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. EXECUTIVE SUMMARY
1. Tse purpose of this report is to review the recent performance of Bolivia's agriculturalsector and to analyze issuescritical to its growth. An overview of the evolution of economic policies and the sector's performance during tho 1980-90 period is provided in Chapter I. The current state of agriculturein the Highlands and valley areas is analyzed in Chapter II. Particular attention is given to assessing the current state of technology, land tenure, and irrigationinfrastructure to determine their influence in this sector's stagnationand its negligible supply response to the existing stableand sound economic policy environment. Policy racommendationsfor this sector are focused on creating conditionsthat will encourage technological change, and promote productive infrastructuredevelopment and the development of rural financialmarkets (Chapter III). In Chap!-crIV, the report raviews the scope of coca production and provides an assessmenton the Government's policies to curtail its production. The positive changes that have been taking place in the Lowlands are reviewed in Chapter V and policy recommendationsfocusing mainly on the need to implement a new lands policy to support efficient developmentof the expanding agriculturalf:ontier are discussed. Chapter VI analyzes the forestry sector in the lowlands,with emphasis on the current regulatoryframework. The impact of smallholder agriculture on deforestationis discussed in Appendix 2. Chapter VII provides a brief discussion on the prospects of Bolivia's agricultureand the role of the Government. A discussionon the current state of implementationof Bolivia's Public Sector InvestmentProgram is contained in Annex 3. Finally, a policy matrix (Appendix 1) summarizesthe report's issues and policy recommendations.-
Background
2. The vastness of Bolivia's territory,and the cultural diversity of its population that encompassesseveral ethnic backgroundsand languages,have contributed to shaping a society marked by sharp contrasts. Nowhere are these contrasts more evident than in the agriculturalsector. The sector's activitiestake place in a highly dualistic setup, comprisinga very poor traditional sector located mainly in the Highlands and Andean valleys, and a modern sector (which coexists with small-scaletraditional farmers) located mainly in the tropical Lowlands. Coca production takes place in the realm of traditional smallholderagriculture in the Andean valleys.
3. Agriculture in the traditionalsoctor is generally practiced under harsh climatic/environmentalconditions, where technology is rudimentary and Government support has baen minimal. Productivityin the traditional sector is low and farmers are amongst the country's poorest. Yields have remained basically unchanged in the past twenty years. Despite these difficulties,the traditional sector still accounts for about 65Z of legal agriculture'sgross value of production,and for most of the coca production.
.1I This report does not analyze issues related to human capital development in rural areas. An analysis and recovmendationson such can be found in "Bolivia: Poverty Report", The World Bank, October 1990. N ~~~~~~~-ii-
4. The modern sector is comprised mainly of medium and large farms gearod to the crop production of exportables,some import substitutes,cattle and timber (also for export). In 1990, the sector contributed to roughly 782 of Bolivia's non-traditionalexports. The main exported commoditieswere soybeans and timber. In recent years, this sector has shown considerable dynamism and growth potential.
The Economic Policy Framework
5. Increased Government interventioninto all aspects of economic activity was the trademark of Bolivia's economic policies during the three decades that followed the Revolution of 1952. During that period, the State steadily increased its share of the economy and, through those interventions, the private sector's role was diminished and distorted. A significantpart of the Government'sinterventions focussd on the agriculturalsector through interventionsin internationaltrade and price controls at the consumer and/or producer level. Domestic price interventionswere also introduced but rarely enforced,particularly in the case of commoditiestraditionally produced by smallholders.
6. For a long period, the problems inherent in the above-mentioned development strategy were masked by a high rate of investment financed by foreign aid, the developmentof the petroleum sector, and improvementsin the country's terms of trade through tin and petroleum products exports. However, by the end of the 19709, it was already apparent that many of the investments undertaken had been poorly conceived. By 1980, political instability and concerns over economic performance led to a drying-up of foreign loans, and an ensuing balance-of-paymentscrisis that triggered a chain of events that culminatedwith the hyperinflationof 1985.
7. The new Government that took power in August of 1985 (headedby Dr. Paz Estenssoro)moved quickly to stabilizethe economy and to reduce the role of the State. In conjunctionwith the stabilizationprogram, the Government instituteda far-reachingliberalization of goods and factor markets to increase reliance on the price system for the allocation of resources and to encourage greater private sector participationin the economy. Those policies were highly successful in stabilizingthe economy and have been maintained by the Paz Zamora administration. Today, there are few remaining distortions in the economy, those remaining being linked to import licensing requirementnfor wheat flour, edible oils and sugar. The Government no longer intervenes in price-setting;import tariffs are set at a uniform 10Z rate, except for capital goods which are subject to a 52 tariff. To compensate exporters for the small distortioi.introduced by import tari.ffs, there is a duty drawback system that credits finished goods' exports with 42 of their FOB value, and primary non-traditionalcommodities with 22 of the FOB value.
The Performance of Aariculture Followina the 1985 Economic Reforms
8. The 1985 economic reforms gave rise to great expectationsof a renewed era of growth and developmentfor Bolivia. These expectationswere largely based on the premise that a stable and distortion-freeeconomic environmentwould rapidly refurbish the demand for private investment,which would be accompaniedby a much needed reallocationof resources under the - iii -
economy'snew (distortion-free)relative price structure. Compared to these expectations,the recent overall performanceof the legal agriculturalsector has buen disappointing. Average annual growth continues at a trend that started in the early 1980s; about 1.1 per year, well below the annual rate of populationgrowth (2.8Z).
9. However, a close look at some of the key structuralcharacteristics of the economy in general, and agriculturein particular, suggest that many of the expectationsregarding the impact of the 1985 reforms on the agricultural sector were ill-founded. Too much weight was given to the potential impact of a realignmentof relative prices, and too little attention to the persistent absence of constructiveGovernment intervention in the provision of much needed public goods such as education,appropriate land titling, agricultural research and extension,and rural infrastructurefor the large traditional sector. In fact, the most crucial effect of the 1985 reforms on agriculture was not the elimination of relative price distortions (since previous Government interventionsin the agriculturalsector had been widely evaded or not enforced);but rather, the restorationof economic stability.
10. Such economic stabilitywas a particularlyimportant prerequisite for investmentsto take place in agriculturein the Lowlands,where large landholdingspredominate. Because of the high cost of land clearing for crop cultivation coupled with the need to follow-upwith good agronomic practices to prevent loss of the investmentthrough fertility decline and weed infestation,investments can only be profitableif agriculturalactivities are carried out in a sustainablemanner for prolonged periods of time. The commitmentof recent Bolivian Government administrationsto maintain a long- term economic policy, has therefore played a significantrole in renewing the modern sector's lemand for investment. Indeed the modern sector has seized the opportunitypresented by the stable economy and has oriented most of its new investmentstoward export and--to a lesser degree--someimport-substitute commodities. In 1990, agriculturalnon-traditional exports--tho vast majority of them originating in the Lowlands--representedslightly less than 802 of total norn-traditionalexports, and almost 252 of total merchandise exports.
TraditionalAgriculture's Potential and Constraints
11. The agriculturalpotential of much of the area where traditional smallholder agriculturetakes place is severely limited by harsh climatic conditions and low soil fertility. However, Governmentcou'd have taken a ringe of actions to increase productivityand alleviate poverty. Government support for agriculturehas been inadequate,and that which has occurred has generally been through bilateral and multilateralsupport, with substantial NGU involvement. However, these efforts have often been uncoordinatedand not sustainableto the extent that recurrent cost financing is required from the Government. One of the most importantarea of Governmentneglect has been the absence of effective technologydevelopment and its extension.
12. Agriculturalresearch activities in Bolivia have always been modest and have suffered from a chronic lack of resources (in 1989, the total public sector support to research--includingforeign assistance--wasabout US$5 million, roughly 0.62 of agriculture'sGDP), and inadequatecoordination among the different agencies. As a result, the limited funds available for research have been dissipated throughouta series of highly fragmentedefforts with no - iv -
appreciable results. There still does not exist an adequate inventory of the proven technology available for the many agroclimaticregions, nor estimates of numbers of producers to whom this technologycould be applied. Neve=theless, some suitable technologyis available either from work done in Bolivia or in neighboringAndean countriesthat could be extended to improve the productivityof small farmers, if an effective extension mechanism existed.
13. Extension efforts have been mostly carried out by the Regional Development Corporations,and a myriad of NGOo. According to mission estimates, there are currently 80 to 90 NGOO with 500 to 600 technical staff providing services to about 90,000 households. Most of these programs do not reach the poorest farmers, nor are they adequatelylinked to research results. Consideringthat more than US$10 million are channeled each year to agriculturalextension, and the number of personnel involved, it is somewhat alarming that so little progress has been recorded to date.
14. Recommendatlons. With the creation of a National Council for AgriculturalResearch and Extension (CNIEA), supported by the World Bank- financed AgriculturalTechnology Development Project, the Governmenthas recently taken a much needed leadershiprole in the definitionof research areas (potatoes,wheat, quinoa, maize, legumes and livestock). A more active role in the promotion of extension activitiesshould follow. However, given the Government'sresource constraints,it is suggested that rather than look to the establishmentof a national extension system, that efforts be focused on a more decentralizedapproach through the Regional Development Corporations,producers associationsand NGOs.
15. For now, the followingkey activitiesshould be carried out a soon as possible: (i) inventory the available technologyand identify what needs to be verified under different agroclimaticconditions. This would not only allow a better organizationof future research activities,but would also help orient presatintextension efforts; (ii) inventory the institutionsworking on generationand transfer of technology. Primary emphasis should be given to strengtheningthe efforts of research institutionsto disseminate information to NGOs and others involved in extension. This could be achieved through the estaiblishmentof regional councils for research and extensionwhich would try to strengthenlinkages between producers,NGOs, and the CNIEA; (iii) conitractualarrangements with NGO's should be explored to utilize this valuable resource in combinationwith appropriateback-up technical and methciologicalsupport; and (iv) research efforts should be extended to includb farming system's research,once the basic individualcrop technologies are developed.
16. Most important,however, at this early stage of the research agencies' strengthening--particularlythe InstitutoBoliviano de Tecnolo2ai Aaronecuaria (IBTA)--isthat they should build up a cadre of qualified and well motivated staff, with sIfficientoperating budget to do meaningful research. Additional support of bilateral and multilateraldonors will undoubtedly be forthcomingonce IBTA establishesitself as a credible research agency. At the same time, IBTA must resist pressures to do research on a wide variety of products at this time so as not to dilute its scarce resources and divert the effort from those key crops/productsgrown by the vast majority of a-allholders. -v -
LaEnLdTenzr 17. The currentland tenuresituation in the Highlandsand valleysis the outcomeof the agrarianreform process initiated in 1953, consiieredto be one of the most importantpolitical, social an economicchanges to have taken place in Bolivia'smAern history. Throughthis reform,all large landholdingswere dividedinto smallparcels that were allocatedto the peasantsthat had t-aditionallylived and worked in themeareas. In broad terms,the AgrarianReform Law providesthat all land belongsto the Bolivian nation. The State can allocate(but not sell) land and issueprivate titles to thoseworking the land, or willingto "improve"it (e.g.,invest in land clearing,land delimitationand the like). The philosophyof the reformwa6 largelybased on equityconsiderations, and as such, specialmeasures were taken to ensurethat the unequaldistribution of land that had prevailed beforetha reformcould not re-emerge. Consequently,the law 2rohibitsrental contracts,and land distributedduring the reformcannot be soldwithout previousauthorization from the Conseio Nacional de ReformaAarrria (CNRA). 18. The resultof the restrictivelegislation on land transactionsis that even when smallholdershave adequatetitling, the extentof their proDertvriahts are severel,limited. This limitsthe developmentof agriculturesince farmerscannot use land as collateralto obtaincredit, and the developmentof appropriatelysized economicunits in responseto new technologies,changes in factorprices, and adjustmentsto migrationis curtailedby thT inabilityto sell or rent land. Moreover,given the unfavorableclimisuic and soil conditions,and the high transactioncosts inherent to a small-farm structure with low-educated farmers living in a mountainous region,it is very likelythat relativelylarger-size farms would have a much betterchance of adjustingthe output-mix,screening the relevant technology, managing the region's high yield-risks, and lowering the transactioncosts inherentin creditand marketingactivities. To promote agriculturaldevelopment, modifications to the AerarianReform Law are required. The Governmenthas alreadyundertaken steps in this directionby preparing a draft new AgrarianLaw. The proposeddraft law would lift restrictionson land transactions,reqrganize the agrarianjustice administration, and would createa NationalInstitute of Lands responsiblefor managingland titling,land use classificationand land valuationfor tax purposes. 19. Irrialtion,Bolivia's most importantrecent developments in irrigationhave taken place throughsmall privateirrigation 2rolects, executodby severaldonor-supported public and privateinstitutions. Most of the works have consistedof the rehabilitationand improvementof existing traditionalsystems. Costs have been kept low, averagingUS$500/ha, and have beengonerally based on a participatoryapproach in which peasantcommunities contributeup to 502 of the investmentcosts throughlabor and local materials. Beneficiarievare orgarizedinto users'committees and take full responsibilityfor the systems'operation and maintenance(0 & M). These programshave been quite successfuland are well suitedto the country'sneeds and resources.
20. Thte otentlal for irrigation develo2mnt. In the HiLhlands, regardless of water availability, cultivation can only take place during the summer. Therefore, irrigation cannot increase cropping intensities and its - vi - most imvortant role is to sustain crop arowth in drought years or thrcuiahdry Piods. The economic loss from droughts (of which there is at least one every five years) is equivalent to at least US$50/ha per year. Providing that 0 & H costs are low, investmentsof up to U$500/ha are justified on these grounds alone. This estimate does not con:ider the additional benefits coming from: (i) the farmer's utility increase because of a smoother income pattern (especiallygiven the farmers' restricted access to rural financialmarkets); (ii) the increased yields possible through better water availabilityand the associatedvarietal and agronomic improvementsthat can then be taken advantage of for even greater benefit; and (iii) the possibility of producing some higher value crops.
21. Unlike the Highlands, permanent irrigation in much of the lower valley areas allows double and even triple cropping, as well as much valued flexibilityto adapt harvesting times. Accordingly,there is a wide range of potential benefits accruing to water availabilitythat varies from about US$110/ha per year (double cropping of maize) to up to US$2,000/ha per year (for increased crop intensitiesand increasedproduction of some vegetables and fruits). These rough estimates could justify considerableinvestment in irrigation. However, in several valleys there is great competition for water resources among alternativeuses.
22. Proposed strategy for irrigation. Irrigation provides a unique opportunityto provide a low-risk,economically viable, and socially icceptableway of relieving poverty in the Highlands and higher valley areas, and to promote growth in the lower valleys. However, given the budgetary constraints of Bolivia's public sector institutions, and their limited capacity to implement and operate irrigation systems, irrigation development should continue to be based on small private or mixed public-privatesystems, with users covering part of the investmentcosts and assuming full responsibilityfor 0 & M costs from the outset. While the role of the public sector in irrigation is bound to remain secondary,MACA's planning department, provided it acquires some technical assistance,should assume a stronger role in irrigation developmentby carrying out the following tasks: (i) an inventory of existing studies on water resource availability. Eventually a comprehensivestudy of the country'swater resources should be conducted; (ii) an inventoryof existing irrigation schemes and current programs, and an evaluation of the most importanttypes of schemes and of the activities of representativeimplementing agencies. This informationwould allow in the design of new projects by learning from the experience of other projects; and (iii) in line with the above-mentionedevaluation of existing schemes, provide suggested guidelines for the definitionof priority criteria and project- selectionparameters for future investment projects. This informationshould be made available to all interestedparties through the existing interinstitutionalirrigation committee. In some cases, to bolster the pace of irrigation development,public funds could be allocated to co-finance planning, constructionand rehabilitationprojects. - vii -
The Role of Rural Financial Markets in the Welfar. of TraditionalFarmers
23. In the past 30 years, large amounts of money have been spent on rural credit programs and the developmentof a formal rural financialmarket (PRIM). However, as a result of a series of unfo-tunatefinancial policies, and the absence of prudential regulationsthat could have prevented the rent- seeking behavior (for economic and/or political reasons) that ha. characterizedthis market, most poor people in rural areas still lack dependable access to formal financial services, especially deposit facilities. The absence of deposit mobilizationfacilities has precluded the rural poor from having an efficient instrument to channel their savings, and prevented the financial sector from performing its most important role--to be an efficient channel through which the resourcesare mobilized to their most profitable use. Moreover, many of the problems that beset lending activities (e.g., political interference,high costs in identifyingcreditworthy borrowers), could have been partially ameliorated if the FRFM would have had a deposit mobilizationcomponent.
24. Recent Financial Sector Reforms and Future Policy Options. As part of a program destined to increase the competitivenessand efficiency of the financial sector, the Government began implementinga new financial sector strategy in 1985. This included gradually lifting interest rate controls, consolidatingdiscount lines in the Central Bank, raising the interest rates on these lines to market rates, reducing loan targeting, and creating a stronger and more independentSuDerintendencia de Bancos. More recently,new legislationhas allowed Casas Bancarias to be formed to provide more competitionamong existing banks. As part of these reforms, the problem- ridden Banco Agricola de Bolivia (BAB) will cease its operations.
25. While these reforms should provide enhanced access to formal financial services for most sectors in the economy, it is likely that the effect on PRPM will be marginal. The demise of BAB will not have a significanteffect since its operationshad decreased dramaticallyin recent years, while the problems that preclude the formal financial institutions' pa:ticipationin the sector remain (i.e., high transactioncosts, lack of informationon the borrower s creditworthiness,and farmers' inability to provide land as collateral). However, the reforms could have a positive erfect on the rural poor. Informal lenders (basicallythose involved in agriculture'sproduction and marketing chain) are likely to benefit from enhanced access to formal credit, and through them, so will their clients.
26. Recommended PolicX Actions. Within the new financial sector policy framework, the Cr_,rnment can still play a positive role in assisting the development of rural financialmarkets by: (i) eliminatingremaining subsidized directed credit operations. (Depositmobilization efforts will be curtailed as long as cooperatives,NGOs, and other lending institutions continue to have access to cheap funds); (ii) supporting the existing lending institutionsthrough technical assistance and training; (iii) removing constraintsthat prevent the use of land as collateral; (iv) developingways to improve access to formal loans by merchant., traders, and other marketing intermediarieswho, in turn, make informal loans in rural areas; and (iv) in the event that Casas Baftcariasdo not expand to service rural areas, establishinga more comprehensivesystem of prudential regulations for semi- formal financial intermediaries,to promote deposit mobilizationefforts. (A - viii - substantialpart of the donor-promotedrural credit activities are still taking place beyond or on the fringes of prudential control, and perhaps as a result of that, some intermediaries,such as the NGOs, are not being allowed to mobilize deposits).
The Coca Sector
27. Bolivia contributesapproximately 302 of the world supply of dry coca leaves, and there is no doubt that Bolivia's overall coca-cocaine industry is significant both in terms of value added and employment. According to Gover.mentestimates, the indutry's value added in 1989 was US$670 milliong equivalent to 152 of GDP. Of this, roughly US$280 million is retained by factors of production in Bolivia (US$170 million to farmers). Therefore, the industry's actual contribution to the economy was estimated at 6Z of GDP. The same source estimated that in 1989, about 61,000 rural families (92 of total rural families) derived at least part of their income from growing coca. Other sources have estimated that, in recent years, the industry's total annual income varied between US$300 and US$700 million, of which US$160-300 million (equivalent to 3.52 to 62 of total GDP) remained in Bolivia as payment to domestic factors of production.
28. The Imnact of the Coca-Cocaine Industry on the Exchange Rate. Perhaps the most significant effect that the coca-cocaine industry has had on the overall economy has been its impact on other sectors with exporting possibilities. This phenomena, commonly known as "Dutch disease", is caused by the decline in the relative price of traded goods with respect to non- traded goods that takes place with the emergence of a strong exporting sector. Compared with the level that would hava prevailed in the absence of the coca industry, coca-cocaine exports in the 1980s have certainly affected the real exchange rate. The decline in minlig exports over the same period, however, has roughly matched the increased revenue for Bolivia from coca-cocaine exports. Consequently, the real exchange has remained at a level similar to that prevailing in the years that preceded the growth of the coca economy. There has, therefore, been a significant change in the origin of the "Dutch disease", but not much in its extent.
29. Government Policies and Proarams to Curtail Coca Production. Efforts to curtail world cocaine consumption have brought about efforts to diminish its supply. In Bolivia these efforts are primarily directed at reducing the annual production of dried coca leaves. The Government's strategy comprises: (i) interdiction efforts at the intermediary level of the coca-cocaine marketing chain; (ii) an eradication program started in 1989 whereby farmers voluntarl.y destroy their plantations for monetary compensation; and (iii) the so-called "alternative development projects" investment projects, that provide factors of production, particularly labor, with alternative--to coca--employment. The potential success of these efforts are soriously jeopardized by the profitability of the coca industry, and by the industry's pattern of vertical integration, as Bolivia increasingly becomes an exporter of cocaine.
30. The voluntarv eradication nrotram encourages farmers to voluntarily destroy their plantations in exchange for US$2,000/ha. To enhance participation, the Government has tried to diminish the relative profitability of coca by lowering the derived demand of coca leaves through interdiction at - ix -
the local trading stages. This approach seeks to decrease the crop's expected profitabilityby both reducing the Drice of coca leaves and by increasina the v^risbii&_,af coca Prices, transformingcoca into a riskier alternative because of increaseduncertainty regarding prices. Although the strategy has had some impact on lowering coca leaf prices, its impact on production--so far--hasbeen minimal. The obstacles faced by this program are two-fold: (i) as long an new areas can be opened for coca production, and indeed the potentialarea for such is vast, this effort may simply cause a shift in the areas of production. This is very difficult to prevent since the Government does not carry interdictionefforts at the farm level in the illegal production zones; and (ii) coca continues to be a very profitable crop; therefore,any significant impact on production through incentivepayments could be exceedinglycostly.
31. Assessing the ImDact of the AlternativeDevelopment Program (ADP). The ADP promotes "alternativedevelopment" investments in coca growing areas and other areas from which rural families migrate to coca producing areas. While priority sectors of activity for these investmentsare agriculture, agroindustry,non-traditional mining and rural infrastructure,in practice, most investmentshave been directed to the agriculturalsector. While these alternative investmentsmay in themselves be a good thing, it seems unlikely that they will have any impact on the availabilityof labor for the coca industry. As long as the economic return to coca is high enough to enable coca producers to pay competitivewages, there will always be labor available for coca production. Of course, if the scale of the ADP investments,and accompanyingtechnological change were large enough, real wages in Bolivia could eventually be driven up to the point where the country would lose its comparative advantage in coca production. However, this is clearly unrealistic. Perhaps the most important issue regarding the ADP is that it would be a mistake to judge its merits based on the success (or lack-thereof) in eradicating coca, since this is the main instrumentthrough which that can be accomplishedgiven the profitabilityof coca. ADP's investments should really be viewed as an adjurct to the developmentprocess and what one day may be the demise of the coca-cocaineindustry in Bolivia (brought about by eradication efforts, drug abuse programs, and diminishedpreference for cocaine, etc)*
32. Current ADP efforts should continue since they provide much needed assistance for increasing the economic opportunitiesof Bolivia's poorest inhabitants. However, more caution should be paid in the project selection process. Several projects have not been all that successful since they have tried to develop alternativeagricultural opportunities in some coca growing areas that are not well suited for the production of alternative crops because of their poor access to markets. The ADP is also putting too much emphasis on the development of areas from where people emi4rate, rather than to other areas to where people might migrate (e.g., the agriculturalfrontier in the Lowlands). Bolivia's history shows that the populationwill migrate to areas that provide good economic opportunities. The ADP investmentsshould, therefore, also be directed to those areas, provided that the needed implementationof a comprehensivenew lands policy takes place at the same time. The Performance,Potential and Constraintsof Agriculture and Forestry in the Lowland.
33. Axriculturalactivities in the Eastern Lowlands have flourished-- particularlyin the proximity to Santa Cruz--becauseof the region's vast potential based in the quality of its soils, climate and the relativelybetter access to export markets through the Paraguay river to the Atlantic and through rail-linksto Brazil. Unlike Bolivia's Highlands and valley areas, the Eastern Lowlands' prospects for agriculturaldevelopment and growth are promising--providedthat the serious efficiencyproblems of the railway are resolved, the road network improved, and an adequate new lands policy is implemented. Host of the existing cropped area is in the hands of a dynamic commercialsector, capable of quickly adopting improved technology. Smallholders,who to this point have received little attention,also hold considerablepotential provided that land tenure problems, similar to those faced by smallholdersin the Highlands, and technologytransfer issues are effectively tackled.
34. While most of the Lowlands' agriculturalsector has been growing in an environmentof economic competition (both at the domestic and international level), there has been one notable exception:the sugar industry. It has been unduly protected by quantitativeimport restrictions. The industry operates as a text-book example of a vertically integratedcartel. Sugarcane Rrowers are protected by strict restiictionsto entry enforced by the sugar mills, who only purchase pre-determinedquantities of sugarcane from producer quota- holders. This automaticallydetermines the sugar output, and the monopoly rents are then shared among the six sugar mills and the sugarcane producers, by splitting the revenue of the refined sugar sales in the domestic and export markets (most exports go to the "preferred"U.S. and Peruvian markets).
35. The domestic wholesale price of refined sugar (in Santa Cruz) has been about US$0.20/lb. Given that domestic consumptionhas been approximately 175,000 ton/year, the implicit tax which the sugar cartel has been extracting from consumershas ranged between US$12 and US$15 million, depending on internationalprices. The Governmenthas recently announced that the market structure for sugar will no longer be protected by the Government. To eliminate the current monopoly practices, the sugar import restrictionsshould be eliminated. The current 10 uniform tariff should be applied. At current world prices (roughly US$0.10/lb),imports would reach the wholesale market at approximatelyUS$0.17/lb, a price which the domestic industry should be able to match. In the event world prices would decline below the marginal cost of productionof even the world's most efficientproducers, the domestic industry could be insulated from those changes through applicationof anti-dumping legislation. In addition, once the domesticwholesale price resembles the importparity price, the rents accruingfrom accessto the preferredU.S. marketshould be a2nropriatedby the Government,since the beneficiaryof the U.S. subsidyshould not be the sugar industry,but Bolivia'ssociety as a whole. 36. Forestry. Despitethe immensevolume of standingtimber in Bolivia,the contributionof forestryto Bolivia'sGDP has been minor,mainly becausemost forestsare locatedin isolatedareas with virtuallyno road access. More than 661 of the forestindustry production is export-orient.-4 and exports have demonstratedconsiderable potential and dynamism. In 195 - xi - the value of wood exports (which almost doubled that of 1980) was roughly the same as that of soybean exports (and related products), about US$49 million, or 172 of non-traditionalexports. Cuirent forestry practices are extremely selective in terms of species harvested, since only very high quality species are exported.
37. However, unlike the developmentof the Lowlands' agriculture,the development of the forest industry raises some poignant issues regarding both the efficiency and equity associatedwith this sector's growth. The industry has developed beyond the capacity of Government control and it has not been subjected to prudential regulationsthat could bridge the gap letween the loggers' private interest and the public interest. Tenure insecurity brought about by short-term concessionspromote the inefficientmanagement of forests which are inevitably exploitedvery rapidly, as loggers attempt to get as much economic value from the forest as possible before it is lost to another occupant/owner. Accordingly,there are no incentives to develop sustainable management practices. To remedy this situation, the Government is reexamining all current forest-concession-leasesand intends to grant long-term contracts. However, this enhanced security of tenure will not eliminate the mismanagement of forests. Long-term sustainableproduction will still be less attractive to as long as relatively uncontrolledaccess to new forest land is possible. The Government therefore needs to address this issue in a comprehensiveway through measures such as a forest deDletion lev1 (a charge for land denuded or otherwiee degraded within the concession),and greater regulatory and enforcementcapability.
38. In this industry the public sector also has an obligation to obtain a return for the public from the logging of public lands. While there is a taxation system for the industry (the derecho de monte, and regalias), the system fails as an instrumentto collect significantrevenue, since tax rates are low and widely evaded. Tc increase the overall tax take, tax rates should be increased and collection efforts improved. The latter could be achieved by merging the derecho de monte and the regalia into a single ad-valorem tax with a cost drawback (to make it a non-distortingtax) and centralizingtax collections in each of the Regional DevelopmentCorporations. Historically, they have had a better track in tax administrationthan the Forest Development Center.
39. The Lowlands' Key Develipment Issue. Given the current level of technology used in the Lowlands' commercial agriculture,and the relative abundance of land, the greatest potential for growth and developmentlies in the rational expansion of the agriculturalfrontier. Central to achieving this is the need for a new lands oolicl that would seek to: (i) allocate land resources among competing activities (e. g for stry, fe…ing" Ma404ol Po_e in a way that would maximize the long-termbenefit of this valuable resource to Bolivia; (ii) promote the efficient and environmentally-soundmanagement and use of resources (within a given activity); (iii) establish a transparent frameworkwithin which a balance can be struck between the often conflicting claims of agriculture,environmental protection concerns and of indigenous poople; and (iv) capture emerging economic rents for Bolivian society from public sector investments that contribute to the developmentof the Lowlands.
40. Bolivia is far from having a land policy that could fulfill the above-mentionedcharacteristics. The biggest obstacle to such a policy are - xii -
provisions within the 1953 Agrarian Reform Law. Since the law prevents the State from selling land, the Governmengtiannot rely on market mechanisms to promote an efficient allocation of land among comoetint activities (i.e., through a land bidding system that would discriminateamong alternativeuses). That has left the State with the alternativeof relying entirely on zoning for the allocation of (free) land-exploitationrights. Ilowever,given the State's low institutionalcapacity to establish and enforce such zoning regulations, coupled with the pervasive rent-seekingbehavior this policy induces, this allocation mechanism is unlikely to be effective. Moreover, it is very inefficient for the Government to take the burden of centrally planning the developmentof the frontier.
41. The Government'sobjectives would be better served by allowing the market to bear part of the costs of that process through a land-bidding process, while the Government centers its efforts on the regulation of externalitiesand the provision of public information. This would require a revision of the 1953 Agrarian Law to provide for a more market-based system of land distributionand transfer. In the short-term,the Government should continue to use 1:250,000 (reconnaissancelevel) surveys, and land capability analysis as a basis for determiningbroad categories of land use and road alignment,with more detailed soil analysis being used for allocating permits for land clearing and farm development.
42. In addition, the economic rents that will accrue from the developmentof the Lowlands will be substantial. But for Government to seek arowth with eauitv will require mechanisms such as a capital gains tax. The absence of such taxation is not only inadequate from an equity point of view, but promotes inefficiencyby increasing the incentive of interest groups to lobby for public funds for roads on uneconomic grounds, and exacerbates the pressures on the agriculturalfrontier by making new land artificiallycheap since farmers do not bear any of the public investment costs in infrastructure. By the same token, it also promotes land clearing and land- grabbing for purely speculativepurposes. While taxation of this value added under frontier conditions is notoriously difficult, the Government should explore such mechanisms as the taxing of capital gains from land transactions.
Conclusions
43. After a prolonged period of economic instability,the process of economic reforms that started in 1985 has yielded a sound and stable economic environmentwhich encourages economic development,investment and growth. The remaining challenge for the Bolivian economy in general, and agriculturein particular, is for the private sector to make best use of the opportunities prst--nu uy L - -:,. YJLLJ -, - -- - -t- 411 ham a critical role to play in the country's developmentthrough the provision of public goods, the establishmentof an adequate regulatory/legalframework that will encourage p .ivate sector development (but that can also protect the public interest), and by providing greater assistance to the country's poorest.
44. The agriculturalsector has the potential of playing an important role in the acceleration--andsustainability--of growth as evidenced by the positive response of the Lowlands' agricultureto the current economic environment. Transformingthat potential into a reality will renuire some - xiii -
important Government actions gnd a strengtheningof Governmentinstitutions. MACA, despite having undergone several restructuringefforts, is still beset by operational difficulties. Those difficultiesare partly the result of its diffuse mandate which includes the politicallyloaded issues of the campesino, making MACA one of the most politicizedministries in Bolivia.
45. In the Lowlands, given the relative abundance of land, most growth will come through the expansion of the agriculturalfrontier. It is thus imperativ,that the Government take appropriateactions to establish an adequate land-policy,regulatory framework and administrativecapability so the expansion takes place in an efficient,sustainable and equitablemanner. The most important impedimentto establishingsuch a policy-frameworkis the 1953 Agrarian Reform Law, which, by impeding the State to sell (or grant long- term leases on land for agriculturaluse) not only precludes market mechanisms to participate in the efficient allocationof land, but also encourages inefficientrent-seeking activities.
46. On the other hand, the long-term prospects of growth of Bolivia's traditionalsmallholder agriculturein the Highlands and most of the valleys are limited by the constraintsimposed by natural resources on productivity and on the potential output-mix--mostlygeared to a small domestic warket. In the long-term,it seems unlikely that agriculture^an form the basis for maintaining at a reasonableincome level the populationof these areas. Government involvement,therefore, should primarily be viewed as poverty- alleviatingand should emphasize investmentsin human capita]. However, there is ground for short- and medium-termgrowth in agriculturalactivities, provided that improvementsare achieved in developingagricultural technologiesand its extensiou,and through inexpensive infrastructure development--particularlysmall-scale irrigation. Improving the performance of these activitiescould be achieved at a relativelylow cost. The demand for private investmentcould also be promoted through the provision of land titles to all farmers owning land, and by modifying some aspects of the land legislation to give farmers more comprehensiverights on their land (i.e, reducing restrictionson land sales and rentals). Within this context, special attzntion should be given some areas in the lower valleys which have a significantunrealized economic potential. Unlike much of the Lowlands, the pr4 vate sector has not taken advantage of these opportunitiesbecause Governmentprovision of needed public goods has not been available, and the farmers who own the land are not necessarily those who have the best possibilitiesof taking advantage of these opportunitiesbecause land transactiensare severely constrained. Additional Government involvementin the lower valleys should be based in the development of infrastructureand research and extension activitiesto promote the developmentof alternative-- to cereals and tubers--crops. I. OVERVIEWOF SECTORALPERFORMANCE: 1980-90
A Output Struc.ureand Trends
1.1 With a population of 7.2 million inhabitantsthat occupy roughly 109 million ha, Bolivia is a large and sparsely populated country. It ts also one of the poorest countries in the American continentwith a 1990 GDP per capita of US$630. As in most poor countries, agriculture is the economy's most important sector in terms of its contributionto GDP and employment. In 1989, tne sector employed close to 40X of the labor force and its registered (i.e., legal) value added of approximatelyUS$950 million accounted for roughly 212 of GDP. Within agriculture'sregistered activities,crop productionaccounts for most of the sector's valued added (841), followed by livestock (141) and fishing and forestry (22). The sector is also an important element of the coca-cocaineindustry. According to Government estimates,in 1989, some 60,000 rural families (about 92 of total rural families) derived at least part of their income from primary coca production, generating an estimated value added of US$150 million; in 1989, the total value added of the coca-cocaineindustry was estimated at roughly US$670 million, equivalent to 152 of total registeredGDP.
1.2 Bolivia is endowed with ample natural resources. More than 25 million ha have been deemed suitable for cultivation;however, the country's total annual cultivatedarea has never exceeded 1.5 million ha, of which less than 140,000 are irrigated. In 1978, the only year for which reliable data is available, roughly 5OZ of the country's territory comprised forests and woodlands, located mainly in the sparsely populated lowland areas, and 302 was in natural pastures.
Structure of Production
1.3 The diversity of Bolivia's inhabitants,which encompassesseveral ethnic backgrounds and languages,and the vastness of the country's territory have contributedto the shaping of a societymarked by sharp contrasts. Nowhere are these contrastsmore evident than in the agriculturalsector. The sector's activitiestake place in a highly dualistic setup, comprising a very poor traditional sector located mainly in the Highlands and Andean valleys, and a modern sector (which coexistswith small-scaletraditional immigrant farmers) located mainly in the tropical lowlands. Coca production takes place in the realm of traditionalsmallholder agriculture in the Andean valleys and hillslopes.
1.4 The traditionalsector is characterizedby a large number of small landholdings(Table 1.1), a legacy of the land redistributionproces that followed the Revolution of 1952. Agriculture is generally practice, under harsh climatic/environmentalconditions, technology is rudimentary and Government support has been minimal. Productivityis low and farmers are amongst the country's poorest. Yields have remained basically unchanged in the past twenty years. Despite these difficulties,the traditional sector still accounts for roughly 652 of legal agriculture'sgross value of production. In the Highlands and Valleys, the most important legal crops ares potatoes, tubers, barley, maize, wheat, and quinoa. Rice is the most important crop grown by traditional smallholderfarmers in the Lowlands. The traditional sector also accounts for roughly 30S of the country'smeat production.
Table 1.1: FARM SIZE AND DISTRIBUTION BY kEGION, 1984 (number'000)
Higbland. andAndean Valleys jI Lowlands SI Les9than 1 ha 91.7 I to 4.9 ba 150.2 18.2 5 to 19 ha 80.5 9.3 20 to 99 ha 17.4 18.1 More thn 100 ha 4.8 7.5 TOTAL 344.6 53.3
a/ The Highland and Andean Valley regions comprise the Departments of La Paz, Oruro, Potosi, Cochabamba, Tarija and Chuquiesaca. The Lowlands comprise the Departments of Santa Cruz, Beniand Pando. Sources: MAC&,Agricultural Census, 1984. National Socioeconomic Survey of Agricultural Sector, 1978.
1.5 The importance of traditional agriculture is largely explained by the geographic isolation of many areas--a consequence of the country's poor infrastructureana difficult geographicconditions. Because of transportation costs, local regional markets have tended to be insulated not only from internationalcompetition, but also from competitionfrom other regions within the country. Accordingly,the geographicdistribution of agricultural productionhas been closely related to the geographicdistribution of the population. Since over 75Z of the country'spopulation live in the Highlands and Andean valleys, the traditional smallholder-farming-system that prevails in those areas continues to be very important.
Table 1.g GROSSVALUE 0l PRODUCTIONOF TRADITIONALAND MODERN AGRICULTURE/ (Index1980 w-100) 1980 1984 1986 1988 1989 Total Agriculture 1O 98O 109 120 112
Traditional 100 :99 1i0 124 113 -- 'dsU*LAS5L5. wiw, 9s i& iu, --Stimilantt 100 143 1l4 223 223 Modsr¢ 100 93 104 108 l08 0--atercentage of 23.12 22.0 22.01 20.72 22.3% total Agriculture
*I Enstiatesof CroneValue of Productianbased on 1987prices. Apt:c¢ordingto the officialGovernment deftnition, It uconpasssthe -production of coffee:, cocoa, te and coca. .Sgouce;Vis$sion eAtimatea based on datafrom M&CIUWDPI!AI Project BO-:-W L/88-;--. 021. : - - : -3-
1.6 The modern sector is comprisedmainly of medium and large farms geared to the crop production of exportables (e.g., soybeans), some import substitutes (e.g., sugarcane, rice, maize, wheat), cattle and timber. In 1990, the sector contributedto roughly 252 of Bolivia's non-traditional exports;'/the main exported commoditieswere: soybeans and related products, timber, sugar, coffee, and nuts (Table 1.3). This sector has shown considerabledynamism and growth potential in recent years, particularly through increased production of soybeans and, more recently,wheat and cotton.
InternationalTrade
1.7 Agriculturehas traditionallybeen a not source of foreign exchange to the economy. Because of the natural protection granted by transportation costs, agriculturalimports have been unimportant1' (when compared to the value of domestic production)and have been dominated by wheat imports, mostly imported through foreign aid programs. However, the country's landlocked position and high transport costs have not prevented soma agricultural commodities from being competitiveenough to reach internationalmarkets. Over time, agriculturehas proven to be the most important non-traditional sector in the economy in terms of exporting potential. In 1990, agriculture accounted for about 772 of all non-traditionalexports.
B. The Impact of the 1985 EctunomicReforms on the Aaricultural Sector
The Period 1952-85
1.8 Increased Government interventioninto all aspects of economic activitieswas the trademark of Bolivia's economic policies during the three decades that followed the Revolution of 1952. During that period, the State steadily increased its share of the economy and at the same time affected the private sector's allocation of resourceswith distortionsthrough subsidized directed credit programs, interventionson the internationaltrade regime, allocation of scarce foreign exchange, or direct price controls. A significantpart of the Government'sinterventions focused on the agricultural sector through price controls at the consumer and/or producer level, and interventionson internationaltrade (Table A.10). However, for the most part, these policies were rarely enforced. This was particularlytrue for commodities traditionallyproduced by smallholders. The more effective interventionsprotected the beef and sugar industries,commodities produced primarily by commercial farmers in the lowlands.51
1/ Traditional exports are those originatingfrom the mining and hydrocarbon sectors.
2/ However, imports have not been as unimportantas reflected by the official trade data, since there has always been contraband from neighboring countries.
3/ For a complete descriptionof the Government'sintervention in the agriculturalsector in the early 1980. see "Bolivia AgriculturalPricing and Investment Policies", The World Bank, 1984. -4-
na Is.1.3 AGRICULTURAL1KPORTS ND EXPORTS, 1980-90 tin USS lln 191F0 198S al 1987 1989 f1990
Cattlqk 1.3 1.2 6.8 6.2 48.8 Coffe* 20.7 13.9 11.5 12.7 13.9 Nuts 1.7 1.5 6.7 9.2 15.2 Soybeas & Related Pzd. 6.9 5.3 18.5 52.9 47.2 Sugar 47.6 1.6 8.6 19.3 31.7 TSiber 28.6 4.8 30.8 44.1 48.8 Anroulture 110.5 29.9 91.8 161.0 227.0 as I of all goods 10.7K 4.5X 16.22 19.6X 24.9Z - s9 2 of ton-traditlonal 65.02 86.72 86.4K B02 77.2% lgyoorta Wheat 37.0 47.9 47.3 29.9 30.6 Anriculture 42.1 49.1 50.6 31.9 n.a. -as I of *ll good. 20.0S 23.52 28.4Z 34.81 n.a. OSurolusw bf Agriculture 68.4 (18.0) 44.5 131.2 n s
gI Ue&tstered export, are likely to be only a fraction of total exports because of widespread underinvoic1ng and conttaband brought about by the difference b-etween the official and parallel exchange rates. -h Defifed as the difference between the value of export. and Imports. ~SouX SBolivian Central Baak, INs estimates Tible 5.4.
The 1985 Mew Economic Policy (NPF)
1.9 For a long period, the problems inherent in the above-mentioned development strategy were masked by a high rate of investment financed by foreign aid, the development of the petroleum sector, and improvements in the country's terms of trade. However, by the end of the 1970s it was already apparent that many of the investments undertaken had been poorly conceived. By 1980, political instability and concerns over economic performance led to a drying-up of foreign loans and an ensuing balance-of-payments crisis that triggered a chain of events that culminated with the hyperinflation of 1985.
1.10 The new Government that took power in August of 1985 (headed by Dr. Paz Estenssoro) moved quickly to stabilize the economy and reduce the role of the Stave. In conjunction with the stabilization program, the Government instituted a far-reaching liberalization of goods and factor markets to increase reliance on the price system for the allocation of resources and encourage greater private sector participation in the economy. These policies were highly successful iu stabilizing the economy and have been maintained by the Paz Zamora administration.!' Today, there are few remaining distortions
4/ For a full account of the stabilization program see: Jeffrey Sachs, "The Bolivian Hyperinflation and Stabilization", American Economic Review, Vol 77, 1987; and Juan A. Morales "Inflation and Stabilization in Bolivia", in M. Bruno, G. di Tella, R. Dornbusch and S. Fischer, eds, Inflation Stabilization: The Ex erience of Israel. Argentina. Brazil. Bolivia. and Mexico, MIT Press, Cambridge, MA, 1988. -5-
in the econowy.11 The Governmentno longerintervenes in prico-setting. Import tariffs are set at * uniform 102 rate, exceptfor capital goods vhich are subject to a S tariff. To compensateexporters for the small distortion introduced by import tariffs, there is a duty drawback system that crodits finished goods' exports with 42 of their FOB value, and primary non- traditional commoditieswith 22 of the FOB value.
Atricultur- in the Aftormath of the NEP
1.11 The NEP's economic reform. gave rise to groat expectationsand hope of a renewed era of growth and developmentfor Bolivia. Unfortunately,the supply response of a vast part of the agriculturalsector (i.eo, the traditional sector) to these policies has been slower than may have been anticipated. However, a close look at the structural charazteristicsof smallholderagriculture (the largest sector in Bolivian agriculture)suggest that expectationsregarding the impact of the NEP were largely ill-founded because:
(a) in Bolivia, the most importantfactor hampering the development of smallholderagriculture has not been excessive Government intervention,but the State's failure to supply much needed public goods such as education, adequate land titling services, technology generation and transfer, and investmentsin rural infrastructure. While the NEP had a very important role in eliminatingdistortions and restoring much needed stability to the economy, these policies should be viewed as complementar to the much needed supply of the above-mentionedpublic goods (these complementaryactions have only recently started to take place); and
(b) the potential impact of eliminatingdistortions in agriculture,and the efficiencygains from the ensuing reallocationof resourceswas exaggerated. On the one hand, the direct impact of the liberalizationof labor and capital markets on the large traditionalsector could only have been limited, since that sector has not had access to formal capital markLts and employs mostly family labor. But more importantly,the trade liberalization process should not have been expected to alter significantlymuch of the economy's long-term relative price structure because: (i) the most importantunderlying factors in the determinationof the real exchange rate (e.g., the internationalprices of primary export commodities,foreign capital inflows, end the emergence of coca/cocaineindustry) have little relation with the official commercial policy; (ii) the official commercial policy has never been very important in Bolivia where the economy has always been quite open as a result of widespread contraband activities;and (iii) previous price interventionsin agriculturewere rarely enforced.
5/ Quantitative import restrictionsare still in place for sugar, flour and edible oils. -6-
Relltive Prices
1.12 While the NEP did correct the relative price distortionsthat resulted from the economic imbalances of the 1982-85 period, the longer-term relative price structure of the agriculturalsector was largely unaffected by the NEP. At the gaareaate level, the current real exchange rate (i.e., the relative price of traded and non-traded goods) is almost identical to that prevailing from 1978 to 1981, prior to the period of strong macroeconomic disequilibrium. The data also shows that the current relative price of agricultural comodities with respect to non-agricultural products is also similar to that prevailing during the years that preceded the hyperinflation process--especially when measured through the food component of the Consumer Price Index (Table 1.4).16
-ab1. 1.4 MtUL WGE PATS-M S'ACT 8RMTIV?,.11MS, 1080.90
fle Exlatmete BatS SEIood CitIt NfL k Von-thod CPI V74odf -§14908 : 00 -0 1:i0-:00 -::. : ;- : 9820 193 103 107: 1983. .240 110 204-: . I984 203 3 .- 09. 19855- - 147 .1-:019 1:::-82: -:: 1986 109 11
1988.ff.7 99 10 :.0.. 123.:.:*. : :
ai Estimateas: (Nominal:-aal. .xoag - a.Tna Cf)X0 Sourc :Hisaicaestimates: ba*e-d @t dataf fro UDAP a: IN. :-0000
1.13 The evolution of relative prices at the more desearezatelevel (within agriculture) indicates that the most important relative price changes that have taken place during the last decade do not seem to be a direct consequence of the NEP trade liberalizationprocess. The evolution of soybean's relative price has closely followed the evolution of the internationalprice of soybeans throughout this period, the eliminationof j/ While it is apparent that the relative price of agricultural coimmodtltes has decreased in the aftermath of the NEP, it is incorrect to infer--ass some studies have argued--thatthe NEP had a negative impact on the sector. Such studies fail to recognize that the increase in agriculture'srelative prices during the 1982-85 period was a short-term effect of the disequililbriumin the real exchange rate: as the parallel real exchange rate was inordinatelyhigh during the hyperin£1ation,so was the relative price of agricultural coimmodities which have a large component of tradable goods. -7- direct Government interventionsin the case of beef accounts for the decline in the relative price of beef, and the continuationof the sugar cartel (para. 5.10) explains the relative price increase of sugar with respect to other commodities. This tends to confirm the hypothesis that the impact of the trade liberalizationwas not as significantgiven the traditional relative openness of Bolivia's economy because of contraband,and that its effect on relative prices was overshadowedby commodity-specificfactors.
1.14 The most crucial effect of the NEP in the agriculturalhas been the restoration of economic stability. This stability has played a significant role in renewing the modern sector's demand for investmentand has refurbished its growth potential. This is evidenced by the positive developmentsthat have taken place in the Lowlands area since 1986; particularlythe growth of soybean production,which took place even at a time when internationalprices were relatively low and had been declining during the previous five years. Economic stability is an extremely importantprerequisite in promoting investment in the Lowlands. Because of that area's fertility, once the initial investment in land clearing is made, the farmer has to be very committed to maintaining its scale of production. Any reduction in production will immediatelytranslate to an almost complete loss of the capital invested in land clearing as weed infestationwill rapidly take over.
- ble 1.5: AGRICULTURALPiODUCTS SELECTD RELATIVEPICES, 1980ae9 g ------'(Ze4ex198041.1t00) - --
_____ ~B61f "Pbetiotta --:---- - VI;e Vaise - ats.- - i -- -hat*e---
1980-61 100;D. 100 10 1t01o - 982 # 11£9o-~~~~~9 10290 - t--:--20--o--S 1 125s 1-9-85-- - 99 90 - - 65 --- 94- 141l -- 1----X9866-- 64 92 41 -76 89 --X98>- 59 -59 - -70 4-61 115 1988 91 77 76 77 89-- - 98w 115 77 --- 76- -#1 -1-OA-
-'. Mua vItlsl aveag Sa',,''_rce -',, - 1_su ;V1.eDoestimates basaR XnRolett . * ortltv.o Agrpeto, >QrR@tW^ : . .. , .:...... ad oletn I o..tivo : . ..:. . . : --
C. Growth and Sources of Growth
1.15 Assessing the perform*nce of agriculture in Bolivia is especially difficult because of the unreliability of the existing data, the existence of a large illegal sector, and the strong short-termvariations in production that are brought about by changing weather conditions. However, all available data indicates that growth in the legal agriculturalsector throughout the past decade has been consistently sluggish. During 1980-90, legal agriculture grow at an average 1.11 per year, while the overall economy experienced a slightly negative growth rate. With an average rate of population growth of 2.8Z during the 1980-90 period, this implied that both agriculturaland total GDP per capita declined during the 1980.. In contrast to the modest growth - 8 - observed in agriculture'slegal sector, the production of coca has increased sharply during the past decade in response to increased internationaldemand for cocaine, contributingan estimated 61 of GDP in 1989.
Table 1.6: GROWTHRATES, 1980.90 (in percentage) 1980.90 1980-86 1986-90 ReElatered-GOP Agriculture 1.11 1.42 0.8O Total -0.1Z -1.62 2.8S crGs Value of Produetlon Stiulants ti 9.32kI 10.02 9.O2%I
sJ Comprises cocs, coffee, tea, and cocoa. - Cotresponddto the period1980-89. -C Vorre*pondoto the period1984-89. 1t29rce :-oltivUn cnttral Sankt MNS. Fssion estimates of CraswValue of ;Productionbased on datafrom MACA/UNDPIPAO Project BOL/S8J021.
1.16 The sluggish growth of legal agriculture is consistentwith the absence of technologicalchanges (especiallyin the traditionalsector), and the fact that the NEP reforms did not trigger a significantchange in relative prices (from a long-termperspective) that would imply efficiency gains in the allocation of resources. Accordingly,there has been a very moderate increase in resources--namelyland and labor--allocatedto legal agriculture,and little growth (Tables 1.6 and 1.7).
*Table.1.7AGRICULTURE'S SOURCES OF GROWT (inpercentake): AveramteAnnual Grogthr Rates -Ayarent PrOd_uctIvItyOaN! &f GDP labor Laud Labor Laud 19B0-89 1.40 .1.32 1.57 .0. 08 .0.17
At oatimatdat the dIfferente between the gromrth rates of agricultural GDP and factors of production In grsiculture.
foue st Ktmoon sattmatest based on MAC4 (land Use)*$ JAPE (employnent), lndw t::.z:.(CDP) data.- :
1.17 That efficiency in production has not improved can be assessed by comparing the rate of growth of output with that of land and labor. That comparison indicates that during the last decade the apparent productivityof both land and labor (measuredas the value added per unit of input) has - 9 -
remained basical3 unchanged over time (Tables 1.7 and 1.8).71 Accordingly, yields, with the exception of a few crops, have shown a stagnatingtrend (Table A.8).
Xijbg.j4 CROPVALO ADPGP PER NECTAR MD PERUNIT o0 LAMO,1980-89
2980 1984 1986 1988 1989 .Va* Uaddndier lTMd;i7 19.2 18.1 17.6 18.9 18.9 Valit aiddedpt* labor kJ 32.5 33.1 33.1 34.3 32.7
iin 1960lSQolivIaW* Piart3OOQ ha. :i, - i 1980 Souv".o pot '000 wor*rs. -Sii Missi£*o;e.timte*; based onH&ACA(land use), UDAPE (ecploAtenr), and 'UN (CDP) data.
D. Conclusions
1.18 The performance of the agriculturalsector during the past decade has been disappointing. Between 1980-90, legal agriculturegrew at an average 1.12 per year, and therefore, agriculturalGDP per capita declined during the 1980s. In contrast to the modest growth observed in agriculture'slegal sector, the production of coca has more than doubled during the past decade in response to increased internationaldemand for cocaine.
1.19 The limited growth that is taking place in the realm of legal agricultureis mostly centered around commercialmedium- and large-scale agriculture. This sector has seized the opportunitiespresented by a stable economy and has oriented most of its new investmentstoward export and--to a lesser degree--someimport-substitute commodities. On the other hand, the traditional smallholdersector continues to stagnate. It has not responded to the newly acquired economic stability,partly because its production is Seared to a dspressed domestic market, and also because the sector's structural problems severely limit its potential response to a more favorable economic environment.
Z/ The accuracy of these productivitymeasures could be affected by the unreliabilityof the officialdata. - 10 -
II LEGALTRADITIONAL AGRICULTURE IN THE HIGHLANDSAND VALLEYS
A. Background
Hlistor /
2.1 Historical accidents, inappropriateGovernment policies, and ethnic conflicts that have plagued Bolivia for centuries have led to th. stagnation of agriculture'straditional sector. Like most conquerors, the Spaniards, soon after their arrival in the Central Andes, appropriatedthe best farmlands on the coasts and valley. and pushed the indigenouspopulation to the more inhospitableHighlands. These lands had been favorite grazing grounds for llamas and alpacas, but had not been used for agriculturebecause of their low productivityand high climatic risks. Under those circumstances,the Highlands, which historicallyhad lacked a comparativeadvantage in agriculturalproduction, became the linchpin of Bolivia's subsistence agriculture.
The Political Economy of Government Interventions
2.2 The natural obstacle presented by the land's low quality was compounded by political and economic ones. Traditionallydependent on the mining sector as a source of fiscal revenues and foreign exchange, the Government largely ignored the agriculturalsector and directed few resources towards its development. This policy of neglect was politicallyfeasible given the smallholders'lack of political influence throughoutmost of Bolivia's history. In addition, the sector's institutionalframework has traditionally been very weak. Although the Ministry of Agriculture and Peasant Affairs has undergone more restructurings than any other ministry, it is still beset by operationaldifficulties. Those difficultiesare partly the result of its diffuse mandate which includes the politically loaded issues of the campesino,making MACA one of the most politicizedministries in Bolivia.
2.3 As a result of the above-mentionednatural constraintsand the absence of constructiveGovernment involvement,the agriculturalsector has lacked the underpinningsin both human and physical capital that facilitate development:a vast group of the population is still illiterate and suffers from health problems; many areas lack year-round trafficableroads; rural financial markets are underdeveloped;the absence of new production technologieshave left farmerswith limited opportunitiesto raise their productivityand income; and land tenure issues (lack of titling coupled with restrictionson land transactions)have discouraged investmentand the adoption of new technologies.
S/8ee M. de Franco, and R. Godoy, "Potato-LedGrowth: The Macroeconomic Impactof TechnologicalInnovations in Bolivia", LA3AG Working Paper. - 11 -
B. AtriculturalProduction and Productivity
The Geotra-hy and Structure of Production in the Hithlands 2.4 More than 40Z of Bolivia'.agricultural production comes from the Highlandsat altitudesranging from 3,500to 4,200moters. This regioncovers 30 millionha, comprisingmost of the area of the La Paz, Oruro and Potosi Department. The region's population is roughly 3.7 million, 502 of which liv- in rural areas,and derive part of their livelihood from agricultural activities.The zone'sagricultural potential is limitedby difficult climaticconditions which constraincrop alternativesto hardiervarieties of cereals, tubers, and forage. The growing season is short, and droughts, hailatormsand freezingtemperatures are common. As a resultof centuriesof cultivation,soils have lost their texture,are very low in organicmatter, and are highlysubject to erosionfrom wind and water. Accordingly,fertility levels are low. Landholdingsare generally small (more than 60Z of the farms in the La Paz, Oruro and Potosi Departmentshave a size equal or smaller than 5 ha), and tend to be smallest in the most productivenorthern areas close to Lake Titicaca (Table A.4). Overall, some 500,000 ha are cultivated annually of which only 36,000 ha have access to some form of irrigation (Table 2.5).
2.5 Most landholdinfsin the north comprise 2 to 5 ha. At all times part of the land is left fallow for 3 to 4 years to replenish fertility,while the land in use is also cultivatedfor 3 to 4 years. Each family typically cultivates 1 to 2 ha per year of cereal or tubers, a smaller area of quinoa, and some beans. There are also some plots of vegetables for the La Paz market, and, in a few cases, greenhousesto extend the season of production. Crop and livestock production is quite integrated. Most families own some cattle, pigs, poultry and sheep. Small ruminants are grazed mostly on common pasture land, where overgrazing is comon.
2.6 Smallholdersin the central region have holdings of 10 to 20 ha, of which about half is cultivatedeach year. Cultural practices are similar to those describedfor the north,growing primarily barley, potatoes and quinoa. However,because of lower and less reliablerainfall, yields are poorerand leos reliable than in the north. Farms in the south are even larger--20to 50 ha--ofwhich less than 502 is cultivatedeach year. The main cropsare quinas,potatoes and cereals--allhave low and unreliableyields. Becauseof the unreliabilityof crop production,livestock production (mainly cameloids and sheep)is an Importantcomponent of the farmer'sincome.
Th Geoargahyand Structureof Productionin the ValleYs 2.7 The valleyareas cover about 15 millionha locatedbetween the cordillra and escarpmentregions of the Departmentsof Cochabamba,Chuquisaca and Tarija. The region'spopulation is about2 million,602 of which live in ruralareas. There are two main types of valleys: (a) the "temnerate valleys", which le at 2,000 to 3,500m elevation,have mild temperatures, experience few frostsand receive300 to 800 mm of rainfall;and (b) the "humidtro2ical valleys" of the Yungasand the Chapare,which rangein altitudebetween 1,000and 3,000m, have warm temperaturesand rainfallof up to 5,000o. These agroclimzaticconditions allow productionof a wide variety of food crops,fruits, and vegetables.Except in the highestupper valleys, - 12 -
temperature.permit year round crop growth. The total annual cultivated area is about 360,000 ha, of which 85,000 ha are irrigated (Table 2.3).
1k IiJ. ?WftUM~AM OtWU1I*C=2 CIO"SYIT UIGGAYUC AlIAS 1910 *~.:. . . (as' of totalplaned Arles) * ; : , ~~~~~~~~~~~~~~~z.: .\ ...; l 284 5.4.1...... | ; ; : ;4k pse 8.31oe
-'.. --...... o ,: ,.,.t;22.. 0.81 1.62 .L;...... s
->>; ; 4~0.21 14.9 4.;315 ;;
18.02##9t189.88 t 14.12 ~t;OCoGQ$*s* t Dsptmts of Ch±tsaxa 02 babinba -t ?ia..0 .. u.- ss vAc.:+5tttta* ..: 8~-o0h'L1tot 18d=s2bA%4
2.8 Farming practices in the central and upoer areas of the temperate valley. are quite similar (althoughsomewhat more,advanced) to those in the Highlands. Wheat, barley, potatoes and maize ar4 the main crops. Broad beans are also important in many areas and alfalfa is grown where there is irrigation or access to groundwater. As in the Highlands, croplands are cultivated for 3 to 4 years in succession and then left fallow for a similar period. Erosion problems are more prevalent than in the Highlands because: (1) over 701 of farmers practice vertical cultivationin the hillsides--as opposed to following the contour. This unsound practice leads to soil- moisturelose and excessivewater run-off,causing erosion; and (ii)most familieskeep flocksof 20 to 40 sheep and goatswhich are grazedin adjacent commonpasture lands. This aggravatesthe run-offfrom the upper slopesand cause damageto downstreamagricultural areas. 2.9 The more equableclimate and even topographyof the tem2erate- vallav floorsin Cochabamba,Chuquisaca and Tarijaallow for a wide varietyof crop and livestockproduction activities. Unlike the Highlands and upper valley*reos, the intensityof land use is high. A large portionof each farm is sown to maize,grain or fodder. Fruit and vegetableproduction is important, especially for farms close to the main markets, and forage productionis an importantactivity in areaswith accessto irrigation.The humid conditionsof the tronicalvallevs permit production of a range of annualand perennialcrops. In the slopinglands of the upper catchments,the most comon crops are coca, cocoa, coffee, citrus, bananas, plantain and papaya. Maize and cassavaare also grown,separately or as an intercrop. Rice, maize and cassavaare also importantcrops in the lower tropical valleys. - 13 -
The Current State of AsriculturalTechnolory and Productivity
2.10 Crop technology continues to be very rudimentaryas the use of improved seeds and other purchased yield-enhancinginputs is very low. According to recent surveys carried out by MACA-USAID, only 12S of farmers in the Highlands and Andean Valleys used improved seods, and les than 10% used chemical fertilizers and pesticides--oftenwith poor applicationmethods. The most important contributingfactor to this state of affairs has been the failure of research institutionsto successfullydevelop improved technologies. This problem has been compoundedby the lack verification of the few available new technologiesto different agroclimaticzones. Therefore,most improved technologieshave only had some applicabilityin locations close to the research stations,and a few other sites where verificationhas been completed.
2.11 Potato productionmethods have been stagnant since the 1960s when the currently used improved varieties were introduced,and yields have been declining for at least a decade as the better land has been shifted to other uses, mainly maize. While some improved varieties have been developed for the Highlands and valleys (Table A.12), acceptance has been low and the prospects of generalized adoption are bleak since the economic advantage of adopting the new technologiesis marginal (i.e., the increase in productivity--yieldscan easily reach 12 ton/ha in some areas--is almost equally matched by increased production costs).
2.12 Maize is the only crop where yields have improved in the past twenty years, mainly in response to the adoption of disease- and pest- resistantvarieties developed at the Centro de InvestinacionFitoRenetica ^irumajnl(CIFP) which, unlike potatoes' new var4eties,have proven profitable (surveys carried at the Cochabamba valley indicate that unit production costs have decreased by approximately301).
2.13 Research programs on wheat, mostly carried-outby the Instituto Bolivisno de Tecnolomia AaroDecuaria (IBTA) in the San Benito station in Cochabamba, have not been successful. The varieties developed by IBTA have not been adopted because they were dwarf types producing little straw for livestock,and its soft grain was ill-suitedfor Bolivia's commercialmills. Accordingly,yields have stagnated in the past twenty years. - 14 -
: V L241 YRIEDS o S=eCTED CROPSIN THE HIGHLANDSAND VALIZYS,1962-88 (ton/ha)
1962-80,7 1980 1982 1984 1986 1988
Matte IA1.S.12 1.19 1.15 1.40 1.33 PotZtoe 5.10 4.30 5.20 3.77 4.60 5.34 *h4*t 0.67 0.51 0.69 0.69 0.73 0.62 Barley 0.87 0.61 0.69 0.82 0.79 0.78 0.61 0.57 0.63 0.50 0.48 0.45
Nalie 1.31 1.41 1.58 1.36 1.45 1.44 P4tato.e 5.70 4.98 6.00 5.10 5.14 6.04 Wheat 0.67 0.57 0.68 0.81 0.73 0.78
jf Nattonaly1ild of produscton. VWYil4 of productionin the Departmentsof La Paz, Oruro and Potosi. ;,I Y*Ild of production in the Departmenat of Chuquisaca, Cochabamba and Tarija.
2.14 The modest research and extension efforts that have been done for most other crops have also had little or no success. In the Highlands, even though almost all barley is grown using rust-resistant improved varieties developed since the late 1970s, cultural practices have changed little and yields have not increased. Quinoa research at Patacamayahas developed four new large-grained-varietiesand developed processing methods, however, these have not yet been adopted. Meanwhile, yields of traditional varieties have been declining. Improved forage varieties of barley, oats, triticale, and alfalfa along with some dairy development programs have lead to increases in forage area and production,partly utilizing land which otherwisewould have remained fallow. Forage yields have also increased in the valley areas. In this area there have also been some technologicalprogress for fruit crops, vines, and vegetables. However, there has been very little success in translatingthese research efforts into extension recommendations,and yields have remained stagnant.
AgriculturalExport Potential
2.15 Notwithstandingthe severe restrictionsimposed by nature on the agriculturalpotential of the Highlands and the high-altitudevalley areas, thore are some products which--if appropriatelydeveloped--may have export potential and can thereby contribute to increase the incomes of these very poor farmers. In the Highlands such is the case of auinoa, leather products, and llama and alRaca fibers. The lower valley areas (includingthe Yungas) are one of the most productive agriculturalareas of Bolivia, and several products could potentiallybe competitivein internationalmarkets; as evidenced by the developmentof the flower industry around the city of Cochabamba in recent years.
2.16 To help realize the above-mentionedpotential, the Government of Bolivia, with IDA assistance, is implementingan Aaro-Exoort Development - 15 -
frostramVwith the objective of expanding production of non-traditional export. Within the program's activities three private export-oriented enterpries will be set in these areas to develop the exports of angora wool, cochineal and carmine, and rosoe. In addition, during 1992-96, research will be carried out to determine the export potential (and the ensuing establishmentof new enterprises)for llama/alpacawool, silk, quinoa, leather, garlic, and tropical fruits.
C. Underlying Factors of the Current AgriculturalProductivity
Technologv Generation
2.17 Given the Government'straditional neglect towards the sector, agriculturalresearch activitiesin Bolivia have always been very limited and have suffered from lack of resources and an inadequatecoordination among the different agencies involved in research. In 1989, the total direct public sector support to research (excludingforeign assistance)was less than US$2 million per year. Foreign aid supported the agriculturalresearch budget with an additional US$3 million. Considering that agriculturalGDP was roughly US$950 million, the total funds destined to research amounted to less than 0.6Z of agriculture'sGDP. The World Bank, AgriculturalResearch Sector Policy Paper (1981) suggests that 1-2S of agriculturalGDP be invested in research.
2.18 For the most part, agriculturalresearch services are carried out by: (i) the Instituto Bolivianode TecnoloaiaAaropecuaria, the national agriculturalresearch agency, which is responsiblefor research on all the country's geographic area other than the Santa Cruz Deparcment; (ii) the Centro de InvestiaacionesPitoeeneticas de Pairumani which carries out research on maize, grain legumes and wheat with support from private foundations;(iii) the Instituto Boliviano de Tecnoloaia Nuclear (IBTEN)which is a Government agency with limited funding that has recently concentratedits efforts on agriculture in the Highlands; (iv) the Centro de Investigacion Agricola Tronical (CIAT) in the Departmentof Santa Cruz; and (v) a large number of NGOs and special programs financed with external funds.
2.19 Coordinationbetween different research agencies has been limited and, until recently, there was no single entity charged with setting national research priorities and coordinatingthe efforts of national research agencies. As a result, the limited funds available for research have been dissipated throughout a series of highly fragmented efforts with no appreciable results. There still does not exist an adequate inventory of the proven technology available for the many agroclimaticregions, nor estimates of numbers of producers to whom this technologycan be applied.
2.20 The above-mentionedadministrative shortcomings and absence of Government leadership in agriculturalresearch are being addressed (with the support of the World Bank-financedAgricultural Technology Development Project) through establishmentof a Conselo Nacional de Investiaacionesv
9/ The program also seeks the developmentof non-traditionalexports in the Lowlands. _ 16 -
Extension Agropecuaria (CNIEA). This Government institution,already established,will determine researchpriorities, filter proposals for research for implementationwith *xternal resources, and will allocate research responsibilitiesbetween the different agencies. In accordancewith the above rationalization,the responsibilitiesof IBTA have been narrowed to include only agriculturalresearch, production of basic seed for improved varieties, and pre-extension. To ensure that research activitieswill be carried out effectively and will not surpass IBTA's capabilities,all research will initially concentrateon six priority commodity groups: potatoes,wheat (small grains), quinoa, maize, legumes and livestock (sheep and cameloids).
Technoloal Transfer
2.21 Although until very recently IBTA had responsibilityfor extension services, the main extension efforts have been carried out by the public sector's Reaional DevelopmentCorporations (RDCs) and a myriad of NGOs. According to a study carried out by FAO/MACA, there are more than 150 NGOs concernedwith agriculturaldevelopment, mainly extension activities. Most of the efforts of the NGOs and other agencies have been poorly coordinated,with farmers often times receiving conflicting advice and recommendationsfrom the different agencies.
2.22 The number of personnel working on extension and the number of farm households reached is unknown. Estimates in 1987 indicated that there were some 1,300 extension agents providing regular service to 100,000 to 150,000 farm families. Since 1986 however, there has been a decline in farmer participationwith the NGOs, and IBTA has discontinuedits services (which allegedly reached about 20,000 farmers in the early 1980s). According to mission estimates, there are currently 80 to 90 NGOs with 500 to 600 technical staff providing services to 90,000 households. According to surveys carried out at Cochabamba, the NGO programs generally do not reach the poorest farmers.
2.23 The provision of extension service by NGOs has certain advantages and disadvantages. Compared with government institutions,NGOs have more flexibilityand are able to work closely with smallholders,jointly designing and implementingprograms which respond to their needs, and in many cases they are concernedwith importantcomplementary activities such as education, public health and water supplies. However, their programs frequently lack clear objectives and contain a mix of activities which bear little relation to well-chosen priorities,and are poorly linked to the research centers.
2.24 Consideringthat more than US$10 million are channeled each year to agriculturalextension (about twice the amount of resources destined to research), and the number of personnel involved, it is a matter of concern that littlo progress has been recorded to date. The absence of a strong public sector extension institutionand the prevalence of a decentralized group of NGOs has ultimately resulted in a very inefficientextension system.
Land Tenure
2.25 The current land tenure situation in the Highlands and valleys is the outcome of the agrarian reform process initiated in 1953, which is considered the source of one of the most important political, social and - 17 - economic changes to have taken place in Bolivia'smodern history. Through this reform, all large landholdingswere divided into small parcels that were allocated to the peasante that had traditionallylived and worked in these areas. In broad terms, the Agrarian Reform Law provides that all land, underground geological deposits, and bodies of water within the national boundaries belong to the Bolivian nation. The State can allocate (but not sell) land and issue private titles to those working the land, or willing to "improve" it (e.g., invest in land clearing, land delimitationand the like). The philosophy of the reform was largely based on eauitv considerationsand, as such, special measures were taken to ensure that the unequal distribution of land that had prevailed before the reform could not re-emerge. The law prohibits rental contracts, and land distributedduring the reform cannot be sold without previous authorizationfrom the Conse1o Nacional de Reforma ARraria (CNRA).
2.26 The result of the restrictive legislationon land transactionsis that, even when smallholdershave adequate titling,'0/the extent of their propertv rights are severely limited. The establishmentof well-defined property rights that are transferableis important for both short- and long- term efficiency considerations. In the short term, titling of land encourages on-farm investment,and creates the potential for a better-functioningrural credit market. Over the longer term, the major benefit from improving property rights is to facilitate the developmentof appropriatelysized economic units in response to changing technologiesand factor prices. This can best be accomplishedby allowing farmers to buy from or sell to others, or rent.
2.27 The prevailing land tenure situationhas been an important constraint to the developmentof agriculture. Given the unfavorable climatic and soil conditions,and the high transactioncosts inherent to a small-farm structure with low-educatedfarmers living in a mountainous region, it is very likely that relatively larger-sizefarms would have a much better chance of adjusting the output-mix,screening the relevant technology,managing the region's high yield-risks,and lowering the transactioncosts inherent in credit and marketing activities. However, the existing legislation impedes the formation of such farms. This problem was already identified in the preparation of the Agro-ExportDevelopment Program, which indicated that in the lower valleys, because of the small size of most farms, farmers continued to produce (under a subsistence-agriculture-pattern)low-risk, low-value varieties of cereals and tubers even though it was apparent that the quality of the land and existing market opportunitieswould allow for a more efficient output-mix.
2.28 To correct the problems that arise from the current land tenure/titlingsituation, the Ministry of Agriculturehas prepared a draft legislationon a new Agrarian Law. The proposed law calls for: (i) eliminationof restrictionsto land sales, rentals and sharecropping; (ii) legal protection to land of any size, and all-we a regrouping of very small parcels by the use of market mechanisms; (iii) a reorganizationof the
IO/ Titling procedures are still cumbersomeand inefficient. At CNRA there are an estimated 300,000 titles waiting to be issued, although all the relevant paperwork has been completed. - 19 -
2.31 As in the case of fertilizers,the smallholders'low adoption of improved seeds has mainly occurrod because of the absence of proven profitable technologicalinnovations, and unsuccessfulextension efforts. While there has been a significantgrowth of seed production and certificationsince 1983, improved seeds still account for a very small fraction of the total seeds used in the Highlands and valleys. Estimates based on the sum of imported and domesticallyproduced certified seeds indicate that, in 1990, at best only 21 of the planted area of forage, barley and maize used certifies seeds, while maize production--thecrop where research efforts have been more successful-- used certified seeds in 91 of its planted area (Table A.11).
2.32 To promote the use of certified seeds,the Government has established--withfinancial assistance from the PL480 program--a National Seed Council (CNS) and seven regional councils responsiblefor establishingseed quality standards, supervising seed multiplicationand certification,and for promoting good quality seed. The CNS is also responsible for certifying the importationof seeds. More than 100 organizations (private,cooperative and various mixes of public and private) are currently operating under the supervisionof regional councils, and certified seeds of wheat, barley, oats, rice, maize, po,tatoes,soya, cotton, sunflower, beans, a wide range of forages and some vegetables are available on the market.
2.33 Use of agriculturalchemicals is believed to have doubled since the 1970s, largely due to growth in commercial crops in the lowlands. In the valleys most producers use fungicidesand/or herbicides on potato crops and some producers use herbicides on onion and wheat crops. In the Highlands less than 501 of producers use fungicides or herbicides on potato crops. Importers of agriculturalchemicals are supposedly required to register with MACA every three months and to make application for all imports. MACA produces lists of approved and banned chemicals. Becaus' these lists are revised only every five years, they contain approved chemicals already banned in the United States. To correct this deficiency,MACA has prepared a National Plant Health project for IDB financing, aimed at introducingrigid controls on imports and exports and strengtheningdiagnostic services.
2.34 The Directorateof Livestock in MACA is primarily concernedwith livestockpolicy and regulatory functions on animal health and genetic imorovement. Implementationof animal production and health programs in the Departments is the responsibilityof MACA, the RDCs, producer organizations and the milk processing plants. MACA's veterinary service has a fully equipped and well managed laboratory in Santa Cruz which provides diagnostic services for producers in all Departmentson payment of a fee. MACA provides vaccination and diagnostic services to date only in parts of Santa Cruz, Cochabamba and Beni. The Highland and Valley's Departmentseach have a simple diagnostic laboratory.
D. Proposed Stratetv to Increase AArliculturalProduction and Productivity
2.35 Inventorv of Technoloav The extent and applicabilityof existing agriculturaltechnology needs to be defined. For each of the country's regions, an inventory should be made of agriculturaltechnology aleeady verified and adjusted for smallholderacceptability. Areas with similar characteristicsto those which have already proven technology should be - 20 -
identified so that programs for verificationcan be planned and implemented. Similarly, areas for which no technology is available should be identified. For these, programs for research should be elaborated.
2.36 Research Focus. Following the strangtheningof research on the six aelected priority commodities (para. 2.20), emphasis should be given to the present and future role of these crops in farming systems. In particular attention should be paid to customary fallow to determine: (i) the role of fallow in restoring fertility; (ii) the dangers of erosion presented by the fallow of croplands; (iii) the cover crops for cash or livestock feeding which could replace fallowe in rotation; and (iv) the potential effect of fallow raplacementon traditionalcrops.
2.37 Improvementsin AgriculturalExtension. An inventoryof institutionsworking on generation and transfer of technology should be prepared. For areas of the countrywhere sufficient technology is available, the primary emphasis should be given to strengtheningthe efforts of research institutionsto disseminate informationto NGOs and others involved in extension. This could be achieved through the establishmentof regional councils for research and extensionwhich would strengthen the l]nkages between producers and the CNIEA. The councils may include representativesof IBTA, the agriculturalfaculty, RDCs, NGOs, producer organizations,and campesinos. Since much of the extension activities at village level would be carried out by NGOs, other functions of the councils may include the coordinationand or organizationof supporting activities such as technical and extension methodology training, developmentof extensionmaterial as well as follow up and evaluation of extension programs.
2.38 Livestock Development. High priority should be given to completing the coverage of animal health services with livestock owners accepting responsibilityfor service and material costs. The financialviability of improved pastures, fodder banks and fodder conservationshould be investigated as a means of reducing seasonal feed variations and improving cattle growth rates.
2.39 Revisions of the Aararian Reform Law. Underlying the smallholders'inability to adapt to new technologiesand varieties are the resource constraints imposed by the limited size of landholdings,the inability to use land as collateral for credit, and the inability of potentiallymore efficient farmers to consolidate land (throughpurchases or rentals) into larger, more efficient units. Agriculturalactivities would benefit from comDrehensiveProperty riahts. Limits on land sales or rentals should be greatly reduced and adequate land title services provided to those farmers who still do not have titles.
E. The Role and Potential of Irriaation in the Highlands and Valleys
Background
2.40 Irrigation in Bolivia is less developed than in other Andean countries,with only about 136,000ha, 1OZ of the cultivated area under irrigation,compared with about 351 in Chile and Peru, and 201 in Ecuador and Colombia. The main reasons have been the country's limited amount of public - 21 -
investmentin infrastructure,the prevalenceof emall farmerswith few resourcesto invest,and the ample availabilityof land in the *gricultural frontiersuitable for rainfedcultivation. Most of the irrigationschemes were constructedbefore this century,and are simpledirect river diversions with unlinedcanals and rudimentarydistribution systems. Water Resources
2.41 A comprehensive study of the country'swater resourceshas not yet boen undertaken,and 'nly partialstudies related to particularbasins exist. However,the Amazons.and La Plata basins,two of the three major basinsin the country,convey 1tugo volumes of precticallyuntapped resources to their tributaries,estimated at 280 and 36 billionm3/year respectively. These basin'smain rivershave permanentstreams to irrigatelarge areasof arid lowlands. In the AltiDlanobasin, locked between the two Andeanmountain chains, the volume of water is estimated at 1.6 billion m3/yea , and the available run-off is generally insufficient to support irrigation on all suitable land. Most of the river flows in the Highlands and valleys are of pluvial origin or melting snow, with substantially reduced volumes of water during the winter. Therefore, reliable irrigation in these areas requires the conotruction of storage dame or transfers between river basins and sub-basins.
Current Status and Performance of Irrigation
2.42 There are no reliable estimates of Bolivia's total irrigated area, since most of the existing irrigation schemes are small private communal systems established in peasant communities scattered in the Highlands and valleys. Most of these irrigated areas have only supplemental/seasonal irrigation from non-regulated surface-pressure sources. Irrigation is organized around three types of institu;ions: (i) public irrigation; (ii) mixed public/private systems; and (iii) private systems.
Public Irritation Districts
2.43 There are only two public districts currently under operation and management from MACA's regional directorates. Both were built during the 1950s and consist of medium size dams and earth canal networks for surface irrigation. The La Antostura system in the Cochabamba valley, still has 70X of its initial storage capacity of 100 million m3, and irrigates about 5,500 ha per year, serving approximately 5,000 farmers organized into a user's association. The Tacaeua system in Oruro irrigates about 4,000 ha with water from a 30 million m3 storage dam that currently operates at 801 of its :apacity.
2.44 The total irrigation efficiency of both systems is very low. In La Anaostura it is estimated at 201 to 301, and in Tacaaua it barely reaches 20SZI To a large extent these systems' efficiency problems &re a result of inadequate operation and maintenance (0 & M) practices. MACA contributes to the systems'0 & M by coveringa few operationalcosts and providing about 6 full time staff to each system. In La An2ostura, water users contribute to
14/ Adequateefficiency levels for gravitysystems range between401 and 601. - 22 -
i-.::i::i::::::f...... :~~~~~~~~~~~~~~~~~~~~~~~~~~~<.....
,a,':-....,5,...e..-.,.-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~...-- : - > '-
cotrbut riono 1a SS25/s InteTcau yte0aot90 sr cnr0t tote eytem'yssmitnnet labo,5 and0cotlueabu S2590/he
,er h tars*pnhsferpuof thes0at~puli sshemest user' asea~socaton2se
psystbem'admvinistrtatin coeraing thei cu mprent0 cotsanul rcequrleaeelo operation,and that farmers receive training in on-farm water management.
Mixed Private/PublicSystems
2.45 These sYStems account for 90S of the total irrigated area in the country. Private/publicschemes have become increasinglypopular over the past two decades following the implementationof many externallyfunded projects. The most importantmedium-sized projects have been: (i) the HuarLinascheme in La Paz (3,800 ha); (ii) the rehabilitationof the Punata- Tiracuesystem in Cochabamba(5,000 ha); and (iii)the Culbinasystem in Chuquisaca(1,000 ha).
2.46 However,Bolivia's most importantdevelopments in irrigationhave takenplace throughsmall irriaation orolecto, executed by severaldonor- supportedpublic and private institutions. These projects were mostly initiated during the 1980s and are estimated to involve up to 15,000 ha. Most of the works consistof rehabilitationand improvementof existing traditional sys*emsat a low cost,averaging US$500/ha (Table A.15). They are generally ba-ed on a participatoryapproach in whichpeasant commnunities contribute up to 50S of the investmentcosts with laborand localmaterials. Beneficiaries *re organizedinto users' commltt-eeo and take full r-sponsibilityfor the systems'0 & M. Accordingto theseprograms' evaluations,'5/ they have been quite successfuland well adaptedto the country'sneeds and possibilities.
15/ Mainlythe "Informodo la M'isiondo Evaluacionde Proyectosde DesarrolloAgropecuaric Dajo Riegoy Secano:PNUD, COTESU, Cooperacion holandesay HIEPLAN",1989. - 23 -
PrivateSystems
2.47 Traditionalsmall irrigation schemes account for moat private irrigation.They belongmainly to peasantcommnitisa and are oftenbased on very ancientsystems. Typicalschemes range from 10 ha to 500 ha, with 0.5 ha to 1 ha irrigatedper family. Bocauseof the systems'rudimentary design and inadequatewater managementpractices, irrigation efficiency is very low, estimatedat between102 to 20S. 0 & H is normallyorganized through a water authority(Juez de Aiuas)or a users'comittee. CurrentInstitutional and PolicyFramework
2.48 The institutionalframework for irrigationdevelopment is extremely weak. There is no high levelcentral authority, nor a publicentity in charge of overaosingthe sector'sdevelopment. A sub-divisionof MACA is, in principle,responsible for water and soil resources,but it is powerless, poorlystaffed, and is barelycapable of supervisingthe performanceof the two publicdistricts. In fact,most of the on-goingprojects and programsin the sectorhave been promotedby donorsand externaldevelopment agencies. To improvethe coordinationof the differentindependent efforts, an ad hoc inter-institutionalcommittee has been set up, with the participationof MACA, donors,NGOs, and internationaldevelopment agencies.
2.49 Water leaislationhardly exists, as thereis no specificwscer use code. A proposedlaw is currentlyunder consideration in the Chamberof Deputies. This law appropriatelyincludes definitions concerning water-rights and concessions,but failsto legislateon waterusers' organizations, public investmentcost-recovery mechanisms, and the like. By the same token, soctoral oolicies concerningpublic investmentpriorities, water charges and cost-recoverycriteria, resource conservation measures, and othertopics relatedto irrigationdevelopment are totallymissing.
F. The Potentialfor IrriaationDevelooment/ 1
2.50 The biggestpotential for immediateirrigation development lies in the improvementand expansionof existingsmall-scale irrigation schemes. It is estimatedthat 5OZ of the existingsystems, representing some 30,000ha, couldbe improvedor expanded. Accordingto MACA estimates,ta large numberof simple,new, small-scaleschemes could be constructed,covering an additional30,000 ha. The currentpace of developmentof small-scale irrigationbarely reaches 3,000 ha per year.
2.51 In the HIishland,regardless of water availability,cultivation can only take place duringthe summer. Therofore,irrigation cannot increase croppingintensities and its moat imnortantrole is to ensurecron arowthin drouahtyears or dry 2-riods. Irrigationcan also increasethe carrying
16/ The discussionin this sectiondoes not includethe irrigationpotential in the Lowlands. Whilethere are amplewater resourcesin most of that area (para.2.38), weather conditions and ampleland availabilitymake land-intensiveagriculture profitable and, therefore,irrigation is not profitable.
AZI "Plande Aprovcchamientode RecursooHidricos para Riego",MACA, 1990. - 24 -
cepacity of cultivatedpastures (mainly alfalfa),thereby reducing overgrazing on traditionalpastures, and in some areas is highly valued as it allows production of more lucrativecrops--such as vegetables.
2.52 In the Highlands, the economic loss of droughts (of which there is at least one every five yearv, is equivalentto at least US$50/ha per year. 1 Therefore, as a rule of thumb, investmentsof up to U$500/ha could be justified on these grounds alone. This estimate does not consider the additionalbenefits representedby: (i) the farmer's utility increase because of a smoother income pattern (especiallygiven the farmers' restrictedaccess to rural financialmarkets); (ii) the increasedyields possible through better water availabilityand the associatedvarietal and agronomic improvementsthat then can be introduced for even greater benefit; and (iii) the possibility of producing some higher value crops. Given that the investmentcosts of most existing small-scalerehabilitation projects, and of new projects are close to the US$500/ha range (Table A.15), the developmentof small irrigationschemes soems profitable--evenwhen only the pecuniary benefits of avoiding the losses caused by droughts are taken into account.
2.53 Unlike the Highlands, irrigationsome of the valley areas have considerablemore potential since permanent irrigationallows double and even triple cropping, as well as much valued flexibilityto adapt harvesting periods. Accordingly,there is a wide range of potential benefits accruing to water availabilitythat varies from about US$110/ha per year (double cropping of maize) to up to US$2,000/haper year (Table A.14). These rough estimates could justify an ample range of investment6s However, in several valleys there is great competitionfor water resources among alternativeuses. Therefore, adequate considerationof the potential for alternative--to irrigation--usesshould be conducted before promoting irrigation investments in these areas.
G. Proposed Strateav for Irrixation
2.54 Given the severe budgetary constraintsof Bolivia's public sector institutions,and their limited capacity to implement and operate irrigation systems, irrigationdevelopment should continue to be based on small private or mixed public-privatesystems, with users assuming full responsibilityfor 0 & M costs. While the role of the public sector in irrigationis bound to remain secondary,MACA's planning department,provided it acquires some technical assistance,should assume a stronger role to help irrigation developmentby carrying out the followingtasks: (i) an inventory of existing studies on water resource availability. Eventuallya comprehensivestudy of the country'swater resources should be conducted; (ii) an inventoryof existing irrigation schemes and current programs and an evaluationof the most important types of schemes and of the activitiesof representative implementingagencies. This informationwould allow in the design of new projects by learning from the experienceof other projects; and (iii) in line with the above-mentionedevaluation of existing schemes, provide suggested
Jft/ Based on the differencein net income (US$252)between a normal year and a drought year of one hectare of potatoes (Table A.13). 0 & M costs have not been taken into account. - 25 -
guidelines for the definition of priority criteria and project-selection parameters for future investmentprojects. This informationshould be channeled through the existing inter-institutionalcommittee (para. 2.48), enlarged with the participationof relevant RDCs. This committee should be maintained and could be instrumentalto promote and organize coordination among the numerous executing agencies. This institutionalframework would allow the continuationof a decentralizedapproach to project implementation, which has proved to be efficient. In some selected cases, to bolster the pace of irrigation development,public funds could be allocated to co-finance planning, constructionand rehabilitationprojects.
H. The Rural PoDulation'sIncome and Migration Patterns
2.55 The low productivityand stagnation of the tr'4itionalsector has had strong implicationson welfare; even tb3ugh agriculture is not the only source of income for most families living in these areas.-L9According to the 1976 census, all smallholderfarmers were either "very poor" or "extremely poor",20/and over 95% of the country's "extremelypoor" lived in rural areas. While these figures probably overestimatethe degree of poverty because consumptionof own-productionwas not taken into account, there is no question that the worst cases of poverty in Bolivia are concentratedin rural areas.
2.56 Although informationon rural incomes is scant and in many cases outdated, the available informationpoints to an average family income in the Highlands and valley areas in the range of US$600 to U$1,000 per year. In 1989, agriculturalwages in these areas ranged from US$2.20 to US$3 per day.
2.57 Migration has been the most prevalentmechanism to cope with the limited economic opportunitiesof agriculture'straditional sector. From the 1950s until now, the Departmentsof Oruro, Potosi and Chuquisaca,heavily dependent on mining and agriculture,have consistentlyhad the country's highest negative net migration rate. While migration from those areas has been consistent throughout the years, the patterns of the migratory movements have changed, particularlyin the last 10 years. Initially, the cities of La Paz and Santa Cruz were the recipients of most immigrants,followed in importance by the Lowland Departments of Santa Cruz, Beni and Pando (Table 2.4). These patterns have since changed with the upsurge of the cocalcocaineindustry in the Chapare. The Department of Cochabamba (where the Chapare is located),which until the late 1970s had a negative net migration rate, is now the highest recipient of immigrants,90% ot which come from the
19/ In 1978, about 40S of a Highland's rural family income came from off- own-farm activities (some of this income may have still originated in the agriculture sector as hired labor either in the region or as migratory labor in other regions). In the more fertile valley areas, off-own-farmincome accounted for roughly 20Z of total family income.
20/ The "very poor" are defined as a those householdswhose total income was not enough to cover 80% of the basic food basket (as defined by the InternationalLabor Office, ILO). The "extremelypoor" are those whose income is not enough to cover 302 of the basic food basket. - 26 -
Departmentsof Oruro and Potosi (whose economy has been badly hit by the demise of the mining industry).
s~g44 AOR1OGRIULTURALVGES ZR $EC RURALAMSA, 1980-89 ;wag par daywvtbiout food) :it s U 4omo1980 in US8 :1980 . . .1987 91989 :ba.v.et) (Feb) (rob)
ie11syof CX*cluibsa =60 77 70 2.8 XoSth Ceztp4.ac 45 64 60 2.4 UotbAtit Biblnd* . 60 90 75 3.0 :. . 1wi*t;HaXkl. QWi) 45 S0 55 2.2 5 s *oIoXiatitoatezia 75 90 79 3.1 l8 Snteerated area 85 103 100 4.0 . :8s . . 70 85 80 3.2
;U :; AO _.1g .4tIdentification Conaral (1989).
-~, ' 2 WOLUO1N: 0o uZT RMA ION BY DEPARTS
::*: M, . .. _ .~. .ae iftte--rrli^0". i96s-88 LS.eloM Himrrcatto Raeee pl s; *: : - ~rat-a, .I 1976 1986 <~ad. : 8:#00 4.45. . . 19.4 6.1
VAft .- ::: -: 4,100 1.94 .. 2.9 *-4*|ac *,700 --O.3 3.3 0.9 :an1 :.;;::;: *,1004lli -.2 13*3 -7.6 -.-Sf3. -1.4 -9.0 -9.0 -1900:.-.:X . -4.9 . -7. -3.2 -38,500 .6. . -11.1 -18.2
.,j :...ti wIk*te?4tOnt.te * . .Rt milratien , * 100 : : ;.opulcto bo.+: Populat$on year ~ U1.'.%~act ate-ib"a. I tutorn*, J. RMtgrac.onmstuat,aa etlantee 10::. .atual .46 :41976w%Ls P'a, sdn; tLcuestaNaclo0nA 4d - 27 -
I. Conclusions
2.58 The pr-ctice of agriculturein the Highlands and Andean valleys is characterizedby very difficult conditionsthat severely limit the productive potential of many of these areas. In that context, it is not surprising that poverty is the main characteristicof its agricultural-basedpeasant economy. However, there is a wide range of Governmentactions that could havy been undertaken to alleviate the overall levels of poverty in the region.
2.59 Government involvementin agriculturehas mainly come about as a resultof uncoordinatedactivities taken by foreign aid agencies and it continues to be inefficient, lacking in continuity and intensity. This has led to agriculture'sstagnation, primarily through the failure of research and extension efforts. Fortunately,the Governmenthas started to address this important issue and has taken a leadershiprole in the definition of research areas. Greater efforts are now needed to ensure that research results are disseminatedto the NGOs and others involved in extension efforts.
2.60 Complementaryto the needed developmentsin research and extension activities,the current irrigationstrategy based on small private systems should continue. Irrigation provides a unique opportunity to provide a low- risk, economically viable, and socially acceptable way of relieving poverty in the Highlands and parts of the valley areas. However, irrigation expansion in these areas is limited by the scarcity of water resources,and cannot be expected to benefit more than an additional50,000 families in the future.
2.61 The Government'edelay in granting adequate land titles to farmers and the legal restrictionson land transactionshave impeded the formation of potentiallymore efficient larger-sizedfarms, and have discouragedon-farm investmentand the developmentof rural financialmarkets. Legal restrictions to land transactions should be greatly reduced and land titling services improvod.
III *URAL FINANCIAL MARKETS AND THE DEVELOPMENTOF SMALLHOLDERAGRICULTURE
3.1 In the past 30 years, large amounts of money have been spent on rural credit programs and the development of a formal rural financial market (FUM). Deopite this, most poor peoplein rural areas lack dependable access to formal financial servies, especiallydeposit facilities. Bolivia's PRPM has therefore failed in its most fundamentaltask: to promote developmentby providing poor farmers with an efficientmechanim through which they can channeltheir options regarding consumption,savings and investment---arole that only an efficientfinancial market can play.
A. The Structure of the Formal Rural Financial Market
Institutional Makeu, of the PrM
3.2 The structureof Bolivia's FRIM has broadened substantiallysince the opening of the Bonco Atricola de Bolivia (BAB) in 1942. BAB's preeminence as basicallythe only institutionserving rural areas,started to change in - 28 -
1967 when the Government required all banks to make 702 of their loans for productive purposes. Over the next few years, the commercial banks were further drawn into farm lending when a number of concessionaryrediscount lines were established in the Banco Central de Bolivia (BCB) to provide funds for various targeted groups in rural areas. In the 1970. a few cooDeratives and credit unions also became involvedwith farm lending. However, BAB continued to be the primary source of agriculturalloans until the early 1980s, making about 661 of all formal (and semi-formal)agricultural loans in 1981.
3.3 In the late 1970s and early 1980s, USAID started encouragingthe formationof alternativechannels for rural credit. The first of these was a mini-centralbank in the form of the PL-480 Executive Secretariatwhich has used the local currency generated by PL-480 activities in Bolivia to give grants or credit to a variety of intermediatecredit agencies that, in turn, on-lend in rural areas.L1
3.4 In the 1980s, a collage of NGOs increasinglyprovided a significant number of loans to poor people in rural areas. Most funds for NGO lending have come directly from one of the several foreign donors operating in the country. The terms and conditionson these loans have varied widely across organizations,none of the programs have a voluntar-ysavings component, and none of the NGOs are authorized to accept deposits. In many cases lending is part of a larger developmentprogram funded by donors.221
3.5 In 1989, the Povernment created the Peasant Development Fund (FDC) to further support the aevelopmentof smallholderagriculture. Among its functions, the FDC has been a vehicle for channellingvarious donor funding into loans for operators of small farms. In the first two years of operations, FDC acted as a second tier intermediaryand has done most of its lending through other organizations. By early 1991, FDC had provided roughly US$1 million for rural lending. However, the Government has recently decided to restrict FDC's participationin RPM to being as second tier intermediary; thus FDC's lending operations to farmerswill cease.
21/ On-lending agencies included private banks, the national credit union federation (PENACRE),farmers cooperatives,regional development corporations,the national savings and loan association (CACEN), and various NGOs.
22/ In 1990 the Ministry of Planning reported 100 rural developmentprojects funded by donors that disbursed funds. Many of these projects had major farm credit components. - 29 -
f f . . - . -. .. C . g .7t A. .fl
...... ?,. ., :: . - :.....j. 2 :~~~~~~~~~~~.,15*4~~~~ 3$ 29.: : 442a:: . -E. .
1 74.0 2a.5 VS~~~~~~~OX7x
...... LlI30 115R ~3~J ......
The Volume and Distributionof Formal Rural Loans
3.6 It is very difficult to obtain a clear picture of rural lending in Bolivia given the poor quality of the information.-L Nevertheless,two important features clearly stem from the available data:
(a) the relatively small rati^ of rural-credit-to-agriculturalGDP,L' which reflects the smallholders'limited access to formal financial services, even though they contribute to roughly 801 of the sector's GDP; and
(b) the substantialvariability in the flow of funds, a consequenceof the heavy reliance on donor funding. This has contributedto the high default rates, because borrowers,when facing undependable credit sources may well conclude that taking a one-time income
231 While BCB and the Superintendenciado Bancos publish year-end outstandingbalances (stock figures) on agriculturalloans made by the banking system, these figures include many loans that are not recoverable and also unknown amounts of long-term loans. As a result, these figures are not closely associatedwith more useful flow figures (the value of new loans) made each year for agricultural purposes. Moreover, since a substantial amount of rural lending is done through agencies that are not supervised by the Central Bank, the official figures are only partial measures of the resources destined to the agricultural sector by the 1RPM.
2&/ During the past decade this ratio averaged about 71, while in most other countries in Latin America these ratios exceed 20S and range up to over 50. - 30 -
transfer in the form of a loan default, is of more value than maintaining a good working relationshipwith the lender.
3.7 In Bolivia, as in most other countries, commercialbank loans to small farmers are very limited. High transactioncosts, lack of information on the borrower's creditworthiness,and farmers' inability to provide land as collateral,generally makes it unprofitablefor banks to service that sector. In Bolivia, all these considerationsare important. Geographicaldistances and lack of modern communicationssystems make transaction-and client- screening costs especially high. Moreover, land generally cannot be used as collateral either because the law prevents it (in the case of land adjudicated after the Agrarian Reform), or because of lack of adequate titling. Coercial banks, therefore,usually require urban property as collateral on agriculturalloans, precluding the access to credit to most smallholders. By contrast,most of the loans made by BAB, the NGOs and the FDC are made to groups of farmers under much less stringent collateral conditions.
3.8 It is likely that less than 50,000 small farmers are currently receiving loans from formal sources. That was the number of farmers estimated to have access to formal credit in 1986, and since then, BAB has drastically reduced its activities (it has reduced credit provision from almost 20,000 farmers in 1986 to about 3,000 in 1990). The smallholder'slimited access to formal credit contrasts sharply with that of the medium- and large-scale commercial farmers in the Lowlands. At the end of 1990, about 75% of the outstanding loans made by the private banking system for agriculturalpurposes had been received by commercial farmers in the Lowlands.
SmallholderAccess to Deposit Facilities
3.9 The access of rural people to formal deposit facilities is very limited, especially for the rural poor, i.oe, there are few institutionsthat are currently providing these services in rural areas. BAB has never offered deposit services, many of the rural credit unions are not operating,NGOs are not authorized to accept voluntary deposits, and commercial banks have few branches in rural areas. For all intents and purposes, FRFMs in Bolivia only service borrowers.
B. The Performanceof Rural Financial Markets
3.10 The rural credit policies applied in Bolivia's FRFM until the late 19809 were similar to those used in most other low income countries. Little attentionwas paid to the developmentof a sustainablefinancial infrastructurebecause it was thought that credit could be effec-ively targeted, that loans were a powerful instrument for promoting development, that credit subsidies could be directed to needy target groups, and that most farmers had a credit "need".' Research in Bolivia as well as elsewhere suggests this strategy was flawed, often did not yield the desired results,
25/ People may be poor and need additional income, but it is not clear if most poor people need credit. A loan is a two sided transaction. The lender extends a loan and the borrower accepts more debt. Seen in this light, it is not at all clear that most poor people need more debt. - 31 -
and usually resulted in FRFMs that were fragile, inefficient,and unable to reach a large percentageof the rural population.
Absence of Deposit Mobilization
3.11 The most significantflaw in the performanceof the FRFM is that, because of lack of deposit mobilizationefforts,. 1 it does not intermediate between surplus and deficit economic units in rural areas. A more balanced PRPM (io.e, one that provides both savings and lending services) would have mobilized at least some of these surpluses and allocated them to borrowers who faced cash constraintsand who had high return investmentalternatives available. This would have resulted in a more efficient allocationof resources, and increased output. In addition, the provision of deposit facilitieswould have allowed the PRPM to service a much larger number of rural households and firms than it has.
3.12 .The lopsided developmentof PRFMs has also underminedfinancial discipline and has had a negative impact on the PRFM' efficiency since the absence of deposit facilitiesdeprives the financial system from a good source of information. When deposit facilitiesare available,potential borrowers are able to establish their creditworthinessin the eyes of the lender through the disciplineof making deposits; this is the same disciplinethat is involved in :%naying loans--theability to defer consumption. Deposits allow potential bo-rowers to earn creditworthinessthrough self-selectionand thus reduce intermAiiaries'cost of acquiring informationneeded to make prudent lending decisions.
Loan Recovery Problems
3.13 Loan defaults have plagued PRFMs in Bolivia for some time. The most serious manifestationsof this are in BAB, which in 1990, made new loans for less than US$4 million, yet had outstandingbalances of nearly US$73 millionY"' While much less severe, loan recovery is also a nagging problem for commercialbanks and NGOs. Even in the most efficientlymanaged NGOs, it is not unusual for loan losses to amount to 102 of the outstanding loans per year in normal years, and much higher in bad agriculturalyears. Several of the commercialbanks experience loan defaults of 202 of their outstanding loans on agriculturalloans.
26/ This lack of deposit mobilizationefforts can partially be traced to the previous existence of concessionarydiscount lines in the BCB and direct concessionaryfunding of BAB and other rural lenders. Since lenders were able to obtain funds at much cheaper rates from these sources than they would have had to pay depositors, they never felt a need to provide deposit services. In addition, NGOs are still not authorized to mobilize deposits, and had no incentiveto seek authorizationbecause of the availabilityof cheap funds from donors.
ZZ/ A very large part of these balances are in loans that will likely never be recovered. - 32 -
3.14 While there are times when borrowershave legitimatereasons for not repaying their loans on time, the chronic loan default problem in Bolivia has been the result of: (i) loans used as rent-transfermechanisms; (ii) political loans; (iii) transitory credit programs and ebbs and flows in suppliesof formal loans that diminishedthe perceivedvalue of sustaining working relationshipswith lenders such as BAB (para. 3.6); and (iv) the existenceof targeted credit, often disbursed on a formula basis. This resulted in loan officers being more concerned about meeting lending targets than in making loans on the basis of creditworthiness.
Londina Costs
3.15 Providing financial services in rural areas, especiallyto low income people, is ixpensive. Proxies for these expenses (includingthe risk- premium) Are the relativelyhigh real interest rates charged on loans in informal markets which vary from 1001 to 2001 per year (para. 3.18). Only the transaction costs of providing loans-- for an efficient institution--would probably be about 31 per month.
3.16 Transaction costs in Bolivia are probably significantlyhigher than those any efficient institutionwould have because of market fragmentation. The EREM is full of small lending operations,with relativelyhigh overhead costs, that are not realizing either scope or scale economies in their lending. However, these costs are hidden by subsidies from various donors. The several second-storyfinancial facilitiesin the country further add to these costs.
Informal FinancialMarkets
3.17 In Bolivia, the banking system has traditionallyoffered a very limited scope of services to a very limited segment of the country's population--a significant proportion of which have been large farmers.2S' To this date, most of the country's small- and medium-sized firms of all economic activities and individualshave had to rely on the informal sector for financial services.-
3.18 While there is only fragmentaryevidence on the extent of informal financial activities in rural areas, available informationsuggests that a substantialnumber of people make regular use of informal finance and that a
28/ This has been largely the consequenceof the oligopolisticnature of the industry, and that, throughout a good part of its history, the banking industry--privateand public--didnot center its efforts in the business of financial intermediation,but rather, was the preferred channel through which interest groups were able to capture rents through access to subsidized credit, cheap dollars, and the like.
29/ In 1990, the entire private commercialbanking system in Bolivia made fewer than 60,000 loans, of which the biggest 2,500 loans accounted for 67Z of the total amount lent (see Zeitinger,C.P., "Bolivia Financial Sectors Study of Selected Non-Bank Financial Intermediaries",GTZ, La Paz, 1991). - 33 -
relatively large number of people extend informal loans.'°/There is also a substantialamount of informal finance associatedwith agriculturalproduct and input markets (particularlyto smallholdersin the Lowlands). It involves input merchants, truckers, and traders who provide short-term loans to farmers who, in turn, promise to sell their products to the lender.
C. Recent Financial Sector Reforms and Future Policy Options
3.19 As part of an overall program designed to increase the competitivenessand efficiency of the financial sector, the Bolivian Government began implementinga new strategy for Bolivia's financial sector in 19 8 5.'l1 This included gradually lifting interest rate controls, consolidatingdiscount lines in the BCB, raising the interest rates on these lines to market rates, reducing loan targeting,and creating a stronger and more independentSunerintendencia de Bancos. More recently,new legislation has allowed Casas Bancarias to be formed to provide more competitionto existing banks. These Casas are to be privately owned and have relatively low capital requirements(roughly US$1 million or US$0.5 million depending on the geographicalarea in which they are located). As part of these sweeping reforms, BAB will cease operations in 1991, and the Banco del Estado will cease its lending operations and will close several branches.
3.20 NotwithstandingBAB's closure and the reduction in the activities of the Banco del Estado, these reforms will most likely provide enhanced access to formal financial services to most sectors in the economy through the role of the Casas Bancarias. However, it is most likely that impact of these reforms on FRFM will be marginal. On the one hand, the demise of BAB will not have a significant effect since its operations had decreased dramaticallyin recent years. On the other, the problems that preclude the formal financial institutions'participation in the sector (para. 3.7) remain, and therefore it cannot be expected that in the short- to medium-term their presence in rural areas will increase. However, this does not imply that the reforms should have no effect on the rural poor. Informal lenders (basicallythose involved in agriculture'sproduction and marketing chain) are likely to benefit from enhanced access to formal credit, and through them, so will their clients.
3.21 The key emerging policy question is whether in the context of the financial sector liberalization,there is still a positive role for the State. Once such policy actions are identified,prioritizing their implementation should be consistentwith a sector developmentstrategy based on the following
30/ Research in urban areas suggests that many forms of informal finance have flourished since the inflationaryperiod--when formal finance was badly damaged. Research on rotating credit and savings associations, locally called pasanakus, showed that a relatively large percentage of the urban households participatedin these informal organizations,that their main motive for participatingwas to save (see Adams, D.L, and Canavesi,Marie, "RotatingSavings and Credit Associationsin Bolivia", Savings and Development,13 (1989).
31/ For a detailed account of this process see "Bolivia:Updating Economic Memorandum",The World Bank, August 1990. - 34 -
premises: (i) deposit mobilizationefforts are the key to the developmentof FRFH; (ii) private commercialbanks are extremely unlikely to serve rural areas. Efforts therefore should be centered in improving the performance of existing institutionsserving rural areas (e.g., cooperatives,some NGOs, and eventually,the Casas Bancarias) and; (iii) informal lending through the marketing-chaincan be a very good alternativeto FRFM for lending, and should be supported.
Policy Actions
3.22 A substantialpart cf the donor-promotedrural credit activities are currently taking place beyond or on the fringes of prudential control by monetary and banking authorities. As a result of that, some intermediaries, such as the NGOs, are not being allowed to mobilize deposits. Deposit mobilizationefforts and lending activities could receive a boost if semi- formal institutionsare adequatelyregulated. Once the Suoerintendencia's role in ragulating the Casas Bancarias has been successfullyestablished, and if the Caaas do not expand to serve rural areas, a more comDrehensivesystem of Drudential reaulationsof semi-formalfinancial intermediaries,that would include some smaller institutionsin rural areas could be put in place to promote deposit mobilizationefforts. These rural financial institutions should be allowed to maintain a smaller equity base than Casas Bancarias, grovided that their risk assets to equity ratio be maintained below internationallyacceot'L levels. Furthermore,eligible rural banks would be required to maintain (i) a sound and trustworthyadministration acceptable to the Sugerintendencia;(ii) a positive profitabilityin real terms; and (iii) an adequate liquidity position and prospects, by maintaining adequate policies to avoid maturity imbalancesbetween assets and liabilities.
3.23 Eliminate subsidized directed credit. Deposit mobilizationefforts Vill be curtailed as long as cooperatives,NGOs, and other lending institutionscontinue to have access to cheap funds. Access to inexpensive (when compared to the market interest rate) on-lendingfunds, promotes rent- seeking behavior and discourageslocal savings mobilization.
3.24 The Government should also sugDort the existing lending institutionsthrough technical assistance and trainina. Developing a program of technical assistanceand training for small rural financial intermediaries could be (partially)in the nature of a public good. While it could be possible for the different small financial intermediariesto organize and finance these activitieswithout Governmentintervention, it is likely that informationand organizationcosts prevent them from doing so.
3.25 Remove constraintsthat prevent the use of land as collateral. Given the nature of the Agrarian Law and the absence of adequate titling, farmland in Bolivia generally cannot be used as loan collateral. Under those circumstances,no private bank has been willing to attend the credit needs of small and medium farmerswhen no other collateralcan be offered to cover the involved credit risks. Crops are dif'icult to administer as collateral (except in cases of commodities like sugar where warrants have been a usual method applied), and most farmers generally do not have other assets for collateral. - 35 -
3.26 The Government should study ways of imnrovina access to formal loans by merchants. traders, and other marketing intermediarieswho, in turn, make informal loans in rural areas. This would capitalize on the accumulated informationthese merchants have about potential borrowers, further expand lending activities in the private sector, and expl^it economies of scale associatedwith combined credit and marketing ac. zities. All Government actions that will further increase the competitivenessof the banking industry will likely have this effect. The Government should also study the possibility of establishinglegislation that will facilitate the operation of bonded warehouses. Bonded warehouses can be a solution for the farmers' current inability to provide adequate collateral.A' Its existence could contribute to the developmentof both formal and informal RFM.
3.27 Government efforts to develop alternative (to land) forms of collateral should avoid the use of loan guaranteenroarams. These programs do not contribute to solve the constraintsfaced by lenders in rural areas (i.e., they do not make individualsmore creditworthy,they do not lower the lender's transactioncosts of making loans, and they do not improve loan repayment performance),and they usually require hefty subsidies to sustain them.
3.28 To further assist the Government of Bolivia in the developmentof a more concrete policy framework, the Bank is currently conducting a study on Bolivia's RPM that will be centered on the above-mentionedpolicy actions.
D. Conclusions
3.29 Almost fifty years after the creation of BAB, and although a vast amount of resources have been put into the developmentof a FRFM, this market continues to be small, inefficient,and contributes little to the improvement of the rural population'swelfare. This has been the result of a series of unfortunate financial policies, and the absence of prudential regulationsthat could have prevented the rent-seekingbehavior (for economic and/or political reasons) that has characterizedthis market.
3.30 Government policy in this area is at a crossroads. For years, the prevalent belief was that one of the best ways to help small farmerswas to provide them with cheap access to credit, and deposit mobilizationefforts were completely neglected. This approach precluded the rural poor from having an efficient instrument to channel their savings, and prevented the financial sector from performing its most important role--to be an efficient channel through which the resources are mobilized to their most profitable use. Moreover, many of the problems that beset lending activities (e.g., political interference,high costs in identifyingcreditworthy borrowers) could have been partially ameliorated if the FRFM would have had a deposit mobilization component.
32/ This is especially important since it is unlikely that in the short and medium term, either the land titling situation in Bolivia, or the legislation that prevents the use of land as collateralwill be modified. - 36 -
3.31 Governmentefforts should center on: (i) promoting deposit mobilization effortsl (il) providing technicalassistance to lending institutions;(iii) promoting both formal and informal lending by establishing mechanisms (and lifting restrictions)so farmers can offer collateral for their loans.
IV. THE COCA SUBSECTOR
A. The Characteristicsof Coca Production
4.1 Coca is a perennial bush which is best suited to the moist tropical forest zones of the eastern slopes of the Andes. It has been grown in Bolivia for a long time, having traditionallybeen used for chewing and brawing coca tea-. Historically,the traditionalgrowing area was the Yunga., in the Department of La Paz. However, since the 1960s, and increasinglyin the 1970. and 1980s, the cultivationof coca has expanded primarily in the more isolated Chapare region, in the Departmentof Cochabamba.-"
4.2 Growing coca has many advantages for the resource-poorfarmer. It has a long history in the Andean region and its cultivation is a matter of general knowledge. The germplasm is readily available, it grows over a wide range of soils and tolerates considerable soil acidity (a common feature of soils in the eastern slopes of the Andes), and it is very resistant to insects and diseases. Since it is a leaf crop, it is not susceptible to the climatic variation that affects grain crops and fruit trees which depend on pollination for their production. With minimal management it produces for many years. The fact that it is harvested several timas a year makes it an ideal cash crop. Post-harvest processing at the farm level is very simple; the leaves are sun-dried and can be stored in banana leaves for months without losing either volume or quality. These factors, together with its normally high profitability, make coca a very competitive crop relative to other alternatives.
4.3 In the traditionalgrowing areas, coca production is very often part of a mixed farming enterprisesystem where it is the cash crop amidst staples such as maize, beans and cassava; while in the Chapare it is usually grown as a monocrop enterprise. Traditionallyit was grown without the use of agrochemicals but in recent years there has been considerable technological innovation with the increased use of chemical herbicides and fertilizers. More than 30 of coca production currently takes place in the Chapare where
33/ It has been registered that as far back as 1826, the most important commodity in Bolivia's domestic trade was the coca leaf (see "La Economis de la Coca en Bolivia: Plaga o Salvacion", Informe Confidencial Ko 64. Mullar , Asociados, 1991)
34/ In 1980, coca's total cultivatedarea was about 23,000 ha. By 1985, the cultivated area had increased to at least 50,000 ha. - 37 -
yields, according to Government *atimates, surpass 2.5 ton/ha)0' Yields ,n the traditional growing area of the Yungas are estimated at roughly 1.0 ton/ha.
B. The Size and Importance of the Coca-CocaineIndustry
4.4 Bolivia contributesapproximately 30S of the world supply of dry coca leavso, and there is no doubt that the overall coca-cocaineindustry is significantboth in terms of value added and employment. However, because of the largely illegal nature of these activities,6 there are very inconclusivefigures of the magnitudes involved. The estimates are heavily based on ad-hoc assumptionsregarding yields, and technical conversion factors (from coca leaves to the more processedproducts), and vary widely across sources.
4,5 According to Government estimates,"/the industry'svalue added in 1989 was US$670 million; equivalent to 152 of GDP. Of these, roughly US$280 million was retained by factors of production in Bolivia (US$170 million to farmers). Therefore, the industry'sactual contributionto the economy wva cstimLted at 61 of GDP. These estimatesare based on very high yields of production (2.5 ton/ha) that imply an estimatedproduction of 139,300 ton of dry coca leaves for 1989. The same source estimated that in 1989 about 61,000 rural families (about 92 total rural families)derived at least part of their income from growing coca.
4.6 A more recent study (Muller y Asociados, on. cit.) estimates the industry's importanceunder different scenariosprovided by alternativeyield estimates. It concludes that in recent years, the industry'stotal annual income varied between US$300 to US$700 million, of which US$160-300 million (equivalentto 3.5Z to 61 of total GDP) remained in Bolivia as payment to domestic factors of production. Irrespectiveof the assumption on yields, the number of people involved in coca production is estimated at 122,000, and the number of people involved in the processing stage at about 85,000.
The Imnact of the Coca-CocaineIndustry on the Exchanee Rate
4.7 The impact of the cocaine industry during the 1980s has been significant,although it has been somewhatmasked because the emergence of the industry coincided with the demise of tin exports. Therefore, the main role of the growing coca industry has not been as a contributorto the country's
35/ US State Department yield estimatesare much more conservative, averaging 1.5 ton/ha for B..`'via'stotal production.
36/ Not all coca production is illegal, since most of the coca production in the traditional growing areas (where it was grown prior to the significant growth of the internationalcocaine market) is deemed legal.
37~/ CONALIDt"Proarama Nacional de Inversion de Desarrollo Alternativo",La Paz, October 1990. - 38 -
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iscase y hedclnei thafrelative prc of trade 0odvthrepctt no-trde oodalta ae Flacevith the emrgnc ofasrogepotn sector Cc&-ocaainee2P,t3inth 2900hv c1,t50 afecedth2ra exhag rat (hifbcomp~eiarey32i vihte eed ee tha v~oud havei prelvaile nh absence ofithe indstry)c.eHwvr.eas tedciei inn xot a rogl mathe 5the incratsedtrevenu for~~Bolivia*u) fromcoc-coain exports
(Tbet 4ea2),bth reathexchasgacrshio frean athelstmvearlth eboufhthabotb h rouhlon-trd matchedto dis the' haomtinresed S'stes.plceithheemergncen revenue eforcBoivat from ococa-cocaine :f ea as exortingoexporstrpstron 4re8alinginBlvisc tor.caCe the mosten signrficanttfhei t efrecttha . have certainlynpfts, thegcocat primaril: ocaine: thedireatdlindstr eathashadomy ge (Tablr at the (if1v coparedleonm ath be4tlee ':itthatipc wl nhaves te preuied ecoswt i,n.thn-e abenef th induty. Howevse, becauMintSethe dfecliS a i mininr medi asyle exorin GOvernmentiPoliThis phndPomena, tonlytaiknownas Prductcdiseaen ofeth(Tabis9cuEd ccclth,n4a.2e), bufobythe the rthrk0ting dreallnecuineain cn thange tvereldoativecuhain; (orthrel in prceofsumtioaded ans ativaerdiatio sicia tatht of prougrahtarotell brodghth reserespett inthi 1989npon-reailg4.9o uperEforts-toan ofarmer sthhaBoliviavolntaralyonsltroy cuprtai in the worlears cocincatheiplanain.ormntr prced conumpio theirgcowt have of sthvencoasbroughyafeteaboutea effortse todimiis itmsresply. Givenleolivia'spominhaen preolledaan prduer bofcoaine's primatry)inputs,begu Goeden'fortslae the primainlygdipretedha atblreduci, the annul prdctione oftdried coca leaesr toveaout1,0 ton-- the evelln considered cnsithen withtradtionalde lhegalwt uses the Goceaen' strategy isblcopie of4i)nedcinefr. tteitreir ee of th coca- t cr-4 ordcocaiemrein-hi;(lanoeradication pa rougrahtarotedi 1989 wher farimersvlunptarlydsto the i plantmntatifonts for monetarlydrco of/tohe expressigonkthisof chalnge(Ian relatiepice,is anoruincrase in
real wages that makes other exportaloose their competitiveneoss - 39 -
compensationgand (iii) the so-called "alternativedevelopment" investment projects, that provide factors of production,particularly labor, that might otherwise be engaged in coca production,with alternativeemployment. The potential success of the programs are seriously jeopardizedby the high profitabilityof the coca industry,and by the industry'spattern of vertical ilntegrationsas Bolivia increasinglybecomes an exporter of HCL cocaine.
The Voluntary EradicationProaram
4.10 This program--thecornerstone of the Government'sstrategy-- encourages farmers to voluntarily destroy their plantationsin exchange for uS$2,000/ha. Farmers that join this program are also entitled to receive technical assistance and credit for the establishmentof alternativecrops. To enhance participation,the Government has tried to diminish the relative profitabilityof coca by lowering the derived demand--andconsequently the price--of coca leaves through interdictionat the local trading stages. This approach seeks to decrease the crop's expected profitabilityby both reducing the price of coca leaves and by increasing the variability of coca prices, transformingcoca into a riskier alternativebecause of increased uncertainty regarding prices. Although it is believed that the strategy has had some impact on lowering coca leaf prices and creating uncertaintyabout prices, its impact on production has been minimal. The difficultiesthis program faces are:
(a) the program may stand no chance of success as long as new areas can be opened for coca production. This is very difficult to prevent since the Government does not carry out interdictionefforts at the farm level. The scope of interdictionefforts is regulated by the 1988 Law No. 1008, which defines the national policy on coca. According to that law, interdictionefforts at the farm level cannot be carried out in the "traditionalareas" (i.e., the Yungas where coca has been produced for centuries,mostly for legal purposes) or in the "transitionalareas" (defined as the area where coca production activities have developed in recent years, mainly the Chapare)A'9/While the Government could carry interdiction efforts in the "ille&as areas" (all those not encompassedby the previous definitions),it is not doing so; and
(b) because of the weakness of interdictionefforts at the trading stages, coca continues to be a very profitable crop; therefore any significantimpact on production through incentive payments to farmers could be exceedinglycostly. A case in point is that in 1991, as the price of coca leaves rebounded from the depressed 1990 prices, voluntary eradicationfell sharply (when compared to 1990), to only 400 ha in the first quarter of 1991.
The Alternative DeveloDment Program (ADP)
4.11 Complementary to the eradicationprogram, MACA's Secretariat of Alternative Development (SUBDESAL) and CONALIDare implementinga program of
3J9 In 1995 the transitionalarea will be redefined as illegal. - 40 -
"alternativedevelopment" investments in coca growing areas end other areas from which rural families migrate to coca producing areas. The current program which has USAID, UNFDAC, UNDP, bilateral and NGO assistance, covers the 1984-92 period. Priority sectors of activity for these investmentsare agriculture,agroindustry, non-traditional mining and rural infrastructure. In addition, a Social CompensationFund has been created to provide short term relief through temporary jobs in public works to those that might be affected by the intended reduction in coca-cocaineproduction.
4.12 Tho rationale behind the ADP is to provide alternativeemployment to factors of production,especially labor, that might otherwise be engaged in coca production. While these investmentsmay in themselves be a good thing,!'°it seems unlikely that they will have any impact on the availabilityof labor for the coca industry. As long as the coca producer price is high enough to enable coca producers to pay competitivewages, either to hired laborers or to themselves,there will always be labor available for coca production. Of course, if the scale of the investments,and accompanying technologicalchange were large enough, real wages in Bolivia could eventually be driven up to the point where the country would lose its comparative advantage in coca production. However, this is clearly unrealistic.Ll In Bolivia, based on the average coca leaf price between 1987 and 1990, the annual gross revenue of an hectare of coca was US$2,000 (with yields of 1.7 ton/ha). The gross revenue of an hectare of potatoes during the same period would not have exceeded US$800/year. Moreover, it is noteworthy that the cost of dried coca leaves necessary to produce 1 kg of HCL cocaine-"account for 82 of the HCL cocaine price FOB Bolivia, 0.52 of the FOB price ex-South America, and about 0.12 of the street value of cocaine in the United States. Thus, under pressure, the price of coca leaves could be increased substantiallywithout any significantnegative impact on the profitabilityof the overall cocaine industry.
Assessing the Impact of ADP
4.13 Perhaps the most importantpoint regarding the Government'sADP, is that it would be a mistake to judge its merits based on the success (or lack- thereof) in eradicatingcoca, since this is not the principal instrument through which that can be accomplishedgiven that the profitabilityof coca
40/ Especially since they are financed through external grants or concessionalloans, and since such aid is supposedlyadditional to what would be forthcomingin the absence of the program.
41/ The difficultiesof combating coca production through a strategy that would raise the country's income is illustratedby the State of California'sagricultural sector. Despite California'slevel of development,and income, it is estimated that marihuana continues to be one of the most importantcrops (if not the most important) in terms of value of production.
42/ Using a conversion factor of 232 kg of dried leaves for 1 kg of HCL cocaine. - 41 - vastly surpasses that of most other crops.4'1 ADP's investmentsshould really be viewed as an adjunct to the demise of the cocaine industry (brought about by eradication efforts in Bolivia or elsewhere, diminished cocaine consumption,and the like). If and when that happens, a developmentprogram of this nature will be needed to cushion the impact on the affected population. The ADP would thereforebe analogousto safety-netmeasures often taken in the context of economic adjustmentprograms to protect vulnerable groups. Another positive aspect of the ADP concept has been that it has generated a--much needed--renewedattention to peasant agriculture in Bolivia, a sector that includes the vast majority of the country'spoorest who have been suffering from many decades of Government neglect. However, more attention should be paid in the project selectionprocess. Several projects have not been all that successful since they have been trying to develop alternativeagricultural opportunities in some coca growing areas not well suited for the production of alternativecrops, particularlybecause of their poor acce8s to markets. The ADP is also putting too much emphasis on the developmentof areas from where people migrate, rather than to areas to which people might migrate (e.g., the Lowlands). Bolivia's history shows that the population will migrate to those areas that provide good economic opportunities,therefore, the ADP investmentsshould also be directed to those areas.
43/ There are some crops that "promise" similar profits at the experimental agronomic stage (e.g., pineapples). Thm.experiments,however, lack significance,since those products have a very limited market. - 42 -
D. Conclusions
4.14 The Government of Bolivia should continue its efforts to reduce the production of coca to the level considered consistentwith legal uses. However, none of the current strategies seem very promising since: (i) coca cultivationis still a highly profitableventure. Its production is not going to diminish in any importantway voluntarily unless stronger interdiction efforts take place to reduce the crop's profitabilityand increase the risks of producing it. Current ADP efforts should continue, however, since they provide much needed assistance towards increasing the economic opportunities of Bolivia's poorest inhabitants,yet a more balanced approach should be taken in project selection. The Government should avoid concentratingits attention in improving economic conditions in the areas from where people migrate (areas exDulsoras) and give more attention to the potential developmentof the Lowlands.
V. AGRICULTUREIN THE LOWLANDS4"'
5.1 Broadly speaking, the Lowlands compriae two regions: the northern Departments of Pando and Beni, and the Santa Cruz Department in the southeast. Both these areas have only recently been integratedto the country's economy; the integrationof Santa Cruz began during the 1950s, after the completion of the Cochabamba-SantaCruz highway, and the northern Lowlands became increasinglyintegrated with the developmentof domestic air transportation-- also during the 1950s.
5.2 The Northern Lowlands are sparsely populated and largely underdevelopedwith very little transport and physical infrastructure. The region encompassesabout 28 million ha, comprisedmainly of forests and natural pastures (Table A.3), and the total population is about 320,000 inhabitants. In 1989, the cultivated area was about 53,000 ha, most of it devoted to the production of rice and maize (Table 5.1). Rubber production and cattle raising have been the traditionalactivities in this area. Since the nineteenth century rubber has been exported from this region through Brazil, and cattle raising in the Beni expanded as an import-substitute industry with the development of domestic air transportation. More recently, the developmentof the export-orientedtimber and Brazil-nut industries have expanded this region's production base, particularlyin Pando. To a large extent, the agriculturalpotential of this area is still unknown.
5.3 The Eastern Lowlands (i.e., the Santa Cruz Department) cover almost all the eastern part of the country with an area of almost 35 million ha. Agriculturalactivities have flourished since the late 1950s when they were centered around the sugar industry. The region's potential is based in the quality of its soils, and the favorable geographic position that facilitate exports through the Atlantic and access to the Brazilianmarket. Unlike Bolivia's Highlands and valley areas--thatsuffer from important natural resource restrictions--theEastern Lowlands' prospects of agricultural developmentare bright. Most of the existing cropped area is in the hands of a dynamic commercial sector capable of quickly adopting improved technology,
44/ Issues related to the forestry sector and natural resource management are not included in this chapter. They are addressed in Chapter VI. - 43 -
while smallholders,who represent the majority of producers, also hold considerablepotential.
A. The Structure of Agricultur&lProductionW 1
5.4 The rural population in the Lowlands of Sants Cruz, Beni and Pando is heterogeneous,containing members from several different backgrounds. Smallholder agriculture--whichrepresents about 801 of producers--isbased mostly on plots of 30 to 50 ha occupied since the early 1960s by immigrants from the Highlands and valley areas (Table A.19). Almost all farms are family units. They depend on hand labor, and cultivate rice, maize, sugarcane, and cotton; often in no more than to 2 to 3 ha annually. Large farmers--mostly with properties of more than 100 ha--produce rice, maize, soybeans,wheat, cotton and sugarcane,often in associationwith cattle for b-ef or milk. Their production methods are relativelycapital intensive,with full mechanization,use of improved seeds and pesticides. Medium-scaleproducers (many of which are Mennonite and Japanese settlers)with 50 to 100 ha are located largely in the proximity of Santa Cruz (the so-called "integrated zone") and in newly opened settlement areas north and northwest of Santa Cruz as well as in Beni. Their compositionof production and technology is similar to that of large farmers. There are also large-scalecattle ranchers, particularlyin Beni and Santa Cruz.
2ANA. ~ 1gL. A9I U&. Zb~~O~,L
_....aa.$ 1ue .... 31 e. 11._:. ...
Aaza MyAC . - O.. .:. :=
Crop Production Technoloazvand Yields
5.5 The vast majority of the region's technologicalimprovements have been developedat CIAT, which has responsibilityfor agriculturalresearch in Santa Cruz. Its activities include active commodity programs for wheat, rice, soybeans,maize, beans, sunflower and pastures as well as studies on cattle, mechanizationand shifting cultivation. Parallel with its research activities, CIAT has a department of technology transfer responsible for pre-
45 This section is mostly centered on the Eastern Lowlands area. - 44 -
extension and communication. This group which forms the link between research and other institutionsresponsible for extension (most extension activities are carried out by various producer organizations,CORDECRUZ, and some NGOs) is responsible for identifyingresearch needs through field contacts, for interpretingresearch findings suitable for extension and for conducting training courses.
5.6 Amongst the most importantcrops, the best rate of success in productivity improvementshave been achieved in soybean and rice. Soybean production has benefitted from material imported from Mexico, Brazil and Argentina, and technology from Brazil. Current yields of about 2 ton/ha (Table 5.2) compare favorablywith those of Argentina (2.2 ton/ha), Brazil (1.7 ton/ha) and Paraguay (1.8 ton/ha). Moreover, research on rhizobia carried out at CIAT is expected to increase yields by a further 20Z by the end of 1991. CIAT-developedimproved rice varieties and technologieshave been widely adopted. Yields have increasedwith the introductionof the Cica 8 variety (curreutlyabout 60% of rice productionuses this variety) and the use of fertilizer. Research on wheat for lowland areas was started in the early 1980s for introductionas a winter crop in rotation with soybeans. Results so far have been impressive;CIAT has been releasingnew varieties each 2 to 3 years which have been promptly and widely accepted. On the other hand, technology for maize has progressed little since introductionof improved varieties in the 1960s. For most crops fertilizeruse has been negligible. Fertilizer trials have demonstratedyield increasesof maize (12Z to 90X), rice (30% to 60Z), wheat (0% to 70%) and soybeans (14%). However, except for Cica 8 rice, these yield increases do not justify the ensuing increased production costs. Therefore, the use of chemical fertilizers is rare.
Table 5.2, YIELDS OF SELECTED CROPS IN THE LOWLANDS, 1980-90 a/ (tonlha)
1980 1984 1986 1988 1990 Santa Cruz --Soybeans 1.3 1.7 2.1 2.0 1.7 --Rice 1.7 1.5 1.5 2.0 2.1 --Matze 2.0 2.1 1.8 1.8 1.6 --sugsarcane 41.0 37.0 34.1 34.0 38.0 --Cotton 0.3 0.4 0.4 0.4 0.5 -.Wheat 0.9 1.1 1.0 1.2 1.0 Beni-Pando -- Rice 1.3 1.6 1.6 1.5 1.7 --maize 1.2 1.5 1.6 1.5 1.0 --Sugarcana 31.7 26.8 42.0 32.8 n.a.
8ources MACA.
B. Performanceand Potential of the Lowlands' Agriculture
5.7 Although registered agriculturalgrowth in the Lowlands'--measured by growth in the gross value of production of agriculture'smodern sector (Table 1.2)--was relativelymodest during the 1980s, this aggregate indicator masks some important changes that have enhanced considerablythe potential of - 45 -
sustained growth in this region. The most significantchange has been the diversificationof the productionbase away from non-traded and import- substitute comodities (ego., rice, maize, and sugar) brought about by the devolopment of the soybean export market.
Soyboan Exports and Wheat Production
5.8 Soybean (and related agro-industrialproducts) have become Bolivia's most importantnon-traditional export sector. Between 1985 and 1990, the soybean cultivatedarea increased from 63,000 ha to 170,000 ha, and the value of soybean exports (includingsoybean-flour) have increased from about US$7 million in 1980 to roughly US$50 million in 1989-90 (Table 1.3). Moreover, the prospects of soybeans' export growth have been greatly enhanced with the recent developmentof wheat as a rotation cron with soybean productionA6JThe profitabilityof soybean cultivationhas increasedwith the rotation. Evidence of that is that e"en though in the past year the soybean export market was affected by a decline in world prices (the price received by domestic producers in 1990 was US$150/toncompared to US$170- 230/ton during 1987-89), and by the reduction in the export drawback system (CRA) from 10S to 21; the sector's planned expansion has continued unaltered.
5.9 Santa Cruz wheat has proven to be competitivereplacing Argentinean imports in Santa Cruz and Cochabamba. Wheat's cultivatedarea increased from about 13,000 ha in 1985 to 25,000 ha in 1990; and was expected to increase to 45,000 ha by 1991, yielding an expected production of about 60,000 ton. Since that production representsless than 201 of total domestic demand, the prospects of increased soybean-wheatproduction are considerable.
The Suaar Industry
5.10 Sugar is the most distorted industry in the Bolivian economy. Unduly protected by quantitativeimport restrictions (importsare prohibited), the industry operates as a text-book example of a vertically integrated cartel. Suaarcane arowers (among the most inefficient'n Latin America based on Bolivia's low yields in production) are protected by restrictionsto entry enforced by the sugar mills' cartel, who only purchase pre-determined quantities of sugar from sugarcane producer quota-holders.'71 This limit on the amount of marketable sugarcane automaticallydetermines the monopolistic sugar output. The monopoly rents are then shared among the six sugar mills (four of which are in Santa Cruz and two in Tarija) and the sugarcane producers who are paid in kind with refined sugar.
5.11 The distributionof the monopoly rents is channeled through sugar's marketing structure. Both the domestic and export markets are divided between both interest groups. The sugarcane growers associationcontrols 57.21 of the refined sugar market, while the remaining 42.8Z is controlledby the sugar mills' cartel. These arrangementshave helped perpetuatethe industry's overallinefficiency in production sinces (i) growers have no incentive to
46/ Soybeansare producedin the oummerseason and wheat in winter.
47/ Moreover,any potentialincrease in the industry'ssize is regulatedso existinggrowers have rightson 801 of any additionalcrop area. - 46 -
produce better quality sugarcane sincetheir return is based on the average quality of sugarcane from all producersl and (ii) the distributionof production across mills is not based on the marginal cost of production (i.e., the most efficientmills do not get a bi8ger production quota).
5.12 During the past three years the domestic wholesale price of refined sugar in Santa Cruz has been about US$0.20/lb (the equivalent of US$440/ton). Given that domestic consumptionhas been approximately175,000 ton/year, and that the import parity price of sugar in Bolivia is approximatelyUS$0.17/lb; the implicit annual tax the sugar cartel is extracting from consumers reaches about US$12 million. In previous years (1982-90)the average annual implicit tax has been even bigger--roughlyUS$15 million--sincethe world price of sugarwas lower and the domestic price has been stable at US$0.20/lb.
5.13 Sutar Exoorts. Despite the above-mentionedefficiency problems, the sugar industry has been able to export sizeable amounts of sugar in the past two years (Table 5.3). In 1990, Bolivia exported about 75,000 ton for a total value of US$31.7 million. However, sugar continues to be primarily an imnort substituting industry, and these exports should not be viewed ad representativeof Bolivia's comparativeadvantage in the world market. Exportsto the UnitedStates have been the resultof the restorationof Bolivia's quota to the protected US market and exports to Peru have been a consequenceof that country's severe economic problems coupled with some preferentialtreatment given in Peru to Bolivian exports. Bolivian exports can, however, reach competitivelynorthern Chile's market.
v.3-e7
M!"...... : .
> 5xiale$I*53$tton. .-. -4st 440
g#Itoa) 442~~~~~~~~~~44 2 .... ~~~~~~~...... - ,-r..... 'p.:. ...' -:.:
5.14 The monopolistic organization of this market is currently being challengedby one of the mills,and the Governmenthas announcedthat sugar's market structure will no longer be protected by the Government The best policy to eliminatethe current monopolisticpractices would be to eliminate the sugar Importrestrictions. The current10S uniformtariff should be applied. At the currentworld price of sugar (roughlyUS$0.10Ilb at major - 47 -
export ports), imports would reach the wholesale market in Santa Cruz at approximatelyUS$0.16 - 0.17/lb, a price which a more competitive domestic industry could probably match. In the event world prices would decline below the marginal production costs of even the world's most efficient producers, the domestic market could be protected through implementationof an anti- dumping law. In addition, once the domesticwholesale price resembles the import parity price, the rents accruing to the access to the preferredU.S. market should be apnropriatedbg the Government,since the beneficiary of the U.S. subsidy should not be the sugar industry but Bolivia's society as a whole.
Other Non-TraditionalExports
5.15 Agriculturalexports are still concentratedin a few products; in 1989, soybeans, sugar and timber accountedfor more than 70X of total agriculturalexports (Table 1.3). However, the agriculture'sexport base is expanding--albeitnot at the rate that the official export data seems to suggest; particularlyby the inordinategrowth of cattle exports (from an average of US$5 million in 1987-89 to US$48.8 million in 1990). Those "exports"were the outcome of a combined scheme destined to collect Bolivia's export drawback (CRA). Since cattle exports are no longer eligible to collect CRA, registeredcattle exports should return to their historical level.
5.16 The most important changes have been the emergence of cotton and beans as potential export commodities. Bean exports (to Brazil) increased from US$250,000 in 1989 to almost US$1.8 million in 1990. This crop is mostly prodaced by medium- and small- size farmers and has considerablegrowth potential. In 1990, cotton reemerged as an export crop. While cotton exports in 1989 wera nil, exports in 1990 were about US$1.8 million. In 1991 cotton's cultivated area increased from about 1,200 ha to 16,500 ha. It is believed that the crop still has considerablymore expansionpotential. Brazil nuts exports have continued to expand, from US$10 million in 1989 to about US$15 million in 1990.
C. Potential Constraints to the SustainedDevelopment of Agriculture
Absence of a ComprehensiveNew Lands Policies (NLP)O'
5.17 Given the relativelyadvanced level of technologyused in much of the Lowlands' commercialagriculture, the greatest potential for growth lies in the rational expansion of the agriculturalfrontier and the efficient management of those resources.M49The efficient exploitationof natural resources can be achieved by creating conditionsthat promote the efficient
48/ The developmentand regulationof the forestry industry is closely linked to this section's discussion,however, it is specifically addressed in Chapter VI.
49/ The development of an extensive agriculture is further exacerbatedby the absence of a capital gains tax (para. 5.23), since farmers do not bear the costs of investmentsundertaken by the Government in the expansion of the agriculturalfrontier. - 48 -
management of land (and forests) in a way that maximizes the long run benefits to Bolivia. On a first approximation,efficient resource management would require that: (i) land resources are allocated among competing activities (e.g., forestry, farming, National Parks) in a way that would maximize the long-term benefit of this valuable resource to Bolivia; and (ii) in any given activity there is an efficient and environmentally-soundmanagement and use of resources; (iii) there is a transparentframework within which a balance can be struck between the often conflictingclaims of agriculture,environmental protection concerns and of indigenouspeople; and (iv) the State can capture emerging economic rents for Bolivian society from public sector investments that contribute to the developmentof the Lowlands.
5.18 Irefficiencyin the Allocation of Land. The ttggest difficulty in achieving an efficient allocation of land resources among competing activities lies in that there are few mechanisms helDing the process since:
(a) in Bolivia, all land is, in principle, the property of the State (para. 2.25), and land-use rights or titles are given, free of charge, to different individualsfor different purposes. Therefore, within the current legal structure, the Government cannot rely on market mechanisms (i.e., a pricing system that would discriminateamong alternativeuses) to promote an efficient allocation of land among competing activities;and
(b) there are no adequate land inventory and informationsystems that can help the Government--througha planning-regulatoryprocess--to encourage the efficient allocation of land among alternativeuses. In the few cases where such mechanisms exist, many of the regulationshave not been enforced.'J0
5.19 For now, the Government of Bolivia is using 1:250,000 (reconnaissancelevel) surveys, and land capability anulysis as a basis for determiningbroad categories of land use and road alignment. To avoid agriculturalsettlements in ill-suited land, within the context of the Bank's Eastern Lowlands Project, a land use plan is being prepared to guide the future development in Santa Cruz by determiningthe appropriateuse and protection measures for its natural resource base. Within that framework, the Government is also addressing the protection of the environmentby identifying and protecting biodiversityreserves; and delimiting and protecting indigenous areas. While many of these actions are positive short-term developments,it is very ineffieientfor the Government to take the burden of centrally planning the development of the frontier.
5.20 The Government'sobjectives would be better served by allowing the market to bear part of the costs of that process through a land-bidding process (for land purchases or long-term leasing),while the Government
50/ Moreover, since in Bolivia, for all practical purposes, land is not taxed, the zoning of an area determines to a large extent who will capture the rents associated to this free good distributedby the State. Accordingly, the emerging zoning has tended to be the outcome of a political process and the zoning has not necessarilycoincided with the best use of the available resources. - 49 -
centers its efforts in the regulation of externalities,and the provision of public information. This point was already recognized during the preparation of the Eastern Lowlands Project and the Government agreed, within the project, to sell most :and in the Santa Cruz area at market prices. However, the implementationof that agreement has been postponed. What is needed is for the Government to reconsider aspects of the 1953 Agrarian Reform Law. Land informationcould be treated as a private good. Potential buyers and sellers of land (includingthe Government)would each have a stake in collecting informationconcerning the quality of land over which they were dealing. Sellers of high quality land would find it in their own interest to have resource inventories (forest inventoriesand/or land capability analysis) done by reputable firms, and made pub'icly available, in order to increase the selling price of the land. Similarly potential buyers would want to verify that the land analysis had been done seriously. In this world of well-defined property rights, the need for Government action would be reduced to providing public information,adequate land titling, and interveningin areas and issues where private individualsacting in their own interest would yield an outcome not in the public interest (i.e., externalities).511
5.21 Land Titling. The lard titling situation in the Lowlands is chaotic. Farmers have been discouragedfrom completing the process that would have given them titles by the disorganized,overly-bureaucratic, and inefficientmanner in which applicationsfor land allocationshave been handled. To make matters worse, there are two MACA agencies providing titles, the Instituto Nacional de Colonizacion(INC), and the Conseio Nacional de Reforma AZraria (CNRA). The lack of coordinationbetween them often save rise to the proliferationof multiple titles to the same parcels of land.52' In addition, farmers with adequate titles face the constrains on land transactions(rental and sales) imposed by the law (paras. 2.25 and 2.26). As a result small farmers have difficultiesin accessing formal credit sources, on-farm investmentsare discouraged,and the formation of optimal-sizefarms is impeded. Moreover, the land allocation system oromotes land hoardina for speculativevur2oses and facilitatesadministrative discretion, since it is a key element through which rents can be distributedto those who benefit from access to some valuable free land.
5.22 Capital Gains Policies. Another missing element of NLP is the absence of a mechanism to capture the economic rent created by Government
51/ The alternative to the market would be the use of land inventory and informationsystems in developing a detailed Geographic Information Systems (GIS). At one extreme GIS can be used to attempt comprehensive land-use zoning. Under this system, technical specialistsdetermine the most appropriateland use for each land area, based on the land's physical carrying capacity and their judgement concerning the value of the land's output. However, given the State's low institucional capacity to establish and enforce such zoning regulations,coupled with the pervasive rent-seekingbehavior this policy induces, this allocation mechanism is unlikely to be effective.
52/ Moreover, the Centro de Desarrollo Forest.el--anotherMACA agency--also grants rights to the trees (but not land), making tenure rights even more confusing. - 50 -
provision of physical and social infrastructure. In the early years of fronti-r development,most of the value-addedof the region is created by Govorrment. The absence of such taxation is not only inadequatefrom an equity point of view, but also increasesthe incentive of powerful interest gronupsin lobbying decision-makerato build roads on uneconomic grounds, and encourages land clearing for purely speculativepurposes. While taxation of this value added under frontier conditionais notoriously difficult,there are some mechanismswhose possibilitiesshould be explored. Perhaps the most attractive is taxing the capital gains from land transactions.
5.23 Roads PolicX.3 To protect areas ill-suitedfor settlement,the Government should reduce the economic indentivefor settlers and colonists to invade new lands. The moat obvious tool to accomplishthis objective is to ensure that transport to the area is poor, since the moat powerful force influencingeconomic pressures on the frontier is tho constructionor improvementof roads. At the same time, there is clearly a need for road improvementin those occupied areas zoned suitable for agricultural development. Until now, decisionspertaining to road developmenthave been largely independentof these considerations,the main determinanthaving been the drive to open up new land or gain access to export routes. TransnortationPolicies34/
5.24 Problems related to availabilityand reliability of infrastructure pose one of the most serious ozonstraints to exporting firms in Bolivia in general, and particularlyfor agriculturalcommodities and agro-based industrialproducts. This reflects the high transportationcosts associated with deliveringrural agriculturalproduce to urban areas and export markets. Most notoriously,an overwhelmingconsensus exists among Bolivian firms that railways are expensive and extremely inefficient. This has seriously affected the competitivenessof non-traditionalexports. There are major problems with respect to both capacity and reliability. However, because of lack of roads, in 1989 more than 80Z of the non-traditionalexports from the Department of Santa Cruz used railway transportation,and, most notably, more than 85Z of the mara wood exports and 87Z of soybean flour exports were exported by train. For soybean exports, the current railway transport rates from Santa Cruz to the exporting ports of Santos or Paranagua (about US$46 and US$49/ton respectively)already represent more than 30Z of the FOB value of exports. This can become an important constraintin future -esrs as the (nominal) internationalprice of soybeans prices is expected to range between US$285- 300/ton, and therefore the international-inflation-adjustedprice is expected to decrease--albeitslightly--from its current level. Efficiency gains in transportationcould make up for this decline and could ensure the continued profitabilityof the crop.
53/ At the moment of the mission, the Governmentwas drafting an environmentallaw, that would address this issue.
S4/ Parts of this section are based in the findings oi a World Bank survey in Bolivia. A d."ailed account of the survey's findings is in "Bolivias From Stabilizationto Sustained Growth", The 'orld Bank, 1991. - 51 -
T.heAlleged Nexative Impact of Donated Wheat
5.25 It is a widely held view in Bolivia that imports of donated wheat represent an unfair competitionto domestic producers,particularly to those located in the valley areas, and this is said to have had a negative impact on the agriculturalsector by reducing not only the price of wheat, but also the price of other commoditieswhich are good substitutesof wheat in consumption. In fact there is no evidence of this.
Table 5.4: WHEAT SUPPLY, 1988-90 1988 M98g 1990 Domest..c Production --Quantity ('000 ton) 70.7 86.0 82.0 -- Produ.aer price Santa Cruz 170.0 195.0 180.0 (US4Itou) Commercial Imnorts (Argentina) -_Quanticy ('000 ton) 36.4 40.0 79.0 -- Average FOB price (US$/ton) 122.0 132.0 106.8 PL 480-1II Inmorts -- Quantity ('000 ton) 122.6 103.2 160.8 -- Average FOB price (US$/ton) 160.6 163.4 123.3 Other Donations -- quantity ('000 ton) 11.9 14.5 11.2 -Average CIF price /USSIton)*1 178.0 180.0 20S.0
'I Estimated from the valueof the monetizeddonations net of adminlstrative import expenses. Source: Missionestimates based on data from the Ministryof Xndustry,ARMO, and CORDECRUZ.
5.26 While it is true that until 1986 some wheat imports were financed with "cheap dollars" at the overvaluedofficial exchange rate, and donated wheat was sold by the Government to the mills at subsidized prices; the effect of those policies was mainly to provide rents to the mills who had access to underpricedwheat. Neverthelessthe market price of wheat was not reduced.551 This outcome is preciselywhat could have been expected given that, throughout all that period, commercial imports coexistedwith the above- mentioned "preferentialimports". Therefore, the market price was determined by the marginal cost of supplying the market with the marginal units (i.e., the "non-preferred"imported units) which were valued in accordancewith world prices.
5.27 The economic rents accruing to those with access to "preferential imports" have diminished significantlysince 1986. The wide difference between the official and parallel exchange rate disappearedby 1986, and in 1987 the Government decreed that all donated imports were to be sold inside
55/ Producer prices of wheat in the Department of Santa Cruz have varied little since May 1985 to date. From May 1985 to April 1988, the producer price varied between US$170-175Iton. Prices increased to US$195/ton in 1989, and then dropped to US$180/ton in 1990 and US$155/ton in 1991 in followinga decline in world prices. - 52 -
the country at their import parity pri~'ce.Nevertheless, it is likely that the mills are still accruing some economic rents from donated imports (the vast majority of donated wheat imports do not pay import duties, and in the case of the PL-480-III imports, the mills receive a subsidy in the form of inexpensive credit).361In any event, all the available evidence indicates that--as before--the domestic price of wheat is determined by the marginal price of imports. Donations do not have a negative impact on the sector. The most conclusive evidence on this point is that the price of wheat for most of the Santa Cruz production is negotiatedwith mills in Cochabamba and Santa Cruz based on the import parity price of Argentineanwheat imports.
D. Conclusionsand Recommendations
5.28 The prospects for agriculturaldevelopment in the Lowlands are bright. The sector has diversifiedits production base towards exportable commodities;most notably, soybeans and related products. Moreover, unlike the previous cotton-exportboom, the sustained competitivenessof this crop is well grounded. The potential developmentof the sector also benefits from the existence of a dynamic private sector, and the constructivesupport of the Santa Cruz local Government.
5.29 The sector has also reaped the benefits of Bolivia's stable and distortion-freeeconomic environment. The current protection afforded to the sugar industry cartel constitutesan exzeption to the above-mentionedsound economic policy framework. The Government should carry-on with its intentions of dismantling the sugar cartel. To that effect, the most efficient policy would be to subject the domestic industry to internationalcompetition by lifting the current import-licensingrequirements. If needed, the Government could protect the industry from severe changes in internationalprices through the use of a variable tariff surcharge that would protect the domestic industry from imported sugar reaching Bolivia at prices significantlylower than the production costs of an efficient and competitiveindustry.
5.30 The most important constraint to the continued developmentof agriculture lies in the potentialmismanagement of the re4ion's abundant natural resources. To improve the allocation system among land's alternative uses, a revision of the Agrarian Reform Law is needed to allow the market, through a bidding system for public lands, to determine the allocation of land among competing activities. The Governmentwould continue to play an important role by providing the market with information,titling services, and issuing prudential regulationson externalities. In the meantime, the efforts to use 1:250,000 and above (reconnaissancelevel) surveys should continue. They can reduce search costs for those interested in land accuisitionand are essential for appropriatesetting of government infrastructureand zoning
5.31 The inadequate provision of land titling services continues. This discourages the demand for investment,and hinders the potential for a better-
56/ It is unlikely that those rents can ever be completely dissipated given the mill's negotiatingpower. This power stems from their monopoly position in being the only channel through which the United States' foreign aid--tied to wheat--can be directed. - 53 -
constrain the developmentof appropriatelysized economic units. Wihilethe recent consolidationof CNRA and INC is a positive development,the Government needs to both simplify and accelerate the mechanisms for land-titlingthat would allow for issuance of titles at a pace consistentwith their demand.
5.32 Complementaryto those measures, the Government needs to imolement measures (such as a capital gains tax) destined to capture the economic rent created by Government provision of Phvsical and social infrastructure. The absence of such taxation is not only inadequate from an equity point of view, but increases the incentive of powerful interest groups in lobbying decision- makers to build roads on uneconomic grounds, and promotes land clearing and land-grabbingfor purely speculativepurposes.
5.33 To promote the sound environmentaldevelopment of the region, consistentwith the land zoning exercise now underway, care should be taken to minimize the economic incentive for settlers and colonists to invade areas ill-suited for settlement. The largest impact on the extent to which this objectivewill be achieved will come from laving a roads Policv that prohibits the constructionof roads that run through or give access to sensitive areas. At the same time, roads are vital to the economic development of the region and a clear and transparentpolicy framework is needed if rational decisions are to be made on road development.
5.34 In the same context, the developmentof an efficient railway to handle exports is vital for the region. This affects agriculturalexports in particular since such exports tend to be low-valuebulky products. The railways system needs to be reorganltzedby promoting more private sector participationin its operations.
VI. THE FORESTRY SUBSECTOR
A. Overview of the Forest Sector
6.1 Somewhat less than 50% of Bolivia's 110 million ha are covered by forest; 80Z of which are located in the Lowland Departmentsof Beni, Pando and Santa Cruz, and the remainder in the Andes. Despite the immense volume of standing timber, the contributionof forestry to Bolivia's GDP has been minor, mainly because most forests are located in isolated areas with virtually no access. In 1980 the forest sector's share in total GDP was 1.72, and in 1990 its contributionto GDP was estimated at somewhat less than 2.52. In terms of known timber harvest, Santa Cruz is by far the dominant region. Forest concessions in that Department account for 65Z of total concessions (in terms of ha), and produce about 602 of the estimated timber harvest.
6.2 More than 662 of the forest industry production is export-oriented (Table A.22), and exports have demonstratedconsiderable potential and dynamism. Exports of wood products have been growing fast, and in 1990, they reached about US$49 million, equivalent to 172 of the value of non-traditional exports. The export market of wood is heavily based on a few high-qualityand high-value species such as mara (mahogany)and oak. Accordingly,current forestry oractices are extremely selective in terms of species harvested. Ir, the hamid tropic regions of Santa Cruz, Trinidad, and Riberalta, over 502 of - 54 -
the humid tropic regions of Santa Cruz, Trinidad, and Riberalta, over 50% of the harvested timber comes from a single species (Table 6.2). Only as the most valuable species become increasinglyscarce, is a wider range of species being harvested in subsequentpasses through the forest. This is evidenced by the progressive decrease of mara's share in total production in Santa Cruz from 71% of total wood harvested in 1980 to 48Z in 1988. In Trinidad, where transport to market is more expensive and logging more recent, mara's share of total extraction has fallen much less: from 85% of total harvested production in 1980 to 65Z in 1988. Finally the concentrationof the most valuable species in Riberalta (in this case cedro), which is still more remote from Bolivian markets, has fallen even less: from 842 in 1980 to 78% in 1988.
Table6.1; FORESTPRODUCTS EXPORTS, 1976-1990
Wood Non-Wood Wood Non-Wood Total Products Producteal Products Products Exports (ton) (ton) (in US$ (in USS (inUS$ million) million) million)
1976 46,903 8,009 10 5 15 1977 45,581 6,781 12 5 17 1978 50,187 6,883 13 7 20 1979 72,942 6,219 22 4 26 1980 86,599 6,251 32 8 40 1981 34,165 3,828 18 6 24 1982 28,633 5,708 15 7 22 1983 21,496 9,378 7 5 12 1984 22,736 9,649 6 3 9 1985 21,953 7,865 6 2 8 1986 51,820 14,303 23 7 30 1987 55,685 8,773 31 9 40 1988 51,126 7,607 25 8 33 1989 82,819 7,816 44 13 57 1990 85,839 11,538 49 19 68
a/ Includescacao, palm hearts,natural rubber, aud brazilnuts.
Source: CamaraNacional Forestal.
6.3 The forest industry has developedto a large extent beyond any kind of effective Government control. Neither has it been subjected to prudential regulations that would bridge the gap between the forester's private interest and the public interest. This has led to unsound forest management practices that fortunately, have not yet caused irreparable losses for the country's environment,since, unlike other countries,population pressure on the agriculturalfrontier is low (Appendix2)."/ To remedy this situation the Government has declared an "Ecological Pause". No additional forest concessionsare to be granted during a five-yearperiod during which appropriate legislation and regulations are expected to be put in place.
57/ However, this situation could rapidly change if efforts to curtail coca production prove to be successful. - 55 -
, y,t ,n~ :*~ :.W4 .:~t .qw : . 1... : :'- :T#W......
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Inefficiency in Forest Hanaaement
6.4 The legislationand administratlvepractices that until recently have regulated the sector have prevented the efficient exploitationof forest resources. The vast majority of forest concessions'grants are short-term, and, regardless of a concession'sterm, many exploit permits have had to be renewed every year. The short-term characteristicof these contracts transaltes into tenure insecurity,which leads to the inefficientmanagement of th. forest. Where tenure is insecure land resourceswill inevitably be exploitedvery rapidly, as loggers (or farmers) attempt to get as much economic value from the land as posible before it is lost to another occupant/owner. Valuable species are felled at a fast pace, and incentivesto develop sustainablemanagement practices disappear.
6.5 Within the "EcologicalPause", the Government is planning on reexamining all current forest-concession-leasesand intends to grant long- term contracts. However, this enhanced tenure security will not eliminate the mismanagementof forests. Long-term sustainableproduction will still be less attractive to loggers As long as relativelyuncontrolled accoess to new forest land is possble. Expectationsof future net benefits are critical in decisions to invest in long-term management,and the role of planned new - 56 -
highway construction (throughyet relativelyunexploited forests in Pando and Beni) plays a critical role in the formationof these expectations.
Forestry Sector Taxation: Eouity and Efficiency Considerations
6.6 In addition to promoting the efficientuse of resources, the public sector also has an obligation to obtain a reasonable return'81 for the public from the logging of public lands. Moreover, measures designed to raise public sector revenues may also influencethe long-run land use of public forest areas. This can be a useful policy instrument in situations where land tenure insecuritypromotes the inefficientexploitation of resources, as taxation will create incentive effects with respect to land use and forestry practices. For example, high concessionsfees may reduce the overall amount of land demanded for concessions,but they will not affect logging practiceswithin the concession. On the other hand, uniform specific royalties, levied per on every cubic meter of wood harvested, regardless of value, will encourage increased selectivityin exploitation(i.e., lower quality trees will be bypassed).
6.7 The current system of forest fees and charges in Bolivia fails as an instrumentto collect significantrevenue since tax rates are low and widely evaded. The system does not create incentives for good management practices either. There are currently three charges levied on timber. Two of these charges, the derecho de monte and the recaudacionesRor conceDto de Dlantacionesforestales are levied on the basis of the standing tree at schedular rates determined by the relative value of the tree, and are updated regularly. The former is legally considered the price the government charges private firms for timber, and ic collectad by the MACA's regional Forest Development Center (CDF). The latter is a "voluntary"contribution to the Camara Nacional Forestal, the industry lobby group, and is notionally earmarked to support plantations. The recaudacionespor conceito de nlantacionesforestales is fixed at one-half the rate of the derecho de monte. The third charge is the regalia and is based on the sales of sawn wood net of administration,marketing and transport costs. It is collected and administeredby the Regional DevelopmentCorporations.
6.8 While the legal base for the derecho de monte is the standing tree, in practice it is levied on sawn wood with conversion factors being applied to approximate the original roundwoddvolume. For the most commonly harvest wood species, mara, the current rate is Bs 22.00 (US$6.25)per m3. Changes made in 1989 in the rates used to convert roundwoodto sawn timber had the effect of lowering the effective tax by nearly 30S. The actual effective tax rate is equivalent to 1.5% of the export value for mara. Combining the derecho de monte and the recaudacionespor concerto de Dlantacioneswould yield a 2.25% charge on this base.
6.9 The regalia is a nominal 11% tax levied on sawn wood and collected and retained by the Regional DevelopmentCorporations. In application two major adjustments are made which significantlyreduce the effective tax rate: (i) administrative,transport, and marketing costs are deducted from the
58/ A reasonable return to the public would be for it to obtain all benefits in excess of normal profits in the forest products indutstry. - 57 -
market value of the wood; and (ii) the quality compositionof wood is administrativelyfixed in a manner that significantlyunderestimates the actual composition. There is also widespread tax evasion. Mission estimates based on data provided by CDF Santa Cruz indicate that the effective tax rate is in the range of 32-42 of the export value of sawn timber.
Needed Reforms
6.10 To increase the overall tax take, tax rates should be increasedand collectionefforts improved. The latter could be achieved by merging the derecho de monte and the regalia into a single ad valoremP1 tax with a cost drawback (to make it a non-distortingtax) and centralizingtax collections into each regions' Regional DevelopmentCorporations--which historically have had a better track in tax-collectionadministration than the Forest DevelopmentCenter. The Governmentcould also allocate more resources to improve tax collectionefforts.
6.11 In addition, the public interest could be brought into the fees and concessionssystem by not only capturing for the public more of the value of timber extracted,but also adequatelyvaluing the immature timber standing-- that is, giving the forester an incentiveto sustainablemanagement, and avoiding the rapid depletion of valuable species. This could be achieved by mechanisms that make the logger internalizethe cost of forest depletion.
6.12 One such mechanism is a forest depletion levy. This is a charge for land denuded or otherwise degraded within the concession. Denuded land, for example, could be monitored by aerial or satellite observation. Faced with such a levy, the short-termlogger would have an incentive to maintain the post-harvest forest and prevent invasion by settlers. Unlike stumpage fees, the intention of this levy is not to raise revenue--itis to discourage depletion. An operator who did not deplete the forest (or allow it to be depleted) would not pay the tax.
6.13 A forest guarantee bond is another possible mechanism to encourage loggers to become a forest producer. It has the additionaladvantages of minimizing enforcement of forest regulationsand making transparentthe process of concessionsallocation. Under a forest guaranteebond system the concessionwould be allocated to the operator able to post the highest guarantee bond in exchange for the right to manage the concession. The bond would be invested for the duration of the lease period and be collectibleby the Government in case the leaseholderwere found to be in violation of specified regulations. Since the amount of the bond would be determined through open competitive bidding, its amount would reflect: (i) bidders' expectationsof the productivityof the area; (ii) the risks involved in managing the area; and (iii) the possibility of arbitrary cancellationby Government. Environmentallysensitive protected areas could be specifically made part of the lease agreement. Through the bond, the leaseholderwould become liable in the case the protectionareas were damaged. Monitoring
S9/ In fact, a volume-basedroyalty system that also differentiatesrates by species, as does the derecho de monte, is in effect a crude approximationto an ad valorem system. - 58 -
could be done through random, comprehensivesite inspectionsinvolving high- lovel Governmentofficials as well as possibly NGOs.
B. Conclusions
6.14 Bolivia's forestry sector is, together with soybean exports, the country's most importantnon-traditional export sector. However, the positive economic performanceof this sector should not mask some important inefficienciesassociated to its performance. Since the sector holds considerablegrowth potential,and its performance could eventuallyhave a significantnegative effect on Bolivia's environment,it is important that the deficienciesbe promptly addressed through the establishmentof a coherent forestry policy which would require the following elements:
(a) improving the current allocationsystem among land's alternative uses (para. 5.18);
(b) creating conditionsfor improved forest management. The most important immediate change needed is to modify the current short- term concession system to enhance land tenure security and promote sustainablemanagement of the forest. To address this issue in a comprehensiveway, measures such as a forest depletion levv, and greater regulatoryand enforcementcapability are also needed;
(c) improving the mechanismsused to capture part of the forestry income for the public sector. The current tax rates should be raised, the differenttaxes merged and tax-collectionefforts need to be centralized into the different RDC's; and
(d) all the above measures would have to be complementedwith an adequate road policy intended to phase in the developmentof new roads' infrastructureat a rate consistentvith maintaining good land-use practices.
VII. CONCLUSIONSREGARDING PRIORITIES FOR THE PUBLIC SECTOR
7.1 After a prolonged period of economic instability,the process of economic reforms that started in 1985 has yielded a sound and stable economic environmentwhich encourageseconomic development,investment and growth. The remaining challenge for the Bolivian economy in general, and agriculturein particular, is for the private sector to make best use of the opportunities presented by this environment. Within that context, the Governmentstill has a critical role to play in the country's development through the provision of public goods, the establishmentof an adequate regulatory/legalframework that will encourage private sector development (but that can also protect the public interest),and by providing greater assistanceto the country's - 59 -
pooreat."' To assist the Government to fulfill that role, the report recommends the specific policy changes, and related measures that are set out in Appendix 1, and highlighted in the discussionbelow.
7.2 The challengesthe Governmentfaces in its task to supDort the development of agricultureare difficult. Bolivia is a large and diverse country, and the constraintsfaced by the different segments of Bolivian agriculture are very different, in line with the duality that characterizes the sector. The challenge is also a very importantone. On the one hand, the agriculturalsector has the potential of playing an important role in the acceleration--andsustainability--of growth as evidencedby the positive developmentsof agriculture in the Eastern Lowlands. On the other, agriculture in the large traditionalsector (comprisedmainly of smallholders who were beneficiariesof the land redistributionprocess that took followed the Revolution of 1952) continues to stagnate. Almost thirty years after the sweeping changes brought about by the Agrarian Reform, these farmers continue to be Bolivia's poorest inhabitants. Poverty alleviation in Bolivia require greater success in improving traditionalagriculture.
7.3 Perhaps the most difficult task is to ascertainwhat should be the role and priorities of the Governmentto support agriculturein the Highlands and higher valleys, where the majority of the country's farmers reside. Agriculture in most of these areas is severely limited by climatic conditions, productivityis low, the output-mix is constrainedto some varieti.!sof cereals and tubers, access to markets is difficult, and the populacion is extremely poor and lacks education. Because of these conditions, there has been a steady migration from these zones to the cities or other rural areas (i.e., the Lowlands and Chapare). With some exceptions, i.e., land in proximity to the cities, agriculturein this areas cannot prosper and the migration process will continue. Accordingly,Government involvement should primarily be seen as poverty-alleviating. The most constructiveGovernment role should be based on human capital development. In agricultural activities,Government invol-ementshould focus on:
(a) measures to improve productivityin the short- and medium-term. Farm productivitycan be increased through increased attention to the developmentand extension of aariculturaltechnologies. The costs of developing (or importing) improved technologiesshould not be too high (even if total public funds directed to research activitiestripled, they would reach roughly US$7 million per year) and the return could be significant (consideringfor example that yields could conservativelyincrease by 102-202 and the annual production of potatoes valued at the farmgate is roughly US$75 million);
(b) activities that will encourage the developmentof small-scale private irrigation schemes. They provide a sound low-cost alternativeto reduce risks and improve productivity;and
60/ The framewrok in which most Government involvementtakes place is contained in the public sector investmentprogram (PSIP). A detailed discussion of the current state of the PSIP is contained in Appendix 3. - 60 -
(c) the grovision of adequate land-titlingservices to those who demand them, and reduction on restrictionson land sales and rentals. These changes will encourage on-farm investmentand will facilitate the migratory process and the ensuing land consolidationby those families wishing to remain in their original land.
7.4 Unlike farmers in the Highlands and higher valley areas, farmers in the lower valleys do not face severe natural-resourceconstraints. On the contrary, some of these areas have some of the country'smost productive land and have a considerableunrealized economic potential. However, this potential has not been realized because most of the land is in the haads of poor smallholderswho have little education,very limited access to information,technology, and financial services. Government support should be based on:
(a) infrastructuredevelopment. These areas hold considerablelong- term potential and would justify long-term investmentsin roads and irrigation;
(b) changes in the land-tenureregulations. Agriculturaldevelopment in these areas will likely be capital-intensive,because--unlike the Lowlands--highquality land is scarce. With the current land- titling system it will be very difficult for farmers to have access to credit to develop a capital-intensiveagriculture. Moreover, it is very likely that the developmentof those activitieswill require land consolidationto benefit from economies of scale, and/or an entrepreneurshipcapacity that current landholdersmay not possess. Impedimentsto land transactionsmay therefore constitute a bottleneck for the developmentof this sector; and
(c) developmentof research and extension activities. These activities should focus on alternative--tocereals and tubers--crops,but should not be started if adequate measures are not taken to promote changes in the current land tenure situation.
7.5 The prospects for future developmentof commercialagriculture in the Lowlands are promising. The sector has diversifiedits productionbase, the private sector has shown considerabledynamism, and the price prospects of wheat, cotton and soybeans are good. However, transformingthis potential into a reality will require some important Governmentactions:
(a) given the relative abundance of land (comparedto other factors of production),most growth will come through the expansion of the agriculturalfrontier. It is imperativethat the Governmenttake appropriate actions to establish an adequate land-policyframework so that expansion takes place in an efficient,sustainable and equitablemanner. The most important constraintfor the establishmentof such policy-frameworkis the 1953 Agrarian Reform Law (and its application),which prevents the State from selling land and therefore precludesmarket participationin the efficient allocationof land among alternativeuses, and encourages inefficient rent-seekingactivities; - 61 -
(b) in the future, as the coca economy is reduced, the pressures on the Lowlands' resources from migration will increase. Therefore, more attention should be paid to research and extension focusing on smallholderagriculture, and subsequent to modifying the land- tenure situationby providing adequate titling and reducing restrictionson the transactionof land's property rights; and
(c) adequate road and transportationpolicies are needed. To protect areas ill-suited for settlement,the Government should reduce the economic incentive for settlers and colonists to invade new lands. This can be achieved by ensuring that transport to those areas is poor. At the same time, there is clearly a need for road improvement in those occupied areas zoned suitable for agricultural development. Since non-traditionalexports are heavily dependent on railway transportation,measures (such as allowing for more private sector participation)should be taken to improve the efficiency of the railway system. - 62 - APPENDIX 1 Page 1 of 4
BOLIVIA AGRICULTURALSE7~R REVIEW POLICY MATRIX
Policy Issues Objective Proposed Measure I. Research and Extension
Researchand extension for Increaseagricultural 1. Concentrateresources and smallholderagriculture In productionand productivity efforts to develop IBTA into the Highlandsand valleys is of mmallholderagriculture. a capable research extremelyweak. Production, institutionserving the yields and technology have prioritytechnology needs of stagnated. small farmers. 2. Inventoryavailable technologiesto identify programs for extensionand/or verificationunder different ecologicalconditions.
3. Inventory institutions working on extension,and identifytheir capabilities. Strengthenthe efforts of research institutionsto disseminateinformation to NGOs and others providingextension services. Support NGO extensionefforts, perhaps through contractual arrangements. 4. Intensifythe provision of animal health services in conjunction with a recovery program for the cost of the service and materials. II. Soil Fertilitv and Erosion Losses in the Highlands and Valleys
Loss of soil texture, Increase and sustain 5. Conduct research on fertility and resultant agricultural productivity by farming systems, with erosion Is prevalentin many improvingland fertility. particular attentionto areas of the Highlands and rotationsand fallow to valleys. develop technologiesto restore soil structure and fertility.
III. Irrination in the and Highlands and Valleys Absence of constructive Promote the developmentof 6. Inventoryof existing Government support hinders private (mostly donor-funded) studies on water resource the developmentof irrigation. small-scaleirrigation availability. Eventually, Irrigation can provide a systems. a comprehensivestudy of the low risk, economicallyviable country'swater resources way to increase production needs to be conducted. and productivity. 7. Inventoryexisting irrigationschemes and pro- grams and evaluate the most cost-effectivetypes of schemes. - 63 - APPENDIX 1 Page 2 of 4
Policy Issues Oblective ProposedMeasure 8. Provide suggestedguide- lines for tLe definition of prioritycriteria and project-selectionparameters for future investment. 9. Bolster the pace of private irrigation development,through the use of public funds to cofinance construction and rehabilitationof schemes, perhaps through the involvementof FDC. IV. Rural FinancialMarkets
Most poor people in rural Promote the developmentof 10. Eliminate subsidized areas lack dependableaccess rural financialmarkets. directed credit operations. to formal financial services, Eliminate incentives to especially deposit facilities. substitute domestic savings II. Support existing lending with foreign savings. institutionsthrough technical assistanceand training. 12. Remove constraintsthat prevent the use of land as collateral. 13. Identify ways to improve access to formal loans by merchants, traders and other marketing intermediaries that usually provide informal financial services. V. The Coca Sector
Illegal production of coca Promote activities that may 14. Modify strategy on leaves has Increased have an impact In curtailing Alternative Development so as significantly since the 1970s coca production an provide a to increase focus on activities in response to increased cushion for lost il_.;ome in and locations (i.e., Lowlands) international demand. the event the size of the where economic returns and coca Industry is reduced. growth potential offer good employment prospects and opportunities.
VI. Rew Lands Policy fo, Agriculture& Forestry The greatest potential for Discourageland clearing, 15. Expand the use of Bolivia's agricultural growth farming and ineffi.ient reconnaissanceland surveys lies in the rational settlement in areas not to provide a more rational expansionof land use. suited for agriculture. basis for allocating land use. However,an adequatepolicy environmentto guide that growth in land use does not exist. 16. Undertake land capabilityanalyses to dete.mine specific land use capabilities and to guide the allocation of permits and road development in the expansion of the agricultural frontier. - 64 - APPENDIX 1 Page 3 of 4
Policy Issues Objective ProposedMeasure 17. Modify the Agrarian Reform Law to enable the State to asellland or have very long-termleasing arrangements. Allow the market in the bidding for the land to determine its best use.
Avoid inefficientland 18. Implementmeasures to clearing for speculative capture some of the economic purposes. Promote growth rent created through the Gover- with equity. ment provision of physicaland social infrastructure.
19. Establish a roads policy that provides a frameworkfor balancingdevelopment needs with environmental protection issues, together with transparent criteria for determiningpublic investments in road constructionand improvement. VII. Land Titling Land tenure insecurity To enhance land tenure 20. Simplifyand streamline reduces desired investments, security, proceduresfor obtaining limits access to titles. Reduce restrictions institutionalcredit, and that prevent land transactions reduces scope for market for both sales and rentals. forces to contributeto development. VIII. Suaar Industry Sugar industry is a Change the industrystructure 21. Eliminate import vertically integratedcartel to a competitiveone, licensingrequirement and comprisedof the sugarcane replacewith a 102 tariff. producersand the mills. Industry structure is protected by import licensing requirements. The cartel is able to capture rents from consumers equivalentto US$12 million per year. IX. Transnort
Inefficientrailway system Improve efficietcyof railway 22. Upgrade rail transport and inadequateroad system transportationand construct facilitiesand privatize the jeopardizesthe sustained key roads to enable the operationsthereof. growth of agricultural efficientdevelopment of Implementnew roads policy non-traditionalexports. designatedagricultural zones. (See 19). More than 802 of these exports are transported through the rail system. - 65 -
APPDIX I Page 4 of 4
Policy Isaues Obl0ctive ProposedMesture
7. Forestry The forest industry has Encourage efficient and 23. Provide long-term leaes developed beyond Goverment's sustainable maagment for foreetry developmnt' capacity to ccontrol it. The practices In forest which liclud e requir emnts industry has not been subject exploitaton. and incentiveo for to prudent!,al regulationu to tsetainably manasing the bridge the gap between the forests. privateand the public interests.Short-term Capturea greatershare of 24. s8mplifythe tax contractsintroduce tenure the economicr it from structureby murgingexisting securitywhich enhancethe forestrydevelopment for taxes into an ad-valorer incentivesto m4ne the Boliviansoclty. tax. Increase tax ratesand foreeta. improvetax cofllction.
XI. PublicSector Investment Prosram(PSIP) Governmentis mplementirg Increasethe efficiencyof the 25. simplifySNIP by: (a) a comprehensiveNational SNIP. eliminatingthe Project PublicInvestment System ImpactMeasurement In the (SNIP). projectselection procesa; (b)using a more qualitative systemfor selectingproject. In place of the cumbersome numericalranking system; and (c) incorporatethe leasonsfrom previous projectsinto new ones.
26* Increasecoordination amng RDCo,m4astriess and other independentagencies as PDC. 27. Introducecomplementary m chausms In MACA to ensurethat adequate provisionsare made for recurrentcost financing. - 66 - MPPflDIX 2 Page 1 of 4
B0LI-VIA
Airicultural Sector Revwow
The Envlroment Impact of Smallholder Agriculture In the Lowland.
The Colonization Proc8
1. Smallholder agriculture In the Lowlands is the legacy of both the directed "colonization"proceos that took place In Bolivia from the early 1950. until the 1970., and the spontaneousmigration that followed the opening of the Cochabamba-SantaCruz road (1953), and the Cochabamba-Vllarroel ana' Villa Tunari in Beni road. (1965 and 1972). While estimatoo on the number of migrants vary widely across several studies, the most conistent information seems to point to an average migration of 3,000 families per year. 11
2. All estimates indicate that Santa Cruz has been the main destination of the migrants to the Lowlands. According to the 1984 Agricultural Census, there were 38,400 landholdingof less than 100 ha in Santa Cruz, of which 60% to 752 belonged to colonizers distributedIn approximately 18 colonizationareas in the hinterland of the city of Santa Cruz (Table A.19). Most of the Bolivian imigrants have come from Potosi (in the Government-sponsoredcolonization programs), Chuquisaca, and Cochabamba (Table A.20).
Underlying Causes of Mlitration
3. Very little has been studied with respect to the underlying causes of migration. The usual explanation for the migration from the Highlands and valleys is the difficult conditions in the area of origin (lack of land) and the opportunityto attain a higher level of income in the Lowlands. According to a recent study of migration to Alto Beni,11 more than 75Z of the migrants had lived in plots of less than 2 ha, and the standard of living of 972 of them was below subsistencelevel. Also wages in the Lowlands are about 202 higher than in the Highlands and valleys (Table 2.4), and the annual family income for small farmers in the Santa Cruz area is at loast US$1,000. By contrast, some estimtes indicate that family income in the Highlands and upper valleys (Chuquisaca)are as low as US$500 per year.
1/ Seo Wiggins, Steve, "Colonizacionen Bolivia", Accion Cultural Loyola, Sucre, 1976, and Zeballos, Hernan, "La Colonizacion*n Bolivia", en Antonio Labal, at. al. Debate Agrario I 7. La Paz, 1987. It should also be noted that not all colonizers are of Bolivian origin (Table A.l9).
I OSeeSoriano Lopez, Rodolfo, "DiaenosticoOocio-Economico Alto Bent". AIPE-PROCOM-CDLA. La Paz, 1990. - 67 - APPENDIX 2 Page 2 of 4
The Role of the Syndicate (Sindicato)in the Settlement Process 4. Tho peasantsindicato is a communityorganization inspired by tCe Highlandsavllusl, whose main functionin to organize the communityfor the provisionof much neededpublic goods in the colonizingaroas, whore the preaenceof the State is minimal. In most cases,it providesor organizes road developmentand maintenance,school building, and land tenuresecurity. The most powerfulsyndicates tend to hold commonproperty rights on land, and grant rightsoroer parcels to individuals.
5. While the syndicatos'provision of aomepublic goods (e.g., education, roads) can certsinly be considered an efficientalternativ- to Government involryement in such areas of development ;I the arrangement that leads to cominal-held property rights is more likely to be more inefficient because it con3trains land consolidation and the ensuing optinmization of the economic units. The communal property arrangement is largely a byprodmet of t.'eneed to increase the colonizers political power and influence to get the attentionof the land grantingagencies,' 1 and to vrotletthe communityfrom the problems related to ill-defined property righta, particularly land grabbing, in the event the value of their land increases.
Parmint Patterns in Smallholder Aariculture
6. To a large extent, the migrants' farming practices have been stereotypedby the standarddescription of slash-and-burnagriculture. Accordingto this description,farmers Initially clear between1 and 3 ha of forestwhich are cultivatedfor 2 to 3 years. After this period,yields normallydecline, weeds take over, and a now plot is clearedfor cultivation. The implication is that smallholder agriculture is "nomadic", that land availability is plentiful and such practices have had a very negative impact on the environment by inducing deforestation.
7. However, a closer examination of the farming pattern shows that colonists tend to settle in an area for much longer periods, and that there are a diversity of ways by which farmers cope with declining yields. According to what has been observed in older colonies, the basic farming pattern comprises three phasea over a 15- to 25-year period. Initially, they occupy (or receive)a landholdingof 20 to 50 ha in which slash and burn in practicedfor the cultivationof maize and rice using very rudimentary technologyand relyingexclusively on familylabor. Duringthe secondphase, the colonistsusually enjoy a periodof relativeprosperity. Yields under slash and burn are sufficientto allowthe accumulationof some capital(from backpacksprayers to livestock) and eventuallysome of the area is destumped.
V/ A description of the avllu systemcan be found in "Bolivia*Poverty Report", op.cit.
4/l This could be consideredto the equivalentof irrigation-associations that collectivelybuild and maintainirrigation system. 51 Many syndicatesare formedby entrepreneurswith accessto INRk or INC. - 68 - APPENIX 2 Page 3 of 4
During the third stage, most of the virgin land has already been cleared, and agriculture starts to be practiced in regrowth areaa, so-called barbecho.
8. The barbecho crisis. This "criaia" ia an extensionof the "nomadic"veraion of smallholderagriculture. It refers to a widely accapted hypothesis that given barbecho'. agriculturedeclining yields, farmera who could not change their farming patterns to liveatockproduction, mechanization,or perennial cropa, were obliged to sell their landholding and search for new frontierswere virgin, foreated land was available. The consequenceof the Obarbecho crisis" vas concentrationof landholdingand deforestation (a pattorn that was in fact observed during the 1970e).
9. This hypothesis of abandonmentof the colony as the main mechanism to cope with declining yields is likely to have been overplayed in tho Bolivian Lowlands, since most of the abandonmentthat took place in the 1970s oeemato have been the result of the decrease in the relative price of rice with respect to labor, and the increased opportunitiesthat came with the developmentof the coca industry. Moreover, there is evidence that colonists are increasinglyadopting mechanized methods of agriculture,and that they actively participate either in their colony's area labor market or start small non-agriculturalbusinesses. This is consistentwith the fact that as the value of older colonies' land increaseswith road developmentand better access to other Government services, agriculturalpractices become less land intensive, there is increased capital formation and the population tends to settle.
The Imnact of SmallholderAgriculture on Deforestation
10. It is reasonable to assume that deforestationcaused from alash- and-burn agriculturewill be practiced more intensivelyin areas where the private opportunity cost of land is lower, the weather Is wetter (accelerating weed growth), and in undulating areas where the differentialin productivity between slash-and-burnagriculture and barbecho agricultureis highest. The areas where this is most likely to occur are in the provinces of Ichilo, Santiateban,Chane-Pirai, Sara, and perhapa fuflo de Chavez and northern San Julian. According to mission estimates, the population of those colonies is about 17,500 families, and they are likely to be deforeatingabout 17,500 ha per year. Given that the annual migration rate to these areas is about 2,000 families per year, and that most families are already established in 50 ha plots of land, the total deforested area should not exceed 200,000 ha over thle next twenty years--as long as there is no abandonmentof the colovy. The rest of the colonies have already shown a high rate of adoption of new technologies,and in a 20- to 30-year period they have mostly settled.
Conclusions
11. Consistent with the developmentof a new lands policy, the Government should continue to study the colonist's agriculturalpractices. It must be expectedthat migration to the Lowlands will continue, and at an acceleratedpace as opportunitiesdevelop. This pace will be much greater if the opportunitiesin the coca industry decline. The pattern of development of - 69 - APPENDIX 2 Page 4 of 4
the earlier colonists should provide grounds for a policy that would support (without doing "directed colonization")the efficient settlement of that population by discouragingsettlement in areas where cultivation in regrowth is more likely to be inefficient,and creating conditions for the development of rural financial markets (see Chapter UII) to facilitatethe evolution to a more capital intensive agriculture. The Government'aAlternative Development Program (in response to the coca productionproblem) should look more to developing opportunitiesin the Lowlands which will continue to attract migrants, rather than--^u currently--focusingon the more populated areas where natural resources and opportunitiesare more constrained in absolute terms. - 70 - APPENDIX 3 Page 1 of 7
BOLIVIA
AGRICULTURALSECTOR REVIEW
The Oraanizationof the Public Soctor Investment Program (PSIP)
A. Backaround
1. Since 1985, Bolivia has pursued an economic policy almed at reducing direct public sector interventionin the economy allowing markets to allocate private resources. In this context, the PSIP (or, more generally, the public sector expendituresprogram) has become the main tool whereby Government can exert a direct influenceon resource allocation, and further specific national, regional and sectoral goals. Therefore, it is of utmost importance that the selectionand execution of public investmentsbe organized and managed efficiently. The Government of Bolivia is presently engaged in a major effortto improvethe organizationand managementof its public sector investmentprogram Y1 2. Public investmentin Bolivianagriculture between 1987 and 1990 averagedUS$36.7 million per year (TableA.22), equivalentto about 42 of agriculturalGDP. As a percentageof totalpublic investmentin all sectors, agriculturalpublic investment in 1987-90was about 102. These investments have been highlydependent on foreignsources of financing,which accounted for 611 of the total.
3. Agriculture'spublic sector investment program is implementedby three categoriesof Governmentagencies: (i) the centralMinistry of Agricultureand PeasantAffairs (MACA)s (ii) MACA's nine decentralized agencies;and (iii) the RegionalDevelopment Corporations (RDCs). lI the past three years (1988-90),most of the investmentswere carriedout by the RDCs (651),rolloved in importanceby the decentralizedagencies (251) and MACA (1OZ). The importanceof the RDCs in the implementationof agricultural publicinvestment greatly exceeds their importancein the implementationof overallpublic investment; for example,in the first quarterof 1991,the RDC8 accountedfor just 13.62of the overallpublic investment.
B. The Role of the VariousGovernment Agencies and Levels
4. The roles of the various agencies and levels of Government in the formulationand executionof the PSIP are definedin Law 1178 of July 20, 1990 (Leo de Administracionv ControlGubernamentales). The overalllead agencyis the Ministryof Planning(MINPLAN), which is responsiblefor: (i) elaborating the PSIP, on the basis of investmentand pro-investmentproposals previously
[I The past difficultiesin managingthe economy'sPSIP are reflectedby the differencebetween programmed and executedpublic expenditures for the 1987-90period (TableA.23). - 71 - APPENDIX 3 Page 2 of 7
approved by the correspondingsectoral and regional agencies; (ii) negotiating any external financing for those projects; and (iii) programmingthe PSIP and evaluating its execution. The Ministry of Finance is the lead agency with regard to the budgeting of the PSIP.
5. Within the frameworkof the basic rules and procedures established by the MINPLAN and the Ministry of Finance, each lead public sector agency has to elaborate its own specific rules and procedures for the formulationand execution of its portion of the PSIP. These leading agencies are the Ministries and the Regional DevelopmentCorporations. Each lead agency has to exercise a function of supervision ("tuicion")over a number of other agencies. For example, MACA supervisesnine decentralizedagencies and nine departmentaloffices. 11 The supervisionincludes assisting the corresponding agencies to establish their systems for the formulationand execution of public investments;evaluating investmentproposals prior to their inclusion in the PSIP; and exercising an external control over the execution of those investments.
C. The National Public Investment System (SNIP): Concept and Structure
6. Since 1987, the Government of Bolivia, with technical assistance from the UNDP and financial support from the IDB and the World Bank, embarked on a major effort to develop a formal system for the formulationand follow-up of public investments. This system, known as the SNIP (SistemaNacional de InversionesPublicas), comprises five subsystems: (i) Project Identification, Preparationand Evaluation; (ii) Project Impact Measurement; (iii) Project Ranking (Jerarquizacion);(iv) Budget Programming;and (v) Physical and Financial Follow-up. Associatedwith it, there is a computerizedinformation system known as the SISIN (Sistemade InformacionSobre Inversiones).
7. Proiect Identification.PreDaration and Evaluation Subsystem. This subsystem is the foundation of the SNIP. It comprises all the processes whereby new projects are generated, screened, and formulated into project proposals, and through which those proposals are evaluated in accordancewith standard methodologies of project evaluation. Positive results of the technical, financial and economic feasibilityanalyses are required (at least in theory) for a proposed project to be considered a candidate for inclusion in the PSIP. With regard to economic feasibility,the project must have an estimated economic rate of return of at least 12x. The responsibilityfor conducting these analyses lies with the originating agency and its supervisory agency. The MINPLAN rarely gets involved directly at this stage, except in the case of very large projects.
8. Proiect Impact Measurement Subsystem. The purpose of this subsystem is to calculate (based on the data generated by the project
2/ Howver, sinceMACA does not have supervisoryauthority over the RDCs, ngriculturalinvestment projects sponsored by the RDCs do not have to be approvedby MACA. - 72 - APPENDIX3 Page 3 of 7
identificationsubsystem) certain indicatorsof project impact in terms of value added, employmentand foreign exchange.
9. Proiect Rankina Subsystem. The purpose of this *ubsystem in to quantify the contributionof each project to a set of developmentobjectives, to compare among projects their contributionto thoa- objectives,and to establish on this basis an order of priority for the inclusion of project. in the PSIP. To this effect, the subsystemwould assign values to a number of economic, social, and geographicalindicators, and would then combine these measurementsinto a single indicatorthrough the use of a system of weights. The indicators in question correspondto three types of objectives: (i) macroeconomicobjectives, which refer to the generationof value added, employment and foreign exchange (para. 7.8); (ii) regional and/or sectoral objectives; and (iii) efficiencyobjectives, as measured, for example, by the net present value of a project. This ranking method is intended to be used within each sector (e.g., agriculture). Intersectoralpriorities are determinedby other considerations,not explicitly incorporatedin the SNIP.V
10. Ludset ProaramminaSubsystem. The purpose of this subsystem,which is basically the responsibilityof the HINPLAN, in coordinationwith thn Ministry of Finance, is to generate two key products, the Annual Public Investment Program (Financed),and the Three-YearPublic InvestmentProgram. The steps involved in the formulationof the Annual Public InvestmentProgram (Financed)are: (i) to estimate the total financing available for public investments for the year, both domestic and external; (ii) to determine ceilings by sectors and by regions; (iii) to estimate how much financingwill be needed for projects and pre-investmentstudies already under implementationg(iv) to determine,based on the previous steps, how much financing remains for new projects or new pre-investmentstudies; and (v) to make a final selectionof new projects or pre-investmentstudies to be included in the forthcomingAnnual Public InvestmentProgram (Financed). Final approval of this Program is then given by CONEPLAN (Conselo Nacional de Economia v Planificacion).
11. Physical and FUiancial Follow-Un Subsystem. The four previous subsystemsrefer to what could be called the pre-investmentstage. This subsystem of the SNIP refers to the investmentstage, and its purpose is to conduct a follow-up of actual project implementation,up to project completion and the finalizationof the correspondingdisbursements to monitor project implementation. It can also provide a sounder basis for the formulationof the subsequentyear's Annual Public InvestmentProgram, by providing more
3/ Therefore, MACA would be expected under the SNIP to develop a specific methodology to rank all the agriculturalproject proposals generatedby MACA and its decentralizedagencies. However, it is not clear how the different RDCs would do a similar ranking among all of their regional project proposals, since that wvoaldinvolve quantifyingthe comparative merits of very dissimilarprojects (in differant sectors of activity). -73- APPENDIX 3 Page 4 of 7
realistic estimates of the actual spending capacity of each implementing agency.
D. Status of Implementationof the SNIP
12. Implementation of the SNIP/SISIN started In 1987. Two stages of the process of implementationcan be distinguished up to now. In the first stage, the system was designed and Implementedat the level of the HINPLAN. Emphasis was put on gathering informationof ongoing projects. At that point the system aimed at clarifyingwhat public investmentprojects were being executed, their expected cCsta, ho ae. had b,en z;ent on each of therm already, and the characteristicsof the financing of these expenditures. The main objectivewas to improve control over budget programmingof investment xpendituresand achieve a better follow up of actual expendituresand physical achievements. In the second stage of implementationof the system, the emphasis switched to efforts to extend the system to the decentralized agencies (Ministries,RDCs, and their dependent agencies). Specific activities during this stage included the provision by MINPLAN of computer software and hardware to the decentralizedagencies and training.
13. There are currently two subsystems of the SNIP which are operational or nearly so, the Budget ProgrammingSubsystem, and the Physical and Financial Follow-Up Subsystem. The latter will reportedly become fully operational by the end of 1991, when approved public investment expenditures will be put (for the first time) on a quarterly basis, and when actual on-site inspection of physical progress will be conducted (also for the first time), by central levels of Government.
14. The decentralized operation of the rest of the SNIP, comprising the portion of the project cycle from identificationto selection of new projects to be included in the PSIP, seems to be lagging much further behind. This is not surprising,since the processes and issues involved are clearly much more complex for this "upstream"portion of the project cycle. Also, at present the decentralizedagencies do not have a legal obligation to install and operate the SNIP/SISIN,and the degree of enthusiasm for adoption of the system reportedly varies widely among the agencies. However, the absence of a legal obligation is unlikely to be the key constraint.
E. Constraints to Further Implementation of the SNIP
15. There are still several important constraints to the operation of the SNIP/SISIN. These ares
(a) weak gro1ect vreoaration. evaluation and execution c2aabilities. The capacity to identify, prepare and evaluate good public investment projects, and to execute them effectively,is very uneven and in general weak throughout the Bolivian Administration. In MACA, for example, most project proposals received from its decentralized agencies lack the basic informationthat would be needed to enter the project into the SISIN (i.e., to fill the - 74 - APPENDIX3 Page 5 of 7
so-calledFormulario Unico); and MACA itselfis not well equipped to evaluateproject proposals;
(b) week ca-nbilitiesto formulatesectoral and regionalPolicies and investmentstrategies. Ministries end RDCs generallydo not have adequatecapabilities to formulatepolicies (sectoralor regional) and inventment strategieson a continuous basis. This makes it very difficult for them to set rational priorities among investment project proposals which meet basic criteria of technical, financial and economic feasibility. This weakness (as the one in project preparation),results from difficultiesin attracting and retaining good professionals,given the public sector's low salary structure And other peroonnel management problems;
(c) high degree of devendenceon foreign financing. The agricultural PSIP is highly dependent on foreign financing (para. 7.2). In practice this results in an absence of open competitionamong alternativenew projects, thus imposing a major restrictionon the operation of the SNIP--as theoreticallyconceived. On the plus side, the involvementof foreign funding agencies may generally result in a more thorough feasibilityanalysis of projects; and
(d) poor coordinationbetween reeional and sectoral heads. Projects originating in RDCs do not need approval of the corresponding sectoral Ministry. This in itself is probably not bad, but coordinationis also lacking to a large extent, lending itself to duplicationof functions,inconsistency in different projects' objectives and the like. The problems that can evolve from a situation like this may well be magnified in agricultureby the recent proliferationof institutionsinvolved in agricultural development;namely the Peasant Development Fund, and the Alternative Development Fund.
F. Evaluation of the SNIP
16. Tne Government'sinitiative to develop and establich a computerized public investmentsystem is a most commendableone. Even an imperfect operation of the system is likoly to yield considerableefficiency gains. The systembeing adopted,however, seems unnecessarilycomplex in certain aspects. At the same time,it would benefitfrom certainadditions to its present structure.
SCoDe for Simplificationof the SNIP 17. The SNIP'sSubsystem of ProjectImpact Measurement is a complicatingelement in the processof projectselection. The indicator proposedin the SNIP (thepresent value of the value added associatedwith a project,direct and indirect,divided by the initialinvestment) is misleading for projectselection. A similarargument can be made with regardto the "associatedemployment" indicator. In prlnciple,the use of an indicator measuringthe impact of a project on employment creation could be useful, - 75 - APPENDIX 3 Page 6 of 7
adding an elementof income distributioneffects to the standard economic analysis of projects (which ignores such effects). The indicator proposed in the SNIP, however, does not measure the incrementalemployment created by a given project (relativeto the no-project situation),but merely the mployment associatedwith a project, direct and indirect. Only if we are willing to assum that in the absenceof the project all the corresponding labor would be unemployed would the two measures coincide.
18. The proposed system for ranking projects also seems impractical. It will be difficult to give a numerical rating to ma.,yof the project characteristicsgiven that they relate to specific regional, sectoral and national priorities. Moreover, any system of weights chosen to combine the ratings of individual characteristicsinto a single indicatorwould be largely arbitrary, reflecting the weight-choosers' uesses of society's preferences. In reality, therefore, the proposed "points system" implies a level of preciseness in ranking projects that in fact is little more than a qualitative judgment on the part of the technocrats involved.
An Alternative System for Proiect Selection
19. The current proiect rankin_ system could benefit from the folloming changes in its procedures. The MIMPLAN, and the sectoral and regional heads, should ensure that any project being considered for inclusion in the PSIP has been subjected to a thorough feasibilityanalysis, and has passed the tests of technical, financial and economic feasibility (the latter would require, for "productive"projects, an economic rate of return of at least 121). Available projects that have passed the above tests would then be submitted to the HINPLAN for considerationand possible inclusion in the PSIP by the sectoral and regional heada. These projects would be ranked by the sponsoring heads, following a discussion of their merits in relation to previously defined sectoraland regional policy objectives and investmentpriorities. Special Investment Committees could be formed in each head agency to this effect. A written explanation of how the ranking was decided upon would form part of the submission by each sectoral and regional head. This would be reviewed by MINPLAN, which could challenge the rationale presented. The MINPLAN would, moreover, bring to bear national level policies and priorities into the determinationof the final set of new projects to be incorporatedinto the PSIP. After this final selection, the MINPLAN would inform in writing to the head agenciesof the rationaleused for the selection, in order to give adequate transparencyto its decisions.
Deslrgble Extensions of the SNIP
20. Notwithstandingthat the SNIP could benefit from some simplification.,certain extensions of the system seem desirable. The system in its present form does not have any standard recuirementsfor environmen*,al imnact evaluationt,nor does it have any provisions for the ex-post evaluation - 76 - APPENDIX 3 Page 7 of 7
of completed projects.Y' Also, it does not provide for the preparation of detailed ImplementationPlans. The preparationof such plans would be important for at least two reasons. Firstly, given the fact that typically a period of 3-4 years elapses between completion of the feasibility study and the start of implementation,the preparation of an ImplementationPlan provides an opportunity to update the assumptionsof the feasibility study. Secondly, the availabilityof an ImplementationPlan would permit the speedy start of implementationonce financing arrangementsare finalized, thus reducing commitment fees.Y'
G. Conclusions and Recommendations
21. The establishmentof the SNIP is a commendableand ambitious effort, which can be expected to improve the administrationof public investment. The degree of success in implementationof the SNIP will depend on the extent to which the current constraintscan be overcome. Some of them, such as the lack of coordinationbetween regional and sectoral heads, could be alleviatedwithout much difficulty. However, other constraintsare more intractable. Addressing weak project and policy capabilitieswould require a radical overhaul of personnel policies (e.g., compensation,recruitment). This is likely to be a long-term effort. Likewise, the high degree of dependence of the PSIP on foreign financing, and donors' influence on the choice of projects selected for inclutioz in the PSIP, are likely to remain a feature of the PSIP for a long time to come.
22. To facilitate the system's implementationthe followingmeasures are recommended: (i) discard the Project Impact Measurement Subsystem; ii) Reformulate the Project Ranking Subsystem (see para. 7.20); (iii) add a standard requirementof environmentalimpact assessment; (iv) add an Ex-Post Evaluation Subsystem, includingan adequate mechanism for the feedback of the lessons of experience into the formulationof new projects; (v) add a standard requirement for the preparation of a detailed Project ImplementationPlan for every new project included in the PSIP; and (vi) introduce a mechanism to improve the coordinationbetween RDCs and sectoral head agencies,with regard to projects originatingin the RDCs. At the level of MACA, there is also inadequate costing, and mechanisms for insuring budgetary provisions for recurrent cost financing are also inadequate. This poses a major constraint to the sustainabilityof the public investmentprograms; actions to correct these deficienciesare needed.
A/ These two points have been made by UNDP staff in their proposal to the IDB for a third phase technical cooperationproject in support of the further developmentof the SNIP.
5/ These points, and the suggestion to introduce a standard requirementfor the preparation of an ImplementationPlan for every project, have been made by UNDP staff in charge of coordinatingthe IDB's technical assistance to the SNIP. - 77 -
APPENDIX 4
BOLIVIA
AGRICULTURALSECTOR REVIEW
Statistical Anpendix
Page No. A.1 Gross Domestic Product by Sector of Origin ...... 78 A.2 National Land Use, Land Capability and Actual Use by Department 79 A.3 Land Use by Department, 1984 ...... 80 A.4 Farm Size and Distributionby Region, 1984 ...... 81 A.5 Crop Area by Department, 1981-90 ...... 82 A.6 Crop Production by Department, 1981-90 ...... 83 A.7 Yields of Selected Crops by Department, 1981-90 ...... 84 A.8 Yieldsof SelectedCrops, 1981-5 . 0 ...... 85 A.9 Livestock Population, 1981-88...... 86 A.1U Indicators of Protection, 1976-82 ...... 87 A.11 Production of Certified Seeds in Relation to Crop Area . . . . 88 A.12 Availability and Location of AgriculturalResearch ...... 89 A.13 Benefits Derived from Irrigation:Illustrative Cases (*Highlands)...... 90 A.14 Benefits Derived from Irrigation:Illustrative Cases (Valleye) 91 A.15 Investment Costs of Some Small-ScaleIrrigation Programs . . . 92 A.16 Official Exchange Rate (Nominal) ...... 93 A.17 Parallel Exchange Rate (Nominal) ...... 94 A.18 ProducerPrices in Santa Cruz...... * ...... 9 95 A.19 Dates of Settlement and Population in the Colonies of Santa COruz...... 96 A.20 Origin of Settlers in the Santa Cruz Area ...... 97 A.21 Years of CultivationAfter Clearing High Forest ...... 98 A.22 Comparison Between Timber Sales Data and Production Data . . . 99 A.23 Presupuesto de Inversion Publica Ejecucion Presupuestaria 1987-90.P .o I. v. r P . i .E c i . r .up . . . .. 100
A.24 Presupuesto de Inversion Publica Ejecucion Preeupuestaria 1987-90. . . . . a ...... a. . 101 - 77 -
APPENDIX 4
BOLIVIA
AGRICULTURALSECTOR REVIEW
StatisticalA&gendix
Paxe No. A.1 Gross Domestic Product by Sector of Origin ...... 78 A.2 National Land Use, Land Capability and Actual Use by Department 79
A.3 Land Use by Department, 1984 . . 8 ...... 80 A.4 Farm Size and Distributionby Region, 1984 ...... 81 A.5 Crop Area by Department, 1981-90 ...... 82 A.6 Crop Production by Department, 1981-90 ...... 83 A.7 Yields of Selected Crops by Department, 1981-90 . . . . . 84 A.8 Yields of Selected Crops, 1981-90 ...... 85 A.9 Livestock Population, 1981-88 ...... 86 A.10 Indicatorsof Protection, 1976-82 ...... 87 A.11 Production of Certified Seeds in Relation to Crop Area . . . . 88 A.12 Availabilityand Location of AgriculturalResearch ...... 89 A.13 Benefits Derived from Irrigat'onsIllustrative Cases (Highlands) ...... 90 A.14 Benefits Derived from Irrigation:Illustrative Cases (Valleys) 91 A.15 Investment Costs of Some Small-ScaleIrrigation Programs . . . 92 A.16 Official Exchange Rate (Nominal) ...... 93 A.17 Parallel Exchange Rate (Nominal) ...... 94 A.18 Producer Prices in Santa Cruz ...... *...... 95 A.19 Dates of Settlement and Population in the Colonies of Santa Cruz . *. 0o0*. . o. o. . . . . 0...... 96 A.20 Origin of Settlers in the Santa Cruz Area ...... 97 A.21 Years of CultivationAfter Clearing High Forest ...... 98 A.22 Comparison Between Timber Sales Data and Production Data . . . 99 A.23 Presupuesto de InversionPublica Ejecucion Presupuestaria 1987-90.ro d . I . . o P .b .i E . o. . r ...... 100
A.24 Presupuesto de Inversion Publica Ejecucion Presupuestaria 1987-90...... a ...... 101 Table2 Al, 41A--OSSUm SM MMCT 3T s510 0r ORIGD (at Constant lo60 Ntue)
197m 1979 193 1981 1962 1983 it" 1965 1t" 1967 i96 196
Gross Doestic Product at U.p. 124,490 124,55 122.946 124,084 116,675 1133577 112,596 111,509 103,529 111,660 114,963 116,095 Kmdirect bus.t.z 3,58 3,236 3,268 3,734 1.,0 571 1,048 1,307 I,U2 2.277 1.5*7 1.S11 Cre. Dmtic Product at p.p. 120,901 121,418 119.658 120,330 117,564 112,606 111,448 110,302 106,647 109.S53 113,136 114,264
PfT5 y Sector 42,430 41,740 41.970 42,493 43.426 37,900 39,455 39,583 36,444 37.66 40,757 42,619 Agricutr 21,490 22,262 22,S63 22,354 23.90 19,76 23,553 25,372 24,478 23,327 23.951 23,572 11.* 21,140 19,478 19.407 20.19 19.526 18112 15,902 14.211 12,166 12,351 14,606 17.047 Iydrocarbou 6,676 6.423 6.728 7,072 7,476 7,176 7.015 6.973 6,647 6.950 7.168 7,503 Itasrals 14.164 13.05S 12,679 13.067 12,050 10,936 6.887 7.238 5,319 5.401 7.617 9,544
Secoodary Sector 25,562 25,057 22,495 20.639 18.229 16,272 18,225 16,872 16,404 16,724 17,871 16.568 Namafacturiug 18.681 18,578 17,974 16.581 14,531 14,558 14.707 13,483 13.742 14,087 14,852 15,374
Comtructiou 6,F1 6,479 4,521 4.056 3,698 3.714 3.510 3,389 2,662 2.637 3,019 3.214 1
Servie.s Sector 52.709 54,621 15.193 57.198 55,929 56,634 53,968 53.847 53.799 14.971 S4.506 55.077
UtUti es 714 734 606 907 930 951 1,025 986 1,059 996 1,033 1,105 Cmerce 13,283 13.622 13,261 14.418 13.464 15,983 13,243 13,316 14,766 15,974 15,350 11,3.5
Transport Storege no ComatolcatU" 6,666 7,577 7,321 6,174 7,799 7,e40 8.471 8,e73 9,346 9,625 9,S66 I0.096 Fiaocial Services (Uauhiug) 7,541 7,496 7,169 6,704 6.126 4,740 4,745 5.046 4,292 4,110 4,017 4,097
Cesral Goverzuet 11,098 11,283 12.940 13,193 13,749 13.312 12.777 12.041 10,116 10,365 10,210 10,333
Otber Servie.* 13,407 13,909 13,676 13,602 13,661 13,808 13,707 13,565 14,216 13,701 14,012 14,049
Source. National Iuetitute of Statistics aod Staff Ectiates.
m!1>
ts _ ; Table A.2: BOLIVIA--NATIONALLAND USE, LAND CAPABILITYAND ACTUAL USE BY DEPARTMENT
Suitable for km2 2 Cultivation Cultivated '000 of Area ------'000 ha ------
Forest & Woods 564.7 51.4 Chuquisaca 2,737 180 Pastures,Nat. 338.3 30.8 La Paz 2,839 267 Wcclands 24.2 2.2 Cochabamba 2,109 231 Lakes 14.2 1.3 Oruro 1,269 75 Arid Areas 126.1 11.5 Potosi 1,083 172 Urban Settlement 2.3 0.2 Tarija 678 103 Cultivable 28.8 2.6 Santa Cruz 6,848 414 - Beni 8,143 55 Pando 203 18
TOTAL 1,098.6 100 25,908 1,514
Source: GEOBOL ERTS/Bolivia,August 1978.
4 - 1-4 Table A.3t BOLIVIA--LUADUSE BY DEPARTMENT,1984 ('000 ha)
TOTAL Chsca La Paz S Crux Cbba Oruro Potosi Tarija Beni Pando
Total Area 23,264 1,047 827 5,532 229 1,337 376 1,071 11,105 1,740 Forests & Woods 9,678 517 204 2,803 30 50 18 743 3,637 1,676 Other Lands 349 28 29 73 7 63 9 45 91 4 Pastures, Nat. 11,233 337 124 2,042 36 1,085 148 202 7,228 31 Cultivated Area 2,005 171 470 613 156 138 201 80 148 28 Crops 1,154 144 302 297 116 52 133 69 31 10 Barbecho 238 8 35 78 13 13 23 3 56 9 Fallow 616 19 134 238 27 74 45 9 61 9 Pasture 209 2 0 187 0 1 0 1 13 5 o
Source: INE, M&CA.
OQm mi z w tv o x Table A.4t BOLIVIA--FARKSIZE AND DISTR!DUBIONBY REGI0N, 1984 (number '000)
TOTAL Checa La Paz S Cruz Cbba Oruro Potosl Tarija Benl Pando
Leos than 1 ha 91.7 4.9 51.2 - 19.9 1.4 11.7 2.6 - - 1.0 to 4.9 ha 168.4 24.3 54.3 15.1 33.9 2.6 26.4 8.7 2.3 0.8 5.0 to 9.9 ha 50.7 8.6 15.4 3.8 7.1 1.8 9.2 4.0 0.7 0.2 10 to 19.9 ha 39.3 4.6 16.8 3.9 2.8 2.0 5.9 2.4 0.6 0.3 20 to 99 ha 35.5 4.0 3.0 15.6 0.6 3.0 5.0 1.8 1.9 0.6 100 to 499 ha 7.1 0.7 0.4 2.2 0.1 1.5 0.4 0.3 0.6 1.0 Over 500 ha 5.2 0.3 0.0 1.7 0.0 0.5 0.2 0.4 1.7 0.5 Total Holdings 397.9 47.5 141.1 42.3 64.4 12.8 58.8 20.1 7.7 3.2
l co
Total Units 452.5 52.2 141.1 42.4 79.6 22.2 80.4 21.7 9.2 3.7
Source: AgriculturalCensus 1984, National SocioeconomicSurvey of AgriculturalSector 1978.
oo
I93 - 82 - APPENDIX 4 Page 5 of 24
Tablek.t BOLIVIA--CROPAM BY DEPARHZNT,1981-90 (ha)
CrOD XY-R gumA La PAZ 5 Cruz gm,a Orgro Pocoso Tza n Pando TOTAL
Rice 1981 35 6,490 39,095 13,175 0 0 115 3,900 550 63,360 1986 350 1W,900 55,000 8,500 0 0 2iO 12,200 5,000 92,200 1968 560 10,000 60,000 7,000 0 0 1,400 12,000 5.250 96,230 1989 630 10,800 65,000 9,000 0 0 1,460 13,000 5,200 105,090 1990 600 12,100 67,000 9,100 0 0 1,500 13,500 5,300 109,100 Wheat 1981 24,930 2,930 7,440 32,610 250 15,665 11,910 0 0 95,955 1986 25,800 5,500 13,300 30,450 1,500 22,800 6,900 0 0 106,250 1988 22,082 4,000 7,900 22,000 1,200 17,000 7,500 0 0 81,682 1989 25,040 3,330 13,000 22,500 0 17,100 5,020 0 0 85,990 1990 23,790 2,839 14,950 18,600 0 16,500 5,320 0 0 81,999 Barley 1981 20,900 22,745 100 8,410 4,320 26,540 465 0 0 83,480 1986 26,800 27,500 200 9,000 8,600 22,000 600 0 0 94,900 1988 23,705 26,000 400 9,100 7,500 21,000 840 0 0 88,545 1989 25,330 26,380 380 8,840 8,100 19,350 700 0 0 89,080 1990 26,600 25,060 350 9,720 7,800 18,500 650 0 0 88,680 Maizd Grain 1981 63,595 13,965 90,485 75,090 60 17,605 45,310 5,900 1.100 313,110 1986 68,000 16,000 85,000 55,000 225 20,500 34,000 11,000 4,27S 294,000 1988 71,160 17,500 80,300 50,500 210 20,190 37,940 11,060 4,500 293,360 1989 70,750 17,240 72,060 44,880 180 20,000 37,830 11,500 4,560 279,000 1990 63,670 19,830 65,000 40,530 130 20,500 35,130 12,000 4,600 261,390 Quinoa 1981 10 13,255 0 275 6,545 2,955 0 0 0 23,040 1986 60 17,000 0 190 8,100 17,son 0 0 0 42,850 1988 190 19,800 0 225 9,400 20,385 0 0 0 50,000 1989 150 15,380 0 210 9,900 17,100 0 0 0 42,740 1990 120 16,150 0 180 10,200 17,800 0 0 0 44,450 Potato 1981 24,965 32,535 3,795 52,630 14,765 36,670 11,805 0 0 177,165 1986 23,700 36,600 2,600 31,000 12,200 30,800 7,500 0 0 144,400 1988 23,265 37,428 4,754 30,347 11,380 29,335 7,186 0 0 143,695 1989 20,500 32,300 4,000 25,600 10,640 26,100 8,000 0 0 127,140 1990 21,110 27,460 3,000 21,630 9,500 26,500 8,810 0 0 118,010 Cassava 1981 800 1,305 9,050 3,865 0 0 210 2,100 600 17,930 1986 1,090 4,480 15,570 3,400 0 0 521 11,376 4,012 40,449 1988 1,090 4,480 15,570 3,400 0 0 500 11,060 3,900 40,000 1989 1,050 6,640 17,500 6,000 0 0 600 11,500 4,200 47,490 1990 980 7,630 19,000 6,100 0 0 630 11,000 4,100 49,440 Cotton 1981 0 0 14,350 0 0 0 0 0 0 14,350 1986 0 0 10,800 0 0 0 450 0 0 11,250 1988 0 0 9,600 0 0 0 350 0 0 9,950 1989 0 0 1,200 0 0 0 0 0 0 1,200 1990 0 0 3,640 0 0 0 0 0 0 3,640 Sugar Cane 1981 35 0 58,685 0 0 0 10,230 720 0 69,670 1986 610 1,000 56,800 310 0 0 14,000 2,340 240 75,300 1988 610 500 43,500 330 0 0 9,900 2,890 260 57,990 1989 0 0 38,430 0 0 0 9,470 0 0 47,900 1990 0 0 47,910 0 0 0 10,400 0 0 58,310 Soya 1981 150 0 31,680 0 0 0 3,000 0 0 34,830 1986 1,000 0 67,418 0 0 0 4,100 0 0 72,518 1988 1,200 0 70,083 0 0 0 4,200 0 0 75,4183 1989 0 0 125,900 0 0 0 3,010 0 0 128,910 1990 0 0 136,350 0 0 0 6,250 0 0 142,600 Other Crops 1981 36,305 100,870 39,010 66,180 16,660 32,750 19,300 3,105 645 314,825 1986 38,357 140,056 50,169 75,315 35,665 29,899 15,806 13,214 4,063 402,544 1988 43,098 146,472 56,758 79,990 39,310 34,626 17,351 14,780 4,750 437,135 1989 KA KA KA VA KA KA KA KA NA NA 1990 KA KA KA MA NA NA NA MA NA NA TOTALAREA 1981 171,725 194,095 293,710 252,435 42,600 132,185 102,345 15,725 2,895 1,207,715 1986 185,767 259,036 356,857 213,165 66,290 143,499 84,327 50,130 17,590 1,376,661 1988 186,980 266,180 348,865 202,892 69,000 142,536 87,167 51,790 18,660 1,374,070 1989 NA NA NA NA NA NA NA Ma NA KA 1990 NA NA KA NA NA NA NA NA NA
EgliEz MACA. - 83 - APPENDIX 4 Page 6 of 24
Table A.G: 0LIVIA.-CROP PRODUCTIONsY DEPARXEtT, 1981.90 (ton)
yer h*u a a S Cruz Qkk 2V4r Z*te1 TarLu ha Anda In"fl
Rice 1981 50 9,470 72,975 12,915 0 0 15S 5,000 660 101,225 1966 560 13,200 63,500 11,900 0 0 400 19,800 7,400 136,760 1985 770 12,000 120,000 10,000 0 0 2,240 18,600 7,675 171,485 1989 882 16,430 156,990 18,000 0 0 2,190 22,100 8,060 226,652 1990 828 14,902 140,700 17,280 0 0 2,100 23,625 7,420 206,655
Wheat 1981 15,005 1,675 5,715 24,;;5 100 10,960 8,210 0 0 66,620 1966 21,930 4,800 13,040 19,250 1,080 16,000 5,100 0 0 61,200 1988 17,665 2,200 9s100 16,500 625 10,555 6,000 0 0 62,645 1989 15,665 2,196 15,483 13,388 0 9,422 4,288 0 0 60,444 1990 13,990 1,718 14,950 9,839 0 6,931 3,520 0 0 50,948
Barley 1981 16,240 12,645 95 7,335 2,195 17,850 270 0 0 56,630 1986 21,500 27,200 210 7,300 4,950 16,350 560 0 0 78,070 1988 18,280 22,000 380 7,400 4,200 16,100 650 0 0 69,010 1989 17,487 17,010 209 5,301 4,352 12,887 406 0 0 57,652 1990 16,518 13,253 161 5,036 3,276 7,770 280 0 0 46,294
Maize Grain 1981 126,050 19,290 165,660 94,565 30 16,555 72,260 8,000 1,300 503,710 1986 95,200 21,000 155,000 78,000 190 30,100 54,000 16,990 6,900 457,380 1988 102,560 24,345 142,690 70,275 200 25,862 56,630 16,320 6,688 445,570 1989 93,210 22,417 136,800 34,715 109 24,510 39,529 17,457 6,699 375,446 1990 83,159 27,069 103,000 28,455 60 26,910 34,004 16,560 6,136 325,353
Quinoa 1981 5 7,200 0 180 3,580 2,075 0 0 0 13,040 1986 27 8,160 0 114 4,455 7,875 0 0 0 20,631 1988 80 8,315 0 95 4,325 9,785 0 0 0 22,600 1989 62 6,650 0 82 6,148 6,498 0 0 0 19,440 1990 44 6,282 0 33 4,590 7,120 0 0 0 186069
Pocato 1981 119,845 167,310 24,755 240,635 56,290 183,685 74,210 0 0 866,730 1986 118,500 190,320 16,400 164,300 52,700 123,, 0 37,500 0 0 703,000 1988 129,000 205,645 40,965 194,360 49,845 162. iS 43,850 0 0 825,800 1989 111,623 1486257 39,000 142,800 41,081 1:_,987 42,867 0 0 638,615 1990 105,483 100,815 10,000 108,380 30,590 119,250 46,168 0 0 520,686
Cassava 1981 7,000 12,840 116,175 32,765 0 0 750 16,900 5,000 191,430 1986 10,000 42,980 153,985 33,320 0 0 3,350 137,365 39,000 420,000 1988 10,300 44,315 157,130 34,400 0 0 3,790 140,065 40,000 430,000 1989 9,975 59,724 192,500 60,00,j 0 0 5,280 115,000 42,210 484,689 1990 8,036 71,426 228,000 61,000 0 0 5,040 121,000 41,410 535,912
Cotton 1981 0 0 6,515 0 0 0 0 0 0 6,515 1986 0 0 10,800 0 0 0 0 0 0 10,800 1988 0 0 3,500 0 0 0 0 0 0 3,500 1989 0 0 540 0 0 0 0 0 0 540 1990 0 0 1,823 0 0 0 0 0 0 1,623
Sugar Cane 1981 230 0 2,437,365 0 0 0 643,005 22,200 0 3,102,800 1986 6,000 30,000 1,935,200 1,200 0 0 840,000 100,000 7,500 2,919,900 1988 18,300 20,000 1 4'1,000 9,900 0 0 509,950 95,370 7,800 2,141,320 1989 Nit A 7 MA 0 0 463,590 1N NA 1,926,677 1990 1V KA, 0 NA 0 053,0250 AL NA 2,350,640
Soya 1981 168 0 612 0 0 0 4,200 0 0 57,960 1986 1,300 0 441,579 0 0 0 6,900 0 0 149,779 1988 1,800 0 142,100 0 0 0 7,200 0 0 151,100 1989 MA 0 256,673 0 0 0 2,916 0 0 259,589 1990 xi 0 225,000 0 0 0 6,661 0 0 231,661
Source: MACA. - 84 - APPENDIX4 Page 7 of 24
Tablo A.7: BOLIVIA--YIELDS or SELECTEDCROPS BY DEPARTMENT,1981-90 (ton/ha)
CROP Year Checa La Paz S Cruz Cbba Oruro Potosi Tarija BenSl Pando Avg.
Rice 1981 1.4 1.5 1.9 1.0 0.0 0.0 1.3 1.3 1.2 1.6 1986 1.6 ;.2 1.5 1.4 0.0 0.0 1.6 1.6 1.5 1.5 1986 1.3 1.2 2.0 1.4 0.0 0.0 1.6 1.6 1.5 1.8 1989 1.4 1.5 2.4 2.0 0.0 0.0 1.5 1.7 1.6 2.2 1990 1.4 1.2 2.1 1.9 0.0 0.0 1.4 1.8 1.4 1.9 Wheat 1981 0.6 0.6 0.8 0.8 0.4 0.7 0.7 0.0 0.0 o.7 1986 0.9 0.9 1.0 0.6 0.7 0.7 0.7 0.0 0.0 0.8 1988 0.8 0.6 1.2 0.8 0.5 0.6 0.8 0.0 0.0 0.8 1989 0.6 0.7 1.2 0.6 0.0 0.6 0.9 0.0 0.0 0.7 1990 0.6 0.6 1.0 0.5 0.0 0.4 0.7 0.0 0.0 0.6 Barley 1981 0.8 0.6 1.0 0.9 0.5 0.7 0.6 0.0 0.0 0.7 1986 0.8 1.0 1.1 0.8 0.6 0.7 0.7 0.0 0.0 0.8 1988 0.8 0.8 1.0 0.& 0.6 0.8 0.8 0.0 0.0 0.8 1989 0.7 0.6 0.6 0.6 0.5 0.7 0.6 0.0 0.0 0.6 1990 0.6 0.5 0.5 0.5 0.4 0.4 0.4 0.0 0.0 0.5 Maize Grain 1981 2.0 1.4 1.8 1.3 0.5 0.9 1.6 1.4 1.2 1.6 1986 1.4 1.3 1.8 1.4 0.8 1.5 1.6 1.5 1.6 1.6 1988 1.4 1.4 1.8 1.4 1.0 1.3 1.5 1.5 1.5 1.5 1989 1.3 1.3 1.9 0.8 0.6 1.2 1.0 1.5 1.5 1.3 1990 1.3 1.4 1.6 0.7 0.5 1.3 1.0 1.4 1.3 1.2 Quinoa 1981 0.5 0.5 0.0 0.7 0.5 0.7 0.0 0.0 0.0 0.6 1986 0.5 0.5 0.0 0.t. 0.6 0.5 0.0 0.0 0.0 0.5 1988 0.4 0.4 0.0 0.4 0.5 0.5 0.0 0.0 0.0 0.5 1989 0.4 0.4 0.0 0.4 0.6 0.4 0.0 0.0 0.0 0.5 1990 0.4 0.4 0.0 0.2 0.5 0.4 0.0 0.0 0.0 0.4 Potato 1981 4.8 5.1 6.5 4.6 3.8 5.0 6.3 0.0 0.0 4.9 1986 5.0 5.2 6.3 5.3 4.3 4.0 5.0 0.0 0.0 4.9 1988 5.5 5.5 8.6 6.4 4.4 5.5 6.1 0.0 0.0 5.7 1989 5.4 4.6 9.8 5.6 3.9 4.3 5.4 0.0 0.0 5.0 1990 5.0 3.7 3.3 5.0 3.2 4.5 5.2 0.0 0.0 4.4 Cassava 1981 8.8 9.8 12.8 8.5 0.0 0.0 3.6 8.0 8.3 10.7 1986 9.2 9.6 9.9 9.8 0.0 0.0 6.4 12.1 9.7 10.4 1988 9.4 9.9 10.1 10.1 0.0 0.0 7.6 12.7 10.3 10.8 1989 9.5 9.0 11.0 10.0 0.0 0.0 8.8 10.0 10.1 10.2 1990 8.2 9.4 12.0 10.0 0.0 0.0 8.0 11.0 10.1 10.8 Cotton 1981 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1986 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1988 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.4 1989 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1990 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.5 sugar Ca- 1981 6.6 0.0 41.5 0.0 0.0 0.0 62.9 30.8 0.0 44.5 1986 9.8 30.0 34.1 3.9 0.0 0.0 60.0 42.7 31.3 38.8 1988 30.0 40.0 34.0 30.0 0.0 0.0 51.5 33.0 30.0 36.9 1989 NA NA 38.1 NA 0.0 0.0 49.0 NA NA 40.3 1990 NA NA 38.0 NA 0.0 0.0 51.0 NA NA 40.3 Soya 1981 1.1 0.0 1.7 0.0 0.0 0.0 1.4 0.0 0.0 1.7 1986 1.3 0.0 2.1 0.0 0.0 0.0 1.7 0.0 0.0 2.1 1988 1.5 0.0 2.0 0.0 0.0 0.0 1.7 0.0 0.0 2.0 1989 NA 0.0 2.0 0.0 0.0 0.0 1.0 0.0 0.0 2.0 1990 NA 0.0 1.7 0.0 0.0 0.0 1.1 0.0 0.0 1.6
Source - 85 - APPENDIX 4 Page 8 of 24
Table A.8: BOLIVIA--YIELDSOF SELECTED CROPS, 1981-90 (ton/ha)
1981 1982 1983 i984 1985 1986 19t' 1988 1989 1990
Rice 1.6 1.6 1.4 1.4 1.5 1.5 1.8 1.8 2.2 1.9 Maize Grain 1.6 1.6 1.3 1.5 1.6 1.6 1.6 1.5 1.3 1.2 Maize Cobs 3.2 3.7 2.7 2.2 2.2 2.3 2.3 2.4 2.5 HA Barley Grain 0.7 0.7 0.6 0.8 0.8 0.8 0.8 0.9 0.6 0.5 Barley Forage 2.7 2.6 2.1 1.9 2.1 1.1 1.5 1.5 2.2 HA Wheat 0.7 0.7 0.6 0.8 0.7 0.8 0.8 0.8 0.7 0.6 Sorghum 3.5 3.6 2.9 4.0 3.5 3.8 3.0 3.0 2.9 NA
Potato 4.9 5.6 2.9 4.7 4.7 4.9 5.7 5.7 4.9 4.4 Cassava 10.7 12.7 12.1 8.5 9.1 10.5 10.4 9.1 10.3 10.8
Broad Beans 2.1 2.0 1.2 1.5 1.3 1.3 1.8 1.9 1.3 NA Onion 7.9 8.6 5.2 6.0 6.2 6.2 6.7 7.1 5.0 NA Tomato 9.4 12.7 0.0 15.3 6.7 9.2 6.7 6.9 8.9 NA Carrots 10.6 10.5 7.4 6.8 9.3 9.0 9.0 9.2 7.1 NA
Banana & Plantain 9.4 9.3 9.0 7.0 7.9 8.2 9.0 9.2 9.2 NA Oranges 7.8 8.8 8.7 3.7 3.4 5.1 6.0 6.2 6.2 NA Peaches 4.9 4.8 3.8 3.7 3.7 3.7 3.7 4.6 4.5 NA Grapes 6.5 6.4 6.3 4.3 3.7 4.4 4.4 4.1 4.7 NA
Alfalfa (Green) 19.5 19.6 11.5 7.7 7.7 7.0 7.0 7.7 7.6 NA
Quinua 0.6 0.6 0.3 0.5 0.4 0.5 0.5 0.5 0.5 0.4 Coffee 0.9 0.9 0.9 0.8 0.8 0.9 0.9 0.9 0.9 NA Soya 1.7 1.8 1.5 1.8 1.6 2.1 2.3 2.0 2.1 1.6 Coca 2.1 2.0 2.0 1.9 2.0 1.9 2.1 2.0 NA NA Cotton 0.5 0.6 0.4 0.4 0.5 0.4 0.3 0.4 0.5 0.5 Sugar Cane 44.5 41.1 38.8 39.8 40.6 38.7 36.8 36.9 31.2 40.3
Source: MACA. - 86 - APPENDIX4 Page 9 of 24
Tabl1 AJ9 BOL7VIA--LIVESTOCKPOPULATION
SDecies Year Chect La Pax S Ctuz Cbbs Oruro Potosl Taril, Bent Pando TOTAL
LIVESTOCKPOPULATION (head '000) cattle 1981 411 298 1,515 309 62 162 275 1,800 16 4,488 1986 500 300 1,256 267 48 116 279 2,274 14 5,055 1988 532 315 1,343 285 49 120 298 2,444 15 5,401 sbeev 1981 940 2,615 240 1,360 1,835 1,897 417 2 2 9,308 1986 458 2,014 150 168 1,600 1,377 257 7 3 6,034 1988 483 2,158 162 1,236 1,712 1,477 268 7 3 7,505 iAE!. 1981 361 200 417 261 38 78 238 35 12 1,647 1986 369 211 615 242 23 75 234 95 23 1,788 1988 429 230 376 270 32 90 257 109 25 2,019
Llamas 1981 0 615 0 28 680 590 0 0 0 1,885 1986 0 486 0 36 384 500 0 0 0 1,405 1988 0 500 0 37 406 523 0 0 0 1,466
Aluacas 1981 0 96 0 5 112 35 0 0 0 247 1986 0 90 0 4 55 21 0 0 0 170 1988 0 91 0 4 57 22 0 0 0 174
NEAT PRODUCTION (ton lLvweveiht)
Cattle 1981 9,987 6,774 28,274 7,529 1,359 3,569 6,831 40,635 375 105,333 1986 11,449 6,121 29,834 6,489 957 2,375 6,339 51,152 321 115,017 1988 14,177 6,496 35,851 6,952 983 2,496 6,581 57,178 340 131,054
Shoeg 1981 2,016 5,456 468 2,992 4,037 4,098 894 4 4 19,978 1986 894 3,423 293 2,336 3,074 2,575 590 13 6 13,204 1988 1,008 3,981 323 2,471 3,945 3,329 590 . 14 6 15,667
P1Ra 1981 9,909 3,838 10,508 5,481 678 1,548 5,426 735 276 38,399 1986 8,509 2,724 11,690 3,806 237 895 4,182 1,883 439 34,365 1988 9,884 3,244 13,548 4,401 385 1,233 5,139 2,189 497 40,521
LlmAS 1981 0 736 0 34 792 701 0 0 0 2,261 1986 0 544 0 41 430 532 0 0 0 1,547 1988 0 580 0 36 583 627 0 0 0 1,628
AlDacas 1981 0 115 0 6 141 44 0 0 0 310 1986 0 108 0 5 61 24 0 0 0 198 1988 0 123 0 4 63 26 0 0 0 216
TOTAL MEAT 1981 21,912 16,919 39,250 16,042 7,007 9,960 13,151 41,374 655 166,281 1986 20,852 12,920 41,817 12,677 4,759 6,401 11,111 53,048 766 164,331 1988 25,069 14,424 49,722 13,864 5,959 7,711 12,310 59,381 843 189,086
Sourcg MACA. - 87 - APPENDIX 4 Page 10 of 24
Table A10: BOLIVIA--INDICATORSOF PROTECTION, 1976-82
1976-81 1982
Aa:iculture a/ Coffee -711 Beef 123S Sugar 331 Rice -431 Wheat - 81
Arro-industriesb/ AgriculturalProducts 31 9S Forest and Fisheries 17.51 Mest 80 41 Dairy Products 2.11 Bakery and Flour Mill Products 65.01 Sugar and Sugar Products 114 51
Average Total Industrial Protection b/ 44.41 c/
a/ Estimates based on the difference between producer prices and border prices at the official exchange rate. b/ Effective protection estimates.
c/ Weighted average, veights are based on each industry's share in total value added.
Sources: "Bolivia:Agricultural Pricing and Investment Policies" c J.A. Moraloe, "Impacto de los Ajustes gEtructuralesen la Agricultura Cempesina Boliviana" en El Impacto de la HPE en el Sector AgroDecuarig,MACA-COTESU-ILDIS, 1990. - 88 - APPENDIX 4 Page 11 of 24
Table A.11: BOLIVIA--PRODUCTION OF CERTIFIED SED IN RELATION TO CROP AREA
Enough Seed Seed Prqduced for Imported Total CroD Area 1983 197, 1990 Area 1990 Area ton ha'000 ton ha'00o Cert 2 a/
Soya 1,087 6,049 12,396 185,940 567 142,600 130 Maize 200 531 480 23,904 90 261,400 9 Rice 160 460 124 6,175 0 109,100 6 Wheat 470 660 2,446 91,725 1,025 81,999 112 Cotton 0 51 80 6,400 80 3,540 181 Barley 5 73 65 2,145 0 88,680 2 Beans 49 22 148 2,457 30 NA NA Potatoes 0 1,200 2,050 2,460 25 118,000 2 Forages 100 500 98 1,627 25 92,000 2 Garlic 0 0 11.9 13 0 NA NA Sunflower 0 0 21 7,800 34 NA NA Peas 0 0 5 1S0 0 NA NA Sorghum 0 0 0 0 76 NA NA a/ Percentage of crop area covered vith locally produced certified seed assuming that cereal grain and potato seed is used for three generations.
Varieties of Certlfied Seed Available
Soya - Cristdlina, Doko, IAC-8, UPV-1, Bossier, Paranagoiana Totai. Maize - Swan, Cubano Amarillo, Tuxpeno-82, CIAT-106, Opaco-11, Amarillo Dentado, Amarillo del Bajio, Compuesto 10, Compuesto 18, Marginal 1-28, XL678. Rice - Cica-8, Bluebelle, Dourado, Bluebonnete, IR-Dominicano, IR1529, Pico Negro. Wheat -Chane, AgS" Dulce, PAI-Comomoci, PA:-Mistol, PAI-Toborochi, Saguayo, PAI-Aurora, loyja, Clinceno-85, Sacaba-81, San Martin, Toarata-80, Nejico, Chinoli-65, Esperanza, Chinoli-20, Pirai. Potato - ALPHA, Deuiree, Chinoli-88, Sani Imilla, Runa Iscayachi, Huayacha Pacena lmllla Negra, Imilla Blanca, Radosa, Cardinal, Dlamont. Garlic - Roeado Criollo. Onion - IBTA-80, Sau Benito, Kantuta, Quilmss, UWA-80, Lucha, Grinon. Beans - BAT-76, SEL-1, Carioca, ICA-Pijano, Charolito. Oate - Litoral, SEFO-ITexas, Gaviota. Sunflower - Pairumani-1, DO-854, D-130. Alfalfa - Koepa, Sabina, Africans, Bolivia 2000, Riviera. Maize F - POOL-12, UMSS V-107. Red Clover - Rendland. Egypt Clover - Cblle. T-Iticale - Ronacer, Cautivador. Pt.. - Criolla Blanca.
§(Urce: Mission estimates. Table A.12s DOLIVIA-.4VAIIABILITTAND LOCSIII Of AGRICLTURALRESEARCH nCoodity Co_odiry Institution Location Technology institution Location TsbzRolo ootyon Comoodly Locatin insttutiort Toebloty Late Csodtnnsiuin LoainTchooyRt
ALTIPLANO tGKADS quino 15TA Patacmy' Vartities Ned-Lw lice CIAT Ssavedra Varieties Ned-High CI1CA Contral Procesing Sub Staus Pet Control Pest Control "ailot Terbult STA Patacamaya Varieties LW CORDEDEDI San Carlitoe Agron loprovement Lo Potato 1TA letacemaa Disease free Hui locayecbi Verieties Soya CIAT Sa edra A Varities Initl Chinoll Sub Sts Agron Practiccs P3OIPh Potosi Vartities Mad-Higb tnnoculants CIYCA Central Adaptive trials CIPC Colonies Adsptive trials Me PRACUE Altipleno Var Selectlon I ed Vheat CIAT Saavedra 9 Varities High Manure 9 Part Sub Stna Peat Control Barley I3TA Pateesmapa Varieties Hed-Riga CIPCA Colonilee Adaptives trials 3.4 CIPCA Central Adaptive trials lKioe CIAT Saavedra & Vo ritiUs Pattemaa Varieties Ned Sub Stas Pest Control Alfalfa 13TD. Agron mprovement Lcw Forageso Th Sole Forage lgat Red-LOW COIDEENIt San Ccrlltoc mF! Lallutacs Forego var Med 0WEI Vallocito Vegetables SE A Pacajoe Greenaoume Rigb Forage CIAT Saavedra Varetiets CIRCA Management Sub Stna Conservation PIOC*ME Organic bed* Hi b Suger cane CINCA Integrated Area Agroodmic Imp Sbp DeW U13 Pataceay Crossbreeding NB leas' 0GW Vallecito Gentie IMp LOW C=loid. IUT Pat cay Nutrition Hod-LW Agroe Improveet Cbiuoli Forag*o Cassavav GW Vallecito gran I proeent lscoyyacb Dr Selection Bananas 0GEW Vallccito gron 1eprovesnt lubber CATA Pando vgon laprovesent VALLEYS Camp Systems CIAT Colonies Rotetioos* "igot Tree Crops CIAT Saavedra & Mhize CIPP Pairumni Varieties Hod Sub Stu* UTA Talle y lt Varieties Had Cattle CIAT Saavedrs & Gentic Iap 1 PIOCAE Potoi, Chayanta Variatien Mad Sub Stta Crossbreeding pFRO Taroto Varieties Ned LIDIVET S.Cruz Animal DiOseees CORDEH Aloela A ron practices LOW CIPCA Colonies Managemnt Potato P20DIP Valleys lcoease free High Pigs C_PEP Integrated Area Genetic Isp DrTh Verietles nal halbtI CIPCA Valleys Varlieties Md CHAPAUR& UINGAS PROCADE Sucre SelectVarieties Mad Potosi Manure lice BTA Chapare Agron leprov_mnt COIDES Alcolo Agron Practiceo Lw Pero Crops 1r Chapare Verietiose Aaron Prect IPTS Cbaysnta FwrtUiser CGaisa UTh Chapare 4gron Ipropven 1m Potod select verities Med Plneapple STA Chapare &rg. lprovement Cbhyanta for Resistnceo Legume CISP Cbparo Crop Rotatlco PnOAS Zudanse Seloct Varieties Med 13TA Cbapare Crop Rotatlons UC Potosi.Tarij Irrigation Tecb Had Coffee 1BTh ungas La Pea Agron lprovemet RAl) Croposeo Tarija Select verities Red Pest Control leparez. Todira Citrus 13TA lungDs La Paz Agron Improvment Wheat U3Th S Benito Wbeat varities LOw Peat Control Herbicides cSbp IBTi Crpsr l Ir Brceds P UOAGRO Zudaeas Select Varieties LwC Flock ,t CICA Valleys Select Varieties Pigs IBTt lungas La Pax Genetic Imp Triticalo DSTh Val Verlities LOW Animl Xeath Bsrley C I1Th CochahCb Varieties Lw Porages FEDEiGRo Cochobamba Agron Improvemnt CHACO Tep Frults IBrT Cochabba Varieties Had Volley Grafting Maize CORDECd Ibopertnda Forage var Nd PROAGRO c Frit Drying cZda heat COIA Chaco. S Crux Genetic Wep COIDECH Alcala Agron practices Lw Soil Watr gt Vegetables PYUGW Tarata Greenhouses nHd Cotton CORGEPAI Chaco, S Cruz Soil. Water gt coDCm Alcala Agron practices Low Milk Cattle COIDECH lboperenda Foras Had Pastures O Sapaearl Varieties Low utrition Tarlja Irrig MotNed Gtic Ip Virea 1T GeneticImpnNed Cattle CODECH S.SsLvador Gen tic lmp Ned Cattle CORDECH S.Salvador Hod p FEDEAGZO Cochabsoba Genetic lp go Sbhep COIDECH Chuquisaca Managmet LoW SmAl 1 FEDiGO Coebabcb6a.
Soureos Preparedfrom ICh. *sees Para una Politics Nacional de Investigaciones y Trsferncia de tUcnologis Agropecuarlio lovember1990 and dlscussions witb IDC and WGOpersooel. II t-h 4- - 90 -
APPENDIX 4 Page 13 of 24
Table A,13s BOLIVIA--BENEFITSDERIVED FROM IRPRtIGATIONtILLUSTRATIVE CASES (Highlands)
Normal Drought Rainfed Year A. PRtVEJ NG CROP FAILURE 1/
Potato yields/ha (tons) 6 4.2 Value of production (at US$140/ton) 840 588 OperatingCosts (ezel. family labor) 333 535 Benefits 305 53 - Incrementalbenefit 252
B. INCREASING PRODUCTiVITY2/ Rainfed Irritated
Cropping intensity Alfalfa production - Alfalfa yields (tons of dry mat.) 1.5 5.5 - Value of production (US$73/ton) 110 400 - Coat -f production (execL4Jngfarm labor) 110 390 - Benefits - Incremental Benefit 280
Im=roved Technolo2n Rainfed Irrigated Potato Productionw/ improved technology - Potato yields (tons/ha) 9.7 11.0 - Value of production 1,360 1,540 - Coat of input. 720 720 - Labor (man/days) (116) 162)
TOTAL COSTS 785 900 (axel family labor) 3 - Benefits 373 640 - IncrementalBinefit 65 j/ Data from ProjectBOL/86/022 1/ Data from ProjectPMPR V1 Familylabor estimatedat 90 man/days. Hired labor at US$2.5/day §ggrca- Misaion astimates. - 91 - APPENDIX 4 Page 14 of 24
Table A. 14: BOLIVIA--BENEFITS DERIVEDFROM IRRIGATIONW ILLUSTRATIVE CASES (Valley.)
Rainfed Irrisated (Plantedin October) (Planted in June) A. ADJUSTING CROPPINGTIMNG
Potato ye1lds (ton/ha) 12.2 11 Prices at harvest (US/Iha) 140 200 Value of production (USSIton) 1,708 2,200 Productioncosts (ecl. fa41y labor) 002 832 Benefits 846 1,348 - Incremental Benefit 502
Rainfed Irrigated B. RAISING YIEIDS Yields Benefit Yields Benefit (ton/ha) (US$/ha) (ton/ha) US$/h1) Some results from small-scale irrigation projects Cereal 1.0 (15) 1.6 41 Potato 6.0 110 10.0 468 laize 1.5 48 2.5 143 Vegetable - - 10.0 840
C. INCREASINGCROP INTENSITIES Rainfed Irrigated Small-scale farm models (Punata) ------(ha)------Farm Size (2 ha) Potatoes 1.0 0.4 Maize 0.5 1.2 Broad bean 0.2 0.2 Barley 0.3 - Onion - 1.4 Chilean strawberry _ 0.03 Cultivatedarea 2.0 3.23 Cropping intesi ty 1.0 1 60
------(US$)- Value of production 2,200 4,416 Cost of production 700 513 (exl. family labor) Hired labor - 146 Benefit 1,500 3,737 - Incremntal Benefit 2,257
Source: Mission estimates. - 92 -
APPENDIX4 Page 15 of 24
Table A.153 BOLIVIA--INVESTHENTCOSTS OF Sote SMALL-SCALEIRRIGATION PROGRAHS
Investment Coats Per Hectare Irrigated Area Program or Proleet Dept. Mz.Hn. N4AM Total Ava.tscheme ______---USS/ha------(ha)------
CORDECRUZ- PNUD La Paz 39 53 433 155 39 CEE - CORDEPAZ La Paz 138 13 600 665 - PL-480 Save the Children La Paz 652 468 983 51 10 (new projects)
PL-480 Save the Children La Paz 319 173 391 150 25 (rehabilitation projeets) CORDEOR-PNUD(1983-87) Oruro 233 38 1187 597 18 COUDEOR-PNUD(1967-89) Oruro 335 138 1383 259 11 ''ORDEOR-CEE Oruro 996 612 2219 62 6
COTESU-SNDC Oruro 224 95 942 121 24 CORDEPO-PNUD Potosi 287 206 882 404 67 Type A (majorwork.)
CORDIPO-PNUD Potosi 289 26 987 642 9 Type B (minorworks)
PDAR-USAID Cochabamba 310 - - 120 51
CARE-CODETAR Tarija 350 - - 430 40
Sources: Evaluacionde proyecto de desarrolloy microriego. PNUD, MINPLAN, COTESU, COPHOL, 1990; and mission data. STabls AlGa3 OLIWJVIA-lCIAL ECUIG UTZ
1960 1961 1382 1963 1964 196s 1986 1967 l9os 198s 1og
*iamaro 1 25.0 1 23.0 3 25.0 1 200.0 J 5)0.0 J .00O.0 J 2,042,671.0 3 1,930.000.0 J 2,220.000.0 J 2.470.000.0 J 3.000,000.0 tfb aY 1 25.0 I 23.0 r 44.0 r 200.0 r 510.0 I 50.000.0 V 1.636,843.0 t 1,940,000.0 1 2,240,000.0 F 2.500,000.0 1 3.030,000.0 March U 25.0 n 23.0 n 44.0 U 200.0 n 510.0 30,000.0o H 1,667.516.0 n 3,9600000.0n 2.270.000.0 K 2,530,000.0 H 3,070,000.0 Aril a 25.0 a 23.0 A 44.0 A 200.0 A 2,100.0 A 50,000.0 A 1,904.200.0 A 2,010,000.0 A 2,300.000.0 A 2.560.000.0 A 3.100.000.0 ma n 25.0 n 23.0 U 44.0 n 200.0 n 2,100.0 K 75,000.0 U 1.904.226.0 n 2.00,000.0 U 2,340,000.0 It 2.590,000.0 n 3,130,000.0 Ju. i 2S.0 J 23.0 3 44.0 J 200.0 J 2,100.0 J 3,o000.03 1.904o,63.0 J 2.060.000.0 J 2.370.000.0 J 2.830,000.0 3 3,150.000.0 JulY J 23.0 J 25.0 J 44.0 J 200.0 J 2,100.0 J 75.000.0 J 1.904.161.0 J 2.070,000.0 J 2,400.000.0 J 2,660.000.0 J 3.170.000.0 Augut A 23.0 A 23.0 A 44.0 A 200.0 A 2,300.0 A 7S,000.0 A 1.909,367.0 A 2,090.000.0 A 2,400,000.0 A 2,760,000.0 A 3,200.000.0 Septer S 25.0 S 25.0 6 44.0 5 200.0 S 2,100.0 S 1,078,029.0 S 1,913,236.0 S 2,110,000.0 S 2,400,000.0 S 2.630,000.0 S 5,240,000.0 Octobewr 0 25.0 0 23.0 0 44.0 0 200.0 0 2,100.0 0 1,103,290.0 0 1.921,129.0 0 2,120.000.0 0 2.400,000.0 0 2,80.000.0 0 3.280.000.0 _oer a 25.@a 23.0 U 200.0 U 510.2 U 9,000.0 3 1,209,733.0 U 1.923,033.0 U 2,130S000.0 * 2.420.000.0 U 2,910,000.0 gm 1990 December 0 25.0 0 25.0 D 200.0 D 510.2 D 9,000.0 D 1,393,032.0 D 1,923,742.0 D 2,0,W000.0 0 2,450,000.0 D 2,950O.0.0 Dec 1990
sources MMo.
0
4N Table A17. IYtA.-P LuJ UWCU*G LATE
1960 19SI to62 1983 1964 1965 1986 17 1966 199 1990
Jamasy J 25.0 J 2S.0 J 42.4 J 390.0 J 1,900.0 3 68,229.0 J 2,287,258.0 J 1.940.000.0 J 2.240,000.0 J 2.500.000.0 J 3,010.000.0 JVebruary V 21.0 * 25.0 r 43.9 1 500.0 V 2,100.0 I 132,656.0 V 1.12,500.0 1 1,9,0000.0 1 2,250,000.0 V 2.520,000.0 3,050.000.0 Haheb H 25.0 H 25.0 n 46.2 H s00.0 H 2.760.0 H 126,451.0 H 1,961,323.0 n 1,990.000.0 H 2,260,000.0 H 2.540.000.0 n 3,060,000.0 *1rt1 A 25.0 A 25.0 A 79.0 A 420.0 A 3,560.0 A 162,700.0 A 1,926.867.0 A 2,030.000.0 A 2,310.000.0 A 2,570,000.0 A 3.110.000.0 Nay H 25.0 H 25.0 n f.0 n 500.0 n 3.400.0 H 250,000.0 H 1.943,710.0 n 2,010,000.0 K 2,360,000.0 Of 2.610.000.0 n 3.140.000.0 JuDD J 25.0 J 25.0 J 103.0 3 390.0 3,S30.0 3 470.3)0.0 J 1.943,967.0 J 2.090,000.0 3 2.380.000.0 1 2,640000.0 Jun13990 July J 2s.0 J 25.0 J 152.0 J 600.0 3 3.500.0 J 647,413.0 J 1,932.742.0 J 2.090,000.0 J 2,420.000.0 J 2.670.000.0 Jul 1990 tuht A 25.0 a 41.3 A L6O.0 A 760.0 A ?,330.0 k 1.146.354.0 A 1,33,323.0 A 2,100,000.0 A 2,420.000.0 A 2,780.000.0 Aug 1990 S.pter S 235.0 S 41.3 S 233.06 765.0 S 15,513.0 S 1.0653,166.0 S 1,924,400.0 S 2,130,000.0 S 2.410.000.0 S 2.650.000.0 Sep 1690 Octobel 0 25.0 0 41.3 0 230.0 0 1,050.0 0 15,160.0 0 1,117.603.0 0 1,932,581.0 0 2,140,000.0 0 2.410,000.0 0 2,300.000.0 Oet 1990 3o,ber U 25.0 3 41.3 U 230.0 U 1.350.0 0 18,394.0 O 1,333,100.0 U 1.935,500.0 1 2.160,000.0 a 2.440,000.0 8 2.930.000.0 Nov 1990 D eeber 0 25.00 41.3 D 290.0 D 1,200.0 D 23,301.0 0 1,724,194.0 D 1.952,903.0 D 2,230,000.0 D 2.470,000.0 D 2.970.000.0 Doe 1990
Perio average 25.0 31.8 143.0 695.4 8.202.5 703,975.2 1.967,569.5 2,076,666.7 2,365,833.3 2.706,66.7
Sources QAun.
001.1 _ tn
0 >C~ - 95 - APPENDIX4 Page 18 of 24
Table A.18: BOLIVIA--PRODUCERPRICES IN SANTA CRUZ *
1985 1987 1989 1990
Cotton Fiber 331.5 1,261.0 1,522.3 1,304.4 Rice 223.8 117.9 170.4 159.0 Maize 94.4 147.4 117.1 94.8 Sorghum 75.5 117.9 100.0 75.4 Soybeans 117.3 120.0 190.0 142.5 Wheat 175.0 172.0 195.0 180.0 Potato 290.2 348.0 136.4 n.a.
Beef (US$/kg) 0.67 1.04 1.02 n.a. Pork 0.78 1.03 1.26 n.a.
a/ Prices correspond to the month of April or May. Source: Camara Agropecuariadel Oriente. - 96 - APPENDIX 4 Page 19 of 24
Table A.19: BOLIVIA--DATESOF SETTLEMENT AND POPULATION IN THE COLONIES OF SANTA CRUZ, 1982
Date of Ha Settlement Families ('000)
BOLIVIAN Yapacani 1958 4,600 38.8 Surutu 1955 200 10.0 Huaytu 1954 300 10.0 Antofagasta 1960 n.a 19.6 Santa Rosa-Palometas 800 17.9 Chane Independencia Puesto Fernandez 1956 1,500 18.5 Aroma-San Juan de Amarillos 1956 570 5.5 Chane-Pirai 1965 4,900 64.7 San Julian 1972 2,016 146.0 Berlin 1970 3,000 20.0
Total 17,886 351
JAPANESE Okinawa I 1958 102 13.5 San Juan de Yapacani 1958 230 20.0 Okinawa II 1960 69 16.7 Okinawa III 1962 31 18.0
Total 432 75.7
MENNONITE Tres Palmas 1956 3 1.0 C&nadiense 1957 103 14.0 Bergthal 1961 83 3.9 Riva Palacio 1967 794 31.0 Swift Current 1968 301 20.0 Reinland 1968 155 5.0 Somerfeld 1968 83 5.6 Paurito 1968 185 15.0 Las Piedras 1968 199 San Jose 1974 86 Nueva Esperanza 1975 83 27.0 Belice Tres Cruces 14.0 Valle Esperanza 15.0 Nueva Holanda 11.0 El Cupesi 12.0
Total 2,075 175
GRAND TOTAL 20,393 602.5
Source: Bojanic, Alan, "Evaluacionde la Estructura Agraria en el Area Integrada de Santa Cruz," En Alan Bojanic et. al. Teneria v Uso de la Tierra en Santa Cruz. CEDLA, Talleres f4. La Paz, 1988. Table A.20: BOLIVIA--ORIGINOF SETTLERS IN THE SANTA CRUZ AREA (as S of Total Settlers)
------Yapacani ------San Julian------1981 Origin 1965 1970 al 1975 1979 1988 1978 1978 1979
11.8 12.3 Cochabamba 49.0 39.1 38.6 40.7 25.7 13.0 12.6 42.0 38.7 Potosi 31.0 30.4 27.0 30.3 20.0 43.9 43.8 12.9 12.8 Chuquisaca 4.0 13.4 10.0 11.4 9.4 13.7 13.8 13.3 14.3 Santa Cruz 9.0 6.4 6.0 7.2 41.2 4.1 7.1 8.8 8.8 Oruro 5.0 6.0 7.1 5.6 2.3 10.6 10.7 8.8 8.5 La Paz 0.0 2.4 3.1 2.4 0.3 10.2 10.0 2.0 1.8 Rest 2.0 2.3 7.4 2.4 1.2 1.5 2.0
a/ The figure for 1970 includes the Antofagasta area. Sources: Mission estimates based together on various sources.
0o :>
o-ID x - 98 - APPENDIX 4 Page 21 of 24
Table A.21 BOLIVIA--YEARSOF CULTIVATIONAFTER CLEARING HIGH FOREST
Years Yapacani Central San Julian
1 34 25 8
2 50 41 64
3 10 23 26
3+ 6 10 2
Source: Maxwell and Pozo, 1981. - 99 -
APPENDIX 4 Page 22 of 24
Table A.22: BOLIVIA--COMPAKMSONBETWEEN TIMBER SALES DATA AND PRODUCTION DATA (1980-88)
Marketed Marketed Total Total Percent Internally Externally Officially Harvested Officially Year ('000m3) ('000m3) Marketed ('000m3) Marketed
1980 4 2 6 445 1
1981 129 A0 149 338 44 1982 107 57 164 233 70 1983 61 25 86 187 46 1984 39 35 74 279 27 1985 29 41 70 292 24 1986 27 77 104 320 33 1987 32 80 112 510 22 1988 36 73 109 366 30
Note: The data suggest problems with Government surveillanceof the industry, statistical collection,or both. For example, a reasonable figure for the transformationof harvested logs to marketed goods (852 sawn wood) is in the range of 25-35X. On this basis, the data from 1984-90 is internally consistent. The values from 1980-83 are not credible, however.
Source: Based on Tables in Dia_nostico Forestal,MACA, 1990. Table A.23: BOLIVIA--PRESUPUESTODE INVERSIONPUBLICA EJECUCION PRESUPUESTARIA,1987-1990 (En miles de dolares)
EJECUTADO | EJECUTADO EJECUTADO EJECUWIADO SECTOR 1987 19U8 1989 1990 ITERNO EXTEBJO TOTAL INTERNOEXTERIO 7OTAL INTERNOEXTERNO TOTAL INTERNOEXTERNO TOTAL
AGROPEOARIO 12,278 11,412 23,690 19,230 32.679 S1,909 13,531 23,191 36,722 12,690 21.872 34,562 NINERIA 1,907 2,047 3,954 6,294 6,681 12,975 7,705 4,576 12.281 590 914 1,504 NIDROCARBUROS 47,438 40,488 87.926 57.909 34,379 92,288 52,001 40,893 92,894 57,632 47.728 105,360 INDUSTRIA 1.672 499 2.171 2.234 48S 2.719 1.141 127 1.268 549 0 549 EMERGIA 9.485 11,913 21.398 13,863 8,744 22,607 10,525 11,856 22,381 9,028 10.666 19,714 TRANSPORIES 29.180 56,813 85.993 38.467 . 85.352 123,819 46,562 71,452 118,014 38,327 43,411 81,738 COWWICACIONES 12.436 2.127 14.563 2.481 9.007 11.488 3.580 2.033 5,613 8,655 12,533 21,188 SALUD 464 6,899 7,363 478 6.977 7,455 766 8.069 8.855 727 18.831 19,S8 EOUCACION 4,646 4,007 8,6S3 2,341 4,696 7,037 1,783 8.056 9.639 1,494 12,9 14,393 SANEAN.BASICO 6.133 10,800 16,933 6,588 23,405 . 29,993 7,626 22,886 30,512 6,186 23,082 29,26B 0 URs.v VIV. 7.652 16,684 24.336 6,1J6 30,893 37,029 4,038 18.197 22.235 4,680 12.175 16.855 RECURSOSHID. 519 81 - 600 1,914 537 2,451 1,382 197 1,579 1,S32 641 2,113 MULTISECTORIAL 3.826 3,687 7,513 6.409 9,806 16.215 4,769 9,498 14.267 5,372 7,375 12,747 OTROS 242 25 267 379 400 779 659 0 659 764 0 764
TOTALES*- 137.878 167,480 305,358 164,721 254,040 418,761 156,068 221,051 377,119 148,226 212,147 360,373 IncluyeFondo Socili de Eaergenci8
Source:MINPLAN.
m m
oQ'S
. .~~~~~~~~~~~~~~~~~~~~~~~~~ Tkble A.24: BOLIVIA--PMSUPUBSTO DE INVERSIONPUBLICA EJECUCION MESUPUESTARLA,1987-1990 (En miles de dolares)
SECTO 19 19 1989 199 ) PFew. EJEC. (X) P30G. EJEC. CX) PROG. EJEC (X) P3"M. EEC (X) ACAOPECUARIO 64,860 23.690 36.S2 20,64 51,909 248.Si 42,28S 36,722 ISERIA 86.84 43,991 34,562 78.S7 16.4S0 3,954 24.04 15S.11 12,975 83.6S 32.678 12,281 37.58 19,014 1,504 7.91 HIDROCARtUROS151.031 87,926 58.22 141,180 92,284 65.37 185,S0S92,894 50.08 156,372 105,360 67.38 INOISIRIA 13379 2,171 16.23 348 2,719 iS1.32 1,620 1,268 78.27 1.996 549 27.46 ENERCIA 1S,161 21,398 141.14 45.74S 22,60? 49.42 44,032 22,381 50.83 27,646 19,714 71.31 TRANSPORIES 177,5068S.993 8.45 105,920 123,819 116.90 133,240 118,014 68.7 COSMMICACIONES 128,941 1,738 63.39 34.598 14,563 42.09 13,514 11,468 85.01 24,811 5,613 22,62 26,3S3 21,168 74.73 SAWUD 11.460 7.363 64.2S 9,403 7,4SS 79.28 7,824 8,655 113.18 16,727 EPUCACION 19,S58 116.92 16,261 6,653 S3.21 4,662 7,037 150.30 10,008 9,836 98.30 16.110 14,393 89.34 S&ANSA.SASICO 40,349 16,933 41.97 28,616 29M993 104.81 37,681 30,512 80.97 UlW. I VIV. 3S,S68 29,268 62.29 43,691 24,336 55.70 44.407 37,029 83.39 24,532 22,235 90U 20,052 16,855 84.06 wEnJRsosKID. 4,374 600 13.n 2,92S 2,451 83.78 6,032 1,S79 26.18 WilTISECTORIAL 2,992 2,M 72.63 16,849 7,513 44.59 7,6S8 16,21S 2M1.7 22,483 14,267 63.46 16,276 12,:74 78.32 OTROS 3,73S 267 7.14 S.901 779 13.19 246 659 268.05 766 76A 99.74
TOTALES-. 609,704 305,356 50.08 446,694 41t.761 93.T5 5?2,976 377,119 65.82 514,807 360,373 70.00
Source: MINPLAN.
o0
M^ s. - 77 -
APPENDIX 4
3OL;iVIA
AGRICVLIWRALSECTOR REVIEW
StatisticalAppendix
Paae No. A.1 Gross Domestic Product by Sector of Origin ...... 78 A.2 National Land Use, Land Capability and Actual Use by Department 79 A.3 Land Use by Department, 1984 ...... 80 A.4 Farm Size and Distributionby Region, 1984 ...... 81 A.5 Crop Area by Department, 1981-90 ...... 82 A.6 Crop Production by Department, 1981-90 ...... 83 A.7 Yields of Selected Crops by Department, 1981-90 ...... 84 A.8 Yields of Selected Crops, 1981-90 ...... 85 A.9 Livestock Population, 1981-88 ...... 86 A.10 Indicators of Protection, i976-82 ...... 87 A.11 Production of Certified Seeds in Relation to Crop Area . . . . 88 A.12 Availability and Location of AgriculturalResearch ...... 89 A.13 Benefits Derived from Irrigation:Illustrative Cases (Highlands)...... 90 A.14 Benefits Derived from Irrigation:Illustrative Cases (Valleys) 91 A.15 InNestment Costs of Some Small-Scsle IrrigationPrograms . . . 92 A.16 Official Exchange Rate (Nominal) ...... 93 A.17 Parallel Exchange Rate (Nominal) ...... 94 A.18 Producer Prices in Santa Cruz ...... 95 A.19 Dates of Settlement and Population in the Colonies of Santa Cruz ...... 96 A.20 Origin of Settlers in the Santa Cruz Area ...... 97 A.21 Years of CultivationAfter Clearing High Forest ...... 98 A.22 Comparison Between Timber Sales Data and Production Data . . . 99 A.23 Presupuesto de Inversion Publica Ejecucion Presupuestaria 1987-90...... 100
A.24 Presupuesto de Inversion Publica Ejecucion Presupuestaria 1987-90...... 101