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FOR OFFCL'

Report No. 9659

PROJECT COMPLETION REPORT

NEPAL

CASH CROP DEVELOPMENT PROJECT

(CREDIT 1339-NEP)

JUNE 14, 1991

Agriculture Operations DivisionCountry Department IAsia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EOUIVALENTS

1 Nepalese Rupee (NRs) - US$0.044 (1987/88-project completion)1 US$ - NRsl3.20 (1982-appraisal)

- NRsl5.50 (1983/84-project start)- NRs22.55 (1987/88-project completion)

WEIGHTS AND MEASURES(Metric System)

1 hectare (ha) - 2.47 acres (ac)1 kilometer (km) - 0.62 miles (mi)1 metric ton (m ton) - 2.205 pounds (lb)1 kilogram (kg) - 2.2 pounds

ACRONYMS AND ABBREVIATIONS

ADBN - Agricultural Development Bank of NepalAPROSC - Agricultural Projects Services CenterBSF - Birganj Sugar FactoryCCDP - Cash Crop Development ProjectDOA - Department of AgricultureERR - Economic Rate of ReturnFAO/CP - Food and Agriculture Organization/IBRD Cooperative ProgrammeFCV - Flue Cured VirginiaHMGN - His Majesty's Government of NepalIDA - InternatiA.onal Development AssociationJCF - Janakpur Cigarette FactoryMOA - Ministry of AgriculturePCC - Project Coordinating CommitteePCR - Project Completion ReportSAR - Staff Appraisal ReportT&V - Training & Visit SystemTDC - Tobacco Development Company

HMGN (BORROWER'S) FISCAL YEAR

July 16 - July 15

FOR OFFiCIL UK OILYTHE WORLD BANKWashington, D.C. 20433

U.S.A.

0.e d Of gctiwCwiw&Opmtiuww IvalUn

June 14, 1991

MEORANDUM TO THE EXECUTIVE DIRECTORS AND TE PRESIDENT

SUBJECT: Project Completion Report on NopalCash Crop Doveloomont Proiect (Credit 1339-REP)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Nepal - Cash Crop Development Project (Credit 1339-NEP)"prepared jointly by the FAO/World Bank Cooperative Programe and the AsiaRegional Office vith Part II of the report contributed by the Borrover. Noaudit of this project has been made by the Operations Evaluation Department atthis time.

Attachment

This document has a restricted distribution and may be used by recipients only In the performanceof their oMcial duties. :s co cents may not otherwise be disclosed without World Bank authordtbon.

FOR OFFCIAL US ONLY

CASH CRLOP DMVELPMET PROJECT(Cr. 1339-UP)

PROJECT COMPLETION REPORT

TABLE OF-CONTENTSPage No.

P FACF .*.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

EVALUATION SUIAY .*... . . . . . . . . . . . . . . . . . . . . . . it

PART I - PROJECT REVIEW FROM IDA'S PESPECTIVEProject Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Background .1... . . . . . . . . . . . . . . . . . . . . . . . . . .Project Objectives and Description . . . . . . . . . . . . . . . . . . 1Project Design and Organization .... . . . . . . . . . . . . . . . . 2Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . 3Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4IDA Performance .... . . . . . . . . . . . . . . . . . . . . . . . . 10Borrower Performance .... . . . . . . . . . . . . . . . . . . . . . 11Project Relationship .... . . . . . . . . . . . . . . . . . . . . . 12Consulting Services .... . . . . . . . . . . . . . . . . . . . . . . 12Project Documentation and Data .... . . . . . . . . . . . . . . . . 12

PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ... . . . . . . 13

PART III -STATISTICAL INFORMATIONRelated IDA Credits .... . . . . . . . . . . . . . . . . . . . . . . 16Project Timetable .... . . . . . . . . . . . . . . . . . . . . . . . 17Credit Disbursements .... . . . . . . . . . . . . . . . . . . . . . 17Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . 18Project Costs and Financing .... . . . . . . . . . . . . . . . . . . 20

Project Costs .... . . . . . . . . . . . . . . . . . . . . . . . 20Project Financing .... . . . . . . . . . . . . . . . . . . . . . 20

Project Results .... . . . . . . . . . . . . . . . . . . . . . . . . 21Direct Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 21Economic Impact . . . . .... . . . . . . . . . . . . . . . . . . 21Financial Impact . . . . . . . . . . . . . . . . . . . . . . . . . . 21Studies .... . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Status of Covenants .... . . . . . . . . . . . . . . . . . . . . . . 22Use of IDA Resources ........................ . 23

Staff Inputs (staff weeks) .... . . . . . . . . . . . . . . . . . 23Missions ...... . 23

MAPS

IBRD 16603IBRD 16604R

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorintion.

i

NiAL

CASH CROP DEvLOPHIUT PROJECI(Cr. 1339-NHP)

nWOECST COMSYTION REPORT

This is the Project Completion Report (PCR) of the Cash CropDevelopment Project for vhich a credit of US$6.0 million (SDR 5.6 million) wasapproved on March 22, 1983. The Credit closed on December 31, 1988 with aninformal extension of six months to cover all applications received through June1989. A balance of US$1.58 million (SDR 1.48 million) remained unspent and wascanceled as of June 30, 1989.

The PCR was jointly prepared by the PAO/World Bank CooperativeProgramme which visited Nepal in November 1990, the Agricultural OperationsDivision of Asia Region (Preface, Evaluation Summary, Parts I and III), and theBorrower (Part II). The PCR is based, inter alia. on the Staff Appraisal Report,the Development Credit Agreement, supervision reports, correspondence between IDAand the Borrower, and discussions with staff of the various implementingagencies, and farmers.

iii

(Cr. 1332-gMM

PROJECT C=qXLT10N REPORT

EVALUATION

Obiectives

i. The main objectives of the project were to: (a) promote thecommercial production of sugarcane, tobacco and oiseeds (mustard/rape);(b) initiate pilot development of sericulture and groundnut; and (c) stren8thenthe existing ginger research facilities. The objectives were to be achieved by:(i) increasing yields on areas already planted to sugarcane, tobacco andoilseeds; (it) improvement of research and agricultural extension services; and(iii) provision of credit to growers. Further, the pilot scheme for sericulturedevelopment included the establisument of 150 hectares (ha) of mulberry.construction of facilities, provision of staff, equipment and training as wellas farm credit. Support to groundnut production was concentrated on varietalselection, seed propagation and farm credit. Ginger development wse expected toimprove by strengthening agronomic research, testing drying mnits and theexecutior. of a marketing study (paras 2 and 3).

ImDlementation Exverience

ii. The project was to be implemented over a five year period, startingin July 1983, with an estimated completion date of July 1988. Total costs wereestimated at US$7.33 million (NRo96.76 million) and ar IDA credit ofUS$6.0 million was made available (para 9).

iii. The complex nature of institutional arrangements hampered projectcoordination and management (para 7). Throughout implementation, the ProjectCoordinating Committee and its sub-committees never functioned effectively, andthe three consecutive project coordinators were not provided the requiredauthority to direct project activities (para 10).

iv. For the purpose of project implementation, sugarcane and tobaccoextension were to be transferred from the Birganj Sugar Factory and the TobaccoDevelopment Company, respectively, to the Department of Agriculture in line withthe institutional objective of bringing extension urder a unified command. Thistransfer was not accomplished for about three years, leading to a lack of clarityas to the responsibilities of the respective agencies, which led to poor servicesto farmers. In addition, the transfer of tobacco research from TobaccoDevelopment Company to Department of Agriculture was delayed by over two years(para 10).

v. In addition to problems in management, extension and research, theprices fixed by Government for sugarcane, tobacco and silk cocoons failed toprovide the required incentives to farmers for productivity and/or qualityimprovements (paras 16, 20 and 28).

vi. The project closed on December 31, 1988. Due largely to thedepreciation of the Nepalese Rupee against the U.S. dollar, savings were

iv

accumulated and a resulting unspent balance of the IDA credit, amounting toUS$1.58 million, was :anceled (para 9)Y

Results

vii. It was envisaged at appraisal that there would bes (d) no increasein the area planted to sugarcane and mustard/rape; (e) limited expansion in thearea under tobaccol and (f) successful project implementation leading to annualincremental production of about 72.,00 tons of sugarcane. 960 tons ofmustard/rape due to yield increases and 1,600 tons of tobacco due to yield andarea increases. It was also envisaged that the project would lead to an annualincremental production of 245 tons of groundtuts and 115 tons of fresh silkcocoons due to area increases. With the exception of mustard/rape, none of theabove production targets was achieved. Sugarcane. mustard/rape and tobaccoyields did not increase significantly, and the area under tobacco cultivationdecreased by about 40%kV. However, the area under mustard/rape cultivationincreased by about 15,000 ha (662), mainly due to farmers giving up tobaccogrowing, and the production of mustard/rape increased by about 9,600 tons. Thislatter increase, however, cannot be ascribed to the project. The groundnut pilotprogram was a total failure and the sericulture program fell short ofexpectation by about 651, both in terms of area cultivated and yield/ha.Finally, no progress was made in ginger devolopment.

viii. At appraisal, the economic rate of return for the project as a wholewas estimated at 62Z. As almost all economic benefits were to be derived fromyield increases of the three major crops, no attempt has been made to re-estimate the economic rate of return in the absence of significant yieldincreases, as it would be negative (para 34).

Findings and Lessons Learned

ix. Project design was too complex, and in an attempt to cover 12districts and 6 different crops, project resources were spread too thin andproject organization and management became cumbersome. Data for crop yieldsunder farm conditions were overestimated and the availability of relevanttechnology was ill assessed. Implementation further suffered from weak extensionand research support and inadequate pricing policies to provide the requiredincentive to producers. The implementation experience suggests a number ofspecific leesons (para 37 and 39). In project design, complex institutionalarrangements should be avoided to minimize problems of project coordination andmanagement. Care should be taken in assessing the data of crop yields, theopportunities for increasing both yields and area under cultivation and theavailability of relevant technology (paras 15, 17, 19, 27). Finally, policyconditionality should be included in the design of crop-specific projects tomaintain the competitiveness of these commodities with potential substitutes(paras 16, 20. 28).

Canceled amounts are shown at the original exchange rate, vis-a-vis theSDR, but disbursed amounts are shown at the exchange rate applicable onthe transaction date.

v This figures is at variance with that of the Borrower (Part II, para 48)because of the use of a different database.

Suaarcane, tobacco, mustard/rape.

S-5J CROP DEVeLOPINT PROJECT(Cr. 1339-NMP)

PROJECT COMPLETION RePORT

PARS x - ROC REVIIE Ina' 5 PREPCTIe

Prgiect identity

Project Name Cash Crop Development ProjectCredit No. 1339-NEPVice Presidential Unit t AsiaCountry : NepalSector 3 AgricultureSub-sector s Cash Crop

Bagkaround

1. Agriculture dominates Nepal's economy, engaging about 90% of the laborforce and generating about two thirds of GDP. In 1981 about 90% of the croppedarea was assigned to foodgrains and the remaining 10% was under cash crops,mainly oilseeds,1' jute, sugarcane and tobacco. Agricultural production has notkept pace with population growth during the last twenty years. The areas undermajor crops have been increasing, but yields of foodcrops, with the exception ofwheat and potato, have almost stagnated or even declined. This was attzibutedto: ) poor performance of government-managed surface water irrigation systems;and (b) shortcomings of the Government's delivery systems for inputs and services(agricultural research and extension). The weak performance in foodcrops hascarried over to traditional cash crops, with the exception of sugarcane. As thefoodcrop sector was already supported by numerous ongoing and planned programs(Part III, Section 1), His Majesty's Government of Nepal (HMGN) requested IDA'sassistance for the developmf't of the cash crop sector, with the main goal ofenhancing self-sufficiency.

Proiect Objectives and DescriDtion

2. Obiective The project responded to one of the ifaportant aims ofHHGN's Sixth Development Plan, which called for increasing cash crop productlonby strengthening farmer support services. The main objectives of the projectwere to: (a) promote the commercial production of sugarcane, tobacco andoilseeds (mustard and rape); (b) initiate pilot development of sericulture andgroundnutsl and (c) strengthen the existing ginger research facilities. Inparticular, the project was to increase sugarcane production in the major supplyareas around the Birganj Sugar Factory (BSF) to enable BSF to fill its entiremilling requirements from within a 30 km radius. Tobacco development aimed toreduce by about 52% imports of high-quality tobacco required by the JanakpurCigarette Factory (JCF), and the oilseed component was to help reduce thecountry's dependence on imports and create the required supply base for thevegetable ghee industry which, in the absence of local production, was importingall its raw materials (mostly groundnuts).

vI Mustard and rape.

2

3. 95snanLa. The project included the following componentsc

(a) increasing *ugarcan- yiolds on 4,660 hectare (ha) by improvingresearch and agricultural extension services, development of a seedmultiplication program, provision of short-term credit to canagrowers, and construction and upgrading of foeder roads;

1b) yield increase and improvement in quality of tobacco grown on 2,800 haby strengthening of research and extension services, improvement oftobacco redrying facilities, provision of short and medium-term creditto growers for production purposes and barn improvement, and providingtraining and technical assistance to staff and farmerst

(c) increasing yields on over 4,800 ha of mustard and rape crops throughstrengthening of research, provision of short-term credit to growers,and pilot development of 350 ha of groundnut production throughresearch, varietal selection, seed production and production credit;

(d) pilot development of sericulture through establishment of 150 ha ofmulberry, provision of staff, training, vehicles, equipment andfacilities for silkworm production and rearing, and provision of shortand medium-term credit to farmers for nursery establishment, mulberrycultivation and silkworm rearing; and

(C) strengthening ginger research and initiating a marketing study.

4. The project was expected to be implemented over a five-year period ata total cost of US$7.33 million. Civil works and farmer credits accounted for30% and 33%, respectively, of the total project cost, and physical and pricecontingencies accounted for 25%. Overall responsibility for projectimplementation was vested with the Ministry of Agriculture (MOA).

Proiect Desion and Organization

5. Design. In view of the limited availability of land for cash cropproduction, the underlying concept of the project was to increase yields inexisting areas. This fitted well with HMGN's development strategy of enhancingself-sufficiency and reducing import requir&ments. Cr. 1339-NEP was the firstIDA-financed project in support of cash crop production in the country, and interalia, aimed at consolidating sugarcane and tobacco extension and research. Themeprograms had fallen under the responsibility of different authorities, albeitunder the overall umbrella of the Department of Agriculture (DOA). The Trainingand Visit (T&V) system of agricultural extension had already been introduceduander provious projects in most of the project area (Part III, Section 1) and theinstitutional framework for input supply and credit was already in place.

6. The project was prepared by the Agricultural Projects Services Center(APROSC), Nepal, with the arisistance of the FAO/IBRD Cooperative Programme(FAO/CP) in April 1982. It was appraised by IDA in May 1982. Although care wastaLen to prepare a project tailored to the most immediate needs of the cash cropand related processing sector, project design suffered from a number of flaws.They includeds (a) spreading resources per crop and district too thinly over 12districts, and three major and three minor crops; (b) underestimating thefarmers' flexibility when allocating land, labor and financial resources to cashor other competing crops and giving too little attention to the effects of theprice levels fixed for sugarcane and tobacco in relation to other crops;

3

(c) overestimating yild potentials of major ezops under farm conditionsreflecting inadequate co-noideration given to agronomic and land use aspectsl and(d) failure to develop a systematic approach to sericulture development.

7. Organizaton. Overall responsibility for implementation of theprojoct was assigned to MOA to ensure coordination with other implementingagencies via establishment of a Project Coordination Committee (PCC) chaired bythe Secretary of MOA. Prior to negotiations, HMCN had decided to transferreponsibilities to DOA for sugarcane extension from BS? and for tobaccoextonsion and research from the Tobacco Developmant Company (TDC). DOA shouldthus have become the sole agency in charge of research and extension for allcrops covered by the project from project start-up. This was not the case, asnine other agencies bosides DOA were responoible for different project actions.They included, inter alia, the Agricultural Development Dank of Nepal (ADBN),which was the sole channel for institutional credit to farmors. The complexityof the institutional arrangements hampered project coordinatic'n, management andmonitoring.

8. In retrospect, it is evident that the project was based on a numberof over-optimistic assumptions, including thati (a) PCC could effectivelycoordinate the activities of the various implementing agencies; (b) the sugar andtobacco extension activities would be transferred to DOA; (c) the recentlyintroduced T&V system of extencion would be in a position to bring about rapidchangoe in crop husbandry; (d) relevant technology was available; and (6) theprice relationship between the cash crops supported under the project andalternative crop options available to farmers would remain static throughout theproject period.

Proeoct Implementation

9. Critical Variance. in Prolect I1ilwentati2n The project was to beimplemented over a period of five years, ;tartirin in July 1983. Total cost wasestimated at US$7.33 mLllion (NR096.76 million) and an IDA credit ofUS$6.0 million (SDR 5.6 million) was mad.e available. The project closed onschedule. Largely due to the depreciation of the Nepalese Rupee against the U.S.dollar, cost aravings occurred, especially in the latter period of the project.The resulting undisbursed balance of SDR 1.48 million (US$1.58 million)V wascanceled in June 1989.

10. Throughout implementation, the project suffered from seriousmanagement deficiencies. Contrary to expectations, PCC and the two sub-committees for sugarcane and tobacco and for other crops, met infrequently anddid not demonstrate the required leadership. Three successive projectcoordinators were responsible for implementation, none of them on a full-timebasis or possessing adequate powers to direct project activities. The transferof sugarcane and tobacco extension to DOA was not effected for about three years.Similarly, the transfer of tobacco research to DOA was delayed more than twoyears*

v Canceled amounts are shown at the original exchange rate vis-a-vis the SDR,but disbursed amounts are shown at exchange rates applicable on thetransaction date.

4

11. Thu linkage between extension and research was very weak and noorganised on-farm/adaptive trials were carried out to develop approprLateteohnological messages in response to farmers' needs. This lack was especiallyfelt in the artas of rainfed crops. Even during the last two years of theproject, the ext nsion service, though more acti'7 than before, was ineffectiveln bringing about yield increase. This was due to the scarcity of proventechnological packages. In addition to deficiencies in project coordination,management, extension and research services, the prices fixed by HMON for*ugarcane, tobacco and silk cocoons failed to provide the required incentives tofarzers to adopt technologies aimed at productivity and quality improvements.This further contributed to the poor performance of the sub-components.

12. Proi-ct Rku. The Staff Appraisal Report (BAR) did not anticipateany major project risks, mainly because it assumed that the already reformedextension service would have the ability to develop and disseminaterecommendations, thus loading to yield increases needed for the project to beviable. The SAR also assumed that the availability of suitable technology was,ln most cases, not a constraint. In contrast to these assumptions,implementation experience has shown that the extension service was neither in aposition to provide, nor provided with, the required incentives and training tosuccessfully implement the programs. Only in the last year of the project didsome improvement take place. Although research-based technology for improvementwas available for tobacco and irrigated sugarcane, the research/extension linkagewas too weak to introduce these technologies to the farmers. For most otherconditions (e.g., rainfed crops) hardly any technology was available which couldhave been readily adopted by farmers. This especially affected the progress ofrainfed sugarcane and tobacco development and the sericulture component (paras17, 19 and 27).

13. Unforeseen Factors Affectina ProJect Im2lementation. The fourdistricts supplying JCF suffered from hail storms in 1985 and 1986, and flooddamage and prolonged rainfall in 1987. As a result, tobacco production in theproject area was severely affected.

Proiect Results

14. The overall project result was unsatisfactory. As described below,none of the components achieved its objectives, with the exception of oilseeddevelopment. However, the incremental production in mustard/rape cannot beascribed to the project (para 23).

15. Sugarcane Develoyment. At appraisal it was assumed that the projectwould increase overall production of sugarcane &o that BSF would be able to fillits entire milling requirements from the surrounding Bara, Parsa and Rautahatdistricn. Production increases were expected to derive entirely in terms ofincreased yields on the 4,660 ha (2,800 ha plant crop, 1,860 ha ratoon) alreadyplanted to cane in those areas. In the case of plant crop, yields were expectetto increase from 24 tons/ha to 46 tons/ha and for ratoon from 15 tons/ha to 30tons/ha with a weighed average of about 40 tons/ha. Although precise statisticaldata were not available to establish time series for areas under both crop types,indications are that a slight shift in land allocation in favor of ratoon took

5

plaoeo The average yield figurseV, given below, clearly show that the yieldtargets were not achieved. Therefore, the overall production was not increased.

Ihb (tea/h) 1960/81 1961/32 1963/33 1963/64 19415 19M3/6 1"6/7 1WM

PA" to Pret 255 28.0 27.6

Wik Poeot 22.0 23.8 31.3 27.0 26.2

There wero various reasons for the failure to achieve increased sugarcane yields.Throo;ghout the project, DOA research concentrated on irrigated sugarcane, whereas80t of production was rainfed. Thus, despite several intervontions by IDAsupervision missions, no improved extension package emerged within the projecttiimframe for the majority of grower. Staffing at the Jitpur Research Stationswas inadequate and, at the end of the project period, only three professionalposts out of seven were filled, and only three technical support staff recruited.turthermore, the research/extension service linkage was weak, and DOA staff werereluctant to provide advice since they were not formally charged with sugarcaneextension, and BsF extension staff no longer felt responsible. Only in the lastproject year did DOA sugarcane extension service became fully operational,supported by training programs.

16. In view of the favorable prices for competing crops, prices fixed byHMGN for sugarcane were considered too low by farmers to provide an incentive forincreasing production and productivity. The supervision missions' recommendationto include sugar pricing in the scope of the Pricing Policy Committee (which wasA3lready constituted for tobacco) was not implemented. Frequent breakdowns at theitugar factory, especially in 1986, resulted in farmers having to wait for daysto sell their cane, and subsequent dalayed harvesting and poor ratoon developmentfurther discouraged production.

17. Improved seed was to be made available to farmers by upgrading theseed production system. By the end of the project period, about 45% of the areaunder cane was projected to be covered with improved seed, 75% by the seventhyear. This program progressed satisfactorily and in the last project year anestimated 2,250 ha were covered by new varieties.l Despite this ach'evement,no major yield increase of the plant crop could be registered, mainly because thevarieties which were introduced only developed their full potential under/irrigated conditions. Les than 5% of the area under sugarcane was irrigated.Although the SAR made provision for research on improved cultivation practices,and pest and disease control, little attention was paid to those aspects and notests of bullock-drawn wquipment were carried out. A total cf 54 km of feederroads were upgraded and six km newly built, which was close to the SAR estimatesof 59 km and five km, respectively. Resulting savings were utilized foremergency repairs aft.r the 1987 floods.

AV These figures are at variance with those of the Borrower (Part II, para 48)because of the use of a different database.

V Mostly COB 767.

6

18. TobacCo Development. Yield increases on 1,250 ha of Flue CuredVirginia (FCV)7. and on 500 ha of Natu tobacco, tog-ther with e plannedext-nsion of 1,050 ha in the total area under tobacco, were expected to resultin 1,S97 tons of incremental production. Combined with improved curing, storageand redrying facilLties, this was expected to reduce JCF import requirements ofhigh-quality tobacco by about 52% over the project period. Separat- yieldfigures for FCV and Natu were not available, but the combined figures belowdmonstrate that the yield target. were not achieveds

VI" 0(trha) 190/31 196/ 6M/3 19M/54 194 196/6 19/3 1967

Ptiorto Pro.t 0.59 0.64 0.66 - -

Wib Prwt$- - - 0,67 0.87 0.49 0.63 0.33

In the project districts the area planted to tobacco decreased from 6,900 ha in1982/83 to 4,200 ha in 1987/881/. Tobacco imports increased in 1988 from about4,000 tone in 1983/84 to over 7,500 tonsV while the amount of local tebaccoused by JCF decreased from 30% to 16%. Clearly the project objective of importsubstitution was a:so not achieved.

19. The reasons for the failure of the tobacco development component werevery similar to those of the sugarcane component. Tobacco research did not makea meaningful start prior to 1986/87. Some improved varieties for FCV, Natu andBurley tobacco had been obtained from India for testing under Napalese conditionsbut no conclusive results were available at project closing. Although themajority of growers do not grow this crop with irrigation, tobacco researchneglected rainfed production techniques. No forma'. transfer of extensionresponsibilities from TDC to DOA took place in the initial project years, andthis led to uncertainty and a lack of clarity as to their respectiveresponsibilities, resulting in poor service to farmers. Finally, in 1986/87 DOAstaff took full charge of tobacco extension, but staff training remained weak,not all key personnel were recruited, and most of those recruited were not givenpermanent positions.

20. Moreover, tobacco pricing policy was not conducive to productivity andqua ity improvement. While the costs of production increased substantially,farmgate prLces remained constant during a three-year period from 1983/84 to1985/86. Subsequent small price increases averaging 10% were unable to arrestthe declining trend. The price differential between top and low nicotine gradeswas too small and tended to encourage production of the cheaper to grow lowgrades. A study carried out during the July 1987 supervision mission found thata comparative economic analysis of alternative cropping patterns in the Teraishowed that, at current yields and prices, tobacco does not compete with otheralternatives either in teims of returns to labor or to investment. Problems of

1/ From 0.6 to 1.0 ton/ha for FCV tobacco, and from 0.45 to 0.9 ton/ha forNatu tobacco.

i/ This declining trend is at variance with that of the Borrower (Part II,para 48) because of the use of a different database. However, it isconsistent with the increase of tobacco imports and decrease of localtobacco used by JCF.

i Including 2,500 tons of leaf imported by JCF.

7

delayed payments to farmers for tobacco and a serious problem of creditadministration by TDC added further disincentives.

21. The relocation of the storage and redrying facilities from JCF toTDC's new site took place as envisaged and, all staff positions were filledaccordlng to BAR targets although with some delay. None of the 150 large-sizoprivate curing barns, which were to be reduced to a size considered more fuelefficient, were reconstructed and credit funds for this remained undisbursed.

22. Not all incremental tobacco reoearch positions were filled, includingthe key post of tobacco agronomist, which remained vacant throughout the projectperiod. Civil works, although delayed, were completed by project closing. Theemployment of trained tobacco curers from India (10 persons in the first year and20 annually up to project closing) did not materialize as planned. Only in1984/85 were 20 curers employed, and 150 farmers trained in curing. No follow-uptraining took place mainly due to administrative difficulties. Of the 36 staff-months of consultancies in tobacco production, none were utilized.

23. Oilsged Development. Project support was intended to increase mustardand rape yields through (a) allocation of incremental credit to meet the needsof 4,800 ha of these crops; and (b) improvement of research. At appraisal, itwas assumed that pre-project oilseed yields were around 0. 3 ton/ha and that therewould be scope for an increase up to 0. 5 tons/ha. National agriculturalstatistics, however, show that in 1980 oilseed yields in the project area werealready above 0. 5 tons/ha, and no improvement has taken place since then as shownbelow:

vidS (tons/ha) 1IM/81 1981/82 1982/83 1M8/14 1984/85 1985/86 1986/87 1987/88

Pro-Roject 0.62 0.78 0.78 - - - - -

With Project - - - 0.81 0.69 0.51 0.53 0.65

However, in the project districts the area planted to oilseeds increased from22,500 ha in 1982/83 to 37,400 hag in 1988/89, mainly due to farmers giving uptobacco growing. The resulting incremental production is estimated at 9,600tons. This increase cannot be ascribed to the project.

24. The project also provided a pilot development program for groundnuts.Although some seeds were imported for testing, and limited propagation tookplace, this sub-component was a failure. The Vanaspati Ghee Industry, which wasto purchase the entire incremental production, did not pursue an activeprocurement program and the small requirements of the conrumer market werealready satisfied from traditional sources. As a result, the program wasabandoned in 1986.

25. The failure of the oilseed program can partly be attributed to thefact that the oilaeed agronomist, who was recruited on a non-permanent basis bylate 1984, left tne research station in October 1985 after being offered apermanent position elsewhere. Although some research recommendations on improvedvarieties, woed control, fertilizer application and spacing, etc., for mustardand rape were available even before the start of the project, limited field

v This figure is larger than that of the Borrower (Part II, para 48), but theresulting incremental production is similar because of the use of differentbase year data.

8

trials and inadequate extension support are considered to be the main otherreasons for the failure of this component.

26. Sericulture Develooment. At appraisal it was estimated that a totalof 150 ha would be planted to mulberry, projecting milk cocoon yields of 770kg/ha. Cocoon yields fluctuated between 150-250 kg/ha and only a few farmersachieved over 300 kq/ha in the last year of the project, still considerably belowtarget. After some delay, both the improvement of the main sericulture stationat Khopasi and the construction of the sub-center in Walling (Syangja District)were completed. In spite of training efforts, project progress was slow and onlyabout 35 ha in Kavre District and 20 ha in Syangja District were operational atproject closing. All staff were recruited as per SAR provision, and farmers,training was carried out (Part III, Section 4). Due to administrative problems,staff training (20 staff-months) in India was not implemented and only in thelast project year did four officers go on an observation tour to India.

27. It was mainly the failure of the pilot activity to address thesystemic problems of sericulture development in an integrated manner whichcontributed to the serious under-achievement of this sub-component. Inparticular, the following was observed: although over 100 ha were planted tomulberry during the course of the project, high plant mortality (between 10-50%)reduced the effective area to about 55 ha by 1987/88 and until now only a fewadditional hectares have been planted. This must be attributed to:(a) conflicting agricultural practices which caused low leaf yields;(b) inadequate sanitation in the feeding and cleaning of the silkworms, which inturn caused disease and low silk cocoon yields; and (c) inappropriate plantingmaterial;V and erratic silkworm egg supply. The infrastructure to back thecultivation of mulberry and the raising of silkworms was also insufficient.

28. ADBN was reluctant to provide loans to farmers, as its estimatesshowed silk cocoon production was not economically viable when based on agovernment-fixed farmgate price of NRs5O/kg of dry cocoon, which was about halflower than that in neighboring countries. Under the circumstances, the economicsof silk production became unsatisfactory and a number of farmers dropped out ofthe program. Supervision missions suggested the Sericultural Unit make adetailed review of sericulture production potential, but this was not carriedout. However, to provide incentives for quality production, cocoon prices wereadjusted in 1990, and grade differentials introduced, with prices ranging fromNRs70/kg for low-quality to NRslOO/kg for high-quality cocoons.

29. In retrospect, it was over-ambitious to attempt simultaneous pilotactivities for sericulture in both the Hills and the Terai. No effort was madeto concentrate production within easy reach of the two sericultural otations.This led to widely dispersed individual production units, which could neither besupplied with inputs in a timely and cost-effective manner nor be properlycovered by the extension service. Similarly, silk cocoon marketing andprocessing suffered from serious delays and subsequent quality deterioration.The lack of shawkie rearing facilities and adequate driers at field level fuL h-ercontributed to the failure.

30. Gincer Develogment. The project-supported ginger research station atPokhara failed to identify improved varieties and agronomic practices. Although

' The variety was a tropical South Indian variety which could not withstandthe Nepali temperate climate and frost.

9

five solar dryers were tested under farmors' conditions, the lack of extensionsupport and cost considerations prevented farmers from adoptlng the improveddrying method. No actLon was taken on the flndings of the APROSC marketing studywhich, inter alia, recommended exploring the posaLbillties for exportlng gLngerpowder to India and using ginger for local beverage productlon. Besides poorresearch and extanslon support, the maln reason for the failure of the sub-component was the slump in fresh glnger prlcez from NRs5/kg to NRc2 in 1987. The*llght price improvement to NRs2.5 ln 1988/89 was unable to arrest the fallingtrend in production.

31. Cr-dl Farm credit amounting to US$2.43 million (33% of totalproject cost) was provided mostly in support of the various crop productlonprograms.

Cmi by Crm SAR Actl a/ Ovaru b/(NR miion) % (19W)

SuJar 14.54 19.49 26.5

Tobacco 10.54 14.94 41.8

Seorulture 4.83 .16 4.6

Oilaeds 2.21 17.68 26.1

Toal 32.12 52.27 c/ 27.8

a Source: ADBNb/ Bued on national avenge.c/ Actash include contingencies and reflect the depteciation of the Nepaiee Rupee against the U.S. dolbr.

The disbursement of farmers' loans by ADBN progressed faster than anticipated,and by July 1987 the allocated project funds were fully utilized. Repaymentperformance has been poor, with the exception of the small sericulture loans madeto a limited number of farmers who used other sources of income for repayment.The exceptlonally low repayment performance of tobacco loans can be attributedto the deteriorating economic viability of tobacco productLon and the cumbersomeloan recovery procedures through TDC/JCF, entailing delays of up to one year.

32. Sub-loans to farmers generally consisted of a cash and a materialscomponent, the former mostly for farm labor, contract plowing, purchasz ofplanting material, tools and minor equipment; the latter mainly for fertilizersand farm chemicals to be provided by the Agricultural Inputs Corporation.Despite these loans, the productivity of the main crops did not increase.According to sample surveys carried out by APROSC,1 the use of fertilizers hasincreased by about 30%-40% for irrigated sugarcane and FCV tobacco, and by about20%-30% for irrigated Natu and rainfed sugarcane and tobacco. For oillseds, anincrease of about 60% occurred. In all cases, however, application ratesremained 30%-55% below recommended levels, although loan provision covered therecommended dosage. Due to the fungible nature of cash and most fortilizers, itwas easy for the farmers to use the loans in part or entirely for other purposes.Evidence available to the mission was not conclusive, but three possibleexplanations can be given for the diversion of loans away from cash cropst(a) for the production of other, more profitable crops; (b) non-productivepurposes such as the construction of houses; and (c) repayment of loans from

IV APROSCt Ex-Post Evaluation of Nepal Cash Crop Development Project, 1989.

10

informal (more expensive) sources. Closer sub-loan supervision by ADBN's agentscould have minimized such diversions.

33. Monitoring and Evaluation. The SAR had foreseen that the Evaluationand Program Analysis Division of MOA would have the main responsibility forproject monitoring and carrying out short-term evaluation studieu. These task.were subsequently shifted to APROSC. The baseline evaluation study work wasconsiderably delayed, and only completed by late 1986. Until 1985, progressreporting also was not very satisfactory. Thereafter, performance improvedconsiderably and by 1987 all reports and work plans were up-to-date.Unfortunately only a few of APROSC findings and recommendations were translatedinto protect actions, mainly due to weak project coordination and management.

34. Economic Rate of Return (ERRI. At appraisal the ERR was estimated at62% for the project as a whole and by component, at 64% for sugarcane, 60% fortobacco, over 100% for oilseeds, and 31% for sericulture. The economic benefitstream was based on the value of incremental production mostly due to yieldincreases of sugarcane and oilseeds, and yield and area increases of tobacco.However, neither these yield increases nor the area increases materialized, withthe exception of the mustard/rape area increase which cannot be ascribed to theproject. Although under the project some roads were constructed (para 17) andsome improvement of research and extension took place, there is insufficientevidence that any possible future improvement of cash crop production/yields canbe directly attributed to project activities. Therefcre, no attempt was made tore-estimate the ERR, as it would be negative.

35. Proiect Impact. The project did not have the expected impact onsectoral growth, as it failed to achieve its main objectives of tobacco andoilseed yield increases, import substitution of tobacco and oilseeds, and therationalization and improvement of sugarcane supply to BSF. The project alsofailed in its pilot developments of sericulture and groundnuts. However, theproject did contribute to human resource development through staff and farmertraining, improved transport infrastructure, and to a limited extent,strengthened the research and extension institutions.

IDA Performance

36. IDA's performance during the early stages of the project cycle and theappraisal process was not satisfactory. The project design was too complex, thedata for crop yields under farm conditions were overestimated, and IDA failed toassess properly the availability of relevant technology. IDA also failed toconsider that adoption of technology depends not only on the farmers, knowledgeof the technology, but on the supply of the complementary factors needed foradoption, and on the economic aspects.

37. IDA's performance during the aupervision phase, was mixed. Tensupervision missiors were fielded with a considerable degree of staff continuity.Generally, the intervals between missions were appropriate, and the criticalissues that hamper project implementation were correctly identified and measuresto correct them were proposed. However, the lack of supervision betweenSeptember 1984 and December 1985 (Part III, Section 8) may have contributed todelays in implementation. More importantly is that no serious attempt was madeto redesign the project during its third year of execution after it became clearthat the project would fall short of expectations. The main lessons learned fromproject implementation that may be relevant to other IDA/Bank-financed projectsare:

11

(a) in project design, complex institutional arrangements should beavoided to minimize problems of project coordination, management andmonitoring (para 7);

(b) if key institutional arrangements such as adequate projectcoordination or restructuring of institutions are not implemented,more decisive action should be taken by IDA to induce correctiveaction (para 10);

(c) at project preparation and appraisal, particular care has to be takenwhen assessing the available data on crop yields, to avoidmisjudgments as to the scope of production increases, and theavailability of relevant technology under the project (paras 15, 17,18, 19, 23, 27);

(d) when designing crop-specific projects, there is a need to determinethe competitiveness of these commodities with potential substitutes.If the Government controls prices (paras 16, 20, 28), policyconditionality should be included to ensure that prices ard the ratiosbetween prices reflect reality; and

(e) any attempt to promote sericulture development must proceed prudentlyand should build a research and extension capability via equipment andtraining. Of critical importance would be to (i) have a long-termcommitment by Government to the development of sericulture which wouldinclude a pricing policy to provide incentives for quality production;(ii) develop mulberry varieties suitable for the various micro-climatic zones in Nepal; (iii) provide either silkworm egg productionin regional centers, or the refrigerated facilities in strategiclocations to store imported hybrid silkworm eggs, enablingsericulturalists to purchase eggs at the appropriate timeo; and(iv) ensure that both farmers and the private sector have access toredit for sericulture activities (paras 27, 28).

Borrower Performance

38. During project preparation, the Borrower's performance was as weak asIDA's, and the project, which was jointly prepared by APROSC and FAO/CP, sufferedfrom a number of flaws (para 6). The Borrower's performance during projectimplementation was also weak. Project coordination and management was inadequatethroughout the project's life (para 10); and staff and consultant resources, aswell as training provisions, were deployed at sub-optimal levels (paras 15-26).

39. There were serious delays in complying with key covenants and somewere not adhered to at all. Project implementation was adversely affected byfailure to: (a) establish a functioning PCC and related sub-committees;(b) provide for adequate management; and (c) transfer the responsibilities fortobacco and sugarcane extension to DOA. During the first three project years,audited accounts were not submitted in a timely manner and the Borrower did notsubmit a Project Completion Report (PCR) within six months after credit closing.The main lessons to be derived by the Borrower are:

(a) for complex projects it is essential that a full-time coordinator beappointed for a sufficiently long duration to provide the neededcontinuity. The coordinator should be given the required authorityto guide and direct the various implementing agencies (para 10);

12

(b) once agreement has been reached on institutional arrangements, theyshould be implemented without delay and adhered to in order to ensuresmooth project implementation (para 10);

(c) research programs should be tailored initially to the needs of thepredominant farming system (in this came rainfed sugarcane andtobacco), to be followed later by more specialized programs (paras 15nd 19). Research undertaken during the project is unlikely toproduce recommendations in time for implementation during theproject's life;

(d) strong extension/reeearch linkages, field trials and out-reachprograms are required to translate research findings into field action(para 25-27); and

(e) adequate staff allocations should be made to ensure timely compliancewith auditing covenants (para 33).

Project RelationshiD

40. IDA/Borrower relationship was not entirely satisfactory. The Borrowerdid not adopt most of the recommendations made by the supervision missions andits initial failure to submit audited accounts required IDA in 1986 to indicateto the Borrower the risk of suspension of disbursement. For subsequent yearsaudited accounts were submitted, albeit late.

Consultino Servie2s

41. Training and technical assistance provided under the project wereunderutilized, although in 1984/85 the services of tobacco curors from India wereutilized, and a positive impact resulted (para 22). Other contractors andsuppliers generally performed satisfactorily, excepting those working on theKalaiya-Matiarwa road. The original contractor had to be dismissed and thesubstitute contractor performed unsatisfactorily, resulting in delayed completionof this road.

Proiset Documentation and Data

42. The Credit Agreement was adequate and appropriate for achievingproject objectives in key organizational and financial areas. The SAR sufferedmajor flaws, however, especially regarding the: (a) proposed institutionalarrangements; (b) assessment of opportunities for increasing both yields and areaunder cultivation; and (c) availability of relevant technology (para 6).nevertheless, the SAR did provide a useful framework for IDA and the Borrower tomonitor the project implementation progress.

43. Although a final monitoring report for the 1987/88 crop year and anYx-Post Evaluation Study were prepared by APROSC, not all data required forpreparation of the PCR were readily available, because no continuous andconsistent monitoring was carried out during project implementation and data madeavailable were not suitable for presentation in the prescribed PCR format.

13

CaBE CROP DEVELOPINT PROJEcr(Cr. 1339-NIP)

PART 1 - rOCT Rvxw FROM oRo' PEPECTV

44. Cash Crop Development Project (CODP) was launched by the Ministry ofAgriculture HaM/N with the financial assistance from the IDA/The World Bank. Thebasic objective for implementing the project was to achieve self-sufficiency andreduce imports of raw materials for the agro-bared industries by strengtheningthe support services. Crop included in the project were: (a) Sericulture, (b)Sugarcane, (c) Tobacco, (d) Oilseed (mustard and groundnut), (a) ginger.

45. Sugarcane programme was design to support the raw materials to runBLrgung Sugar Factory and the tobacco was for Janakpur Cigarette Factory.Oilseeds and groundnut improvement programme was run to reduce import of oil andoilceed from outside and smooth running of vegetable gh-e factory. Gingerimprovement programme was run to produce improved variety with low fibre anddrying facilities to the farmers.

46. The CCDP was initiated in 1983 under the responsibility of theMinistry of Agriculture HMG/N. In terms of area under different cash crops,farmrs were supposed to allocate their land for sugarcane, tobacco,mustard/rape, groundnut, ginger and sericulture. The farmers were to get theservices on inputs, technology, credit and research and extension services.

47. The farmers seems to be interested with the cash crop developmentproject, as they have allocated their rainfed areas for cultivating the cashcrops under the project comuand areas. The status of the components after thecompletion of the project is given here under.

48. The project implemented in 1983 has now completed its five year periodby June 1988. As regards to the support services specially the strengthening ofresearch activities of all crop components (offLce building, staff housing anddevelopment of laboratories) have been made and the activities pertaining to theimprovement and construction of foeder road around sugarcane area is reported tohave been completed. The main objective of the CCDP project is to increase yieldlevel by improving cash crop technology generation, verification anddissemination, supply of improved seeds, fertilizer, pesticides, irrigation andcredit, also improving road and other basic infrastructures for marketing,processing and storage facilities, How far the achievement of the objective toincrease crop productivity is fulfilled during project period it may be brieflyexplained in the following tables

14

NEPAL CASH CROP DEVELOPMENT PPOJECToCrp Yield of Projection

________ BabJ Yer 1983 Actua with Project 119Ob/SW With PRoiect (Terget

Area (he) Yild at/he Production Arta Yield Production Area Yield Production

ugarOane 1.660 24.00 111940 6,940 32.00 222,080 4,600 36.00 164,600

Tobacco 1,650 .60 990 5,270 7.6 4,006 2,800 .95 2,710

Muetard 4,00X .30 1 ,440 12,710 4 334 4,600 .5 2,400

Asecomred to the bee yeaw 1903.

49. The area has increased from 4,600 ha to 6,940 ha for sugarcane, from1,650 ha to 5,270 ha for Tobacco, and from 4,800 ha to 12,710 ha for mustard in1988-89. The production level has increased from 111,840 mt to 222,OVO mt forsugarcane, from 990 mt to 4,005 mt for tobacco and from 1,440 mt to 88,330 mt formustard. The improvement in yield/ha has remained modest. The increase in yieldfor sugarcane is from 24 mt to 35 mt, for tobacco from 0.60 mt to 0.76 mt. Themustard yield has increased from 0.30 mt to 0.64 mt, which is higher than thetargeted yield estimated in the future with the project.

50. Regarding modest achievement in yield it may be observed that theprice, particularly of sugarcane and tobacco, is determined by the BSF and TDC,and the rate its increment is generally lower than the increase in costproduction compared to other cereal. This has led to the lower rate of adoptionof complete packages of improved technologies and farms. Increase in totalproduction of rapeseed and mustard was mainly due to increase in area ratherthan due to increase in productivity only. Price policy was not timely for thegroundnut growers and also the purchase of groundnut has not been timely.

Recommendations:

A. Sericulture

Some the major recommendations are as followes

Institutional build up

1. National Sericulture Research Center, withResearch facilitiesNational training facilitiesTraining and demonstration units for cocoon technological sectorsSilkworm variety maintenance facility.

2. Seed Organizations, includingP2 breed multiplication farmsP1 breed multiplication farmsConmnercial silkworm egg production arainace

3. Regional Sericultural Centres, withSilkworm supply facilitiesMarketing facilities for farmers cocoonRegional research facilitiesShort term regional level training facility

15

4. Two Mulberry Nursery farms

5. One Sericulture Centre

6. Silk Development Board as a Statutory Body.

Therefore, it is suggested that any sericulture development assistance shouldoonsider the above recommendations.

B. 8ucarcan-

1. Research should be concentrated in government farms.

2. There should be donations for research and verification activitiesfrom 8SP and private factories.

3. Technology transfer and production programme should be launched by theteam of sugarcane development workers of the concerned factories incoordination with the ADO of the respective districts.

4. Pricing policy should be improved for increasing the productivity ofsugarcane crop.

C. Tobcc

1. Technology generation and verification should be intensified onlythrough Tobacco Development Programme.

2. Technology dissemination through production block approach should beconducted through extension workers of TDC in collaboration with ADOof the concerned districts.

3. Pricing policy for Virginia and Natu Tobacco procurement must be wellorganized under the supervision of MOA and MOI.

D. QOilcee

1. There should be proper support on oilseed research activities withrequired personnel and facilities

2. The extension of oilseed tachnology should be launched in a campaignmanner. For this there should be proper budgetary facilities in eachpotential districts for oilseed crops.

3. Master plan for oilseed development programme should be developed forproviding realistic production programme in the country.

Z. Gincer

1. Research on ginger crop should be further strengthened.

2. Marketing and storage facilities should be developed in the potentialdistricts.

16

(Cr- 133-NIEP)

PrOJECI COMPLEIION IPR

PART m - STA3I1IICAL.EMATION

1. Rd Cmditno (0.3) PeApsa _- s

Narsyai rriatin Project 11 To upgrade the miting Nepal We18 Completod he CCDP has built on the(Cr. U56-NEP) astem Canl and atend the 1216 ternalo svics

developmt of its command ae ropaied by th_started under the Birpan pojes in Pam, Ba,Irriatin Prject (Cr. 373-NEP) Rupandehl, Rautahat, andand to intensif agricultural Morang

teeslon stared ttder Stage I

Agricultural Extension and To reoranz the agriultural 2181 Competed In fihe of the ditictsResarch Project etenson service and upgrde 1/7/90 (Slhi, Mahottard(Cr. l1OWNEP)1i research fadlitis In eight distrt Danusha, Chitawan d

of the Terai Nawalparsi) the CCDPhas utilized and/rstrehened the servesand fitieks created by thisproject

Hill Food Production Project To increase food rop production V191 Compled The CCDP has rlW for(Cr. 1101-NEP) in four hll districts through 1/7/90 the rikulture development

mainly the establishment of 20 component In Syana onAgricutural Services Centeo credit and supplyimproved input supply and improvament under theinfratructure projec

Ariculture Research and To reorganize and strengthen the 3/85 Ongoing Four of the projectExtension 11 (Cr. 1570-NEP) agricultural extenlon sevice in 12/91 distrcts, Ic, Bars, Pua,

eleven districts of the Temi Rautshat & Siraha,previously caeed by IDA coincde with districtsassisted irrigation schemes. covered by CCDP

Naryani 11 Irriaption Project To further expand irrigation in the 6196 Ongoing The project is a follow-up(Cr. 1715-NEP) Teral and to strengthen atension, 694 to two prvious projects in

reserch, input supply and credit. the Naravani Zone of theTeal coari the CCDPDistricts of Pans Bars andRautahat and using theParwaripur ResearchStation upgraded under theCCDP.

Mahakali Irriation II Project To improve Irrigation and 6/88 Ongoing lhe project is a foUow-up(Cr. 1924-NEP) ctension In selected Tered and 3/97 to Cr. 1055-NEP which

Hill Districts with the aim to closed in 198& It containincreaue food and cash crop abo a pilot component for(oiseed and cotton) production farmner manu ed irriation

schemes and is, inter als,operationa In theNawaparas and SyangjaDiticts cvered by CCDP.

1/ Project dosexd as planned. Completion of a few outstanding works wdi be carried out under Cr. 1570-NEP.

17

2. .

Item Date Panned Actual Date

Poiidentification - March 1981Identification March 1981 July 1981Preration February 1982 April 1982Appraisal mission May 1982 May 1982Credit negotiations November 1982 December 1982Board approval January 1983 March 1983Credit signature March 1983 April 1983Credit effectiveness July 1983 August 1983Credit closing December 1988 December 1988Credjt completiop Jun.e 1989- Japuary l99O 2

Project completion July 1988 July 1988

I/ With en informal extension of aix months to cover al eli4ible expenditurem incurred prior to December31, 1988.

2/ Delayed due to pending receipt by the Bank of an outtanding amount of USS199,313 remininsg In the Pcojoct's Special Account. Thorefand ws received January 3, 1990.

3. Credit Disbu

Cumulative Fstimatd and Actua Dlsdmrsaeum(SDR and USS million)

Worl Bank P cl Year 1984 1985 1986 1987 1988 1989(Calwdar Year)

Appaisal eimate (SDR) 0.2 1.0 2.3 3.7 S.0 5.6Appabis estimate (USS) 0.2 1.0 2.5 4.1 5.4 6.0

Actal (SDR) 1.6 2.4 3.4 3.9 4.1Aetul (USS) - 1.6 2.4 3.6 4.3 4.5

A Xas % of estimate (SDR) 0 160 104 92 78 73Actual as X of eaimte (USS) 0 160 96 88 80 7S

NB: For the purpose of calculation, the outstanding amount of USS199,313.42 which remained In the Project's Spoeial Account at creditlosing (refunded January 3, 1990) was deducted from actual disbursements in 1986/87, the year the account was established.

is

4. ftoet wDi entatIonKey Indicators - Physical Program

Program lmitU SAR Acta

A. ARCANE DEELQPMEN Tr Iww

* fillig A gaveilUl of existing toa km. 59 55Conastbn of new roads km. S 6

Jitput Reserch Station unit 3 3-tbj" Maomer Ipeelt unit I I

ed Pduction Farm, SLmrFencing of S"d Production Amre 4,600 4,600Inproving of brigation Sysem unit 1 1

YOWLIPik-up Van no. I IMotorcyle no. 1 2

RECRUnMBN1Jitpur Research Station Staff stffyears 15 1Subject Matter Specialist staff/years S S

-_SMCALC pjERKkANcAIncremental Production m.ton 72,700 n/a "

B. TOBACCO DEVE,iOMN

Iriz Plalnt unit I I

StaffousinRedrying Plant Staff unit 8 8Reearch Staff unit 7 10Extesion Staff unit 2 2

EQUIPMLNT AND FURNITRrBRedtyingFPat (genentors) no. 2 1Beblchapi Resarch Station (lab equipment) et I IExmeuion (office equipment & funiture) set 2 1

VEHICl,ESMinibus no. I I Pickup VanMotorcycles no. 4 1

RECRUnMEN^T

Redrying Plant Staff stff/year 1i ISUpgrmding TDC Staff stff/year 20 20Belachapi Reserch Station Staff sff/year 90 90Subject Matter Specialist stafk7year 10 10

Consuutei 3egvieegTobacco Production Specialist aff/year 5 -Curers no. 90 20

TECHNIAL PIEROMANCElncremerninal Producion mton 1,600 negative

nte - not available*r a available for ate" Lrnder mugarceane However, it s esimated that overall production was not incresed.

19Unit SAR ActAd

Tarpt Actlemes

Kopui Serieuiture Sation building 10 9Wallin Subceonter building 3 4

Kcpa, slli."rcul wrtato 4t S 5 1#Wain Sub-eeagr set 13 12

Pink-4 Van 4WD no, I IM0otorcyle no. 1 2

ilopri S ricuituroStation suffyear 25 22

Walling Sub-center Vf/year 20 20

Trani"Fanners TrainIg ponr 500 467Staff In-service Trining parsons 65 65Staff Training in indbia prsone 10 4

New Mulberry Am Developed ha. ISO 55Cocoons Sold by Farmrso mAton 115 10

D. OIEEDEL

Oisee AgonoMitA Affyear 5 0.5

BM And MustrdIlncrmental Production mWton 960 9,600 ,

Incruse in Am ha. 350 n/lIncromental Production mton 245 rna

S. GINGER D&VEi&PMZ

EOUtPMiEiAND EFUREDrjfiry Units no. 5 12

RESCRUiiEiTGingr Agronomist Miff/year 5 3 Y

V The cocoon dryer for the Syndja distrct was not proured.

Ikt was p--id that 20 officers would undero et monhdis o opwhwp tann. Due to admlatilv problems oly bar officers weton a bulot obseration tour.

t Dus to area ineaue which cannot be ausribd to the project.

Y Me gn agrononist who wa working under the provision of CCDP resignd In June 1986, but an Assirant Vegepble DevelopnentOfcer wee continuing limited "nres h work.

20

S. Project CoetA and FEnanciCg

A. E

(KSS .M e1) (USS s.Me)

c _eo Local Foanp TOW Lal Fisa TOeW

Supmam 2.24 0.75 2.99 2.52 0.84 3.36

Tab"o"o 1.17 0.42 1.59 0.85 0.41 1.26

Indeakia 0.53 0.14 1.67 0.45 0.12 0.57

0U.iw 0.17 - 0.17 1.01 1.01

CHser. 0.04 0.01 0.05 0.03 0.01 0.04

Mmb *odq aIvluadoo 0.09 0.09 0.20 - 0.20

Nam Cost 4.24 1.32 5.56 .

lhyuhad coewe i"pu 0.25 0.18 j.43

Ptl Cogb,ui 1.04 0.33 1.37 -

Tod 5253 1.83 7.3 5.06 1.36 6.44

B. Proeet Fln

-Xfe Pk=W Fk

(USS mion) Percet (USS bmi Pent

IDA (TMot) 6.00 82 4.59 Y 71

1. CvW Wofek 1.77 24 1.80 27

2. Mlawl a, Equipmest, Fumitu,. and 0.27 4 0.17 3

3. 1Ommea 1pn uingCot 0.21 3 0.10 2

4. Tgalnig ndTebTlhcalServi 0.16 2 0.17 3

5. Iat and Modhi-erm sub-louu 2,36 32 2.35 36peve by ADIN

6. UaOoeaed 1.23 17

HONM 1.33 18 .85 29

Ted 733 100 6.44 100

V CluJd aouu a ioww a ona1 exchanse moe vls--vis Om SDR, but disbumed amouns ar shown at h exhaqnp tat, applicableem e uaa.ee date

V Toa pmji sm lhwadl eangsnsle but set of taxes and dudes.

21

6. .tIlewaesa

bhistn AppWea sa EWWar A Clah Dat BE ta at FM

imeal Sugaeae Productio (ton) 72,720 a/a a/a

Ibe otal Toacco Pduction (tons)

a) FCV 1,025 estia" WSW"

b) Natu 572 ngtve meowe

bhmetl Mustard Prouction (o) 960 9,600 V 9,600 V

OresMi Produton (NW) 245 sit a/a

Pr1e Cocooouos ) 115 10 10

ermeare (halles) 37,115 37,000 37,000

a/ Due to a" lncrs ich cannot be acribod to th projt.

B. EcQnomicnmpactEcommkc Rafte of Roter. Appraia ifatheate Agtual

(pertt)

Total Projt 62 Mg.

Sugaoa 64 ass.Tobcco 60 Mg.Serlculture 31 MS.

Oilaed > 100 not applicablW

a/ inremnal production not abutable to the pct.

NO: No em t was made to readmatt the ERR as It wo be gative rotbe pjct as a whoe as wl a for he augp ,tobacco and ericulture componnt.

C. FnanclJmnaDt

SAR Fidmate Actul

Foreig Exchau Saving US$4.0 Million nul

D. MudISub Purpose DWed at Appail S_t

Morirn Sudle ColletIon of informatn on projct a) A I Moola Repopm 1985/36 publdS 1936Inputs nd actvites. b) Anul Moifda Report 19/87 pubishd Dec. 1937

e) Au Mooig Repott 19S7/U publibhd Nov. 1988

vauoo Studies Adhboc stdes to analyze pject a) eibi Stdy puble July 19i6outut, #etts and genra b) Mi-Tem Evluaio publihed Avgut 1937deokpe _ Impat a) hbt-Pon Evakto pubie 199

Oiwr Mareti Study To m es *teXpot and kl market Publied March 193UpOteniakl for fieh and duy ginge

Ad sbo sudIs wan carded out by AROSC. No annual mo fitorin pors wew bled r the yul 1984 and 194/ adwok on th basln dy was delayed by over two yea. In additin APROSC card out a tdy titd *Probma otNonAdopdonof Suprw Crop In Atessound rWDprj Sugar Patory', whih was aed In Octor 1985.

22

7. Status of Covenants

Coveat Subject Date of Status ComnentsCompliance

Section Government shall make available USS2,430,000 to OK3.01C(ii) ADBN and established acceptable procedures for crop

credit.

Section Borrower shall establish Project Coordination Part Although the commite3.02a Committee and two sub-committ. wer eablished, they did

not mot regulrly anddid not provide therequired laershiphnotion

Sation Borrower to establish Tobacco Pricing Commilteo OK3.02b(i)

Secton Borrower shall cause TPC to announce tobacco prices 05/06/83 OK3.02b(u)

Section Borrower shall maintain adequate records and OK3.05b procedures to monitor progress of the project.

Section Borrower shall maintain adequate accounts for Part Considerable delays4.0la departments or agencies of the Borrower responsible occurred with submission

for carrying out the Project (including, but not limited of audited reportsto ADBN ard TDC), and have accounts cerdfied byauditrrs not later than 7 months after the end of eachEnancisa year.

Sched Borrower shall maintain the feeder roads under the OKS.C(i) project through the Road Department of the Ministry

of Public Works and Transport.

Sched Borrower shall post a trained assistant sericultural 06/30/83 OKS.C(ii) entomologist to carry out the project scricultural

component.

Sched Borrower shall purchase all suitable groundnut seed OKS.C(iii) by farmers and ensure futther distribution to growers.

Sched Borrower shall secure an area of 3 ha of land for OKS.C(iv) ginger research at the Pokhara Horticultural Station.

Sched Borrower shall complete a ginger marketing study and lV31/34 OK Completed 12/855.C(iv) shal forward a report on ginger drying units.

Sched Borrower shall start collecting data (area, yields and OK-1 Handled by APROSCS.C(v) total produetion) on cash crops in project area through under contract

the Food Marketing Services Department of MOA,such datA to be monitored and evaluated by theEvaluation and Programs Ana!ysis Division of MOA.

Sched Borrower shall employ tobacco curers by December No Only in 1984185 tobacooC(vi) in each year during project implementation. curers were employed

Sched Borrower shall employ a tobacco production specialist 06/30/83 NoC(viO) 06/30/83 and therafter cause him to start work by

06/30 in each the following three years.

OK: Covenant oomplied withOK-1: Covenant complied with, but was revisedPat: Prtial complianceNo: Covenan not complied with

1t t t .

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tP%. = '\s -820 - rs4° NEPAL

,'\ sJ < _CASH CROP DEVELOPMENT PROJECTHr'/ U M,, HUMtA 9'\ PROJECT DISTRICTS

(,J. ~~~~~~~~~~~~~ HUMIA ~~~~~~~~~~~~~Sugarcane,.- DARCHULA\. i

t _ >,>2 f / --Zxw ~ E C H I N A TobaccoBAJHANG ! MUGU (t/8AI G /8 vd MUGU { _JRSericulture

, y e /4 ~ v \ <t t ~ \> ............ t \, OilseedsD^3etDHuRAj S -/ J JUMLA . . r / <. DOTI ACHHAM\~

~~~AN~~~~ .in*~~~~~~~~ - I~~~~~~!J~~ GingerPJ- DOT LI 0 HDPA -

Crop Reseorch SeodonsKAILALI 0 M A o Odseed).* 5l.. KAILALI , RUKUM \ 'Ft X p a o MANANG 13 ./ o Sugorcose

N. SURKHET S )MYAG0I " -ASK;

2BARDIYA Y.. .4 ,.. K LAMJUNG

Zonol boundo~~~~~Ri * t /SOLPKU8A 8, T P EUG Poo

280 \ ..- ' >~~~~~~~R0LPA~ )-.. G ) BANICE 0 D .- RASUWA 2BY6UTHAN)_,U1M-IX..N/

KHANCHI '~~ ANA ' NUWAKOTp .SN HDANGmTAUN ' )ACO KHADHULA ,tKH

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Kilonoters0 50 100 50 200 v_9 5\ > Q sPALPA 0

District boundories 0M 50 100 r AKU DA*AH I___KterseR s o p aWISARIWj

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Zonol boundaries \IAU j ( SOLUKHUM8 (U

nterntional boundaries

-. _QKHALDHUG q :

Kilometers 0 50 100 150 200 .NIDIUI.iHTA-~

_____________ ~~~~~~~~~~~~~~~~~~~~~' D4~~~~~~iNK`6T`AMiles 0' 50 0 ~~DAYAPU'R.YY

, 1Th,s map has boon pepecd by the World Bank's staff excluswely for th conve,mnce IN D I A ) M0RAN0)-" % -

of themrade,s of themrport to *.,ch tos attached The denom,nat,os used and the 'SN$Rboundafies show,, on Mhmn map do sot mply, on the part of the World Bank and its

APAIJHAPA -affiliates. any judgpment 'in the legal status of an,y teffto.y or any endorsement or

.)acceptance of such boundernes

'ya25 e4~~~~~~~~~~~~~~~~~~~~~~~~~~~ eeo 4~~~~~~~~~~~~~~~~~~~~~0

_________ _________ ________ _________ ________ _________ _________ ________ ______BRDRD 16604R84'45' J|/ FEBRUARY 1983

/ ~~~~ AOpe;1a 'j( __________S__________'______

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kt/ /' I\ - *--Jaito //

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CAS CRO DEVLOPMNT POJEC \s $'I - --- t------ *

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e-hunio Saboithwa BIRGANJOk A BRCT \ .

oBe-two-Jya anarpur 7 \ 2 0

CASHlya-Malia CROP DEVELOPMENT PROJECT Mat-yrp

SUGARCANE DEVELOPMENT*Sugarcane Research Station Metalled Roads avdAPUR

-Now Road Construction Protect)- Earthern RoadsBhwantpur-East-West Highway 25km A Ovdgment Station Wh Brdes Paterwo\, oJhotonpur-Easi-West Highway 25km A-i-t-StatRion Weiagd Bridges

530-km 0 Sub-Cente, Ofl.ces-_lmprouements to Existing Roads 0 Selected Towns N 2

(Proiect): l~District Capital / %K(ehurta - Pokhar/a 10 km .-. RivetsJilpur- Bisiwaguti B District BoundariesSabaitwa - Tilawe 1 3 Internotional BoundlariesBelwa- Jaga-nathipur 7 Kealaiya- Baghuban 5 0 5 1 .Koloiya - Mahiarwa 8Surch, - Padam Road 8 Th,u -itp ti,, b-e prnp-rdby the WerdBarr- s nt.f-sr--euy far thHAUon.A,Anr

59 km nf thui eders of fhu repnortr whic ir attached The d-oo-6at-n usd a-d the$noue h-w -s ths maP do set -p/y. en the par of the Ws5d Bask -dd is

uff,5,ars , -p judg-en en irh e,7 -gt. ssof nov ire-nters e-ue end--srnr N ran-pt-no- -v ub- hod.-,S

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