Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 4065-MOR

KINGDOM OF MOROCCO Public Disclosure Authorized

STAFF APPRAISAL REPORT OF THE OULMES-ROMMANI

AGRICULTURAL DEVELOPMENT PROJECT Public Disclosure Authorized

November 12, 1982 Public Disclosure Authorized Europe, Middle East and North Africa Projects Department

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

Currency Unit = Dirham (DH) US$1.00 = DH 5.30 DH 1.00 = US$o.19

WEIGHTS AND MEASURES

1 hectare (ha) = 2.47 acres

1 kilometer (km) = 0.624 miles

1 kilogram (kg) = 2.205 lbs

1 ton (t) = 2205 lbs m 3 o.b. = cubic meter of wood over bark (with bark) m3 u.b. cubic meter of wood under bark (without bark) m 3 s solid cubic meter of sawn wood

ABBREVIATIONS

DEFCS Forestry Department (Direction des Eaux et Forets et de la Conservation des Sols)

FNF National Forestry Fund (Fonds National Forestier)

MARA Ministry of Agriculture (Ministere de l'Agriculture et de la Reforme Agraire

MOI Ministry of Interior (Ministere de l'Interieur)

GOVERNMENT OF THE KINGDOM OF MOROCCO

Fiscal Year

January 1 - December 31 FOR OFFICIAL USE ONLY

ABBREVIATIONS

CLCA Local Agricultural Credit Bank (Caisse Locale de Credit Agricole)

CNCA National Agricultural Credit Bank (Caisse Nationale de Credit Agricole)

CNERV National Extension Centre (Centre Nationale d'Etudes et de Recherche sur la Vulgarisation)

DPA Provincial Directorate of Agriculture (Direction Provinciale de l'Agriculture)

FAO Food and Agriculture Organization (Organisation pour l'Alimentation et l'Agriculture)

FAO/CP Food and Agriculture Organization/ World Bank Cooperative Program (Programme de Cooperation FAO/Banque Mondiale)

FERTIMA Government Fertilizer Distribution Agency (Societe Marocaine des Fertilisants)

INRA National Institute for Agricultural Research (Institut National de la Recherche Agronomique)

MARA Ministry of Agriculture (Minist4re de l'Agriculture et de la R4forme Agraire)

MOI Ministry of Interior (Ministere de l'Interieur)

ONE National Electricity Board (Office National de l'Electricite)

ONEP National Water Board (Office National de l'Eau Potable)

SONACOS National Agency for Seed Marketing (Societe Nationale de Commercialisation des Semences)

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

KINGDOM OF MOROCCO

STAFF APPRAISAL REPORT OF THE OULMES-ROMMANI

AGRICULTURAL DEVELOPMENTPROJECT

Table of Contents

Page

I. Introduction ...... 1.I

II. The Agricultural Sector ...... I

A. The Place of Agriculture in The Economy ...... 1 B. Distribution of Agricultural Resources and Agricultural Performance ...... 2 C. Government Objectives and Strategy ...... 2 D. Sector Issues Relevant to The Project ...... 3 E. Bank Involvement in the Agriculture Sector ...... 6

III. The Project Area ...... 7

A. Physical Features ...... 7 B. Socio-Economic Features ...... 8 C. Agricultural Services ...... 11 D. Infrastructure and Social Services ...... 13 E. Major Project Area Constraints and Conclusions ...... 14

IV. The Project ...... 15

A. Project Objectives and Approach ...... 15 B. Description of Project Components ...... 16 C. Project and Start-Up Activities ...... 23 D. Project Cost Estimates ...... 23 E. Financing ...... 25 F. Disbursements ...... 26 G. Procurement ...... 27 H. Accounts,Audits and Reports ...... 28 I. Environmental Impact ...... 29

V. Project Implementation ...... 29

A. Coordination and Management of The Project ...... 29 B. Principal Agricultural Support Services for the Project ...... 31 C. Monitoring and Evaluation ...... 38

This report is based on the findings of an appraisal mission in March 1982, composed of Messrs. B. van de Poll, J-P Chausse, J. Hall, J. Laeyendecker and N. Roberts (World Bank) and T. Synnott (Consultant). Page

VI. Production, Marketing, Prices ...... , ...... 39

A. Production ...... 39

B. Prices, Markets and Marketing of ProjectO utput ..... 40 C. Supply and Marketing of Project Inputs .. 43

VII. Financial Analysis ...... 44

A. Financial Implications for Farmers ...... 44 B. Financial Implicationto Government and Cost Recovery ...... 45

VIII. Benefits and Justifications ...... 48

A. Benefits and Beneficiaries ...... 48 B. Economic Analysis ... 49 C. Project Risks and Sensitivity Analysis ...... 50

IX. Major Agreements Reached at Negotiations ...... ,52

Annex I: Project Costs and Disbursements...... 53 Table 1: Project Costs ...... 53 Table 2: Estimated Schedule of Disbursements 56

Annex II: Selected Documents and Data Available in Project File ...... 57

Annex III: ImplementationSchedule....o...... 59

MAPS

IBRD 16473: Infrastructureand Project Works IBRD 16474: Land Use "lNGDO1AOF' MOROCCO

STA'FF APPRAISA-L REPORT OF THE OULMES-ROLANI

AGRICULTURAL DEVELOPMENTPROJECT

T Tnt*coduction

1.01 'Ihe proposed project is directed towards the development of crop, livestock and forestry production, and the provision of better social services in 7 out of 23 rural communes in the Khemisset Province which is situated northeast of Rabat; tne capital AAlthough the project area selected has relatively favorable ecological conditions, its agricultural development potential has until now been neglected. The proposed project would alleviate some of the constraints to the development of the area, through an improvement i.n agricultural support services and socio-economic infrastructure. This would lead to increased agricultural production and employraent, raising the farm incomes aTId standard of living of the predominantly rural population of the project zone.

1.02 'Th.eproject was identified by a World Bank FAO/CP mission in 1979. Preparation was undertaken by Government in close collaboration with FAO/CP and completed in March 1981.

II. The Agricultural Sector /1

A. ThLePlace of Agriculture in The mEconEj

2.01 Morocco's population is estimated at about 20 million (1980), with an annual growth rate of 2.9%. Some 60% of the population live in rural areas, with agriculture providing about 40% of total employment. Per capita GNP was US0790 in 1979 but about 45% of Moroccan families live at or below the estimated rural absolute poverty level of US$222 (1981) per capita. Whilst the share of agricultural employment in the overall labor market is declining (along with the sector's share in GDP), absolute employmnent in agriculture is still increasing.

2.02 The value of agricultural output has grown at an average annual rate of 2.4% (in constant prices) for the past fifteen years, a lower rate than in the other sectors of the economy and less than the growth of demand for agricultural products; this has led to a rapid increase in imports. Agriculture contributed 13.4% to Morocco's GDP in 1978-1980, down from 20% in 1968-1972 and 15% in 1973-1977. Cereals and pulses contributed 36% to the agricultural GDP in 1978-1980, with livestock contributing 33%, citrus 11%, vegetables 11%, and industrial crops and forestry about 6%.

/1 For more details on Lhe agricultural sector, see Report 2667-MOR of May 2, 1980 and for the Forestrv subsector see Report 3670-MOR of February 12, 1982. 2.03 Agricultural exports accounted for 32,6% of the value of total exports in 1980, down from about 58% in 1971-1973. Food products represented 86% of total agricultural exports in 1980, with fruits and vegetables accounting for about 50% of these. Agricultural imports accounted for 27% of total imports in 1980, with bread wheat, sugar, and edible oils representing half of agricultural imports. Morocco has been a net importer of food since 1974.

B. Distribution of Agricultural Resources and Agricultural Performance

2.04 Morocco has a total land area of 67 million ha, of which 760,000 ha are irrigated, and 6.6 million ha are suitable for rainfed crops; forest covers 7.7 million ha. Of the area under cultivation, 61% consists of cereals, 7% of pulse crops, 6% of fruit trees, and 22% of fallow. Livestock production is mainly extensive, based on grazing. Intensive livestock production in irrigated and high rainfall areas is growing rapidly, accounting for half of national milk production but only a small part of red meat production.

2.05 While techniques and production in the irrigated areas have progressed rapidly, development in the rainfed sector has stagnated and agricultural yields have progressed only marginally. Cereal, olives and meat production show no long-run improvement, and the production of pulses declined during the 1970's. Low overall. yields are the result of poor farm technology and limited investment in rainfed agriculture, due in part to the lack of a coherent price policy, and to imperfect Government support services, particularly, agricultural and livestock extension. Forestry production is also limited; industrial timber production covers only 25% of the country's needs, with Morocco's wood product trading balance steadily deteriorating, and with particularly acute shortages of sawlogs and mining timber. Production of fuelwood only covers demand at the cost of massive overexploitation; current consumption is estimated at about 10 million m3 o.b. per annum, with ar allowable cut of only 3 million m 3 o.b. /1.

C. Government Objectives and Strategy

2.06 The 1981-1985 Plan's objectives for the agriculture sector are (i) improvement of agricultural self-sufficiency through increased production of staple foods; (ii) increased agricultural exports through intensified production of off-season vegetables and fruit; (iii) increased domestic forest production to off-set imports and better meet local demands for fuelwood and individual wood products; (iv) reduction of social and regional income disparities through increased investment and employment creation in depressed areas; and (iv) more emphasis on processing and marketing of agricultural products.

2.07 The strategy proposed to achieve the objectives stated above includes (i) increasing the share devoted to agriculture in the public investment program; (ii) increasing public investment in the rainfed sector

/1 FAO estimate, o.b.= without bark. and in small- and medium-scale irrigation schemes; (iii) pursuing input and output price policies which will ensure equitable returns to the farmer and stimulate import substitution for the basic foodstuffs; (iv) adaptating the land-ownership system to encourage rational and intensive use of resources; (v) strengtening the planning and project preparation capabilities of the Ministry of Agriculture; and (vi) expanding the role and lending program of the Agricultural Credit Bank (CNCA).

2.08 The priority given by the Government to the agricultural sector is reflected in the increase in public investment allocation in the current Five-Year Plan (1981-1985). Agriculture (dams excluded) is allocated 22.5% of total planned public investment, as compared to 18% in the 1973-1978 Five-Year Plan and, on an annual basis, the program is about 25% larger in real terms than during the previous plans. The proposed lending program of CNCA amounts to DH 11 billion for 1981-1982 and represents a substantial increase in real terms over previous plans, both for seasonal and investment credit. An important expansion of the CNCA network in the rainfed areas is foreseen.

2.09 The proposed project would be in line with the Government's Plan objectives and the proposed investments would be mainly allocated to the rainfed sector. To realize the objectives of the project (paras 1.01, 4.01) a number of specific sectoral issues have to be addressed.

D. Sector Issues Relevant to The Project

Input and Output Price Policy

2.10 The Government's intervention in the agricultural sector through price regulation and subsidies is discussed in detail in the Agriculture Sector Memorandum on Morocco 11 and is further discussed in chapters VI and VII. In summary, the existing price structure for agricultural and forestry products is sufficiently attractive to stimulate increased farm production, and is in line with projections for international commodity prices. The detailed impact on farm production of subsidies for selected on-farm investments, improved seeds, fertilizer and credit is however unclear. For this reason Government has decided to review and amend as necessary the Agricultural Investment Code under which, among other matters, current agricultural subsidies are defined (para 7.03). A study of the impact of current subsidies and required reforms to the Agriculture Investment Code is being financed under the Loukkos project (Loan 1848-MOR).

Land Tenure

2.11 As is the case throughout Morocco land distribution in the project area is skewed, with about 75% of the farm families owing less than 25% of the land. Most of these farms are too small to be economically viable particularly with so many subject to low rainfall (300-500 mm), relatively steep slopes (over 10%), or too much fragmentation for intensive farming.

/1 Report 2667a-MOR of 1980 -4-

Absentee landlords who hold land for speculative purposes either leave it idle, or have it cultivated by tenant farmers who have no security. These land tenure problems restrict the use of modern production techniques and agricultural credit. The Government in Morrocco is attempting to address land tenure issues through the Investment Code and through land reform measures. Among Bank-supported operations, the Meknes project (Credit 555-MOR) included a trial program for land consolidaton on private land and for the creation of viable holdings on collective land (para 3.04). In order to obtain a better understanding of land usage problems and possible future land consolidation programs in the project area, the project would include a cadastral survey to catalogue the ownership of the project's agricultural lands (oara. 4.29).

Livestock and Pastoral Development

2.12 Traditional livestock production depends upon stubble and fallow grazing, and upon the forage resources of forest and range lands, which between them supply about 80% of forage consumed. Productivity of traditional livestock is low dtue to inadequate nutrition, and due also to (i) poor health and a lack of shelters and water points; (ii) poor genetic characteristics; and (iii) undeveloped milk production potential due to a lack of collection facilities. The 1978-1981 Development Plan neglected traditional livestock production, particularly in the areas of lower rainfall, and the Government has not yet dealt adequately with range management. At current levels of forage production, the national herd receives only some 80% of its food needs--even after taking account of overgrazing of the forest areas. The current Plan recognizes both the importance of livestock in collective grazing areas, and of the forestry range. The share of livestock investment in total agricultural investments would almost double to 1i%, with over half of it allocated to collective grazing areas. There is a need to define a strategy for improving the management and productivity of range lands, based on organization of the local population and the integrated development of agro-sylvo-pastoral forage resources. Tne Government has recently begun this task (both the Livestock and the Forestry Departments have started implementation of sylvopastoral improvements on collective and forest state land respectively) and the project would assist by developing further methods.

Forestry Development and Erosion Control

2.13 Morocco's forest resources are declining at a dramatic rate. It is estimated that annually 20,000 ha of forest which are being harvested are not regenerated (for details see footnote page 2). Population growth and economic development have resulted in increased domestic demand for fuelwood and industrial timber. Morocco's reforestation efforts have not kept pace with domestic demand and the country relies increasingly on wood

imports (para. 2.05), wnile conversion of range land into agricultural land due to population pressire has led to increased grazing pressure on the forests. Action is required to (i) integrate forestry and livestock development, and to raise fodder production on Government forest land by adequate range mangement practices; and (ii) to improve forest management, - 5 - regulatingovercutting and overgrazing,and increasingrate of planting with fast-growingspecies, The proposed project would promote the integrationof wood fiber and forage production and would also develop purely productive plantationsusing fast growing species.

2.14 The pressure on State forest land has also resulted in areas being stripped of their natural vegetation, and soils are either exploited until exhausted or carried away by erosion. Inappropriate farming methods are likewise destroying the productive capacity of cultivable soils. The proposed project would address these soil erosion issues and would promote a range of soil conservation measures in the forestry program and through the extension service.

Research

2.15 Morocco's agricultural research is undertaken on 46 stations and in 20 laboratories. Despite some positive technical results, in particular in the development and production of new cereal varieties, the impact of research on agriculture has not been sufficient. Reasons include (i) too little attention paid to the practical problems of farm production systems; (ii) inadequate transmission of results to farmers through the extension system, and little verification of recommendations by on-farms trials; (iii) poor coordination between researchers, and a lack of policy definition; and (iv) poor administration, low salaries, and a general shortage of human, physicial and financial resources. To overcome those constraints, the Government created the semi-autonomous National Institute for Agricultural Research (INRA) in December 1980, responsible for coordination and execution of agricultural research. With Bank assistance preparation of a Research Master Plan is underway as a first step to improve INRA's organization and to define research policies and priorities. The project would carry out some formal research on agriculture in upland areas, not at present undertaken elsewhere in Morocco. Otherwise, research under the project would be project specific and the program would be carried out by INRA.

2.16 Agricultural Extension. Agricultural extension in Morocco is organized through 225 agriculture centers. Much of the effort of extension agents is directed to distributing inputs to farmers, collecting statistics, and enforcing regulations; they have not been very successful in diffusing new technology for this reason, and also because of Ci) their frequent lack of practical farming experience; (ii) a lack of communication skills due largely to deficient training; (iii) weak research-extension linkages and technical back-up; (iv) organizational weaknesses, including imprecise work programs and lack of supervision; and (v) shortages of vehicles, equipment, and recurrent budgets, alongside low salaries and poor incentives. The result is a cadre of agents who are ineffective and lack respect from their clients, who lack substantial responsibility and are not given encouragement; morale is generally low. A reform began in July 1980 with the establishment of a Directorate of Extension and definition of a program which would aim (i) to establish homogeneous extension regions with locally adapted extension objectives and messages; (ii) to integrate research, extension and training; and (iii) to increase the accountability of extension agents and establish proper incentives. Studies and plan preparation for an Extension Master Plan are scheduled to start in September 1982 with Bank assistance. By the end of 1983 both Research and Extension Master Plans should be ready, and should result in a Bank-assited national research and extension project following the definition of new policies. The project would contribute to the national planning process by developing a cost-effective approach specific to rainfed areas that could be used as a model elsewhere in the country.

E. Bank Involvement in the Agriculture Sector

2.17 Bank group lending for agriculture in Morocco began in 1965 and to date 16 projects have been undertaken and supported by US$561.5 million Bank/IDA funds (US$24.0 million in IDA credits). They include five irrigation projects: Sidi Slimane (FY65, completed), Sebou I (FY70, completed), Souss Ground Water (FY75, completed), Doukkala I (FY76, completed), and Doukkala II (FY77). There also have been four agricultural credit projects (FY66, FY73, FY77, all completed, and FY79 ongoing), an agro-industries and flood control project (Sebou II, FY74), four rainfed agricultural development projects (Meknes FY75, Fes-Karia-Tissa FY78, Loukkos FY80, and the Middle Atlas FY82); one export-oriented project, the Vegetable Production and Marketing project (FY79), and one Forestry Project (FY82).

2.18 Performance of Bank-financed projects has generally been satisfactory. Performance in irrigation projects has been good once initial problems of land distribution, and organizational delays in construction and procurement of irrigation equipment have been overcome. Inadequate cost recovery is the major issue. The implementation of a recently-decreed increase in irrigation water charges by about 100% will contribute to the solution of the cost recovery issue (see also para 7.06). The project performance audit report for the Sebou I project was submitted on June 213 1982. The report stresses the project's success in institution building and in providing infrastructure to achieve increases in the production of irrigated crops, and the importance of their production. It also highlights the importance of succesful extension and timely allocation of funds to O&M, and the collection of water charges. Completion of land reform remains, and is necessary if the full economic and financial potential of the investment is to be realized. The project completion report for the Doukkala I Irrigation project was submitted on June 4, 1982. The project was successfully completed with crop production and cropping intensity exceeding appraisal targets and a higher rate of return than expected. The project included a land consolidation and extension program which has eliminated land fragmentation and has facilitated the introduction of an improved cropping system. Performance of the four agricultural credit projects has been good. OED reports for three of them are 4vailable (Report 2543, June 15, 1979, Report 3248, December 23, 1980)41- These reports stress the contribution made by the

/1 The First Agricultural Credit Project was reviewed in OED's Report on Agricultural credit Programs, Background Paper No. 4. - 7 - loans to agricultural development, their success in establishing an efficient credit institution and the successful expansion of credit to small farmers. They also underline the importance of agricultural price policy, extension and input distribution for improved economic and financial performance of the credit loans. These issues are being addressed through Bank sector work. The Fourth Agricultural credit Project has recently run into liquidity problems because of the 1980-1981 drought which resulted in rescheduling of farmers' debts. Adequate measures to deal with these temporary problems have been taken. A fifth project to provide a line of credit to CNCA is currently under preparation and is scheduled to be appraised in early 1983. In the rainfed subector, the first project (Meknes, FY75) experienced considerable implementation delays due to the complicated and time-consumming land redistribution problems, poor preparation of project components, over-optimistic assessment of implementation targets, and inexperience in the organization and management of rural development projects. The Fes-Karia-Tissa Agriculture Project (FY78) was designed to minimize organization and management problems encountered with Meknes and is performing well, and the implementation of both productive and social components is generally satisfactory. The Loukkos project is progressing satisfactorily and the Middle Atlas and Forestry Project have made a good start.

2.19 Lessons learned from these projects, both technical and institutional, have been taken into account in designing the proposed project. Start-up delays, experienced by most projects in Morocco, would be minimized by (i) the close prior involvement of the Moroccan authorities in Project preparation; (ii) early nomination of key personnel; (iii) availability by negotiations of first year designs and work plans, and the prompt allocation of financial resources to the start-up year. Project management problems would be avoided by (i) the dovetailing of project management structures into the existing structure of support services; (ii) the involvment of the local authorities from the design and preparation phase; and (iii) the establishment of national and provincial-level coordinating committees, which have proven extremely useful in the implementation of Bank-supported rainfed projects.

III. The Project Area

A. Physical Features

Location and Land Resources

3.01 The project area (MAP IBRD 16474) covers some 328,000 ha or 41% of Khemisset province; 48% consists of forest land (mainly State-owned) and 41% of agricultural land. The natural forest is mainly cork and holm oak, chgne zene and thuya. A considerable part is degraded or open with bush type vegetation. Some 4,000 ha of the forest consist of plantations, mainly pine and eucalyptus. The forest is also an important source of livestock grazing. The agricultural land is mainly limited to rainfed crop production, as water resources are scarce. Some 800 ha in the project area are irrigated, all in small perimeters. - 8 -

3.02 T grahy Climate and Soils. The project area lies between 350 and 1,350 m above sea level, and can be divided into two distinct areas: a relativelydry area with elevations between 250 and 700 m, on the west and center of the project zone, and a more humid area to the east, with elevations varying from 500 to 1,200 m. The lower and drier areas are characterizedby undulatinghills; annual rainfall ranges between 300 to 550 mm. The higher area is cut by steep ravines, with rainfall ranging from 700 to 950 mm. The project area has several plateaux. The lowest are about 550 m above sea level situated in the west. The most importanthigh plateau is at Oulmes (1,000 m) in the east. Most of the zone is drained by the Bou Regreg river (a major source of drinking water for Rabat) while the extreme eastern part drains into the Oued Beht, which irrigates part of the 1%harb plain. The dry season lasts from May through October with high average temperatures of up to 40% during summer. Early morning frost and occasional snow occurs in the eastern and higher part of the project area, limiting the length of the vegetative period and prohibiting irrigated cropS i.n the winter. The main soil types are the brown forest soils derived from schists and quartzites, with some pockets of heavy clays (tirs) found in the central and western parts. In summary, the project area is erosion-prone with soils of medium to good agricultural potential.

B. Socio-Economic Features

3.03 Population. About 118,000 people, 27% of the population of Khemisset Province, live in the seven rural communes in the project area. PoDl.,iation density is lowest in the high elevation areas in the east (17 per k'2J a8d highest in the central plain area (49 per km2). The annual population growth of 2.2% is lower than the national rate of 2.9%; this is due to out migration to urban areas. About 87% of the population is engaged in agriculture. Apart from working on their own farm, many small farmers work as laborers on the large farm holdings. Under- employment is still a common factor in the project area, however. The average farm family size is about 5.5; there are considerably fewer farm holdings than households indicating that often more than one family is dependent on a single enterprise.

3,04, Land Tenure. Land tenure within the project is shown below:

ha

Pi-iv.ateland 115,900 35.0 (incl 800 ha irr.) CollecJti-v land 11,400 3.5 Forest land 158,000 48.0 Agricultural state land and coops 7,900 2.5 Uincultivated 35,200 11.0

Total 328,400 100.0

Most farms in the project area are privately owned. Of the small amount of callecztive land half is for crop cultivation and half is rangeland. State Forest land is well delimited and the two main tribes in the project area - 9 - have the usufruct of the grasslandand dead wood for domestic purposes. Other State agriculturalland is used for seed production,or general field and tree crop production. Most of the privately owned land is not registered;most holdings are small with heavy fragmentationof parcels. The present law discouragesfurther subdivisionof farms among heirs since a tax equal to 30% of the value of the land to be divided has to be paid to Government if subdivisionoccurs. The proposed cadastral survey (para 4.29) would form the future basis for land consolidation.

3.05 Land Use. The proposed project can be divided into three distinct zones (zone 1 in the north and center, Rommani and Maaziz); (zone 2 in the east, Oulmes); (zone 3 in the south, Ezzhiliga). They have marked agriculturaldifferences: Rainfed Land Use Arable Land Total Area Forest UncultivatedCultivated Cereals Legumes Fallow

Zone 1 52 42 11 47 52 22 24 Zone 2 32 71 5 24 46 2 29 Zone 3 16 31 22 47 58 1 40

3.06 Over half of the agriculturalland is used for cereals, with grain legumes growingmainly in the northern and central part of the project area (zone 1). Most forage includingbarley is produced in the eastern part (zone 2). Irrigatedland accounts for only about 800 ha, or less than 1/2% of the cultivated land, consisting of vegetables in the low lying areas and fruit crops on the plateau of Oulmes. Dryland plantationswith olives and other treecropsamount to about 1% of the agriculturalland. Fallow land and forest areas are to a large extent used for livestock grazing.

3.07 In the forest area of about 150,000 ha, cork and holm oak (46%) are the most valuable species. Thuya (Tetraclinisarticulata), mainly used for fire wood and building poles, makes up 18% of the forest area. Forest plantationdevelopment has so far been slow, and to date only 3,700 ha have been planted with fast growing species, mainly pines (Pinus halepensis,P. canariensis,P. pinaster) and eucalyptus (E. camaldulensis.). The main land-use objectives for the forest areas are to restore and maintain forest cover for the protection of soils and water supplies, and to produce cork and wood; these activitieswould be associated with livestockgrazing whenever compatible. Farmsize and Systems

3.08 There are 11,400 farmholdingsin the project area. More than 36% are small subsistenceholdings of less than 4 ha (and occupying about 5% of the private and collective agriculturalland); a large proportionof these are too small to provide an adequate family income, with farm families to a large extent dependent on income derived from farm labor on larger farms and from their livestock. Sixty-twopercent of farms are small to medium-sizedsemi-commercial holdings (5-30 ha), occupying about 70% of the - 10 -

land, whereas 2% are large commercial farms occupying 25% of the land. The traditional farming system is based on a cereal-fallow rotation, using little improved seed, inadequate amounts of fertilizer and generally poor soil preparation. During the last decade mechanical soil preparation has become common. Animal traction continues to be used for certain farm operations or on sloping land by most small and medium farmers. Mixed livestock farming (sheep, goats and cattle) prevails throughout the project area, with the smaller-sized farms raising more animals per ha of arable land. Livestock depends for 2/3 of its feed on fallow and stubble grazing on the farm, with some use of straw, and for 1/3 on forest range grazing, with the smaller farm units relying more heavily on the range than the larger farms. On-farm fodder production has generally been neglected. Many parts of the forest in the project area are under severe grazing pressure, which is degrading the forest. This has been particularly acute during the past two years of low rainfall.

Agricultural Production

3.09 The bulk of the agricultural production is derived from rainfed annual crops. Average cereal yields do not exceed 1 ton per ha, whereas grain legumes mostly yield less than 0.8 ton/ha. The advanced farmer in the area, however, gets double or triple these yields. A considerable potential for increasing yields exists, particularly by making available and accessible improved farm supplies and credit, and improved farm technology.

3.10 The project's livestock resources consist of 300,000 sheep, 80,000 goats and 50,000 cattle. The area's most important production is its meat, followed by milk and wool. Productivity is low due to the poor genetic potential of the local breeds, insufficient nutrition, poor reproductive management and insufficient health control, particularly of parasites. Presently fodder production in the project area covers about 90% of total requirements. Improved farm technology and range management techniques would lead to a substantial increase in fodder production.

3.11 The-existing natural forests are mainly in mountainous terrain, affected by grazing and cutting, and containing valuable supplies of cork, fuelwood and poles, and less valuable supplies of sawlogs. The mean annual increment of mixed oak forests (poles, fuel and timber combined) is estimated at less than 1 m3/ha/year, with average standing volumes usually less than 50 m3 /ha. There is some scope for increasing volume, value and quality by silvicultural techniques, such as selective thinning, provided that illegal cutting and animal browsing can be controlled. Yields from cork harvests amounts to about 20 steres of cork per ha. Volume production in the plantations is much higher, even with little management, with mean annual growth rates for pines (mainly Pinus halepensis) between 2.5 and 4 m3 /ha and (for Eucalyptus camaldulensis) 3.5 to 5 ml/ha. With improved management and planting stock these yields could be considerably increased. - 11 -

C. AgriculturalServices

3.12 Ministry of Agricultureand Agrarian Reform (MARA). At the central level in Rabat MARA comprises 10 directoratesreporting to the SecretaryGeneral of Agriculture. The main six directoratesinvolved in the project would be: extension and agrarian reform, rural engineering, land registrationand topographicsurvey, crop production,forestry, and livestock. The Bank has worked closely with these units, particularlywith the crop productiondirectorate, which was responsible for preparationof the project. The crop productiondirectorate was chosen by MARA as the lead directorate for the Oulmes-RommaniProject, coordinatingpolicies and budgetarymatters at the central level (para 5.02). At the provincial level the same directoratesare representedand headed by the Provincial Director of Agriculture(DPA). The DPA is not only responsibleto the SecretaryGeneral of MARA but also to the Governor of KhemissetProvince (para. 3.18) and is therefore the key agent for agriculturaldevelopment in the province and the project area. At the field level the services of four key directorates(crop production,which also handles crop extension, forestry, livestockand rural engineering)are also represented. Their present low level of staff, and lack of infrastructureof these and other key support serviceswould be rectified under the project.

3.13 INRA (para 2.15) is represented in the project area by two existing research stations. The one in Merchouch is very important nationally for the selection and multiplicationof cereals and grain legumes. A small station in Oulmes has recently been opened, but lacks infrastructureand equipment; it would be stengthened,and would assist the project in the productionof improved forage seed.

3.14 Training. All formal agricultural,forestry and livestock training needs for senior staff are met by the Agronomic and Veterinary Institute Hassan II in Rabat, the National School of Agriculture in Meknes and the National Forestry School in Sale. Formal training for mid-level technical staff is adequately carried out in the Royal Schools of Livestock (Kenitra)and Forestry (Sale),while the AgriculturalSchool in Tiflet (Khemissetprovince)-presently trains between 40-60 agriculturalextension workers per year. Problems are not foreseen in meeting the general pre-servicetraining needs for technical staff. However, senior staff are mostly not specializedin key subjects of particular concern to the project (range management, fodder production,farm management). The project would therefore initiate measures to overcome these shortcomings(para 5.17). The introductionof a new and demanding agriculturalextension system, requires also that the AgricultureSchool in Tiflet introducea more specific and practical pre-servicecourse.

3.15 Inputs. The state_ownedfertilizer and seed companies (FERTIMA and SONACOS) both have distributioncenters in Khemisset, and SONACOS has a Centre in Rommani. In the project area distributionof farm inputs is mainly carried out through MARA's agriculture centers. Existing centers do not cover all farming areas, some of which have a poor road network, discouragingprivate wholesalersof fertilizersand pesticides from - 12 -

traveling to the market centers. Farm machinery and other equipment are mainly available from retailers in the main towns. Contract ploughing and other mechanical farming operations are carried by private farmers and to a small extent by the agriculture centers (para 6.17).

3.16 Credit. The National Agricultural Credit Bank (CNCA) is the main supplier of seasonal and medium-term credit in the country. CNCA services the Project area with two regional banks (CRCA, in Rabat and Khemisset) which lend to medium and large farmers whose net fiscal income is above DH 3,000. Two local banks (CLCA, in Khemisset and Rommani) provide seasonal and medium-term credit to farmers with a fiscal income of less than DH 3,000. Although the Project area is mountainous, road communications difficult, and credit outlets few and concentrated in its northwest zone, a relatively large number of farmers currently have access to agricultural credit;

Potential clients/a Actual Clients/b Percentage (%) CRCA CLCA Total CRCA CLCA Total CRCA CLCA Total

Morocco 64,500 1,052,500 1,117,000 37,500 216,400 253,900 58.1 20.6 22.7 Khemisset Province 3,800 32,300 36,100 2,300 6,800 9,100 60.5 21.1 25.2 Project Area 1,700 9,400 11,100 1,300 2,700 4,000 76.5 29.7 36.0

/a Potential clients have fiscal income of more than DH 100. /b 1980/81.

Because of the high proportion already receiving credit, the potential increase in the number of CRCA's clients requesting seasonal credit is therefore relatively small and can be handled by the existing physical and human infrastructure. The potential for an increase in CLCA clients is important.

3,17 Presently, loan eligibility and amount for CLCA clients are based on a farmer's "fiscal income". Morocco's tax authorities annually determine each Moroccan farmer's taxable income by applying potential revenue norms to the number of hectares, livestock and fruit trees owned by the farmer. This taxation system was introduced in 1963 to provide some production incentives by linking taxes to potential and not actual revenues from farms. Farmers' debt repayment capacity is then determined by CNCA as a multiple of their annual fiscal income. However, fiscal income norms have not been updated and no longer reflect farmers' real income. Providing adequate access and financing to the area's small farmers will require both a change in lending procedures and the extension of CNCA physical infrastructure. CNCA has adopted farmers' fiscal income as the basis of its lending to small farmers to provide an easy way to determine with limited staff and costs creditworthiness and debt repayment capacity for a large number of small farmers. Farmers with a fiscal income above a certain minimum are eligible to receive credit. Over the years, CNCA has gradually updated its criteria. With a fiscal income threshold for credit eligibility of DH 100 there were 9,400 CLCA potential - 13 -

determine with limited staff and costs creditworthiness and debt repayment capacity for a large number of small farmers. Farmers with a fiscal income above a certain minimum are eligible to receive credit. Over the years, CNCA has gradually updated its criteria. With a fiscal income threshold for credit eligibility of DH 100 there were 9,400 CLCA potential clients in 1980. The fiscal income threshold was further reduced to DH 50/year in 1981 which fractionally increased the number of potential CLCA clients.fL Furthermore, CLCA clients having legal title to their land are now financed, like CRCA clients, on the basis of their actual needs. For the 1981/82 agricultural season, the mnaximum annual debt repayment capacity of small farmers who do not have legal title to their land (the majority) has been fixed at 150% of his fiscal income for short-term loans and at 120% of his fiscal income for medium-term annuities. Application of the fiscal income rule does not take into account farmers' cropping pattern and financing requirements and sets allowable credit at an insufficient level. Moreover, ceilings set by CNCA on maximum debt repayment capacity have proven somewhat restrictive. Providing adequate access and financing to the area's small farmers will require both a change in lending procedures and the extension of CNCA physical infrastructure. A new short-term lending procedure, successfully introduced under Bank-financed Fes-Karia-Tissa project (Loan 1602-MOR) and aimed at financing small farmers according to their actual crop production costs would also be applied under this project.

3.18 The Minister of Interior (MOI) has an important role in the agricultural development of the project area: (i) the provincial governor in Khemisset, who represents MOI, has overall responsibility for development activities in his province and is responsible for coordinating the operations of the technical services; (ii) the governor reviews and approves the decisions of the 7 local government authorities in the project area including their budgets; (iii) MOI through the Directorate of Collectivities has the trusteeship of the collective land. During project preparation a close collaboration between MOI, the project's local government councils and MARA was established. For successful implementation of the proposed forest range development, MOI must play a key role.

D. Infrastructure and Social Services

3.19 General. In the past, the project zone has not only received a low level of government support for agricultural services, but also for economic and social infrastructure. In the present 5-year plan Government has put a high priority on the development of these services in the rural areas, focusing development groups of services around active rural centers. The purpose of this "chef lieux" policy is to help stem the tide of rural out-migration. These rural centers are crucial to both economic and social life, as they provide not only the main trading markets, but are also the principal regular meeting place of the inhabitants of an area.

3.20 Roads. The project area is served by 315 km of paved roads as well as 530 km of agricultural dirt feeder roads and 550 km of forest tracks. Road density of 2.5 m/ha is low and should be increased in the better agricultural areas. The average density of forest tracks is about 3.4 m/ha, compared to an

/1 Fiscal income of DH 50 represents about 0.5 ha of rainfed land or 2 ewes. - 14 - acceptable track density of 5 m/ha. Maintenance of the 440 km of classified project roads is the responsibility of the Roads Department and is generally adequate. Maintenance of the 400 km of non-classified roads is the responsibility of the local Government Councils and is generally inadequate. Forest road maintenance is the responsibility of the Forest Services, and forest roads are poorly maintained, which will be improved under the Project.

3.21 Water Supply and Power. The National Water Board (ONEP) serves the three large urban areas of Maaziz, Rommani and Tiddas, where some house connections exist for water supply. Other systems run by the Government Councils exist in 9 other villages. In the countryside the distribution network for drinking water is inadequate as the population and their cattle have only 340 watering points, or roughly I point per 320 people. Electric power is provided by the National Electricity Board (ONE), and is available in the main urban centers. The grid will be extended under the national rural electrification program. However, this program will exclude a number of important agricultural communities in the project zone.

3.22 Education and Health. The project area has an estimated rate of school attendance of 43% for the 7-11 age group, well below the national average of 72%, which is only attained in the rural commune of Maaziz. The main reasons for poor primary school attendance in the area are (i) the shortage of classrooms, and (ii) the custom of using children as shepherds. In order to attempt to reach the national goal of full primary enrollment of the 7-year age cohort by 1995, an intensive school building program is required, particularly in the remote areas. Public health facilities consist of an 80-bed hospital in Rommani, 4 health centers, and 9 rural dispensaries. To bring the project area up to Government minimal health care standards, one dispensary needs to be replaced, and a small maternity annex built onto one health centre.

E. Major Project Area Constraints and Conclusions

3.23 In spite of the agricultural potential of the project area, development has been limited by a number of constraints. The physical constraints relate mainly to the amount and distribution of rainfall, as the moisture available to the growing plant is generally the most significant single factor limiting yields in a semi-arid climate. In addition, the mountainous topography of the zone in combination with injudicious land use has contributed to poor water conservation and extensive soil loss. The negative impact of the physical constraints could be avoided if farmers applied improved and timely farm practices and became more conscious of the value of introducing tillage techniques which increase moisture storage, and of soil conservation measures.

3.24 A major social constraint is the unequal distribution of land and its fragmentation, which leaves many farmers with unviable holdings and limited scope for modernization. While a start can be made on the problem of fragmentation through the cadastral survey (para 2.11) in the short term, only marginal improvements to production can be expected on most small farms through the projects' actions. The most productive and cost effective interventions would be on the medium sized semi-commercial holdings, which could thereby contribute more strongly to national marketed food production. - 15 - overgrazing and the degradation of forest resources. Rectification of this would require better livestock grazing control and the production of more forage both on the farm and on the range.

3.25 A major institutional constraint in the project area is the lack of agricultural support services (e.g. extension, adaptive research and access to farm inputs and credit) caused by a lack of financial and trained human resources. Strengthening the present network is a prerequisite for rapid development. Special attention is required to improve the extension services, at present ineffective, yet crucial to future development.

3.26 The proposed development actions have sought to resolve these constraints wherever possible. The packages proposed for crops, livestock and forestry, whilst relatively simple due to the restrictions posed by the physical environment, nevertheless require coordinated and efficient support from the agricultural services for their realization.

IV. The Project

A. Project Objectives and Approach

4.01 The main objective of the project is to increase production and productivity in the rainfed agricultural areas in order to improve Morocco's self-sufficiency in staple foods (paras 2.06-2.07). The project aims to improve the living standard of the predominantly rural population in the project area by raisilig farm incomes (through increased agricultural and livestock production) and by providing better social and agricultural services. In addition, the project would increase roundwood production and would take steps to conserve the productive environment by countering soil erosion and forest degradation. The project would seek to improve the integration between livestock and forest production in the forest State land areas. Since increased agricultural employment would be provided and living conditions would be improved, it is expected that out-migration would be reduced.

4.02 The strategy proposed for reaching those objectives at the farm level envisages the introduction of relatively simple improved crop production techniques, and more intensive use of modern inputs, while altering the landuse system (principally to reduce the proportion of land left fallow, and to increase on-farm fodder production). Extension and rehabilitation of irrigated perimeters would play a minor but important role in the project. Livestock development would concentrate on animal health, genetic improvement, and fodder production on the farm and the range. Forest production would be increased by introducing better harvesting and management techniques for natural forests and forest plantations. Soil protection and erosion control, together with the introduction of an improved range management system, would be integral parts in the improvement of the area's forest resources. Successful project implementation would require continuous dialogue with the population, which would be secured by fully involving the Governor, MOI and the local government councils and by using other existing local coordination committees (para 5.04). - 16 -

B. Descrietionof Project Components

4.03 The project would be implemented over a 5-year period and would include;

(i) r ro e

(ii) irrigationdevelopment;

(iii) forest development,including soil conservationand forest range management;

(iv) economic and social infrastructure;

(v) institutionaland logistical developmentof the agriculturalservices;

(vi) technicalassistance to help with implementation;and

(vii) a cadastral survey.

Rainfed Crop and Livestock Development

4.04 Crop Development. The project would provide for improved crop productionon some 80,000 ha private rainfed land in conjunctionwith the developmentof about 12,000 of forest range (para 4.16) and with livestock activities (para 4.07). Increasedcrop yields would be obtained by applying known and tested technologicalimprovements including improved and timely soil management and through the provision of inputs and credit, backed up by an improved extension service, and applied research. Apart from increasing cereal yields production of grain legumes would be expected to increase from about 18,00 ha to 24,000 ha as a substitutemore and more for fallow as would on-farm fodder productionwhich would be expected to increase from about 7,000 to 16,000 ha, supplementingfodder production on the range. Production of vetchoats and pea barley would be increased,although other fodder crops such as berseem, alfalfa, Medicago truncutula,Vicia sativa and maize would also be gradually introduced. Silage conservationmethods (600 ha) and the treatment of straw with ammonia (1,200 ha) to improve its nutritive value would be introducedon a modest scale. As a result of increasedgrain legume and fodder production the amount of fallow is expected to be reduced by about 30% in the project area by full development.

4.05 The project approach to the improvementsof cultural techniqueswould vary according to the physical characteristicsand the economic resources of the individual farmer. On land already tilled mechanically,the project would seek to improve tillage (with a more complete and timely cycle of soil preparation),and to increase the use and management of improved seeds, fertilizersand pesticides. On land tilled by animal traction due to slopes, excessive fragmentationor poverty, the project would improve the prefered tillage method, by upgrading traction animals and introducingbetter tillage equipment and would encourage greater and better use of modern inputs. - 17 -

4.06 A small land improvementcomponent has been included in the project. Under this program about 2,000 ha of potential agriculturalland would be destoned at an average cost of about US$1,000/ha. These operationswould be conducted in a similar manner to those successfullyapplied in the Meknes project. Land improvementwould also take place in some 2,000 ha of areas covered by unpalatable shrubs (doum and jujubier);credit is readily available for this from CNCA.

4.07 Livestock Development. The main objective of this component would be to assist in overcoming low productivityin the existing herd. Improvementof animal nutritionwould be a priority, reflected in the emphasis on fodder production described above. The project would also pay particular attention to the genetic improvementof cattle, sheep and farm horses, and to herd management and animal health. Well-establishedand tested genetic improvement methods would be used and would require the constructionand staffing of five cattle breeding stations, (mainly to improve milk cows), two horse breeding stations, and the purchase of 500 selected sheep for distributionto farmers to upgrade their sheep herds. The animal health program would include eight dips (three of which to be mobile) for external parasite control, and additional drugs and equipment. Morocco's successfulexperience in introducingand managing milk collection centers would be continued under the project, which would finance two new centers and would increase collection capacity in three existing centers (para 6.09). The project would also provide credit for the purchase of feed concentrates,the building of sheep and cattle folds, the purchase of improved rams, ewes and milk cows and the purchase of forage harvesting, silage and hay making. Additional infrastructurewould be provided to the cattle breeding station in Oulmes, which improves and multiplies the local Oulmbs cattle breed, and to a trial pasture area to be managed on 500 ha of collective land at Telt.

Irrigation Development

4.08 The project would include: (i) the development,rehabilitation, and extension of eleven traditional irrigationperimeters by about 570 ha./Li Water would be pumped from small rivers and springs, and would be distributed by gravity through lined primary and secondarycanals; (ii) equipment for two ten-hectareirrigation demonstrationfarms in the most importantproject irrigation areas (Tanoubertand Oulmes); and (iii) studies of groundwater resources of the Tanoubert basin and Oulmes plateau, and the preparationof detailed developmentproposals for future investmentsnot financed under the project. The traditionalperimeters would produce vegetables and forage, whereas an irrigationperimeter on the Oulmes Plateau would produce apples and pears.

Forest Development and SylvopastoralImprovement

4.09 The forestry component (see Annex 2) of the project would include (i) production plantations: commercial timber plantations of about 5,000 ha of pines and 3,000 ha of eucalyptuswould be establishedfor commercial and industrialend-uses; (ii) protection plantations: 4,000 ha of plantationsof

/1 See Annex VI of Project File - 18 -

degraded forest to restore the forest cover, as part of the Government's program of forest production; there would also be limited commercial timber production; (iii) soil protection and erosion control measures in areas of vulnerable or eroding soil, including small soil engineering works and appropriate tree planting on about 4,000 ha State and private land; and (iv) sylvopastoral operations increasing the quality and yields of timber, cork and fodder in some 12,000 ha of indigeneous forest and bush land, by selective thinning and pruning of trees and pasture improvement measures, combined with livestock management and rotational grazing.

4.10 Most of the areas selected for plantations and sylvopastoral improvement are indicated in the existing forestry management plans preparedl by the Forestry Department. They are located on State forestry land. Aboul 10% of the land will be in areas with other designations or on State lands without plans, especially in areas with easy access to markets (including town and village feed markets, para 5.11).

4.11 The eucalyptus selected for planting in the production plantations would be Eucalyptus camaldulensis and would be used for fuelwood, poles and pulpwood. Plantations would be clear-felled after 10 years and the coppice regrowth would be cut twice again at 10 year intervals. On limestone sites E. gomphocephala would be planted. Pines selected would be mainly Pinus halepensis and P. brutia on lower, drier or poorer sites, whereas the P. canariensis and P. Pinaster would be used on higher, moister or more fertile sites. Production would be mainly for sawlogs and poles. Pine plantations would be clear-felled after 30 years. Most of the thinnings after 15 years would be large enough for sale as poles. Average annual under bark (u.b.) production for eucalyptus is estimated at 7 m3 /ha u.b. and 5 m3 /ha u.b. for pines. These estimates are conservative and are based on experience and measurements elsewhere in Morocco.

4.12 The protection plantations located in degraded State forest areas would, when restored, protect soil and water catchment areas, and produce limited quantities of wood. Species selected would be the same as for the commercial plantations but yields would be much lower with 3 m3 /ha u.b. for eucalyptus and less than 2 m3 /ha u.b. for pines. The establishment technique would be designed to minimize costs, while giving particular attention to soil stabilization.

4.13 The soil protection and erosion program. It would involve a wide range of techniques which could be adjusted during implementation including the planting of fruit (olive, almond) trees on small terraces or banquettes; establishment of bunds and semi-permanent uncultivated strips along contour lines in sloping cultivated fields; and treatment of actively eroding gulleys, culverts and ditches with transversal walls of stones, gabions and culvert realignment.

4.14 Basic fire protection arrangements already exist in the project area, but would be improved during the project. The regular grazing of livestock and the normal practice of leaving unplanted breaks of 10-20 m around blocks of 25-30 ha greatly reduces the fire danger in the plantations. In the - 19 - natural ftorests the thuya forests are vulnerable to fires and burn more easily than the oak or mlxed forests. The project would therefore establish50 km of firebreaks in these areas, as well as 3 fire towers or observationposts.

4.15 Insect diseases in the project area have not been important,although the eucalyptus plantationsmay get problems from the beetle Phoracantha semipunctata. At present the recommended control measure is to cut and remove all affected trees as soon as possible. To meet the increaseddemand for seedlings in the project area an additionalnursery would be establishedin Harcha with a capacity of 3 million seedlingsper year.

4.16 SylvopastoralImprovement. The project would introduce sylvopastoral operations on the forest range, on areas which are identified in the existing management plans and distributedin 5 separate blocks of about 2,400 ha each. The sylvopastoralareas are partly in forests in which suitable techniques can improve wood production (thinning,pruning), and fodder production;and partly in open areas with little tree cover but which can produce fodder. The forest range would be improved by (i) developing the natural herbaceous cover in 6,000 ha of existing cork oak forest and by thinning about 3,000 ha of holm oak; (ii) improvementof 2,000 ha of natural grazing in open bush land areas and the planting of about 1,000 ha of forage shrubs (Acacia, Atriplex, MEdicg, Colutea and Cytissus). Techniques for forest range would also include reseedingwith grasses and annual and perennial legumes, and fertilization. Investmentsfor fencing have also been included in the project costs. It is expected that the quality and yields of timber and oak would slightly improve through proposed thinnings and that the present low level of fodder productivityof these ranges would be increasedby two-fold. The suitable technical interventionsare already known as demonstratedon the Adarouch ranch, the range research at Timahdite, the UNDP/FAO project (MOR 73/106, but their practice needs improvement. Most importantwould be the control of stocking rates and the organizationof the legitimatebeneficiaries into grazing associations. Because of the distinct social and economic situations in each of the sylvopastoralzones, a study phase of about nine months would be required prior to commencementof the developmentof each zone. A start has already been made in Harcha, the first zone scheduled for development(para 5.13).

Infrastructure

4.17 Like the on-going Fes-Karia-Tissaproject (Loan 1602-MOR) this project would include a number of infrastructuralsupport and social components. Some of these (market constructionand improvement,rural roads, dual purpose water points, and a flood protectionbarrier) have clear economic linkages with the agriculturaland livestockobjectives of the project. Other components (10 bed-maternityhospital and dispensary,drinking water, and sewage systems) would have beneficial effects on the health, of the project area's population,whilst others (street paving, electrification)would improve the living environmentof rural market towns. Details of the main infrastructuralcomponents are given below and are all shown in the Project File. - 20 -

4.18 Market Development. In order to upgrade the level of commercial activities in the project area and facilitate the sale of surplus produce resulting from the project, the project would provide for the construction/extension of 14 markets; 3 of these would replace existing facilites, 3 would be entirely new facilities and works for the remaining 8 would complement existing facilities. A typical market consists of an enclosure wall, a slaughterhouse, a tax office, 10 meat vendor stalls, a block of 8 shops and storage spaces with a roof for grains and pulses. These weekly markets would also play a key role in the project's extension system (para 5.05). Fees paid by merchants on entering the markets form a substantial source of income for the local Government Councils.

Forest and Rural Roads

4.19 The present low density of forest tracks in the State forest areas has resulted in difficulties in logging operations and consequently low bids tendered by private logging contractors. On the basis of the existing management plans, 150 km of new forest tracks would be constructed under the project to improve access to the existing forests and proposed plantations areas. A further 35 km of existing unmaintained and deteriorating tracks would be rehabilitated. Both upgraded and new roads would have minimum design standards compatible with satisfactory serviceability and would be based on standard 4-m forest roads with drainage ditches and culverts as required. As most roads will be built on stoney areas, it is estimated that only 20% of the new tracks will need gravelling. About 800 km of forest tracks would be maintained (para. 5.16).

4.20 The project would also provide for the upgrading of 106 km of existing non-classified dirt roads in the most isolated rural areas, to a minimum standard of 4 m width on a 6 m platform. The road between Oulmes and Touiza, with a length of 18 km, would be built with a 8 m wide platform, because of the greater importance of its traffic. This would permit further upgrading to secondary standard by the Roads Department at a later date. The program would include draining and retaining works and rectification of some of the worst bends. No gravel pavement is foreseen since the roads are in schist rock. Road construction costs are based on a December 1981 contract for sirnilar mountain roads in the Middle Atlas project (Loan 2082-MOR) and costs average US$34,000/km, except for the 18 km of the Oulmes-Touiza road where a wider platform and requirements for rock excavation increase the average cost/km to about US$68,000. About 400 km of non-classified rural roads would be maintained (para. 5.16), at a rate of 130 km each year.

4.21 Water Supply. The project would provide for the extension or new construction of water supply systems equipped with public fountains in 10 population centers, and also for the construction of 61 water points in the countryside to serve the needs of the dispersed population and their animals. Of the 61 water points, 40 would consist of structures to capture existing sources, 19 would be new wells and 2 would be boreholes equipped with hand pumps. Each water point would be equipped with a drinking basin for cattle.

4.22 Education. The proposed project would finance the Government's primary school investment program for the project area until 1987-1988, as - 21 - defined by the national and regional education authoritieson the basis of the national school mapping exercise already determined to be acceptable to the Bank. This program would include the constructionof 7 schools (53 classrooms)in permanentmaterials in the more heavily populated small villages near Maaziz, Oulmbs, Rommani and Ezzhiligha. Constructionwould include ancillaryworks necessary for establishmentof a new school (e.g., site preparation,office, canteen, principals'house, sanitation). Teachers' houses would not be constructed,but would be rented using the recurrent budget. In addition, 101 prefabricatedclassrooms would be erected in the more remote rural areas; for every three of these on average, a prefabricated teachers'house would be built, as renting is not feasible outside villages. In addition, the program would include furnitureand equipment for all 154 classrooms. A sufficient number of teachers are available to staff the schools at normal teacher pupil ratios. The project componentwould contribute to the Bank's education sector policy in Morocco, which includes support for more equitably distributedand effective rural education through the constructionof primary schools in ths most deprived rural areas, and the provision of basic educationalmaterials L21.

4.23 Status of Engineering. Engineering studies for the traditional irrigation perimeters are at the level of prefeasibilitystudies. Quantities have been roughly surveyed. The project would provide for the final design and preparationof tender documents to be carried out by local consultants. For a number of social and economic project components standard designs are ready. These include the markets, street paving, health buildings, school construction,water supplies for Oulmes and Ezzhiliga, and the flood protection barrier at Maaziz. For the remainingwater systems and sewers, cost estimateswere based on quantity take-offs derived from studies done at the feasibilitystage; and for power supply, from data obtained from the National Power Authority. Since the 18 km stretch of road between Oulmes and Touiza would be constructedduring the first project year, Government submitted to the Bank at negotiationsdetailed studies and the final design for this road. In addition,detailed studies for the first year forest track program was also submitted at negotiations(para. 4.19).

Institutionaland Logistic Support

4.24 To back up the project's crop development,livestock, forestry and rural engineeringprogram, Government agriculturalsupport services would be reinforced. The project would provide incrementalstaff, vehicles, offices, housing and other administrativesupport for four key directorates(para. 3.12) in Khemisset and in the project area. Project actions would furthermore include (i) a reform of the extension system and a selectiveprogram of intensificationincluding training of a variety of types of extension staff; (ii) the implementationof a research program; and (iii) improved input supply and credit systems.

/1 See: SAR of Fifth Education Project for Morocco, Report No. 3693-MOR, pages 6 and 8. - 22 -

4.25 Extension Service. The project's extension component would include (i) the upgrading of two agricultural sub-centers to full centers, reinforcement of the five other centers and sub-centers, and the creation of five village posts (see Map IBRD 16473); (ii) the employment of 29 new extension agents and eight senior extensionists to re-staff the service, with support for them (administrative staff, including four directors for the agriculture centers, vehicles, equipment, housing); (iii) backstopping from Khemisset for the field staff, including an audio-visual unit with two expert technicians, vehicles and equipment; a soil analysis unit; and six subject matter specialists; and (iv) creation of a special one-year pre-service training course for extension agents, and pre- and in-service training for all operations staff.

4.26 Research. Since the National Research Master Plan is not yet ready (para 2.15), the project includes only a modest research component, consisting primarily of applied on-farm and forest-range trials including farming system. trials and demonstrations, mainly relating to forage production and specific livestock issues. In addition, formal research in controlled conditions on the existing Oulmes and Ezzhiliga research station in the project area would also be carried out. These trials would mainly concern the varietal development of annual and tree crops, particularly for higher elevations. The project would include the costs of supplemental infrastructure and equipment to make the existing Oulmes research station and the Ezzhiliga sub-station fully operational. The research would be carried out by INRA, working closely with the project's extension services, particularly through research assistants who would operate with the extension staff (para 5.06). With respect to forestry, a limited research program would be integrated with the on-going research of the National Forestry Research Center in Rabat and would concentrate on (i) the improvement of nursery techniques, including production of improved seeds through identification of elite trees and establishment of seed orchards; (ii) plantation establishment trials; and (iii) fertilization trials.

4.27 Input Supply and Credit. The organization of input supplies and the provision of credit would be improved under the project (para 5.18). Small farmers would be financed according to their actual seasonal production requirements, based on annually adapted costs of cultivation, their cropping plan, and their estimated repayment capacity. Over the project period, incremental short-term credit requirements would amount to about DH 25.0 million including contingencies and by full project development (year 12) to DH 75.0 million. The number of beneficiaries of CLCA loans would increase from about 2,700 in 1980-1981 to more than 4,500 at full Project development. The average CLCA short-term loan per farm would increase from DH 1,000 in 1980/81 to DH 2,600 (1982 prices) during the same period. The number of CRCA clients is projected to increase from 1,300 in 1980-1981 to about 1,500 at full project development. Medium and long-term loans for on-farm investments would amount to DH 27.0 million over the project period and more than by 36.5 million by full development, which corresponds to total estimated on-farm investment costs of DH 39.0 million and DH 52.0 million respectively. These investments would include land improvement, agricultural machinery, improved livestock and animal shelters. - 23 -

TechnicalAssistance

4.28 The project would provide a total of 26 man-months of short-term technical assistance in the field of cork oak management and harvesting (4 months) (para. 4.09), monitoring and evaluation (2 months) (paras. 5.19-5.20), and applied research, agricultureand extension (20 months) (paras 5.05, 5.14). Final allocation of these consultancieswould be determined on the basis of specific needs arising during implementation. In addition, two man-years of long-termconsultancies would be required to assist in the initial implementationof the forest range component (paras. 5.12-5.13). At negotiationsassurances were obtained that MARA would be responsible for preparing detailed terms of reference, and that all consultantswould be employed on terms and conditionsand with experience and qualifications acceptable to the Bank (para. 4.39).

Cadastral Survey

4.29 The major effort of the Topographical Surveys Directorate of MARA in the past was directed to recording land ownership in the large irrigation perimeters,as land consolidationwas a prerequisitefor their development. With the shift in the Government'semphasis towards rainfed agriculture,a correspondingshift in cadastral activitiesis taking place. The project would include a 320,000 ha tranche of the national cadastral survey, which would cover the project area. Project financingwould include aerial photography,mapping and comprehensiveground surveys. The cadastral survey would in the short run facilitatethe delivery of property titles, and thus facilitate the provision of credit, and in the long run would permit land consolidation.

C. Project Start-UpActivities

4.30 Several project activities would be initiatedby the DPA prior to loan signature: groundwaterstudies (the 9 first test drilling results were already submitted to the Bank at negotiations,para. 4.08), the 18 km road study and first year forest road studies (para 4.23), and the socio-economic study of Harcha (para 4.16), aerial photography for the cadastral survey, and certain project actions which require immediateattention such as the infrastructureand organizationrequirements for the first training course at Tiflet (para 5.17), and detailing the project's first year research operations. Provision has been made for up to US$1.0 million of retroactive financingfor these activities,which would take place betwen June 1982, and the date of the Loan. The Government has allocated funds for the project for 1982 and this permits preparation to continue and preliminary tasks to be commenced. Both the Project Manager and the deputy Project Manager are already in place and have been fully involved in project preparation.

D. Project Cost Estimates

4.31 Total estimated project costs during the proposed five-year investmentperiod are estimated at DH 577.3 million (US$l05.0million) of which DH 208.9 million (US$38.0 million), or 36% would be foreign exchange. Cost estimates include an estimatedDH 131.9 million of taxes and duties or 23% of total project costs. Base costs estimates are based on actual prices - 24 -

obtained during appraisal, updated to end of 1982-prices. Physical contingencies included in the project cost estimates are 15% for civil works and 10% for equipment and operating costs. The allowance for expected price increases has been calculated for both local and foreign base costs plus physical contingencies. Estimated price increases for local costs are 11% for 1983 and 9% for 1984, and 8% thereafter and for foreign costs 8% in 1983, 7.5% 1984, 7% 1985 and 6% thereafter. Total contingencies would amount to DH 172.6 million (US$31.4 million), or 30% of total costs, and 43% of baseline costs. The average costs of consultants services are estimated at US$10,000 per man-month (including travel and subsistence). Details of project costs are presented in Annex I Table 1 and summarized below:

Project Cost Estimates

Foreign Components Local Foreign Total Local Foreign Total Excharne ----- (DH Million)------(US$ Million)---- W)

Agricultural Development 27.7 9.5 37.2 5.0 1.7 6.7 25 Livestock Production & Range Management 25.5 15.0 40.5 4.7 2.7 7.4 37 Irrigation Infrastructure 8.3 3.5 11.8 1.5 0.6 2.1 29 On-Farm Investments 28.2 11.1 39.3 5.1 2.0 7.1 28 Incremental Inputs 33.9 22.6 56.5 6.2 4.1 10.3 40 Forest Development 49.0 33.6 82.6 8.9 6.1 15.0 41 Research 10.6 4.3 14.9 1.9 0.8 2.7 30 Cadastral Survey 10.7 6.6 17.3 2.0 1.2 3.2 38 Rural Roads 16.4 14.7 31.1 3.0 2.7 5.7 47 Social Infrastructure 24.2 14.1 38.3 4.4 2.6 7.0 37 School & Health Buildings 14.4 9.7 24.1 2.6 1.8 4.4 40 Studies, Training & Technical Assistance 5.0 6.1 11.1 0.9 1.1 2.0 55

Total Base Costs 253.9 150.8 404.7 46.2 27.4 73.6 37 Physical Contingencies 25.8 17.0 42.8 4.7 3.1 7.8 40 Price Contingencies 88.7 41.1 129.8 16.1 7.5 23.6 32

Total Project Cost 368.4 208.9 577.3 67.0 38.0 105.0 36

Front-end Fee on Bank Loan /a - 2.5 2.5 - 0.5 0.5 100

Total Financing Required 368.4 211.4 579.8 67.0 38.5 105.5 36

/a Bank Loan assumed as US$29.5 million. - 25 -

E. Financing

4.32 Net of the costs of on-farm investments and incremental inputs (which would be financed mainly by credit from CNCA), total project cost would be approximately DH 430.0 million, 37% of which would be in foreign exchange. Due to Morocco's difficult financial situation, and the relatively small quantity of foreign exchange involved, the proposed Bank loan to the Government of Morocco would cover 50% of the project costs net of taxes, and excluding the aforementioned on-farm requirements. The Bank loan would therefore amount to US$30.O million, and would include a Bank front-end fee of about US$500,0OO, equivalent of 1-1/2 percent of the amount of the Loan. The following table shows financing sources for project costs during the five-year implementation period:

Financing Sources

Project Costs IBRD CNCA Beneficiaries Government Total ------(US Million)------

Agriculture, Research Cadastral Survey 6.5 - - 14.4 20.9 Livestock & Range Management 4.5 - - 6.5 11.0 Forestry 8.6 - - 13.1 21.7 Economic Infrastructure 3.7 - - 3.9 7.6 Social Infrastructure 6.2 - - 10.7 16.9 On-Farm Investments and Inputs - 13.5 10.2 3.2 26.9

Total Project Costs 29.5 13.5 10.2 51.8 105.0 Front-end Fee on Bank Loan 0.5 - - - 0.5

Total Financing Required 30.0 13.5 10.2 51.8 105.5

4.33 The Bank loan would be made to the Government for a term of 17 years, including a 4 -year grace period, at the interest rate prevailing at the time of Board presentation. Retroactive financing for an amount not exceeding US$l.0 million would be authorized for project start-up activities carried out from June 1982. - 26 -

F. Disbursements

4.34 The proposed Bank loan of US$30.0 million would be disbursed over six and half years (1983-89),and would finance; Category Amount Disbursement (US$ Million)(x

I. Civil works 20.7 40% of total expenditures

II. Vehicles & Equipment 2.9 100% of foreign expenditures and 65% of local expenditures

III. Studies, Consultants' 2.8 100% of foreign expenditures Services,Training and and 60% of local expenditures Cadastral Survey

IV. Unallocated 3.1

V. Front-End Fee 0.5

30.0

4.35 Disbursements for project items would be made after receipt of full documentation,except for works under force account (about US$5.0 million) for which disbursementswould be made against certified statements of expenditures. Supporting documentationwould be retained by MARA and held available for inspectionby the Bank. An estimated schedule of disbursementsis summarizedbelow and detailed in Annex 1, Table 2.

Fiscal Year (US$ Million) 1984 1985 1986 1987 1988 1989 1990

Annual 1.6 2.5 4.9 5.8 9.3 4.9 1.0 Cumulative 1.6 4.1 9.0 14.8 24.1 29.0 30.0

The historical country-widedisbursement profile for Morocco indicates a disbursementperiod of 8 years. However, the design of the project has taken into account the primary factors that have caused delays in disbursementon previous projects (para. 4.30). Both the project manager and deputy are already in place and Governmenthas released funds to commence project operations. Most of the tender documents affecting first-yearproject operationshave been completed and certain studies affecting road and irrigationdevelopment will have to be completed before negotiations. In view of the above, the period of disbursementis expected to be completed in 6-1/2 years, i.e., about one year after the end of the investmentperiod. - 27 -

G. Procurement

4.36 Except in the case of school construction (para 5.01), procurement would be carried out by the Provincial Agricultural Directorate of Khemisset which would be responsible for the project. The project would be phased over five and a half years, resulting in the division of the procurement into a large number of contracts of different sizes. Under present Moroccan procedures, bid evaluation and final contract award would be subject to final approval by the regional Commitment and Expense Controllers of Khemisset and would be referred to the Minister of Agriculture through his central directorates in the following cases: (i) if the cost of works exceeds DH 500,000; (ii) if the cost of studies exceeds DH 10,000; or (iii) if contracts are negotiated.

4.37 International Competitive Bidding (ICB). Contracts for construction of forest and rural roads exceeding US$2.0 million (valued at a total of US$8.5 million), as well as contracts for the purchase of equipment and vehicles exceeding US$200,000 (valued at a total of US$4.8), would be awarded by ICB in accordance with Bank guidelines. Domestically manufactured goods would be allowed a 15% preference or the applicable import duty, whichever is lower, when comparing bids with those of foreign manufacturers. Equipment and vehicle contracts would be bulked to the extent feasible for efficient procurement. When bulking is not feasible, equipment and vehicle contracts which do not exceed the equivalent of US$200,000 each could be awarded on the basis of local competitive bidding (LCB) or according to local procedures acceptable to the Bank. In aggregate these contracts would not exceed US$900,000. Contracts for aerial photography and mapping valued at US$2.7 million would be awarded by ICB in the case of contracts exceeding US$300,000; otherwise procurement would be by LCB, not to exceed US$500,000 in the aggregate.

4.38 Local Competitive Bidding (LCB). Project civil works concerning forest plantations, destoning operations, social infrastructure (other than roads), offices, houses, classrooms and other buildings, breeding stations, and milk collection centers would be executed in small contracts over a 5-year period and would be scattered all over the project area. All these works, valued at about US$40 million, would not be of interest to foreign contractors and would be awarded on the basis of LCB, in accordance with procedures acceptable to the Bank. Contracts for forest and rural roads less than US$2.0 million, and for irrigation works (US$2.8 million) would also be awarded on the basis of LCB procedures. Sufficient construction firms both local and foreign are established in Morocco to assure competitive prices under LCB. The total amount of contracts to be awarded under LCB is expected to equal about US$50.0 million. Small project works having a value of less than US$100,000 equivalent which might not attract even local enterprises would be undertaken on force account arrangements depending on local conditions and the type of work involved. The costs of these works would not exceed US$5.0 million.

4.39 Consultant Services. Contracts for 50 man-months of technical assistance by consultants with a total value of US$0.6 million would be awarded in accordance to Bank guidelines for the use of consultants issued in August 1981. - 28 -

4.40 Contract Review. All bidding packages for works estimated to cost over US$300,000, and bidding packages for goods and services over US$2O0,0O0 includingthe first two contracts relating to either the various social infrastructuralcomponents, plantations, irrigation and road development,vehicles or equipment, would be subject to the Bank's prior review of procurementdocumentation. This would result in a coverage of about 80% of the total estimatedvalue of works and goods contracts. The balance of the contracts would be subject to random post-reviewby the Bank after contract award.

H. Accounts, Audit and Reports

Accounts and Audit

4.41 The existing system of financial control and audit of governmental bodies is satisfactory. Although ministries and other public institutions have a substantialdegree of autonomy in the physical implementationof their program, the Ministry of Finance tightly controls their financial commitments,transactions and accounts. Two officials of the Ministry of Finance are responsiblefor overseeing, on a day-to-daybasis, the financialoperations undertaken by a particular governmentaldepartment. A Financial Controller reviews all proposed contractsand must countersign them before they take effect. A Treasury Officer keeps records of all financialtransactions after checking them against predeterminedprograms and financialallocations, and approves correspondingdisbursements. The Financial Controller and Treasury Officer prepare monthly reports to be transmittedto the Central Services of the Ministry of Finance. They also prepare year-end statementswhich are transmitted,after review and approval, through the Minister of Finance to the "Cour des Comptes". All governmentbodies are subjected to random inspectionsby the Service of General Inspection of the Ministry of Finance, in particularwith respect to force account operations. Control of expendituresand of their conformity to predeterminedprograms is thereby adequate. However, physical checks on actual implementationof works and of the supply of goods or services is seldom undertaken,either by the Inspection Services of the technicalMinistry concerned or by the services of the Ministry of Finance.

4.42 Assuranceswere obtained at negotiationsthat (i) each Government department participatingin the Project would have its annual budgetary resources necessary to carry out planned Project actions specifically individualizedin the relevant annual "Lois de Finances" and "Programmes d'Emploi"; (ii) that each government department participatingin the project would maintain separate accounts for the project works; (iii) that these accounts, as established and certifiedby the Regional Financial Controller and Treasury Officer, would be audited by the Ministry of Finance; and (iv) that an overall audit report for the Project would be prepared by the Ministry of Finance and would be submitted to the Bank, along with the year-end certified summary accounts of all participating Government departments,within 6 months of the end of each fiscal year. The audit report will include a specific opinion on whether funds disbursed by the Bank on the basis of statements of expenditureshave been used for the purpose for which they were provided. - 29 -

I. Environmental Impact

4.43 The project will have a beneficial effect on the environment. The areas selected for the main plantation and sylvopastoral development are mostly in relatively degraded and open areas subject to uncontrolled grazing and erosion. Although they are much less effective than the well developed closed natural forests as a protection for the physical environment, or as a habitat for flora and fauna, these plantations and sylvopastoral improvements will greatly assist the conservation of soil and water supplies and will help reduce overcutting and environmental degradation elsewhere. No special provisions have been made for management of wildlife, for hunting, or for natural reserves and sanctuaries for the protection of flora and fauna. However, the preparation of reports on all unmanaged state forests in the project area (para. 4.10) will identify areas which are important for the protection of flora and fauna.

V. Project Implementation

A. Coordination and Management of the Project

5.01 The project would be implemented by the existing Agricultural Services in Khemisset, headed by the Director of Provincial Agricultural Directorate (DPA) and who would also be the Project Manager. The DPA would be assisted in project execution by a Project Management Unit (PMU), comprising a deputy project manager and the project's six subject matter specialists (SMS) as described in paras. 5.06, 5.08/09. The PMU would also receive technical support from the DPA's service chiefs concerned with project execution. Apart from ensuring day-to-day project management the PMU would be charged with (i) preparation of the annual work plan, synthesizing the contributions of the directors of the agriculture centers (para 5.04); (ii) monitoring and evaluation (paras 5.19-5.20); (iii) contract adminstration and supervision of project works and assisting the local services in their execution (paras. 5.06-5.09). During negotiations the Bank was informed that the PMU was established with functions and authority acceptable to the Bank. Assurances were obtained at negotiations that the PMU would be fully staffed by September 30, 1983, and with local extension staff as and when required. The education component would be implemented by the provincial delegation of the Ministry of Education, under the supervision of the Project Implementation Unit in the Ministry of Education, which implements Bank education projects. The health component would be implemented by the provincial delegation of the Ministry of Health in Khemisset.

5.02 At the National level, MARA would have overall responsibility for project execution. Within MARA, the responsibility for the project would be taken by the Directorate of Crop Production. The Secretary General of MARA would preside over the National Project Coordinating Committee (NPCC) of the type successfully established for rainfed projects in Morocco (para. 2.19). Members of this committee would include the project manager and representatives from the directorates and other entities of MARA involved in the project (Directorates of Livestock, Forestry, and Rural Engineering, Extension; INRA; SONACOS). It would also include representatives from other ministries and bodies involved (Directorate of Rural Affairs of MOI; - 30 -

Ministry of Public Works; Ministry of Finance; CNCA; Ministry of Education). The NPCC would meet at least once every six months, and would be responsible for (i) the resolution of issues and assurance of cooperation between concerned ministries; (ii) the definition of broad outlines for each years' project actions, including such modifications in project approach as may be made necessary by the evolution of national policies or the progress of the project; (iii) the review of the detailed annual work plan submitted by the Provincial Coordinating Committee (para. 5.03); (iv) the exercising of financial control over the project and assurance of timely availability of funds to the provincial project authorities.

5.03 At the Provincial level the Provincial Coordinating Committee (PCC), presided over by the Governor of Khemisset, would include the DPA and his service chiefs (agricultural development, livestock, forestry, rural engineering, research), the deputy project manager, representatives from other Ministries and bodies involved (Public Works, Education, CNCA), local government officials (Circle Chiefs) and influential representatives from the local community. The PCC would ensure inter-ministerial coordination and the involvement of the community in the progress of the project, particularly in the preparation of the annual work plan. Acting as the secretariat to the PCC would be the PMU.

5.04 At the local level, the technical services would be coordinated by the directors of the agriculture centers, who would hold regular meeting with senior staff from all concerned MARA agencies in the center's action zone. This would ensure close technical cooperation at the local level in operations, supervision of project works, and the collection of project monitoring and evaluation data. Local involvement in the project would be ensured through existing bodies such as the Agriculture Center Administrative Councils (ACAC) and the two Technical Committees for Ag riculturalDevelopment (TCAD). Both committees are presided over by the Circle Chiefs, the local deputies of the Governor. The ACAC includes as members the rural commune presidents in the agriculture center's action zone, a representative from the local Chamber of Agriculture, two from MARA's local services, one from the Finance Department, and a number of local farmers. The director of the agriculture center has a consultative role. The ACAC is mainly responsible for an advisory input into the annual budget of the agriculture center. The TCAD exists at the Circle Level (Rommani, Oulm-s), with a similar tri-partite composition (local government, technical services, farmers). Its main function is to keep abreast of agricultural problems encountered by farmers in the Circle during each agricultural campaign (e.g. shortages of inputs, crop diseases) and to report to the province-level technical committee chaired by the Governor. Through those and other channels (Local Government Councils, farmers' extension groups) a flow of informal feedback would come both to the PMU and to the PCC. In their turn, members of the ACACs and the TCADs would be a source of accurate information on project actions. For the purposes of preparing the project's annual work plan, the AC Director would be responsible for reviewing progress of all local project actions against targets, both in respect to physical implementation and adoption of project - 31 - packages, and to assess targets and requirements for the following year. In making his assessment he would formally involve the agriculture centre extension staff, the other MARA services, and the ACAC and TCAD wherever appropriate.

B. Principal Agricultural Support Services for the Project

5.05 Agricultural Extension would be implemented by the crop production services of the DPA, and would evolve within the context of a national re-definition of agricultural extension (para. 2.16). It would serve as a pilot system for similar areas elsewhere in Morocco. To maintain its experimental validy it would be capable of mid-term adjustment, to test new Government concepts in the field. In its first three years, the project would use extension agents at the agriculture center, subcenter and village post level, supported by subject matter specialists, soil analysis services, and an audio-visual unit in Khemisset. The extension system to be introduced would distinguish between extension on rainfed and on irrigated land, and would use both mass methods of communication and individual on-farm consultation. It would (i) redefine the responsibilities of the extension agent; (ii) institute regular and more intensive timetables of field work; (iii) improve the support structure for the agents; (iv) ensure adequate preservice and inservice training of agricultural staff; (v) create working links between extension and research on the farm; (vi) improve inputs distribution and machine repair services, and (vii) encourage the formation of farmers' associations and service cooperatives.

5.06 Extension would operate on three levels (for full details, see Annex IX in Project File): (i) Mass extension through radio programs and films. The DPA, Khemisset, would contract with regional radio stations (Rabat, Meknes) to make and broadcast programs encouraging the adoption of project packages, and publicizing project actions; and with MARA's central Extension Directorate to produce a series of films illustrating agricultural and livestock practices suitable to the project area. These films would be shown by the mobile audio-visual teams in markets (see (ii) below) and by the agriculture centers and sub-centers either on-premises or in the villages; (ii) Mass extension through the Souks. By the second year of the project, two specially fitted landrovers would visit the major souks of the project area every week, and the minor souks every fortnight. They would carry cine equipment with daylight projection facilities, slide-projectors, and other audio-visual equipment, and would be staffed by an extension agent and a technical agent from the Audio-Visual Unit. Since every household in the project area normally attends one or more weekly markets, this forum is ideal for reaching all classes of farmers. The mobile unit would project films relevant to the agriculture, livestock and soil-conservation concerns of the area, including those custom-made for the project. It would re-broadcast radio programs, and present slide-tape shows made by the Audio-Visual Unit. The mobile team would be joined at the souk by representatives from the local project services. In addition to advertizing technical project packages, veterinary treatment and information on project services would be available. The mobile team would - 32 - also visit schools, farmers' extension groups (see (iii) below), and agriculturecenters and sub-centers;(iii) Individualextension to-private farmers. (a) For the rainfed areas of the project, the experimentalsystem of pilot farms' started by the Government in 1981-82 would be developed and refined . In contrast to the past, when the extension system has concentratedon single crop extension, the "pilot farm" concept aims to teach integrated farm management and budgeting as well as technicalskills, and, provides a concentratedextension effort which through its visibility to surroundingfarmers has a strong demonstrationeffect. Eighteen extensionagents would be assisted by four research assistantsand supervisedby five senior rainfed extensionists(field crops), and by three SMS (cereals; forage conservation;farm management). Their work program would involve fortnightlyvisits to a number of 'pilot farmers';180 pilot farmers would be selected in the first three years of the project, with a sufficientgeographical distribution to ensure visibility in all parts of the project area. The majority of pilot farms selected would represent the medium-sizedsemi-commercial farms upon which the project can expect to have the most impact. Each pilot farmer would sign a contract with the AgricultureDevelopment Service of the DPA, agreeing to their assistance in the management of his farm for a three-year period. In order to safeguard the "pilot" farmer against possible losses, the Servicewould meet the incrementalinput costs generatedby their technicalrecommendations in the first year, up to DH 300 per hectare, and with a ceiling of DH 6,000 per farm. It is estimated that over a three-year contract period, the agent would be able to form a regular working relationshipwith about 35 farmers in the neighborhoodof each pilot farm. (b) For the irrigatedareas of the project (para. 4.08), 8 extension agents would live on or near the irrigationperimeters to give advisory services. These agents would also operate a limited number of pilot farms on the rainfed land of farmers in their perimeters of operation. For the irrigated land they would maintain a regular schedule of advisory visits to groups of farmers, would help organize perimetermaintenance and water management, and would ensure that farmers obtain input supplies from the input staff at the agriculture centers and sub-centers (para. 5.18). They would work closely with the project's research assistants (para. 4.26), conductingprograms of on-farm trials, and would be backed-up at two levels: by one of the three senior irrigationextensionists based at the Agriculture centers, and by the irrigationSMS based in Khemisset.

5.07 In 1985-86, a review of the new extension system would take place in the light of the evaluationof national extensionpolicy, which would be better defined by that date. It is recommended that the project be used as a forum for experimentingwith a fee-paying extension system such as the one described in Annex IX, para. 23 of the Project File.

5.08 The services of the extension component depends upon the timely recruitmentof appropriatestaff. Sufficient extension agents, service extensionistsand CT directors are available for employment. Recruitment of SMS is likely to prove more difficult (para. 5.01) and some may have therefore to be recruited from overseas. The audio visual unit would be run by the training SMS, who should be appointed from among the first - 33 -

SMS, who should be appointed from among the first graduates of the "in-service" trainers, course to be held in 1982-83 at the new Development and Training center (CNERV) in Meknes and should become available late 1983. The audio-visual technician and the graphics artist for the unit should be selected prior to overseas training, no later than September 30, 1983. Assurances were obtained at negotiations that these staff would be appointed on the agreed dates.

5.09 Livestock. The project would develop livestock production through a set of integrated actions described in para. 4.07. The component would be implemented by the Livestock Service of the DPA, using veterinary and animal husbandry staff at the livestock center and sub-center level, in close collaboration with the agricultural extension agents. The field staff would be supported by the livestock breeding activities of the Oulmes Cattle Farm and Telt Sheep Farm, and by one range management SMS at the DPA in Khemisset. Livestock extension under the project would be based primarily on the provision of specific animal services in central locations, and on the improvement of fodder resources. On farm advisory services would focus on integrated livestock and fodder management and would include the encouragement of dairying where appropriate and the popularizing of animal shelters, particularly in association with genetic improvement to the herd, varying with the size of the farm and the subzone. In the case of cattle, the project would emphasize the improvement of the dairy herds of viable small and medium sized farms in the depressions of Maaziz and Rommani, with access to parcels of irrigated land. Initially stud bulls would be used, and artificial insemination would be introduced at a later stage. The cattle breeding stations to be established under the project would enable production of 1,500 improved animals per year by full development. Credit would be made available for the purchase of pure bred cows. Genetic improvement of the sheep would be more widespread. Rams of the Timahdite race would be distributed to selected individual herders possessing 25 or more ewes on contractual arrangements obliging them to return to the livestock services an agreed number of selected young rams. At full development, these multiplication flocks would produce 1,500-2,000 selected rams each year, sufficient to serve half of the ewe population.

5.10 Preventive animal health services would also be improved and mobile anti-parasite dipping-units would be operated, with a greater geographical coverage than fixed anti-parasite baths. Apart from actions designed to increase range land and on-farm forage production, the project would introduce proven methods of fodder conservation, to provide to farmers at cost by the Agriculture Centers. Ensilage and hay treatment units would be created to demonstrate on a wide scale the methods and the financial advantages of increasing the nutritive value of fodder conservation. After a successful period of demonstration, the equipment would be sold to private individuals who would continue to provide the services. In addition, an experimental unit would carry on trials in the treatment of straw with ammonia, also on cost and with the same objective of encouraging the adoption of profitable and sound livestock feeding practices. As a service, project vehicles would undertake transportation of molasses from nearby sugar factories to the farm gate; according to the Code of Investments, transport costs would be met by the Government. Under - 34 -

the provisions of the Code, the financing of the full investmentcosts of a cooperativemilk collection facility would be met by Government but operating and maintenance costs would be recovered from farmers; the project would add two such centers (para. 4.07). The milk collection centers would be an integral part of the program to improve the genetic stock and health of dairy cattle, and to increase fodder available to them.

5.11 Forestry. The Provincial Forestry Services of the DPA would implement the forestry component according to the existing management plans which specify all forestry activities to be undertaken. However, about 100,000ha in the State forest area have no management plan. As the commercial and environmentalvalue of these forests is not always high enough to justify time-consumingand costly detailed inventoriesand surveys, funds have been included in the project costs for the preparation of relatively simple management plans. These plans would be based on existing data and quick reconnaissancesurveys supplementedby the knowledge of the local forestry staff. This would allow planned management to be introduced,even if it consists only of patrolling and boundary maintenance,and would ensure continuity of actions and availabilityof information.

5.12 SylvopastoralManagement. For the enforcementof the sylvopastoralmanagement regulations,the key to any improvementprogram, the project would ensure local complianceby (i) a major combined extension effort (forestry and livestockand MOI) to explain the forest range proposals and benefits co the population involved; (ii) implementingonly those range activitiesand regulationswhich have been agreed with the population. Their acceptanceof the new system of range improvementsand management regulationswould be accomplishedthrough close collaborationby the project with MOI, and prior endorsement from provincial and local committees (para 5.03-5.04).

5.13 The five forest range areas to be improved would each require a cycle of studies, planning and discussionswith the local population lasting about 9 months prior to implementationof the forest range program. The socio-economicstudy of the first forest range area to be developed (Harcha) is already in progress. Preliminary studies by the Forestry Department for 5,600 ha of State forests near Harcha are completed. Discussions regarding the sylvopastoralprogram and farmer's obligationsunder the project, between the DPA, MOI and the population affected by the proposed activity have also been initiated. Furthermore, submission to the Bank of details of the technical and organizational arrangementsbased on the new law (para. 7.05) and discussed and agreed with the beneficiaries (includingdetermination of stocking rates, rotation plans and grazing taxes) would be a condition of disbursement,in each of the five range development areas. Sylvopastoralimprovements would be implementedby a joint technical team consisting of staff provided by the Forestry and Livestock Departments of DPA; INRA would assist the project by undertaking resource studies of the forest range (eg. technical surveys and fertilizersneeds studies). An experiencedrange management officer would be employed for two years to assist in the overall planning and supervision of these operations and to carry out on the job training of Moroccan - 35 - staff. Funds have been included in the project for international recruitment of the range management officer since Morocco does not have sufficient people trained in range management to provide for the project. Assurances were obtained at negotiations that the range management officer would be appointed and be in position not later than September 30, 1983, and that the technical implementation teams to be set up in each of the five forest range areas would be directly responsible to the DPA.

5.14 Research. Research and extension would be linked by locating in each of the three ecological project zones a research assistant, who with the extension agents would be responsible for identifying research needs, demonstrating research results on the pilot farms (para. 5.06), and maintaining a communication channel between farmers and research. In addition, the INRA agricultural research specialist at DPA level would, in conjunction with the project SMS's and directors of the project's Agricultural Centers, establish specific problem solving research topics for the annual research program. Except for the forestry research program, which would be carried out by the Forestry Services, the applied agricultural research for the project would be executed by INRA staff and work in close cooperation with PMU and CT staff. The submission of the project's global research program, including the first year's detailed program was submitted to the Bank at negotiations and found satisfactory. Furthermore, assurances were obtained at negotations that INRA's annual research program for the project would be annually reviewed by the Bank before implementation.

5.15 Infrastructure. In respect to the proposed project infrastructure, the Rural Engineering division of the DPA in Khemisset would be responsible for the preparation of tender documents and supervision of construction (except for the education and health component para. 5.01). Since this task is too large for the available manpower, additional staff would be required and a large portion of final design and preparation of tender documents would be entrusted to local consulting firms who have experience in this type of work. Except in the case of schools and buildings for the health component, completed works are handed over to the local Government Councils which are responsible for their operation and maintenance. Annual budget allocations to the Councils for operation and maintenance is generally adequate. Assurances were obtained at negotiations that the Government would ensure that those Councils would operate and maintain the infrastructure in question with appropriate financial and technical means, and would make all necessary safety inspections, repairs and renewals.

5.16 Rehabilitation of degraded forest tracks and maintenance of the agricultural and forest roads network will be carried out by two road brigades to be established in Oulmes under the authority of the DPA. The brigades would be organized around a central workshop each staffed with a mechanic and two aides. The field work would be directed by a foreman responsible for direct supervision of works, recruitment of local unskilled workers and organization of equipment maintenance. The brigade staff would also include five equipment operators and five drivers. A repair van would follow the brigades and provide mechanical assistance. The overall preparation, supervision and coordination of design, and execution of proposed road works, would be done by an experienced road engineer - 36 -

recruitedby the PMU under the direct supervisionof the project manager. Constructionof rural roads and forest tracks would be carried out by private contractors recruited after competitivebidding. Assurances were obtained at negotiationsthat the roads brigades be establishedand adequately staffed not later than December 31, 1983 with the roads engineer to be appointed not later than September 30, 1983, and that the Government would cause sufficientfunds to be made available for operations and maintenanceand ensure that the local GovernmentCouncils of the communes benefitting from those roads would contribute a proportion of the operating and maintenance costs from existing budgets.

5.17 Training. (ij A year of preservice training would be given to the 29 extension agents required by the project in two groups, in 1982-83 and 1983-84. This additionalyear of practical work would supplement the standard two years of basic training,and would consist of farm work with limited special studies and training visits to the agents' future posts. While the basic training stresses practical training, it does not give trainees an appreciationof the realities of farming, and the third year course would do this. It would be organized at Tiflet, a training school for extension agents on the edge of the project area, with typical rainfall and soil conditions. Groups of trainees would be given at the beginning of the season plots of land of 5-15 ha of rainfed land to work and manage, and would simulate farm systems typical in the project area. Trainees would also farm irrigatedplots, and would manage livestockbelonging to the school's exis.tingherd. Realism would be assured by making the trainees work within the economic constraints faced by typical medium-sizedfarms in the project area, and follow developmentplans and packages coincidentwith those they would later advocate. In addition they would take classes in farm budgeting and planning, rural sociology,and communicationmethods. The project would provide the extra civil works, equipment, inputs and operating costs needed by Tiflet to run this course, an experiencedsenior extensionistto coordinate it, and technicalassistance to help with its establishment. (ii) Other preservice training to be given under the project would include short periods of overseas training for the audio-visualtechnician and graphics artist of the Audio-VisualUnit and for the agriculturaleconomist (monitoringand evaluation)of the PMU. (iii) In-service refresher training would be coordinatedby a new training SMS, using the facilities at Tiflet for the extension agents, senior extensionistsand research assistants (four times each year for five days) and, in separate short courses for the agriculturecenter support staff (inputs staff, mechanics, etc.). SMS and senior extentionistswould also attend technical seminars organized throughoutMorocco by MARA's "Service de Formation Permanente",and courses provided by the new Development and Extension Training Center (CNERV) at Meknes from 1983-1984onwards. Assurances were obtained at negotiationsthat the annual training program mentioned in (iii) would be annually reviewed by the Bank before implementation. - 37 -

5.18 AgriculturalInput Supply, Machinery and Credit. Extension advisory services are of limited use without adequate access to inputs. Accordingly,the project would strengthen the input supply system by constructionof four additional inputs stores, and by assuring an adequate production of high-yieldingseeds (para 6.14). The project would require a substantialincrease in short-term credit available to farmers, as well as improved access to credit for small farmers. This will be achieved by: (i) introducingin the project area new criteria to determine farmers' seasonal credit requirementsand new procedures for loan approval (para 3.17); and (ii) increasing the staff and facilities of CNCA in the area. Short-termcredit would be provided for the purchase of necessary inputs, and to pay for labor and machine services. Small farmers' seasonal credit eligibilitywould be based, as in the case of commercial farmers serviced by CRCAs, on estimates of actual crop production costs. These estimates are determined annually by CNCA in collaborationwith MARA services. The total amount of seasonal credit available to a farmer served by a CLCA would be limited by the farmer's overall debt service capacity, estimated at 50% of his potential agriculturalincome. This limit to farmer borrowing would provide CNCA with an adequate measure of safety against a reduction in farmers' debt repayment capacity caused by poor harvests. Medium-term loan appraisal procedures and conditions for small farmers would be identical to those applied to CRCA clients: they would be based on technical criteria, and on the incremental income generated by the investments. Farmers from the most remote communes have to undertake a minimum of two trips to the nearest CNCA outlets every year. Each trip usually requires two to three days of travelling. To provide improved access to credit to a larger number of farmers,CNCA would open seasonal outlets in each of the seven communes of the Project area, in the communes'sAgricultural Centers or souk, for a three-monthperiod at the beginning of each agriculturalseason. These outlets would receive, evaluate and approve seasonal loan applications,and transmit investment loan applicationsto the regional CRCAs for processing. During the rest of the year, these seasonal outlets would be opened one day a week on the day of the souk. Once a seasonal outlet could handle a lending volume sufficient to cover its operating costs, CNCA would convert it into a permanent CLCA. In addition,CNCA will shortly open a new CRCA in Rommani to decrease the workload of the one in Khemisset, and a new CLCA in Tiddas, as part of its overall plan of infrastructuredevelopment. To satisfy the projected number of CNCA clients in the area at project full development, about 10 additional loan officers would be necessary. This would not present a problem to CNCA, which regularly recruits staff for its expanding nation-wideoperations and has a good internal training program. During negotiationsassurances were obtained that CNCA would provide adequate resources to meet the project's seasonal and investmentcredit demand, open up sufficient seasonal outlets and introduce in the area the new policies basing small farmers' credit requirementson their actual crop production plans. - 38 -

C. Monitoring and Evaluation (M&E)

5.19 Monitoring of inputs, activities and outputs of the proposed project would be executed by the PMU. The two man-months of short-term consultancy for monitoring would be provided to the PMU to assist in determining (i) critical indicators for regular measurement; (ii) a simple data collection system; (iii) efficient analysis procedures. An agricultural economist would be attached to the PMU for the duration of the project. He would be assisted by three secondary-school graduates who would be stationed in the CTs at Rommani, Oulmes and Maaziz as enumerators to collect field data, principally by working with the extension staff. The local technical services of MARA would be responsible for the collection and synthesis of standard monitoring data. The agricultural economist would submit regular reports to the PMU on project inputs, activities, external variables of consequence, and achievements. The PMU would send quarterly reports of progress both to the MARA and to CNCA and would provide a basis for discussions at the NPCC and PCC. The PMU would submit to the Bank on a twice-yearly basis a report derived from this information. It would detail physical progress, problems and proposed remedies; progress towards the goals of the project; and policy decisions needed to assure further project success. MARA would prepare a completion report, based on the monitoring and evaluation exercises, to be submitted to the Bank no later than six months after closing of the loan. Assurances were obtained at negotiations that the PMJ and MARA would submit the above mentioned reports.

5.20 Evaluation. Evaluation of project impact and effectiveness would be supervised by the Central Project Monitoring & Evaluation Unit of MARA. Technical Assistance to this Unit is being provided under the Loukkos Project to help draw up standard monitoring and evaluation procedures for Bank-financed projects. One man-month of short-term consultancy for evaluation would be provided to the PMU; the agricultural economist and his field enumerators would also carry out the evaluation studies. The main purpose of evaluation work would be to provide information to the project manager on (i) the impact of the project on farm production and income; (ii) the distribution-of project benefits among farmers; (iii) access of different groups to project inputs and (iv) continuing constraints to development. The primary purpose for deriving this information would be to serve the project, by giving practical guidance to the project manager quickly enough for it to be used in adjusting the project. The project would adopt a pragmatic and quick approach to evaluation, concentrating on in-depth farm profile studies (see Annex XI), combined with the longitudinal collection of information on changes in key indicators of wealth and well-being. Assurances were obtained at negotiations that the M&E agricultural economist would be appointed on September 30, 1983. - 39 -

VI. Production,Marketing and Prices

A. Production

6.01 Crop and Livestock Production. Most of the increasedagricultural production due to the project would come from the introductionof relatively simple improved technicalpackages and from changes in the cropping pattern (reductionof the area of fallow by 33% and increase in the area of fodder and legumes, by 155% and 30% respectively). The productivityof the herds would increase mainly due to better nutrition and herd management,and genetic improvements. Production increaseswould result from the participationin the project by 55% of the farm families living in the project area, managing between them about 70% of the cultivable land. Increasedcrop and livestockproduction is summarized below. Forage productionthrough forest range improvementswould be increasedby about 6 million feed units at full development (year 12).

Present IncrementalProduction % Production at full Development Increase …------(Q000 t)…

Crops

Cereals 70.4 8.2 12 /a Forage 14.9 42.6 290 Legumes 15.7 13.2 85 Olives 0.6 0.7 100 Fruit 3.2 0.8 115 Vegetables 3.5 12.5 360

Livestock ------('000 t)------

Beef meat 2.1 0.8 40 Cow milk 5.9 10.0 170 Sheep meat 1.1 1.0 90 Wool 0.2 0.01 50 Goat meat 0.3 -0.08 -25 Goat milk 0.8 0.5 65

/a While total cereal production would increase by 12%, per hectare yields would rise by over 20%. This is masked by the reduction in the hectarage of cereal by 9% in favor of legumes and forage. Details on yields increasesare given in Annex I and II of the Project File.

Forestry Production

6.02 Wood production from the plantationswould begin after the project investment period, according to the rotation lengths and yields given in paras. 4.11-4.12. The estimatedwood fiber production over the 35 years of the project is as follow; - 40 -

Pulpwood Rural Poles Sawlogs Pitprops Poles Fuelwood …---(1,000 m 3 u.b.)------

Eucalyptus 345 246 - - - 247 Pine - - 340 198 265 80

B. Prices, Markets and Marketing of Project Output

Agriculture and Livestock Products.

6.03. The bulk of traded agricultural and livestock production from the project area is privately sold through the traditional network of local weekly markets, the souks. The exceptions to this are a proportion of cereal and pulse production, milk, and tree crops (paras. 6.04/5, 6.09/10). There are 15 souks in the project area, 14 of which would be improved under the project.

6.04 Cereals. In a normal year (1979), the project area produces a marketable cereal surplus (32,500 t in 1979). Some 90% of this is traded privately, with up to one-third purchased directly from farmers by wholesalers from outside the project area. Another 60% is traded through the souks, and about 10% (1978, 1979) is purchased by SCAM (Societ4 Cooperative Agricole Marocaine), a subsidiary of the official cereal marketing chain supervised by ONICL (Office National Interprofessionel des Cereales et Legumineuses). ONICL intervenes in the cereal trade to guarantee high enough producer prices to stimulate production, while maintaining low prices particularly for bread for urban consumers, every year fixing support prices for the main cereals and itself marketing part of the production. Over the last four years, the Government has readjusted official producer cereal upwards, and they are now sufficiently attractive to stimulate production. Current support prices stand at DH 1,450/t for durum wheat, DH 1,350/t for bread wheat, and DH 1,000/t for barley, and adequately cover production costs. Off-season producer prices on the free market average 5-15% more than support prices, and prices offered by contractors at the farm gate are reportedly much less (10-30%), due to the lack of transport available to farmers. Morocco is already a cereal importer and since national cereal demand has been projected to rise by as much as 80% between 1982 and 2000L; no problem is foreseen in marketing the growing surplus from the project area.

6.05 Pulses. At present (1980) Morocco exports about 35% of its pulses, primarily to EEC countries, and the potential for exports is likely to increase as dry broad-beans and chick peas are used increasingly as fillers for manufactured food. As the Government does not intervene in the pulse market, the area's surplus is sold either on contract at the farm gate, or through the souks (to intermediaries, or directly to the agents of

/1 Agriculture Sector Memorandum on Morocco, Table 10; 4.3% per annum per capita income growth rate assumption. - 41 - exporters and urban wholesalers). Prices in 1981-1982averaged DH 2,200/ton in the project area.

6.06 Fruit and Vegetables. The Oulm&s region supplies 7% of the nation's apples and 6% of its pears production. Almost the entire crop is sold on the tree to contractorsfrom Meknes, Casabancaand Rabat, who stock it in cold storage facilities,re-importing part of the productionto the souks in the project area during the off-season. There are consumer price differencesof over 100% between harvest and off-season prices, but even harvest produce prices more than adequately cover production costs, indicatingconsiderable surplus demand for fruit. To decrease seasonal price fluctuationand secure a larger part of the value added through marketing, local producers are expect to seek CNCA financingto establish a cold store for 0ulmas to be built during the project period. Summer vegetable productionalso falls far short of local demand, and the extra production generatedby the project would be sold and consumed locally, or to the nearby urban centers.

6.07 Fodder. The project area is currentlydeficient in fodder resourcesby approximately10% of current livestockneeds (para. 3.10). Within the project area, individual fodder surplus is mainly sold by medium and large farmers renting fallow and stubble to smaller farmers. As the project will reduce the area of fallow land by one third by full development,the emphasis in fodder production and marketingwill shift from natural, low cost sources towards a greater volume of hay and cereal sales, and fodder costs are as a result expected to rise from an average of DH 0.35/FU to DH 0.70/FU (1982 prices) but with improved fodder quality. The lucerne produced under irrigated conditions in the project area would be used on the producing farm for dairy cattle fodder. The bulk of the increased fodder production due to the project will be used on-farm while a small balance would be marketed outside the project area. Given the deficit in fodder production in Morocco no marketing problems are foreseen.

6.08 Meat. Morocco is still basically self-sufficientin red meat but it does not have the capacity to export. There is no import of live animals but for herd improvementpurposes. Imports of chilled meat are insignificantand only the armed forces are allowed to import frozen meat (7,600 t in 1980). However, as population and per capita income, it is expected that Morocco will have to rely in the future on growing amounts of meat imports to satisfy domeqtic meat demand. Projectionsof the national demand for meat made in 1980l1 indicated a potential increase in total demand of over 200% by 2000. The marketing of extra meat resulting from the project is not expected to pose problems. Live animals are sold mainly in the souks with about 50% destined for municipal slaughterhousesin the large cities outside the project area and between 10 and 20% of the animals bought by local butchers. The remaining animals are sold to individual herders and consumers. Liveweight prices of about 8,900 DH/ton for beef, and 11,000 DH/ton for mutton (1982 prices) are expected under the project.

/1 See; AgricultureSector Memorandum on Morocco, Report No. 2667-a-MOR, Table 10. - 42 -

6.09 Milk. Prices paid to producers are fixed by the Government, currently at 1.45 DH/kg, and have been adequate to encourage production; between 1971 and 1979 the volume of milk received by processing centers in Morocco rose by 350%, and now about 1/3 of total cow's milk production is sold through processing centers. However, in 1980, Morocco imported the equivalent of about 10% of its domestic milk production and with national milk demand projected to grow at a rate similar to that for meat (para. 6.08), the country's milk imports are expected to increase substantially so that marketing of project production is not expected to be a problem. The project would increase milk storage capacity at existing and new centers from 2,500 1 per day to 9,500 litres per day by the end of the project and regular collection by Meknes and Casabalanca-based processing cooperative would continue. Goat's milk is mainly consumed on the farm.

Forestry Products

6.10 The Forestry Services of MARA sell wood stands through annual auctions. About 200 private loggers operate small operations (between 20-40 ha per year) in the project area. Competition between loggers is strong, keeping profit margins low. This competition in turn ensures that prices received by the Government at auction approximate to the maximum that can be expected.

6.11 Domestic demand for all categories of wood products, other than wood pulp, considerably exceeds Morocco's production potential. No difficulties are expected in marketing the project's output of utility and industrial timber and fuelwood aimed at domestic consumption. Neither is pulpwood marketing likely to present any difficulty, due to a rising demand for paper in Morocco, and an anticipated increase in world market consumption of paper and paperboard. World demand for bleached hardwood sulfate pulp (the type produced by the nearby pulp mill at Sidi Yahia) is expected to rise from 17 million t in 1980 to 25 million t by 1990, an increase of 4% per year.

6.12 Eucalyptus Products. In order to fulfill a supply contract signed with the Sidi Yahia Mill, the Government requires loggers to deliver 55% of eucalyptus harvested volume to the mill. The mill pays a price determined annually by the Government through indexation to the price of European bleached hardwood pulp. Real eucalyptus pulp wood price is expected to increase from DH 130/m3 (1983) to DH 132/m3 (1985) and DH 135/m3 (1990). The remaining eucalyptus harvest is sold as poles for construction, and fuelwood. Sidi Yahia wholesale depot is the most important in the country for rural construction poles with prices in 1981-1982 at about DH 180/m3; the estimated 20% residual eucalyptus wood is sold as fuelwood. It is almost entirely transformed into charcoal for sale in urban areas, with one m3 of fuelwood giving 1.8 quintal which sells on-site for about DH 50-70/q. - 43 -

6.13 Pine Products. In 1980, coniferouswood imports representedmore than 70% of total wood imports to Morocco. The domestic market would absorb project pine products without difficulty. These products include sawlogs, pitprops,poles, sawlogs and fuelwood. In 1981-1982average prices were DH 350/m3 for pitprops, 250 m3 for sawlogs and 300 m3 for 5m-poles. Fuelwood is sold as charcoal.

C. Supply and Marketing of Project Inputs

6.14 Seed. High-yieldingcereal seeds are sold exclusivelyby SONACOS (Societe Nationalede Commercialisationdes Semences) through stores in the agriculturecenters and subcenters. The distributionnetwork would be expanded under the project (para 5.18), and by full development,use of HYV cereal seeds would increase from 1400 to 4300 tons per annum. The main constraint to increaseduse thus far has been insufficientsupply. Cereal and forage seed supplies to the project would be assured by a gradual expansion of the existing outgrower network, which includes Agrarian Reform Cooperatives,SOGETA state farms, and private farmers under contract. SONACOS in its operations subsidizesboth the seed-producerand the farmer using HYV seeds; the subsidy to the individualHYV user varies from 20% for wheat seeds, to 30% and 35% for forage and barley seeds, with subsidies to farmers groups and cooperativescurrently at 25% for wheat seeds, and 60% for forage seeds, thus encouragingan increased production of forage and drought resistant cereal.

6.15 Fertilizers. Apart from phosphates, fertilizersare imported and processedby FERTIMA (SocieteMarocaine des Fertilisants);FERTIMA, using six of the ACs and ASCs as outlets, is also the sole official marketer of fertilizersin the project area, as no network of licensed dealers has yet developed. Small quantitiesare also sold by independenttraders on the souks. Under the project fertilizermarketing would continue to be handled by the CT's in the initial stages of the project but would, subsequent to the extent possible, pass from the CT's to the private sector, with individualsor farmers' groups renting existing or planned storage space from ACs and ASCs. Farmgate prices of fertilizersare substantiallybelow border-priceequivalents, with a subsidy provided directly to FERTIMA and SCP (Societd Cherifiennedes Phosphates, processorof domestically-mined phosphate-basedfertilizers), rather than to farmers at the local level.

6.16 Pesticides. Pesticides are privately imported, and sold by both large and small dealers in the towns, villages and souks in the project area. The demand for pesticides,which will rise by over 300% by full developmentof the project, would be easily met by existing local suppliers.

6.17 Machine Services. At present, the CTs and SCTs provide a very few of the smaller farmers with subsidized machine services,with the accent on ploughing, cover-croppingand hay-baling; only 1% of the field-cropSAU of private farmers is serviced this way. The private sector provides the vast majority of machine services,with larger farmers renting the spare capacity of tractors and equipment to smaller farmers. The developments - 44 -

foreseen under the project would require the number of tractors to increase in the area from approximately 210 at present, to 335 at full development. These would be financed through CNCA channels to private farmers.

VII. Financial Analysis

A. Financial Implications for Farmers

7.01 To quantify financial costs and benefits of the proposed actions to the farmers, farm budgets have been developed for each of the three subzones in the project area in Annex XII of the Project File. Per hectare financial rates of return were prepared for the small irrigation component and the DRS program and are shown in the Project File. The subzones' selection is based on the ecological conditions (rainfall, topography, soils) which have determined the farming systems. The farm models chosen were based on studies of the farmers in the project area which included (i) a typology study which categorized farm parameters from a random sample survey; and (ii) information from regional technical staff on production potential and production methods. The farm models chosen represent typical farmsizes and farming systems found on rainfed land in the three subzones. Of the 12 representative models found in the project area only 7 can be expected to derive major benefits from the project as it is assumed that both the very large and very small types of farms would make only little technical progress because of the project (with small farms remaining at low levels of investments and large farms already operating as commercial enterprises).

7.02 The changes in income and the financial rate of return to investments to the indicative farms are;

Farm Models Income without Income with Financial Rate Project Project of Return -______------DH ------

Subzone 1 Small farm 5.5 ha 3,900 6,700 21 Small farm 5.5 ha (asso- ciated with irrigation) 4,400 7,700 25 Medium farm 30 ha 20,200 23,100 44

Subzone 2 Small farm 8.8 ha 4,500 10,100 29 Medium farm 31 ha 17,700 35,000 40

Subzone 3 Medium farm 17 ha 5,600 8,500 32 Large farm 93 ha 25,100 36,300 40

The results suggest that the incentives to participate in the Program are substantial and that farmers would be able to repay the required recovery - 45 -

The results suggest that the incentives to participatein the Program are substantial. The per ha financialrate of return of the approximately600 ha of new irrigated perimeters and rehabilitationworks is over 100%, due to the very high value of the irrigatedvegetables cultivated in the area and the relatively low per ha investmentcost (for new areas about US$2,700/ha). The financial rate of return on the irrigated land suggests the possibilityof the Government recovering a substantialpart of the investmentwithout eliminating farmers' incentivesto undertake the proposed works. The financialreturn on the per ha soil conservation measures provided by the project to private farmers varies from 12 to 22%.

B. Financial Implicationto Government and Cost Recovery

7.03 Subsidies. Government subsidizes farm inputs and investmentsto stimulateuse of modern inputs, foster on-farm investmentand provide sufficientproduction incentives to farmers while at the same time maintain relatively low price for consumers. Seeds of improved varieties, plant protection chemicals and tractors services are subsidizedto various degrees. The Government recently changed its subsidy policy for fertilizers: subsidiesat users' level have been abandoned in favor of subsidiesgranted to state enterprisesimporting (FERTIMA)and producing (Societe Cherifiennedes Phosphates) fertilizers. The Agricultural Investment Code provides the basis for subsidies for on-farm investments. Under the project, the most important investment subsidiesgranted to individual farmerswould be for purchase of tractors and implements (10% of list price), draught animals and implements (50%) and pure bred livestock (25%), for the constructionof livestock shelter (20%), for land improvement(40%) and for the establishmentof fruit-treeand cereal banquettes for soil conservation(40%). In addition,60% of the cost of small scale irrigation infrastructure(para. 7.06) and the totality of that of milk collection centers would be borne by the State. For the project as a whole, the Net Present Value (10% discount rate) of incremental production cost subsidieshas been estimated at DH 4.6 million and that of investment subsidies at DH 9.2 million. This would be offset to an important extent by incrementaltax revenues. The Net Present Value of incrementaltaxes on agriculturalproduction accruing to the Government generated by the project would be some DR 6.6 million or 48% of total agriculturalsubsidies. Overall, Government'srecovery through user charges and the fiscal system,while substantial,will not fully cover Project costs to the Government. However, this is in line with Government policy to develop the country's rainfed agriculturalsector and effect some income transfer in favor of one of the poorest segment of Morocco's population.

7.04 The table below presents estimates of recovery of per ha establishmentand maintenance costs for 12,000 ha of forest plantationsto be establishedon statelandunder the project. - 46 -

NPV of Costs and Benefits per ha of Plantations and Cost Recovery

NPVLa of Establishment Financial & Ma4intenance Cost Recovery Rate of Costs Benefits Coefficient Return --- DH------x %

Production Plantations Eucalyptus 4,110 2,960 72 7.0 Pine 4,790 2,490 52 6.8

Protection Plantations Eucalyptus 2,370 1,060 45 3.0 Pine 2,570 780 30 4.4

Total 13,840 7,290 53 6.0

/a 10% discount rate.

The overall financial rate of return of the plantation component is 6%./L The overall cost recovery coefficient is 53%. Establishment and maintenance costs will be borne by the Government's general budget. Wood product sale proceeds accrue to the communes within whose administrative boundaries the forests are located, while an ad valorem tax is added to the auction price and accrues to the 10% National Forestry Fund tax (FNF) and some other administrative fees amounting to about 8% of auction price accrue to the Government's general budget.

7.05 Forest Range Investments. Existing legislation provides the framework necessary for the implementation of the project's range improvement component. The Dahir of 1917 recognizes customary tribal grazing rights on State land and the right of the State to limit stocking rates according to the carrying capacity of range land. It provides for the creation of local commissions, composed of representatives of the Government, the local authorities and of the tribes concerned, to identify rightholders, fix stocking rates and determine plans for the management of range perimeters. However, this law has been rarely applied, and then only incompletely, because of the lack of key implementation decrees. A newly proposed law ("relative a la creation de zones d'amelioration pastorale dans les forets domaniales") sets out in detail the respective rights and obligations of the central government, the communes and the grazing right holders for improved range perimeters to be established on state land, including the financing of required investments, Government subsidies and cost recovery mechanisms. The draft law which has been adopted by the

/1 This compares with the economic Rate of Return of the component of 13% (para. 8.05). - 4 7 -

Government Council, will be submitted for approval to the Parliament during 1982. When adopted, it will apply to the project. According to its proposed provisions,beneficiaries of the investmentswould be the grazing right holders of the concerned area, provided they become members of a grazing associationcreated to manage the improved perimeter. The Government would undertake physical implementationof the works and grant investment subsidies of a level yet to be determined. The communes would be requested to contribute an adequate part of the operation and maintenance costs and of the investmentcosts relating to the sylvopastoral improvementsmade under the project out of their forest revenues. The level of their contributionwould be fixed by the provincialGovernor on advice from the livestockand forestry services. The members of the grazing associationswould have to pay an annual grazing fee, to cover an adequate level of operations and maintenance costs of the project's perimeters,based on estimates prepared by the project's forest range management unit in conjunctionwith elected representativesof the grazing association, These fees will also take into account the user's ability to pay. Assurances were obtained at negotiationsto these effects. It is expected that the proposed law will be in force before physical implementationof project range improvementworks are initiated in the first perimeter.

IrrigationInvestments

7.06 In connection with ongoing reform of the Small and Medium Irrigation Subsector, tne Moroccan Government is redrafting a law of 1924 and its implementingdecrees providing for the establishmentof farmers associationsto create, operate and maintain irrigation or drainage perimeters. Although the 1924 law provides a suitable framework for the organizationof farmers, it cannot be directly applied because of several antiquateddispositions, unsuitable to current conditions and existing institutionsin Morocco. The revised law would preserve the main dispositionsof the 1924 law. In the meantime and as an interim measure, de facto associationswould be created, as it is the case for traditional irrigationperimeters created under the Mekn2s AgriculturalProject (Credit 555-MOR) also financed by the Bank, and the cost recovery arrangements would be similar to those recently adopted by the Government for the Meknes Project: 40% of investmentcosts would be borne by the beneficiariesand recovered over a period of 20 years including a 3-year grace period, bearing an interest rate of 8%; the beneficiarieswould also bear 100% of annual operation and maintenance costs. These arrangementswould ensure a recovery of about 60% of total project irrigation costs. Beneficiaires' rent recovery index would be 16%. This is appropriate for farmers with per-capita incomes situated between Morocco's estimated critical consumptionlevel and average per-capita income. Assurances were obtained at negotiationsthat, under the new law, the water charges to be paid by the water users would be sufficient to recover all operation and maintenance costs and an adequate portion of the investmentcosts in each of the 11 perimeters. Prior to the establishmentof de facto or formal farmers' associations,a detailed socio-economicsurvey would determine the exact distributionof land and water rights within the perimeter. These water rights, which are currently often not formally established,would then be properly registered. A condition of disbursementwould be that the Bank had received satisfactoryevidence that the users of these perimeters - 48 -

have been grouped into duly established associations and have agreed to comply with the payment of adequate water charges and the adoption of cost recovery formula mentioned above. Further assurances were obtained at negotiations that the creation of formal farmers associations would follow the enactment of the newly proposed law.

VIII. Benefits and Justifications

A. Benefits and Beneficiaries

8.01 The project would benefit the population of seven communes of the Khemisset Province. The main beneficiaries would be the participating farmers and their families. It is estimated that some 6,130 farms out of a total number of 11,400 farms in the area would participate in the project. These families, representing about 54,000 persons, would directly benefit from project actions through an increase in their farming income (para. 7.02). Farmers' participation rate has been based on their current level of technology and the intensity of the proposed extension program in each of the three project's sub-zones. The participation rate during the project period corresponds to 54% of the farms representing 66% of the area's total agricultural land (84,000 ha), as shown below:

Participation of Farmers in Project

Project Year 1 2 3 4 5

Incremental Number of Participating Farmers 61 304 2,055 1,990 1,720 Cumulative Number of Participating Farmers 61 365 2,420 4,410 6,130 Cumulative % of Area's Total Farmers 1 3 21 39 54 Incremental Agricultural Area under Project (ha) 1,570 7,435 28,460 26,915 19,360 Total Agricultural Area under Project (ha) 1,570 9,005 37,465 64,380 83,740 Cumulative % of Total Agricultural Land 1 7 30 51 66

8.02 It is expected that improvement of agricultural techniques in the area and easier access to agricultural services (credit) would have, in the longer term, a positive impact on the non-participating farmers. The latter would also benefit from the rural and social infrastructure financed by the project. Although agricultural labor productivity would improve, employment in agriculture and livestock is expected to increase from an estimated 2.3 million man-days to about 2.8 million man-days by full development, an increase of 22%. This is the equivalent of 2,300 new full-time jobs. Based on farm-budget analysis and with the assumption that there are two persons per family working full time on the farms, effective employment on the farm would increase from 46% currently, to 56% at full development (year 10). In addition, the implementation of the forestry - 49 - component would require more than 3.0 million man-days over the five-year project period.

8.03 The project would also increase the forest revenues of the communes in the area. The Net Present Value (10%) of the forest revenues generated by project's plantations over a 35-year period would amount to DH 19 million or about (1982) DH 0.5 million per year. These revenues are for the most part used to finance investments in the forest sub-sector and communes' rural or social infrastructure, and would therefore benefit the entire population of the area.

B. Economic Analysis

8.05 The overall economic rate of return (ERR) of the project is estimated at 14% over a 35-year period. Benefits include the value of the incremental crop, livestock and wood fiber production resulting from project actions, valued at economic prices. Project costs include the cost of incremental inputs used on the farm, the cost of on-farm investments and the project's capital and operating costs, also expressed in economic terms. The economic cost of the project's social infrastructure components has not been included in the total project cost used for the economic analysis, since the long-term benefits of these components, which are difficult to quantify, have not been included in the project's estimated total benefits. Economic prices have valued those inputs and outputs traded on world markets at border prices, adjusted for transport, handling and processing in Morocco. Non-traded inputs or outputs have been valued at their marginal value for project purposes. Separate rates of return have been calculated for those various project components which can be clearly separated out. They are indicated below.

Economic Rate of Return (%) Total Project 14.0 Agricultural Development Component 15.5 Forest Component 13.0 of which Production Plantations 13.5 Protection Plantations 10.0 Soil Conservation Component 23.0 Irrigation Component 48.0

8.06 All project components show an acceptable Economic Rate of Return. Only the value of the incremental wood-fiber production has been included in Forest component benefits. Major long-term benefits deriving from soil protection and watershed management measures undertaken by the project have not been taken into account in the economic analysis. They include various downstream positive externalities such as the decrease in the rate of sedimentation of river basins, the reduction in areas of agricultural land lost due to flooding, and the decrease in the siltation rate of downstream reservoirs. An attempt has been made to assess the economic value of some of the downstream effects of watershed management through an estimation of the losses in irrigated crops avoided by - 50 - decreasing the siltationrate of the dam on the river Bou Regreg near Rabat. The river Grou, whose watershed management would be improved by the Project, is a tributaryof the Bou Regreg. The Net Present Value of downstream benefits generatedby project soil conservationworks has been estimatedat about DH 75/ha. Inclusionof these benefits in economic calculationshad however little impact on ERRs of Forestry and Soil Conservationcomponents.

C. Project Risks and SensitivityAnalysis

8.07 The project design attempts to minimize the main risks of the project; those are:

ti) the occurrenceof an exceptionallysevere drought, which would decrease and/or delay the project's expected agriculturalbenefits;

(ii) the adoption of proposed agriculturalpackages by a lower number of farmers in the area than expected;

(iii) the refusal of the concerned population to participate in, support and respect the proposed range management techniques;and

(iv) delays in implementationdue to administrativeinefficiences.

8.08 The effects of foreseeabledroughts on crop and livestock productionhave been emoodied in the estimated crop and livestockyields. However, the occurrence of an exceptionallysevere drought such as in 1981 could decrease the agriculturalproduction of the year concernedby as much as 50%, and could also negatively affect the rate of farmers' adoption of the proposed agriculturalpackages. Project analysis has assumed a relatively low rate of farmers' participation at full development (54%), with rates of adoption increasingwith the size of the farm and the technologicallevel of farmers. The proposed technical packages are well proven and have already shown their efficacy in the region. The recommendedextension system, along with increased access to agricultural credit, would ensure the participationof farmers. But for investmentsfor fruit-treebanquettes, which are in high demand by private farmers because of their financialreturns, the costs of project soil conservationworks on private land would be borne by the government as part of a demonstration program. Adoption of these conservationtechniques is therefore likely, as farmers of the area are already aware of potential benefits of such techniques as contour plowing.

8.09 The risk of refusal of proposed range management techniques (rotation,deferred grazing, respect of stocking rates) is significant. However, range improvementinvestment costs represent about 5% of total project investmentsand the risk of non-cooperationby concerned populationshas been minimized by (i) ensuring that range improvement actions would be implementedonly after local users have been consulted and had given their consent to the program; (ii) linking the adoption of range management practiceswith improved access to veterinary and other livestock support services; and (iii) introducing the envisaged mechanisms for investment and operating costs of the improved range perimeters only when - 51 -

their benefits have clearly been demonstrated. Moreover, traditional range management and rotations had long been practiced by Moroccan tribes before being gradually eliminated by increased population and livestock pressure. The recent catastrophic drought has heightened population awareness of the urgent need for rational range management and the enforcement of stricter grazing regulations.

8.10 Delays in Project implementation due to administrative constraints have been frequent in Morocco. This risk has been reduced by (i) minimizing the complexity of project actions; (ii) limiting the number of independent agencies involved; (iii) requesting individual itemization of works connected with the project and their corresponding funds in each of those agencies' annual physical and budgetary programs (Lois de Finances), and (iv) having the Provincial Governor, who represents all ministries at the Provincial level, chair the Provincial Coordination Committee (para 5.03), which should ensure adequate coordination and quick solution of disputes. In addition, the early involvement of Moroccan provincial staff in the preparation of the Project, and their commitment to its implementation, are expected to minimize possible start-up difficulties.

Sensitivity Analysis

8.11 The risks discussed above such as the occurence of a drought would translate into either reductions in crop yields, a lower participation of farmers, cost overruns or delays in implementation. Sensitivity analysis was undertaken to reflecc the impact of such occurrences on the Project's ERR. It is summarized below: Economic Rates of Return

Base case 14 Decrease in total expected benefits 10% 11 Decrease of 10% in agricultural benefits 12 Total benefits delayed by 2 years 9 Cost overruns of 20% 10 Cost overruns of 10% and decrease in benefits of 10% 10 Decrease of expected participation by 20% 12

Switching values for Project's most critical variables are given below:

Switching Values for Critical Variables /1

Agricultural Production -17 Forest Production -130 On-farm Inputs and Investments +26 Forestry Costs +150 Infrastructure Costs +72 Total Project Costs +20 Rate of Participation of Farmers -40

/1 Discount rate = 10% - 52 -

IX. Major Agreements Reached at Negotiations

9.01 During negotiationsassurances were obtained that:

(i) each government departmentparticipating in the project would have its annual budgetary resources individualizedin the relevant annual Loi de Finances and prgrammesd'emploi, would maintain separate project accounts for project works; these accounts would be audited by the Ministry of Finance and this audit report would be submitted along with year-end certified summary accounts of participatingGovernment departmentswithin 6 months of the end of each fiscal year. The audit report would include a specific opinion as described in para. 4.42;

(ii) the PMU would be fully staffed by September30, 1983, and local extension staff would be obtained as and when required (para 5.01);

(iii) the social infrastructurewould be operated and maintained with appropriate financial and technicalmeans and all necessary safety inspections,renewals and repairs would be made (para. 5.15);

(iv) the road maintenance brigade be establishedand adequately staffed not later than December 31, 1983, with the road engineer to be appointed not later than September 30, 1983, and that sufficient funds would be made available for operating and maintenance are made available as described in para para. 5.16;

(v) an adequate part of the investmentcosts and of the operation and maintenance costs of the five forest range improvement zones, would be paid by the communes in the manner described in para. 7.05;

(vi) the cost recovery formula as described in para. 7.06 would be adopted for the 11 irrigation perimeters to be developed under the project. Furthermore the creation of formal farmers associationswould follow the enactment of the newly proposed law; and

(vii) CNCA would provide adequate resources to meet the project's seasonal and investmentcredit demand, open up sufficient seasonal outlets and introduce in the project area the new credit policies (para. 5.18);

9.02 Bank disbursementagainst investmentcost on each of the five forest range areas would be conditionalupon submissionto the Bank of details of the technical and organizationalarrangements of each of the five range development areas (para. 5.13). Furthermore,Bank disbursementagainst investment costs on each of the 11 irrigationperimeters would be conditional upon fulfilling the conditions described in para. 7.06.

9.05 With the above assurances and conditions, the proposed project is suitable for a Bank loan of US$30.0 million. 53- ANNEX I Page 1 KINGDOM OF MOROCCO

STAFF APPRAISAL REPORT OF THE

OUUMES-ROMHANIAGRICULTURAL DEVELOPMENTPROJECT

Project Costs --(nso nn) 5u~aCosts t Price Cont, Base Costs on Base Foresin Etchante Costs Unit Unit Cost No. of Units 1983 1984 1985 1986 1987 Total (USS'000) 2 Aeount

1. INVESTHENTCOSTS

A. CONSTRUCT1ON

HOUSES,OFFICES UNIT 26.4-350 115 11,989.8 3.411.4 1200.8 - - 16,602.0 3,407.9 40.1 6,651B8 WORKSHOPS, STORES , INPUTS CENTRES UNIT 1-266 6,807 4,913.8 4,937.2 360.0 - - 10,211.0 2r130.5 40.0 4,084.4 MILKCOLLECTION CENTERS UNIT 170 2 170.0 170.0 - - - 340.0 70.6 40.0 136.0 SHEEPDIPS UNIT 200 5 200.0 400.0 400.0 - - 1,000.0 219.3 40.0 400.0 BREEDINGSTATIONS UNIT 2.5-530 12 575.0 577.5 20.0 - - 1,172.5 244.1 40.0 469.0 NURSERIES UNIT 280-600 3 505.0 825.0 - - - 1330.0 279,0 40.0 532.0 LANDPURCHASE UNIT 1 906 203.0 703.0 - - - 906.0 197.0 0.0 0.0 SCHOOLHOUSES UNIT 62 34 496.0 620.0 558.0 248.0 186,0 2,108.0 473.8 40.0 843.2 SCHOOLS UNIT 38.7 14,784 8,372.0 1,122.3 3,780.7 3,325.8 1,991.2 18,592.0 4,149.3 40.0 7,436.8

Sub-TotalCONSTRUCTION 27,424.6 12,766.4 6,319.5 3,573.8 2.177,2 52,261.5 11,171.5 39.3 20,553.2 Phasical Contingencies - 3,646.3 1,827.8 731.0 357.4 217.7 67080.2 - 39.2 2,659.4 Price Continsencies - 3,027.6 29769.0 1,960.3 1,452.4 1,110.8 10,320.1 - 34.3 3,536.8

Sub-Total INCLUDINGCONTINGENCIES 34,098.5 17,363.2 9.010,8 5,383.6 3,505.7 69,361.8 11,171.5 38.6 26,749,3 Taxes - 10,229.6 5,209.0 2,703.2 1,615.1 1,051.7 20,008.5 - 0.0 0.0 ForelAnExchange - 13,355.2 6,425.9 3,524.4 2,092.5 1,351.3 26.749.3 - 0.0 0.0 P. PROjECTWORKS

IRRIGATION UNIT 12-100 586 495.0 5t250.0 6,200.0 - - 11,945.0 2,701.6 30.0 3,583.5 ROADCONSTRUCTION UNIT 51-360 256 3,900.0 10.670.0 11.660.0 5,740.0 - 31.970,1 7,126.4 50.0 15,985.0 ELECTRIFICATION UNIT I 4.500 - - 1900.0 2,600.0 - 4.500.0 1,088.9 40.0 1,800.0 ROADREHADILITATION UNIT 92 35 1,380.0 1.840,0 - - - 3,220.0 665.7 50.0 1,610.0 FLOODPROTECTION UNIT 1 1,400 - - 1,400.0 - - 1,400.0 326.5 35.0 490.0 WATERSUPPLY UNIT 1-320 12.303 160.0 1.375.0 3,115.0 3,700.0 4,300,0 12,650.0 3,118.5 40.0 5,060.0 SEWAGEDISPOSAL UNIT 1 6,400 1,200.0 1.500.0 IP500.0 1.500.0 700.0 6,400.0 1.477.6 35.0 2i240.0 SOUKDEVELOPNT UNIT 1 11.800 1,000.0 1,800.0 3,000.0 2,500.0 3,500.0 11,800.0 2,852,3 35.0 4,130.0 STREETPAVING UNIT 1 1.400 - - - 700.0 700.0 1.400.0 362.5 35.0 490.0 PRODUCTIVEFOREST PLANTATIONS UNIT 4.11-4.79 8,000 4,997.0 7,256.0 7.256.0 7,256.0 9,515.0 36,280.0 8,642.4 40.0 14,512.0 PROTECTIVEFOREST PLANTATIONS UNIT 1-15 99000 1,395.5 3t.88.5 4,296.0 4,790.0 4,790.0 19,160.0 4,6109 40.0 7,664.0 FIRE BREAKSAND TOWERS UNIT 6-100 53 60.0 360.0 60.0 60.0 60.0 600.0 135.3 40.0 240.0 SYLVOPASTORALDEVELOPNENT HA 0.09-3.3 31.150 2,142.2 2,761.6 3,492.9 4,176.3 4,056.3 16,629.2 3.979.5 40.0 6,651.7

Sub-TotalPROJECT WORKS 16,729.7 36,701.1 43,880.0 33,022.3 27,621.3 157,954.3 37,090.0 40.8 64,456.2 Physical Continsencies - 1,950.6 4,584.9 5,731.4 4,064.0 3,427.9 190758.9 - 39.8 7.859.1 Price Contingencies - 1,808.7 7.744.9 13,823.4 13,752.2 14,707.0 51,836.2 - 35.6 180477.9

Sub-Total INCLUDINGCONTINGENCIES 20,488.9 49,030.9 63,434.8 50,038.5 45,756.2 229,549.4 37,090.0 39.6 90,793.2 Taxes - 5,100.4 12,354.3 15,968.9 12,353.9 9,194,0 54t971.4 - 0.0 0.0 Foreign Exchange - 8,508.9 19,892.9 25,048,9 20,221.2 17,121.3 90,793.2 - 0.0 0.0 C. EOUIPMENT

FARMHACHINERY UNIT 20-158 22 536.0 776.0 200.0 - - 1f512.0 318.0 60.0 907.2 COLLECTIONCENTER EQUIPMENT UNIT 50 7 100.0 100.0 100.0 50.0 - 350.0 75.7 60.0 210.0 EXTENSIONEOUIPNENT UNIT 7.5-158.5 10 322.5 152.0 - - - 474.5 95.6 60.0 284.7 RESEARCHEQUIPNENT UNIT 1 2,584 1,219.0 1,265.0 100.0 - - 2,504.0 544.4 30.0 775.2 FORESTRYEOUIPNENT UNIT 2.5-210 24 232.5 125.0 175.0 - - 532.5 112.8 50.0 266.3 WORKSHOPEQUIPMENT UNIT 10-20 15 230.0 - - - - 230.0 45.5 50.0 115.0 FARNEQUIPMENT AND TOOLS UNIT 0.5-60 81 140.0 30.0 - - - 170.0 34.5 40.0 68.0 ENGINEERINGEGUIPMENT UNIT 142 5 284.0 355.0 - - - 639.0 131.1 60.0 383.4 FENCING UNIT 0.3-1 3,660 211.4 254.6 219.0 262.5 262,5 1,210.0 283.0 50.0 605.0 ROADNAINTENANCE EQUIPMENT UNIT 1-B50 396 96.0 4,396.0 96.0 96.0 - 4,684.0 1003.0 50.0 2,342.0 CADASTRALSURVEY EQUIP UNIT 1 1,169 830.5 330.5 - - - 1,169.0 235.0 60.0 701.4 VETERINARYA LIVESTOCK EQUIPMENT UNIT 0.2-184 1.054 444.0 100.0 - - - 544.0 108.5 60.0 326.4 SCHOOLEQUIPMENT UNIT 12.3-12.3 154 639.6 356.7 442.8 270.6 184.5 1,094.2 414.8 60.0 1,136.5 ADMINISTRATIVEEQUIPMENT UNIT 12-75 22 316.0 24.0 - - - 340.0 67.6 50.0 170.0

Sub-TotalEQUIPMENT 5,601.5 8,272.8 1,332.8 679.1 447.0 16,333.2 3,469.3 50.8 8,291.1 Physical Contingencies - 570.7 840.0 144.2 81.0 57.8 1.693.8 - 50.7 859.4 Price Contingencies - 552.0 1,614.7 386.6 264.2 222.7 3,040.2 - 47.8 1,452.0

Sub-Total INCLUDINGCONTINGENCIES 6,724.2 10,727.6 1,863.6 1,024.4 727.5 21,067.2 3,469.3 50.3 10,602.4 Taxes - 2,130.8 3,630.3 587.8 306.5 180.7 6t836.2 - 0.0 0.0 Foreign Exchange - 3,406.8 5,260.7 997.5 552.7 384.7 10.602.4 - 0.0 0.0 - 54- ANNEXI Page 2 KINGDOM0F MOROCCO

STAFF APPRAISALREPORT OF 1!HE

OUEMES-ROMANIAGRICULTURAL DEVELOPMENT PROJECT

Prolect Costs (DH '000)

D. SELECTEDBREEDING ANIMALS

SELECTEDLOCAL BREEDING ANIMALS UNIT 1.2-9 600 50.0 204.0 234.0 156.0 390.0 1.034,0 256.7 20.0 206.0

Sub-TotalSELECTED BREEDING ANIMALS 50.0 204.0 234.0 156.0 390.0 1,034.0 256.7 20.0 206,S PhFsical Contionencies - 6.5 26.5 30.4 20.3 50,7 134.4 - 20.0 26,9 Price Continencies 6.2 47.5 79.5 70.6 223.1 426.9 - 16.3 69.6

Sub-TotalINCLUDING CONTINGENCIES 62.7 278.0 343.9 246.B 663,8 1.595.3 256.7 19,0 30313 Taxes - 8.2 36.1 44.7 32.1 86.3 2074 - 0.0 0 0 Foreisn Exchange - 12.2 53.7 66.1 46.9 124,3 303.3 - 0.0 0.0 E. VEHICLES

PASSENGERCARS UNIT 30-90 39 756.0 594.0 60.0 - - 1.410.0 299,0 60.0 846.0 TRUCKSAND BUSES UNIT 100-150 17 750.0 720.0 450,0 450.0 - 2i370.0 511.2 50.0 Ir185.0 FOURWHEEL DRIVE UNIT 70-140 29 1,140.0 770.0 280.0 - - 2.190.0 452.4 60.0 1,314.0 MOTORBIKE UNIT 4-4 34 100.0 36.0 - - - 136.0 27.3 50.0 68.0 TRACTOR UNIT 80 10 160.0 480.0 160.0 - - 800.0 169.5 60.0 4e0.0

Sub-T%talVEHICLES 2.906,0 2P600.0 950.0 450.0 - 6,906.0 0,449.4 56.4 3,092,0 PhtysicalContOnsencies - 290.6 260.0 95.0 45.0 - 690.6 - 56.4 389,3 Price Contingencies - 266.7 478.9 262.8 163.7 - 1,172.2 - 55.0 641.9

Sub-TotalINCLUDING CONTINGENCIES 3,463.3 3,338.9 1,307.8 658.7 - 8.760,8 1,449.4 56.2 4992,.2 Taxes - 1.373.4 1344.8 561.5 329.4 - 3.6090 - 0.0 (0.0 Foreisn ExchanSe - 1.973.3 1,902.8 721.7 329.4 - 4,927.2 - 0.0 0,0 F. TECHNhICALASSISTANCE MAN-MONTHS 55 53 1.650.0 935.0 330.0 - - 2.915,0 601.2 85.0 2,477'.7 Price Contingencies - 143.7 162.0 85.7 - 391.4 - 80.7 31',9

Sub-TotalINCLUDING CONTINGENCIES 1F793.7 1,097.0 415.7 - - 3,306.4 601.2 84.5 2.77,L6 Foreign Exchange - 1,516.9 926.1 350.5 - - 2,793.6 - 0.0 c:uo G. STUDIESAND TRAINING

STUDIES MAN-MONTHS1-250 4.959 2,245.0 2,360.0 850.0 250.0 250.0 5.955.0 1P283.0 50.0 2,977.5 LOCALTRAINING NAN-MONTHS0.8-2 532 175.4 189.1 91.1 93.0 61.7 610.3 139.S 15,0 91_5 OVERSEASTRAINING MAN-MONTHS 1-10 125 200,0 30.0 60.0 30.0 30.0 350.0 75.2 75.0 26!.5 EXTENSIONMEDIA CONTRACTS MAN-MONTHS55-110 2 - 77.0 66.0 11.0 11.0 165,0 37.4 40.0 66.0 CADASTRALTECH, CONTRACTS MAN-MONTHS 1-1 5.412 59412.0 - - - - 5,412.0 1,064.3 60.0 3,247.2 CADASTRALFIELD CONTRACTS NAN-MONTHS I 6.519 3,2595 3595 - - - 6.519.0 1,358.2 30.0 1,955.7

Sub-TotalSTUDIES AND TRAINING 01,292.0 5,915.6 1,067.1 384.1 352.7 19.011.3 3,957.6 45.2 0,600.4 Physical Contingencies - 1,129.2 591.6 106.7 30.4 35.3 1,901.1 - 45.2 060.0 Price Continsencies - 1,124,6 1.238.8 326.9 158.9 182.0 3,031.2 - 38.0 1,076.3

Sub-Total INCLUDINGCONTINGENCIES 13,545.7 7,746.0 1,500.6 581,4 570,0 23,943.7 3,957.6 44,4 10,6`6.8 Taxes - 4.559.3 29211.7 216.0 63,0 67,3 7,117.4 - 0.0 0,0 ForeigOnExchange - 6.572,1 2,070.7 701.2 242,8 250.0 10,636.8 - 0,0 0,0 H, ONFARM INVESTMENTS

CROPDEVELOPMENT INVN DH000 1 31,035 230,0 1.262,9 8,212.7 11.152,5 10,176,7 31,034,6 7,866.7 25.0 7,75B,7 LIVESTOCKBEV. INVM DH000 1-1 8.291 17.8 138,9 1.004.1 2,091.6 4.238.4 S,290,9 2,120.9 40.0 3,31.6.3 INCREMENTALSHORT TERM INPUTS DH000 1 56,448 260.7 2,743.9 8,387,0 17,691,8 27,364.8 56,448.1 14,355.9 40.0 22y5''9.3 , ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ------.-.---- - Sub-TotalON FARM INVESTMENTS 508.5 4,145.6 07,603.8 31,735.8 41,779.9 95,773.6 24,343.5 35,1 33,654,2 Phasical Contingencies - 50.9 414.6 1,760.4 3,173.6 4,178,0 9,577,4 - 35.1 3,3,.,4 Price Continsencies - 57.9 890.9 5,605.8 13,359,5 22,012,8 41,926.9 - 30.4 12,745.6

Sub-Total INCLUDINGCONTINGENCIES 617.3 5,451.1 24,970.0 48,268.9 67,970.7 147,277.9 24,343.5 33.8 49,7S5.2 Taxes - 96.5 932.1 3,892.6 8,159,6 12,257.0 25,337,8 - 0.0 0.0 Foreign Exchange - 201.0 1,882.8 7,986.3 16,133.1 23,562.1 49,765.2 - 0.0 0.0

TotalINVESTMENT COSTS 66,162.2 71,540,4 71,717.1 70,001.0 72,768.1 352,108.9 82,339.1 40.4 142,132.7 Physical Contingencies - 7,644.7 8,545.4 8,599.1 7,779.7 7,967.4 40,536.4 - 39,5 16,019,4 Price Contingencies - 6,987.4 14,946.9 22,531.0 29,221.5 38,458.4 112,145.2 - 34.3 380418.9

Total INCLUDINGCONTINGENCIES 80,794.4 95,032.7 102,847.2 107,002.3 119,193.9 504,0870.5 82,339,1 38.9 196,571.1

Taxes - 23,498,1 25.718.3 23,974.8 22?859.5 22,837.0 118,887,7 - 0,0 0.0 Foreisn Exchange - 35,546.4 39,215.7 39,396.6 39.618,6 42,793,7 196,571.1 - 0.0 0.0 55 - ANNEX I

KINGDOtM OF MOROCCO Page 3

STAFF APPRAISAL REPORT OF THE

OUL14ES-ROMMANIAGRICULTURAL DE'ELOPMLblT PROJECT

Project Costs (DR '000)

11. RECIRIENTCOSTS

A. PERSOYINEL

ENGINEERS MA-YEARS 30-55 159 1.117,5 1,489.0 1,441.0 1,441,0 1.441.0 6,929.5 1.676.2 C.0 0.0 TECHNICALASSOCIATES 4AN-YEARS 1-32.5 6.689 3.170.3 3,264.2 2,7031.8 2,806.A 2,854.8 14,799,8 3,536.4 0.0 0.0 TEChNICALASSISTANTS MN-YEARS 3.6-22.5 26A 57.,3 915.4 962.4 962.4 962.4 4,281,9 1,045.9 0.0 0.0 SKILLED112RKERS , 0R GS4RI5ERS MAN-YEARS9.6-16.6 392 433.8 997.A 1'115.4 1,085.0 1,1D5.0 4,917.0 1,212.9 0.0 0.0 LABORERS HAN-YEARS IS 12 - 45.0 45.0 45.0 45.0 106.0 44.9 0.0 0.0

Sub-Total PERSONNEL 5,300,9 6,611.4 6,267.6 6.440.2 6,488,2 31,100.2 7,516.3 0.0 1.0 Price Cantinsexcues - 626.8 1.443.7 1,979.5 2,711.9 3,469,8 10,231.7 - 0.0 0.1

S0b-Total INCLUDINGCONTINGENCIES 5,927.7 0,055.0 8,247,1 9,152.1 9,959.0 41,339.9 7.516.3 0.0 0.0 Taxes - 592.8 805.5 824.7 915.2 995.8 4,134.0 - 0.0 0.0 S. SALARIES

DISPENSARY,MAERNITY 70-125 8 195.0 195.0 195.0 i95.0 - 790.0 179,9 0.0 0,0

lab-Total SALARIES 195.0 195.0 195.0 195.0 - 780.0 179.9 0,0 0.0 Price Centinsoecies - 23.1 42.6 01.6 02.1 - 209.3 - 0.0 0.0

Sub-Total INCLUDINGCOGTIN5EKCIES 218.1 237.6 256.6 277.1 _ 9G9.3 179.9 0,0 0.0 Taxes - 21.8 23.8 25.7 27.7 98.9 - 0.0 0.0 C. D MDH PRGECTII;RK

CIVIL NR M DH000 1 2.099 172.6 324.5 490.7 555.7 555.7 2,099.2 508.0 35,0 734.7 SYLW0-PASTGRALOIN DH000 0.15 11,503 - 75.2 225.2 525.1 900.0 1,725.5 448.6 20.0 345.1

Sob-TotalI 0 ANDH PROJECTWRKS 172.6 399.7 715.9 1,080.9 1.455,7 30,24.7 956.5 28.2 1,079.8 Ph-sacal Cont ssncies - 25.9 59.9 107.4 162.1 218.4 573.7 - 28.2 162.0 Price Continsgcies - 20.0 09.8 237,7 481.3 8230. 1,651.8 - 2302 383.1

Sub-Total INCLUDIN3CDNTI0GENCIES 218.5 549.4 1,060.9 1,724.3 2,497.D 6,050.2 956.5 26,9 1,624,9 Taxes - - 56.8 142.9 275.8 448.3 649.2 1,573.0 - 0.0 0.0 Foreoss Exchanoe - 75.1 172.3 311.5 458.4 607.5 1,624,9 - 0.0 0.0 D. 0 AND9 E3UIFHENT

EXTENSIONEQUIPMENT 01K DH 000 1.1-50 49 89.0 115.5 115.5 115.5 115.5 551.0 128.5 45.0 248.0 RESEARCHEQUIPMENT 031 DH000 1 450 50.0 100.0 100.0 100.0 100,0 450.0 105.9 45.0 202.5 FORESTRYE2UIPHEKT 014 DH 000 1-30 332 30.5 138.5 222.0 224.0 224.0 842.0 202.7 45.0 170.9 VETERINARYI L1IESTOCK EQIPMENT 01D 0D 000 1-9.5 993 17.0 095.2 642.8 862.4 916,4 2,830.8 693.4 45.0 1.275.2 ADMINNSTRATIONEOUIPHENT D000 606-15 108 167.7 147,0 147.0 147.0 147.0 755.7 174,4 45.0 340,1 INPUTSCOSTS FOR D080 I RESEARCH IN 000 1-60 1.221 392.0 402.0 402.0 160.0 160.0 1,516.0 338.4 50.0 758.0 ENIKEERIKGEQUIP 01 DH000 14.2-14.2 20 28.4 63.9 63.9 63.9 63.9 204.0 66.9 45.0 127.8 R800 MAINTENANCEEQUIP 01 194H000 1 3,600 - 900.0 900.0 900.0 900.0 3,600.0 863.3 45.0 1.620.0 UDRKENOPEQUIPMENT DH000 3.5-7 75 77.0 80.5 80.5 80.5 00.5 399.0 92.5 45,0 179.6

Sit-Total 0 AND9 EGUIPHENT 854.6 2,342.6 2,673.7 2,653.3 2,707.3 11,231.5 2,665.9 45.7 5.130,0 Phssical Cotnserces - 85.5 234.3 267.4 265.0 270.7 1.120.2 - 45,7 513.0 Price Cootioseecles - 87,9 470.1 801.8 1,058.3 1,353.2 3,774.3 - 41.3 1558.7

Sub-Total INCLUDINGC2NTINGENCIE8 1,027.9 3,050.0 3,742.8 3,976.9 4,331.3 16,129.0 2.665.9 44.7 7,201.7 Texes 308.4 915.0 1,122.8 1,190.1 1,299.4 4,839.7 - 0.0 0.0 Foreisn Exchaese - 480,9 1,177.1 1.681.6 1,759.5 1,902.7 7,201.7 - 0.0 0.0 E. 0 ANDHN ORICLES

CARS01H UINIT 7.8-9.B 91 105.4 144.4 160.0 160.0 160.0 729.8 171.1 45.0 328.4 FDU9R-WHEELDRIVE 018 UNIT 1-18.5 1,824 606.0 853.1 843,1 843.1 843.1 4,068.4 947.4 45.0 1.830.8 TRUCKS21H - 17IT 16.3-25,3 08 54.3 90.5 139.4 188.0 118.3 660.7 159.0 45.0 297.3 NTDTRCYCLES019 LUIT 0.8 146 17.6 24.8 24.8 24.8 24.8 116.8 27.0 45.0 52.6

Sub-Total 0 AN8H VEHICLES - 063.3 1,112.8 1,167.3 1,216.2 1,216.2 5,575.7 1,304.8 45.0 2,509.1 PhRsacalContirotecoes - 06.1 111.3 116.7 121.6 121.6 557.6 - 45,0 250.9 Price Contingencies - 89.9 225.5 350.9 485.6 608.6 1,760.6 - 40.7 716.5

Sub-Total INCLLDIKNC2NTI!ENCIES 1.039.5 1,449.6 1.635.0 1,823.4 1,946.4 7,893.9 1,304.8 44.0 3,476.4 Ta.es - 011.8 434.9 490.5 547.0 583.9 2,368.2 - 0.0 0.0 Feorein E.ehase - 462.2 641.9 722.1 801.1 B49.2 3,476.4 - 0.0 0.0

Total RECURRENTCOSTS 7,306.3 10,661.4 11,019.5 11,585.6 11,867.4 52,520.1 12,623.5 16.6 8,718.9 Ph-socal Coetononcles - 197.7 405.5 491.5 549.1 610.7 2,254.4 - 41.1 925.9 Price Contingencies - 847.7 2,274.7 0,431.5 4,819.3 6,254.6 17,627.8 - 15.1 2,658.3

Total IKCLU1NGCGNTIK3ENCIES 8,431.7 13,341.5 14,942.4 16,954.0 18,732.7 72,402.3 12,623.5 17.0 12,303.0

Taoes - 1.291.6 2,322.0 2,739.6 3,131.4 3,528.3 13,012.8 - 0,0 0.0 Fortian Exchane - 1018.2 2,1901. 2.715,2 3,010.9 3.359.4 12,303.0 - 0.0 0.0

Total BASELINECOSTS 73,548.5 82,201.8 82,736.6 81,586.6 84,635.5 484,708.9 94,962.6 37.3 150,851.6 Pheosical Cwetionegwaes - 7,842.4 8,950.9 9,090.6 8,328.8 8,578.2 42,790.9 - 39.6 16,945.3 Preae Continoeecais - 7,835.1 17.221.5 25,962.5 34,040.8 44,713.0 129,773.0 - 31.7 41,077.2

Total P1JECT COSTS 89,226.1 114,374.2 117,789.7 123,956,2 137,926.6 577,272.8 94,962.6 36.2 2088874.1

Taxes - 24,789.7 28,040.2 26,714.4 25,990.8 26,365.3 131,900.5 - 0.0 0.0 Foretin Exchanse - 36,564.6 41,407.0 42.111.8 42,637.5 46,153.1 204,874.1 - 0.0 0.0

Novetber 2, 1982 17108 - 56 -

ANNEX I Table 2

KINGDOM OF MOROCCO

STAFF APPRAISAL REPORT OF THE OULMES-ROMMANI

AGRICULTURAL DEVELOPMENT PROJECT

Estimated Schedule of Disbursement (US$ million)

IBRD Fiscal Year Disbursement Cumulative Disbursement Semester Ending During Semester at End of Semester

FY 84

December 31, 1983 0.7 0.7 June 30, 1984 0.9 1.6

FY 85

December 31, 1984 1.2 2.8 June 30, 1985 1.3 4.1

FY 86

December 31, 1985 2.3 6.4 June 30, 1986 2.6 9.0

FY 87

December 31, 1986 2.8 11.8 June 30, 1987 3.0 14.8

FY 88

December 31, 1987 4.6 19.4 June 30, 1988 4.7 24.1

FY 89

December 31, 1988 3.3 27.4 June 30, 1989 1.6 29.0

FY 90

December 31, 1989 1.0 30.0 - 57 -

ANNEX II Page 1

KINGDOM OF MOROCCO

STAFF APPRAISAL REPORT OF THE OULMES-ROMMANI

AGRICULTURAL DEVELOPMENT PROJECT

Selected Documents and Data Available in Project File

A. Selected Reports and Studies on the Agricultural Sector in Morocco

Al. World Bank: Memorandum on Morocco's Agricultural Sector - Report 2667a-MOR of May 21, 1980.

A2. World Bank: Draft Public Sector Investment Review of Agricultural Sector

A3. Plan de Developpement Economique et Social; Ao^ut 1981, 6 volumes

B. Reports and Studies Relating to Project

Bl. Rome, FAO Cooperative Program - Rapport de Preparation Projet de D6veloppement Integre dans la Province Khemisset, March 1981.

B2. Kingdom of Morocco - MARA - Situation Actuelle de la Zone du Projet (November 1980).

B3. Kingdom of Morocco - MARA - Propositions de D6veloppement (November 1980) 3 volumes.

B4. Kingdom of Morocco - MARA - Enquate Douars (December 1979).

B5. Kingdom of Morocco - MARA - Caracteristiques Generales des Exploitations Agricoles (December 1979).

B6. Kingdom of Morocco - MARA - Systeme de Culture - Typologie des Niveaux Techniques (February 1980).

B7. Kingdom of Morocco - MARA - Characteristiques Socio-Economiques (June 1980).

B8. Kingdom of Morocco - MARA - Le Syst'eme d'Elevage (February 1980).

B9. Kingdom of Morocco - MARA - Prix Unitaires et Techniques de Developpement (November 1980).

C. Selected Working Papers

Annex I Agriculture Development and research Annex II Fodder Production and Livestock Annex III Forestry Development - 58 -

ANNEX II Page 2

Annex IV Social Infrastructure Annex V Education Development Annex VI Irrigation Development Annex VII Road Construction Annex VIII Soil Conservationand Erosion Control Program Annex IX AgriculturalExtension Annex X AgriculturalTraining Annex XI Monitoring and Evaluation Annex XII Farm Budgets Annex XIII Project Cost Tables Annex XIV Prices, Marketing and Financial Analysis for Forestry Component Annex XV Economic Values of Input and Outputs Annex XVI Economic Analysis - 59 - ANNEX III Page 1

KINGDOM OF MOROCCO

STAFF APPRAISAL REPORT OF THE

OULMES ROkMANI AGRICULTURAL DEVELOPMENT PROJECT

Implementation Schedule

PYO I PYI PY2 I PY3 I PY4 I PY5 6/82 1/83 1/84 1/85 1/86 1/87 Loan Signature *

Loan Effectiveness *

Project Management

Appointment of Pro. Man. done Establishment of PMU Bef. Effect. Equipping PMU Full Staffing of PMU Bef. 12/31/83 * Mon. & Eval. Agric. Economist Bef. 9/30/83 *

Agriculture Component

Constr. + Equip. of CTs Constr. + Equip. Equip. Tiflet Pre-Service Const+Equip_ Tiflet Pre-Service Courses 1 2 In-Service Training First Batch Pilot Farm Program Second Batch Third Batch Radio Radio + film Contracts Film Mid-Term Review Extension, Training, 12 m.m. 3 m.m. (for Mid-Term Review) Tech. Assist. Audio-Visual Forage 5 m.m. M + Eval. 2 m.m.

Livestock + Sylvo-Pastoral Component

Construction + Equipment Sylvo-Pastoral Nursery Cork Oak Range Impl. 150 ha 1,000 ha 1,250 ha 1,800 ha 1,800 ha Holm Oak Range Impl. 375 ha 500 ha 625 ha 750 ha 750 ha Open Range Impl. 250 ha 330 ha 420 ha 500 ha 500 ha Shrub Planting 125 ha 170 ha 205 ha 250 ha 250 ha Ram Outbreeding Program Appoint. Range Man. Officer: TA Bef. 9/30/83 * 24 m.m.

Irrigation Compondnt

Formation of ASAPs (Ist set) Bef. 6/30/83 * New Perimeters (excl. Plat. d'Oulmes) 200 ha 250 ha Rehabilited Perimeters 50 ha 65 ha Feasibility Studies

Forestry Component

Construction + Equipment Constr. + Equip. Equip. Forestry Nursery Submit Studies Ungravelled 20 km 40 km 60 km for 1st Year at * Forest Roads Negotiations Gravelled 10 km 20 km Firebreaks 10 km 10 km 10 km 10 km 10 km DRS Olives 25 ha 75 ha 100 ha 100 ha 100 ha DRS Cereals 100 ha 400 ha 500 ha 500 ha 500 ha Bunds, Wattles, Gulleys, Culverts 125 -ha 525 ha 650 ha 650 ha 650 ha Production Plantations 1,100 ha 1,600 ha 1,600 ha 1,600 ha 2,100 ha Protection Plantations 400 ha 800 ha 800 ha 1,000 ha 1,000 ha Tech. Assist. Cork Oak 4 m.m. Harcha. Study Submit at Negotiat. * Other Forest. Man. Studies I 1 1 I - 60 - ANNEXIII Page 2

KINGDOMo? MOROCCO

STAFFAPPRAISAL REPORT OF TNE

OULMESROMMANI AGRICULTURAL DEVELOPMENT PROJECT

ImplementationSchedule

PY pyl I PY2 PY3 FPY4 I PY5 6/82 1/83 1/84 1/85 1/86 1/87 Research Component

1st Year Program submit at negotiations * Construct. + Equip. Const. + Equip. Equip. Tech. Assist. 1 m.m. 1 m.m. 1 m.m.

Cadastral Survey

Rural Roads

Final Design Oulms- Submit at Touiza Negotiations * Construction 8 km 30 km 34 km 34 km Maintenance 300 km 300 km 300 km 300 km

Social Infrastructure

Construction Water Supplies Study Construction _ Market Development Study Construction Sanitation Study Construction Flood Control Study Construction Power Study Street Paving Construction

Education Component

Permanent Classrooms + Equip. 27 9 10 7 Prefab. Classrooms+ Equip. 25 29 27 12 8 Teachers' Houses 8 10 9 4 3 --- r - - r IBRD16473 S S 00 0 PORTL C;A FQI ANKl NF 1982 6"45' S 30 5 S

KINGDOM OF MOROCCO C. GIERALTAR OULMES-ROMMANI AGRICULTURE A ¾ -Roeot DEVELOPMENTPROJECT

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