Document of

The World Bank

FOR OMCUIL USE ONLY

Report No. 8581

PROJECT COMPLETION REPORT

BANGLADESH

AGRICULTURAL CREDIT PROJECT(CREDIT 1147-BD)

APRIL 30, 1990

Agriculture Operations DivisionCountry Department IAsia Region

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

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CURRENCY EQUIVALENTS

US$ Bangladesh Taka (Tk) 30.40 (1987)Tk 100 US$3.29Tk 1 million US$32,895

WEIGHTS AND MEASURES

1 meter (m) 3.28 feet (ft)1 kilometer (km) = 0.62 mile (mi)1 hertare (ha) = 2.47 acres (ac)1 maund (md) . 37.3 kilograms

ACRONYMS AND ABBREVIATIONS

BADC - Bangladesh Agricultural Development CorporationBB - Bangladesh BankBIBM - Bangladesh Institute of Bank ManagementBKB - Bangladesh Krishi BankBRBD - Bangladesh Rural Development BoardBSBL - Bangladesh Samabaya Bank Ltd.DTW - Deep TubewellGtB - Government of BangladeshHYV - High Yielding VarietiesKSS - Krishi Samabaya SamitiPCI Participating Credit InstitutionsRCPD - Rural Credit Projects DepartmentSAR - Staff Appraisal ReportSTW - Shallow TubewellUCCA - Upazilla Central Cooperative Association

FISCAL YEAR

July 1 - June 30

FOR 0MCU^L use ONLYTHE WORLD BANK

Washington, D.C. 20433U.S.A.

Opwtimrat Evalt"wn

April 30, 1990

ME(ORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECTs Project Completion Report on BANGLADESHAgricultural Credit Project (Cr. 1147-BD)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Bangladesh - Agricultural Credit Project (Cr. 1147-BD)- prepared by the Asia Regional Office. No audit of this project hasbeen made by the Operations Evaluation Department at this time.

Attachment

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 disclosd without World Bank authorization.

PROJECT COMzZUON WEORT FOR OMCIAL Use ONLY

BANGLADESH

AGRICULTURAL CRDIT I PROJECT(CREDIT 1147-BD)

Table of Contents

Page No.

PREFACE ......................... . i

BASIC DATA SHEET ....................... . . i

EVALUATION SUMMARY ................. ....... . iv

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

II. PROJECT FORMULATION . . . . . . . . . . . . . . . . . . 2

- Project Origin . . . . . . . . . . . . . . . . . . . 2- Identification and Preparation . . . . . . . . . . . 2- Project Appraisal . . . . . . . . . . . . . . . . . 3

III. PROJECT IMPLEMENTATION . . . . . . . . . . . . . . . . 4

- Negotiations and Credit Effectiveness . . . . . . . 4- Implementataion Schedule . . . . . . . . . . . . . . 4- Progress of Project Lending Programe . . . . . . . 4- implementation of TA and Training Components . . . . 5- Procurement ....... ... 7- Project Cost ....... .. 7A Project Financing and Credit Allocation . . . . . . 7

IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT . . . . . . . 8

- Implementing Agencies . . . . . . . . . . . . . . . 8- Bangladesh Bank ...... .. 8- Participating Credit Institutions . . . . . . . . . 10- STW Turnkey Contracts . . . . . . . . . . . . . . . 11- Accounting and Reporting . . . . . . . . . . . . . . 12- Compliance with Covenants . . . . . . . . . . . . . 13

V. PROJECT IMPACT .................. . . 13

- Agricultural Impact .......... . 13- Farm Incomes .. . . . .. .15

- Economic Re-Evaluation . . . . . . . . . . . . . . . 16

VI. IDA PERFORMANCE ................... . 17

VII. CONCLUTSIONS ..... . . . . . . . . . . . . . . . . . . 18

This document has a restricted distribution and may be used by recipients only in the peformance|of their oficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

TABLE OF CONTENTS (CONT'D)

TABLES

1. Comparison of Appraisal and Actual Project Cost2. Total Cost of Project Credit Component - By Participating Bank3. STW Sales - By Participating Bank and By District (Numbers)4. Training Courses Held and Number of Participants5. Total Bank Branches, E:igible Branches, and Average Loan Recovery

Percentage6. Project Districts: Saallow Tubewells and Command Areas7. Cropping Pattern and Cropping Intensity (X)8. Crop Yields, and Production Input per Acre9. Area Cropped, Yields, Production10. Computation of Economic Prices (in 1987 Constant Terms)11. Financial and Economic Prices12. Farm Model - Barind Tract13. Farm Model - Other Shallow Flooded Areas14. Economic Analysis

MAP IBRD 15591R

PROJECT COMPLETION REPORT

BANGLADESH

AGRICULTURAL CREDIT I PROJECT(CREDIT 1147-BD)

PREFACE

This Project Completion Report (PCR) reviews implementation of theAgricultural Credit Project in Bangladesh for which Credit 1147-BD in theamount of US$40 million was approved on May 21, 1981. The Credit wasclosed in December 1986 following a one-year extension of the Closing Date,when an undisbursed balance of US$6.34 million was cancelled.

The PCR was prepared by FAO staff under the FAO/World Bank Coope-rative Program on the basis of a PCR prepared by Bangladesh Bank, a reviewof the Staff Appraisal Report, the Credit Agreement, IDA supervision mis-sion reports, project files, progress reports prepared by project manage-ment and discussions with officials of the implementing agencies andGovernment of Bangladesh.

This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower and implementing agencies on Janu-ary 31, :993. for comments by March 21, 1990, but none were received.

PROJECt COMPLETION REPORT

BANGLADESH

AGRICULTURAL CREDIT I PROJECT(CREDIT 1147-BD)

Basic Oita Sheet

KEY PROJECT DATA

Col. 2 asAinraisal IEstimate Actual of Col. I

(1) (2) (3)

Total Project Cost (USS million) 62.4 48.9 76Credit AOunt (SOR million)

- Disbursed 32.6 2n.4 84- Cancelled - 5.2

Proportion of fqysical Targets Net 1/- Shallow Tubewell- 27.000 36,646 136- Villnge Workshops 50 - O y- Mechanic's Kits 50 17 3- Grain Storage (No. of Stores) 20 25 12S .y

Ecoimic Rate of Return 60% 14% 23

CUMULATIVE DISBURSENENTS

FY 82 ft 83 FY 84 FY 85 FY 86 FY87

Appraisal Estimate (SOR million) 0.25 4.75 15.66 27.70 32.60 32.60Actual (SOR sillion) - 5.05 14.43 25.17 26.85 27.43Actual as % of Apraisal Est. (S) 0 106 92 91 82 84

PROJECT GATES

Oriinal Plan

Identification 'e". 1OPreparation NAy 1960Appraisal Oct.-_v. 1900Negotiations April 1981Board Approval 21 Nay 1981Credit Signing 21 _an 1961Credit Effectiveness 6 Oct. 1981Credit Closing 31 Dec. 1985 31 Oec. 1986

{iii

STAFF VuF (Steff weeks)

ProTook FY77 "Y7 FY76 FY79 FY0 FfO FY62 FY8 FY84 FY65 FYS8 FY87 FY60 fY69 TOTAL

P4eappralsal 7. .3 217 18.8 ii4 81.u 0 Appraisal 78.7 78.7Nogotlations 8.8 1.1 4.5Loan Pioc. .4 .9 .7 .2 .1 8.9 11.0Supervtsoin .1 27. 8*3.2 21.6 26.4 28.0 9.8 8.0 181.4FCR 11.3 .2 11.6Proj. Admin. .3 1.0 .1 .0 .6 .1 2.0

Total 7.7 1.9 22.8 13.9 14.6 122.8 29.9 a8.8 20.0 28.4 28.6 9.4 14.8 .2 348.2

MISSION DATA

No. of s Specializations Ty O ! !fNiissi Oate s n Fied R s ted ,/ Status Tren Pablm

Idmtiftcat010 Jan. 80 3 90 e,c.e9Pr"paration May s0 4 104 e.t.engAppraisal Oct. 80 S 1SS f 4illsagSuprisio I Nov. 81 1 10 f 2 1 oSupirsion 2 Apr. 82 1 10 f 2 1 f.oSuperision 3 Oct. 82 1 10 f 2 1 eSuperisiot 4 May 83 2 24 p.c 2 1 *.tSupeision 5 oct. 83 3 30 e.f.eng 2 1 *,tSupervision 6 ay 84 4 n/ p.f 2 1 *tSupervision 7 Oct. 84 2 18 f 2 t *.tsupervision a Mar. 85 1 14 f 2 1 m.t

Supervision 9 Jun. 85 2 R;18 p 2Supervision 10 Now. 8S 2 20 f.cSupervioiOn 11 June 86 2 Re pSupervision 12 Jan. 87 2 RM8 p

Follow-on project: under preparation/diff.rent approach.

OTHER DATA

Borrower: Goverment of Bangladesh (GOB)Fiscal Year of Borer: I July - 30 JuneName of Currency (Abbreviation): Taka (Tk)Exchange Rate (Tk/USS):

A ppraisal Year Average (1980/81) USSI * Tl6.O0- Intervening Years (1981/82-85/86) USSI * T126.06-1986/87 Average US$1 - Tk3O.40

y Az at project closing date of 31 Decemer 1986.No locos wer disbursed for this line.Achieveswnt was 75S of appraisal target in terms of grain storage capacitycreated.a a agricudturalist. en economist. fu financial analyst. c- creditspecialist. eng engineer. p. pogrm officer.

/ 1 Pblem free or Minor Problems. 2- Moderate Problms, 3. Major Probles.y I a *Iproving. 2a Stationary, 3- Deteriorating.Y To Technical. Me Managerial. Ps Political, On Other.y Project Identification and preparation (by FAO/CP) was based on a report

by consultants ewloyed in 1977 to review the agricultural credit system,and finamced under the First IDA Technical Assistance ProJect (Credit409-80).

/ Sup ision done by staff frm the World Bank's Resident Mission in Bangladesh.

iv

PROJECT COMPLETION REPORT

BANGLADESHAGRICULTURAL CREDIT PROJECT

(CREDIT 1147-BD)

EVALUATION SUMMARY

Introduction

1. To support the Agricultural Credit Project (Credit 1147-BD),with an estimated total project cost of US$62.4 million, a four-yearCredit of US$40.0 million (SDR 32.6 million) was approved by IDA onMay 21, 1981. The Credit became effective on October 6, 1981. Theproject was closed on December 31, 1986, after a one-year extension.At the time of project closing, total disbursement of the Creditamounted to SDR 27.4 million and the balance of SDR 5.2 million wascancelled.

Obiectives

2. The project was intended firstly to establish a replicablesystem for delivery of long-term agricultural credit and secondly toincrease agricultural production, rural incomes and employmentopportunities (SAR 4.02). Other objectives and features were tofurther the Government's policy of privatizing the procurement anddistribution of irrigation equipment (which had been supported earlierunder three IDA assisted projects) (SAR 4.04) and to allocate at leasthalf of lending to small farmers or landless persons (SAR 6.17).

3. The project was appraised in October/November 1980 andemphasized financing of shallow tubewells in the Rajshahi Division ofNorthwest Bangladesh. Other credit components were for: (a) equippingtubewell maintenance and repair workshops; (b) tool kits and bicyclesfor village mechanics; (c) construction of grain stores, and (d)pioneering new lines of credit (e.g. for water distribution channelsand farm equipment). Funds were also provided for participatingcredit institutions for 56 manmonths of consultants' time and forlocal and overseas staff training.

Imolementation Eggerience

4. Implementation of the major project component, lending forshallow tubeweils, was slow the first year but increased thereafter tototal 36,648 wells or 1361 of the SAR target. Tubewell fundingtotalled 129X of the SAR target in local currency, but because of

V

devaluation only 85X of the SAR target in US$ terms. T-.bewell fundingwas 951 of total credit disbursements. By project closing, 25 grainstorage loans for a total capacity of approximately 7,500 tons hadbeen disbursed (the SAR target was 20 loans and 10,000 tons totalcapacity). Other credit components were neglected initially and therewas no funding of workshops and very little for mechanics tool kit.Disbursements for "pioneer" credit lines eventually exeeeded the SARtarget. The project was successful in further supporting the privateprocurement and distribution of minor irrigation equipment. There isconflicting information on whether the target was achieved of halflending going to small farmers and the landless.

Results

5. The primary objective of introducing a "replicable" long termagricultural credit delivery system was clearly not achieved. Thealready poor loan recovery performance of the participating creditinstitutions deteriorated even further and the Rural Credit ProjectDepartment of Bangladesh Bank, which was responsible forimplementation of the project, did not develop into the intended ruralcredit monitoring and development agency. There was only partialimplementation of institutional aspects of the project, including thattechnical assistance and training components were not fullyimplemented and were always behind schedule. The project was extendeda year to allow recruitment of two consultants, but these staff werenot recruited. The nroposed overseas training program was notexecuted, and although local training was carried out it appears tohave made a limited contribution to upgrading technical skills.

6. Annual incremental agricultural production for all crops hasbeen estimated at about 224,000 tons which is 61 per cent of the369,000 tons envisaged at appraisal. Two explanatory factors aresmaller average tubewell command areas than projected and inadequateagricultural extension support to farmers.

7. The recalculated overall ERR for the project is 14%, comparedto the SAR estimate of 601. This difference is due mainly to the SARestimate not allowing for phasing of tubewell installation, thesmaller tubewell command areas and lower than predicted croppingintensities, which together result in a more gradual rise inproduction than projected in the SAR. Another influence has beenhigher rates of increase in input prices than in output prices.

Sustainability

8. Institutional sustainability was not achieved by the project.The sustainability of a long term credit system, the primary objectiveof the project, which achieves only 29 percent recovery performance(and has since fallen to about 20 per cent) is clearly in doubt. So

vi

long as government (and donors perhaps) are prepared to finance thelarge implied subsidies the program may survive, but it is more agrant-in-aid system than a replicable credit program. Thesustainability of the main investments, the shallow tubewells, is lessdebatable, although the failure of the project's maintenance andrepair components contributed to operating problems reported in thePCR.

Findings

9. The poor performance of the institutional component, andtherefore the failure to introduce a viable long term credit system,can be attributed mainly to unrealistic expectations at appraisalrelating to the commitment of the Government and concerned agencies toth.e project's main objective. The training and technical assistancewas only partly implemented because, as the PCR reports, there waslittle suppor; for these activities to be financed under the project.Similarly the failure to reverse declining credit recovery ratessuggests that there was also lack of political support for improvingcredit discipline (the PCR notes that repayment capacity was not aproblem as the shallow tubewell investments are profitable). Insummary it may be concluded that the context in which the iroject wasconceived, prepared, and negotiated was too narrow, since a broadercommitment to financial sector rectitude was needed if the project'smain objective was to be achieved.

PROJECT COMPLETION REPORT

RANGLADESH

AGRICULTURAL CREDIT I PROJECT(CREDIT 1147-BD)

I. INTRODUCTION

1.1 Increasing agricultural production has been, and is, a primarydevelopment objective of the Governmc'nt of Bangladesh (GOB). Consequently,GOB policy has emphasized the development of irrigation, drainage and floodcontrol facilities, more intensive use of inputs such as better seeds,fertilizers and pesticides. and strengthening support services such asresearch, extension and credit. However, despite considerable support to thesector, annual foodgrain imports averaged around 1.7 million tons in the1970s. In analyz.ng the problems, various contributory factors wererecognized, including lack of agricultural credit to finance privateinvestment in productive assets such as STWs.

1.2 The Agricultural Credit Project (Cr. 1147-BD), was initiated in1981 both to continue support for GOB's programme for expanding small-scaleirrigation, and to strengthen the agricultural credit institutions. Theproject area was restricted to the Rajshahi Division in Northwest Bangladesh.The main emphasis of the project was on financing shallow tubewells (STW).Other components included financing private workshops and village mechanics,and developing diversified lending, including grain storage. In addition,funds were peovided for technical assistance and for local and overseastraining. Over a four year period, the project was estimated to cost US$62.4million.

1.3 A draft Project Completion Report (PCR) was prepared by theBangladesh Bank (BB) in June 1987. That draft, along with additionalinformation collected by BB, provides the basis for this PCR. In addition,this report is based on a review of the Staff Appraisal Report (SAR no.3348c-BD); the Development Credit and Proj^'ct Agreements (dated 9 June 1981);IDA supervision miseion reports; and a visits to Bangladesh between 14-19 July1987 and 10-19 January 1988 by FAOIWorld Bank Cooperative Programme missions.

2

II. PROJECT FORMULATION

Proiect Origin

2.1 In the early post independence years, there was generalrecognition that the Bangladesh agricultural credit sector was weak, and animportant constraint on agricultural development. Institutional sources ofagricultural credit were severely limited, and in particular commercialbanks played an insignificant role in the provision of credit to farmers. Inview of the unsatisfactory situation, the Government, assisted by the FirstIDA Technical Assistance Project (Credit 400-BD), employed consultants in1977 to undertake a comprehensive review of the agricultural credit system,suggest improvements and identify investment opportunities throughagricultural credit.

2.2 The consultants submitted their draft final report in August 1979.Although the report lacked a critical analysis of the credit situation inthe country, it put forward various proposals for dispensation of credit andinstitutional development. Broadly, these included: (a) credit for irrigationdevelopment, (b) credit for fisheries development, and (c) training support topersonnel of lending agencies. In late 1979, the Consultants' report wasreviewed by the Government and banking authorities concerned and, in agreementwith the World Bank, it was decided that an initial project for agriculturalcredit should concentrate on support for minor irrigation development for foodproduction.

Identification and Preparation

2.3 Based on the consultants' report, the project was identified andsubsequently prepared by missions mounted by the FAO/World Bank CooperativeProgramme in January 1980 and May 1980 respectively. As prepared, the fiveyear project was aimed at providing credit for the purchase and installationof STWs (25,000 units) and deep tubewells (1,000 units); for the establishmentof private workshops; for tool kits for qualified private mechanics; and forpioneering new lines of credit. In addition, the proposals included acomponent (including 24 man months of technical assistance) for trainingagricultural credit personnel. The report proposed centralized training ofall banking staff at a strengthened training center at Bogra; and since thefirst batch of trained personnel would be needed when the project becameoperational, IDA technical assistance was proposed to cover the cost ;ftraining during the first year of the training programme (i.e. before theproject became operational). Project lending was confined to the RajshahiDivision in the Northwest Bangladesh, comprising the districts of Rajshahi,Dinajpur, Rangpur, Bogra and Pabna. This was done to keep the project withinthe managerial capacity of PCIs, and to take advantage of the highagricultural potential of the area for which there were adequatehydrogeological stud!es supporting proven availability of groundwater.

3

Project Appraisal

2.4 A five man IDA mission visited Bangladesh in October/November 1980to appraise the above project. Broadly, the project as appraised was in linewith the proposals included at preparation. However, due to fundingconstraints, the project was scaled down in size, and in duration (to fouryears). The appraisal mission scaled down the DTWs to 200 units (from 1,000proposed at preparation); however, due to various problems (includingdifficulties foreseen in delineating DTW areas to minimize interference withDTW operation) the component was dropped altogether with a correspondingincrease in the STWs to be financed (to.a total of 27,000 units). Theappraisal mission also added specific technical assistance for restructuringthe Bangladesh Samabaya Bank Ltd. (BSBL). In addition, the participatingbanks found the proposal for having centralized training of all banks, staffat Bogra unsuitable. At the time of appraisal the local training programmewas not finalized (oniy an outline plan was agreed at negotiations); it washowever agreed that a detailed plan, satisfactory to IDA, would be prepared bythe Bangladesh Bank.

2.5 Project Description. Aimed at increasing agricultural production,the basic thrust of the project was to: (i) establish a replicable system fordelivery of long term agricultural credit; and (ii) support on a largescale GOB's policy to divest the Bangladesh Agriculture DevelopmentCorporation (BADC) of its centralized role in the procurement and distributionof minor irrigation equipment and to transfer this responsibility to theprivate sector. As appraised, the project included tnefollowing components:

(a) Credit: i) to farmers' groups (including UCCA/KSS) andfarmers for constructing and equipping STWs (for estimatingproject cost, financing for 27,000 STWs was assumed); ii) toworkshop owners for equipping tubewells maintenance andrepairs workshops (assumed project total of 50 loans); iii)to village mechanics for purchasing toolkits and bicycles(500 loans assumed); iv) for construction of grain storage(total capacity to be created assumed at 10,000 tons); andv) for pioneering new lines of credit (US$2.0 million).

(b) Funds for Participating Credit Institutions (PCIs): i) for atechnical assistance programme of about 56 man monthsconsultants time; and ii) for local training programmes andabout 70 man months training abroad.

BB was to provide refinance to the PCIs, and it's Project Department was maderesponsible for planning, supervising and monitoring all aspects of project

4

implementation. The PCIs were the Bangladesh Krishi Bank (BKB)1 and theSonali, Janata and Agrani Banks.

III. PROJECT IMPLEMENTATION

Negotiations and Credit Effectiveness

3.1 Negotiations for the proposed credit of SDR 32.6 million (US$40million) between the GOB and IDA took place during 15-16 April 1981. TheBank's Board of Directors approved the credit on 21 May 1981. The credit wassigned on 21 June 1981 and became effective on 6 October 1981.

Implementation Schedule

3.2 The project was scheduled to close on 31 December 1985. However,the project actually closed on 31 December 1986, after a one year extension.While the time overrun for the project has not been significant, the proposedinstitution strengthening component has not been implemented in line withappraisal expectations. It was expected that while lending activities wouldbe modest during the first year of the project, the technical assistance andtraining programme would be initiated. However, consultant recruitment wassignificantly delayed, no short term training abroad undertaken, and the localtraining programme also delayed (paras 3.7-3.11). In actual fact, the projectwas extended by one year principally to allow for consultant recruitment andadditional local training to be completed.

Progress of Proiect Lending Programme

3.3 STW Loans. STW lending was the project's major activitywith the SAR projecting loans for 27,000 units, representing 87Z of the SARestimated total project cost. The granting of loans for this component gotoff to a slow start, principally because the project's objective to privatizethe sale and distribution of STWs met with serious initial problems. Themajor problems revolved around the following: initial oversupply of STWs inthe hands of the public sector (BADC and BKB) in 1981; public sector STWprices being Tk 5,000-6,000 lower than those charged by private dealers;delays in authorizing bridging finance of foreign exchange for importers ofSTWs, causing delays in issue of licenses and opening letters of credit;different borrower contribution requirements by BKB from those proposed underthe project, and prevailing subsidies under BKB's own programme. Theseproblems were all largely resolved by the second half of 1982.

1 Since 1987 the Rajashahi Krishi Unnayan Bank has been set up, whichhas taken over all of BKB's operations in the project area. However,since during the project the participating bank was still BKB, it isreferred to as such throughout the PCR.

5

3.4 As shown in Table 3, the number of STW loans granted each yearfar exceeded SAR targets after year 1 of the project, with the project's totallending target (of 27,000 units) being fully achieved by year three. Bankloans for a total of 36,648 STWs were provided during the project period.representing 1362 of the SAR target. Against this, BB provided refinance ofTk 913 million towards bank loans by PCIs for 33,453 STWs (912 of total),totalling an estimated Tk 1.1 billion. Of the total STWs, 362 were fielded inRangpur district, 271 in Rajshahi, 192 in Bogra, and 91 each in Pabna andDinajpur (see Table 3). During the course of implementation, concern wasexpressed by GOB on excessive STWs being sunk in some areas, and based onpreliminary observations further sinking of STWs was halted in 26 upazillas(15 in Rajshahi, 8 in Bogra, and 3 in Pabna) in early 1984.

3.5 Grain Storage, and Other Loan Categories. These components werelargely neglected during the early period of project implementation, andprogress was very slow. With regard to grain storage loans, initially it wassuggested by the Rural Credit Projects Department (RCPD) of BB, that privateinvestment was not financially attractive at the prevailing rate of interest;also RCPD had in the early stages set the borrowers' contribution towards suchinvestment at 5O0 (contrary to the SAR proposal of 10X), which also acted as adisincentive. The latter was subsequently changed to 102. Regarding theproposed lending for workshop and mechanics' kits, there was lack of demandfor bank loans for these activities in the project area. Finally, with regardto the 'other diversified lending" category, it became apparent that eventhough certain qualified PCI branches were lending from their own resourcesfor non-irrigation equipment, they were not aware that such loans couldqualify for refinancing under the project. To address these problems, it wassuggested that both RCPD and the PCIs should undertake a vigorous publicitycampaign to create awareness both among PCI branches and prospectiveborrowers.

3.6 Due to the initiatives taken, lending activity under thesecategories picked up in 1984/85. By the time of project closing 25 grainstorage loans (SAR target 20) had been disbursed, for a total storage capacityof around 7,500 tons.2. However, only 17 loans were disbursed for mechanicskits (SAR target 500). With regard to the 'other lending' category, it wasfound that many loans made by eligible bank branches did not qualify forrefinancing from BB as their lending terms did not tally with those proposedunder the project. Consequently, while the PCIs record 13,494 loans (Tk 93.28million) as having been made under this category, BB provided refinance foronly 5,482 loans (totally around Tk 52 million under the project). In Takaterms, the latter represents 127Z of the SAR target (Tk 41.0 million).

Implementation of TA and Training Components;

3.7 Technical Assistance. Six consultancies totalling 50 man/monthswere proposed at the time of appraisal, as follows: for Bangladesh Bank -Credit Specialist (10 /im), a Training Specialist (10 m/m), and an

2 30 Loans were actually approved for a total capacity of 8,825 tons.However, only 25 loans were disbursed.

6

Agricultural Economist (6 mlm); and for Bangladesh Samabaya Bank Ltd. (BSBL)- Cooperative Credit Expert (8 Wml) and a Management Expert (10 m/m). Finally,a Cooperative Agricultural Credit Specialist (12 m/m) was proposed toundertake a review of the UCCA/KSS cooperative system. At the time ofnegotiations, it was agreed that the credit specialist for BB and the trainingspecialist would be appointed by 30 November 1981, the CooperativeAgricultural Credit Specialist by 31 December 1981, and the others by 31 March1982.

3.8 In actual fact, only three (Credit Specialist, CooperativeAgricultural Credit Specialist and Cooperative Credit Expert) of the above sixronsultants were appointed for a total of 34 man months. In all instances,Lu.eir appointments were considerably behind the originally proposed schedule.Of the three consultants recruited, the work of the Cooperative AgriculturalCredit Specialist was found to be most useful. He reviewed the UCCA/KSScooperative system, prepared a Banking Plan for the IDA assisted Second RuralDevelopment Project (Cr. 1384-BD), and assisted in arranging and conductingseminars ard workshops for Sonali Bank and BRDB staff on the use of the Plan.The Banking Plan was eventually adopted on a nationwide basis. BB found thework done by the other two consultants less useful.

3.9 Various factors contributed to both the delays and thenon-recruitment of some of the consultants. At the beginning there weredelays in preparing the terms of reference for consultants. Thereafter, inthe early stages of project implementation, some consultants were nominated byBB, but were either found to be unsuitable by IDA, or early clearances were notforthcoming from GOB. In some instances (agricultural economist, managementexpert), posts had to be readvertised, and the selection process re-startedafresh; in other cases (for e.g. Training Specialist), by the time GOBclearance was obtained and the offer was made by BB, the nominee was no longeravailable. The project was extended by a year to allow the recruitment of twoconsultants (training, economist/credit specialist) under the project. Thesewere eventua4ly not recruited. There is an apparent reluctance on the part ofGOB to recruit international consultants.

3.10 Training. The proposed overseas training programme was notimplemented. With regard to local training, there were delays in drawing up aprogramme as BB was awaiting the appointment of the training consultant.Eventually, in early 1582 RCPD met with the heads of the Bangladesh Instituteof Bank Management (BIBM), and Training Institutes of PCIs, and obtained broadagreement on the number of courses, and the outlines of syllabii/curricula forthe different courses. Details of the training courses held and numberstrained are shown in Table 4.

3.11 Under the project, five Basic and Follow-up courses wereconducted by BIBM for staff at managemant level (above the rank of BranchManagers); these were attended by 84 PCI officials. At the field level, 46Basic courses were conducted by PCI training institutes, and attended by 948branch officials, while 46 Follow-up courses were attended by 814 officials.In addition 23 borrower training courses were held (total of 1,003participants) jointly by RCPD, PCI trainia.. institutes and representatives of

7

STW dealers; refresher and motivational courses for PCI field staff were alsoheld. Overall, while the training programme has been successfully, completedin terms of organizing the number of planned courses, its effectivenessappears to have been limited. As noted in IDA supervision mission reports,the courses have contributed little in upgrading the technical skills of PCIstaff.

Procurement

3.12 Recognizing that the previously prevailing system of centralizedprocurement through BADC and BKB had proved to be unsatisfactory, GOB andIDA had agreed that under the project, the procurement and distribution ofirrigation equipment would be based on "farmers' cnoice", and handledthrough the private sector. It was agreed that eight engine brands,3 whichhad been identified by farmers' choice procedures through earlier schemes(including Credits, 724-BD and 990-BD) and which had proved satisfactory forBangladesh conditions, would qualify for project supplies.

3.13 Procurement of STWs and materials was accordingly arranged throughprivate turnkey contractors, under the monitoring mechanism of RCPD. Forreasons stated in para 3.3, importers were a little cautious initially, andthe project had to start by selling, through dealers, STWs with locallyassembled engines. However, once these were solved, there were no majorproblems in procurement, with adequate supplies being imported by the dealers.Due to the lack of demand for two engine makes (Mayur and Deutz), they werereplaced in agreement with IDA, by two other makes (Daedong and Javahar).While there were some problems identified with regard to the new privatesector system (para 4.9), on the whole the project was successful inestablishing the role of the private sector in the sale of STWs.

Project Cost

3.14 Table 1 shows a comparison between actual costs and estimates madeat appraisaL-of total project cost. On completion, the project has costTk 1,200 Billion (US$48.88 million), which is 1202 (782 in US$ terms) of theSAR estimate of Tk 998.8 million (US$62.42 million). The cost of the STWcomponent represents 94Z of actual total costs (87? of SAR total costestimate). The cost overrun, in Taka terms, is wholly the result of 362 moreSTW units being fielded, as compared to the SAR target of 27,000 units;average unit price of STWs sold under the project have been lower than thoseestimated at the time of appraisal (price including the price contingencyprovision). The total cost in US$ terms is lower on account of thesignificant depreciation of the Taka vis-a-vis the US dollar since appraisal(present exchange rate Tk 30.4 per US$; SAR Tk 16 per US$).

Project Financing and Credit Allocation

3.15 Project Financing. The IDA Credit of SDR 32.6 million (US$40million) was expected to finance 64Z of SAR estimated total project cost.

3 Deutz, Kirloskar, Krishi, Kubota, Maur, Mitsubishi, Usha and Yanmar.

8

At the time of Credit closing SDR 27.43 million (around US$28.5 million) hadbeen disbursed, representing 84t of the original Credit. This amount covered58Z of actual project cost. Annual disbursements are shown in the Basic DataSheet. The undisbursed balance of SDR 5.17 million, or 162 of the Credit, wascancelled.

3.16 Credit Allocation. A comparison of the planned allocation andactual Credit disbursement is shown below:

Planned Actual Credit CancelledCategory Allocation Disbursement Amount Z

......... (SDR million).1. BB Refinancing of Loans

made by PCIs 31.03 27.12 3.91 (13)2. Local Training 0.66 0.15 0.51 (77)3. Overseas Training/

Consultants' Services 0.91 0.16 0.75 (82)

Total 32.60 27.43 5.17 (16)

while only 131 of the original allocation for meeting BB refinancingcosts has been cancelled, around 802 of the allocation has been cancelled forthe other two categories. This reflects the lower achievement of SAR targets(partially from Government reluctance to borrow for such items), with acorresponding adverse effect on the institution strengthening objectivesof the project.

IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT

Implementing Agencies

4.1 As originally agreed, the credit component was handled bythe four PCIs, with BB providing refinance against approved project sub-loansto final borrowers. National and district project coordinating committeeswere set up to deal with problems BB could not settle, review work programmesand deal with policy issues. The committees proved particularly useful inaddressing early start-up problems (particularly regarding STWs), and later indeveloping campaigns to promote the project lending programme in the projectarea.

Bangladesh Bank

4.2 Initially, the Agricultural Credit Project Division under theAgricultural Credit Department (ACD) was designated as the ProjectImplementation Unit in BB. Subsequently in January 1982, the Division wasupgraded to a separate Department, called the Rural Credit ProjectDepartment (RCPD), with an organization structure largely in line with the

9

SAR proposals. Also, supervision cells were established by RCPD in each ofthe five project districts. The total strength of the Department in early1982 was 35 staff; at present (January 1988) there are 54 staff (against 58sanctioned posts).

4.3 The performance of RCPD must be viewed in the light of the newresponsibilities which were taken up by BB under the project. The projectenvisaged the creation of a central agency for planning, supervising andmonitoring the financing of rural credit project activities, as well asto assist lending agencies to acquire development lending capabilities.Clearly, the project has made little progress in meeting this institutionalobjective. Several factors havo contributed to this situation. Althoughthree consultants were provided under the project to strengthen the Departmentand improve its capability in its new role, only the credit specialist waseventually appointed. No in-depth training (local or foreign) was provided tothe staff to make them better able to perform their new tasks. Successive IDAsupervision missions pointed out that with only one officer in the districtRCPD cells and no vehicles, there was weak supervision over projectactivities. Furthermore, there were vacancies in technical staff positions inRCPD, and more important, a regular turnover of staff. During the five yearproject period, there were five different General Managers of the Department.

4.4 However, RCPD has played an important monitoring role,particularly in the earlier stages of the project, in ensuring thatquantitative lending targets were met. In early 19P2, it issuedvarious procedural guidelines and circulars on project credit operations, toassist both the PCIs and STW dealers/importers. It made allocations betweendifferent engine makes, based on agreed criteria. In collaboration with PCIsand the District Coordinating Committees, it conducted an intensiveinformation campaign in the project area; initially, it also played animportant role in clarifying project lending operations to PCI regicnal andbranch managers. RCPD took the initiative in drawing up the trainingprogramme, and assisted in conducting some of the courses. In its supervisoryrole, RCPD fpcussed largely on the STW component. It reviewed the operationsof the private dealers, ensuring among others, that: adequate branches werebeing opened by them in the project area; there was not a concentration ofdealer activities in the urban and more accessible areas; there was anequitable distribution of STWs between the project districts; dealers werekeeping suitable number of mechanics on their staff to provide STW buyers withafter sales service. In fulfilling these objectives, RCPD was successful tovarying degrees; to the extent possible, they followed up on complaints lodgedagainst dealers. Finally, RCPD had important reporting functions (para 4.11).However, IDA supervision mission found that at times there wereinconsistencies in project reporting, and that the activities of the RCPDPlanning Wing needed to be made more effective.

4.5 Overall, RCPD was more involved under the project in issuesrelated to procurement, physical implementation and reporting. At one stageGOB questioned the need for them to be so closely involved in these matters,and expressed a desire that RCPD should focus more on matters related tocredit, refinance, appraisal, and PCI branch supervision.

10

Participating Credit Institutions (PCIs)

4.6 Table 2 shows lending by PCIs for the STW and graini storage loancategories. As can be seen, 33Z of STW sales were financed through BKB, 51?through Sonali Bank, 112 through Janata Bank, and 5? through Agrani Bank.Nearly 70? of the STWs financed by Sonali Bank (12,967 STWs, or 35Z of totalproject sales) have been through UCCA/KSS. As can be seen from Table 3, inthe first year of the project, over 80? of STW sales were financed throughBKB. This was largely on account of BKB's greater prior experience in termlending, and the delay in appointing field staff by the other PCIs. Also,UCCA/KSS demand for STW was largely neglected in the early stages. Lending bythe other banks, and particularly lending to UCCA/KSS increased after year 1.With regard to grain storage, 20 loans were given by Sonali Bank (representing73Z of total cost), and five by BKB (financing 27? of total cost). Detailedbreakdown by PCI, of the "other diversified lending" category (which waseligible for refinancing) is not available. Overall, as noted in IDA missionreports, the Nationalized Commercial Banks (i.e. PCIs other than BKB) havegenerally been reluctant to promote in a large way agricultural term lendingfor a number of reasons, including low profitability, lack of experienced ortrained staff, and poor past record of recovery.

4.7 While the PCIs have exceeded the quantitative lending targets,their performance in loan recovery has shown a declining trend. At appraisal,it was proposed that no PCI branch would be eligible to lend under the projectif loan recovery were to drop below 40? of demand (defined as overdues plusamount falling due) and after 31 December 1983, below 50? of demand. A formatfor a Loan Recovery Status Report (LRSR) was agreed, which was to be submittedby each PCI branch to report on their recovery performance, and establishtheir eligibility to participate in the project. Other than determine branchparticipation eligibility, the LRSR was expected to become an importantmanagement tool for PCIs to monitor their loan recovery performance andinitiate measures where it was not satisfactory. Table 5 provides details oftotal branches, eligible branches, and average loan recovery percentages forthe different PCIs in the project areas. Average loan recovery percentagesfor three years are summarized below:

As at 30 June1982 1985 1986

BKB 68X 29Z 262Sonali-Direct 39 38 32

- through UCCA/KSS 55 43 36Janata 54 39 39Agrani 46 61 53

Total (for all PCIs) 44 n.a. 29

Eligible Branchesas X of Total PCIBranches 78a 532 402

11

As can be seen, loan recovery percentages have declined Ln all cases.with the exception of Agrani Bank (which also had the lowest share in totalterm lending under the project,. Furthermore, eligible branches as apercentage of total PCI branches in the project area has also declinedsignificantly. The poor loans repayment performance of borrowers does notnecessarily reflect a general inability to repay the loan. As shown in paras5.8-5.9 (farm income analysis), the investment in STWs yields adequatefinancial cash flows to fully meet the debt servicing liabilities.

4.8 While the above are the only data readily available to measurePCI performance on loan recovery, it is necessary to point out that themajority of PCI field staff are still not able to prepare the reportcorrectly. Consequently, the report has not effectively served the purposeenvisaged for it. Various instances have been recorded by IDA supervisionmissions of errors in LRSR submissions by individual PCI branches; it was alsopointed out that expertise to appraise agricultural term loans is stilllacking in many cases. Various factors contributed to this situation:

(a) training courses being both inadequate, and also noteffective;

(b) transfer of trained staff outside the project area, withnewly posted staff not receiving training (some of thesestaff may come from urban branches, with little priorexperience in rural lending);

(c) field staff of PCIs lack mobility to visit borrowers orproject sites;

(d) the accounts, as presently prepared by bank branches, do notgenerate the data necessary to prepare the LRSR (in the formas agreed at appraisal); branch offices would need tocompute specific figures for the report, which not all areable to do.

Furthermore, even RCPD staff (in sufficient numbers) did not have thenecessary training to be able to review, on a sample basis, PCI branchreports, and correct inconsistences and errors. Other than submitting theloan recovery data to IDA, as part of their reporting functions, RCPD staffwere unable to do much to monitor the recovery position of the PCIs. Finally,there has been a rapid increase in the number of PCI branches (from around 500to over 700 between 1981-86, as shown in Table 5), with inevitable staffingproblems.

STW Turnkey Contractors;

4.9 Overall, the project was successful in getting the private sectorinvolved on a large scale, in the procurement and distribution of shallowtubewells (having sold in excess of 36,600 STWs during the project period).However, both IDA supervision missions, as well as two project evaluationscarried out by BB and by consultants, brought out certdin weaknesses intheir operations. To begin with, the contractors were found reluctant tooperate in the less accessible areas (up to March 1983, nearly 40Z of the

12

STWs fielded were in Bogra). To some extent this shortcoming was addressedwith dealers being required to open offices in all project districts; at thetime of project closing, of the total STWs fielded 36Z were in Rangpur, 27Z inRaishahi, 19Z in Bogra, and around 92 each in Pabna and Dinajpur. Also,dealers were found to be initially reluctant . sell through UCCA/KSS(eventually, about 352 of the STWs sold went t, UCCA/KSS). Complaints werealso voiced with regard to availability of spare parts and of mechanics toprovide after-sales service. Dealers did increase their .et'.:ork of facilitiesand the availability of mechanics. However, since the project has closed anddealers' sales activities reduced, it is reported that they have cutback onoffices in the project area, as well as mechanics hired by them. Of the totalSTWs fielded under the project, there were 412 Mitsubishi, 222 Kubota, 212Yanmar, and 162 of the other five makes.

Accounting and Reporting

4.10 As required by the DCA, separate accounts were generallymaintained by the PCIs of project related lending activities. As agreed,audit reports on project expenditures were submitted to IDA through RCPD;however, there were delays in their submission. Since UCCA/KSS were to beinvolved in project lending, it was agreed at appraisal that during theproject period, overdue audits of UCCA/KS in the project area would bebrought up to date. According:y, a programme was agiied to complete the auditof 3,028 "A" and "B" class KSS (covering 4,326 audits) through the Consultantsfor Cooperatives. By project closing a total of 4,288 audits were completed,covering 2,990 KSS. The registration of -he remaining 38 KSS were cancelled.

4.11 Quarterly progress reports on project implementation were to besubmitted to IDA by Bangladesh Bank (RCPD). In addition, RCPD was required tosubmit annually a consolidated LRSR, on the basis of which PCI brancheligibility to participate in the project was to be established. Generally,IDA supervision missions have stated that project reporting was not effective,and in most instances reports were submitted late. lt was found that the datareported arei-often both incorrect and inadequate. To address some of theshortcomings, the quarterly progress report format was amended by the WorldBank in consultation with RCPD, in February 1985. To some extent thepoor quality of reports was the result of difficulties faced by theRCPD district cell staff in getting accurate data from the PCIs. To addressthe weakness in preparing the LRSR, one-day courses were organized in 1985 forbranch staff directly involved in its preparation. However, weaknesses stillremain.

4.12 Finally, a mid-term evaluation of the project was carried out bylocal consultants in December 1984. This was followed-up by a month longevaluation study conducted by RCPD in July/August 1986. On the whole, thereports are of a very general nature. However, they (particularly the first)brought out shortcomings, as well as instances of irregularities by creditagencies as well as by dealers, and made various recommendations.Essentially, these findings further point to the need for and urgency ininitiating institution building measures in the country.

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Compiance with Covenants

4.13 The borrower did not recruit all the consultants agreed upon. Thereasons are explained in paras 3.7 to 3.9. With regard to other covenants,they were generally complied with. However, there were various instanceswhere target dates specified were not met.

V. PROJECT IMPACT

Agricultural Impact

5.1 At appraisal, it was expected that STW installation in the projectarea would be confined to the Barind tract (with heavy Barind clays andsubject to shallow flooding) and to the other shallow flooded areas (which hadlighter soils). As there were differences in prevailing and projectedcropping patterns between the two areas, separate analyses were carried out.However, as no bench mark survey was carried out and crop performanceduring the project not monitored, comparing appraisal expectations with actualagricultural development is difficult. RCPD, the main monitoring agency underthe project has no agricultural staff and there was little or no liaison withthe Department of Agriculture. Furthermore, STW sales were reported districtwise but not according to Barind Tracc and other shallow flooded areasrespectively. Uhile sample surveys were carried out by RCPD, and asocio-economic evaluation study conducted by consultants in 1984, they weregenerally inadequate for carrying out a detailed comparative analysis.Hence, mission assumptions of cropping pattern, cropping intensities andyields were based on discussions with District Agriculture Officers andfarmers, in addition to the data available from sample surveys and thesocio-economic evaluation study.

5.2 The project was expected to result in higher production of paddyand wheat, and replacement of pulses and oilseeds by more profitable cropssuch as potatoes. It was expected that in the Barind Tract a Boro crop wouldbe added to the transplanted Aman dominated cropping pattern, while inother shallow flooded areas, the main effect of irrigation would be thereplacement of broadcast Aus by transplanted HYV Aus. The project isconsidered to have reached full development since virtually all the STWs(36,352) had been installed by 1984185. Consequently, current croppingpattern and yields, on which this report is based, are not expected to changeconsiderably in the near future.

5.3 Net Cultivable Areas. At appraisal an average 10 acre commandarea per STW was assumed. Various estimates have been made in the past ofthe area irrigated per STW in northwest Bangladesh (ranging between 10 to 12.5acres). A sample survey of 200 STWs (40 in each project district) carried outby RCPD in 1987 for preparing the PCR, provides the most recent estimate.This shows that comnand area per STW ranges from as low as 2 acres to over 20acres in some cases. On a district basis (see Table 6), the sample shows thatthe average comnand area ranges between nearly 5 acres (Rajshahi) to nearly 16acres (Pabna). Accordingly, the weighted average of 8 acres command area per

14

STW has been used for financial and economic analysis. Based on data from thesurvey, the STWs installed under the project have resultcd in irrigatingaround 280,000 acres. It is roughly estimated that 8,000 STWs (22Z of total)have been installed in the Barind Tract, and the remainder (28,648 or 78z) inthe other areas.4

5.4 Cropping Pattern. As expected at appraisal, irrigation from STWsfielded has resulted in broadcast Aus being partially replaced by HYV T. Aus;HYV Boro added to the cropping pattern in the Barind Tract; and a considerableincrease in wheat acreage (¶Lables 7 and 9). The increase in Boro and wheat isgreater than appraisal estimate, but contrary to appraisal expectations, thejute area has decreased, pulses and oilseeds continue to be cultivated, andthe increase in potato area is less than anticipated.

5.5 Cropping Intensity. A comparison of actual and SAR estimatedcropping intensity (see Table 7) is summarized below:

SAR PCRBarind Other Areas Barind Other Areas

........................... ............................

Without Project 120 165 125 145With Project 190 210 180 190Incremental 70 45 55 45

For the project as a waole, the SAR estimated cropping intensities to goup from "without project' estimates of 1472 to 201Z "with project". Based onthe data available, overall cropping intensity for the project has actuallygone up to 1882, from 141% "without project'.

5.6 Crop Yields. As anticipated at appraisal, yield increases arehigher for HYVs than local varieties (Table 9). However, yields of all cropsexcept potatoes are lower than appraisal estimates. Although the use offertilizers has increased, its application is mainly confined to HYV.Furthermore, the rates of application of fertilizers, pesticide and irrigationvary considerably and are generally below the recommended rates. Also, watermanagement practices in non-Barind Tract areas where the s,ails are mainly sandloam are generally poor. Based on discussions in the field, it appears thatfarmers are not getting adequaee extension support; this is reported as beingdue to problems of staffing and inadequate mobility.

5.7 Production. The estimated annual production "with" and "without'project is given in Table 9. Paddv production has increased from about

4 At appraisal, the distribution of the proposed 27,000 STWs wasprojected at 8,000 units and 19,000 units for the two areasrespectively.

15

278,000 tons to 474,000 tons and wheat from about 8,000 tons to 59,000 tonsannually, Comparative annual incremental crop production is summarized below:

CroRs SAR PCR....... ('000 tons).

Boro paddy 79.2 141.3Other paddy 196.0 54.0Wheat 28.2 50.7Jute 10.2 (3.4)Pulses & Oilseeds (8.7) (0.4)Potatoes 83.8 28.5

Compared with appraisal estimates, incremental production is higher forwheat, T. Aman (HYV) and Boro paddy, but lower for all other crops.

Farm Incomes

5.8 At appraisal, four farm models were prepared to estimateincremental financial returns from STW investment. For each of the two areas(Barind and other shallow flooded areas), two models were prepared, oneshowing return when the farmer owns the entire command area irrigated (10acres per STW), and the other, when half the area irrigated belongs to him,and he sells water to neighbors to irrigate the remaining half of thecommand area. A similar analysis (but assuming eight acre command area perSTW) has been carried out (see Tables 12 and 13) for the PCR, based oncropping pattern assumptions shown on Table 7, and per acre crop budgets shownin Table 8. The table below presents the salient features:

SAR (10 actes) PCR (8 acres)No. Sale With Sale No. Sale With Saleof Water of Water of Water of Water

BARIND TRACT

IRR 40S 29Z 332 202Incr. Net Cash Flow Tk12,300 Tk6,600 Tk7,630 Tkl,7302 Increase in CashInflow 'with project" 792 852 272 122

OTHER AREAS

IRR 402 282 32Z 212Incr. Net Cash Flow TK11,500 Tk6,000 Tk7,000 Tk2,2002 Increase in CashInflow 562 59S 26Z 172

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5.9 In all cases, while the investment remains financially viable,returns are much lower than those estimated at appraisal. This is on accountof a 202 reduction in the average command area per STW as compared to SARassumptions, reducei cropping intensities, and finally, a higher increase ininput costs as compared to output prices between appraisal and now. Finally,financing costs have also gone up by 23Z, from 132 p.a. interest rates onloans at the time of appraisal to 162 p.a. at present.

Economic Re-Evaluation

5.10 At the time of apprais'. economic rates of return (ERR) wereestimated on a model basis. For ti.d purposes of the analysis, the life of theSTW was assumed at seven years; however, recognizing that the pump andtubewell would still have some useful life remaining a 1OZ residual value wasassumed. The analysis which was carried out in 1980 constant price terms,yielded ERRs of 632 for STUs in the Barind Tract, and 57? for those in theother shallow flooded areas. A weighted average project ERR of 60? was alsoestimated for the STWs only. However, since the analysis was done on a modelbasis an implicit assumption in calculating the project ERR was that all STWswould be sold in project year 1.

5.11 In re-estimating the projects economic impact the basicassumptions made at appraisal have been retained. The principal difference isthat total incremental benefits arising from the project have been phased onthe basis of actual annual STW sales, in estimating total project ERR. Also,an average command are of 8 acre per STW has been used. The analysis has beencarried out in 1987 constant price terms. Historical STW investment costshave been restated in 1987 price terms by applying the specific STW priceindex. These costs have been restated into border price terms by using aspecific conversion factor of 0.84. In estimating this, duty and local taxeshave been excluded, and the cost of local items restated in border price termsby applying the Standard Conversion Factor (SCF) of 0.80.

5.12 The majority of STWs (971 of total) were installed during thethree year period FY83-85. Given that incremental benefits in the year of STWinstallation (i.e. year 1) are assumed to be nil, and that full developmentbenefits are reached in year 3, incremental project benefits were relativelyinsignificant prior to FY85. Accordingly, average economic farmgate pricesfor traded commodities have been estimated (in 1987 constant terms) for theperiods 1985-89 and 1990-95 (see Table 10). The prices of non-tradedcommodities have been restated into border price terms by applying thestandard conversion factor of 0.8 to their financial prices. In line withestimates in recent World Bank appraisal reports, farm labor has beenvalued at 75Z of the financial wage rate, and a conversion factor of 0.85has been applied on financial STW operating costs.

5.13 Based on the above assumptions, the cropping pattern and peracre crop budget assumptions shown on Tables 7 and 8, and a 13 year periodof analysis, the current estimate of ERR for the project as a whole is around14? (see Table 14). As mentioned earlier, this is not directly comparable

17

with the project ERR estimated at appraisal, since the latter does not takeinto account the phasing in STW sales. ERfl' have also been estimatedfor the Barind and other areas separately (see Table 14). giving the followingresults: and ERR of 152 for the Barind Tract (SAR estimate was 63Z), and of142 for the other shallow floc.ed areas (SAR - 57Z).

5.14 There are various factors which have contributed to the lower ERRsas compared to appraisal estimates. The more important ones include:

i. a 202 lower command area per STW, than that expected atappraisal;

ii. at appraisal, the overall cropping intensity was expected toincrease by 54Z (from 1472 to 2012); revised estimates putthe increase more than 10 lower, at 482;

iii. actual yields obtained "with project" are in important cases(T. Aus and Boro paddy, wheat), significantly lower(between 10-202 lower) than those projected at the time ofappraisal;

iv. finally, economic costs in Taka terms have increased muchmore than the increase in the price of agricultural output.while the economic price of labor is five times thatestimated at appraisal, urea between 64? (1985-89) and 1252(1990-95) higher, and TSP between 35-552 higher, thefarmgate economic price of paddy has gone up by only beLween13-232.

However, while overall returns are lower than those estimated at the timeof appraisal, the investment in STWs remains economically viable. At thesame time, the potential economic benefits are not being fully achieved,particularly in terms of areas irrigated per STW. The fact that many STWsare being used to irrigate areas in excess of 10 and 12 acres each, achievingan average of 8 acres is considered low. If average 10 acre command areaswere to be achieved, the ERRs would go up 192 for the Barind Tract and 18Z forthe other areas.

VI. IDA PERFORMANCE

6.1 This was the first IDA financed project in Bangladesh aimedspecifically at addressing some of the weaknesses of the country'sagricultural credit sector. Other than increasing agricultural production,the project was appropriately designed to strengthen the role of thenationalized commercial banks, particularly in agricultural term lending, andto accelerate the process of privatizing STW distribution and sales.

6.2 However, the institution strengthening objectives of the projecthave not been satisfactorily met. While institutional development is along-term process, it is possible with the benefit of hindsight, to identifysome weaknesses in project formulation/appraisal, particularly with regard tothe training component. In this context, it should be pointed out at the

18

outset that the non-appointment of the training consultant by BB/GOB, has to alarge extent undermined the possibility of that component playing its desiredrole. However, appraisal expectations that BB's Project Department (RCPD)would be able to play an important catalytic role in institution strengtheningwere ambitious, particularly as staff appointed to RCPD were undertaking arole new to them. It would have been useful if, at appraisal, a more detailedassessment of training needs had been undertaken, and broad trainingprogrammes drawn up. The fact that training imparted under the project hasnot always proved effective, points to the project designs' shortcoming in notmaking specific provisions for training the proposed trainers, as well as RCPDstaff.

6.3 While the objective of bringing about uniformity in branch andhigher level loan accounting by the PCIs was certainly desirable, it wasoptimistic to expect the changeover to take place within a relatively shortspan of time. Consequently, the LRSR was unable to play the role designed forit, since in most instances where it was checked by visiting missions it wasfound to be incorrect.

6.4 A total of 12 supervision missions were fielded by IDA between thefive year project implementation period; five of these were manned by IDAstaff from its Resident Mission in Bangladesh. Good continuity of staff wasmaintained between missions. The missions played an important role inhighlighting weaknesses in project performance, and in particularcontinuously reiterated (unfortunately without result) the need for GOBto recruit consultants as originally agreed.

VII. CONCL'JSIONS

7.1 The primary objective of the project was to increase agriculturalproduction through the sale of STWe. While the project has more than metthe STW sales target, incremental agricultural production is less thanthat estimated at appraisal; overall economic returns from the project arealso lower. A matter of particular concern is the relatively smaller averagecommand areas of STWs sold under the project. While detailed data are notavailable, this may be a reflection of poor selection of beneficiaries byboth PCIs and contractors; it may also be a reflection of the fact thatfarmers may be less willing to sell water to smaller farmers nearby, asincremental returns from selling water appear to be low.

7.2 There are conflicting data available on whether the project metits equity objectives, i.e. meeting the project requirement that at least 502of credit for financing STWs should go to small farmers(with less than threeacres of land). Various factors contribute towards lower participation bysmaller farmers: the existing land tenure and sharecropping arrangements inthe rural areas often preclude participation by smaller farmers; furthermore,the prevailing social structure also inhibits small farmers from organizingeffective irrigation groups around STWs; finally, incremental cash inflowsfrom selling irrigation water appear to be low at present prices.

19

7.3 In terms of meeting the objective of transferring to the privatesector the responsibility for procuring and distributing minor irrigationequipment, the project can be considered to have been generally successful.While problems and shortcomings did emerge during the course ofimplementation, most of these can be addressed by effective and impartialinstitutional supervision. Overall, the rapid pace at which distribution andsales of STWs proceeded in the project area was the result of the privatesectors positive response to GOB's policy of privatization.

7.4 While the project has generally met its physical targets,the impact of the project on strengthening the agricultural creditinstitutions has been limited. In particular, the experience in recoveringloans made has been extremely disappointing. Among various other factors,this reflects the continued weakness in PCIs, particularly at branch level, inloan appraisal and supervision capabilities. While it is debatable whetherthe loan recovery performance of the PCIs would have been significantly betterhad the technical assistance and training component been better implemented,it is certainly true that these components, as eventually implemented, havenot contributed in any large measure in upgrading the technical skills ofparticularly the PCI branch level officials. While RCPD, which was expectedto become an important development agency, has played an important role inthe project in various respects, as a rural credit monitoring anddevelopment agency it is still weak, and most staff at present requireconsiderable training to upgrade their technical capabilities.

7.5 The principal lesson which can be gleaned from the experience ofthis project is that it is desirable to assess carefully institutionalcapabilities, and ensure adequate preparation of all components prior to acredit becoming effective. The inability of RCPD to draw up a comprehensivetraining programme and that of the respective training institutes toeffectively train bank staff was the result of an optimistic assessment oftheir capabilities. Furthermore, key appointments (such as the trainingconsultant) aritical for meeting what was one of the fundamental objectivesof the project must also be made prior to the project becoming operational.

AGRICULTURAL CREDIT PROJECttCr. 1147-SD)

\ C04parison of Appraisal and Actual Project Cost

Appraisal Actual Actual as X of Appraisal

Category No. Tk Million tJS$ MillIon No. Th itillton USS # illion It No. Taka USS

Credit Componmt

Shallow tubewells 27.000 t68.0 54.25 3t.648 21 1.123.3 45.92 136 129 a5

Workshops - Tools S S0 30.6 1.91 - - 0 0 0

EouipmentVillage mechanics' rits 500 7.1 0.44 17 0.2 0.01 3 2 2

Grain Storage 20 22.0 1.38 25 15i2 0.58 125 69 42

Other Diversified Lending n.a. 41.0 2.56 5.482 52.0 2.00 n.a. 127 78

Sub-Total - 968.7 60.54 - t.190.7 48.51 - 123 80.___._ _ __ _ _

ITotal Loans Disbursed) (909.01 (1.078.0) 3'

Technical Absistance & Training

Consultancies 56 o/m 10.4 0.65 34 aim 4 4.1 0.18 61 41 28

?ellowshaps 50 5.8 0.36 - - - 0 0 0

Local Training 1.000 13.9 0.87 - 5.0 0.19 - 36 22

Sulb-Total - 30.1' 1.88 - 9.3 0.37 _ 31 20

Total Project Cost 998.8 62.42 1.200.0 48.58 120 78

1i Following rates of exchange (per USSI used: 1981182 - Tk2O.05. 1982083 - Tk23.37. 1983184 - Tk24.88. 1984185 - Tk26.06. Ot

1965186 - Tk29.92. 1986/87 - Tk3O.40.Source: IIF. International Financial Statistics.

2' Refinance provided by BB aqamnst only 13.453 STt'F.3 Dased on amounts refinanced by Be. gros.ord °I) by ,.tt mated part scipatuaiq bank cnolribut in of 10. toowards amount disbursed.

4 Excludes consultant time spent on preparing evealuatio,i i.tudirs. and for auditing UCCA'KSS.

Source: RCPD. Bangladesh Bank.

SANGLADESN

ACGRICLTURAL CREDIT PROJECT(Cr. 1147-80)

Total Cost of Prolect Credit Component - Dv Particioating flank

Shallo" Tubewaells Oral. Storage Other Loans

Bank No. of Loans L-Shars) Ttsl _Qt No- Of LLans TQatt:ICQ5t NLQ,offLJ.nafi Amaont(Tk Million) (Tk Million) (Tk Million)

Sds.Uledesh Krishi Sank 12,21S (33.3) 362.62 5 4.09 n.s. n.a.

Sonali Sank 18.788 jI '5'.3) 590.36 L/ 20 11.14 n.a. n.-.

Janata Sank 3.643 ,IO.S) 11.50 - - n.s. n.a.

Ageatis S antkh 1.802 (4.9) 54.62 - -. a. n.a.

Ia±ai. 6 SD(1001 i.-Z1 25 1 5 .2.a3 S.499 V/ S2L.17 V

tJ Of this. credit for 12.907 STWs (total cost of Tk426.92 million) was disburscd through UCCA/KSS.ZI Detailed breakdown by banha not available. Amount disbursed, based on refinance provided by 88. grossed up by estimated

participating bank contribution of 10% towards amount disbursed.

Sources RCPD. ttnglad-sh Sank.

cr

S

DANCLADE'SH

AGRICULTUIAL CREDIT PROJECT(Cr .1147-BDI)

STW Sales - By Partictpating Bank and By District (Numbers)

1981162 t982183 t983184 1984185 1985186 1986187 Total X Share

STIs Financed - By Part1e1pating bank

Bangladesh Irisbi Bank 628 7.000 3.986 533 34 34 12.215 33.3

Sonall Bank 96 4.432 7,644 6.463 .110 43 28.788 ti 51.3

Janata Dank 25 1.794 1.135 632 52 5 3.643 - 10.5

Agrant Dank 19 1.070 520 175 to - 1.802 4.9

Total 768 14.296 13.285 8.003 214 82 36.648 100.0

STn Sales - By District (Old)

Rayj4aba 121 4.212 2.829 2.531 40 11 9.744 26.6

Pabna 117 1.909 670 564 54 - 3.314 9.0

0ogra 450 4.958 1.433 242 3 - 7.086 19.3

Rangpur 80 2.373 6.877 3.579 102 66 13.079 35.7

Danajpur - 844 1.476 1.087 15 3 3.425 9.4

Total 768 14.296 13.285 8.003 214 82 36.648 100.0

Appra aal Target 2' 2.000 5.000 11.000 9.000 - - 27.000

Actual as % of Target 384 286; 12i. 59 n.a. n.a. 136X

11 Of thas. credit for 12.907 STIs was disbursed through UCCAIKSS (annual breakdown not ava lablet.TI Distract allocation not made in SAD.

Souree: RCPD. Bangladesh Dank. s

I!is

BANGLADESH

AGRICULTURAI CREDIT PROJECT(Cr. 1147-BDI

Trainang Courses Held and Number of Participants

Type of Training Course 198182 1982153 1983154 1984185 1985t16 1986187 Total Level of Start Trtlued

L Course bu;raston

t. Basic Course - No. Held 1 8 27 35 - - 51 Nanagewent S field Lvel- No. of Participants 19 169 558 286 - - 1.032 (6 days)

2. Follow Up Cours- No. Held - - 8 32 11 1 52- No. Participants - - 115 563 200 20 896 (6 days)

3. Borrowers Trg. Courbe - No. Held - - 1 14 - 8 23 Borrowers- No. of Participants - 50 600 - 353 s.003 tl day)

4. Refresher Course - No. el4 - - - - 21 - 21 Branch Managers- No. of Participants - - - - 545 - 545 (1 day) N

S. Refresbher Course No. Held - - - - 23 - 23 Lower Level Branch Staff- No. of Participants - - - 476 - 476 t4 days)

6. Refresher Course - No. Held - - - - - 22 22 Lower Level Branch Staff- No. of Particapants - - - - - 538 538 42 days)

7. Motivational Course - No. Held 12 - - - - - 22 field Level Staff- No of Participants 409 - - - - - 409 II day)

8. Motivational Course - No. Held I - - - - - I Field Level Staff- No. of Participants 21 - - - - - 21 (4 ddyb.

9. Induction Programme - I - - - - 1 fanatj-ieni Le%el Stafr- No. of Particapanto - 25 - - - - 25 (6 daybI

lO Trainers Training - No. field - - - - I - I Traineri for .RSR- No. of Participahtb - - - - 17 - 17 It day)

Source: RCPD. Bangladesh Bank

I!

BANGLADESH

AGRICULTURAL CREDIT PROJECT(Cr.1147-SD)

Total Bank Oran_hes.. ,1.tOle Canch mas a 8ec oyo yPavcen±ao

Songai Oank Efliible as SgmI Oi±reci UiCALKSU Sn JanaSa haraLi Total of Total Branches

As at 30 June 1981

Total Branches (No.) 73 132 69 150 83 507 -No. of Eligible Branches 73 92 69 133 fi 428 84Avg. Loan Recovery Percentage (S) Si 100 I/ Z/ / 54 I 49 _

As at 30 June 1982

Total Branches (No.) 42 129 el 142 93 487 -No. of Eligible Branches 40 96 fi3 110 72 381 76Avg. Loan Recovery Percentage (%) 68 39 55 54 46 44 -

As at 30 June 1983

Total Branches (No.) otO 138 93 152 86 570 -

No. of Eligible Branches 70 106 63 152 72 463 elAvg. Loan Recovery Percentage (S) 53 51 58 56 51 50 _

Ab dt 30 June 1984 L

Total Branches (No.) 122 139 107 153 101 622 -No. of Eligible Branches 34 82 70 93 79 358 58Avg. Loan Recovery Percentage (S) 17 40 72 42 65 34 -

As at 30 June 1995 1

Total Branches (No.) 124 164 123 154 107 672 -No. of eligible Oranches 25 93 76 77 81 355 53Avg. Loan Recovery Percentage (%) 29 38 43 39 61 n.s. -

As at 30 June 1986

T9tal Branches (No.) 132 178 138 154 108 710 -No. of Eligible Branches 31 79 60 St 61 282 40 @Avg. Loan Recovery Percentage (%) 26 32 36 39 53 29 - %

Soufce: RCPD. Bangladesh Bank.

1/ Only 2 branches extended term loans.2' No term loans extended.a/ Only I branch extended term loans.

26

Table 6

BANGLADESH

AGRICULTURAL CREDIT PROJECT(Cr. 1147-BD)

Project Districts: Shallow Tubewells and Command Areas

Total EstimatedNumber Command Net

District of STWs Area CultTvableinstalled per ST i/ Area

(acres) ('000 acres)

Bogra 7,086 5.7 40.4Dinajpur 3,425 10.6 36.3Rangpur 13,079 8.0 104.6Pabna 3,314 15.8 52.4Rajshahi 9.744 4.7 45.8

Total 36.648 7.63 2/ 279.5

1/ Based on a sample of 40 STWs per district, surveyed by RCPD in thesecond half of 1987.

y Weighted average.

27

Table 7

BANGLADESH

AGRICULTURAL CREDIT PROJECT(Credit 1147-0D)

CropDana Pattern and CroppinQ Intens1ty (X)

SAR ,PCI

Barlnd Other Shallow Barind Other ShallowTract Flooded Areas Tract Flooded Areas

B. AUS (local) _ _ 20 _ 10 10 25 1ST. As (0") - - - CO - 10 0 5T..An (local) 75 70 70 60 75 80 75 SST. Am (HW) 25 30 30 40 25 20 25 45SO. (et:; - 60 - - 0 30 0 35

Sub-total 100 160 120 160 110 IS0 125 1SS

nuER CRPSWheat 10 20 1S 20 5 20 5 25jute - - 20 20 - - 7 3Pulses ndm0,iseeds 10 - 10 - 5 3 6 4Potatoes - 10 - 10 5 8 2 3

Sub-total 20 30 45 S0 15 31 20 35

TotalCropping Intensity (5) 120 190 165 210 125 181 145 190

i a Future without projectg = Future with project

BANGLADESH

AGRICULTURAL CtREDIT PROJECT(Cr.t147-OD)

Crop Yields, and Production Inputs per Acre

S. T. T. T.Aug. Aus. Aimn Ain Boro Wheat Jute Pulses G PotatoestL=ocail tI TR (Local) (tHYvI tHv-WT trJv ILItVI Oilseedas

W.W W W W W W w W W w w w w H w

coINPVT88eed- (kg) 30 15 24 14 14 11 30 50 50 5 5 12 13 85 75Fertilisers (kg)

Urea 0 60 20 30 40 60 70 45 50 iS 15 20 40 45 60TSP 0 45 0 0 20 40 55 40 40 10 10 30 50 40 80HP 0 25 0 0 0 20 35 20 20 au 20 15 25 25 800o 1.300 1.600 2.200 2.200 1.400 2.000 2.200 2.300 2.400 3.000 3.000 1.200 1.200 2.000 2.900

Plant protection (7k) 145 250 180 210 200 340 300 80 too 100 ISO 50 80 140 170Animal power (bullock praday) 22 I4 20 20 24 25 26 24 26 in 20 l2 15 45 45Hired labour (maniday) 28 41 36 37 41 43 47 22 24 36 38 4 5 42 48

Irrigation Coststacre (Tkl 500 300 1 o0r 700 300 600

YIELD (tonlacre) 0.48 1.30 0.80 0.83 1.14 1.30 1.49 0.59 0.88 0.51 0.66 0.22 0.29 3.60 4.63

Itr

BANCLADESH

AGRICULTURAL CREDIT PROJECTICr. 1Mt47-S1O

Arco Cropped. Yields. Production

Area Cropped *i lelds ProductAon

S PFCR 1SR 5A1 _ SAN PCR

U t t W I U W t w w N I v N I

............. 00 acr ........... (t crel ....... ............... to000 to n. ..

PAUM

B. Auu (local) 35.0 - -35.0 60.8 38.9 -21.9 0.51 - 0.51 0.5t 17.9 - -17.9 31.0 19.8 -11.2

T. Aus INIVI - 114.0 114.0 - 17.0 17.0 - 1.47 - 1.20 - 167.6 167.6 - 20.4 20.4

T. Aen (local) 189.2 170.0 -29.2 209.7 169.0 -40.7 0.73 0.81 0.80 0.88 t30.1 137.7 -0.4 167.8 148.7 -t9.1

T. Amen t("VI 74.6 100.0 25.2 70.0 110.5 40.5 1.10 1.29 1.14 1.30 82.3 129.0 46.7 79.8 143.7 63.9

sort t NVW - 48.0 48.0 - 94.8 94.8 - 1.65 - 1.49 79.2 79.2 - 141.3 t41.3

Sub-total 299.0 432.0 133.0 340.5 430.2 89.7 - - - - 238.3 513.5 275.2 278.6 473.9 191.3

OTHER CROPS

Wheat 35.3 S4.0 18.7 14.0 66.9 52.9 0.73 1.00 0.59 0.88 25.8 54.0 28.2 8.26 58.9 50.7

Jute 35.0 38.0 3.0 15.3 6.t -6.7 0.59 0.81 0.51 O."6 20 6 30.8 10.2 7.8 4.4 -3.4

Pulsfe atnd Oilbced, 26.4 - -26.4 1I.1 10.5 -5.6 0.33 - 0.22 0.29 8.7 - -8.7 3.5 3.1 -0.4

Potatoes - 19.0 19.0 7.4 11.5 4.1 - 4.41 ].30 4.60 - 83.8 83.8 24.4 52.9 28.5

Sub-totel 96.7 111.0 14.3 52.8 95.4 42.6

Total Croppm Atea 39S.7 543.0 147.3 393.3 525.6 132.34'000 acres)

Wet Ctfltavable Are 269.2 270.0 - 279.5 Z79.5 -( 000 acre,. )

Cropping Intensity tXI 147 201 54 141 288 47

I I 8.ut.e ,11 Pbtilmated dibtributlon or pro)vct SThs at. follmbF: 8.000 sm. liaragi Tract *Im. 2a.644 10, tiw * tiwr *arOs.

; K rotture without projectW a tuture with projectI c Ineremental

B^ALDVSH

AGR1C[ILTRAL. CREDIT PROJECTU-. 1147:8lr--

C.outati of Econ@ir P _rices fie 197 Cons!ant -e-s)

Paddv Uheat Juoe Urea TSP IPn99M9Uj5 Ms-g --- MEM M9:895991:95 reS - -r95 TVUerT- rY5

Proiected Price (USMtonWl/ ?30 234 164 165 438 388 141 204 136 161 79 93h9 usimlnt Fatior 21 0.9 0.9 1.1 L.I 1.0 1.8 1.4 t.4 1.4 1.4 1.4 1.4CtF/FOB Chittaqong

- M tton 217 229 180 1? 408 368 197 286 190 225 109 131-Taa/in V/ 6,417 7,f9f 5,580 5,64? 12,648 11,409 6,107 8,866 5,610 6,975 3,379 4,031

ItarnG tTi7 ten) U - ert 1,0 66 1,000 1,000 1,606 1,600 880 no0 880 ego 880 881Processing, IlandlinTpt. o(naret to Firnr) 1/ 83 080 200 200 1,44U 1,440 200 200 "00 200 200 218

Fhrqgale Price 6,537 7,219 6,380 6,442 9,608 8,369 7,187 9,j46 6,970 8,055 4,459 5,111

Processing Ratio 652 65% - - 80 M S - - - - - -

Faragate Price - Adjosted

foTk/ Pnes5ig 4,250 4,692 6,380 6,44? 7,686 6,694 7,187 9,946 6,971 8,055 4,459 5,tlO

1/ lased on 1ED published 'Hl2f Yearly Revision of Commodity Price Forecasts", September 1987. ' .4U l ed on past relationship hetuten inport (export for jute) unit prices aM reference quality prices. cr

11 Adjusted by SCF of 0.96.-h

31

Table 11

BANGLADESH

AGRICULTURAL CREDIT PROJECT(Cr. 1141-80)

Financial and Economic Prices

Financial Price 1/ Economic Price 2/

CROPS

Paddy: Aus 5.1 4.3-4.7Aman 6.1 4.9-5.4Boro 5.1 4.3-4.7

Wheat 5.3 6.4Jute 5.1 7.7-6.7Pulses & Ollseeds 12.5 10.0 3/Potatoes 4.8 3.8 3/

INPUTS

Fertilizer: Urea 4.8 7.2-9.9TSP 4.8 7.0-8.1MP 3.9 4.5-5.1Manure 0.1 0.08

Seeds:,Paddy (Local) 6.4 5.4-6.0(HYV) 7.3 6.2-6.9

Wheat 5.9 7.1-7.3Jute 7.0 10.6-9.2Pulses, Oilseeds 12.0 9.6 3/Potatoes 7.2 5.8 3/

Animal Power (pair-day) 30.0 24.0 3/Hired Labour (man-day) 35.0 26.3 A/

.JI Based on presently prevailing farmgate prices.

y1 Average prices estimated for traded commodities for the periods1985-89 and 1990-95 (see Table 10).

3/ AdJusted by SCF of 0.80.

4/ Adjusted by a conversion factor of 0.75 as used in latestWorld Bank appraisal reports.

8ANLADESN

ACRICULWRM CgR%DT PROJECT

Farm Wel - brind TractItE'1115

Vith,, IJI thoutMIX Year I ~YeAr 2 YeAr 3-7 Y~t srjU Ya ea eriT

*..rnotfSiTting wJkIrJrri~ .................. ( nerSeITing MiFer 4-3t2....

Criss Valve of Production 53.96 53.96 82.51 94.74 94.14 26.93 26.98 41.26 4.37 47.37Revenue frof Sale of Water - - - - - - 3.11 4.40 4.40

53.96 53.96 K1.51 94.74 94.74 26.98 26.98 44.37 51.7? 51.7

CASyUlUTFLOU

STU lnopstont Cost - 32.30 - - (3.23) 3/ - 3.30 - (3.23) 3/Crop Prodoction Cost 25.32 25.32 38.05 43.51 43.51t 12.66 t2.66 19.03 21.76 21 76 -StUo& - - 3.40 4.86 4.86 - - 3.40 4.86 4.86Inctemental Vorking Capital 41 - 9.77 3.44 - (13.23) - 4.38 2.10 - (6.9)

htill 25.32 67.39 44.91 48.3? 31.91 12.66 49.94 . 4.53 26.62 16.40

Lq i_IIEO LyE S 28.64 (13.43) 37.60 46.37 62.83 14.32 (22.86) 19.84 25.15 35.37

nuerwntal Flsw - U2.607) 8.9k 17.73 34.19 - (37.18) 5.52 11.83 21.05

IhR a 33% (SAR- 40%) 1Rt 202 (SWi - 29%)

Long Tern Loan §/ - 29.40 - - - - 29.40Short loan - 9.77 13.23 13.21 - 4.88 6.99 6.9Debt Service - Long Terq loan - - M4M75) '7.98) (7.98) - - (4.71) (7.9B) (7.98)

- arl Terp Loan - - (11.33) (15.353 (15.35) - - (5.66) (8.11) (8.11)

'let Finamcing - 39.17 (2.90) (10.1R) (23.33) - 34.29 (3.37) (9.11) 16.09)

291.64 25'.74 34.93 36.27 39.5O 14.32 11.42 16.47 16.05 19.28 1md1 fom 28r 3I.no (2.90) 5/ 6.16 7.63 10.88 - (1.90)5/ 2.15 1.73 4.96

pr 1 1tK'ftuurnd outflows from colti9ating total I acre uanmd area. R.i)d op rate ar.r-eed at 02 for Year I (i.e. year of installation), f to eW

t,/ CghIuetiug blonow 4 atres, and rtenuie from salp of wAter for 4 acres al an average sale price of T1,210 per asee of irrigated crop. Peild up

13J eJI"ageS ealR ssumedcof lb. IiK W itora tin cost is the followine par.

faru sn' otributioa at Taia2,900, and long term loan lor financing thp balance. Loan at 16Z interest, vith a 7 leap repammot period intlditnoce wiod.

MCGI ADES

AGICU.^T'UAIP CfII PROJECT

Far lMldel _ Ot_er %hallow Flooded Areas

llijbjt Mi toutfFutc-I 1 Year 2 Year 3-7 Year_ 8 P s!& YarA UZ Ta -

... ir~er not7SMITng uJfiFrrr. .t- (4p9ijjg Aeilp or 41rfyj.'K

rovng xSe lt Ibter - ------ .57 S6. m T55.00 55.00 83.37 95.53 ?5.53 27.51 27.51 45.72 53.53 53.53

SW noentsnt Cast - 32.30 - - (3.23) 3/ - 32.30 - - (3.23) 3JCFO& Ndlttill Cast 28429 28.29 40 83 :3 46 22 14.15 14t15

xw- OL4 ~ ~ -- 4.00 A52 :0 : :

Inctemntal Working Capital Y - 9.27 3.55 - (11.9?) - 5.14 2.21 - (7.34)

lt1i 29.29 68.96 48.38 51.92 36.87 14.15 51.59 26.62 28.82 18.25

Ut Iw- E PUE FLN-A)NJ 26.71 413.86) 34." 43.61 58.66 13.35 (24.19) 19.16 24.71 35.29

lncremental Fla - (40.57) 8.29 16.90 31.95 - (37.44) 5.75 11.3 21.93

III : 321 (SAR - 40?) 1 :212 (SAM - 29M)

Loq Terom Lo 5/ - 29.40 - - - - 29 U - - -

shot 1uon -0.27 11.82 11.92 - - 5.14 7.34 7.34 -

Debi-bSmnic - Long TFr- Loon (4.76) (7.O9) (7.98) - *4.70) (7.98) (7.1?B- Skert Term Loan - (9.59) (13.71) (13.71) - - MM.96) (8.51) (8.51)

et Financing - 37.67 (2.47) (9.87) (21.69) - 34.54 (3.3?) 49.15) (16.49)

IETIBQY PIf FINANC1ILN 26.71 23.81 32.52 33.74 36.97 13.35 10.t45 15.78 t.5S 1.79To 16ew19iR1tJI-fW- -(2.90) 5/ 5.81 7.03 10.26 12.90)/t 2. .21 5.44 <,

VrIt1 5INMIDand sotflows from cultivating total 8 acre cnmnd area. build up rate ass,med at 09 for Year I (i.e. year of installatisnl, 70? for Year2and I6OU (romt Tear 3 on,.i

3/ tbtiwating his own 4 acres, and revenve from salP of ater for 4 acres at an average W.Je price of TkI,280 per acre of irrigated crop. Build up

sate Ian as abosu s.N 56Z eoftaeo intne in o*atino cost in the follouinn loar.

f larwrs' cut ibution at Tak&21900, and long ter loan or financing thp balance. Loan at 16% interest, with a 7 lear rearint perid, includinggrace period.

BANGLADESH!1tultural Crek% Pre,ett

CKrinc g: lk.lIlifv

=ZZZz--e-- -----.-----

Year 1 21 2 3 4 5 6 7 8 9 It 11 12 13

STis tiqWde 31iNrttl iricir 768.0 2988.1 2710.0 1632.6Oth. Areas 3. 1 11396.0 10585.0 6371.0 214.0 82.01.1a1 SIMs 761.0 1426.0 13285.6 8803.0 214.0 82.0

liiesiRlm rest 19.5 .3 73.1 43.8 6.0 1.0 0.0 -2.1 -7.6 -7.3 -4.4 1.0 1.0le r daction ~~350.4 349.9 451.6 'S 1.5 578..06 371. 141.l

A,;r Xc-ti $A269.7 231.4 314.7 A.9 44 .0 975 . 5 I t5'6 258 24. 141: 1trrmqatil 06116.0 2.2 11.5 22.8 39.8 .8 8 32.8 32. 29.7 17.8 6.7 1.6 .tle~cwunta II.C. 7.5 31.3 38.2 27.1 6.8 .0 0o. -7 5 -3:.3 -38.2 -33.9 0.0 I.

elect goef jis - 7. I -, IO U | ; I'-% 519 11 `0 N 56. 1- :1 7:1 IEconosic Rate of Return . 15

XwesCost 0.0 2.f.7 X6.b ~~717. 5.4 2.6 0.0 -.0 -0 -20.7 -7t -0.5 -0.2~~~~~~~o 6.6 294.1 27 I 831 23 235,1 -

Valvef #,gductisn 0.6 13150D 16033 19.3 2271. 83 2351.1 . 235Z. t523.4 7 26.1 7.2Cut of Prduction 0.6 1068.8 1248.5 100.8 1678.7 1712.8 1789.7 1730.2 1730 2 108 .6 42.7 1e.? 5.2

triga ien 0B11 0.0 0.0 38.7 91,8 12-.3 139.5 148.1 141.2 14 2 4.4 32.81 1. .4

ftno0lt Project 8henefits 818 W., 2 2 : 25 1 2A:1 2I zs'1 1 9 '3:3 1 7 0tl*t bv. knefits 1.0 -411 9 -375.4 -129.0 177.0 224.4 229.: 229.4 371.6 379.9 281.5 33.t 2 8

tOSAL FROZEC Economic Rate of Return * 14%atincr W .iets -27 0 -514 9 -4U3 O -tS1 9 2233.9 2Y2.4 Z51.1 306.9 471j9 476.8 259.1 33 5 2.8Econftic Rate of Return * a14

IJ Based on estimated average conmand area Per SIV of 8 acres. For purposes of discounting no incremental benefits assumed in year

of StV installation. 70S In Year 2 and 100I from year 3 on. Useful life of STU assuied as 7 years, with a 10* residual value at

the end.

2/ Year I relates to 1981/82.

31 Distribution between the two areas roughly estimated by the mission.

IBRD 15590OMARCH 1081

210 BANGLADESH 27°

AGRICULTURAL CREDIT PROJECTLAND USE

E. ViCROPPING PATTERN I (Mainly 8natz Amen, Fallow)

i CROPPING PATTERN It (MainIy Tranwlant Aman, Fallow)I N D I A F CROPPING PATTERN III (Maindy ranWant Aman, Ausl

- LIlT] OTHERS

A - MAJOR ROADSi \_. ,---.--. - RAILWAYS

i(1 A THANA BOUNDARIESr. -. -_ -DISTRICT BOUNDARIES

' . -. *-i _._INTERNAriONAL OOUNDARIES

,.A, 4 1.s,, 20

, ,r\J /. - _ .) I CR KILOMETEFRSS I 20 30 4 6

260 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~260

* 'iI N D I A

I N D I A ea(lusively I1

rho ~ deo',e,n sedt? f;<\ riso. -* ¶1 a

bowidegies Mown en ~~~ -A

24~~~~~~~ do not imly -, the pa l 'fth.

en, tnwenitoftyrof cX,> --- ,- ,,,,/fany endoreJen

880~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5

boie how on w ap { \ %S=Q - .,::..5., .. ......................... .CS 4l OAA %24 * ktfetnotnafldif w two \ ._KSH: \ ' - g ................................. ULE

en*iovonvmet i/+;;s e ml)tt =Au

.2~~~~~~ue a,8d ft INDI\X:_t[ ^ -