Bolivia Agricultural Sector Review
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ReportNo. 9882-B0 Bolivia Agricultural SectorReview April6, 1992 Public Disclosure Authorized CountryDepartment Ill Latin Americaand the CaribbeanRegional Office MICROFICHE COPY Report No. 9882-BO Type: (SEC) FOR OFFICIAL USE ONLY PANZER, J./ X39363 / I5059/ LA3AG Public Disclosure Authorized Public Disclosure Authorized scmuwAtitoftbeWM Bdank~ Public Disclosure Authorized Thisdocumnent'has a restricted distribution and mnaybe usedby, recipients o4y inthe performanceof theirofficial duties.Its contents may not otherwise be disclosedwithou World Bankauthorization. FISCAL YEAR January 1 - December 30 CURRENCY AND EOUIVALENCY UNITS Currency Unit - Boliviano (Be) Official Exchange Rate Effective April 31, 1991 US$1.00 - Bs 3.54 US$0.28 - Bs 1.00 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS ADP - Alternative Development Program BAB - Bol'vian Agricultural Bank BCB - Bolivian Central Bank CDF Centro de Desarrollo Forestal CIAT - Centro de Investigaci6n de Agricultura Tropical CIFP - Centro de Investigaci6n Fitogenetica Pairumani CNIEA - Consejo Nacional de Investigaciones y Extension Agropecuaria CNRA - Consejo Nacional de Reforma Agraria CNS - National Seed Council CORDECRUZ - Santa Cruz Regional Development Corporation CRA - Certificado Reintegracion Arancelaria FAO - Food and Agricultural Organization of the United Nations FDC - Peasant Development Fund FRFM - Formal Rural Financial Markets GDP - Gross Domestic Product IBTA - Instituto Boliviano de Tecnologia Agropecuaria IBTEN - Instituto Boliviano de Tecnologia Nuclear INC - National Colonization Institute INE - National Institute of Statistics MACA - Ministry of Agriculture and Peasant Affairs MINPLAN - Ministry of Planning and Coordination NEP - New Economic Policy NGO - Non-Governmental Organization NLP - New Lands Policies PSIP - Public Sector Investment Program RDC - Regional Development Corporation UDAPE - Unit for Political and Economic Analysis USAID - United States Agency for International Development FOR OFFICIAL USE ONLY BOLIVIA AGRICULTURALSECTOR REVIEW Table of Contents Paxe No. COUNTRYDATA EXECUTIVESUMMARY . I. OVERVIEW OF SECTORAL PERFORMANCE:1980-90 . 1 A. Output Structure and Trends .I... .. Structure of Production . ......... 1 InternationalTrade 99.9..9.9. 999.9. 3 B. The Impact of the 1985 Economic Reforms on the Agricultural Sector . 3 The Period 1952-85.. ... 3 The 1985 New Economic Policy (NEP) . 4 Agriculture in the Aftermath of the NEP . 5 Relative Prices ... 6 C. Growth and Sources of Growth . .. 7 D. Conclusions . 9 II. LEGAL TRADITIONALAGRICULTURE IN THE HIGHLANDS AND VALLEYS . 10 A. Background . .... ...... 10 HIistory ............ .. .. .. ... 10 The Politicai Economy of Government Interventions . 10 B. Agricultural Productionand Productivity . 11 The Geography and Structure of Production in the Highlands 11 The Geography and Structure of Production in the Valleys . 11 The Current State of AgriculturalTechnology and Productivity . * . .* . .. .. 13 AgriculturalExport Potential . 14 C. Underlying Factors of the Current AgriculturalProductivity 15 Technology Generation . .. .. 15 Technology Transfer 99999.9.......... 16 Land Tenure ...... ........... 16 Supply and Distributionof Inputs . .18 This report is based on the work of a World Bank mission which visited Bolivia in April 1991. The mission comprised Mr. John Panzer, Chief of mission, Mr. Hugo Diaz (Senior Economist),Mr. Robert Schneider (PrincipalEconomist) Mr. Marcelo Mendez (Economist,FAO/CP), Mr. Dale Adams (Economist, Consultant),Mr. Doug Masterton (AgricultureConsultant), and Mr. Gaston Labadie (Sociologist,Consultant). This document has a restricted distribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosed without World Bank authorization. - lii - Table of Content. D. ProposodStrategy to IncreaseAgricultural Production nd Productivity. .. .... l9 3. The Role and Potentialof Irrigationin the Highlandsand Background. 20 WaterResources . & . * . * . 21 Current Status and Performance of Irrigation . 21 Public Irrigation Districts . ... .. .. ... 21 Mixed Private/Public Systems .. t ..*. 22 PrivateP Systems . m . 23 Current Institutionaland Policy Pramevork . 23 P. The Potential for Irrigation Development . .. 23 G. Proposed Strategy for Irrigation . 24 H. The Rural Population's Income and Migration Patterns . 25 I Conclusion. 27 III. RURAL FINANCIALMARRETS AND THE DEVELOPMENTOF SMALLHOLDER AGRICULTURE. s. - . o * -. 27 A. The Structure of the Formal Rural Financial Market (PRFM) 27 Institutional Makeup of the FRM. ............ 27 The Volume and Distribution of Formal Rural Loans . 29 SmallholderAccess to Deposit Facilities. .. 30 B. The Performanceof Rural FinancialMarkets . 30 Absence of Deposit Mobilization ... 31 Loan Recovery Problems .................. 31 Lending Costs . ... 32 Informal FinancialMarket ................ 32 C. RecentFinancial Sector Reforms und FuturePolicy Options . 33 Policy Actions . 34 D* Conclusions . 35 IV. THECOCA SUBSECTOR . 36 A. The Characteristicsof Coca Production . 36 B. The Size and Importance of the Coca-CocaineIndustry . 37 The Impactof the Coca-CocaineIndustry on the Exchange Rate . a . a . 37 C. Government Policies and Programs to Curtail Coca Production 38 The Voluntary EradicationProgram . 39 The Alternative Development Program (ADP) . 39 Assasing the Impact of ADP . 40 Do Conclusions . 42 V. AGRICULTUREIN TTLOWLANDS . ... ................ 42 A. The Structure of Agricultural Production . 43 Crop Production Technology and Yields . 43 - Iii - Table of Contents Page No. B. Performance and Potential of the Lowlands'Agriculture . 44 Soybean Exports and Wheat Production . 45 The Sugar Industry .r. ........ 45 OtherNon-Traditional Exports a . 47 C. Potential Constraints to the SustainedDevelopment of Agriculture . * . * * * . * * 47 Absence of a ComprehensiveNew Lands Policies (NLP) . 47 TransportationPolicies a ............... a 50 The Alleged Negative Impact of Donated Wheat . 51 D. Conclusions andRacomendations . 52 VI. THE&STRYSUBSE CTORYSUBSE 53 A. Overview of the Forest Sector ......... 53 Inefficiencyin Forest Management . 55 Forestry Sector Taxation: Equity and Efficiency Considerations. 56 Needed Reforms . 57 Be Conclusions * * . * * 58 VII. CONCLUSIONSREGARDING PRIORITIES FOR THE PUBLIC SECTOR . 58 APPENDICES I - Policy Matrix . a. 62 2 - The EnvironmentalImpact of SmallholderAgriculture in the Lowlands . 66 3 - The Organizationof the Public Sector InvestmentProgram (PSIP) . ........70 4 - Statistical Appendix . 77 Mes (IBRD 20516) Pa, I of 2 BOLIVIA COUNTEYDATA SHEET M109.6 (1989): (mtllions) 7.1 DENSITY:6.46 pop./sq. km. 1Pou sq. km.) Rate o Grozth: 2.8X POPULAIlONCHARACTEEISTICS Crude birth rate (per 1000): 42.0 (per(nportetIty 1000 live births): 106 Crude death rote (per 1000): 13.5 Population per physician: 1538 $CCESSTO S Fl WATER of population- urb n: 82 - rural: 27 NUTRITIC EDUCATION Dailtcatorie supply per person: 2086 Primary school enrollment-(X) of Per capitsprotefn intake (g/day): 57 relevantage group:91X iNPpLer toaft CUSS 1989)630 GROSSNATIONAL PRODUCT 90 US$ .n X 1980-5wz 1958°19 GDPat Market Prices 4228 100.0 -2.6 2.5 3.0 Gross Domestic Investment 512 12.1 -18.5 0.2 0.2 Gross National Saving 157 3.7 Current Account Balance -357 -8.4 Exports of Goods, NFS 960 25.8 5.5 10.2 12.6 Inports of Goods, NFS 1092 22.7 3.0 -3.5 3.3 VALUEADDED IN 1990 Value added In J980 gotlyivno as9 of GDP Agrfcutture 25,190 21.1 Industry 37,820 31.7 Nining 10,821 9.1 Hydrocarbons 7,789 6.5 Nanuf. and Construct. 19,210 16.1 Services 56. A04 Total 119,490 1000 GOVERNMENTFINANCE C~otsoldatedPublfi Sector flfrLCon n (Mtl. as) 'S of GDP s}Xo zflGDP Current Recefpts s U 1 2 7 T . Current Expenditure 2876 20.2 2090.3 2499.6 17.3 17.6 Current Surplus 359 2.5 -230.9 -120.9 -1.9 -0.9 Capital Expenditure 1084 7.6 336.0 392.7 2.8 2.8 oryv Data thet cont'd eM 2 of 2 SOLIVIA COUITRYDA6A NSHET MONEY,CREDIT A PRICES 190S198 1 6 (n. otf ga outstanding at and of perr )2 MoneyS4lpty (M2) 290 a22 1175 1662 2244 3339 Sank Credit to Pubic Sector -215 -508 -406 -159 364 525 lank Credit to Private Sector 409 947 1376 1852 2629 3710 (Percentge o- Index #d.era) Moenyas X of CDP 12.9 11.0 13.3 16.2 18.5 23.5 Genral Price Index (1960.1) 18159 68278 7S265 90795 104596 122482 Aiual percentagchags In: Genral Price Index 11770.0 276.0 14.6 16.0 15.2 17.1 Bank Credit to Pubilc Sector . .. lank Creditto Privats Sector 1450.0 131.5 45.3 34. 42.0 41.1 BALANCEOF PAYNENTS MERCHANDISEEXPORTS (AVCE FYI8-90) im mz 1m 81 t 12x m Exportsof Goode,NFS 704.5 652.7 673.2 868.4 955.9 Tin 111.1 15.8 lportsof Goods,NFS 816.0 920.5 914.8 1034.1 1092.3 Zinc 70.2 10.0 TradeBalence -111.5 -267.8-241.6 -165.7 -136.3 SIlver 37.6 S.4 NaturatGas 267.7 38.2 NetFactor ServfWes -308.9 -258.8-260.0 -249.3 -242.5 Other all 30. NetPrIvate Tranefera 17.0 7. 12S 2A ZIA Total 7W0.9 100.0 CurrentAccount aldnce -403.4 -508.7-488. -393.1 .3572 EXTERNALDEBT. DECEMBER 31, 19S9 CapitalAccount 358.1 179.6 341.7 380.0 381.3 NetOfficial Trnsfers 62.0 103.2 123.9 133.9 138.4 PublicDebt inc. Guar. 3420.2 PrivateCapital Flow ' 10.0 36.4 30.0 35.0 35.0 Non-Guar.Priv. Oebt 200.0 NetLT Lending 292.5 64.8 193.6 187.3 153.6 TotalOutat. & Ofsb. 3620.2 Diebur_menteZ 396.1 350.7 401.6 396.7 387.9 A.ortizatfont 103.5 285.9 208.1 209.5 234.3 Other Flows -26.4 -24.8 -5.6 23.8 54.3 DEBTSERVICE RATIO FOR 1989 Changein Reserves -110.4 41.0 -29.8 -139.8 98.9 Pubilc Debt, Inc. Guar. Mon-Guar.Priv. Debt Exceptfonal Ffnancingp 155.7 286.2 117.4 -126.7 74.8 Outstandfng* D1eb. Gros ReservesLevel 505.3 424.7 408.8 36i.2 363.9 IBRDIOALENDING t12131I89 Nitl USS RATEOF EXCHANGE(eelr ina AmustAveraoBs CUSSBn) 1B10 IDA US1I.00=Cr *17CZW 2 5W 2 2.69 3A71A Outstanding& Dis. 199 325 CrP1.0011US S .520 0.487 0.425 0.371 0.314 Undi bursed Outs. Inct. Undfeb. 1 - oetly net dfroct forofgn fnvetmnt Inctude C pftot1zdi nterest Awrtfiztlon p Id cnty Inctudes Short-torm capital,private non-uaranteed, errors nd misions, ad unpaid gas rlepts frm Argentina £ Includ required rescheNltngof auortzation frombilateral creditors nd change in arrears.