUES8/

1. Certification Fees:

a) Cereals & Cotton 25 415 530 770 950 1,020b) Hybrids, potato and

others - 40 60 100 120 1509/

2. Tags, label sales 14 180 220 285 340 380

Total Revenues 49 635 810 1,155 1,410 1,550

C. OPERATING SURPLUS (DEFICIT) (172) 25 110 127 295 35§

D. PROJECT COST TO COVER DEFICIT 172

Physical Contingencies 10% 1710/

Price Contingencies 6

PSCA Operating Deficit inProject Costs 195

1/ Year 1 includes last half of 1976 and thus revenues are for kharif seed cropcertification only.

2/ Salaries, from Table 2, excluding inspectors salaries which are SCA specific; PSCA,by year 5, has 43 field and seed inspectors.

3/ After year 2, SCA stops renting except for field offices.4/ Tags, seed tables and forms @ Rs.4/ton.5/ 125 days/inspector/yr. @ Rs. 15/day; plus 100 days for HQ staff.6/ Jeep at Rs.l/mile for 5,000 miles; and motorcycle @ Rs. 0.3 per mile for 4,000 miles.7/ Rs. 2,000/ha for about 2-4 ha annually.8/ Rs. 50/ha for cereals and cotton; Rs. 80/ha for hybrids, vegetables, potatoes. Mostly SSC

growers, but 10% additional for others in (b). Only wheat, paddy, potato, cotton areconsidered here.

9/ Rs. 10/ton.10/ At 7% p.a.

INDIA

NATIONAL SEED PROJECT

QUALITY CONTROL

STATE SEED LABORATORY: INVESTMENTS(Rs.000)

___________--- YEAR -------------- % Foreign1 2 3 4 Total Exchange

Renovation & Expansion of Existing Labs 200 - - 200 -Air-conditioning and dehumidification of sample storage room - 60 - - 60 25Air-conditioning equipment and metal cabinets for twogermination rooms 40 - - 40 25Purity Analysis Equipment 60 - - 60 75Germinators, cabinet t ye 70 - 70 140 75Special Test Equipment- 60 - 30 90 75

Repair of Existing Equipment 30 - - 30 25Office Equipment 50 - _ 50 _Vehicle (Jeep) 50 _ - 50 25

Sub-Total 620 - 100 720 36

Contingencies:

Physical@ 5% - 30 - 5 35 36Price 4/ - 53 - 27 80 45

TOTAL - 703 - 132 835 37aS ss= === = .

1/ For Andhra Pradesh, Haryana and Punjab; no investments proposed for Maharashtra.For existing seed testing labs at PAU in Ludhiana, in Karnal, and at APAU in Rajendranagar.

3/ Health, moisture, vigor and quick test.4/ For civil works 8% for 1976 and 10% for 1977 onwards; for equipment (local) 7% p.a. ; for equipment (foreign) 10% and 8% a for 1976 and 1977 respectively, and 7% for 1978 onwards. CD

ANNEX 6Page 1

INDIA

NATIONAL SEED PROJECT

Training and Technical Assistance

Training

Seed Technology Research

1. Development of seed technology research as proposed would requirestaff with in-depth training in seed related research techniques and proce-dures. This type of training can best be accomplished through a graduate studyprogram in an established seed technology curriculum in one of the developedcountries. The project would therefore provide finance for one candidatefrom each of the five participating Agricultural Universities to undertakean advanced degree program in the USA, Europe or Australia.

Processing

2. Cereal seed processing would be considerably expanded, necessita-ting training of plant managers and operatives. This would be done at exist-ing NSC and TDC facilities. Costs would be met out of normal SSC operatingbudgets.

3. Cotton seed processing would be a new activity for which trainingcould not be given wholly in India. One processing engineer from each planthandling cotton seed would be sent on a two month study tour to the USA tofamiliarize themselves with modern cotton seed processing operations. Onreturn to India they would then be responsible for on-the-job trainingof plant operatives assisted by the consultant (para 8).

4. NSC would be responsible for providing technical services to theseed industry. To ensure that the responsible engineers were fully abreastof latest technology, two would be sent on a two month tour to study opera-tions in developed countries.

Quality Control

5. With the expansion of certification and seed testing activityconsiderable staff training would be necessary. Most of this could begiven in India, using mainly NSC and TDC staff and facilities. Costs couldbe borne out of normal operating budgets. Proposed training in India is:

ANNEX 6Page 2

the Chief Inspector and Senior Seed Officer of eachcertification agency should be programmed for 4 weekson-the-job training with counterparts at TDC and NSC;

- the seed testing officer and two seed analysts fromeach State testing lab should be programmed for 4 weekson-the-job training with the NSC and Central Seed Test-ing Laboratories; and

- the quality control officer and assistant quality controlofficers of each SSC should be programmed for 4 weekson-the-job training with TDC and NSC counterparts.

After completion of training these officers would establish and conducttraining courses for their junior staff.

6. In addition to the above, it is proposed that the Director or ChiefInspector of each SCA, and the Senior Seed Testing Officer of each State test-ing laboratory, undertake a months observational tour of established certifi-cation agencies and seed testing stations in Australia, Europe or the USA.This would familiarize them with up-to-date procedures, management systemsand equipment and improve subsequent performance in expanding activity andtraining staff.

Technical Assistance Seed Technology Research

7. Interdisciplinary seed technology research programs would be devel-oped at five Agricultural Universities. Because this would be a new activitya specialist would be provided for two months to advise Universities onprogram planning and the facilities to be developed. The specialist would bea senior staff member from an established seed techology program.

Processing

8. NSC would be responsible for the design, inter alia, of SSC pro-cessing plants. NSC engineers have developed a number of cereal seed plantsbut none of the size, and with the range of equipment, proposed for SSCplants. They have no experience of cotton seed processing. A specialist(s)would be engaged to assist NSC engineers prepare designs for the two pro-posed cereal plant modules and for the cotton seed processing units. (Sincetwo of the plants are combined cereal/cotton units, every attempt would bemade to employ one specialist conversant with both cereals and cotton).This would require a three month assignment. The specialist would be en-gaged for a further two months when the cotton plants had been constructed tohelp commission them and train staff in the operation.

9. A second specialist would be engaged for one month to advise NSCon the most appropriate materials and equipment for packaging vegetableseed.

ANNEX 6Page 3

Quality Control

10. India has the technical expertise to expand quality control opera-tions. However administrative procedures have received little attention.Given the intent to decentralize certification from NSC to State Agenciestechnical assistance would be required to develop satisfactory administra-tive procedures. The Central Seed Certification Board would engage aspecialist for two months to assist State Agencies in this area.

Marketing

11. A major element of NSC's future role in the development of theseed industry would be marketing - embracing demand assessment, distributionand sales, and promotion of the use of quality seed. Hitherto, in a seller'smarket, NSC has only focused on distribution and sales. Consultants wouldbe engaged to help NSC reorient its marketing efforts, to develop and runstaff training programs and to update the ongoing demand survey. It is ex-pected that there would be Indian firms with marketing expertise qualifiedto undertake these assignments.

Terms of Reference and Costs

12. Proposed terms of reference for consultancies are at Appendix 1,training and technical assistance costs are at Table 1.

ANNEX 6Appendix 1Page 1

INDIA

NATIONAL SEED PROJECT

Draft Terms of Reference

1. The Government of India is engaged in the reorganization and ex-pansion of the seed industry under a National Seed Program. A project whichwould implement the first phase of the NSP has been submitted to the WorldBank with a request for financial assistance.

2. The proposed project would be concerned mainly with major cerealcrops - wheat, rice, maize, sorghum and pearl millet - and cotton. It wouldsupport all facets of seed production, from breeder and foundation seed pro-duction through certified seed production, processing, storage and marketing.In particular and inter alia, the project would:

- establish State Seed Corporations in Andhra Pradesh,Haryana, Maharashtra and Punjab for the production andprocessing of certified seed. Major investments wouldbe for seed processing plants;

- develop seed technology research capabilities at severalAgricultural Universities;

- establish and equip State Seed Certification Agencies;

- provide processing and packaging equipment for theNational Seed Corporation's vegetable seed operations;and

- strengthen the National Seed Corporation's marketingoperation including gathering demand data.

In addition the project would finance technical assistance specialists toassist in the above areas. Resume's of appropriate qualifications and jobdescriptions follow.

Cereal and Cotton Processing Plant Design

Qualifications

3. Consultant must have minimum of 10 years experience in the designand installation of seed processing plants and facilities as commonly re-quired for cereal and legume seed, and for cotton seed. As used here

ANNEX 6Appendix 1Page 2

processing encompasses receiving (intake), conveying and handling, drying,aeration, bulk storage, cleaning, grading, treating, packaging, and flatstorage operations for cereal and legume seed, and, in addition, handlingand conveying, cleaning, bulk storage, aeration, mechanical delinting,acid delinting, drying, cleaning, grading, treating, packaging, flatstorage and fumigation of mechanically delinted and acid delinted cottonseed.

Job Description

4. Consultant would be engaged by the National Seed Corporation.Consultant would prepare for technical assistance in India by thoroughreview of the India National Seed Project, especially the Annex on SeedProcessing, and gather together references, designs and other informationalmaterials and data as needed for activities specified below.

5. Consultant would require two assignments in India. The first wouldbe for 90 days to serve as technical advisor on seed processing facilities tothe Engineering Division, National Seed Corporation (NSC), New Delhi. In-ternal travel would be undertaken as needed to accomplish objectives.

6. During first assignment in India consultant would:

(a) review all proposals for seed processing facilities inthe National Seed Project to assess their validity andadequacy, and recommend revisions and modifications indetails of proposals as might be necessary to accomplishobjectives of each facility;

(b) advise the NSC on the layout and design of proposed seedplants and facilities to include:

(i) efficient arrangement of buildings and facilitiesat each plant site;

(ii) layout and arrangement of equipment and machinerywithin each building; and

(iii) dimensions and general construction features ofbuildings needed to house the several operationsat each plant site.NOTE: Architectural and structural engineeringservices would be separately provided.

(c) advise the NSC on selection and specifications of allequipment and machinery needed; and

(d) assist the NSC in the preparation on specifications for civilworks and international tenders for equipment.

7. The second or follow-up assignment would be scheduled after civilworks are completed and equipment has been received. Its purposes would be

ANNEX 6

Appendix 1Page 3

to advise on installation of equipment, and to check and demonstrate opera-tion of acid delinting plant for cotton seed. Period of the assignmentwould be 60 days. More specific objectives for second assignment would beformulated after completion of first consultation.

Development of Seed Technology Research Programs

Qualifications

8. Consultant must have a post graduate qualification in agriculturalscience, preferably at the doctoral level. He must have considerable ex-perience of seed technology research with at least five years in a seniorposition in a seed technology research program.

Job Description

9. Consultant would be engaged by the Indian Council for AgriculturalResearch. Consultant would prepare for the assignment by thoroughly re-viewing the India National Seed Project and related reports.

10. Consultant would spend 60 days in India to advise the IndianCouncil for Agricultural Research and five Agricultural Universities (AndhraPradesh, Haryana and Punjab State Universities and the Akola and ParbhaniUniversities in Maharashtra) on the design of inter disciplinary seed tech-nology research programs at these Universities. Consultant would also adviseon necessary staffing and facilities to operate the programs.

11. Consultant would visit all Universities and present his finalrecommendations in the form of a written report.

Improving Administrative Proceduresof State Certification Agencies

Qualifications

12. Consultant would have a minimum of 10 years experience in seedcertification in the United States, Europe or Australia-New Zealand, withat least 5 years at the Manager (Director) or Assistant Manager (AssistantDirector) level. Further, the consultant should have experience with amajority of the important crops in the project - wheat, rice, cotton andhybrids of maize, millet and sorghum.

Job Description

13. Under the project State Seed Certification Agencies would beestablished or expanded to take over certification duties hitherto performedby NSC. Consultant would be engaged by the Central Seed Certification Board,

ANNEX 6Appendix 1Page 4

for 60 days, to advise State Agencies on organization, and administrative,recording and other management procedures, appropriate to the expanded workload.

14. Consultant would prepare a written report of his recommendationsfor the CSCB.

Strengthening NSC Marketing Operations

Qualifications

15. Consultant would be a firm of management/marketing consultantshaving previous experience in sales promotion, market strategy developmentand advertising, as well as in the design and operation of staff trainingcourses in these areas. Experience relating to agricultural inputs wouldbe an asset.

Job Description

16. Consultant would be hired by NSC. The objective of the trainingcourse would be to emphasize to and prepare NSC staff for a new marketenvironment characterized by seed surplus rather than shortage. Two typesof training courses, one for management staff, and another for field market-ing staff, would be developed. The first would focus on developing an over-all long range marketing strategy for NSC. The latter would deal with fieldvariables like dealer development, relationship with extension agencies,advertising media selection, design of advertising and promotion message,and identification and use of progressive farmers as catalysts. Use of casestudies would be essential. Trainees working in small groups, would beasked to evolve marketing innovations and adjustments in response to variousmarket situations.

17. Suitable training materials, including case studies, charts,posters, slides and write-ups would be prepared. Consultants would alsoprepare NSC training division staff for repeating the field staff course atNSC regional offices. A suitable training manual would be written.

ANNEX 6Table 1

INDIA

NATIONAL SEED PROJECT

TRlINING & TECHNICAL ASSISTANCE(Rs. '000)

Man- Foreignmonths 1 2 3 4 Total Exchange

A. PLANT DESIGN

Consultants: Travel - - 60 - - 60 100Fee & Expenses 6 - 300 - - 300 50

B. SEED CERTIFICATICN

Director & Chief Seed Officers (8) 8

Travel § Rs.15,000 - 120 - - 120 50Expenses 0 Rs.300/day - 70 - _ 70 100

Consultant

Travel - - 20 - - 20 100Fee & EFpenses 2 - 100 - - 100 50

- 310 - - 310 -

C. SEED PROCESSING

Seed Processing Engineers (7)

Travel @ Rs.15,000 - _ 105 - 105 50Expenses 0 Rs.300/day 14 - _ 125 - 125 100Tuition & Books - - 10 - 10 100

D. MARKETING'

Local Consultants S Rs.7,500/man-month 18 - 90 - 45 135 -

Training Materials & Equipment - 50 - 25 75 -Market Surveys 150 - 100 50 300 -

E. SEED TECHNOLGY RESEARCH

Ph.D Fellowships (5)

Travel & Rs.20,000 - 50 - 50 100 50Expenses S Rs.50,000/man-year 180 - 250 250 250 750 100Tuition & Books S Rs.15,000/

man-year - 75 75 75 225 100

Consultant - 120 - - 120 -

Travel - 20 - - 20 100Fee & Expenses 2 - 100 - - 100 50

F. TOTAL BASE COST 150 1,305 665 495 2,615 65

Price Contingenc" _ 100 105 120 325 65

TOTAL COST 150 1,405 770 615 2,940 65

1/ Local consultants to design a training program for NSC marketing staff, and con-duct the initial program; repeated in year 4, market survey in year 1 and year 3.

2/ 7% p.a. for local costs; and a% p.a. for foreign costs to 1980.

ANWEX 7INDIA Table 1

NATIONAL SEED PROJECT

PROJECT COSTS

APSSC: Investments(Rs.O00)

---------. YEAR -------------- % Foreign

1 2 3 4 Total Exchange

A. PROCESSING PLANT

Land & Buildings 310 4,905 4,905 - 10,120 15

Machinery & Equipy1nt - 4,510 4,510 4,510 13,530 35.5

Interim Equipment- 1,270 - - - 1,270 30

Import Duties 120 260 250 250 880 -

Base Cost 1,700 9,675 9,665 4,760 25,800 26

Contingencies:

Physical 90 485 485 240 1,300 26

Price 35 855 1,820 1,215 3 27

Sub-Total A. 1,825 11,015 11,970 6,215 31,025 26

B. OTHER INVESTMENT

Quality ControlEquipment at HQ 40 40 - - 80 50

Vehicles 490 150 150 - 790 25

Furniture & OfficeEquipment at HQ 150 150 - - 300 -

Furniture & OfficeEquipment at Plants 50 100 150 - 300 -

Base Cost 730 440 300 - 1,470 16

3/Contingencies:

Physical 35 20 15 - 70 16

Price 1S 35 50 - 100 23

Sub-Total B. 780 495 365 - 1,640 17

4'c. TOTAL SSC INVESTMENT 2,430 10,115 9,965 4,760 27,270 25

3/Contingencies,

Physical 125 505 500 240 1,370 25

Price 50 890 1.870 1,215 4_4025 9h

TOTAL 2,605 11,510 12,335 6,215 32,665 25===S2= ~ ~ ==m ======

1/ One 10,000 ton and one 5,000 ton capacity plant (See Annex 3 Table 5 for details).

2/ All interim equipment, except for silos and heaters, at Tanuku,become part of new plants.

3/ Physical at 5%, price contingency based on following: local equipment: 1976 (½ year) 7% and

then onwards; local civil works, 1976 (½ year), 8%, and then onwards 10%; foreign equipment

1976 (½ year) 10%; 1977-79 8% and onwards 7%.

41 In addition, APSSC would purchase existing NSC plant and equipment, but this is not

included in project costs. Nominal value used further in this analysis is Rs.2,070,000,

but final value is to be determined by NSC/SSC evaluation teams.

ANNEX 7Table 2

INDIA

NATIONAL SEED PROJECT

PROJECT COSTS

HSSC: Investments(Rs .000)

------YEAR------------- X Forei

1 2 3 4 Total Exchange

A, PROCESSING PLANTS: CEREALS

Land and Buildings 155 2,920 2,925 - 6,000 15Machinery & Equipment - 2,315 2,315 2,320 6,950 35

Interim Equipment 860 - - - 860 95

Import Duties 260 135 135 140 670 -

Base Cost 1,275 5,370 5,375 2,460 14,480 26

3/Contingencies:

Physical 65 270 270 125 730 26

Price 30 480 1.015 625 2.150

Sub-Total A 1,370 6,120 6,660 3,210 17,360 26

2/B. PROCESSING PLANTS: COTTON/CEREAL

Land and Buildings 400 3,555 3,560 - 7,515 15

Machinery & Equipment - 4,235 4,235 4,235 12,705 47

Import Duties - 505 505 505 1.515 -

Base Cost 400 8,295 8,300 4,740 21,735 32

Contingencies:

Physical 20 415 415 235 1,085 27

Price 10 750 1.550 1.245 3.555 32

Sub-Total B 430 9,460 10,265 6,220 26,375 28

C. OTHER INVESTMENTS

Quality Control Equipment at HQ 40 40 - - 80 50

Vehicles 490 150 150 - 790 25

Furniture & Office Equipment at HQ 150 150 - - 300 -

Furniture & Office Equipment atPlants 50 100 150 300 -

730 440 300 - 1,470 16

3/Contingencies:

Physical 35 20 15 - 70 16

Price 15 35 50 - 100 23

Sub-Total C 780 495 365 - 1,640 17

D. TOTAL SSC INVESTMENT 2,405 14,105 13,975 7,200 37,685 29

Contingencies:

Physical 120 705 700 360 1,885 29Price 55 1265 615 1.870 5.805 33

TOTAL 2,580 16,075 17,290 9,430 45,373 30

1/ For one 10,000-ton processing plant plus two sets of interim capacity; one set to become part

of new plant.2/ A 2,500-ton cotton seed unit at Sirsa with 5,000-ton wheat seed; and a 500-ton clean cotton

seed unit at Hissar with acid delinting facility, but wheat seed unit. 7Z

3/ Physical at 5%, price contingency based on following: local equipment, 1976 (kyr)/and thenonwards; local civil works, 1976 (liyr) 8%, and then onwards 10%; foreign equipment71976 (yr)10%; 1977-79 87, and onwards 7%/.

4/ In addition HSCC would purchase existing NSC plants/equipment at Kernal and Yamunanagar atprices to be determined by NSCISSC evaluation teams. The costs of this plant are not includedn project costs.

INDIA ~~~~~~ANNEX 7INDIA Table 3

NATIONAL SEED PROJECT

PROJECT COSTS

MSSC: Investments(Rs. 000)

------------Year -------------- % Foreignl(lyr) 2 3 4(kyr) Total Exchange

A. PROCESSING PLANT: Cotton Cereal

Land & Buildings 610 6,205 6,205 - 13,020 15Machinery and Equi rent 6,090 6,090 6,090 18,270 40Interim Equipment2 430 - - - 430 95

Import Duties 130 540 540 540 1n750 -

Base Cost 1,170 12,835 12,835 6,030 33,470 29

Contingencies:3/

Physical 60 640 640 330 1,670 29Price 25 1.160 2.410 1,710 5.305 32

Sub-Total A 1,255 14,635 15,885 8,670 40,445 29

B. OTHER INVESTMENTS

Quality Control Equipment at EQ 40 40 - - 80 50Vehicles 490 150 150 - 790 25Furniture & Office Equipment:HQ- 150 150 - - 300 -

f f " Plants 50 100 150 - 300 -

Base Cost 730 440 300 - 1,470 16

Contingencies:-/

Physical 35 20 15 - 70 16Price 15 35 50 - 100 23

Sub-Total B 780 495 3b5 - 1,640 17

C. TOTAL SSC INVESTMENT4- 1,900 13,275 13,135 6,630 34,940 29

Contingencies:3/

Physical 95 660 655 330 1,740 29Price 40 1,195 2,460 1.710 5.405 32

TOTAL 2,035 15,130 16,250 8,670 42,085 29

1/ At Akola, a 5000 ton cotton seed unit plus a 5000 ton hybrid cereal unit. At Parbahani, a2500 ton (acid delinting) cotton seed unit plus a 5000 ton hybrid cereal unit. Only 70% of the

land and building costs shown on Table 5 Annex 3 are included since physical facilities areto be shared with tne cotton units. Machinery and equipment estimates based on cotton unitestimates (Table 5 Annex 3) and the 5000 ton module estimates (Table 9 Annex J), excludingvehicles.2/ Interum equipment (Parbahani)becomes part of new plant.3/ Physical at 5%, price contingency based on following: local equipment, 1976 (lyr) and thenonwards; local civil works, 1976 (½yr) 8%, and then onwards 10%; foreign equipment 1976 (½yr)10%; 1977-79 g%, and onwards 7%.4/ In addition, APSSC would purchase existing NSC plant and equipment, but this is notincluded in project costs. Nominal value used furtner in this analysis is Rs. 2,070,000,but final value is to be determined by NSC/SSC evaluation teams.

INDIA ANNEX 7

NATIONAL SEED PROJECT Table 4

PROJECT COSTS

PSSC: Investments(Rs.OOO)

--------------- YEARS -- ------ % ForeignI (WYrl 2 3 4 (kYr)Total Exchange

1/A. PROCESSING PLANT: CEREAL

Land & Buildings 310 3,655 3,655 - 7,620 15Machinery & Equipment - 2,875 2,875 2,875 8,625 35.5Interim 860 - - - 860 95Import Duties 260 140 140 140 680 -

Base Cost 1,430 6,670 6,670 3,015 17,785 28

Contingencies:

Physical 70 335 335 150 890Price 35 575 1,200 715 2,525

Sub-Total 105 91O 1,535 865 3,415

B. NEW PROCESSING PLANT: CEREALCOTTON (MIIUTSAR)

Land & Building 150 2,490 2,495 - 5,135 15Machinery & Equipment - 2,425 2,430 2,425 7,280 47Interim Capacity 430 - - - 430 95Import Duties 130 225 230 225 810 -

Base Cost 710 5,140 5,155 2,650 13,655 333/

Contingencies:

Physical - 260 260 130 685 33Price 15 446 915 640 2,010 36

Sub-Total B. 760 5,840 6,330 3,420 16,350 33

C. OTHER INVESTMENT

Quality Control Equipment at HQ 40 40 80 50Vehicles 490 150 150 - 790 25Furniture & Office Equipment

at HQ 150 150 - - 300 -Furniture & Office Equipment

at Plants 50 100 150 - 30 -

Base Cost 730 440 300 - 1,470 163/

Contingencies:

Physical 35 20 15 - 70 16Price 15 35 50 - 100 23

Sub-Total C. 780 495 365 - 1,640 174/ _ _ _ _ _ __ _ _

D. TOTAL SSC INVESTMENT2 2TX19r 12,250 12,125 5,665 32,910 29

Contingencies:

Physical 140 615 610 280 1,645 29Price 65 1,050 2,165 1,355 4,635 31

TOTAL 3,075 13,911 14,900 7,300 39,190 29

1/ Two 5000-ton nominal capacity cereal processing plants.

-2/ One plant 3,200-ton clean cotton seed and 5000-ton wheat.3t/ Physical at 5%, price contingency based on following:

local equipment: 1976 (4 year) 7% and then onwards; local civil works, 1976 Wear, 8%, and thenonwards 10%; foreign equipment 1976 (½ year) 10%; 1977-79,8%;and onwards 7%.

4/ In addition, PSC would purchase existing NSC plant, but this is not included in project costs;approximate equipment value used further in this analysis is Rs. 500,000,with another 100%added for civil works and 15% physical contingencies.

ANiEX 7INDIA Table -5

NATIONAL SEED PROJECT

PROJECT COSTS(Rs. 000)

----------------YEAR---------------- % Foreign1 2 3 4 5 Total Exchange

A. STATE SEED CORPORATIONS (Annex 7, Table 1-4)Civil Works 1,935 23,730 23,745 - - 49,410 15Machinery & Equipment 4,750 24,255 24,255 24,255 - 77,515 37Other Investments 2.920 1,760 1,200 - - 5.880 16

Sub-Total 51 9,605 49,745 49,200 24,255 - 132,805 27Contingencies: Physical 480 2,485 2,465 1,210 - 6,640 27

Price 5/ 210 4,400 9,110 6,150 _ 19.870 35TOTAL A. 10,295 56,630 60,775 31,615 - 159,315 28

I/B. INCREMENTAL SSC/PSP WORFING CAPITAL 5,030 6,700 8,370 6,700 6,700 33,500

Contingencies: Price 5/ 90 480 1,190 1,500 2080 5,340_TOTAL B. 5,120 7,180 9,560 8,200 8,780 38,840

2/C. FARM DEVELOPMENT

SAU and SFCI Farms 9,970 15,120 6,860 2,750 - 34,700 35Canal Remodelling 945 10,400 5.600 - - 16,945 15

Sub-Total 5/ 10,915 25,520 12,460 2,750 - 51,645 23Contingencies: Physical 235 2,600 3,400 1,155 - 7,390 23

Price 5/ 235 2,485 4,150 815 - 7,685 16TOTAL C. 11,385 30,605 20,010 4,720 - 66,720 22 f

D. AGRICULTURAL UNIVERSITIES (Annex 1, Table 5)Breeder Seed Units 1,000 6,050 5,330 - - 12,380 30Foundation Seed Processing Unit 1,780 7,730 7,420 - - 16,930 32Seed Technology Research Unit 480 2.345' 1.040 670 - 535 18

Sub-Total 5/ ' 3,260 16,125 13,790 670 - 33,845 29Contingencies: Physical 25 915 2,050 210 - 3,200 29

Price 5/ 70 1,415 2,340 200 - 025 353,355 18,455 18,180 1,080 - 41,070 30

3/E. QUALITY CONTROL

State Seed Certification AgenciesEquipment & Deficits 2,415 1,980 1,465 500 - 6,360 24

State Seed Testing Labs Equipment - 1860 - 300 - 2.160 37Sub-Total 5/ 2,415 3,840 1,465 800 - 8,520 24

Contineencies: Physical 145 225 75 40 - 485 - 24Price 5/ 40 225 200 120 - 585 30

TOTAL E. 2,600 4,290 1,740 -960 - 9,590 24

F. PRIVATE SECTOR PROCESSORS (Annex 4, Table 1) - 15,375 25,625 10,250 - 51,250 21Contingencies: Price 5/ - 1,295 4.460 2.805 - 8560 22

TOTAL F. - 16,670 30,085 13,055 - 59,810 22

C. NSC VEGETABLE SEED UNIT (Annex 3, Table 10) - 3,435 2,400 - - 5,835 48Contingencies: Physical 5/ - 680 480 - - 1,160 48

Price 5/ 330 505 - - 835 46TOTAL G.' - 4,445 3,385 - - 7,830 48

H. BULK & TRANSIT STORAGE (Annex 11, Table 6) - 12,510 7,430 3,565 - 23,505 5Contingencies: Physical 5/ - 625 370 175 _ 1,170 15

Price 5/ - 1,135 1,430 1,160 - 3,725 15TOTAL H. - 14,270 9,230 4,900 - 28,400 15

I. TRAINING & TECHNICAL ASSISTANCE (Annex 6, 150 1,305 665 495 - 2,615 65Table 1)

Contingencies: Price 51 - 100 105 120 - 325 65TOTAL I. 150 1,405 770 615 - 2,940 65

4/J. RESERVE STOCKS 5/ 1,965 5,900 11,800 11,800 7,870 39,335 -

Contingencies! Price - 35 425 1,675 2,655 2.360 7,150TOTAL J. 2,000 6,325 13,475 14,455 10,230 46,485 -

K. PROJECT COSTS 5/ 33,340 140,455 133,205 61,285 14,570 382,855 20.5Contingencies: Physical 6%) 885 7,530 8,840 2,790 - 20,045 25

Price (14%) 680 12,290 25,165 15,525 4,440 58,100 24.5TOTAL PROJECT COSTS 34,905 160,275 lt7,210 79,600 19,010 461,000 21

1/ Permanent increase in the working capital of NSC/SSC/private sector due to the project; see Chart 1; incremental workingcapital is 55% of total shown on Chart 1, based on increase in seed production in the project areas.

2/ Including canal remodelling in Haryana (Annex 2, Table 2), excluding 60 tractors of less than 50 hp that are reserved forlocal procurement.

3/ Based on typical SCA investment (Annex 5, Table 1) plus cost of extra motorcycles for A.P., Haryana and Maharashtra SCAs.41 Stock of Annex 11, Table 7, valued at ex-SSC prices.37 Price contingercy based on followirg: local equipment: 197 (½ year) and onward 7%; local civil works,

1976 e year, 8%, and then onwards 107,; foreign equipment 1976 (½ year) 10%; 1977-79, 8% and onwards 7%.Physical at rates of para. 4.37; overall 6%

March 22, 1976

INDIA

NATIONAL SEED PROJECT

FINANCING & DISBURSEMENT(Re. 000)

L- RD FINANCINGh -- M- Pbl 3I 22-1 -GQI__________ ---- STATE GOVERNMENTS------- Private Gre P rtcitoant. thru GQI PobIEr Share Capital Share Capital Public Sector Reaty Ac pa ing

1/ Total 7 ARDC ExDondttaro. (Thronoh NSC/SFCI/CWC) racta toSICceaditareSLPc in SSC Eardit- NSC HLD P.S.C _ AIsDA B.eks

A. SSC IVESTTENTS

1. Pror.naing Machinery (Itported) 19,070 ISSE cif 14,130 - 14,330 - j 16,730 _ - -_ 16,730 21 Rio Ill 155

2. Other Eq.lpoont and Civil Wo-rk 140,245 NO 84,170 - I 5 200 ___

159,315 62 98,305 - 14,330 16 ,73v0 2070

B. LARGE FARSd DEVELOPMENT

1. Mahinery & Equip-eno (Itported) 11,435 1007I ift 12,600 I 13,133 | 5,065 5,00 -_ 980 _ - 2 2

2. Local YEqipmet & Land l,eveivp-nr 31,475 60% I (SFCI) A (lAO) I (SFCI) (SAUl 2,765 2,765

3. Canal R-edallteg 23.810 60% 14.290 - ... zo(oe366anal.7e=odellirg 23,810 430% 12,600 27,425 5,065 5,600 - 9,520 - 9BO _ - 2.765 7,765

C. AGRICULTURAL UNIVERSITIES (B 4 F lSod)

1, Machinery 6 Equip-ent (Eaported) 5,710 100% cif - 4,050 - 1,660 -

2. vool iqoip.ent & Civil or-kh 32,910 60 - 19,750 13,160

3. Seed Technology Reaarch: Oper-tion. 2,450 - - - - 2 450

41,070 58 _ 23,800 _ 17,270

D. QUALITY CONTROL(CNCB)

1. SCA & STL Eqaipmtnt (Itoported) 2,140 100% ctif 1,500 _ 640 - _ _ _

2. LCoal Eqvipnse. sd Civil War-k 6,910 60 - 4,145 _ 2,765

3. SCA Operating rificire 540 _540 -

9,590 59 -5,645 - 2,9-45 _- -

E. PRIVATE SECTOR PROCESSORS forProrrgeing Planto and R.eoarbh Fa-ea 59,810 70% af 25,850 - 17,945 - 13,630 2,385

ARD860

1/F. NSC VEGETABLE SEED UEIT

1. Nachine.y & Eqaipac.t (Inported) 4,125 100% rif 2,930 2 - - - - 2,350 - - - - I3f52. Coral Eqoip.ent & Civil Worka 5 705 60 of cost 2.225 - - - - - '35 -

1/ f i 6 5.155 2,350 325

GC BULi & TRANSIT STORAGE 28,400 60 17,040 - 8,520 -_ _ _ _ - - 1,420 1,420

(CWC)H. TRAININC & TECHNICAL ASSISTANCE '2,940 100 - 2,940 _ _ _ _

I RESERVE STOCKSI 46,485 - - - - 46,405 - _ _ _ - _

(ciSC)J. WORKING CAPITAL (PERMANENT) 38 840 (§ 8 900 -_ 10 120 - - 9.700 10. 120 _

TOTAL PROJECT 461,000 47.5 158,950 59,810 36,815 73,300 26.850 9,520 2.350 980 27,645 26,850 1t,f1 11,05D

…-----218,750…-----------110,115.…------ ----- 86,370…---------------57,925 …-------(U0S,SM 52.7) - (ROOM 25,0)4/ (----- 12.60)-. (UN$1 his ( 6---cus 7,825

/ loan. trot bankt f-r 70T af pro-ert l Aveetmonic AROC relianrfcig 90% of b-ak la- 12/ Ioaca frot. boAk tar 757 af p-i-et Anveete: 6002 r-fi.acticg 90% of batk T...-

3/ For SUacy A0

rlcnleorai Ocivorsities (SAU) ..ane by GQI en ftlnce 60% of cast of land dev-lop-nt at i.t-ee-e rate af 9% pa.l

4/ 'aFy v tqoiporvr ftr SFIT, OLOC eronoofrrod bh NtC ti SSC vouId ierroa.e thiE.

A,.g-l 6, 1976

ANNEX 7Chart 1

INDIANATIONAL SEED PROJECT

WORKING CAPITAL NEEDS OF NSP AT FULL DEVELOPMENT

z NSP

1 30 ,l Peak =Rs 1 57m

/ \PTotal NSP120 _ _ _ _ _ _

100

-- - -- - - - --- --- --- -- -- - -- -- - ------- 1---------.---------...-----..---. ... .... Avg. Needs =95 m. //\

/ TOTAL SSCs

. I t | - \ Peak: Rs 157m.0 t. . . Avg.: Rs 95m.

Minimum: Rs 60m.

C0

cr 6C

\0 / / \< Private Sector\ 27 APSSC / | g X>HSSC

, ~ ~~~ OA ' I~

40 L % i

Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. Jan. Feb.

Months

Wheat Paddy Jowar Bajra Maize Cotton Potato

Seed into inventory after processing(plus storage) valued at (Rs/ton) 1450 1150 1800 1800 1650 3000 7000

Seed sales, just before planting season, i95o 1650 3800 4900 2800 4000 1100valued at (B/ton)

SSC paid by NSC after saleSeed growers paid grain price at arrival; final payment after payment by NSC

About 55% is incremental

World Bank-157281HR

ANNEX 8Table 1

INDIA

NATIONAL SEED PROJECT

Disbursement Schedule

Cumulative DisbursementBank Fiscal Year & Quarter at End of Quarter

(Rs. Million)

FY 1977

1st2nd 0.083rd .954th 2.15

FY 1978

1st 3.52nd 5.23rd 7.254th 10.1

FY 1979

1st 12.92nd 15.33rd 17.54th 19.5

FY 1980

1st 21.32nd 22.53rd 23.74th 24.4

FY 1981

1st 25.02nd -

1/ Calculated from Annex 7, Table 6 and Table 7, assuming1-2 quarter lags in disbursements.

2/ Estimated date of effectiveness 30 Sept., 1976.3/ Estimated closing date 31 Dec., 1980.

March 22, 1976

ANNEX 9Page 1

INDIA

NATIONAL SEED PROJECT

Organization and Management

General

1. A major shift in the organization of the Indian seed industryis contemplated under the National Seed Program (NSP), and in some States,notably Haryana, Maharashtra and Karnataka, it is well under way. NSC, whichtill recently was the major seed production, certification and marketingagency, is to give up the first two roles to concentrate on marketing and onthe overall coordination and promotion of the national seed industry. StateAgricultural Universities (SAU) are considerably to enlarge their role inbreeder and foundation seed production, the former coordinated by ICAR, andthe latter by NSC. Certification responsibility is to be with autonomousState Seed Certification Agencies (SSCA). State governments are to phase outof seed production, leaving it to State Seed Corporations (SSC), and in turnconcentrate on seed law enforcement and seed promotion. Overall organizationand management of the seed industry is depicted diagramatically on Chart 1.

A. National Seed Development Council

2. Overall policy guidance for the development of the seed industryin India would be provided by the National Seed Development Council (NSDC)already constituted by GOI. The Seed Cell in the Ministry of Agriculturewould provide the secretariat to the NSDC with assistance from NSC. NSDCrepresentation would be broad-based to accomodate the policy guidance role.The following agencies would be represented on NSDC:

GOI, NSC, ICAR, Central Seed Certification Board, State Governments,SAU, SSC State marketing agencies, seed growers, private sectorprocessors, and private sector seed dealers.

B. Central Seed Committee

3. The Central Seed Committee (CSC) constituted under the Seed Act,would continue to have the responsibility for variety release for seed lawenforcement and for notification of crops and varieties to which the SeedAct is applicable. CSC would operate in close consultation with similarstate seed committees, which advise State Governments on seed matters.Newly formed State Seed Corporation and Seed Certification Agencies wouldbe represented on the State Seed Committees.

ANNEX 9Page 2

C. Project Management and Monitoring Committee

4. To oversee the implementation of NSP, a Project Management and

Monitoring Committee (PMMC) would be established by GOI. PMMC would be

chaired by GOI, Secretary for Agriculture Other members would be NSC, GOI

Ministry of Finance, ICAR (1), ARDC (1), SSC (4-8) and private sector

processors (1). Secretariat to the PMMC would be provided by GOI

Ministry of Agriculture.

5. The PMMC would:

(a) Provide quarterly reports to GOI and the Bank on

the progress of NSP, and any other reports requestedby the Bank.

(b) oversee procurement of goods financed under the project;

(c) oversee detailed planning for large farms financed under NSP;

(d) review any complaints from SSC, private sector processors or

commercial banks regarding working capital and otherfinancing matters, and recommend suitable correctiveactions to GOI and other agencies;

(e) ensure timely flow of finance from GOI to project institutions;

(f) ensure speedy request for disbursements from the Bankas soon as project expenditures are undertaken;

(g) assist the private sector processors and dealers to get equaltreatment with the SSC and State marketing agencies;

(h) monitor the physical implementation, projected andactual performance, including seed quantity, qualityand financial viability of SSC;

(i) monitor the performance of the SAU regarding theirrole in breeder seed and foundation seed production;

(j) monitor the performance of SSCA regarding quality control;

(k) monitor the production impact of NSP seed through a suitablydesigned study including a bench mark study and periodic surveysover the next 10 years;

(1) assess needs for further financing and make appropriate recom-mendations.

ANNEX 9Page 3

D. National Seed Corporation

6. The National Seed Corporation (NSC) was created to be mainly apromotional agency. However, it found itself in seed production, process-ing, marketing and certification in the absence of other agencies. NSC wouldcontinue to play an important role in the national seed industry, but wouldtransfer the production, processing and certification functions to SSC andSSCA, and concentrate its efforts on the marketing, promotion, and coordina-tion of NSP.

7. Specifically NSC would:

(a) participate in the share capital of the SSC, andactively assist them to take over NSC activites andbecome autonomous viable seed production agencies;

(b) coordinate the certified seed production programs of theSSC;

(c) assess demand and arrange for interstate marketing ofcertified seed;

(d) plan and organize the production of foundation seed bythe Agricultural Universities--or SFCI, if necessary;

(e) plan the production of breeder seed with ICAR;

(f) design, procure and construct processing plants for theSSC, and provide technical consultancy services toSSC and private sector processors;

(g) produce vegetable seed for local and export markets;

(h) coordinate with State Governments in seed promotionalactivities;

(i) operate the reserve stock scheme;

(j) conduct bi-annual seed demand surveys; and

(k) reorient its staff to active seed marketing andpromotion.

Capital

8. GOI would continue to hold all NSC equity, and provide addi-tional equity required to enable NSC to invest in the share capital of the

ANNEX 9Page 4

SSC, or to borrow for working capital or vegetable seed unit. NSCwould subscribe about 30% of SSC capital, at least 15% as equity shares,and balance in 11% cumulative preference shares. Processing plants wouldbe transferred to the SSC as part of NSC capital contribution at a mutuallyagreed price by the October-November 1976 processing season. NSC would havetwo representatives on the Board of Directors of the SSC. In addition NSCwould offer to transfer its existing staff or to have them work on deputationwith the SSC for a period of one year in order to facilitate a smooth changeover.

Seed Production

9. Certified seed production programs of SSC would be coordinated byNSC. To facilitate this, NSC Board would be reconstituted so as to includeSSC Managing Directors. NSC seed production and processing program in theproject areas would be transferred to the SSC. NSC would no longer contractseed growers in the project areas after the kharif 76 season. All NSC growersin the project area would be asked to become SSC shareholders and NSC wouldassist SSC in enlisting new shareholder growers. Seed production by SSCoutside the project areas would be phased out to match the increase in seedproduction within the project area. NSC would undertake to continuallymonitor the seed market and provide regular assessment of demand, prices,availability, and farmer reaction to the SSC. Total seed demand projectionswould be made four years in advance and be updated at regular intervals.Allocation of certified seed production would be made at least three monthsbefore the production season. All SSC would be offered the same ex-plantprice to encourage competition. SSC would not produce seeds of all crops andvarieties, but would specialize in those best suited. NSC would undertake toidentify suitable producers for all seeds needed by the SSC.

Demand Assessment

10. Demand assessment would be a key NSC activity. It would be basedon feedback from its marketing network. NSC demand assessments would be sup-ported by GOI's assessments from zonal conferences which are organized twiceevery year for this purpose. NSC would also undertake demand and farmeracceptance surveys about every two years through qualified agencies. Advanceindenting by purchasing agencies would be encouraged through suitable incen-tives. Firm orders, backed by 10% advances received by NSC would be passedon to SSC as firm orders with 10% advances. Especially in the early years,when SSC willingness and ability to take risk would be small, NSC wouldplace additional firm orders with SSC based on its own assessment of demand.Seed obtained against these orders would partly go into the reserve stocks.SSC would be permitted to produce at their own risk any additional amountthey wish to produce. NSC would offer to charge half of the normal servicecharge on any seed that is produced by SSC on their own risk, and sub-sequently procured by NSC. If despite all efforts, SSC together are notwilling or able to undertake production to the level of NSC projected re-quirements, NSC would be free to continue with a seed program outside the

ANNEX 9Page 5

project area, but would purchase seed from non SSC producers only as alast resort. SSC agreement with NSC for supply of certified seed wouldinclude suitable damages claused for failure to supply or lift the con-tracted quantities.

Marketing

11. Interstate marketing of seed produced by SSC would be under-taken by NSC (See Annex 11). Intrastate marketing of NSP seed would bedone by SSC. No direct SSC to SSC or government to government transactionswould take place without NSC concurrence. NSC would sample the seed enter-ing its marketing network, and test it for purity and germination as asecondary quality control mechanism. NSC would offer to sell in the inter-state market for private processors also.

Foundation & Breeder Seed Production

12. SSC would contract with NSC for the supply of foundation seed ofvarieties of all India importance. For the much smaller quantities oflocal varieties, SSC would contact directly with Agricultural Universities.Foundation seed production for all India varieties would be organized by NSCon a contract basis mainly with Agricultural Universities. To the extent,that the universities do not have sufficient land suitable for foundationseed production, SFCI or government departmental farms would be used. Sincefoundation seed is produced at least 2 years in advance, and it is a keyinput, it would be included in the reserve stock scheme. Risks of carry-overor obsolesence will be borne by NSC, but not by the Universities. Foundationseed prices would be set by NSC to recover all direct and indirect costs, andare expected to be lower than those in the recent past. Foundation seedrequirements of the private sector would also be assessed and met by NSC underdamages clauses similar to those between NSC/SSC.

13. Breeder seed production would be organized by ICAR and NSC wouldkeep close contact with ICAR to ensure adequate production of the requiredcrops and varieties (Annex 1).

Plant Design

14. SSC would contract with NSC for design, procurement and construc-tion the SSC processing plants on a turn-key basis. NSC would strengthenits engineering cell with a civil engineer to prepare complete plant designs.These would be reviewed by the plant design consultant (Annex 6). Civil workswould be contracted out by NSC or SSC, while plant installation and start upwould be NSC responsibility. Foundation seed plants to be put up by Agricul-ture Universities would also be designed, procured and installed by NSC undercontracts with universities or SFCI. Similarly, NSC would offer its engineer-ing services to private seed processors. All processing equipment, financedby the Bank except for the private sector processors would be procured byNSC.

ANNEX 9Page 6

Reserve Stock Scheme

15. The reserve stock scheme would be operated by NSC under theguidance of a committee, chaired by the Secretary of Agriculture, andcomprising Ministry of Finance and NSC (Annex 11).

Organization Structure

16. NSC would be reorganized during 1976, to match its changing role.Its Board would be reconstituted to include Managing Directors of SSC in whichNSC holds equity. A proposed organization structure is shown on Chart II, and

consists of five divisions under the Managing Director:

(i) Production and Quality Control: responsible for foundationseed production, vegetable seed production, and forNSC-wide quality control, including the marketing network.

(ii) Project and Engineering: responsible for turnkey design, pro-curement construction and startup of SSC and universities pro-cessing plants, and technical services to private processorsor cooperative societies.

(iii) Marketing: responsible for storage, transport, distribution andmarket development for all seeds, including vegetable seeds. Aspecial cell in marketing division would deal with demandprojections.

(iv) Finance and Accounting: for accounts, audit, bank finance,financial relations with SSC, cost control and inventorymanagement policies.

(v) Personnel and Administration: for administration, staffrelations, staff training.

Two staff units would be:

(i) Company Secretary and Legal: an advisory unit to theManaging Director.

(ii) PMMC Secretariat: headed by GOI, Deputy Secretary (Seeds)

NSC would have 10 regional offices. Regional managers would report to theManaging Director, but have three functional sections dealing with marketing

development, sales and distribution. The role of the regional offices would

be: dealer selection and appointment and dealer training; advance ordering,demand assessment; extension through government agencies; intrastate trans-portation; and local publicity.

ANNEX 9Page 7

E. State Seed Corporations

17. SSC would be established under the Companies Act of 1956. Articlesof Association of the SSC would be subject to Bank approval, and essentialfeatures are in Appendix I.

18. SSC would:

(a) Agree with NSC on the certified seed production program;

(b) Organize quality seed production through shareholdergrowers;

(c) Assist shareholder growers on technical aspects and inobtaining foundation seed, seed inspection, and credit;

(d) Promote quality seed use through State Government departmentof agriculture;

(e) establish and operate processing plants including thosetransferred from NSC;

(f) Estimate intra state demand for seeds of all type andarrange for their production within State, if agronomicallyfeasible or outside State through NSC;

(g) store seed, on behalf of NSC, under the reservestock scheme;

(h) arrange for marketing of seed within state;

(i) hire qualified staff;

(j) train farmers in becoming good seed grower;

(k) support seed technology research programs atuniversities and research institutes;

(1) assist Government with seed industry policy formulation.

Capital

19. State Governments, NSC and seed growers would subscribe to thecapital of the SSC approximately in the proportion 35:30:35. Preferenceshares of upto 25% of the capital would be held equally by State Governmentand NSC, and carry cumulative rights and 11% dividend. Equity capital wouldbe subscribed by the participants so that (a) State Governments and NSChold approximately equal percentages; (b) the seed growers have not morethan 50% of equity shares; (c) excessive dependence on seed growers'

ANNEX 9Page 8

equity as a source of project finance is avoided. Agriculture Universitieswould hold at least 20Z of State Government shares, and other governmentagencies or corporations (like the Agro Industries or Marketing Federation)may hold upto 25% of the State Government shares.

20. Shares allocated to growers, but not subscribed within three months,would be subscribed equally by NSC and State Government if necessary fromcash flow considerations. However, this would occur only after the sharespreviously subscribed are fully paid up. Also, such shares would be transfer-red to eligible seed growers immediately upon request. Only those farmers inthe project area who operate land suitable for seed production and purchaseone share of SSC would be eligible. Share values would be about Rs 500/acreShare allocation would be proportional to seed production area offered for theSSC program. Institutions like the SFCI, or Agricultural Universities, wouldbe eligible to purchase shares out of the grower allocation. While a share-holder would have the option not to undetake a seed program offered by theSSC, he would cease to be a member if he failed to do so for two consecutiveseasons. SSC would offer seed production program in proportion to the share-holding. In order to ensure that shareholders receive seed production pro-grams that cover high proportion of seed area offered to SSC, the SSC wouldenroll the shareholders progressively over 4 years by expanding the opera-tional project area progressively to reach the target area over 4 years.Terms and conditions of seed production would be specified in agreementbetween the SSC and the growers. Any reluctance on the part of a farmerto become shareholder would be overcome by offering shareholders a betterprice than for contract production, and also by calling up shares in install-ments. The difference in the shareholder price and contract price would beaccumulated by SSC on the contract growers account to be used to pay for thepurchase of an equity share for the contract grower.

Management

21. SSC would be managed by an 11 member Board of Directors (exceptin Maharashtra where, because of the participation of three Agricultural Univer-sities, the Board would be 15). Up to three members of the Board would benominated by GOI and the balance elected by the various groups of share-holders on the basis of representation in proportion to equity shareholding.The Board would comprise:

Secretary Agriculture/Agriculture Production Commissioner

Managing Director, SSC

Agricultural University

Government Agency

Participating Bank

ANNEX 9Page 9

Chairman, NSC

Managing Director, NSC

Shareholder Growers (4)

The Chairman would be either the Agriculture Production Commissioner orSecretary of Agriculture, or the Vice Chancellor of the Agricultural Univer-sity. The Managing Director, responsible for day to day executive functions,would be appointed by the State Government with the concurrence of the GOI,upon the recommendation of the Board.

22. Responsibility of the Board would be to:

(a) appoint best qualified staff on attractive salaries;

(b) invite share subscriptions from project areas and approverequests from farmers based on objective criteria;

(c) define production program, based on NSC/SSC agreements andon local market demand;

(d) agree on SSC service charges and selling price to NSC, aswell as selling price within state;

(e) approve accounts and declare dividends while maintainingadequate financial reserves; and

(f) approve investment proposals, and obtain bank finance.

Organization Structure

23. A proposed SSC organization is shown on Chart III and would consistof four divisions under the Managing Director:

Production: responsible for certified seed production programming,field inspection and SSC/grower relations. Seed production officers,during the processing season, would work as shift supervisors andunit foremen as required.

Plant Managers: responsible for processing plants and plant sitestorage, would be senior staff, especially for plants located awayfrom H.Q.

Marketing and Quality Control: responsibility for contracts with NSC,intrastate seed sales and demand projections, local market devel-opment and quality control at all stages from production through sales.

Accounting and Finance: Cost control, audit and inventory management.

Responsibility for legal affairs, staff relations, training and establishmentwould be with a staff unit under the company secretary.

ANNEX 9Page 10

Personnel Policies

24. SSC personnel policies would be geared to rewarding performance.Recruitment for non-clerical positions would be based on India-wide selection.Qualifications of staff would be decided by the Board, and a selection com-mittee constituted. Salaries would be equivalent to current NSC salaries forsimilar qualifications. Staff deputation from Government would be limited toone term of one year, after which either return to the original job, or anabsorption into SSC cadre would be required. Staff while on deputation wouldbe permitted to earn either the SSC salary or their original salary plus a 20%deputation allowance. Deputation would enable the SSC to study the on-the-jobperformance of an individual before absorption into the SSC cadre (which inIndia tends to be permanent). For present NSC staff, no deputation allowancewould be paid. A system of annual performance reviews would be adopted by theSSC for all operational staff below Managing Director. Flexibility in salaryadministration would be maintained to reward good performance. A proposed SSCstaffing pattern is in Table 1.

F. Agricultural Universities

25. Agricultural Universities would organize a separate seed productionunit for production of foundation seed and breeder seed. University FarmDepartments would supervise any certified seed production program. The plantbreeder would be asked to regularly supervise the foundation seed as well asany certified seed production program. Additional staffing for the seedproduction activity would be required for research and seed production activi-ties, but would be kept to the minimum programs by calling upon Universityteaching and research staff to provide technical support. Close integrationof University technical expertise and into the project is expected to signi-ficantly improve seed quality.

G. Seed Certification Agencies

26. Seed Certification to date has generally been the responsibility ofNSC since almost all states had notified NSC to be their certification agency.However, under NSP, a GOI policy to support the creation of autonomous seedcertification agencies would be implemented. Certification would be in-dependent of both the producing agency (NSC/SSC) and the seed law enforcementagency, a principle not followed in the past. Under the Societies Act, seedcertification agencies would be created or re-constituted. Bylaws of SSCAwould be subject to IDA approval. SSC, Central Seed Certification Board,private sector processors, seed growers, seed users, and agricultural univer-sities would be on the Governing Council of the SSCA, which would be chaired bythe State Secretary of Agriculture.

ANNEX 9Page 11

27. A Central Seed Certification Board (CSCB) has been establishedby GOI. The CSCB would coordinate SSCA certification programs to ensureinterstate uniformity of standards and procedures. All SSCA would berepresented on CSCB.

28. Seed law enforcement would continue to be the responsibility ofState Governments, and assistance would be provided under NSP to improvethis activity by strengthening the seed testing laboratories of the StateGovernments. State Governments would also be encouraged to adopt a GOIpolicy to create special inspectorate to enforce quality standards for seed,fertilizers and pesticides.

H. Private Sector

29. Private sector seed companies, assisted under the project, wouldbe free to locate, process, and market wherever they find it attractive. NSCwould nonetheless offer them help to market their production, supply themfoundation seed, and assist them in plant design, procurement, and installa-tion if requested to do so. These companies would have representation onthe CSC, PMMC, SSCA and CSCB. They would provide necessary competition tothe SSC.

I. Project Implementation

30. A timetable to reach project effectiveness at the earliest pos-sible date has been developed. All actions that must be completed between1st January 76, and the effectiveness date of the project are identified inTable 2. Their likely durations are estimated in weeks. The logical relation-ships between these activities are shown on the logic network Chart IV 1/.The longest path through the network determines the critical path - any delayin activites on the critical path (ie, activities with no slack time) willdelay effectiveness.

1/ Each activity is shown by an arrow linking two circles (nodes). Allactivities entering a circle must be complete before any activity leav-ing the circle can start. The earliest times (X) for reaching variousnodes are calculated by assuming all activities start promptly. Theearliest time to reach node 24 (effectiveness) is also taken as thelatest time permissible to reach effectiveness. A backward calculationgives the latest times (Y) to leave various nodes. Differences betweenY and X indicates the slack times. Critical path links the nodes forwhich slack time is zero; any delay in the critical activities woulddelay effectiveness.

ANNEX 9Page 12

Critical Path to Reach Effectiveness

31. Activities, which delayed, would delay effectiveness, are:

Activity Reponsibility Latest Finish

a. SSCs Registion and MDs State 1976appointment Governments 15 April

b. NSC/SSC Project Agreements NSC/SSC 20 May

c. Existing Plant Valuation NSC/SSC 15 Sept.

d. Existing Plant transfer NSC/SSC 15 Nov.

32. Other activities with low slack times, which need to be closelymonitored are:

a. Amend Seed Act to restrict GOI 15 October 76movement of "local" seed

b. SSC Key Staff appointed SSC 1 July

c. Processing plants, designed& built NSC/SSC 1 April 78

d. Interim Equipment Installation NSC/SSC 1 April 77

Start and finish times for other activities are given in Table 2.

Overall Implementation Plan

33. The above timetable only deals with actions required to reacheffectiveness at the earliest possible date (15 Nov. 76). For other events,like construction of new plants, priority equipment installation etc fixedcompletion dates are shown. These would be agreed with GOI at negotiations.Detailed planning schedules to achieve these completion dates would be preparedby NSC/SSC/CWC/SFCI as part of loan proposals to banks. A long range imple-mentation schedule is shown on Chart V.

ANNEX 9Appendix 1

INDIA

NATIONAL SEED PROJECT

SSC: ARTICLES OF ASSOCIATION

Essential Features

A. Membership of the SSC would be restricted to state government, NSC andseed growers in a well-defined project area who in the view of the SSC Board,possess the necessary skills and facilities to produce quality seeds. Far-mers who fail to undertake seed production offered by SSC for two consecutiveseasons would automatically lose membership. Project area would be enlargedin a phased manner to reach the target project area in 3 to 4 years. Changesin projects area to be subject to GOI approval.

B. Share capital. Seed growers together would own up to 50% of the equityshares, the balance being with State Government and NSC. NSC's minimum equityholding would be 15% of the total issued capital or 20% of the equity capital.Preference shares, cumulative, 11% to be held equally by NSC/Government, wouldnot exceed 25% of the paid up capital. Shares allocated to growers but notsubscribed by them within 3 months, would be temporarily subscribed equally byNSC and State Government and transferred to any eligible grower immediatelyupon request. However, such subscription would only take place after theother subscribed shares had been fully called up, and only if necessary toraise equity capital required by financing institutions. NSC/ Governmentwould not be candidates in elections to Board of Directors representinggrowers by virtue of holding such proxy shares. At least 25% of stategovernment's shares would be held by the Agricultural University and up to25% by other State agencies.

C. Management. A Board of Directors would be elected by the shareholders,except for upto 3 members nominated by GOI. Elected positions would be splitbetween groups of shareholders on the basis of proportional representation.One of the nominated directors would be a representative of the Bank parti-cipating in the project financing of the SSC. The chairman would be eitherthe Vice-Chancellor of the Agricultural University or the Secretary of Agri-culture. The Managing Director would be a Government nominee on the Board,and would be appointed with GOI concurrence subject to Board approval.Secondment of staff from other agencies would be restricted to maximum oneyear.

D. Operations. SSC would sell all seed outside the state through NSC, andnot deal directly with either State Governments or other agencies. NSC wouldsell all seed in the state through the SSC. All foundation seed would beprocured by SSC for its gorwers through NSC. NSC would be contracted to doturnkey plant construction for SSC. Existing NSC plants in the projectareas would be taken over by SSC at a price to be determined by a NSC/SSCjoint evaluation. Contract production outside the project area by NSC wouldbe phased out to match increased production within the project area. SSC wouldnot produce seed outside the project area.

ANNEX 9Appendix 1Page 2

E. Financial Aspects. Prices would be determined for inter-state trade

with NSC. Intra-state prices may be below ex-plant production costs only

if the SSC financial reserves position is sound, and debt servicing or

guaranteed divided payments are not affected adversely. Local seed retail

prices would be at least the same % premium above local grain prices, as

the % premium applicable on inter-state trade. SSC would ensure profit-

ability so as to gradually build up four special funds for expansion,replacement, loan redemption and research support to the following levels.

(a) Plant replacement: to be built up over 5 years prior

to anticipated replacement, to provide 30% of cost ofreplacement;

(b) Plant expansion: to be built up over 5 years prior to

anticipated expansion (next one in 1980) and to provide30% of cost of expansion, so that the balance may beborrowed from commercial banks;

(c) Loan redemption: to be built up within 2 years to borrowingand to equal the annual debt service; and

(d) Research: to equal 5% of total retained earnings and be usedto finance problem specific seed research at Universities orresearch institutes. Research funds would be held as segregatedcurrent assets. Others would represent allocations of earnings,so as to be available for use as seasonal working capital, if

necessary.

INDIA ANNEX 9Table 1

NATIONAL SE PROJECT

$C Staffing Pan

--------- Project Year-- --- Average MonthlyPoait±on 1 2 3 Is S9laryi/

_(Re.)

Managing Director 1 1 1 11 2,500

Company Secretary 1 1 1 1 1,500Personnel Officer - 1 1 1 1,500Office Superintendent 1 1 1 1 1,200

Division

Prftion

Chief 1 1 1 1 2,000Seed Production Officer 2 2 3 3 1,500Seed Production Aast. 20 20, 30 30 800

LtAy*ting & Qulity Control

Chief 1- 1 1 1 2,9000Quality Control Officer I 1 1 1 1,500Maret Analyst 1 1 1 1 1,200Market Development and

Extension Officers 1 1 I 1, 1,5boSales, Trnaport &

Distribution Officer 1 1 1 1 1,500.ar4"Asst 4 4 6 6 800QualftyCoatrol Ast. 2 2 3 3 800

Processing See staffing pattern, procesaing plant--- 7

Accounting & Finance

Controller 1 1 1 1 2 000Audit & Cost Control

Officer - 1 1 1Accounts Officer 2 2 22 2 1,500Accounting Aast. 4 li 4 4 800Audit Asst. 2 2 2 800

General

Clerk & Typists 4 6 6 6 500Drivers 3 5 6 6 30C)Attendants 4 6 8 8 20CC

r-

1/ For typical SSC; may vary between states.^2/ Excluding benefits, uptQ about,40%.

MaIOUL SD acT

Project Iplmentation Schhale

Critical Path to Reach BEfectiveres

Likely b.rliest latest Total Slack TimeCoce Activity yame ieisonaibility Start Finish Avil i Loop

1, 23 Amend Seed Act to restrict movmntof "local" seed 24 GOI 1 Apr'76 1 Oct'76 4

1, 3 1977-78 Breeder & Foundation Seed Plairng 4 NSC/ICAR 1 Apr'76 1 Ju1'76 8

3, 26 Breeder & Foundation seed production allocation 4 ICAR 11May'76 Aug'76 d

1, 4 TCR for CSCB technical assistance areed 4 ID/00I 1 Apr'76 1 Sept'76 16

4, 24 CSCB technical assistance procured 10 (OE 1 Kay'76 15 vT'76 16

1, 15 Seed Certification &genCy bylwas agreed 14 IBRD/GOI 1 Apr'76 1 Sept'76 16

5, 24 Seed Certification Agencies registered & staffed 10 GOI/State Govt. 1 May'76 15 Nov'76 16

1, 7 TOR NSC technical assistance agreed 4 IBRD/NSC 1 Apr'76 15 Sept'76 18

7, 8 NSC technical assistance procured 8 IBRD/NSC I Nay'76 15 Nov'76 18

1, 9 NBC engineering cell strengthmned 6 NSC 1 Apr'76 15 Nov'76 24

9, 27 Processirg plants designed and built 95 NSC/SSC 1 Jul'76 Apr'78 1

1, 10 CSCB & Central Seed Comittee composition agreed 4 IBRD/GOI 1 Apr'76 15 Oct'76 22

10, 20 CSCB & CSC reconstituted 4 GOI 1 MY'76 15 Nov'76 22

1, 11 Seed DOand Survqr/Report 16 NSC 1 Apr'76 1976

11,20 Phase II Appraisal 4 IBRD 15 Aug'76 1976

1, 20 NSC/TDC etc. 1975-76 marketing evaluation 2 JWP 1 Apr'76 20 Apr'76 1

1, 2 All large farm developent planning initiated 2 NSC/SFCI/UNIV 1 Apr'76 1 Jure 76 6

2, 30 Fam mechinery (& budget) for all largefarms prnpre 12 SFCI/U6IV 15 Apr'76 Aug'76 6

2, 29 Farm development plannizg for all large fares 24 SFCI/INIV 1 Apr'76 Jan'77 6

1, 6 Participatirg banks selected and agreedl/ 2 ARDC/SSC 1 Apr'76 1 Jul'76 10

6, 12 ARDC/PCB agree1nent 4 ARDC/PCB lg Apr'76 1 Aug'76 10

12, 13 PCB/SSC Agree1ent/ 4 PCB/SSC 15 5ay'76 1 Sept'76 10

1, 14 SSC registered and MD appointed' 2 State Govt. i Apr'76 15 APr'76 None*

14, 16 WC/W80 prolect azreinents 6 NSC/SSC 15 Feb'76 15 Apr'76 2

14, 17 SSC key staff appointed 8 SaC 15 Apr'76 1 Jul'76 2

17, 25 NSC/SSC seed progr_K haridoe 1r4 NC/SSC 15 Jun'76 Jul'76 2

18, 19 Existizg plants' luation* 16 NSC/SSC 15 hy '76 15 SePt'76 None

16, 25 Interim equipment orders and delivery 20 BC 15 Jun'76 1 Jan'77 6

25, 31 Interim equipment installatio¢ 16 YSC/SSC 15 Nov'76 Apr'77 6

19, 23 Estirw plants transfer* 8 NSC/SSC 15 Sept'76 15 Nov'76 None

20, 21 Negotiations 2 IBRD/WOI/NSC/SSC 15 Apr'76 1 May'76 -

21, 24(A) 001/ARDC subsidiary loan agreent 4 00I/ARDC 1 MIay'76 15 Nov'76 22

(B) Credit signing, legal opinions, etc. 16 IBRD/GOI/HSC/ARC 1 Hay'76 15 Nov'76 -

TIIM TO TFETIVUSSS: 10 Weeks (15 Nov'76)

Critical activities are arked *; arW delay in these wvxld delay effectiveness,I/ Agreement relating to speedy financing of interim capacity to be installed by April'77.2/ Slack time available for an activity is reduced, as total slack is used up by other activities on same loop

March 22, 1976

ANNEX 9Chart I

INDIANATIONAL SEED PROJECT

PROJECT ORGANIZATION & INSTITUTIONAL RELATIONSHIPS1 /

|CAR ID C L: A Re PSPr

!GROWERS|

ARDC Agricultural Refinance and Development CorporationCSC Central Seed CommitteeCSCB Central Seed Certification BoardGOI Government of IndiaGOS State GovernmentsICAR Indian Council of Agriculture ResearchNSDC National Seed Development Council.PCB Participating Commercial BanksPSP Private Sector ProcessorsPMMC Project Management and Monitoring CommitteeSAU State Agriculture UniversitiesSCA State Seed Certification AgenciesSSC State Seed Corporations

1 l Achieved by membership of Board of Managements. World Bank-15712(R)

INDIANATIONAL SEED PROJECT

NSC: ORGANIZATION CHART

BOARD OF DIRECTORS

MANAGING DIRECTOR

FblMC COMPANY SECRETARY|SECRETARIAT B LEGAL ADVISER

SDTE COSTE:CIF CONTROL DEELMN &|ESTABLS&E

DISEED UNIT | | OlSTRIDUTION | P DEVELOPMENT &

> Ch,nt Prodactron would con-tIue to lk after anV NSC teed production till treed- In SSC;

7Proe..... Eg plts- ,n- heedd do, .o SSC. -. ld he .eaged by Chtel. Prejents ehd EnginleeinO;

- Breedet seed mspac lon will bh handled here, any NSC rponpt .ilrtie te oWrtiinaion wnuld be. antil teenslerted to SCA, handled herr. Word B-k-156484R)

INDIANATIONAL SEED PROJECT

SSC: ORGANIZATION CHART

BOARD OF DIRECTORS

MANAGING DIRECTOR

COMPANY

SECRETARY &

CHXMARKETING & P M GACCOUNTING &

PRODUCTIONQDSTRLBUTIONNMRKET PLANNINGNAN&

SEED PRODUCTIONSAE MAKTPANNACUSADI&

| QUALITY l

CONTROL OFFICER

World Bank-15645 H '0

INOIANATIONAL SEEDS PROJECT

C,ialI Path AN,alysis to RfCh Loan Eff.tOioOOo

NSCI SSCI SEED PROGRAM

SSC KEY STAFF APPOINTED to 2=YOL PLAN

P 17LA

r T o/ * DPi~~~~~~~~~~~~~~~~~ODERED 8.DELWVESY IN"E EQIMETISTLE

L-~~~j EXISTING PLANTSEYALUA ~ ~ ~ UIrERDIIE

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1pis

DONATION 35 VeERIESD RDC/P 5 A N

BA 12 GREFME 1C... A' R~~~~~~~~~~~~~~~~~~~~~~~~~~~~~A o incitcI D,we

O ~~~~~~~~~~~~~~~~ ~~~~~~FARM MACHINERY P N N IG

j_j / / ~~~~ALL LARGE FARMS DEVELOPMENT F 8 / ~~~~~~PLANNING hI-TIATED .

r // / _ _ FARM DEVeLOPMENT PLANNING s JAN. 77 i~~~~2 GOU/ARC AGREEMENTS >\

\. // / N~~~~~SC/ TDC/ 6OVT /PVT SECTOR 1975-78 MARKETING EXPERIENCE EVALUATED r t

^ Zf - E >/ 3 = 4 14~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~T SIGNNGEALOIOS ETC 1 FiCTIVENES%

76 De t _ _ lXJ / ->~~~~~~~~~~~~~~~~~~O C 7

'D ANS ACV lOA SEE o \PCB LOANS

L 4 -t\\ CSC & % PHASE lB~~~~~~~~~~~1 APPRAISAL tCN

GSCU RE' ONST11UTION ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ot R,-Si2R

L) \\\\\ ~~~~OR NIEG E~NGGEH*A NSC TECHNICAL ASSISTANCE PROCURED 12 30/ ,

\~~~~~~~~~~~~~ ~ ~~~~~~~~~~~~~ \ \4/ F.RS'T GENERATI.. PLANTS

A2 \ \\\\ ~~~~~~~~NSC ENGINEERING CELL STRENGTHENEiD 12 y D DEINED 81 BUILT

SEEDFYAW CETIFIECADTION AGENCIES t SCA RUGISTEE ... .E/l D XN d

\\\ ~~~~~~~~~~~~~~~~~~~~~~TOffi TECHNICAL ASSISTA~NCE FORCSFARE

CRITICAL ~ ~~~ PAT FON\ UO SEE PRDCTO ALLOCATEDon ctvT~~~~~~~

x4 .- w t92 24t

DURATION 30 WEEKS \ _ Cravetal tzero slank ;me} acilsstles t5~~~~~~~~~~~~y L,, .. ,h ,-,bI .,Z II

\ AnY *bt m cr/rics 5CtvtEtEs cf ;'~~~~~~~~~~~~~~~~~~N.d Nb-\ AM END SE ED ACT TD RESTRICT MOVEMENT OF *OCAL SEED wltl delae efectlveness da_t - e d W fvo

.3 :~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~rld akt73R

INDIANATIONAL SEED PROJECT

Long Range Implementation Schedule

ITEM FY76 FY77 FY78 FY79 FY80

A. SSC (i) Processing Plants V_4sss s _ _

(ii) Interiem Equipment

B. NSC Vegetable Seed Units 7FA_sA _ _

C. Private Sector Companies WAIsIIIs IsIII

D. Agriculture Universities m IIII_I_I_

E. Large Farm Development WA-ssIEIUI*ss a _ _ _

F. Canal Remodelling "A__.

G. Quality Control

H. Bulk & Transit Storage __sssss _ * * _ _ _Plant Design CSCB Processing

I. Training & Technical Assistance a_ _ _I. Training & Technical Assistance Demand Survey Marketing Demand SurveyI -

Seed Technology Research.. I

' ~~~~ Design*UEhEEEhhhhhhI Financing* - _ _ * Procurement

- ~~~Construction ;World Bank-15881

C+i

I

ANNEX 10Page 1

INDIA

NATIONAL SEED PROJECT

Lending Operations

General

1. Most project investments would be financed by loans from partici-pating commercial banks, at commercial interest rates. In addition to long-term investments under the project, banks would also undertake to provideseasonal credit to SSC for seed inventory purposes. Investments in reservestocks, training and technical assistance, and research, would be GOI grants.

A. Seed Growers

2. Seed growers would be selected from among farmers in the projectarea for their progressive agricultural operations. Most would already haveaccess to assured irrigation, and to a tractor for timely operations. Thusneed for farm investment credit is expected to be small. Any loans required,say for on-farm lined channels, or underground pipe linking two wells, wouldeasily be met by banks operating in the project area. Should the need forrefinance from ARDC arise, the SSC would assist its lending bank to drawup a scheme for such on-farm financing of seed growers' needs, and submitit to ARDC. Under IDA credit 540-IN, ARDC has sufficient funds for suchpurposes.

3. Seed growers would need short-term credit for agricultural inputs.Although most seed growers finance working capital to a large part from ownsources, certainly within 3 years of starting seed production, institutionalfinance is available mostly through cooperative banks (90%) and some throughcommercial banks (10%). Under NSP, state cooperative banks would continueto be the prime source of seasonal credit for seed growers. The cooperativebanks are refinanced by the Reserve Bank of India (RBI) at about 2% belowthe bank rate (9%). RBI limits the maximum borrowing of cooperative banks,but only rarely do the banks fully use their credit limits. In any event,RBI maintains flexibility so that no worthwhile proposals suffer due toscarcity of funds. It often lends to State Governments to invest in theequity of cooperative banks in order to enable them to borrow more from RBI.Thus RBI refinance is not expected to be a constraint. The quantum of RBIfinance is multiple of the cooperative banks own resources (deposits + equity).The multiple, ranging from 1 to 4, depends upon the audit classification(related to overdues) of the cooperative bank. This results in the definitionof a per unit area credit limit for farmers which often is below the inputneeds for seed production.

ANNEX 10Page 2

4. Working capital needs for seed production of self-pollinated cropsis only 15-20% higher than that for commercial cultivation. Thus, availabil-ity of bank seasonal credit would not be a constraint to seed production,especially for wheat or paddy. However, for hybrid seed cultivation, whereworking capital needs increase by 50-70%, a problem does exist, since theloan limit for seed production often needs to be significantly higher thanfor crop production. State Governments would ensure that seasonal creditlimits for seed production would be set by the State Cooperative Bank inconsultation with SSC.

5. Commercial banks invariably provide working capital support to allfarmers whose on-farm investments they finance. Even though the interestrate is generally higher than that of cooperative banks, given the simpler theprocedures and greater efficiency, it does not deter the farmers from borrowing.

6. All seed sales of project seed growers would be through SSC. ThusSSC would be in an ideal position to provide collection services to banks fromfarmers. The SSC would offer these services to commercial banks as well ascooperative banks. The latter would be through the central cooperative bank,acting as agent of the village cooperative societies from which the seedgrowers would actually borrow. For those seed growers who do not have accessto a cooperative society, SSC would seek to arrange for seasonal credit fromthe SSC's lending commercial bank.

B. Large Farm Development

7. Farms of the State Farm Corporation of India (SFCI) and AgricultureUniversities would be developed to produce certified and foundation seedsrespectively. Loans to finance up to 75% (but maybe as low as 50%) of theinvestments would be provided through participating banks selected by ARDCin consultation with the borrowers. The loan proposal would be prepared bythe borrowers in two parts. The first would provide a farm mechanizationproposal, supported by a farm budget and a simple cash flow statement. Thesecond would be a detailed farm planning exercise including topographical,soil, and ground water surveys, and a work plan for farm development. Sup-porting financial statements would be required for SFCI. Also a Governmentguarantee for principal and interest repayment would be provided. In addi-tion, the Agriculture Universitiers would be required to create separateoperating and accounting units for the seed operations and make arrangementsfor separate collection and disbursement procedures. The balance of theinvestment funds would be provided by GOI for SFCI and by State Governmentsfor the Agriculture Universities. ARDC would refinance up to 90% of partici-pating bank loans to SFCI and Universities.

ANNEX 10Page 3

C. Seed Corporations

8. NSC and SSC would need credit to finance: (a) processing plantsand storage; and (b) inventory of processed seed between processing and sale.Loans for fixed investments would finance up to 70% of investments, the bal-ance being financed from share subscriptions (either equity or preference).ARDC would select one commercial bank in the State to be the SSC lending bankand refinance up to 90% of its loans to SSC. Loan requests for NSC/SSC plantand storage investments would be prepared by NSC and submitted to the partici-pating banks. The request would include detailed investment proposals, plantlocation, a cash flow statement, report of SSC's financial condition andmanagement. The participating bank and ARDC would scrutinize the request andagree to disbursement procedures. Advance payment of up to 20% may, at ARDCdiscretion, be provided to cover any ordering or engineering costs, thoughthey would normally be covered by equity contributions.

9. Working capital financing for seed inventory would come from parti-cipating banks against hypothecation of seed stocks. The participating bankswould normally have adequate funds to cover the working capital needs. How-ever, seed is a key agricultural input, like fertilizer, and its stockingprior to use should not be allowed to suffer by any constraints on the re-sources of the participating banks. Thus GOI would constitute a consortiumof participating banks, along the lines of an existing consortium for ferti-lizer stocking. The banks in the consortium would agree to assist each otherin meeting the working capital needs of the NSC, SSC and the private sectorprocessors. GOI would undertake to relieve any legitimate resource con-straints the consortium may face in seed inventory financing. Should NSC,SSC or private sector processors find difficulty in obtaining adequateseasonal credit for their working capital needs, or the private sector proces-sors find that they are not being treated at par with the SSC, they would seeGOI assistance through the PMMC. SSC requirements for seasonal credit forworking capital are likely to reduce as SSC build up its reserves and by 1980it should be possible to discontinue the consortium.

D. Private Processors

10. Loans would also be available to private sector processors forplant investment needs on the same terms as to NSC/SSC. Loan proposals forthem would be prepared by Agricultural Finance Corporation while NSC wouldreview the technical details and plant designs. Participating banks would beselected by ARDC after a short list of participating processors is establishedby NSC. Loan proposals would be supported by confidential statement offinancial position, history of seed production, and NSC technical comments.Up to 70% financing would be provided for fixed assets. ARDC would provide upto 90% refinance to the participating bank. Private processors would beprovided with credit to develop research farms on the same terms as for SFCIor Agriculture Universities. Proposals would be supported by detailed farmplans and machinery lists.

ANNEX 10Page 4

E. Credit for Other Institutions

11. Bulk storage would be constructed by the Central WarehousingCorporation (CWC) and leased to NSC. CWC would be financed by a participatingbank to be selected by ARDC. Investment proposals would be prepared by CWCand presented to the bank, supported by detailed cost estimates, storageavailability and use statement, CWC financial position, and a contract withNSC for long term lease. The participating bank would finance up to 70% ofthe investment costs, and the balance of 30% would come from CWC reserves orfrom additional GOI equity contribution to CWC. ARDC would refinance up to 90%of bank loans.

12. The transit stores, and even some of the bulk stores may be ownedby the State Warehousing Corporation (SWC). Other transit stores would beowned by NSC. Loan proposals would include detailed designs, in case of SWC,approved by CWC, and a justification for location and size.

F. Lending Terms and Conditions

Borrower: India

Beneficiaries: National Seeds Corporation; State Seed Corporationsand Agriculture Universities in Andhra Pradesh,Haryana, Maharashtra and Punjab; State FarmsCorporation of India, Central and State WarehousingCorporations, Haryana Agro Industries Corporation;and private sector processors.

Relending Terms: (i) From GOI to ARDC

Repayable over 15 years at 7% per annum minimumnet of any prompt payment discounts. Interest oncapitalized interest, if any, to be at same rateas on principal.

(ii) ARDC to Banks

Interest at 8% minimum net of any prompt paymentdiscounts; repayment to coincide with payments byultimate borrowers; refinance of up to 90% of bank'sloans.

(iii) Banks to Borrowers

Interest at 11% minimum; grace period as necessary;loans to finance up to 70% of NSC/SSC/CWC/SWC/SFCI/private sector processors investments, repaymentover 5-15 years, as suitable.

ANNEX 10Page 5

(iv) GOI to Agriculture Universities

Interest at 9% minimum; loans to finance at least60% of project investment in farm development,Repayment over 10-15 years.

Lending Conditions: (i) For Banks to SFCI

Submission of detailed farm planning proposals,including soil, topographical and ground water survey,farm mechanization and land development plans, cashflow statements to be provided; minimum financialrate of return to be 20%, with suitable cash flow.A Government guarantee for repayment of principal andinterest would be provided if banks so desire.

(ii) Banks to SSC/NSC

Detailed investment proposal, supported by technicalreview and plant design by NSC, to be submitted,including cash flows and financial position.

(iii) Banks to CWC/SWC/NSC

Investment proposals to be made by the institutionsthemselves; for SWC, technical approval of CWC. ForCWC proposal, a CWC/NSC lease back contract, and NSCagreement to the technical specifications would berequired. CWC to also provide overall storage capacityavailability and use statement to justify expansionand choice of location and size.

(iv) Banks to private processors

Loan proposals for processing plant to be preparedwith technical review of plant design by NSC. Anyresearch farm development proposals to provide detailsas at (i) above, excluding Government guarantee.

(v) GOI to Agriculture Universities:

Details same as (i) above, excluding Governmentguarantee.

(vi)

All sub-loan proposals would include detailedimplementation schedules.

INDIANATIONAL SEED PROJECTFLOW OF PROJECT FUNDS

LOANSTHROU GH IDA/IERD ! _ GRANTS THROUGH GOI'- _G FUNOS - - -_ -----------

NSCFOR TECHNICAL CENTRAL

ASSI STANCE & ICA STATE SEDCENTRAL-

RESERVE STOCK GOVERNMENTS SEED CETFI-SCHEME

r , r ~ 1 _ s STATE< ;v1 I I l I SEED

ERC ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~CERTI FICATIONFAGENCIES

BANK ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~RSARHIFR EQUICPMENT,NST E T N BUILDING, OPERATING

FOR BREEDER LABS I TECHNICAL

LOANS THROUGH GOI AND STATE GOVERNMENTS SEED P ASSISTANCE

l l STATE MAJORAGRICULTURE IRRIGATION

Ns( ( HARYANA'| PRIVATE | | SFCI FOR VEGETAL F FOR PLANTS R | FARM FOR CANAL

FORCELANTS FOR STORAGE FOR FARM SEEDS & AND DEVELOPMENT DEVELOPMENT &

DEVELOPMENT MARKETINO ESTABLISHMENT BREEDER SEED

X 4 ,$ EQUITY * i TECHNOLOGY CENTERSr

t~~~~~~--- -- ~~--- ---- ~~~~~ r------- i-------- ' - - - - - - -'1~~~~~~~~~ ~~~LOANSV 1 SEED 'STATE GOVERN- I - _GRANTS

PR OC ESSOR S GNCLUDINGAUOR AOENC ES GROWE S M ENT5 -E-----EOUITY

Additmon of GOI f.nding would be nnnsar, y.2

Some of their own funds are added to IDA funds for Onleoding by ARC and Banks. '

- In some cases afte warehousing corporations may be -o.lved.

4/ Haryana for farm dewlfopm,nt. by Agro Industries C.rpor-uoW n

World B-nk-156500l

ANNEX 11Page 1

INDIA

NATIONAL SEED PROJECT

Demand, Marketing & Pricing

Introduction

1. Demand for certified seed is related to growth of areas underhigh yielding varieties (HYV). While the latter has increased at about 19%annually over 1969-74, the increase in the former is not known. Seed supplyhas kept pace with the expansion of HYV areas, also growing at about 20%annually over 1969-75. However, expansion of HYV areas had begun to slow down(Table 1) and is expected to be about 9% annually over 1975-80. What effectthis would have on seed demand is not known. However, since some seed sur-pluses - mainly maize and sorghum-resulted in the 1974-75 season when NSCincreased its output and sales by about 50%, it is possible that supply anddemand have reached a better balance. Stimulation of demand through agressivepromotion, marketing and pricing is essential for further expansion of seedindustry.

A. Demand

2. A realistic assessment of market demand for certified seed isessential. In the past, oversupply in one year, due to unrealistic demandprojections, led to enormous financial losses in the seed industry and asevere jolt to seed production in subsequent years. Factors determining cer-tified seed demand are complex. Not only agronomic and economic considera-tions, but'also farmers' traditions and attitudes have to be taken intoaccount. Except for hybrids, demand is also affected by the fact that cer-tified seed can be readily substituted by farmers' own grain. There is ascarcity of data regarding factors which affect certified seed demand. Todetermine a realistic scope for the first phase of NSP, a base demand esti-mate for major crops has been arrived at by:

(a) projecting area under HYV by 1978-9, based on past andlikely future trends;

(b) projecting seed replacement rates for different agro-ecological regions, based on past data;

(c) projecting the proportion of annual area coming underHYV likely to be sown to certified seed; and

(d) comparing projections with seed industry growth trends.

ANNEX 11Page 2

HYV Program Performance

3. Table 1 summarizes the growth since 1969 of area under HYV of thefive major cereal crops. Over 1969-74, area under HYV grew at an annualrate of 19%, but increased by only 2.5% over 1973-74. It is projected thatover 1975-79, area under HYV would grow at 9% annually to reach 40% of totalarea under these crops.

Seed Replacement

4. Seeds of self-pollinated crops, like wheat and paddy, should bereplaced every four to five years. However, certified seed demand forreplacement depends upon a number of factors:

(a) where climatic conditions (high humidity and temperatureduring the storage period) affect the viability of seedstored on-farm, commercial seed demand is high;

(b) in grain surplus States, since grain prices are low, theseed grain price ratio is less attractive than in deficitStates, where the grain prices are high; conversely,seed/grain quality ratio is usually less in surplus thanin deficit areas;

(c) for transplanted crops, like paddy, and in some casesmillet, low germination rate of ordinary seed does notaffect yields, and certified seed demand is low.

Table 2 summarizes the certified seed replacement rates assumed for variousStates, based on the above factors.

5. The estimated additional area coming under HYV annually is indicatedin Table 3, along with total HYV area in 1980-81 for individual States andcrops. For seed producing States, it is assumed that 50% of the growth inHYV area would be achieved through farmer-to-farmer exchange of seed, whilefor other areas it is assumed to be 15%.

6. Table 3 gives the estimated statewise demand for individual Statesand crops, summarized below:

Certified Seed Demand (1980-81)(tons)

Wheat 105,800Paddy 42,360Maize 17,570Millet 20,400Sorghum 29,020

Total 215,160

ANNEX 11Page 3

Vegetables

7. Data are not available to estimate the effective demand for vege-table seed. About 21,000 tons of vegetable seed would be required to fullymeet the recommended consumption of 280 gm per day. Present production isestimated to be about 9,000 tons. It is estimated that seed demand can beincreased by 50% over the next five years.

Demand Survey

8. The above demand estimates are suitable only for the purpose ofestablishing a reasonable scope of the initial investments under phase I ofthe NSP. These investments are planned to create capacity to meet the fulldemand up to 1978 or 1979. It is necessary before any additional investmentsare made, to improve demand forecast by an extensive seed demand survey andanalysis of the results. The proposed study, already initiated by NSC, wouldbe in two parts. Terms of Reference are in Appendix 1. The first part wouldinvolve a 50,000 farmer survey in 6 eco-agronomic regions and extrapolationof survey findings to a national basis. The survey would be conducted bythe Institute of Agricultural Research Statistics following a questionnairealready agreed with the Bank. The second part, to be done by National Councilof Applied Economic Research (NCAER) would concentrate on establishing andanalysing the factors affecting future demand for certified seed. Thesewould be combined with the farmer survey in a final report by NCAER. Thereport would be available to the Bank before a phase II project is appraised.

B. Marketing

9. Only about 2-3% of all seed used enters commercial marketing chan-nels. Another 8-10% is bought and sold locally through village coopera-tives. For seed marketed commercially, there are two marketing systems.Seed produced by State Agriculture Universities or on goverment farms aremarketed through village cooperatives or government extension agency. Theseseeds are often unprocessed, and frequently not certified. Generally smallquantities of foundation seeds are released and further spread takes placethrough informal multiplication by farmers. The expansion of HYV areas inStates like Punjab and Haryana is believed to have taken place through thisprocess.

10. On the other hand commercial seed producing agencies, like NSCand Tarai Development Corporation (,DC), have developed elaborate marketingnetworks. For example NSC uses three different channels:

(a) State governments and their agencies;

(b) private dealers; and

(c) its own sale outlets.

ANNEX 11Page 4

A major part (about 60%) of NSC total sales are now through State Governmentswho place firm advance orders for seed, arrange for transport and distributionand usually set retail prices at low levels. NSC has about 1,060 dealers,about 50 being village cooperative societies. Typically these dealers handleother seeds as well as other agricultural and non-agricultural commodities.NSC sales through its dealers have declined from about 60% of the total salesin 1972-73 to about 25% in 1974-75. NSC regional offices have retail out-lets, about 85 in total. NSC sells about 15% of its seeds through theseoutlets which provide NSC with market feedback.

11. Private sector marketing differs with size of operation. Smallerones are usually organized as producers associations or cooperatives andinvolve local marketing of raw seed, "truthfully" labelled. Larger privatecompanies, about 6 in number, have well established marketing networks. Theysell certified seed and operate interstate. Most operate in Maharashtra,Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu.

12. Cooperatives are also active in seed distribution. Invariably,seed is produced for the cooperative by members and sold back to them in thefollowing season. Gujarat, Maharashtra and Uttar Pradesh together accountedfor 75% of total sales by cooperatives in 1973-74 (Rs 450 million comparedto Rs 100 million by NSC). In Gujarat, the State Cooperative MarketingFederation itself produces and markets seed, while in Maharashtra, the ApexMarketing Federation distributes seed produced by village organizations.In Uttar Pradesh, the Apex Marketing Federation markets seeds produced bythe Department of Agriculture. GOI has a policy of one-point sale for allagricultural inputs and in future more of the 44,000 existing cooperativesale depots are likely to be involved in selling seed.

Future Marketing System

13. NSC would act as the principal coordinator of all SSC productionintended for interstate marketing as well as become the wholesale distri-butor in interstate marketing. Under this system supply and productionwould be properly coordinated, transport costs minimized by rational move-ment planning and bulk movement, bulk storage organized at optimal locations,duplications of sales offices and dealers avoided, and seeds of all cropsand varieties made available with every dealer.

14. In seed producing States, SSC would establish a retail seed dealernetwork, using any existing NSC dealers. SSC would be free to choose theirdealers, whether private or cooperative, on the basis of the dealers' effec-tiveness in seed marketing. For the seeds now not produced by the SSC,NSC would supply seeds to SSC from other States. In States without SSC,NSC would expand its retail dealer network. The network would includeprivate dealers. Cooperatives would be used to the maximum extent possible(para 12). The marketing network of the State Agro-Industries Corporation

ANNEX 1 1Page 5

or Cooperative Marketing Federation would be utilized for this purpose. Theyvould act as distributor, and underwrite the dealers' financial obligations.They would operate under an agreeaent with NSC and receive a service charge of0.5% out of the dealers' 10% commission.

15. Wnen the NSP seed rarketing network is fully developed, eachCommunity Development Block; vould have at least four sale poinits. Flowevet,the number of dealers in any area would be related to the total quautity ofseed to be marketed to ertsure that each dealer would have a reasonable marlketshare. HowNever where seed Is additional to a dealer's existLag operation,this wcuLd be less important. The merchandizing capal;li-y and past perform-ance of dealers in selling other agricultural inputs would be givea import-ance. NSC contracts with dealers would clearly specify thelr responsibilityin sales promotion. Although market dexvelopment would primarily be NSCresponsibility, all dealers would be required to do a minimum amount ofpublicity and advertisement and participate in meetings and denLonstrations.NSCs would supply publicity material and undertake national advertising, andwork closely with the departments of agriculture.

NSC Marketing Organization

16. Marketing would become the prime NSC activity. The proposed market-ing organization is shown on Chart I. Three major activities - market dev-elopment, storage and transport, and sale and supply - would be directed bysuitably qualif Led managers. Market development activities at USC Read-quarters would focus on policy and national promotion or mass publicity. Tofoster close contact between Lhe dealers and the NSC, dealership selection andservicing would be the respon3ibility of NSC regional offices. 14arket promo-tion would be performed from the regional office under the overall directionof headquarters. This would ;ermit better adjustment to local situations.This would require a shift from the current emphasis of regional offices onseed production. A training program to re-orient NSC staff towfards seedmerchandizing is proposed (Annex 6). Irn addition, each regional office wouldhave an extension specialist to work with State Government extension servicesand to assist the dealers witil seed promotion. Biannual dealer meetings todiscuss market development would also be organized.

C. Prices

17. Because of the easy substitution of comlmercial seed by farmersown grain, seed demand is strongly linked to seed price and quality. Pricesin informal farmer-to-farmer transactions can lhardly be higher thar. grainprices since the seed is hardly different from grain. Prices fcr the smallquantities of seeds sold as part of government extension activities are keptonly fractionally higher than grain prices. Certified seed, on the otherhand, must be priced higher because:

ANNEX 11Page 6

(a) on farm production-costs are 10-20% higher for self-pollinated crops and up to 70% higher for hybridsand in addition the seed grower has to be compensatedfor increased risk (Annex 12);

(b) cost of processing, to remove broken and foreign matter,and to treat;

(c) cost of certification;

(d) cost of storage under conditions that prevent loss of quaiity;and

(e) cost of marketing, fixed and working capital and managementoverheads.

Past Pricing Policies

18. Generally, commercial seed prices of different producers have beenlinked to NSC prices. The latter were determined by NSC on a cost plus basis.Given the low volume of turnover, the overhead costs were high (37% in 1969falling to 20% in 1974) resulting in high seed prices. This in turn dampenedsales volume.

NSC Seed Retail Prices(Rs/ton)

1973-74 1974-75 1975-76

Wheat - 3,200 2,900Paddy - 2,650 2,400Maize 3,200 4,600 4,350Pearl Millet 8,500 10,050 9,700Sorghum 8,000 8,000 7,400

19. Additionally, seed sales in grain surplus areas have been low be-cause of NSC policy of maintaining a uniform national price. To avoidcertified seed consumption as foodgrain, seed prices have to be higher thangrain. However, movement of wheat and paddy has been restricted. Thus grainprices in deficit areas are often twice as high as in surplus areas. Withuniform national price this meant that seed prices in surplus areas were up tothree times the farmer's selling price for foodgrair... Farmers in these areasshowed a natural resistance to purchasing certified seed and very little seedwas sold in these areas (Table 4).

20. The seed market of the recent past was a sellers market with supplyof quality seed undoubtedly beldw demand. NSC undertook a major sales ex-pansion in 1974-75 and increased supply by roughly 50-60%. A minor glutresulted, especially in the hybrids, requiring all-around price adjustments.With the expected slow down in the expansion of HYV areas to about 9% annually

ANNEX 11Page 7

and increased seed production under NSP, supply would match demand moreclosely and seed prices would not only have to be lower, but also would haveto be determined close to the marketing season and area.

Future Pricing Policies

21. Selling prices under NSP would be characterized by:

(a) lower seed prices;

(b) dual pricing; and

(c) price competition among SSC.

22. Reduced unit overhead costs because of increased turnover would re-sult in lower seed prices. NSC over 1974-76 has been able to reduce sellingprices by 10-15% because of increased turnover. NSP policy would be for NSCand SSC to charge a service charge to recover costs, passing the benefit ofincreased turnover to the seed users.

23. Dual pricing would replace the uniform national price. A minimumretail selling price in the Interstate market would be determined on a fullcost plus return on capital basis. However, price would, if necessary, behigher than the minimum price to prevent seed consumption as foodgrain.In the seed producing areas, the minimum retail price of seed would be deter-mined by adding the same premium above grain retail price as applicable indeficit areas. However, the financial viability of SSC would be the over-riding criteria. GOI would administratively restrain the interstate move-ment of seed sold by the SSC for intrastate use. This restriction would berequired only as long as movement of foodgrain is restricted.

24. NSC seed procurement prices and retail prices would be determinedby NSC Board. Price competition among SSC would be encouraged by NSC offer-ing to buy from all SSC only at the lowest ex-plant price offered by an SSC.Seed procurement prices of NSC would be raised until the full interstateneeds are met. To ensure the availability of a buffer supply in case of anemergency, NSC would offer to charge only half its normal service charge onquantities procured from SSC above the guaranteed offtake.

D. Seed Storage

25. Processed seed generally has to be stored for at least 4-6 monthsbefore use. For rabi crops, this period includes the monsoon season. Care-ful storage under safe conditions is crucial to maintain seed quality tillactual use. Storage immediately upon processing would be at plant (Annex 3).For effectiveness in marketing, storage close to major railheads and consump-tion points would be essential. High capacity bulk storages would be estab-lished at five points between the processing plants and consumption areas.

ANNEX 11Page 8

They would be located on major rail links, have a suitably dry climate for

year-round storage as well as proximity to consuming areas. Proposed loca-

tions, phasing and sizes are:

Year Size

Location Conplete (tons) Purpose

Varanasi (U.P.) 1977 15,000 Supply seeds toEastern States

Rampur (U.P.) 1979 5,000 Same as Varanasi

Coimbatore (T.N.) 1977 3,000 Supply paddy seedsto Kerala

Srirampur(Maharashtra) 1978 3,000 Supply hybrid crop

seeds to North andEast

Delhi 1978 8,000 Supply East and Southfrom North, as well asfor vegetable seeds

26. Upto sixty-four smaller transit stores for the wholesale needs of indi-

vidual market areas would also be established. Required additional capacity

for transit stores would be 11,500 tons by 1980.

27. Total expenditure on the marketing network, mainly storage,. of

NSP is given in Table 6. The bulk stores would be owned-by- the Central

Warehousing Corporation (CWC) or its subsidiaries, the Stateia-rehousing

Corporations (SWC), and leased out to NSC on a long-term basisia CWC, a

Government of India undertaking, was created in 1962, with the purpose of

building and operating suitable warehouses, mainly for agro-industrial com-

modities. It operates 140 warehouses with a total capacity of 15 million

standard bags (or 9 million tons), average capacity utilization was about 80%

in 1974/75. Specifications far design would be agreed by NSC and CWC.

Locations have been agreed by NSC and CWC, but actual construction of Rampur,

being close to Delhi, would be contingent on a re-examination of its role in

1977-78. Transit stores would be put up by SWC in ]"cations where alternative

storage is not available; or by NSC, where the SWC are reluctant to put up new

stores, but where seed stores are important for NSC marketing strategy. Local

competitive bidding would be employed for letting out contracts for the

construction of these stores.

ANNEX 11Page 9

E. Reserve Stock Scheme

28. Under NSP it is proposed to build up reserve stocks of foundationand certified seeds on the following grounds:

(i) seed production programs may be affected by adverse agro-climatic conditions or pest-disease problems;

(ii) natural calamities like floods or long dry spells duringthe monsoon season, in turn necessitating resowing or mid-course correction in cropping programs, may give rise tosudden, unanticipated demand for seed;

(iii) inability to judge farmer reaction to new varieties mayresult in unexpectedly high demand for seeds of a newlyreleased variety;

(iv) for foundation seeds, reserve stocks become more criticalsince foundations seeds have to be produced at least 2years ahead of commercial seed; and

(v) periods of shortages-result in abnormally high seed pricesand the sale of sub-standard seed, and during periods ofglut that invariably follow, large surpluses result infinancial loss in the seed industry and economic lossesdue to loss of production.

29. The reserve stock scheme would be operated by NSC, for GOI, and beinitially confined to the major cereals. Quantities of seed to be kept inthe reserve stock (Table 7) would be related to the total demand estimatesof NSP. About 3% of anticipated demand for certified seed of self-pollinatedcrops would be held in reserves; 10% for hybrid. Corresponding proportionsfor foundation seed would be 10% and 50%. Certified seed reserve stock wouldpreferably be held at processing plants to minimize problems of qualitymaintenance and blending, and to minimize condemnation losses, since seedwould be held untreated.

30. Foundation seeds being more valuable and small in quantity wouldbe kept in air-conditioned and de-humidified seed stores. Cost of storageof reserve stocks by various institutions like SSC, Agricultural Universitiesor SFCI would be borne by NSC.

ANNEX 11Appendix 1Page 1

INDIA

NATIONAL SEED PROJECT

Terms of Reference for Seed Demand Survey

A. General

1. The Natinal Seed Program for the development of the seed industry,envisages the creation of several State Seeds Corporations and through thema large expansion of seed production of major crops. The safe limit to thisexpansion will be determined by the effective demand for seed of these crops.Present seed demand information is inadequate. This survey will be a firststep in remedying this deficiency.

2. No actual surveys have been concluded on the farmers' seed buyinghabits, and projections of seed needs are based on projected growth of theHYV area which in the past has been extrapolated with varying degrees ofaccuracy. The figures of seed sales from public sources show that in areaswhere farmers are able to carry over seed stocks, seed buying of an estab-lished variety has declined dramatically in 4-5 years. Presently seed busi-ness is shown to rely heavily on selling to areas that have storage problems:wheat to West Bengal and Bihar, rice to Kerala. These studies have shownthe existence of the following components of seed demand:

(a) variety replacement;

(b) purchase by farmers unable to store through climatic reasons;

(c) purchase by farmers unable to store for financial reasons;

(d) buying because the quality of purchased seed is higher thanthat kept by the farmer himself; and

(e) growers buying hybrid seeds.

B. Scope of the Study

3. The proposed study would establish present and future nationaldemand for certified seeds by farmers, in a ten year perspective. It wouldalso estimate the extent of this demand that would be met by the State SeedsCorporation with the assistance of NSC, as against the established and up-coming private suppliers. Subsequent studies would focus also on seed mar-keting or distribution.

ANNEX 11Appendix 1Page 2

C. Methodology

4. There would be a two-pronged approach, conducted by two separateagencies. The Institute of Agricultural Research Statistics (IARS) wouldconduct farmer interviews according to a questionnaire agreed with NSC/IDA.Some 20,000 of these would be completed in six states, Andhra Pradesh, Bihar,Haryana, Kerala, Maharashtra and West Bengal. These states have been selec-ted to broadly represent different agro-ecological regions in both foodsurplus and deficit areas, in order that the data obtained can, by extra-polation, be applied to the whole country. The respondents would be chosenaccording to a stratified sampling method normally used by IARS.Its summarization and extrapolation over the entire area of the crops inquestion within the States and their HYV or hybrid component (as applicable)would be done by the office staff of the Institute, who would also summarize,tabulate and interpret the answers to the other questions, to give the pre-sent situation in these States. After completion, their advice and assistancein the next phase would be valuable.

5. Concurrently with thee farmer survey, the National Council ofApplied Economic Research (NCAER) would conduct its part in the study. Thiswould involve a number of investigators (two per region) who would collectback-up information and would be involved in the writing of the report. Theywould be required to collect all relevant information that, together with thefarmer survey, will provide background data for a report.

For individual States:

(a) Area of wheat, rice, maize, sorghum and pearl millet in theStates, since 1970, district-wise.

(b) The annual area actually under HYV or hybrids (as applicable)since 1970, district-wise.

(c) Area brought under irrigation, year by year, since about 1970,from all sources.

(d) Plans for irrigation development from all sources to 1985, asfar as they can be quantified.

(e) Data relating to quantities and prices of seed actually soldto farmers by Government, NSC, TDC, State Seeds Corporations,Cooperatives, and private producers annually since 1970.Double counting is to be watched. Information regarding theprice of grain at the time of sowing in these areas since1970, would be useful in case of self-pollinated crops. Thisinformation is to be related to growth in HYV area and to theHYV varieties traded in specific years to determine anycorrelation between the two.

ANNEX 11Appendix 1Page 3

For Agro-ecological Regions:

(a) With a view of estimating likely future trends, following

discussions would be essential: interviews with the agri-cultural extension workers, community leaders, progressivefarmers and a number of ordinary farmers, interviewed in their

fields.

(b) Plant breeding performances, especially the likely futurevariety releases for identifiable ecological regions shouldbe evaluated. Future hopes must be judged against pastachievements. The agronomic suitability and economic advan-tage of the variety must be evaluated in relation to the onescurrently grown, or already available to the farmers, tojudge farmer response.

(c) Discussion with University Agricultural Economics Departmentregarding their relevant field studies will yield valuableinformation.

(d) Likely market penetration of the private seed companies,taking into account their present or future breeding capa-bilities, and their ability to compete with the pricing andother policies of the SSC's under NSP, should be evaluated.

(e) The pricing issues as it relates to demand for seed must bethoroughly analyzed. To be meaningful, figures should beexpressed both numerically and as a percentage of the freemarket grain prices. All analyses must be supported byfigures.

D. Reporting

6. NSC would receive a draft report not later than 10 weeks afterthe summarized and tabulated results of the farmer survey are made availableto NCAER. The report would consist of two parts: the main report and sup-porting volumes. These latter would include the IARS questionnaire andreport, and sufficient data and additional information to enable the findingsof the main report to be substantiated.

ANNEX 11TAble 1

INDIA

NATIONAL S,E PROJECT

HYV Targets and Performance(million ha)

Total V Plan Targets Mission

Crop Area Actual HYV for HYV Projections

1973-74 1969-70 1973-74 1974-75 1974-75 1978-79 1978-79

Wheat 19.0 5.1 10.9 11.7 12.1 15.9 14.7

Paddy 38.0 4.3 9.6 10.5 11.3 17.0 14.5

Maize 6.o o.4 0.75 o.8 o.8 1.3 1.3

Sorghum 17.0 o.5 1.2 1.2 1.3 2.6 2.2

Bajra 13.6 1.1 3.3 2.2 3.5 5.° 4O5

Total 93.6 11.4 25-75 26.h 29.0 41.8 37.2

Growth Rate - - --------- 19%

------------------------- 9%

--- C 2.5%

Source: GOI

March 22, 1976

ANNEX 11Table 2

INDIA

NATIONAL SEED PROJECT

Certified Seed Replacement Rates -

CropState Wheat Padd Maize Sorghum Bajra

Punjab 3% 3% All hybrids = 100%Haryana 3% 3%Uttar Pradesh 1.5% 3%

Andhra Pradesh - 3%Karnataka - 3%Tamil Nadu - 5%Kerala - 50%

Assam 15% 3%Bihar 5% 3%Orissa 10% 3%W. Bengal 15% 3%

Madhya Pradesh 3% 3%Maharashtra 3% 3%Rajasthan 2% 3%Gujarat 8% -

1/ Proportion of certified seed in total seed applied to HYV areas;balance being farmers own seed: or obtained through farmer tofarmer exchange.

Source: GOI: "Demand for Seed in V Plan"

March 1, 1976

TInDA

NATIONAL SEED PEJECT

Certified Seed DJamd ProjectLons

HYV Area (Growth rate) 1980-81 Certified Seed Demnd 1980-81(ha thousands (ha tiousaads)

TotalState Wheat Paddy maize millet Scrhum WPheat Padtd maize el1hlt Sethol.n

Andhra Pradesh 45(3) 2,000(100) 65 210 300 375 3,360 935 790 3,150 8,610Karnataka _ 540(26) 250 120 525 - 675 1,225 450 5,670 8,020Tamil Nadu - 2,250(25) 125 515 95 _ 3,715 250 1,930 1,000 6,895Kerala - 350(25) - - - - 7,740 - - - 7,740

Assam 170(15) 650(50) 10 - 3,600 1,815 160 - - 5,575Bihar 2,000(50) 1,300(100) 550 - 15,950 3,630 9,350 _ - 28,930Orissa 170(15) 1,100(100) - - 2,725 3,450 - - - 6,170W. Bengal 975(75) 2,000(150) - - - 19,875 5,490 - - - 25,365

Haryana 1,350(75) 290(25) 15 430 - 7,575 615 240 1,610 - 10,040Punjab 2, 350(50) 750(50) 20 - 9,400 1,380 )A60 - _ 11,240Uttar Pradesh 5,000(150) 1,750(100) 90 85 - 14,775 2.985 810 320 - 18,890

Madhya Pradesh 1,000(60) 1,300(75) 60 50 335 7,920 3,015 635 190 3,650 15,430Maharashtra 700(50) 25(75) 25 ,liOO 1,400 6,200 2,510 385 5,250 14,700 29,045Oujarat 385(10) - 40 1,500 35 3,850 - 640 5,625 375 10,490Rajasthan 1,225(75) - 45 1,100 - 6,050 - 840 4,125 - 11,015

Others 565(25) 830(50) 200 30 4__ 7,525 1.970 1,640 110 475 31,720

Total 15,935(668)15.145(940) 149 5,440 2,735 105,820 42,350 17,570 20,400 29,020 215,160

March 22, 1976

ANNEX 11Table 4

INDIA

NATIONAL SEED PROJECT

Certified Seed Sales: 74-75/

States Maize Sorghum Bajra Paddy Wheat Total

Kerala - - - 4,G00 - 4,000

W. Bengal 100 - - 4,300 14,800 19,200

Assam 20 - - 2,000 500 2,520

Bihar 7,000 - - 1,000 10,500 18,500

Karnataka 200 1,500 800 550 150 3,200

Tamil Nadu 100 800 800 2,000 20 3,720

Maharashtra 500 5,500 1,050 1,500 4,000 12,550

Andhra Pradesh 300 1,500 300 1,000 - 3,100

Orissa 30 - - - 200 230

Madhya Pradesh 200 140 50 200 1,000 1,590

Haryana 50 - 1,000 200 700 1,950

Punjab 500 - 70 500 200 1,270

Rajasthan 100 - 1,000 50 200 1,350

Gujarat 100 80 1,800 1,000 1,500 4,480

Uttar Pradesh 260 - 250 1,500 2,000 4,010

Others 70 - 70 750 810 1,700

Total 9,530 9,520 7,190 20,550 36,58o 83,370

1/ Production 1973-74

Source: NSC/Mission estimates.

March 22, 1976

ANNEX 11Table 5

INDIA

NATIONAL SEEDS PROJECT

TOTAL SEED SALES BY NSC

(tons)

Program for1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76

Wheat 2,940 4,820 4,670 6,210 9,180 13,470 40,000

Paddy 1,800 3,750 3,750 2,520 5,070 12,920 20,000

Maize 1,350 1,520 1,450 2,460 2,710 3,630 9,250

Sorghum 410 990 1,180 1,960 1,490 2,920 4,500

Millett 160 160 150 700 460 800 2,500

Vegetables 470 1,060 1,970 1,960 520 300 n/a

Potatoes - - - 3,220 3,230 6,190 10,000

Others 1,220 1,310 1,280 1,230 570 480 1,680

Total 8,350 13,610 14,450 20,260 23,230 40,710 87,930

SOURCE: NSC.

March 22, 1976

INDIA

NATIONAL SEED PROJECT

MARKETING

SEED STORAGE: INVESTMENTS(Rs.OOO)

___------ YEAR-------------Item Cost/Unit Units 1 2 3 4 Total Cost % Foreign Exchange

(Rs.) (Rs. 000)

Storage 350/ton 34,000 tons - 6,310 3,800 1,790 11,900 -Land & Development Costs 60/m 58,000 m

2- 1,850 1,130 520 3,500 -- 8,160 4,930 2,310 15,400 -

Transit Stores

Storage 350/ton 11,500 t ns - 2,130 1,290 605 4,025 -Land & Development Costs 60/,

233,000 m? - 630 300 1_980

- 3,180 1,920 905 6,005 -

Conveying SystemsBag Conveyors

Conveyors 21,000 7 - 84 42 21 147 30Carts 300 100 - 16 10 4 30 10Weighers 110 20 - 12 7 3 22 30

- 112 59 28 199 30

Vehicles

Pick-ups (Transit Stores) 50,000 26 - 700 400 200 1,300 25Trucks (Bulk Stores) 120,000 5 _ 360 120 120 600 25

- 1,060 520 320 1,900 25

Base Cost F L,561 2 7_ |

Contingencies:

Physical - 625 370 177 1,173Price - 1.135 1,431 1.160 3.726

TOTAL - 4,272 9,230 4,900 28,403

1/ 5 bulk stores at Delhi, Coimbatore, Srirampur, Varanasi, and Rampur.2/ Transit stores of various sizes at about 60 strategic locations.3/ Physical at 5%; price contingency based on following: local equipment: 1976 (i year) 7% and then onwards; local civil works, 1976 e year, 8%, and then

onwards 10%; foreign equipment 1976 ( year) 10%; 1977-79, 8%; and onwards 7/.

ANNEX 11INDIA Table 7

NATIONAL SEED PROJECT

Reserve Stocks

(tons)

Certified Seed Foundation SeedDemand Demand

Crop 1980-81 % Buffer Quantity 79-80 % Buffer Quantity

Wheat 105,300 3 3,150 5,250 10 525

Paddy 42,300 2 860 5,250 10 525

Maize 17,500 10 1,750 180 50 90

Sorghum 29,000 10 2,900 720 50 360

Millett 20,400 10 2,040 240 50 120

214,500 5 10,700 11,640 14 1,620

March 1, 1976

INDIANATIONAL SEED PROJECT

NSC: MARKETING ORGANIZATION

MANAGER MANAGER MANAGER(MARKET DEV.) (STORAGE AND TRANSPORT) (SALES AND DISTRISUTION)

MARKET F] SA ES &

EEDEEVTENSELOTRANSPORTENTTRAGE EXPORT DISTRIBUTION SALES MARKET D EXTENSIo DISTRIoBUtONOFFICER [SjRVO UPRIO Su OFFICER OFFTE

World Bank-I 5649

ANNEX 12Page 1

INDIA

NATIONAL SEED PROJECT

Financial and Economic Analysis

A. Financial Analysis

Seed Growers

1. Seed price premiums above grain price required to fully compensate

the seed grower for increased production costs and risks are determined on

Table 1. Production costs and yields for commercial and seed operations are

compared. Also, likely impact on income should the seed crop be rejected is

also shown. A seed grower faces two types of risk: (a) risk of seed re-

jection; (b) normal risk of farming. The former is about 5-20% depending

upon the seed crop. The latter increases as production cost increases raise

the farmer's financial exposure. Equating the expected income from seed pro-

duction after allowing for the-probability of seed crop rejection, to income

from commercial production compensates the farmer for (a). To compensate

him for (b), his expected income as a seed producer must exceed his income

as a food grain producer. The ratio of operating costs under the two

situations is used as a measure of the increased risk of farming. Seed

price premiums above grain price (farmgate) are determined so as to provide

an increase in expected income equal to increase in operating risk. The

required premiums are:

Wheat: 40%Paddy: 33%Maize: 75%Millet: 200%

Sorghum: 125%Cotton: 25%

Large Farm Development

2. Tables 2 to 6 show the financial analysis of a model f a large SFCI

farm at Hissar. Yield and operating cost assumtpions are based on past man-

agement levels. However, recent changes in top management are likely to

improve operating efficiency. Investment costs for canal development, which

would be borne by Government with SFCI paying a water charge, are not in-

cluded. Output is seed, and is valued at projected certifLed seed procure-

ment prices of Table 1. The expected financial rate of return on incremental

investment is 22%. A cash flow projection (Table 5) indicates problems in

servicing loans for project investments on normal commercial terms (11% 70:30

ANNEX 12Page 2

debt:equity, and 6 years to repay). A lower debt equity ratio of 50:50 wouldbe required to ensure adequate debt service capacity. Participating bankswould determine on-lending terms based on 4etailed farm development plansand cash flow projections to be prepared by the sub-borrowers.

State Seed Corporations

3. Projected income statement for the Andhra Pradesh SSC is shown inTable 7. Ex-SSC prices are assumed to reach the following by 1980:

Wheat : 1,950 (Rs/ton)Paddy 1,650Maize 2,800Millett : 4,900Sorghum : 3,800

4. An allowance is made for intrastate price being 10% below inter-state price. Also, a 1% bonus to seed growers (equivalent to approximately10% divided on share purchase) as a price adjustment, is provided. Prefer-ence shares earn 11%, and income taxes are assumed at 50%. The projectedfinancial return is 30% after tax and 50% before tax. The most significantrisk facing the SSC is uncertainty of seed demand. However, a large pro-portion of costs is variable (80%) and thus the rate of return is insensi-tive to sales volume.

5. APSSC cash flow projections (Table 8) demonstrate its abilityto service project debts on the proposed terms (11% interest, no grace oninterest, 3-4 years grace on principal and 7 year repayment). Accumulation ofthe four special reserve funds is also shown, and is expected to be adequateto meet the needs for plant expansion and replacement, loan redemption,and research support.

6. Other SSC would have similar cost structures and cash flows. Pre-investment, detailed cash flow projections would be presented to participa-ting banks to support loan requests. These would be available to the Bank.

National Seed Corporation

7. NSC projected cash flow for certified seed marketing (Table 12) isbased on:

(a) Continued staffing at present levels, but reorganizationto match new role;

(b) Projected seed production of about 300,000 tons by 1981-82,of which about 160,000 tons would be inter-state trade.

The cash flow analysis shows that a 5% service charge would be adequate tofully meet costs at the throughput assumed. However, at a 75% lower through-put the service charge required would be 7%. This is reasonable in relation

ANNEX 12Page 3

to the 11% cost currently on a much lower throughput. Tables 13 showsthat operating costs of NSC's other services would be fully covered bythe proposed service charges. Vegetable seed operations are expected tohave a financial rate of return exceeding 50% (Table 14).

B. Economic Analysis

8. Primary project benefits to the Indian economy would be increasedgrain production, estimated at 900,000 tons by year 10. This representsroughly 0.75% of the current national foodgrain production.

9. Key assumptions and adjustments made in computing the economicrate of return were that:

(a) The prices of investment and operating costs wouldremain in real terms at mid-1976 levels.

(b) Foreign exchange has not been shadow priced.

(c) Incremental seed produced under the project would, inthe case of wheat and paddy, be used on areas already underHYV, and would increase yields by 7-1/2% over four years,before being replaced; in the case of hybrids, project seedwould be part of a package needed to shift farmers fromtraditional to HYV cultivation; and only 25% of the yieldimpact and net benefits would be due to improved seed.

(d) Increased production of wheat is valued at projected CIFinternational prices for 1980 in 1976 terms; paddy since itis not internationally traded, is valued at a projected CIFinternational price derived from the rice price (this priceis roughly equal to what the local paddy price might be inthe absence of movement restrictions); hybrid grain are valuedmarket prices (ex-farmgate) since there are no distortionsdue to movement restrictions, cotton seed is valued at twicethe cotton oilseed market price, which is the economic inputprice for ICDP analysis.

(e) Incremental on-farm labor, required mainly during the peakdemand season for harvesting, is valued at the market wagerate and not shadow priced; prices of imported inputs likefuel and fertilizer are valued at the domestic prices sincethese are comparable to international prices (e.g. ureadomestic price is 1850 Rs/ton compared to a cif price of1825 Rs/ton).

(f) Skilled and semi-skilled labor for processing plant operationsis priced at the financial wage rate.

ANNEX 12Page 4

(g) Cost of plant breeding, training, technical assistance, andoperation of the reserve stock scheme is charged to the project,as are all administrative costs of SSC, and certification agen-cies.

(h) Benefits due to farmer to farmer exchange of generations ofseed produced from project seed are not included;

(i) Incremental grain production beyond year 13 is excluded sinceproject processing investments end their economic life then;

(j) investment costs ($0.9 million) and benefits from vegetableseed production (about 2,000 tons) and potatoes (5,000 tons)are not included in the analysis due to the lack of objectivedata on yield impact; however, both operations are financiallyhighly attractive, and there is no doubt about economicjustification; and

(k) average lag between benefits and production costs would be fourmonths. However, discounting at four month intervals would bedifficult because of the multiplicity of crops and productionareas. Thus a discounting period of 1 year is used, and averageworking capital is included in investment costs as a surrogatefor discounting at 4 month periods.

10. Based on these assumptions, the economic rate of return is pro-jected to be about 65% (Table 15).

11. A sensitivity analysis shows that if investment costs were 25%higher, the rate of return would be 55%; if operating costs were 25% higher,58%, and if benefit 25% lower, 45%; these are satisfactory.

12. Economic rate of return for large farm development, based onsimilar assumptions is 17% (Table 8).

13. The reserve stock scheme is also economically justified. Reservestocks would be used up once every two years - as a result of national orregional calamity. Investment per annual ton in reserve stocks mainlystocks and additional storage, is about 50% higher than other seed, whileoperating cost per ton is the same. Without such stocks, some areas wouldnot be planted at all, and most would receive poor planting material.Benefits would be at least the same as for non-reserve stock seed andeconomic rate of return on this component would be 45% minimum (based onsensitivity analysis).

14. Incremental project seed production would impact about 6.2 millionha; 3.6 million ha under hybrids would receive new project seed annually,while 2.6 million ha under wheat and paddy would receive new seed every fouryears. Seed would be used nationwide, and users would include all segmentsof the farming community. The project would generate about 14,000 manyears of seasonal on-farm employment for harvesting.

INDIA

NATIONAL SEED PROJECT

FINANCIAL ANALYSIS

Costs and Returns of Certified Seed Production

_------ __ H___ T ------ -- - ------ P- DUYL------ -- 2 _/3------ /2E;L_-- _-_ _ _ COT-T-Off ------ ---- PRARL MILLET _---- ------ - ------Cosecercial Certified mCerciel Certified CoG ernil Certified C_ercial CErtified Coserrial Certified Ct_rnisl C1 rified

R/h i Rbs Ri Rth. Rb Rihs R/b. R/hRhR/bs Rib

A. PRODUCTION COST3

Land PreParation 250 250 200 200 250 250 250 250 250 250 250 250Seed -- Cnsdrcial 125 - 60 - 40 - 40 - 50 - 90 -

Foundation - 225 - 150 - 150 - SO - 100 _ 150Nursery and Transplanting - - 125 125 -

eertiliser 600 720 400 5Sf 350 600 250 300 215 300 300 375Weeding - 100 100 100 150 100 100 50 100 73 150Peetinide/Nerbicide - 125 30 60 20 40 60 250 - 30 50 100Rouing i/Dtasseling - 40 - 40 - 100 - 50 - 100 - 100Irrig ation 70 100 110 110 60 100 60 60 5O 125 75 150Iaspection Fse - 50 - 50 _ 80 - 50 - 80 - 80Rarve-tiog 300 300 300 300 100

2 0 0-/ 140 180 80 120 100 150Trfanport sad Handling 55 70 64 74 30 50 14 18 20 20 30 30Misrellsasoa i50 50 61 91 50 80 61 72 25 45 30 65

Total Prodontion Costa 1,450 1,930 1,450 1,800 1,000 1,800 975 1,400 740 1,270 1,000 1,600

Incrrn.antsl Production Costs - 480 - 350 - 800 - 425 - 330 - 600

B. YIELDS

Grain (100 Kg/ho) 26 - 32 - 18 - 7 8.5 10 - 13 -Sead (100 Kg/ho) - 23 - 28 - 16 - - 6 - 9.5Ocreenings/Mala RowJs - 0 _ 7 - 9 - - - 4.5 - 4.5

(100 Kg)C. PRICES

GraIn (Rs/S100 Kg) 105 - 75 - 120 - 250 - 135 - 135Seed (Rs./100 Kg) - 150 - 100 - 210 - 310 - 400 - 300SIcreenings.1 -l Rows (Rs./100 Kg) - 55 - 40 - 85 - - - 90 - 90

D. REVEFUE 2,730 3,980 2,400 3,080 2,160 4,135 2,100 2,635 1,350 2,755 1,755 3,205

E. FINANCIAL COSTS- 55 100 60 90 40 95 40 70 30 110 35 105

F. INCOME 1,225 1,750 890 1,190 1,120 2,230 735 1,165 660 1,495 720 1,550

G. INCOME IF SEED RREjCTED - 1,050 - 770 - 907 - 675 - 170 - 230

H. PROBABILITY OF REJECTION- - 57 - 5t - 15% - 15% - 25% - 257.

1. EXPECTED INCOME&/ 1,225 1,715 890 1,170 1,120 2,030 - 1,090 660 1,165 - 1,220

J. INCOME RATI 1.40 - 1.30 - 1.61 - 1.48 - 1.76 - 1.70

1/K. RISK RATIo - 1.33 - 1.24 - 1.80 - 1.44 - 1.71 - 1.60

L. SIITABLE PRICE PREHIUM ABOVEGRAIN PRICE - 40% - 33% - 75% - 25% - 200% - 125%

1/ Os.ad on Punjab/Hiryana conditions;2/ ..snd on Andhr Pradesh nonditioss;3i Sorghbo and tillet hybrid seed production .sssned to have slosilar soat structure; for traditional cultiv tion, costs of fartilizer, pesticides would nst pply./ Includes alloance for additional sorting and cob handling;

6/ E.pented inncoe - (Innes fins, seed) n (Probability of .. septanne as send) + (In-osae if rsjectsd) a (Probability of reSction)5 At 157. per yer for vorking capital (R0% of operating coats) for 4 onthe; asd for seed, (delay In paymnt of the price pr_iun abo- grain price) for 3 e-ntha;7/ boner ratio is thb ratio of expected incone froa asad to inca frost Starin cultivation: it nsaottr.s the necessary r-turn to conpenta.t for risk;8/ Risk ratie is the rati of funds tied op in the two nprationa; this ratio is nsed as a neas-rs sf increase En fek for the coltivetor. Expected 3up in incoLes -at eatch this rati for . eed .n.duction to be attractive to the faner;

P/ probability of rejection is based on csrtificstioc agency enparies; it is high for hybrids partly becouse -stre skill is rceqired in seed production over grin production.

March 1, 1976

ANNEX 12Table 2

INDIA

NATIONAL SEED PROJECT

Financial Analysis

SFCI: Hissar Incremental Investments(Rs thousand)

Land Development F'inancial Economic Residual Value-

(net of taxes & duty)90 HP tractor 800 320 400Scraper 100 65 50Land plane 50 32 12Land leveller 50 33 13Motor grader 300 120 N.A.Operation 630 630

Sub-total 1,930 1,200 FConveyor System 3,600 3,600Cultivation

Tractor 70 HP 1,800 720Tractor 50 HP 350 228Implements 375 244

Sub-total 2,525 1,192

Spares 775 365

2/IrrigatianZ/ - 6,300

Buildings 750 750

Physical Contingencies 450 225

Total 10,.030 13,630

1/ Sold in year 4 after conpletion of land development program.

2/ SFCI: Hissar portion of canal remodelling costs, paid by stategovernment.

March 22, 1976

ANNEX 12Table 3

INDIA

NATIONAL SEED PROJECT

Financial Analysis

SFCI Hissar Farm - Annual Fixed Costs

Without WithProject ProjectR'OOO R'OOO

Salaries 1,200 1,200Wages-general labor 1/ 100 100Building maintenance - (21) 33 5oIrrigation channel maintenance 2/ 90 3/Tractor operation 4/

70 HP - 418 5/50 HP 400 523 6/30 HP 80 -

Implements 100 125Combines 90 140Vehicles 150 175Equipment hire 37 _Land revenue 7 7Administration supplies and services 120 150Miscellaneous 13 22

Total Fixed Costs 2,330 3,000

Incremental Fixed Cost 670

1/ Present value R7,335,000. with project value R 4,335,0002/ Covered by general farm labor3/ Materials only.i/ Without project based on farm accounts.

With project figures cover only fuel, oil and apares.5/ R 21,800 per year for fuel, oil, labor and spares_/ R 34,550.

March 1, 1976

NTIONAL SEW PROJCT

Financial and Eoonomic Anelyala

SFCI Hiasar Farm Yodal - Inreastal Variable Prwhaotion Costa

itbout Project th Project Inor_ntalFertili.er Pesticide Se Id lAor Irrje aon Fartill r Peticide Sd bor 7rr3gAtion Variable In _oreaal VariableArea per per per par per Area per pe per per per Productlon PtbcVcD C"SOCrP ha ha Total ha Total ha Total ha Total ha Total Total ha ha Total ba Total ha Total he Tota m Total Total Coats 20X R' 000 5 8' 000 R'OOC R 9R' 000 RFT0 ' 0I 0 R R5'O COO R- R'OCC i0 ' Ro R'OCO RTOO0 ITloOO

iINI (Eoono ic Analyais)

Sharif (Mon ... n)Cotton (lSonsoon 550 200 110 200 no 25 14 350 192 100 55 481 800 250 200 300 240 80 64 400 320 100 80 904Pearl Millet 190 200 38 - - 5 1 125 24 50 10 73 400 250 100 - - 50 20 750 60 50 20 200Pulse 280 100 28 _ _ 60 17 125 35 50 14 94 600 125 75 50 30 100 60 150 90 50 30 285Other 1,420 - - - 50 25 - - - - 25 640 - - - - 50 32 - - - - 328A=j (Dry see.0n)Lih (Dt 550 400 220 - - 225 124 140 77 100 55 476 80o 500 400 125 100 225 180 140 U2 100 do 872Grain 120 100 12 - - 60 7 125 15 25 3 37 500 125 63 - - 100 50 150 75 25 13 201Noetard 120 140 17 - 15 2 100 12 50 6 37 300 175 53 100 30 15 5 150 30 50 50 168Other 1,650 - - - - 15 8 - - _ 8 84C0 - - - 15 13 _ _ _ _ 18Unallocated Variable

Costs __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 350 __ _ _ _ _ _ _ _ __ _ _ __ _ _ __ _ _ __ _ _ _

trotag 6425 UO 19d 355 143 LSdl 891 400 424 687 273 2.675 .L2 365 729 1,094

S (Financial Analvyis)

Iupots for grain 1,561Additional wheat seed 91 132input. 9113

Total L.672 £..07 1.135 378 757 1,135

Mrch 1, 1976

IRDIA

NIATIOML SM PRWJCT

financlal end Ehonce Ana)-oeee

SFCI Hissr Farm Nodel - Inoremental Revenues for Fimncial Analysis (Seed Prices)

_ WI T HOUVT P ROJ 13C T ---

Area 1/ Tiold 1/ PDduction r 1 Year 2 Year 3 Year 4 - 20

Crop ha qtl/ha qtlc Price Rs/qtl Revenue RsIOOO Price Rs/qtl Revenue Ris000 Price Rs/qtl Reveaue Re'OOO Price Rs/qtl Revnum Rt000

8harif (Monsoon)

Cottonr" - 5> ) 550 6.5 3,575 250 894 250 894 250 894 250 894

Pe,erl Millot 5/ 190 7 1,330 135 180 135 180 135 180 135 180

Pulses ,/ 280 2 560 200 112 200 112 200 112 200 112

Other 67 1,420 - - - - - -

Rabi (Dry season)

4/ Seed ) 550 (20 11,000 165 1,815 163 1,793 161 1,771 160 1,760Screenings) (5 2,750 55 151 55 151 55 151 55 151

Gram 5/ 120 4 48o 200 96 200 96 20O 96 200 96

Mostard 5/ 120 2.5 300 200 60 200 60 200 60 200 60

Other 6/ 1,650 - - -

Total R-.oeue Without Project 3,308 3,286 3,264 3,253

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W I T h P RO0 J A C T - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Max MIx. Maximum Year 2 Year 3 ar 4 -. 20

Area,/ Tiela v Production Production 2Revenue Price Revenue Prodaction Pce Reenme Procfction Price Rev.r.

Crop ha c t1/ha c qtls Qtl Bs/qtl OOO qtl Re/otl RstOOO Rs/qtl Re'OOO qt'l R0/qtl R00OOO

Mharif (Honsoon)

Cotton4/ See ) 8 11 6dow(6,53°00 5,317 250 1,329 7,058 250 1,764 8.800(2,500 290 725 a 8,(2,500 1 725Sepas) (6d, 300'~ (6,300 250 1, s571 (6,300 1, 575

Pearl Millet 5/ 400 10 4,000 2,220 135 300 3,110 135 420 4,000 135 540 6,000 135 540

Pulses 5/ 600 4 2,400 1,173 200 235 1,786 200 357 2,400 200 480 2,400 200 480

Other 6/ 640 - -

Rabi (Dry season) 8 4 8/

Wh6t/ Seed 2 800 (1 900 U' 13,733 165 - 2,266 16,467 160 / 2,635 19,200 155- 2,976 19,200 150- 2,880

Wheat- - Screenings) 30( 6 2,000 ( 4,800 3 433 55 l89 4,167 55 229 4,800 55 264 4,800 55 264

Grame c/ 500 6 3,000 1,320 200 264 2,160 200 432 3,000 200 600 3,000 200 600

Mustard c/ 300 4 1,200 600 200 120 900 200 180 1,200 200 240 1,200 200 240

Other 6/84

Total Revenue With Project 4,703 6,017 7,400 7,304

Incremental Rsve - - 1,395 2,731 4,136 4,051

/ Based on averages 1970/71 to 1974/75.g/ Wheat price at seed rates, remainder at grain. The quality of the non-ibeat crops is indeterminate, ani to give

a realistic incremental revenen commercial prices are used for those crops. The prices are weighted to allnw for-creerdnig *.ses etc.

3/ Mission judgenent.Full irrigation.

5/ Protective irrigation.M/ Hain crops: fall, ard green mnura.Nission judgement of wheat seed price trend without project.M/ ission judgement of wheat seed price trend with proect.

March 1, 1976

INDIA

NATIONAL SEED PROJECT

FINANCIAL ANALYSIS

SFCI: Hissar Farm: -- Rate of Return(Rs. Thousand)

---------------------------------- YEAR-------------------------------------------------1 2 3 4 5 6 7 8 9 10-12

1/A. Incremental Investment-otatMd17Prcs

A. Incremental Investment ----------------------------- Constant Mid-1976 Prices ----------------------------------

Land Development & Equipment 4,210 2,900 2,900 (475) - - 2,450W. Capital2/ 125 125 125 - - - - _ - (375)

Total Investment 4,335 3,025 3,025 (475) _ _ 2,450 - (375)

B. Incremental Revenue (Annex 12, Table 5) 1,395 2,730 4,135 4,050 4,050 4,050 4,050 4,050 4,050 4,050

C. Incremental Fixed Costs (A=nex 12, Table 3) 225 450 670 670 670 670 670 670 670 670

D. Incremental Variable Costs (Annex 12, Tab.4) 380 760 1,135 1.135 1. 1135 1,135 1.135 1,135 1.135

2/E. Operating SurPlus (Constant Prices5 790 1,520 2,330 2,245 2,245 2,245 2,245 2.245 2,245 2,245

Financial Rate of Return pr,2/

F. Operating Surplus (Current Prices) 850 1,730 2,860 2.750 3,065 3,280 3,510 3,755 4,300 4,9004/

G. Debt Service:

Interest 480 780 1,100 1,100 920 730 510 270Amortization -1600 1,780 1.970 2,190 2.430

5/Total Debt Service 480 780 1,100 2,700 2,700 2,700 2,700 2,700 - -

Net Inflow: 370 1,050 1,760 50 580 8 1,055 4,300

1/ Some land development equipment is sold in year 4; replacement for cultivation equipment in year 8; working capital 33% of incrementaloperating cost, released at end of analysis.

2/ Assuming 7% p.a. price escalation.3/ Based on operating surplus and total investment.4/ Total loan, from Annex 12, Table 2, including physical and price contingency, and loan equal to 70% of investment is Rs. 4.4 M, and

2.9 M in years 1 to 2 and 3 respectively.5/ Based on normal commercial terms (11/ interest, 70% loan and 5 years repayment, 3 years grace) debt service is not satisfactory, since it

depends to a large extent on general price escalation while payment for interest and principal remain constant. Debt : equity ratio of50 : 50 may be necessary. Participating banks would carefully evaluate detailed cash flows to be prepared by each farm, before F'etermining terms of loansc

March 22, 1976

PAETIOIAL SHID PIDJSCT

Financial and Baoncsic Analyses

SFCI Hiaear Farm odel - Incrental Rever,es for Zcononic AnZlYsia (Grain Priem)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W IT H OU11T P R O J 1S C T - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_

Are]/ Yield PrhtonIe r1ar Ye ar 2 Ier 3 !ear 4 - 8 Tear 9 - 20

Area- Yield Production 8/Croo ha IlA/ha qtls Price Rs/qtl Reere Rs 1000 Price Re/qtl Revenue Re! OOO Price Rs/Qtl Revenue Rs'OO Price Rs/qtl Reverue Rse000 Price Rs/qt Reveme Re'00

4h!rir (monsoon)

Cotton 3/ 550 6.5 3,575 18C -/ 644 190 644 180 644 180 644 180 644

Pearl Millet - 190 7 1,330 135 180 135 180 135 180 135 180 135 180

Pulsee s,/ 2eO 2 560 200 112 200 112 200 112 200 112 200 112

Other 1,420 - -

Rabi (Dry season)

Wheat 1/ 550 25 13,750 162 7' 2,228 161 2,214 158 2,172 161 2,214 164 2,255

OreaxW 120 4 480 200 96 200 96 200 96 200 96 200 96

Mooterd a / 120 2.5 300 200 60 200 60 200 60 200 60 200 60

0iutaerd 12 2- 30 200- - - -- --

Other5/ . ..

Total Reve.oe Without Project 3,320 3,306 3,264 3,306 3,347

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - WI IT H P R O J I C T - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_

nax. nMX. Maximum Year 1 YIn,, 7a Yo *_r 1,-_ 8 evenue Prodvctioa______

Area Yield Production Prodaction Price Reue troldwton ce Reeuf Production Prie Rev Pro&cton Pdoe I u Reyt e Ituuee

Crop ha gtl/ha qtls qtl Re/qtl Re'000 qtl Re/Dtl R 3000 Rt '00j.. t OOO qtl Rq00 tOlOD 4/qt RJ'

[harif (Monsoon)

Cottons3/ 80 11 8,ooo 5,317 1 957 7,058 180 1,270 8,800 180 1,584 8,800 180 1,584 8,8bo 180 1,584

Pearl Millet 4/ 400 10 4,000 2,200 135 300 3, 110 135 420 4,000 135 540 4, 000 135 540 4,OCO 135 540

Pulses 4/! 600 4, 2,4,00 1,173 200 235 1,786 200 357 2,1300 400 200 480 2,400 200 480 2,400 200 480

Other 7 640 - - -

Rabi (JJry season)

Wheat ei 800 30 24,000 17,166 162 - 2,781 2o,634 161 3,322 24,000 158 3,792 24,0o00 161 3,864 24,ooo 164 3,936

Grem, W 500 6 3,000 1,320 200 26,4 2,1eO 200 432 3,000 200 600 3,000 200 600 3,000 200 600

Riotard )j/ 300 4 1206C 0 200 1 1,00 600 20 180 1,200 200 240 1,200 200 240 1,200 200 240

lOatherd 300 4 1-0 60 20 1- 90 200 - - - - - -

Otherl/ 840

Total Revenue Vrth Project 4,657 5,981 7,236 7,30d 7,380

Incrent-l Revenue 1,337 2,675 3,972 4,0C2 4,033

a/ ased on averages 1970/71 to 1974/75.Misasion judgem,ent.Fu1l irrigation.

4 Protectire irrigation,5/ Hain crops; fslinu and green _anure.6/ Cotton price Years 1 - 20g Shadow prie 180 Pe/qtl - Se conoio Analsi of Sirsa Pam, Integrated Cotton Project Apprealel, Report No.

7 h/ lsat price Years 1 - 20: Free mariet price for, frcn Price forecasts for major primary camwdtiss, ard forecat transportation costs. (See back-op set)

/ Crop prices except cotton and wheatt ; ar ket prices (also see Findneial Anelyni Incr_nntal Revnue Annex 12 Tablo 5 )

March 1, 1976

ANNEX 12INDA rabl. 8

NATIONAL SWD PROJECT-

SFCI: XMIMUC ASLIS

----- ---------------------------------------- Y1 A-----------------__- _______-_-___-_-___-____-_-__________ -_

1 2 3 4 5 6 7 8 9-12 13 14-19 20

A. Incrr_ntal Invstment

Land Dev.lopmnt and Equipnt 4,920 4,350 4,350 (210) _ 1,070 - - 1,070Working Capital 2/ 125 125 125 - - - - (375)

Total Investment 5,045 4,475 4,475 (210) - 1,070 - - 1,070 - (375)2/

B. Incremental Revenue 1,337 2,675 3,970 4,000 4,000 4,000 4,000 4,000 4,035 4,035 4,035 4,035

C. Incremental Fixed Costs 225 450 670 670 670 670 670 670 670 670 670 670

D. Incremental Variable Costs 380 760 1.135 1.135 1.135 1.135 1.135 1. 1 11J135 1 135 1.135 1,135

Net Benefit Inflow (4 313) (3,010) (2,310) 2,405 2,195 2,195 1,125 2,195 2,230 1,160 2,230 2,605

Economic REate of Return . 17%

1/ Some land development equipl nt is sold in year 4; replacement for cultivation equipment in year 7 and 13. Working capital - 33% of incremental operatingcosts, releaed at and of analysis.

2/ From Table 7. Annex 12.3/ From Table 3, Annex 124/ From Table 4, Annex 12.

March 22, 1976

ANNEX 12

INDIA Table 9

NATIONAL SEED PROJECT

FINANCIAL ANALYSIS1/

APSSC: Headquarter's Overheads(Rs.000)

--------------YEAR---_________1 2 3 4 5ff

(1976) (1977) (1978) (.199) (i2/

Staff Salaries 850 980 1,130 1,200 1,2003/

Vehicles Operation andMaintenance 150 200 250 250 250

Office Rental andUtilities 150 150 150 150 150

Office Expenses 70 80 90 100 100

Travelling 30 35 40 50 50

Staff Bonuses @ 10% 85 100 115 120 120

Miscellaneous @ 57% 65 75 90 95 95

TOTAL SSC OVERHEAD COSTS 1,400 1,620 1,865 1,965 1,965

1/ In constant mid-1976 prices;2/ Excluding plant management and staff; see staffing plan table 1, Annex 9.3/ 10,000 miles/year @ Rs.1.20/mile for all except motorbikes at Rs. 0.35/mile;4/ 40 days annual for all marketing, quality control and operational staff @ Rs.15/day,

plus 400 days total for managerial staff at Rs. 25/day.

March 1, 1976

INDIANATIONAL SEED PROJECT

Financial Analysis

APSSC: Incos Analysis

(Ra ,000)

______------------------------- Year 1/ ------------- s--------------~~---------- ------------------------------~~~-~~~~ -~~--

1 2 3 4 5 6 2 8 9 10 11-13(half year)

------------------------ _-_--------------- constant aid 1976 prices ----------------------------------------------

A. Revenue 4,200 23,700 26,200 27,800 29,270 30,780 )

4,530 20,140 20,850 21,550 21,680 21,810 ) c o a a t a t- 12,800 15,380 16,010 15,950 16,070

1 380 7.820 10,910 12,030 12 660 12.850Unadjusted - Revenue 10,110 64,460 73,340 77,390 79,560 81,510 81,510 81,510 81,510 81,510 8, 710

B. Revenue Adustments_3/

Dual Price Operationg 4 100 575 640 680 720 800) o n t a n tSeed Grwre' bens _ - 470 530 550 560 570 5

e r100 1 045 = 10 1250 1.280 1,370 1.370 1,370 1,370 1=370 1 370Net Revenue 10,010 63,415 72,170 76,160 78,280 80,140 80,140 80,140 80,140 80,140 80,140

C. Operating Costs3/

1. ProcureuoentPaddy 2,600 15,000 16,330 17,070 17,640 18,200

b. Maize 3,330 15,050 15,520 15,980 15,955 15,960 ) c o n a t a n tc. Millet - 10,400 12,400 12,800 12,790 12,800d. Sorghunm 1535 6360 8.770 9 570 9.900 9.900 9OO _

Sub-Total (1) 7,465 46,810 53,020 55,420 56,285 56,860 56,860 56,860 56,860 56,860 56,860

2. Processing Plants -

Direct, Paddy 410 2,380 2,700 2,950 3,190 3,440Hybride 380 2,400 2,770 3,010 3,170 3,300

b. Labor . Paddy 40 225 255 280 300 325Hybrids 40 265 305 530 350 370

c. Certification Materials: Paddy 45 250 285 310 335 365Hybrids 50 305 350 380 400 425) c on t nt

d. Plant Supervision & Office 335 670 670 770 865 865e Maintenance:

Equipment & Machinery (5%) 65 130 130 595 1,060 1,060Plant & Building (2k%) 30 60 60 180 310 310

Sub-Total 1,395 6,685 7,525 8,805 9,980 10,460

3. SSC Headquarters-7 8 500 1,400 1,620 1,865 1,965 1,9654. Interest on Working Capital - 65 425 490 540- 570 605 ) ___ -

Tutal Operating Costs 9,425 55,320 62,655 66,620 68,790 69,890 69,890 69,890 69,890 69,890 69,890

9/D. Operating Surplus - 585 8,095 9,515 9,540 9,490 10,250 10,250 10,250 10,250 10,250 10,250

----------- …cu--------------------------------------current prices------------…-------------------605 8,660 10,850 11,640 12,370 14,250 15,250 16,310 17,450 18,680 19,990

E. Finsncial/Other Custs

1. Depreciatiun4 10% for chinry & equipent 200 400 400 1,650 2,910 2,910 2,910 2,910 2,910 2,910 2,910@ 5% for plant & buildings

2. Interest on long-term debt @ 111 100 645 1,560 2,150 2,515 2,110 1,660 1,275 1,170 610 -

F. Gross Profit 105 7,615 8,890 7,84D0 6,945 9,230 10,680 12,125 13,370 15,160 17,080G. trporate Taxes 150 3,810 4,445 3,920 3,470 4,615 5,340 6,060 6,690 7,580 8,540H. Net Income 155 3,805 4,445 3,920 3,sh75 4,615 5,340 6,065 6,680 7,580 8,540

I. Operating Surplus after Taxes 450 4,855 6,405 7,7ZO 8,895 9,635 9,910 10,245 10,770 1l,l1O 11,450---------------------------------- I---------------- constant prices -------------------------------------------------- ___

435 4,540 5,590 6,330 6,845 6,930 6,690 6,460 6,370 6,140 5,950

Financial Rate of Return after Revenue Adlustments and Inca Taxe -12 (Before taes - 537.)

1/ Year 1 covers khri; seed production for 1976. For this analysis, a year is defined to include * rabi seed season and the following khbrif seed essom (i.e.Oct. to Oct.). Small inaccuracis in matching the timing of revenues and costs on this table, with other tables where a year is a calendar year, are ignored.

2/ Revenue is based on ex SSC prices (see Chart I),assuming a single price formula. These en SSC prices proposed under NSP are achieved gradually over 4 years.3/ Revenue adjuetments are subject to SSC Board decisions in light of SSC financial reserve position.4/ Only for crops subject to interstate movement restriction, intrastate em SSCQ *ed prices can be lowered, subject to such prices having the sane pre-ism above grain

prices as applicable to interstate sales. Here intrastate prices for paddy se*d is assumed 10% below interstate price.5/ Seed growers c-n be paid a bonus, a part of final payment, in light of actuil Belling performance. here a bonus of 1% of seed procurement price is asoumed This

is equivalent to a 10% dividend on share purchase.6/ See Table 6, Annex 37/ See Table 1, Annex 9

B/ based on average year round working capital needs of Rs 5.5 m (see Chart I ). On month-to-month basis working capital needs v-ry fron cere to Re 18.2 mInterest at 15% for 70% of the working capital needs fin-nced by loan, rest frin reserves.

9/ All items below this line are in current prices. Operating surplus converted from constant nid '76 price to current prices assaning 7% p.s. general price escalation.10/ T-xes @ 50% are noninal and nay be lower after allowing for special ecemptions like developnent rebate or faster depreciation.11/ Operating surplus Iess taces, converted back to constant aid '76 prices.12/ ROR calculated on investments, excluding price contingencies, from Table 1, Annes 7, and the constant price operating surplus after t-xes (1).

March 22, 1976

A5= 12

11TTOL Bu Pmm CT Table 11

*D^USCA UUYSIS

APSSC: Pro1 cted Cash Plow(Ia. 000)

----------- __--_-------------------------------YEKR------------------------------------------------------------------~1(br) 2 3 4 5 6 7 8 9 10 11-13-_--------------------------------------In Crrent PriosZ-L-----------------_------_--_--_-------------------_--

A. SOURCE OP FUNDS

1. Share Cemitel __--Share Structure--------------------1. Share Capital B ~~~~~~~~~~~~~~~~~~~~~qit Pref rfe To I t% of imitt)

-Seed Grower, 390 1,725 1,265 770 1 35%r 3 - 35% 50 - -NSC 2,070 - 1,170 3251 15% 15% 10% 20% _ _State Goverrent 390 1.725 1.265 770 t 20% 15i 352 301

Sub-Total 2,850 3,450 3,700 1,865 1 70% 30% 1007. 100% - -

2. Loas

From bank. for fixed assets 1,825 8,060 8,635 4,50

350per.ting surplus after teas 450 4.855 6.405 7.720 8.895 9.635 9.910 10.245 10.770 1141n0 11,450

Total Sources ot Fund. 5,125 16,365 18,740 13,935 8,895 9,b35 9,910 10,245 10,770 11,110 11,450

B. USL OF FUNDS

1. Investmente

New Processing Plants 1,825 11,015 11,970 6,215SSC HQ Invesments 780 495 365 - - - - - - - -Purchees of NSC Plants - - - - -

Sub-Total 4,675 11,510 12,335 6,215 _ _ _ _ _ _ _

2. Debt Service

Intert 100 645 1,560 2,155 2,515 2,105 t,b60 1,275 1.165 615Amortistion - 3.675 4, 08 4.525 4 O 9,020 5,570

6 ub-Tot.l 100 645 1,560 2,155 6,190 6,185 6,185 6,185 6,185 6.185 -61

3. Dividends

Preference Shares - 190 330 390- 390 390 knon.t.nt-----_-- __--- __- ___- _____________________Equity Shares 9J -- 395 830 _

Sob-totel - 190 330 390 785 1,220 1,220 1,220 1,220 1.220 1,220_2/ ., §1

4. Plant Exoansion Reserve - 1,425 1,725 1,850 930 - - -

5., Iant Rol.ecnt Res -serv - - 1,750 1,750 1,/sO 1.,SO 1.750 1.750

6. Lon Red tion Rxeerve 325 820 950 1,090 - - - - - - -7. Researd FundsIO/ 2 200 225 250 100 110 125 120 150 175 5008. GlUEirgEflY9bl,T a3 1 45 5 1 3675 8 90 1 46 s L7110 5015

Tot,l to Reserves 350 4,020 4,515 5,175 1,920 2,225 2.555 2,740 3,365 3.705 10.268

Cum.letive sauove 350 4.370 8.885 14.060 15,9N0 18 205 20700 23,500 20.865 30.570 61b365

Total Use of Funds 5,125 lb,365 18,740 13,935 8,895 9,635 9,910 10,245 10,770 11.110 11.450

I/ Converted from constant mid-76 price, dsing 7% general pride escalation, extept for project investments for which specific contingencies for civil work, foreignend local equipent are given in Table 1. Aenx 2.

It To maintain the desired share stroctore, nd to provide working funds for SsC, year I and 2 a.bocriptionn should cooe together. NSC subscription in year I isentirely in the form of traneferred "sets.

3f 70% of investments secured by mortgage./ expansion by addition of about 10,000 ton tapacity is likely for 1982.

5/ Upto 3-4 year of grace on interest (11%). Debt service ratio *hoot 1,5 based on (current) funds frm operations. On a ore coneervetive, constant funds fromoperations ratio is 1.1 and thus seven year repayment is recomended rather tan six shown hare,

6/ 11% on preferenre shares; 10% on equity shares after loan redmeption reserve is built up.7 To provide for all eqoty requiremant (30% of cost) for the expansion in 1981-82, plant expansion reserve tund shoold build op to 50% of paid op qoity._/ Plant replacemnt reserve fund is to provide for total equity requirement (30% of cost) for plant replaceent. in year 11-13 zn annu- allocation (enual to WO7

of depreciation tharge in the previous year if straight line; 30% if accelerated wou,ld be nectssary.9/ Loan redemption res*rve fund to be built up during the grte. period to equel 50% of following year'o dott service. No qouity share dividend to be declared till

- loan redemption built up.10/ At least 5% of total reserve, woold be placed in a reserve fund to be used to support research efforts by SAU/ICAR through suitable proble specific grant.llt Etcess of projected inflow over outflow shown here; this is not applied for finnting investments due to uncertainties in its availability.

Mtrch 27, 1976

INDIA

FINANCIAL ANALYSIS: NSC

NSC: Certified Seeds

At 100% of Projected Throughput

---------------------------YEAR---___________1 2 3 4 5 6 7-10

1. Revenue

Service Charges @ 5% 15.10 16.53 18.36 20.40 22.67 22.67 22.67

Recovery of expenses ofReserve Stock from GOI 1.45 2.90 4.35 5.80 7.25 7.25 7.25

Total 16.55 19.43 22.71 26.20 29.92 29.92 29.92

2. Operating Cost2/

Establishment 7.72 7.72 7.72 7.72 7.72 7.72 7.722/

Administrative 1.93 1.93 1.93 1.93 1.93 1.93 1.933/

Publicity 1.50 1.65 1.84 2.04 2.27 2.27 2.27

Expenses on reserve stock 1.80 3.60 5.40 7.20 9.00 9.00 9.00

Interest on short-termloans 15% 0.90 - - - - - -

Miscellaneous 1.31 1.51 1.71 1.91 2.10 2.10 2.10

Total: 15.16 16.41 18.60 20.80 23.02 23.02 23.02

3. Operating surplus 1.39 3.02 4.11 5.40 6.90 6.90 6.90

1/ Interstate trade through NSC of 160,000 tons (87,000 tons wheat; 45,000 tons paddy; 25,000 tons hybrids);if throughput is only 75%, a service charge of 7% would be required.

2/ Continued staffing at present levels.3/ 25% of establishment. - X4/ %% of sales. U N

SOURCE: NSC March 1, 1976

INDIA

FINANCIAL ANALYSIS

NSC ENGINEERING DIVISION (Rs. million)--____________---------YEAR--------------------------1 2 3 4 5 6 7-10

Revenue1/

Service charges 2.60 5.10 1.65 5.75 0.70 0.70 0.70

Operating Costs2/

Establishment 2.15 2.15 2.15 2.15 0.45 0.45 0.45

Administrative 0.65 0.65 0.65 0.65 0.15 0.15 0 15

Total: 2.80 2.80 2.80 2.80 0.60 0.60 0.60

Surplus/Deficit 0.20 2.30 (1.15) 2.95 0.10 0.10 0.10

1/ Revenue @ 10% of the capital works to be executed; after year 5 when all works are over, cunsultancyrevenues are assumed @ 5.5% of the capital costs on which service charges were calculated.

2/ Additional temporary staffing during peak work load is relieved by year 5.

0X

SOURCE: NSC

March 22, 1976

ANNEX 12INDIA Table 14

NATIONAL SEED PROJECT

FINANCIAL ANALYSIS

NSC - VEGETABLE DIVISION(Rs. Million)

----------------- YEAR--------------------1 2 3 4 5-10

Revenue

Sale of certified seeds 29.30 32.22 35.85 38.77 42.63Sale of foundation seeds 3.95 3.81 4.62 5.42 6.17

Sub-Total 33.25 36.03 40.47 44.19 48.80

Operating Costs

Procurement of certified seeds 14.97 16.62 18.09 19.83 19.83Procurement of foundation seeds 2.06 2.47 3.08 3.30 3.30Procurement of breeder seeds 0.11 0.12 0.13 0.15 0.15Processing & packing expenses 1.70 1.91 2.12 2.31 2.31Storage expenses 0.18 0.20 0.23 0.24 0.24Transportation 0.50 0.55 0.61 0.71 0.77Dealers commission 1/ 2.93 3.22 3.58 3.88 4.26Publicity 2/ 0.38 0.46 0.54 0.62 0.62Establishment expenses 3.60 3.60 3.60 3.60 3.60Administrative expenses 3/ 1.35 1.35 1.35 1.35 1.35Cost of working capital @ 157% 3.00 3.00 3.00 3.00 3.00

Sub-Total 30.80 33.50 36.35 39.00 39.45

Operating Surplus 25 2.53 4.12 5.19 9.35

Financial Rate of Return > 507. 7

1/ Dealers commission @ 10% on certified seeds only.2/ Publicity @ 1% of certified seeds.3/ Revenues and costs are shown matched, although seed is procured about 6-7 months

prior to sale; seed stocks (about Rs. 20 million) are financed by short term loansat 15%.

4/ Based on investment of Table 10, Annex 3.

March 22, 1976

INDIA

NATIONAL SEED PROJECT

ECONOMIC ANALYSIS

Table of Economic Costs & Parameters

Wheat Paddy Maize Millet Sorghum Cotton1/

Incremental Cost of seed production (Rs./ton) 78 50 13 42 35 80

Cost of Foundation Seed Production, (Rs./ton)Processing and Marketing 1,950 1,600 2,450 3,050 2,900 3,100

Cost of Breeder Seed Production (Rs./ton) 2,700 2,700 8,000 8,000 8,000 8,000

Cost of Certified Seed Processing, storage 2and marketing (Rs./ton) 565 505 600 600 600 535

4/ 4/ 5/ 5/ 5/Incremental Cost of grain cultivation (Rs/ha) 16 12 410 200 285 -

6/Seed Multiplication Ratios

Foundation to certified 20 75 90 85 40 35

Breeder to foundation 15 65 85 100 35 20

1/ Derive from table 1 , Annex 12, net of value of byproducts; labor valued at financial wage rate.21 Assuming foundation seed cultivation costs 30% more than certified seed; and processing 50% more due to smaller scale.3/ Derived from Table b, Annex 3, excludirg capital cost, depreciation, procurement cost, and assuming that 75% retail

commissions are economic costs.4/ For project seed users over non-project (grain)seed users; only additional cost is for harvesting5/ For hybrids cultivation package over traditional cultivation.6/ Allowing for over producing as a safety margin. x

2.?March 22. 197h

INDIA

NATIONAL SEED POLICY

Project Benefits

----------------------------------YEAR-_--_--__-____-____________-_______-____-_1 2 3 4 5 6 7 8 9 10

1/_A. Incremental Seed Production (00 tons)

a. Wheat - 6.0 12.0 21.0 28.0 34.5 >b. Paddy - 2.2 4.5 6.3 8.0 9.6 1c. Maize - 0.7 2.25 3.7 5.2 6.5 Xd. Millett - 0.7 2.5 4.4 6.2 7.9 > Constant------------------------e. Sorghum - 1.1 3.6 6.1 8.6 11.0 §f. Cotton - - 2.0 8.5 13.7 13.7 j

2/B. Parameters Seed Rate ----------Increase in Yield-

(ton/ha) (Tons/ha)

a. Wheat 0.1 0.28 0.17 0.10 0.05b. Paddy 0.03 0.25 0.15 0.09 0.045c. Maize 0.015 0.9d. Millett 0.004 0.5e. Sorghum 0.01 0.75

3/C. Incremental Grain Production (000 tons)

a. Wheat - - 16.8 43.8 85.2 129.1 171.2 193.2. 203.0 207.0b. Paddy - 13.6 40.9 73.2 106.6 138.0 157.6 167.0 171.8 172.8c. Maize - 10.0 32.3 50.7 70.0 96.4 96.4 96.4 96.4 96.4d. Millett - 21.9 78.0 137.6 193.5 246.5 246.5 246.5 246.5 246.5e. Sorghum - 20.5 67.1 113.1 160.3 205.0 205.0 205.0 205.0 205.0

4/D. Project Benefits (Rs. million) - 27.9 113.3 224.8 370.7 512.4 598.3 642.3 662.5 669.7

1/ From Table 1, Annex 3.2/ For wheat and paddy yield increases from use of certified seed in year 1, continue through year 4; for hybrids, increase in yields by shifting

from traditional to hybrid cultivation required annual replacement by certified seed.3/ Only 25% of increase in production is attributed to project.4/ Net benefit: wheat: 1500 Rs./ton; Paddy: 1160 Rs./ton; for Hybrids and Maize 186 Rs./ton; Millett 237 Rs./ton; Sorghum 242 Rs./Ton; and 0X

Certified Cotton Seed 2400 Rs./ton.

,, f~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~N

INDIA

NATIONAL SEED PROJECT

ECONOMIC ANALYSIS(Rs. 000)

----------------------- __ _ ___ _ ---- _ _--------------- YEAR --- -- -- --- -- -- - _- ___-_-_-_-_- __-_- __-_-_-_-_- __-_-_--_-_-

1 2 3 4 5 6 7 8 9 10 11-12 13

1/A. Project Investment 30,110 145,105 142,045 64,075 14,570 - - - -- - -

Less Duties & Taxes 7,665 22,360 15,380 2,845 _

Net Project Investment 22,445 122,745 126,665 61,230 14,570 - - - - - - _

2/Incremental Working Capital

SSC/PSP 2,400 3,200 4,000 3,200 32,000 - - - - - - (16,000)

Seed Growers 1,160 2.320 3,720 4,960 5,970 - - _ _ _ _ (14,130)

Seed Users - 26000 26000 27X600 26X000 20,200 _ - (125,800)

Sub-Total 3,560 31.520 33,720 35,760 35.170 20,200 - _ - - * (159.930)

Total Investment 26,005 154,265 160,385 96,990 49,740 20,200 - - - - - (159,930)

B. Incremental Operating Costs

41Foundation Seed Units 2,760 3,625 4,960 6,035 6,035 6,035 j

Breeder Seed Units 3/ 5/ 790 470 550 550 550 550 JCertified Seed Production 6/ 655 1,415 2,555 3,890 4,445 4,445 X Constant------------------------------------------------

Processing, Storage, Marketing 2,200 10,900 20,780 34,800 46,600 52,940 i

Quality Control Units 7/ 1.100 3-23 4,360 6,170 7.100 7,760 |

Total Operating Cost 7,505 19,645 33,185 51,445 64,730 71,730 71,730 71,730 71,730 71,730 71,730 71,730

C. Net Value of Incremental Productionjabltl66) - 27,900 113,300 224,800 374,700 512.400 598.300 642,300 662500 669,700 669,700 669,700

D. Net Benefits (33,510)(146,010)(80,270) 76,365 256,230 420,470 526,570 570,570 590,770 597,970 597,970 757,900

Economic Rate of Return - 657

1/ From Table 5, Annex 7, excluding NSC vegetable seed unit and price contingencies; duties at 40% on imported items; and assuming local taxes at 17P

on all exceptW working capital, reserve stock, training ani technical assistance,2/ From Chart I, Annex 7 for SSC/PSP, taking 55%, as incremental; for seed growers, from Table 1, Annex 12, and seed production area of Table 16, Annex 12.

For seed users from Table 16: working capital assumed outstanding for 1/3 of year, used here as a surrogate for shorter discounting period to

match production cycle.

3, Table 14, Annex 12, for breeder seed requirement and standard costs of table 15.

4/ Table 14, Annex 12 and standard costs of Table 14.sJ Table 1L, Annex 12, fo- standard costs, and Table 16 for volume of incremental production.

6/ Table 6, Anrex 3.7/ Table 3-6, Annex 5; 4 SCAs and 3 STLs. z l

March 22, 1976 aah-

ANNEX 12Chart I

INDIANATIONAL SEED PROJECT

APSSC: WORKING CAPITAL ASSESSMENTCROP ARRIVALS AND SALES

isPK RS. 18.2 M

14 - t -TOTAL WORKING CAPITAL NEEDS

12 - - -

0

.X I,Cf - - - -

CL

0

P-- - JOWAR Miz

IPADDY

- GrainAVERAGE WORKING CAPpIAL F ls.l.5

47~

PaddV~ ~ ~ ~ ~~~~~~ ~ol JBank-15704aiz

Arivasvlel tR: 15 lo015 pr10k

Saesvaue!/atR: 65 38 40/81 ri rc lsSS ahcsstl eailsls

1 / Paddy Jowar Bajra Maize Word Bnk-570

70' HO8 , NDO

INDIA

AFGHANISTAN -N NATIONAL SEED PROJECTPROJECT AREAS, MAJOR CROPS AND PLANT LOCATIONS

JAM414/ andKA5HM/P PHASE I PHASE,

SingiS r PROJECT STATE BOUNDARIES STATES' MAJOR SEED PRODUCTION

PROJECT DISTRICT BOUNDARIES I :AT "I PADDYWHEAT AND COTTON

PHASE 1 OOTTON AND HYBRID GRAINS|- HI/IACHAL . . PROJECT STATE BTUNDARIES HYBRID GRAINS

5 ADES H PROJECT DISTRICT 3OUNDARIES F ADDY AN D HY3RID G RAINS.3-'-, ~~~~~~~~~JUL 'ADYAD RANPAKISTAN LUEI A *misha N ,i .3D FERDS <\\e;imia >~S C H I N A Se-JNAAAi ( Sl aECu= <\T I B E T)r

amp.,~'. NEPAL X.- $K,s AJ.ImE~~

5

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BURMA~~Z

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A tOERSIS - S HRt LANKA H MI 2ES

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