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FILE Py Public Disclosure Authorized Report No Documrent of The World Bank FOROFF:ICIAL USE ONLY FILE Py Public Disclosure Authorized Report No. 2475-BO Public Disclosure Authorized STAFF APPRAISAL REPORT BOLIVIA OMASUYOS-LOS ANDES RURAL DEVELOPMENT PRO.JECT Public Disclosure Authorized Ma.y 24, 1979 Public Disclosure Authorized Projects Department Latín America and Caribbean Regional Office 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 Worid Bank authorization. CURRENCY EQUIVALENTS US$1.00 = $b 20.00 (Bolivian Pesos) $b 1.00 = US$0.05 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS BAB - Agricultural Bank of Bolivia CDF - Forestry Development Center CIPCA - Central Investigation and Promotion of Farmers CONEPLAN - Ministry of Planning and Coordínation CORDEPAZ - Development Corporation of La Paz DESEC - Center for Social and Economic Development FOMO - National Manpower Services IBTA - Bolivian Institute for Agricultural Technology IICA - Inter-American Institute for Agricultural Sciences IFAD - International Fund for Agricultural Development INBOPIA - National Institute for Handicrafts and Small Industries INC - National Colonization Institute INFOL - National Institute for the Development of Wool MACA - Ministry of Peasant Affairs and Agriculture MPSSP - Ministry of Social Security and Public Health PAN - Northern Altiplano Project PIL - Industrialized Milk Plant SNC - National Road Service SNDC - National Community Development Service FISCAL YEAR January 1 - December 31 FOR, OFFICIAL USE ONLY BOLIVIA OMASUYOS-LOSANDES RURAL DEVELOPMENTPROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. BACKGROUND ............................................... 1 A. Sector Characteristics, and Recent Performance ........ 1 B. The Policy Framework ................................ 4 C. Main Development Constraints ........................ 5 D. Development Strategy and Bank Assistance .... ........ 7 E. The Ingavi and Ulla Ulla Projects ................... 10 II. TRE PROJECT AREA ......................................... 12 A. Physical Features ................................... 12 B. Population Characteristics .......................... 12 C. Land Tenure and Utilization ......................... 13 D. Marketing ............................................ 14 E. Institutional Support ............................... 14 F. Infrastructure ....................... 16 III. TRE PROJECT ............................... 16 A. Introduction. ............................... 16 B. Brief Description ................................ ,. 17 C. Detailed Features ................................ ,. 17 D. Project Costs ........................................ 18 E. Financing ............................................ 19 F. Procurement ............................... 20 G. Disbursement .................. ,........ 20 IV. PROJECT IMPLEMENTATION .................... 22 A. Organization and Manapement ......................... 22 B. Training ............ ................................ 24 C. Input Supply System ................................. 25 D. Participating Institutions .......................... 25 E. Coordinating Committee .............................. 26 F. Lending Policies and Procedures ..................... 26 G. Accounts and Auditing ............................... 27 H. Monitoring and Evaluation ........................... 27 V. SPECIFICATIONS OF FARM MODELS ............................. 28 This report is based on the findings of an appraisal mission which visited Bolivia during October 1978. The mission comprised Messrs.,N.P. Sharma, J. Loup, C. Plaza, H. Wagner, E. von Loehneysen, Ms. de Regt (Bank) and Mr. R. Paraud (Consultant). 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 disciosed without Wor-ldBank authorization. - ii - TABLE OF CONTENTS (Continued) Page No. VI. PRODUCTION AND MARKETING .................................... 31 VII. FINANCIAL ANALYSIS .......................................... 33 VIII. ECONOMIC ANALYSIS ....... .............. ......................34 A. Benefits and Justífication ............................. 34 B. Fiscal Impact .......................................... 35 C. Economic Rate of Return and Sensítivíty .... ............35 D. Project Risk ... ....................................... 36 E. Environmental Impact ................................... 38 IX. SUMMARYOF AGREEMENTSREACHED AND RECOMMENDATION.... ........ 39 SCHEDULE A - Lending Procedures, Terms and Conditions, and Flow of Funds .............................. 42 Table 1 - Phasing of the Lending Program .... .............46 ANNEXES 1. Consultants' Terms of Reference ............................. 47 2. Farm Models ................................................. 48 T.1 Proposed Yearly Cropping Pattern ........... ........... 51 1.2 Farm Model 1 - Crops and Dairy Investment Costs ... .... 52 1.3 Farm Model 1 - Estimated Labor Budget .... .............53 T.4 Farm Model 1 - Cropping Pattern, Yields, Total Production, and Production Value .................... 54 T.5 Farm Model 1 - Crops Operating Costs .................. 55 T.6 Farm Model 1 - Herd Projection (Group of 40 Famiíles) . 56 T.7 Farm Model 1 - Dairy Production Projection .... ........ 57 T.8 Farm Model 1 - Dairy Production Value and Operating Costs ...............................................58 T.9 Farm Model 1 - Total Production Value and Operating Costs ........ ............... ........................59 T.10 Farm Model 1 - Financíal Analysis ..................... 60 T.11 Farm Model 2 - Crops and Sheep - Investment Costs ..... 61 T.12 Farm Model 2 - Estimated Labor Budget .... .............62 T.13 Farm Model 2 - Croppíng Pattern, Yields and Total Production .................. ..................63 T.14 Farm Model 2 - Crop Production Value .................. 64 T.15 Farm Model 2 - Crop Operating Costs ................... 65 T.16 Farm Model 2 - Flock Projection (Group of 40 Families) ...... .............. ....................66 - iii - TABLE OF CONTENTS (Continued) Page No. T.17 Farm Model 2 - Sheep Production Projection (Group of 40 FamiliLes) ............................ 67 T.18 Farm Model 2 - Crops and Sheep - Production Value and Operating Costs (Group of 40 Families) ..................... .................... 68 T.19 Farm Model 2 - Total Production Value and Operating Costs - .................................69 T.20 Farm Model 2 - Financial Analysis ......... .......... 70 T.21 Farm Model 3 - Crops and Alpaca - Investment Costs ... .........................................71 T.22 Farm Model 3 - Estimated Labor Budget ............... 72 T.23 Farm Model 3 - Cropping, Yields, Total Production .......................................73 T.24 Farm Model 3 - Crop Production Value ................ 74 T.25 Farm Model 3 - Crop Operating Costs ............... 75 T.26 Farm Model 3 - Herd Projection (Group of 40 Families) .......................................76 T.27 Farm Model 3 - Alpacia Production Projections (Group of 40 Families) .............. ...............77 T.28 Farm Model 3 - Alpaca Production Value and Operating Costs (Group of 40 Families) .... ......... 78 T.29 Farm Model 3 - Total Production Value and Operating Costs ...... .............................79 T.30 Farm Model 3 - Financial Analysis .................... 80 T.31 Farm Model 4 - Crops (3.5 ha) - Estimated Labor Budget ......................................81 T.32 Farm Model 4 - Cropping Pattern, Yields, Total Production, Production Value ............ .... 82 T.33 Farm Model 4 - Crops Operating Costs ................ 83 T.34 Farm Model 4 - Financial Analysis ......... .......... 84 T.35 Farm Model 5 - Crops, Estimated Labor Budg,et ........ 85 T.36 Farm Model 5 - Cropp,ing Pattern, Yields, Total Production, and Production Value ........ .... 86 T.37 Farm Model 5 - Operating Costs ........... ........... 87 T.38 Farm Model 5 - Finan,cial Analysis ......... .......... 88 T.39 Forestry Production Model - 1-ha Eucalyptus Plantation ........ ................................89 T.40 Cash Flow - 1-ha Eucalyptus Plantation .............. 90 3. Detailed Project Cost ...................................... 91 4. Related Documents and DataiAvailable in Project File ............................................... 92 MAP IBRD No. 14079 - Omasuyos - Los Andes Rural Development Project BOLIVIA OMASUYOS-LOS ANDES RURAL DEVELOPMENT PROJECT I. BACKGROUND A. Sector Characteristics and Recent Performance Agriculture in the Economy 1.01 Agriculture in Bolivia contributes 25% to GDP and provides employment for about 60% of the labor force. Until 1973, agricultural growth was low, increasing at an average annual rate of 1.9%; however, since 1973 growth rates have averaged 4 to 6% annually. In spite of some improvement in agricultural performance, agricultural production has not kept pace with domestic demand. Currently, the agricultural trade balance is negative and Bolivia has to import substantial volumes of agricu,lturalproducts, accounting for about 25% of total imports. Main imported iteimsare edible oils, lard, dairy products and wheat flour, many of which could be produced efficiently within Bolivia if improved technologies and appropriate incentives were introduced. Agricultural exports (sugar, coffee fruits and lumber) were relatively unimportant until 1970, accounting for less than 5% of total exports, but since then, with rapid
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