R.pod No. 90! TheWorld Bank Impact EvaluationReport Benin-HinviAgricultural Project Public Disclosure Authorized (Credit 144-BEN) April5,1964 Operations Evaluation Department FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Doaunent of the d Bank .- This document has a restrited dkistibtion and may be used by recipents only in the perfoffmanceof thei officialduties. Its contents may not otherwise be discdosedwithout V'A,ddBank authorization. ABBREVIATIONS ffb - Fresh fruit bunches (of oil palm) FAC - Aid and Cooperation Fund (French bilateral assistance) FED - European Development Fund PMWA - Bank Permanent Mission in Western Africa SOBEPALH - Beninese Oil Palm Corporation SONADER - National Company for Rural Development ZOCA - Annual crops area FOR OMCIAL USE ONLY THE WORLD BANK Washington.D.C. 20433 USL Odice caDi,ectcr-Gmal Opera0omEvaluan April 5, 1984 MEMORANDUMTO THE EXECUTIVE DIRECTORS ANMTHE PRESIDENT SUBJECT: Impact Evaluation Report - Benin Hinvi Agricultural Project (Credit 144-BEN) Attached, for information, is a copy of a report entitled "Impact Evaluation Report: Benin - Hinvi Agricultural Project (Credit 144-BEN)" prepared by the Operations Evaluation Department. Attachment Mervyn L. Weiner by Shiv S. ICapur This document has a restricted distribution and may be used by recipients only in the performance of their officialduties Its contents may not otherwise be disclosed without World Bank authorization. FOR OMCIAL USE ONLY IMPACT EVALUATIONREPORT BENIN - HINVI ACRICULTURALPROJECT (CREDIT 144-BEN) TABLE OF CONTENTS Page No. Preface .. ......................................................... i Summaryand Conclusions ............ ............................... ii I. INTRODUCTION 1 II. AGRICULTURAL IMPACT . 6 III. MAINEXFASONS FOR PROJECT FAILURE. 9 IV. ECONOMIC AND FINANCIAL IMPACT . .. 5..................... V. SOCIAL IMPACT . 17 VI. CONCLUSIONS AND OUTLOOKFOR THE FUTURE .. 19 VII. LESSONS LEARNEDFROM THE PROJECT 20 Annexes 1. Land Use by Cooperatives ................................. 23 2. Yields per Hectare on Cooperatives, 1973-82 ...... 24 3. Yield Curve: Latest Estimates and Achievements . .25 4. Annual Rainfall Deficit in Pobe 26 5. Social and Economic Characteristics of Hinvi Region 27 6. SOBEPALH: Cost of ffb as a Proportion of Total Sales 32 7. Different Worker Groups Within the Cooperatives as of April 1983 ...... .... ....... 33 8. Work Reaction to the Cooperative Experience ...... 34 9. Profit and Loss Statement of the Cooperatives from 1977-82 ......................... 38 10. Composition by Age and Sex of the Five Rural Communities in the Hinvi Region .................................... 39 11. Bank Contribution to the World Oil Palm/Coconut Sector ... 40 Map IBRD No. 2112 In document has a eVkftd diMibutil and maybe ued byr onlyin th perfomance of I thei ofcial dute Itscontents way not oterwise be diL witout WorldBank auto0rizto. IMPACT EVALUATIONREPORT BENIN - HINVI AGRICULTURAL PROJECT (CREDIT 144-BEN) PREFACE This is an Impact Evaluation Report of the Hinvi AgriculturalProj- ect in Benin, for which Credit 144-BEN in the sum of US$4.6 million and supplemental credit 144-2-BEN of US$600,000 were approved in February 1969 and January 1974 respectively. The French Fund for Aid and Cooperation (FAC) co-financed the project with the Bank and contributed a total of US$5.1 million equivalent. The project was closed in June 1976 after cancellation of US$25,000. The Impact Evaluation Report is based on a review of the Appraisal Report (No. TO-615b) dated February 3, 1969, the Project Performance Audit Report (PPAR, OED Report No. 2053) of May 19, 1978, the FAC Evaluation Report dated May 1981 and the French Central Economic Cooperation Agency (CCCE) Report on the oil palm sector in Benin of April 1983; relevant Bank files and documents have also been consulted, and particularly the Review of the Oil Palm Sector prepared by Booker Agriculture International,Ltd. (Bank consul- tant), in July 1982; Bank staff associated with the project have been interviewed. An OED mission visited Benin in January 1983 and held discussions with officials of the Ministry of Planning, SOBEPALH and SONICOG. A field trip to interview a number of participating farmers was undertaken. Farm surveys and data gathering were carried out from February to April 1983 by Mr. Ogunsola John Igue, Professor at the National University of Benin, who interviewed a sample of 48 cooperative members and held discussions with the 10 cooperative boards of directors in the project area. The information obtained during these missions and discussions was used to test the validity of some conclusions of the 1978 audit report and to assess the project's impact on agricultural production, on the lives of the project beneficiaries and on the Beninese economy. A copy of the draft report was sent to the Borrower on December 23, 1983. However, no comments were received. The project was selected by OED for a second look evaluation because its economic and social impact was still uncertain at the time of audit and because its cooperative development approach was both innovative and controversial. The valuable assistance provided during the preparation of this report by the Government of Benin, by officials of SOBEPALH and SONICOG, by Professor Igue and by FAC and CCCE staff is gratefully acknowledged. - ii - IMPACT EVALUATION REPORT BENIN - HINVI AGRICULTURAL PROJECT (CREDIT 144-BEN) SUMMARYAND CONCLUSIONS The Project 1. Credit 144-BEN (US$4.6 million), approved in February 1969, was to assist in financing agricultural development in the heavily populated Hinvi region through planting of 6,000 ha of oil palms and 1,000 ha of forest; preparing 6,000 ha for annual crops; constructing an oil mill; developing beef production; and constructing access roads and project facilities. The project beneficiaries, about 4,000 farming families, were to be organized into ten producer cooperatives, each with 600 ha of oil palm, 600 ha of annual crops and 300 ha of pasture, afforestationand village area. 2. Farmer participation in the project was compulsory. The owners (A7 members) of land were to receive one share, bearing a 3Z interest rate per year, of the cooperative for each hectare leased by them for the project on a fifty-year basis. Laborers ("B" members), mostly landless farmers, who were to work at least 200 days on the establishment of oil palm plantations, were also to receive one share of the cooperative. Only "B- members were to have a voice in the running of the cooperatives and a participation in the cooperative profits. 'A' and "B- members were to receive a 1.5 ha plot of annual crops to be worked individually by cooperative members following a specific crop rotation. SONADER (later renamed SOBEPALH), the Project Authority, was to manage the oil palm plantations on behalf of the coopera- tives for the 25-year life of the project. 3. At appraisal it was recognized that the rainfall distribution in the project area was sub-optimal but acceptable for oil palm production and that organization and management of producer cooperativeswould be a diffi- cult task that SONADER, an efficient and competent organization, would, however, be able to carry out. 4. While the planting program was implemented on schedule, the annual crop program soon ran into difficultiesbecause fewer farmers than expected were prepared to abandon traditional shifting cultivation in the forest and to take a 1.5 ha plot in project blocks. However, the introductionof animal traction and a greater flexibility by SONADER on crop rotation stimulated farmer interest. 5. At project completion, in 1976, about 14,000 ha including oil palms, annual crops, afforestation, pasture and urban areas had been developed. Functioning of the mill was satisfactory. Yields of oil palm, however, were lower than estimated at appraisal. The annual crop system was not popular with farmers; the yields obtained were low and the planned rota- tion created labor constraints. - iii - 6. The project ERR was re-estimated at about 5Z, compared with 12X calculated at appraisal. However, the social impact of the project was con- sidered substantial. Different opinions were expressed in the PPAR as regards the cooperative system, which was found by the PPAM "well on the way to becoming efficient farmer organizations'while the PCR stated that it was difficult to conclude that the cooperatives -had really taken root". In addition, the PPAR stated that insufficient knowledge at appraisal of local conditions and overoptimistic assumptions of labor availability had resulted in difficulties with the maintenance of oil palms and an overestimation of the benefits that the farmers could derive from the proposed annual crop sys- tem. Neverthelessit was found that a new technology had been introduced in the project area and farmers were adopting better practices than elsewhere in the country. Project Impact 7. Five years after completion, the project can now be considered a major economic and social failure. Yields and production of oil palms have only reached 25% of appraisal estimates, due to low rainfalls, poor mainr- tenance of trees and considerable stealing of fruits. For annual crops, cropping intensity and crop production remain at about 30X of appraisal projections because the proposed technical package has proved unrealistic and had an adverse effect on soil fertility. The livestock component has failed and incurred financial losses for the past five years. Forests