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