World Bank Document

~.f. REST F,IC T1D Report No. SAM: Ap-i1

Public Disclosure Authorized ThiRdot- hmben prepared for ASIAN DEVELOPMENT BANK IZ ive of the Eak.

APPRAISAL Public Disclosure Authorized

OFTHE

AGRICULTURAL DEVELOPMENT PROJECT

WESTERN SAMOA

Public Disclosure Authorized OCTOBER 1980AL

R Public Disclosure Authorized CURMNCGY EQZJIVALENTS WasUof 30 usie 1980)

GCarrency.-Unit Western Samoa Tala (WS$) i

WS$ l O0 - US$1. 1060 US$1. 00 , WS$,. 4

(a) Since 27 October 1975 the WS$ exchange rate has been determined daily on the basis of the weighted basket of currencies used by New*Zealand. The Western Samoa Tala was devalued by 15 per cent an 20 June 1979.

(b) For -purpose of calculations in the Appratisal Report, a rate of US$1 00 a WS$0. 9139 has been used.

WEIGHTS AND MEASURES

.1 acre * 0.405 hectares

1gallon 4. 546 litres

1 mile X 1.609 kilometres,

1 pound 0.454 kilograms

1 ton (2240 lbs.) . 1008 kilograms

1. board foot 1 piece of timber 12 inches by 12 inches by 1 inch

NOTES

-i) Throughout this report "1$"1 refers to U.S. Dollar.

(it) The Fiscal Year for the Government and WSTEC begins on I January. ABBREVIATIONS

ADAB - Australian Development Assistance Bureau

DBWS - Development Bank of Western Samoa

DOA - Department of Agriculture and Forests

FAO - Food and Agriculture Organization of the United Nations

-A- International Development Association

PFL - Pacific Forum Line

PW-D - Public Works Department

SPDC - Special Projects Development Corporation

SPDMIC - South Pacific Developing Member Country

UNDP - United Nations Development Program

USAID - United States Agency for International Dev,4lopment

USP - UMAversity of the South Pacific

WSTEC - Western Samoa Trust Estates Corporation PROJECT FOCUS, DESIGN AND RATIONALE.

Agriculture is the mainstay of the econory and comprises two distinct subsectors: the smallholder and commercial. The primary gal of national policy is to increase agricultural production both for domestic consumption and export. The purpose of the Project is to assist the Government in its efforts to increase agricultural production through a more efficient utiliz-ation of the country's resources, and to provide increased income and employment opportunities in the rural sector. The Project is designed to help the achievement of these objectives in both agricultural subsectors through the provision of agricultural inputs, infrastructure development and institution building.

2. . The Project ints will include assistance to WSTEC, the largest commercial organization: to replant 1,000 acres of senile coconuts and plant 1 000 acres of cocoa under coconuts; fertilize existing cocoa and coconut; provide infrastructure facilities such as roads, fences, transport, storage sheds, drinking water, . livestock equipment and pasture improvement for cattle; expand existing soap processing facilities; replace coffee processing facilities; improve and expand coconut stem utilization facilities; and provide consultants' services for institution building and project implementation. The smallholder subsector will benefit from the Project through inputs to. DOA which is wholly responsible for research and extension for this subsector, for improving its applied research capabilities and extension service at the field level. The Project will provide DOA with research facilities in the major agroecological regions; a national Agricultural Extension Center for in-service training; construction of 21 field extension centers and improvem'ent to two others; provision of transport facilities; consultants' services for strengthening staff capacity; and provision of training fellowships for Samoans in agricultural research and extension. The total cost of the Project is $10.8 million of which the foreign exchange cost is $7. 0 million and the Bank' s contribution $3. 0 million.

3. The incremental project outputs at full development on an annual basis are estimated at 1,100 tons of cocoa valued at $2.9 million; 1,400 tons of copra valued at $611, 000; 500 tons of laundry soap valued at $588, 000; 400 tons of toilet soap valued at $1, 310, 000; 400 tons of soap powder valued at $1.9 million; ,Z5O0, 000 board ft of exportable grade timber; 430,000 board ft of .&nce post rmaterials; 90-120 tons of fuelwood and 30-50 tons of charcoal from coconut ster utilization facilities valued at $170, 000; and beef production of 68 tons valu`d at $60, 000. The total incremental annual value of the WSTEC component at full development is estimated at $7. 5 million. The output from the smallholder subsector due to the Agricultural Resear.h and Extetision component, though not easily quantifiable, can be expected to be siubstantial, given the present low productivity in the agricultural sector. With regard to the assumgtions of the Project, besidles the standard provisions and requirements contained in the loan agreements of the Bank, specific assurances were obtained frorn the. Government (para. 134, Pages 41-42) to ensure the successful implementation of the Project: organization of executing agencies; expeditioous dlearance, of imported goods for the Project; position classification of the extension service; appointments to vacancies in technical positions at DOA; and continuation of the Project after the investment period. The achievements and progress of the Project will be monitored through the Bank's operational activities such as review missions, and also the project benefit monitoring envisaged under the Project.

4. The major economic risk associated with the Project relates to th4 World market prices for cocoa and coconuts which are the major outputs of the Project. This risk, however, has been minimized by interplanting cocoa with coconuts which are subject to different market conditions. An institutional risk associated with the Ag.ricultural Research and Extension Component is the capacity of DOA to attract and retain suitable staff for the implementation of the Pr,oject. TABLE OF CONTENTS

Page

MAP1 (ii) MAP2 (iii)

I. INTRODUCTION 1

II. BACKGROUND 3

A. General 3 B. The Agricultural Sector 3 C. Agricultural Products 4 D. Western Samoa Trust Estates Corporation 6 E. Agricultural Support Services 8 F. External Assistance to the Agricultural Sector 13

III. THE PROJECT 17

A. Objectives and Scope 17 B. Project Components 17 C. Details of Project Components 19 D. Project Costs 26 E. Financing Plan 28 F. Relending Arrangements with WSTEC 29 G. Environmental Impact 30

IV. PROJECT MANAGEMENT AND IMPLEMENTATION 31

A. Executing Agencies 31 B. Implementation Schedule 32 C. Procurement 32 D. Consultants 34 E. Accounts and Audit Reports 34 F. Project Benefit Monitoring System 34

V. PROJECT BENEFITS AND JUSTIFICATION 36

A. Benefits to the National Economy 36 B. Benefits to WSTEC 39 C. Social Impact of the Project 40

VI. CONCLUSIONS AND RECOMMENDATIONS 41

APPENDIXES 43 - gk

* ; t7 LOOFW MAP OF WESTERN 2 SAMOA

SAVAN'I ISLAND- Farmalo Satotu SOUTH FACIFIC OCEAN

FaloWupea'l -f0009

Mt. Silisili

SCAL-E 2 - , Mt.Mafne) - S 5 5 10 5 0 Miles _| ( Tuasivi

Palauli 1119 UPOLU ISLAND

L L. .1' r->>vs. 2 g--Alafua (USP)- : .w : .. t + - ; i¢LlWA. PIA,, tu

- ' ' - ~R oa ds ,< Falutasi It SigaeleEtQ !4FerrybLp

-i WSTEC. Estates S aXUteLBe y\- [,3 Government Land L NUULUA

- Freehold Land .

; ' Govrnment* , Land, . ' .- 'L'A

FreodLn 172'00'M1.r'

WESTERN SAMOA:' AGRICULTURAL DEVELoPMENT PROJECT:

Location of Project Activities WSTEC Component

FAILEATA

CASALA- COCONUT STEM UTILISATIoN

TUANA IMATO> V

FUGALEI. APIA FACTORY 3ILES

- L-TAFAIGATA 4000 H000 METER VAI PAPA

TAUSAG I

,4O' , S4A -D

- ~~~WSTECII1ESTATES ,.|

- WSTEC I ESTATES .-

17*;0'N . '

' 17z00'N.: ' 0' - ' 0 ' -' i ) 2 ' ' ' -~ ; '''-.. y' *' Io .1NTR22OgDU

A fonolbility o u y carried ovt in 1977 by FAO under a Bank technical gazzitanc- grant- examined the rehabilitation of Western Samoa Trust Jsmtates Corporration' s (WSTEC) 14 estates on Upolu Island in Western 3amoa. rollowing the receipt of the report, the Government of Western r!noa. and the Bank agreed that a phased rehabilitation of the estates would 'e more prudent and would not excessively tax the implefntenting capacity of WSTEC. In December 1977 the Bank approved a loanEL of $3. 0 million to Western Samoa for the rehabilitation of six WSTEC estates on Upolu Island.

2. In early 1979 the Government requested technical assistance to formulate a project for a second loan to WSTEC tp rehabilitate the other eight eatates. This was approved in October 19793-and three consultants were fielded in November 1979 to update certain aspects of the original feasibility study and to examine product processing in detail. In addition; in response to a request from the Government, the Bank provided two conanlotSs from the International Agricultural Development Service (IADXJ3Y-to examine the National Agricultural Research and Extension Services and to make recommendations for their improvement. A Project Formulation Mission dircussed the consultants' reports with the Government in November/December 1979 and these discussions led to an agreement about the scope of the Project discussed in ihs report.

3. An Appraisal Mission visited Western Samoa from 23 April to 13 May 1980 to appraise an Agricultural Development Project which was to comprise the rehabilitation of the other eight WSTEC E,(ftates and the streagthening of the Department of Agriculture and Forests' (DOA) Agricultural Research and Extension Services. The Mission comprised M. D. Bauche (Mission Chief), R. W. Arnison (Agronomist), N. Amerasinghe (Project Economist), 0. Gendrano (Forestry Specialist) and R. Keswani (Senior Counsel). This report is based on the original FAO feasibility study, the consultants' reports, findings of the Project Formulation

i/ T. A. No. 189: Agricultural Development Project.

~/ Lo,an No. 338-SAM(SF): WSTEC Agricultural Development Project.

#/ T. A. No. 308/79: WSTEC Agricultural Development Project II.

f/ IADS was commissioned by the Bank in March/April 1979 to conduct this study. Mission, field visits, and discussions the Appraisal Mission had with officials of the Government and the executing agencies. 4. After careful consideration by the Mission, some compo- keF* included in the original Government request were excluded from the Project, for the foll6wing reasons:

(i) Rehabilitation of WSTEC estates:

5. Only seven of the eight estates remaining on Upolu Island have been included in the Project. The Malalololei estate, consisting of some 85 acres, was inspected and it was found that because of its small size and the lack of land for expansion, the investment required could not be justified. As a result, the rehabilitation of the Malalololei estate has been excluded from the Project.

(ii) Agricultural Education:

6. The provision of agricultural education at the secondary school level was to have been included in the Project. However, subsequent to the Government's 2equest and before the Project appraised was there were certain changes in the field of agricultural education in Western Samoa. The Australian Government undertook to provide a comprehensive program on agricultural science to the Secondary Teacher's College, and is constructing an agricultural laboratory and developing field plots there. The Mission therefore decided to exclude this component from the Project. -3-

II. BACKGROUND

A. General

7. Western Samoa, which is located in the South Pacific, comprises two main islands, Upolu (1,065 sq.km.) and Savai'i(l, 735 sq.km.). Its total population is estimated at 155, 000, of which nearly 72 per cent live on Upolu. Natural population growth is entimated at 3.0 per cent per year during 1975-79, but emigiation, mainly to American Samoa and New Zealand, reduced the actual growth rate to less than 1 per cent per year during this period. The demand for additional employment opportunities is growing, particularly in the capital - Apia. q 5pss National Product (GNP) per capita was estimated at $350 in 1976.

B. The Agricultural Sector

8.. Agriculture is the mainstay of the economy and accounts for approximately 50 per cent of the GNP. More than two-thirds of the population depend upon agriculture, including forestry and fishing, for their livelihood. Agricultural products - copra, cocoa, bananas and taro - account for about 90 per cent of export earnings. Because of the importance of agriculture, the Government attaches considerable importance to improving its productivity, and gives high priority to agricultural and rural development. The current Five Year Plan (1980-84) places emphasis on projects capable of enhancing the productive base of the economy, increasing exports, creating import substitution industries, generating employment and diversifying the economy.

C- Of the total land area of 694, 000 acres, an estimated 170, 000 acres are now under cultivation. Most of the land (81 per cent) is. held by villages as customary land. The Gover ment holds 11 per cent; WSTEC, 4 per cent; and 4 per cent is freehold. 27/

AQ. The agricultural sector comprises two subsectors: the village or smallholder subsector and the-commercial subsector. It is dominated by the village or srnallholder subsector. The,.rur*i population of about 130, 000 lives in about 350 villages, which are located along the coast, and village

i/ World Bank estimates. No later estimate is available. i/ See Map 1 on page (ii). 4

lands stretch inland towards the central mountain areas, Agricultural production in the commercial sector is largely carried out by WSTEC, with a few isolated efforts by other agencies such as Government departments.

1L There is considerable scope for the development of the agricultural sector, and this could lead to-significant increases in export eariings and in savings of foreign exchange through import substitution. As many of the most suitable forms of agriculture are labor intensive, their development would create substantial employment opportunities. Further, in view of the limited natural resources in the country, any opportunities for industrialization would depend on raw materials produced in the agricultural sector.

12. The underlying duality in the scope for agricultural development is increasingly apparent. There is some potential in the village agriculture subsector for increasing production beyond broad subsistence requirements. WSTEC and other Government and private enterprises could, if reorganized and rehabilitated, increase commercial agricultural production to provide both short- and long-term benefits to the economy. The main thrust of the Fourth Development Plan (1980-84) is on village development, through the Rural Development Program of the Prime Minister's Department and through direct technical assistance to village producers. The WSTEC projects on Upolu and Savai'i will be the largest developments in the commercial agriculture sector and they will help that organization to eypend its contribution to national production, to provide a significant amount of additional employment, and to provide a model for further large scale development.

C. Agricultural Products

1. Coconuts

13. Coconut :.s the basis of the Western Samoan economy. It provides the largest tex-ort earnings (as copra) and is the foundation of the Samoan lifestyle, for i s used in cooking, for fuel and as building materials.

4.. The current area of productive coconuts is approximately 90, 000 acres and another 32, 000 acres are planted but have yet to come into bearing. Annual production is estimated to be around 30, 000 tons (copra equivalent). About one-third of this is used in fresh form for domestic consumption. During the period 1971-76, annual copra production ranged from 13, 000 to 19, 000 'cons.

IS. The current levels of productivity in the copra industry are low by world -standards, averaging about 700 lbs.of dry copra per acre. This is due to sevzral factors, such as senile plantations, poor cultural techniques, lack of fertilizer, failure to remove the old trees under which the new stand has been planted and failure to collect the crop on time. Many of these constraints could be removed through an effective extension service.

2. Cocoa

16. Cocoa, which is produced primarily for export, occupies about 12, 000 acres. Both production and yields have declined since the early 1950s, and total annual production is now about 1, 540 tons. This decline is attributed to poor agronomic management, low soil fertility, poor planting material, uneconomic small blocks and highly unstable prices. The revival of the smallholder cocoa industry will depend on an efficient extension service, an active research program to identify suitable high yielding varieties, and an efficient price stabilization scheme.

3. Taro

R17.. Taro is the staple in the Western Samoan diet. Annual per capita consumption is estimated at 365 pounds, which indicates an annual production of approximately 25, 000 tons, some of which is traded in the Apia market. There has been a growing overseas demand for taro in recent years. During the period 1975-1979, the quantity exported increased from 19, 853 cases to 130, 664 casesL/ and was an important foreign exchange earner. As a staple food crop and a relatively high priced, quick return cash crop, taro production is given high priority by farmers.

4. Bananas

48. Banana is another important source of food. Domestic consumption accounts for the major part of total production. From a peak export volume in 1969 of almost 16 million pounds, exports have fallen to less than 2. million pounds in recent years. This was a result of severe hurricane damage in 1966 and 1968 and the subsequent inability of the producers to re-establish their plantations and to control banana diseases. In addition, the lack of fertilizer to counteract the rapid depletion of soil fertility caused by the cultivation of bananas has led to lower yields.

1/ A case contains approximately 70 pouiids. 6-

5. Cattle

Western Samoa has an estimated 20, 000 head of cattle, of which about 8, 000 are owned by smallholders and 12, 000 by WSTEC. The :cattle are mainly Hereford crosses, and are acclimatized to local conditions. The Government wishes to expand the national herd so as to reduce the imports of meat.

D. Western Samoa Trust Estates Corporation

1. General

Zt0... The Western Samoa Trust Estates Corporation (WSTEC) owns 30, 000 acres, or 18 per cent of the country' s total cultivated area of 170, 000 acres, and is the largest enterprise in Western Samoa. It is wholly-owned by the Government and is headed by a Board of six directors, appointed by the Head of State, and is chaired by the Prime Minister. The administrative powers of the Board are delegated to a General Manager (GM).1/

2. Agricultural Enterprises

Z&. The Government regards WSTEC as the leader of the agriculture sector. It expects it to set the pace by developing and demonstrating pro- gressive crop asnd'animal husbandry practices. WSTEC's8major involvement is with plantations. It has 14 estates on Upolu containing approximately 20, 000 acres of plantation, and is develop;Pg about 10, 000 acres on Savai'i I3land with the assistance of an IDA creditS/

22. WSTEG cultivates about 10, 000 acres of coconut. All the area under coconut is either grazed or undercropped with cocoa or coffee. WSTEC has about 2,400 acres under cocoa cultivation, of which part is grown as a pure stand, with yields averaging about 300 pounds per acre.. However, the cocoa is generally senile, too thinly planted, and because sit is mostly grown without shade, suffers from over-exposure to sun. WSTEC grows. about 333 acres of coffee, of which 318 acres are of the poor quality, "li'bericall variety. The coffee is all-consumed in Western Samoa. The ne.ct most important WSTEC enterprise to coconut is cattle.

%/ The organization of WSTEC is given in Appendix 1. / IDA credit No. 951 WSO,'1979. -7..

The total cattle population on WSTEC properties is about 12, 000 head, which comprises 60 per cent of the national herd. The e"tates used for cattle grazing need drinking water supplies,. -pasture improvement and fencing. .eneral stock ma-nagement also needs improvement.

3. Non-Ar ral Enterprises

23. The non-agricultural enterprises of WSTEC include a soap factory, a coconut stem utilization plant, a retail store, a service station and an engineering shop. Whilst the soap factory is essentially export oriented, the other facilities serve WSTEC and the general public. From an organizational point of view, these activities are contained in a separate administrative unit and do not conflict with the agricultural enterprises. Opportunities for increasing revenues and profit margins for the corporation by the manufacture of soap and thr processing of coconut-wood by- products were studied by consultants.!/ The recommendations made to expand these facilities have been adopted and appropriate provisions have been made in the Project.

4. Marketing

24.. WSTEC utilizes the services of the Copra Board, Cocoa Board, Banana Board and the Produce Marketing Board to market its -produce. It also markets some cocoa directly through brokerage houses in London, New York, Auckland and Sydney, and so frequently secures a higher price for its better quality produce than does the Cocoa Board for the lower quality smallholder cocoa. Cattle are slaughtered at its own abbatoir, and the meat is sold on the domestic market through the Corporation's own retail points and other retail traders. WSTEC' s meat processing and marketing facilities in Apia are also used to market pork and pork products such as bacon and ham.

5. Financial Position and Performance

S5 Income Statements and Balance Sheets for 1973-1978 are presented in Appendix 2. (The audited financial statements for 1979 were not available at the time of appraisal). The main aspects of WSTEC' s operation and performance over-these years are as follows:

(i) WSTEC has generated significant profits each year during this period and now has a net annual profit

j/ T.A. No. 308/79: WSTEC Agricultural Development Project II. of .abou2."', 1r .0 =Dmillion;

(ii) Net profit before tax expressed as a return on total capit3- employed ranged from a low of 3. 6 per cent in L973 to 20. 2 per cent in 1977, the year in which cocoa prices reached a peak;

(iii) The increase in total assets from WS$3. 0 million to WS$6. 5 has been financed primarily from retained earnings, resulting from corresponding increases in production and revenue during these years;

(iv) WSTEC's capital structure is basically sound, however, in recent years its liquidity position has weakened as itundertook new development projects on Upolu and Savai'i, without immediate cash returns. The liquidity position is not likely to improve until the impact of these projects is translated into increased yields and earnings. The current ratio over the period varies from a high of 16:1 in 1976 to a low of 1.8:1 in 1978; and

(v) The WSTEC management recognizes that it needs assistance to develop its long-term financial planning, budgeting, treasury and cash management functions. WSTEC requested that a suitable consultant should be provided under the Project and the Mission considers this is imperative to ensure the success of WSTEC's new development projects on both Upolu and Savai' i;

E. Agricultural Surport Services

26. The Department of Agriculturelynd Forests (DOA) is under the control of the Minister of Agriculture. _ The DOA, which is mainly responsible for resea. ch and extension to the smallholder sector, receives priority in developmen, expenditure for the Government is convinced that the development of land holds the greatest potential for the future. How- ever, the level of achievement in the agricultural sector has been dis- appointing. ! This poor performance can be attributed mainly to a shortagt

1J See Appendix 3 for the Organization Chart of the Department of Agriculture.

A! The 1980 Budget Statement, Government of Western Samoa, Minister of Finance, November 1979, p. 14. -9

of trained scientific staff and appropriate back-up facilities for research and extension.

1. Research

27. The DOA was reorganized tvo years ago and the new organizational structure appears satisfactory. The position of Assistant Director - Research and Technical Services has been established but remains vacant. The College of Agriculture at Alafua was the research arm of DOA until 1977 when the College became the School of Agriculture of the University of the South Pacific and its emphasis was changed from providing the entire natioxnal research effort to regional needs, thereby reducing the benefits derived up to that time by Western Samoa.

28. The main shortcomings of the Research and Technical Services Division! of DOA are the lack of trained personnel and the lack of coordination of research activities. There are few Samoan's trained in agricultural science and most of their activities have been directed to non- research matters, such as plant propagation, plant protection and Lr -leasing livestock breeding stock to farmers. The need for some expatriate staff over the next five to ten yeyr is clear because of the shortage of Samoans with the requisite training.-

29. Research has been conducted hitherto on an ad hoc basis with no coordination between projects. There is no focus on adaptive research and consequenJly there are weaknesses in the extension service. Several bilateral agencies and UNDP have established support programs for DOA in agronomy, plant protection and livestock husbandry. The facilities established under these programs at Nu'u, together with the research facilities provided to WSTEC under the Banlc loanlZ at the same location, have been largely used for annual crops research work. The Mission believes that research into annual crops should be strengthened; meaning- ful research on perennial crops should be initiated; and opportunities for scientists to conduct adaptive research in different agroclimatic regions of the two islands should be provided.

j See Appendix 3, page 2 for the Organization Chart of the Research and Technical Services Division. i/ Loan Agreement, Schedule 5, para. 4. j/ Loan No. 338-SAM(SF): WSTEC Agricultural Development Project. 10o

2. Extension

30. The Agricultural Extensoion Division is the principal field arm of DOA, and is responsible for direct contact with farm families. The organization and staffing of the Dlivision (see Appendix 3, page 3) was recently reorganized, particularly at the Agricultural Officer (AO)level, to decentralize supervision and management. If fully staffed, the division would have 31 field assistants (FA's) and ten district field officers (DrO' s). At present, 12 posts at different levels of the extension service are unfilled.

31. Both within and outside DOA, the Agricultural Extension Division is reported to be the weakest division in the department. Observations on field visits and interviews bear out this assessment. The division-does not currently have a program or professional staff capable of mounting an extension program designed to modernize agriculture.

32. Research, the results of which benefit farmers, particularly smalholders, is fragmentary and falls short of critical needs. In short, research and extension are inadequately planned and coordinated. Attempts to influence the farmers to adopt improved, income-increasing practices are disjointed. The extension agent often selects parts of a package of prLctices though the benefits can be derived only from the ful. package.

33. The DOA has difficulty in recruiting qualified staff for extension and research due to the unattraitive terms of service relative to other agricultural sector employers.-' Only two or three persons have had any formal training in extension methodology. With very few exceptions, extension staff have only received a primary school education. There is a lack of facilities for in-service training for field staff which exacerbates the problem of staff quality. Further, a lack of transportation and housing have become major constraints to pro4Viding an effective service.

3. Education

24. Agricultural education is provided at two levels in Western ,c moa, at the junior secondary high school level, and at the university level, through the School of Agriculture of the University of South Pacific (USP), which is located at Alafua on the outskirts of Apia. USAID is providing financial assistance to ttie School of Agriculture of USP for it:- regional training needs. The Australian Government has provided facilities at the Secondary Teacher's College to train teachers in agricultural science. A comprehensive program has been drawn up; an agricultural laboratory is being constructed; and field plots are being developed under the Australian Aid Program. An appropriate junior secondary high school curriculum based on Samoan conditions is also d/ Loan Agreement, Schedule 6, para. 7. being developed. Some schools already have facilities for practical work, and with additional assistance, all schools could be provided vi th the necessary facilities.

35. The USP' s School of Agriculture has been offering a three-year course leading to a diploma for some years, and in 1977 it began offering a degree course in agriculture. Teachers are recruited from all over the Pacific area and their performance has been gernerally good, although their usefulness is limited by their very short assignments. At presqnt about 30 people receive diplomas or degrees each year, about 50 per cent of them are Samoans.

4. Credit

36. The Development Bank of Western Samoa (DBWS), which was set up in 1974 with Bank assistance!!, is the only development financing institution in the country. The Bank has been the largest single sourccp of funds for DBWS, and has so far provided loa:-is totalling $8. 0 million' 4 and two technical assistance grants.

37. The type of guarantee required for loans is determined by tke size of the loan and the purpose for which it is obtained. Interest rates range from 8 to 10 per cent for agricultural loans, and 9 to 12 per cent for industrial loans. In the first five years of its operations, about 62 per cent of DBWS' s total lending (WS$13. 4 million) has been for agriculture, mainly to smallholder farmers. About 90 per cent of these agricultural loans were for less than WS$500, and they represent 43. 7 per cent of the total amount of agricultural loans.

:38. DBWS is participating in the village development program, which is the most important rural development project in the country. This program is designed to foster agricultural development at the village level and is financed 60 per cent by government grant, 35 per cent loan from

Sj T. A. No. 80-SAM, 11 January 1973 i/ Loan No. 218-SAM(SF), 18 March 1975; Loan No. 287-SAM(SF), 21 December 1976; and Loan No. 366-SAM(SF), 21 November 1978.

.t/ T. A. No. 137-SAM, 18 March 1975 and T. A. No. 185-SAM, 16 December 1976. - 12 -

DBWS and 5 per cent by the village. DBWS is at present emphauizing short-term agricultural lending for annual crops to improve its liquidity position and to bring about more rapid improvement in rural areas.

5. Input Supplies

39. The Agriculture Store, which was set up in 1975, is the national agency for inaporting and distributing all agricultural inputs. The store is managed by a Board chaired by the Minister of Agriculture and is operated as a non-profit organization. Its main facilities are in Apia, but its facilities at Salelologa on Savai'i are being substantially expanded. The Agriculture Store provides physical inputs, such as fertilizer, chemicals and small farm implements at subsidized prices to the smallholder farmers. Sales amounted to WS$1. 05 million in 1979, but the store is handicapped by inexperienced management and irregular shipping services. Recent bilateral aid support is expected to improve the efficiency of the Agriculture Store.

6. MBrketing Agencies

40. The marketing of copra, cocoa and bananas is handled by specialized boards managed by interministerial committees. The marketing of other agricultural crops (mostly taro) is handled by the Produce Marketing Division of the Department of Economic Development. The Copra Board, which was established in 1948, and the Cocoa Board, which was inaugurated in 1972, act as the final buyer for copra and cocoa, which are subsequently exported. At each point along the chain of delivc fy, the Boards determine, on the basis of prevailing world prices, the pricesto be paid to the producers or agents. With the commissioning of the oconut Oil Mill, which is being constructed with Bank assistance , the Copra Bo4yl will cease to be an exporter of copra and will instead sell directly Jto Samoa Coconut Products Ltd., which will operate the Mill and export the oil.

41. The Banana Board, which was established in 1976, is responsible for the collection and transport of bananas from the grower to the wharf in Apia for export. It provides all cases and packing materials as well as haulage, handling and inspection. The Produce Marketing Division exports all items which are not covered by the marketing, boards. These include taro, taamu, fresh coconuts, fruitsi and proceseed produce. j Loan No. 328-SAM(SF): Coconut Oil Mill Project. i/ The Copra Board's selling price to Samoa Coconut Products Ltd. will be based on the fob Apia copra price (Loan Agreement No. 328-SAM(SF), Schedule 6, para. 3) which is consistent with the current method of determining prices paid to copra producers. - 13 -

42, The inefficiency and high cost of transportation affect the supply of inputs and marketing. The demand for efficient transportation will increase in response to increased agricultural exports. An important recent development has been the establishment of the Pacific Forum Line (PFL), a skhipping concern owned by the governments of New Zealand, Western Samoa and other Pacific Islands. PFL has two ships in operation, which have substantially expanded transport capacity, improved transport schedules and lowered transportation costs, by introducing competitive rates. PFL will be a vital element in Western Samoa's agricultural development.

7. Road Infrastructure

43. A satisfactory basic road network exists on both Upolu and Savaili. Roads are built and improved by the Special Projects Development Corporation (SPDC) and maintained by the Public Works Department (PWD). SPDC is an autonomous public entity established in 1974 to handle all road building and improvements and is not restricted by civil service regulations. SPDC has performed well since its inception. PWD' s road maintenance, however, is not satisfactory and a major effort is required to plan, organize and fund a road maintenance program. PWD has started receiving technical and financial aid from bilateral sources and this should help it to improve its performance.

F. External Assistance to the Agricultural Sector

44. The following are the main ongoing projects and programs in the Agricultural Sector being implemented with assistance from multi- lateral and bilateral sources:

(i) Asian Development Bank!/

45. In December 1977 the Bank approved a loan for $3. 0 million to Western Samoa for the rehabilitation of six WSTEC estates on Upolu. The main components of the Project included the improvement of infrastructure and management practices; establishment of an agricultural research station;

4/ W5TEC Agricultural Development Project - Loan 338-SAM(SF), 1977; Coconut Oil Mill Project - Loan 328-SAM(SF), 1977; Development Bank of Western Samoa T.A. 80-SAM 1973, Loan 218-SAM(SF) 1975, T.JA. 137-SAM 1975, T.A. 185-SAM'1976, Loan 287-SAv(SF) 1976, Loan 366-SAM(SF) 1978. 14 -

machinery for road improvement and maintenance; provision of necessary product processing facilities for cocoa and copra; assistance for project implementation, operation and maintenance; and provision of fellowships for overseas training of local staff.

46. To improie the foreign exchange earning, capacity of the coconut industry, the Bank approved a loan of $2. 2S million in December 1977 for the establishment of a copra crushing mill for coconut oil production.

01.s The Development Bank of Western Samoa set up with Bank assistance in 1974 is the only development financing agency in the country. Agricultural lending has been a major activity of DBWS, accounting for about 62 per cent of the total loans.

(ii) The World Bank

46. In 1979 the World Bank approved $8. 0 million under an IDA creditY/ for the development of WSTEC estates on Savai'i. The total cost of the project is $20. 5 million, the foreign exchange cost component being $13. 7 million. Co-financing for the Project will be provided by the Australian Government ($5.4 million), UNDP ($1. 7 million), Japanese Government ($1. 4 million) and EEC Special Fund ($0. 3 million).

The Project consists of investments in nurseries, imported improved planting material, and field development of about 2, 400 acres of coconuts, 2, 130 acres of cocoa and 200 acres of coffee in four WSTEC estates and selected villages on Savai'i; technical assistance for the above crops and for agricultural diversification in the WSTEC estates and selected villages; taro marketing by WSTEC on behalf of villages; estate road construction and development; and project administration,

(iii) FAO/UNDP - Animal Health and Production Project

50. This five-year Project commenced in 1977, its objectives are to expand animal health services; continue applied research in pastures and livestock production; provide technical support to government, commercial and rural sector livestock production projects; and provide training for professional and technical staff.

.1/ IDA Credit No. 951 WSO, 1979. (iv) FAO/DP Coc rid Seed Production and Plant Protection

11. The Plant Protection Project, which was approved in 1977, provides .for plant protection services, including a laboratory, insectary and plant house complex to be established at Nu'u Agricultural Research Station. Advice is being provided on quarantine development, and a post-entry quarantine house, mist propagator unit and wharfside incinerator and fumigation facilities will also be constructed. A 45-acre coconut seed garden of dwarf mother palms has been establinhed under the Program to provide hybrid seed nuts.

(v) Australian Aid

52. The Australian Government has a ten-year agreement with the Government of Western Samoa to undertake research and provide extension services for the production and processing of cocoa. Under this agreement a well-equipped laboratory, plant propagation unit, office accOmmodation and two staff houses at the Nu'u Agricultural Research Station have been cors tructe4 and two Australian experts are at present engaged in cocoa research and extension work. The team is to be expanded in the near future.

53. Australian aid has also been p,r ovided to DBWS for the provision of beef cattle; for agricultural education , and to support the FAO Plant Protection Project, through the provision of an additional post-entry quarantine house to facilitate increased imports of Amelonado cocoa and Robusta coffee for WSTEC and DOA.

(vi) Federal Republic of Germany - Plant Protection Project

54. The Federal Repu)blic of Germany has provided technical assistance for plant protection. A three-man team, comprising an entomologist and two pathologists, is working at the USP's School of Agriculture until laboratory facilities at Nu'u Agricultural Research Station are completed. An agricultuiral complex at Salelologa on Savai'i, including facilities for plant protection and extension, is also being built.

j/ See paras. 6 and 34. (vii) New Zealand Bilateral Aid Program

55. The New Zealand Bilateral Aid Program has provided technical and material support for a range of agricultural sector projects during the past 4 to 5 years. These include the WSTEC Feed Mill, USP' s School of Agriculture Pig and Poultry Units, Agricultural Store Warehouse, DOA livestock project, agricultural engineeririg and food processing. In addition, funds have been provided for the Government' s capital input into the Development Bank and for the Rural Development Program. - 17 -

III. THE PROJECT

A. and Scope

56. The overall aim of the Project is to assist the Government in its efforts to increase agricultural production, export earnings and save foreign exchange through a more efficient utilization of its existing resources and to provide better income and employment opportunities in the rural sector. The Project is designed to help achieve these objectives through: (i) providing assistance to WSTEC for the rehabilitation and development of seven of its estates, the expansion of its processing facilities, and the improvement of its management system; (ii) providing assistance to DOA for the provision of-facilities and expertise to strengthen its research capabilities and improve the quality of its extension services, This is in line with the strategy for SPDMCs . indicated in the South Pacific Agricultural Survey undertaken by the Bank in 19791~which emphasizes, among others, support for the smallholders through the strengthening of agricultural research, qxtension and management training to increase smallholder incomes.

B. Project Components

57, PartA of the Project comprises assistance to WSTEC and hias the following components:

(i) replanting 1, 000 acres of senile coconuts on one estate and planting 1, 000 acres of cocoa under coconut on four estates;

(ii) rehabilitation of seven estates by introducing a fertilizer application program to existing cocoa and coconuts to

4/ SJuth Pacific Agriculture: Choices and Constraints (South Pacific Agricultural Survey 1979), Australian National University Press, 1980.

4/ Bank Operations in the Agricultural Sector in the South Pacific - Working Paper 2-80, Asian Developmert Bank, 20 May 1980. - 18 -

improve yields and by providing infrastructure facilities such as roads, fences, transport, storage sheds, drinking water, livestock equipment and pasture improvement for cattle;

(iii) expansion of the existing soap processing facilities; replacement of the coffee processing facilities; improvement and expanaion of the coconut stem utilization facilities; and

(iv) provision of 108 manmonths of consultants' services for institution building and project implementation.

58. Part B of the Project comprises assistance to DOA to improve its agricultural research and extenision programs and has the following components:

(i) establishment of a research facilities network based on the counLryl s major agroecological regions and the strengthening of support facilities for the crop experimentation centers on Upolu and Savai'i, as necessary;

(ii) establishment of a National Agricultural Extension Center, including training and dormitory facilities and housing for research and extension personnel at Nutu;

(iii) construction of 21 Field Extension Centers and improvements to two existing Field Extension Centers;

(iv) provision of transport anad other support facilities for the extension service;

(v) provision of 120 manmoniths of consult'ants' services for strengthening agricultural researc-h and extension; and

(vi) provision of fellowships for the overseas training of local research and extension staff (`135 manmonths).

2/ Current WSTEC yields of copra and cocoa are approximately.800 pounds/acre and 300 pounds/acre respectively. Estimated yields at full development are expected to increase to 1, 500 pounds/acre and 480 pounds/acre respectively. See Appendix 13, pages 2 to 5, Tables 1 to 4 for estimated yields. - 19 -

C. Details of Project Components

Part A : WSTECi/

1. Coconut Replanting

59. There are approximately 5, 000 acres of coconuts on the seven estates. It is proposed to replant 1, 000 acres of the oldest palms and to provide fertilizer for an additional 3, 750 acres.

60.- Selected seeds from Samoan tails will be used for replanting 1,000 acres of coconuts at Vaipap, at a rate of 200 acres per year, over a period of five years. Seedlings-' will be, planted under aged palms and unproductive palms will be selectively thinned as the young palms begin to produce. (The aged palms will be completely ±emoved over four years..) This procedure will minimize the adverse effects on production, and hence income from the estates.

2. Cocoa Planting

61 There are approximately 2, 000 acres of cocoa on the seven estatesa/ proposed for rehabilitation. About 1, 775 acres are. suitable for fertilizing. The remainder are too sparse, too old and too diseased.

6Z. Cocoa production on the estates has declined over the past few years. Though the decline has been checked through improved management practicer, it is extremely important for WSTEC to begin replanting. At the same time, the productive capacity of the present cocoa stands need to be maintained so as not to affect WSTEC's income. It is, therefore, proposed that 1, 000 acres of cocoa be planted under younger (maximum 30 years) coconut palms on Vaipapa, Tausagi, Faleata and Casala estates and all existing cocoa considered worthwhile should be fertilV'ed to increase i/ See Map 2 on page (iii) for location of WSTEC estates and Appendix 5 for facilities to be provided for the estates.

&/ See Appendix 4 for the Land Use Pattern of Seven Estates.

%/ A polybag nursery has already been established. - 20 -

the income from the present stands of cocoa until they are replanted.

63. It is proposed to use Amelonado seed imported from the Solomon Islands, for planting. (Amelonado has proven high yielding properties and higher Phytophthora [black pod] resistance. ) The DOA has established quarantine facilities which will have sufficient capacity to handle WSTEC' s requirements.

64. The replanting program entails thie establishment of a cocoa nursery (the present nursery at Tuana'imato has to be moved to make way for the new cocoa factory under the first project), windbreaks where necessary, fencing and road improvement.

3. Cattle

65. Cattle are at presert grazed on Vaipapa, Tausagi and Faleata estates. This helps control grass and weed growth among the coconuts and provides income for WSTEC. The water supply on those estates is inadequate and the handling facilities and pasture need improvement. There is considerable scope on sections of Faleata (490 acres) and Vaipapa (300 acres) to improve the pasture, to provide water for cattle, and allow for fattening of young stock for slaughter.

66. Under the first project, cattle management on WSTEC estates improved considerably, but the fattening areas for young stock need to be increased. This c n. be done by providing improved pasture, water and handling facilities.1' Under the Project, 790 acres of pasture on Vaipapa and Faleata will be improved by fertilizing and by planting selected pasture species; drinking water will be provided by tapping existing bores and reticulating water to troughs in paddocks; and handling facilities will be improved by providing weighing scales, cattle crushes, special cattle trucks, It,:. These additions will considerably increase the carrying capacity and the number of steers and heifers that can be fattened on these estates.

j/ The Mission has taken into consideration the findings and recommendations of the Project Performance Audit Report (PE-27[AU]L68-SAM) on the Beef Cattle Pilot Project - Loan No. 68-SAM(SF), approved 29 May 1971.

Acres per livestock unit.

2/ See Appendix 13, page 6, for increases in carrying capacity. 4. Estate Rehabilitation

67. The Mission considers that fertilizer application is an integral- part of the estate rehabilitation .program. The Government has given an assurance th , the fertilizer application program will be continued after the Project.

68. Upgrading of existing buildings and the construction of additional structures (such as housing, offices and stores, copra and tractor sheds) will be provided at each estate, as necessary. Eleven miles of new roads will be constructed and 38 miles of existing roads will be up- graded. Twenty miles of new fencing will be erected and 68 miles will be refenced. A total of 16 vehicles (trucks and pick-ups) and six tractors are to be provided. A water supply for domestic use is also to be provided. 5. General Support Facilities

6.9. The increase in production of cocoa and copra will necessitate the construction of cocoa and copra stores at Apia. The new copra store is also needed for the coconut oil mill, which is being constructed. These stores will be built on land WSTEC is now reclaiming for a general central complex at Fugalei in Apia.

6. Soap Processing Facilities

70. The proposed expansion of the soap factory is designed to: (i) increase the production of laundry soap from about 1, 000 tons to 1, 500 tons per annum; (ii) increase the production of toilet soap from about 100 tons to 400 tons per annum; and (iii) to introduce the production of soap powder to a capacity of 400 tons per annum. 71. The existing soap processing facilities were built in 1966. The original capacity of the plant was 500 tons per annum on the basis of one eight-hour shift per day. As demand grew, the capacity was increased by operating three shifts per day and production now stands at about 1, 000 tons per annum. Toilet soap production was introduced in 1967 and some 30 to 40 tons have been produced each year.

;/ Loan Agreement, Schedule 6, para. 3. 8/See AVptbndix 5 fibr fvilities to be provided at each estate. Set j Appen4ix 5-,. 'p4ge 4-5, for faciliWiet to be provided for th So4 Processing P'acilities. i2. The factory produces its own coconut oil by means of an ex- peller. Surplus quantities of coconut oil are exported. With its present capacity of about 1, 000 tons per year, the soap factory has reached its maxinaum capacity, as production is dependent upon the steam boiler capacity, soap pans, pumps, tanks and vacuum plodder. Most of the existing machinery is in urgent need of repair.

73. The equipment and machinery for the expansionr will be modern, but not automated to the extent that would make it susceptible to production losses because of minor technical breakdowns. Parts of the old plant will be integrated into the new production lines. While the new facilities are being installed, the existing production lines can continue operating so there will be no loss in production or revenue during installation of the new plant.

74. The equipment and machinery to be provided for the production of laundry soap will have a greater capacity and will also allow soap powders and detergents to be produced on the same line.

7?. The proposed new toilet soap line is planned to meet an ever- increasing demand for better toilet soap with an increased content of coconut oil. WSTEC have sold toilet soap in Hawaii, Australia and New Zealand. With an improved product that meets the quality requirement of these markets, a large export potential is foreseen. By the same token, local demand should rise dramatically due to the recent import restrictions introduced by the Government. It is proposed gradually to increase production of toilet soap to a maximum of 400 tons per annum.

7*. A completely new line is proposed for the manufacture.of soap powder and detergents. In Western Samoa, there is an increasing demand for soap powder products. At present, soap powder is being imported frorn Fiji, Australia, Great Britain and New Zealand. The proposed production of soap powders and detergents will be done by means of a Spray Mixing Plant. A maximum capacity of 400 tons per annum from the new line is proposed. In addition, the laundry soap line could be converted also to produce soap powder and detergents as demand dictates,

7. Coconut Stem Utilization Facilities}

MI-7. The proposed expansion of the sawing facilities and the pressure treatment plant will enable the processing of coconut stems that will be j/ See AppendixS, .'page ,5, -Ir .1acilities to. be provided Ior tbe Cbcondt Stem Utlivtion Facilities. - 23 -

felled from the coconut thinning program (see paragraph 60). The mill will be capable of producing each year about 250, 000 board feet of lumber, of which half would be exportable, and 430, 000 board feet would be fence post materials. It will produce as a by-product 90-120 tons of fuelwood from lumber slabs and trimmings, and 30-50 tons of charcoal.

78. Equipment to be provided under the Project includes a circular headrig, which will break the coconut log for further cutting on the present benchsaw; a rail-mounted log carriage; a log truck equipped with a crane and winch; a delivery truck; chainsaws; as well as spares and accessories. The existing pressure treatment plant and benchsaw will be rehabilitated. A building to house the headrig and complementary equipment, a sawshop and a fungicide treatment vat will be constructed. The present mill site at Vaitele will also be improved to facilitate operations, particularly during the wet season.

8. Replacement of Coffee Processing Facilities

79. The existing coffee hullers at Tuana'imato, which are housed in the old cocoa factory, are obsolete and need to be replaced. Under the proposed Project, a new coffee huller and tower drier are to be installed in the new cocoa factory now being erected at Tuana'imato. They will have a capacity of 150 tons of parchment, which will be adequate to handle current and-1 planned coffee production.

9. Consultants' Services /

80. Large new development activities on Upolu and Savai'i are to be undertaken by WSTEC with external assistance over the next-five years. Certain areas of WSTEC' s management will therefore need to be strengthened and the proposed Project provides for a total of 108 manmonths of consultants services. These consultants will undertake certain specific tasks and will also give on-the-job training to their counterparts and other local staff.

81. The consultants for institution building will have expertise in the fields of financial controllership (24 manmonths) and general plantation administration (24 manmonths). Three consultants with experience in cocoa estate management (24 manmonths), coconut estate management (24 manmonths) and sawmill management (12 manmonths) are proposed

i/ See Appendix 6 for the Terms of Reference of the Consultants. -24

to assist with the expeditious and efficient implementation of the Project.

Part B: Department of Agriculture and Forests

82. This part of the Project provides facilitiesi/and expertise to strengthen the country's agricultural research capabilities and to improve its agricultural extension services on both Upolu and Savai'i Islands. components are: Its

Agricultural Research

1. Crop Experimentation Centers

83. Western Samoa has two main agroecological zones: a wet zone and a dry zone. With the setting up of the Central Agricultural Research Station at Nu'u through assistance from the Australian and West German Governments and the research facilities provided to WSTEC under a previous project, the country will have adequate facilities for research into dry zone agriculture. However, facilities need to be provided for the scientists working at the Nu'u Agricultural Research Station so they conduct field can experiments at other sites. The Project therefore for the strengthening provides of facilities for adaptive research and for demonstration plots at the crop experimentation centers at Togitogiga on Upolu, and at Asau on Savairi. The research activities to be provided under this Project will complement and not duplicate any efforts now being undertaken by DOA, WSTEC or any bilateral aid agencies and are directed to the national since the regional needs, requirements are being met by the School of Agriculture of USP at Alafua.

2. Consiultants' Services.i/

84. A team of two agronomists with experience in applied research will be provided to spearhead a program of accelerated agricultural development. At present, the only concerted research work is in relation to but there is cocoa, an urgent need to undertake research work on agronomic practices for coffee.

j/ See Appendix 5, page. 6,, fox facilities to be provided for Agricultural Research and Extension.

&/ See Appendix 6 for the Terms of Reference of the Consultants. - 25

85. A Tree Crop Agronomist is to be provided for 36 manmonths to undertake research into coffee and to investigate the potential for other crops such as rubber, palm oil and spices and a Banana Agronomist is to be provided for 36 manmonths t conduct agronomic investigations on bananas and other fruit crops.

Extension Services

1. National Extension Training Center

86. An extension training center, including dormitory facilities for 25 people and housing for the Extension Program Organizer, is to be provided at the Nu'u Agricultural Research Station. Short term in-service training programs covering modern farm production and processing techniques will be conducted for field extension workers, agricultu'ral officers and key farmers.

2. Field Extension Centers~/

87. There are 30 extension districts, each covering about 700 farm famiilies, but only nine hav.e "Extension Stations" (i.e., office, store, house and demonstration plot) and only seven have adequate facilities. The extension officers serving 21 districts do not have a base and often have to live outside their districts. This is obviously unsatisfactory and the problem is exacerbated because transport is not provided for these officers. It is therefore proposed to construct 21 new extension centers, to upgrade the facilities of two centers, and to provide transport facilities so as to improve the agricultural extension service. . C/ 3. Consultant Services

88'. The extension staff is poorly trained and its management needs improvement. An Extension Program Organizer is therefore to be provided for 48 manmonths to conduct suitable training programs and to orientate

1/ There is at present a lack of information available on basic agronomic practices relating to bananas.

2/ See Appendix 7 showing the location of existing and proposed field extension centers.

3/ See Appendix 6 for the Terms of Reference of the Consultants. - z6

the activities of this essential agricultural development support service to farmer edcation. An extension system based on the "training and visit sy.stem"-' where the scope of the training and interaction with farmers would be continuous and carried out over specific periods of time will be introduced.

4. Training - FellowshiRs

89. Because of the shortage of trained research and extension staff, overseas training is to be provided for local staff. Provision of 120 manmonths of training at various suitable levels in fields not available at USP are to be provided under the Project. Fifteen manmonths of short-term research and extension training at appropriate locations, depending on specific needs, are also to be provided. The Consultants for the Research/ Extension component will be expected to make recommendations about the type of training and its duration and to supplement overseas training. The consultants would be required to provide substantial on-the-job training to staff as appropriate.

D. Project Costs

The total cost of the P oject, including provisions for physical contingency and price escalation. /, is estimated at $10.8 million, of which $7. 0 million represents foreign exchange costs and $3.8 million local currency costs. Details of the cost estimates of the Project are given in Appendix 8 and summarized in Table 1.

i/ Agricultural Extension: The Training and Visit System, Daniel Benor and Jamep Q. Harrison, World Bank, May 1977.

~/ See Appendix 13, page 31 for contingency factors used. - 27 -

- Estimtedroect Costs ($'000) Foreign Local Total PART A: WSTEC I. Facilities by Estate 661 Vaipapa 275 386 255 Tausagi 120 135 313 Faleata 152 161 189 Casala 91 98 287 Tuana' imato 164 123 90 Lesea 36 54 163 Tafaigata .84 74 1, 958 Sub-total I 922 1, 036 84 240 II. WSTEC Overall 156 829 III. Soap Processing 765 64 154 IV. Coconut Stem Utilization 127 27 Planting Cocoa 257 278 535 V. 908 VI. Fertilizer 669 239 21 217 VII. Water Supply 196 569 VIII. Consultants 478 91 Sub-total (I-VIII) 3, 570 1, 840 5, 410 626 Physical Contingencies 385 241 Price Escalation 1, 045 685 1, 730 TOTAL - PARTA 5, 000 2, 766 7,766

PART B AGRICULTURAL RESEARCH AND EXTENSION 717 I. Civil Works 381 336 9 94 II. Vehicles 85 4 71 III. Machinery & Equipment 67 79 199 IV. Operations & Maintenance 120 273 930 V. Consultants 657 VI. Overseas Training 164 Fellowships 164 - Sub-total (I-VI) 1,474 701 2, 175 317 Physical Contingencies 177 140 530 Price Escalation 349 181 TOTAL - PART B 2,000 1,022 3,022

3, 788 LO, 788 TOTAL PROJECT COSTS (A ' B) 7, 000 - 28

E. Financing Plan

91. It is proposed that the Bank finance $3.0 million apd the Australian Development Assistance Bureau (ADAB) and IDA22 each $2. 0 million of the foreign exchange cost of $7. 0 million. The proDosed Bank loan is to be made available from the Bank's Special Funds resources at a service charge of 1 per cent with a epayment period of 40 years, including a grace period of 10 years. r /

IDA Credit

92. IDA has agreed to co-finance the Project /; the Bank will be responsible for the administration of IDA funds with disbursement arrangements such a-- will afford maximum flexibility in the use of such funds and the least administration burden for the Bank. A s the estimated cost of Part B of the Project -- the Agricultural Research and Extension part -- amounts to $2. 0 million, for ease of loan administration and so as to involve only one Executing Agency (DOA) with IDA funds, the Mission proposed and the Government agreed that the IDA credit be used entirely to finance the foreign exchange cost of Part B of the Project.

ADAB Grant

93. At the request of the Government, the Mission identified appropriate components for ADAB co-financing. These were discussed with the Government and the Australian auLhorities in Apia. The cost of the components identified, including contingencies, amounts to $2. 0 million (see Table 2). ADAB will administer its own funds under arrangements which are to be concluded between the Government and ADAB and which are to be satisfactory to the Bank. j/ See Appendix 10 for Loan Allocation by Category and Source of Funds. g/ ADAB has agreed in principle to finance $2. 0 million on a grant basis and IDA has agreed in principle to provide a $2. 0 million credit. / Western Samoa qualifies for loans from Special Funds resources under the criteria laid down in "A Review of Criteria for Lending from the Asian Development Fund", Doc. R83-77, Revision 1, Final, dated 14 September 1977. i/ See ADB-World Bank Co-financing in the South Pacific, Doc. IN-149/80, dated 25 Septetnber 1980. 29

Table 2: Cornonents for ADAB Co-Financin ($'000)

Components Year 1 Year 2 Year 3 Year 4 Year 5 Total

Fertilizer 12 147 158 170 182 669 Planting Cocoa 37 44 52 59 66 258 Water Supply 149 46 - - - 195 Coconut Stem Utiliza- tion Facilities 127 - 127 Storage Sheds - 69 - - - 69 Contingencies 109 136 119 148 170 682

Total 434 442 329 377 418 2 00

Local Currency Costs

94. The Government has given an assurance that the funds required in addition to those provided by ADAB, IDA and the Bank, sht be made available promptly as needed for carrying out of the Project. In the case of PartAof the Project -- assistance to WSTEC -- since WSTEC is a viable commercial enterprise, it will itself provide the necessary local currency amounting to $2. 8 million over the project period of five years from its retained earnings. The financial projections for WSTEC have been examined and this indicates that WSTEC shou)Jd be able to meet the local currency requirements from its cash flow.Z In the case of Part B of the Project, the Government agreed to make the necessary annual budget allocations for DOA to meet the local currency requirement of $1. 0 million over the project period of five years.

F. Relendin Arrangemeats with WSTEC

95. The Government will relend the proceeds of the Bank loan to WSTEC in accordance with the provisions of a Subsidiary Loan Agreement, which will be concluded between the Borrower and WSTEC on terms and conditions satisfactory to the Bank.2I/ The Government agreed to relend the proceeds of the proposed Bank loan to WSTEC for a period of 20 years,

4/ Loan Agreement, Section 4.02.

&/ See Appendix 12 for WSTEC' s Projected Financial Statements, 1979- 2006, and Project Agreement, Section 2. 02. j Loan Agreement, Section 3.0 l(b). - 30 -

.with a grace period of 5 years, at t1 Bank's current rate,for loans from its ordinary capital resources.

G. Environmental Impact

96. The Project will not have any deleterious environmental effect. A beneficial environmental impact will result through the disposal of senile coconut stems. At present about 3,000 coconut stems need to be disposed of annually increasing to 12,000 by 1987 and beyond. Decaying coconut stems provide a natural breeding ground for coconut pests, particularly the Rhinocerous beetle which 'is a grave threat to all coconut plantations in the country. Clearly, the economic disposal of coconut stems as envisaged under the Project will remove this hazard while contributing to the economic development of the country.

1/ Loan Agreement, Schedule 6, para. 5. - 31 -

IV. PFROJECT MANAGEMENT AND IMPLEMENTATION

A. Executin3 Agencies

97. PartA - WSTEC will be the Executing Agency for this part./ Thie Projec, Manager and Project Office established to implement the first Bank loanJ to WSTEC will be responsible for implementation of this part of the Project.

98. WSTEC' s performance in implementing the Bank's first loan, which was declared effective on 14 April 1978 and is due to be completed by mid-1983, has been satisfactory. Disbursements and contracts awarded to 31 Augaijv; 14S" amount to $1. 639 miliIQn- ut.,it a loan of $3. 0 million. Much of the work on the. rehabilitation of the six estates, such as civil works, procurement of equipment, road building and fencing, has been completed. Water supply systems are being installed and the pasture improvement and fertilizer application programs are continuing. Yield responses as envisaged under the first project loan are beginning to materialize. Construction of the cocoa processing facilities has started and work on the development of the Agricultural Research Station is well under way. The Project Office is well organized and efficient. The Mission is satisfied that WSTEC is capable and ready to undertake the implementation of its part of this Project with the assistance of consultants. WSTEC's financial projections3/demonstrate that it is capable of carrying the debt required to undertake this Project, which will make it a long-term viable and profitable government enterprise.

99. Compliance with the Bank's covenants under the earlier loan has been generally satisfactory, as shown in Appendix 11.

100. Part B - The DOA will be the Executing Agency for this part. While the overall responsibility for the implementation of this project component will rest with the Director of Agriculture, a Project Office headed by a P-roject Manager and staffed with adequate personnel will be established. The Project Manager will be at the Assistant Director level, but because he cannot be released entirely from his departmental duties,

j/ See also paras. 21 to 25 and Loan Agreement, Schedule 6, para. 1(a). i/ Loan No. 338-SAM(SF): WSTEC Agricultural Development Project.

X/ See Appendix 12 for WSTEC's Projected Financial Statements, 1979-2006. - 32

the Government has agreed to appoint a full-time Deputy Project Managa 7 to carry out the day-to-day tasks involved in implementing the Project. The Mission considers this arrangement to be satisfactory.

B. Implementation Schedule

101. PartAwill be implemented over a five-year period according to the schedule given in Appendix 9. The coconuts will be planted over five years at the rate of 200 acres per year, as will the planting of the 1,000 acres of cocoa. The application of fertilizers is to be a continuous process. Virtually all the equipment and processing facilities will be purchased during the first year. Civil works, including the water supply, is scheduled for the first three years, while fencing and road building is phased on an estateby estate basis ovet' five years.

102. Part B wili be implemented over a five-year period according to the schedule given in Appendix 9. The civil works are of a relatively simple character and will be undertaken over five years. The Extension Training Center and the two houses at Nu'u Agricultural Research Station will be constructed during the first year. The construction and upgrading of the field extension centers will be done over five years, taking into account the needs of the different regions of the country and implementation capacity of the Executing Agency.

103. To avoid any possible delay, the Executing Agency will take early action to recruit consultants and initiate procurement. The selectioui of persons for overseas training and decisions about their training programs will be made during years 1 to 4. This spread is designed to allow newly recruited staff to gain experience and thus ease any burden created by the absence of key staff members.

C. Pro cu rement

1. Under the Bank Loan

104. Procurement of all goods and services financed under the Bi k loan will be in accordance with the Bank's Guidelines for Procurement. 1 It is recognized that because of the remoteness of the country and because many small packages will be involved, international shopping procedures

X Loan Agreement, Section 6, para. l(b). S/ See Appendix 10 for Loan Allocation by Category and Source of F1'undu. ,j Loan Agreement, Schedule 4, para. 2. - 33 -

will more effectively serve the interests of economy and efficiency./

105. Civil works financed under the Bank loan, including installation of the water supply system and road construction, shall be performed by local contractors engaged by WSTEC or by force account. The planting material required under the Project shai, be procured in accordance with sound practices satisfactory to the Bank. -

2. Under the IDA Credit

106. The procurement of goods and services financed under the IDA credit will be in accordance with the Bank's procurement procedures.2/

107. Civil works contracts, except for two modular houses to be erected at the Nu'u Agricultural Research Staticn, will be awarded to local contractors. Minor civil works may be undertaken by local contractors or by force account. To maintain a uniform standard design for the houses at the Nu'u Agricultural Research Station, the two houses to be erected there are to be procured from and installed by the manufacturer of the existing houses.

108. Withdrawals for' all civil works will be allowed at fixed percentages of the total costs of these works and such percentages v11 represent estimated foreign exchange cost components of civil works.

3. Under the ADAB Grant

lO9T The procurement of goods and services financed under the ADAB grant will be in accordance with a.rrangements between the Borrower and ADAB to be satisfactory to the Bank.

j/ Working Paper No. 6-78, 14 November 1978, A Review of Bank Operations in the South Pacific DMC' s. g/ Loan Agreement, Schedule 4, para. 5.

2/ See ADB-World Bank Co-financing in the South Pacific, DQc.IN;-149/80, dated 25 September, 1980. i/ See Appendix 10 for Loan Allocation by Category and Source of Funds. -34-

D. Consultants

1. Under the Bank Loan

110. The consultants to be financed under the Bank loan will be selected and engaged on an individual sis in accordance with the Bank's Guidelines on the Use of Consultants.

2. Under the IDA Credit

1.llThe consultants whose services are to be financed by IDA, will be selected and engaged on an individual basis in accordigyce with arrange- ne to- be made between the Borrower .and the BankJ in consultation witg'IDA. E. Accounts and Audit Reports

1lL. The Government will maintain, or cause to be maintained, accounts for the Project. The accounts will be audited internally on a continuous basis and annually by the Chief Auditor of the Government. Within six months of the closing date of every fiscal year, the audited accounts of WSTEC and of the project component administered by DOA will be submittd to the Bank in such details as the Bank may request from time to time.

F. Project Benefit Monitoring System

113, The DOA will be responsible for collecting data and monitoring in respect of Part B of the Project. The Economic Analysis and Planning Division of DOA in collaboration with the Extension Program Organizer consultant will select samples and draw up questionnaires and schedules for collecting the data required for monitoring and evaluating the benefits of this part of the Project. A baseline survey to determine the level of adoption of modern farm technology by smallholders will be conducted initially, and follow-up surveys and case studies will be instituted, as

9/ Loan Agreement, Schedule 5, para. 2.

2/ Loan Agreement, Schedule 5, paras. 4 and 5.

3/ Loan Agreement, Section 4. 06(b). - 35 -

deemed appropriate, to determine the impact of Part B of the Project./ Since the demonstration effects of the WSTEC development on rural people cannot be unambiguously quantified, no benefit monitoring system is recommended. However, benefits to the organization may be evaluated on the basis of reviews conducted by Bank staff during and on completion of the implementation of the Project.

l/ Loan Agreement, Schedule 6, para. 10. - 36 -

V. PROJECT BENEFITS AND JUSTIFICATION

114. A primary goal of national policy and an integral component of the Development Plan (1980-84) is to increase agricultural production, both for domestic consumption and export. The Project will assist in institution building and infrastructure development in the dual agricultural sector of Western Samoa with the object of accelerating agricultural development. In the dominant smallholder sector, the Project will assist in strengthening the research and extension capabilities of DOA, which is wholly responsible for the development and dissemination of improved farming technology. On the other hand, the support to WSTEC for improvement in its land use, expansion of the soap processing and coconut stem utilization capacities will significantly contribute to the development of the plantation sector. The Project is financially and economically sound and is socially desirable.

A. Benefits to the National Economy

1. Incremental Production

115. The primary benefits to the economy from the WSTEC component will be increased productivity resulting in enhanced export earnings from cocoa, copra, soap products and coconut stem products, and a reduction in the import of beef. Incremental production per annum at full development is estimated at about 1, 100 tons of cocoa valued at $2. 9 million; 1, 400 tons of copra valued at $611, 000; 500 tons of laundry soap valued at $588, 000; 400 tons of toilet soap valued at $1, 310, 000; 400 tons of soap powder valued at $1, 882, 000; 250, 000 board feet of exportable grade tiimber; 430, 000 board feet of fence post material; 90-120 tons of fuelwood and 30-50 tons of charcoal from coconut stem utilization facilities valued at $170, 000; and beef production of 68 tons valued at $60, 000. The total incremental annual value of the WSTEC component of the Project at full development and at constant 1980 prices is estimated at $7. 5 million, which could be expected to have a salutary effect on the balance of payments position of the country. The impact of the Agricultural Research and Extension component on incremental production in the smallholder sector, although not easily quantifiable, can be expected to be substantial, given the low productivity which prevails.

2. Land Use

1 16. The Project will substantially contribute to the improvement in land use on seven WSTEC estates covering 6,641 acres of the most productive land in Western Samoa. The replanting of 1,000 acres of senile - 37 -

coconut palms and the intercropping of 1, 000 acres of coconut lands with cocoa will enaeble a better utilization of land and other resources on thLe existing WSTEC plantations. Fertilizer application on about 3, 750 acres of coconut land and pasture improvement under coconut will also enable greater efficiency in the use of available land resources. Given the dominance of the smallholder sector, the improvements in land use which could be anticipated frorm a more effective extension service and app]ied research work would be significant.

3. Agricultural Research

117Q It is proposed to provide two agronomists to investigate the potential for the cultivation of commercial crops in Western Samoa such as rubber, oil palm, spice crops and orchard crops besides examining the scope for expansion of the existing coffee and banana plantations in Western Samoa. The potential benefits from such investigations could be very large in view of the country's dependence on agriculture as the primary source of foreign exchange and earnings. The establishment of field experimentation centers at Togitogiga and Asau will facilitate adaptive research work by scientists at key agroclimatic locations on both islands. In view of the absence at present of any positive guidelipnes on agronomic practices, it is anticipated that the potential benefits of providing essential infrastructure for research will be substantial.

4. Agricultural Extension

118. The Project will help substantially to strengthen the national extension service which is at present stifled in its operations due to poorly trained field level workers and lack of basic facilities. The provision of a consultant to organize the extension service and to conduct in-service training programs will help to improve the quality of the field staff. The establishment of a National Extension Training Center will provide central facilities for extension training. The provision of 23 field extension centers with living and working facilities for the field workers, and of support for transportation could be expected to have a salutary impact on the efficiency of this essential agro-support service.

5. Manpower Training

119. One of the most significant contributions of the Project will be in manpower training at different levels. In the case of the research and extension component, there should be major improvement in the quality of staff. Besides on-the-job training which Samoan research scientists and extension workers will receive from their consultant counterparts, there - 38 -

are opportunities under the Project for overseas training which are expected to have a major long-term impact. The extension programs which will be conducted under the Project and subsequent activities of the field extension staff are expected to have a major impact on farmers in the country. In the case of the WSTEC component also, there will be significant on-the-job training benefits for Samoans through the five consultants to be engaged. Moreover, the demonstration value of WSTEC as a modern plantation enterprise for other large-scale organizations as well as smallholders is significant.

6. Economic Internal Rate of Return

20. The economic internal rate of return (EIRR) for Part Aof the Project is estimated at 19 per cent. This level is considered satisfactory in view of the substantial secondary benefits of the Project which have not been quantified. Individual rates of return for the WSTEC estates, Soap Processing and Coconut Stem Processing sub-components are 19, }5 and 32 per cent respectively, which are also considered satisfactory...! The economic analysis has been confined to the WSTEC component only, because of the difficulties of assigning a precise level of benefits to the research and extension component. Attributing precise levels of primary benefits to research and extension is ambiguous since it is virtually impossible to determine what proportion of the benefits expected from improved agricultural practices are due to extension or research alone and what is due to past efforts in these areas, the purchase of additional inputs or externalities.

121. The computation of the EIRR has been based on the FIRR calculations adjusted for distortions in the market prices, i. e. shadow wage rates and duties on export commodities and imported goods. The Project life has been assumed to be 25 years and the analysis is based on incremental benefits and costs. All traded goods are priced at the relevant border prices (FOB Apia), while non-traded goods and services are priced at their respective local market prices and wage rates. The assumptions of the analysis are given in Appendix 13, pages 30 and 31.

122. The Project's sensitivity to changes in various aggregate variables has also been examined.U It is clear that a decrease in benefits

/See Appendix 13, page 42, Table 26. j See Appendix 13, page 42, Table 27. - 39 -

(15 per cent), an increase in investment costs (10 per cent), an increase in operating costs (12 per cent) a one year delay in implementation or a combination thereof would not adversely affect the viability of the Project. The sensitivity indicators which range from 0. 19 to 0.51 indicate the relative stability of the EIRR to variations in the aggregate variables tested.

B. Benefits to WSTEC

1. Financial Internal Rate of Return

123. The financial internal rate of return (FIRR) to the capital invested in the WSTEC component is 15 per cent, which is considered satisfactory. The Project life is assumed to be 25 years and is based on incremental project benefits and costs. Inputs and outputs are valued at market prices. The assumptions of analysis are given in Appendix 13, pages 30 and 31. 124. The individual internal rates of return for the WSTEC estates, Soap Processing and Coconut Stem Processing subcomponents are 14, 14 and 31 per cent respectively, which are also considered satisfactory (Appendix 13, page 41, Table 25). The Project's sensitivity to changes in various aggregate variables have also been examined. It is clear that decreases in benefits (15 per cent), increases in investment costs (10 per cent), increases in operating costs (12 per cent), a one year delay in project implementation or a combination thereof do not adversely affect the viability of the Project. The sensitivity indicators for the aggregate variables tested range from 0. 17 to 0. 40 which indicate the relative stability of the Project to adverse conditions.

2. Overall Profit Contribution and Financial Position

125. WSTEC contributes 'n a special manner to the economic development of Western Samoa. As a wholly-owned government enterprise, it is required to transfer its annual unappropriated profits to the Western Samoa Treasury for the welfare and economic and social benefit of Western Samoa. WSTEC's ability to generate profits is important to Western Samoa in that it provides another source of revenue for the Government particularly in the form of foreign exchange. Over the economic life of the Project (25 years), WSTEC's acfmulated reserves will increase from WS$5. 2 million to WS$58. 0 million.-'

j/ See Appendix 12 for WSTEC's Projected Financial Statements, 1979 -2006. - 40 -

126. Long-term projections demonstrate that WSTEC has the capacity to carry the debt required to undertake substantial development activities in the early stages, which will make it a long term viable and profitable government enterprise and an important contributor to the overall economy of Western Samoa.

C. Social Imrpact of the Project

1. Benefits to Smallholders

127. The smallholder sector will benefit from the Project due to the development of high-yielding varieties and improved cultural practices which will enhance the opportunities for earning higher incomes from farming. The establishment of a more effective extension service together with the strengthening of the applied research capability in the country will ensure opportunities for higher incomes in the rural sector and better income distribution in the country. In this regard, the demonstration value of the WSTEC developments is also expected to have a salutary effect.

2. Employment Effects

128. About 300 additional permanent employment opportunities in Western Samoa will be created as a result of the Project. In addition, the incremental labor demand during Project implementation is about 85, 000 man-days annually. This benefit is of considerable significance to Western Samoa in view of the growing labor force and under-employment in the country, particularly since the bulk of the increased demand for labor is in the part-time or seasonal category, which is well suited to Samoan rural conditions. - 41 -

VI. CONCLUSIONS AND RECOMMENDATIONS

129. The development of the agricultural sector has been accorded high priority by the Government of Western Samoa. The Project combines assistance to WSTEC for the rehabilitation and development of seven ofits estates on Upolu, expansion of its processing facilities and management support, with assistance to DOA for the provision of facilities and expertise to strengthen the country's research capabilities and improve the quality of the extension service on both Upolu and Savai'i Islands.

130. The Project is expected to increase the annual production of copra, cocoa, soap, coconut wood by-products and beef by $7. 5 million at full development, and will improve the farm incomes of smallholders. It is expected that the Project will have an impact on virtually two-thirds of the population who depend on agriculture for their livelihood.

131. The Project is technically feasible, economically viable and socially desirable. The organizational and institutional arrangements for the Project are satisfactory.

132, The total cost of the Project is estimated at $10.8 million equivalent, of which $7. 0 million is the foreign exchange cost. Of this amount IDA and ADAB have agreed in principle to finance $2. 0 million each on a loan and grant basis respectively. The Bank will administer the IDA credit and ADAB will administer its own grant funds under an agreement between the Government and ADAB, satisfactory to the Bank.

133. The Project is suitable for a Bank loan from its Special Funds resources in the amount of $3. 0 million. The Borrower will be the Independent State of Western Samoa.

134. In addition to the standard provisions and requirements contained in the loan agreements of the Bank, specific assurances were obtained from the Government and concerned agencies on the following:

(i) The WSTEC component of the Project shall be carried out by the Project Office already established to implement the WSTEC Agricultural Development Project financed under Bank Loan No. 338-SAM(SF). The Project Manager of this Project Office shall also be responsible for the day-to-day activities and execution of the proposed WSTEC component of the Project (Loan Agreement, Schedule 6, para. l(a)); - 42 -

(ii) Upon loan effectivity, the Borrower shall establish within the principal office of DOA at Apia, a Project Office to implement the Agricultural Research and Extension component. The Project Office will be headed by a Project Manager at the Assistant Director level. The Project Manager will be assisted by a full- time Deputy Project Manager, who will be appointed simultaneously with the Project Manager. The Project Office shall be staffed with adequate technical and clerical staff (Loan Agreement, Schedule 6, para. 1 (b));

(iii) The Borrower shall ensure that the goods imported into Western Samoa by WSTEC for the purpose of the Project shall be exempted from the payment of customs duty (Loan Agreement, Schedule 6, para. 4);

(iv) The Borrower shall take expeditious and appropriate action to review the position classification of the extension service personnel of the DOA with a view to upgrading these positions in order to recruit and retain qualified extension workers (Loan Agreement, Schedule 6, para. 7); A

(v) The Borrower shall ensure that the research facilities to be established at Vaia'ata and Asau on Savai'i under the recent IDA loan shall be available to DOA for use as crop experimentation/extension centers under the DOA component of the Project (Loan Agreement, Schedule 6, para. 8);

(vi) The Borrower shall appoint a suitably qualified person to the position of Assistant Director - Research and Technical Services in DOA, which is established and remains vacant (Loan Agreement, Schedule 6, para. 1(c)); and

(vii) The Borrower shall ensure that the Project facilities are properly operated and adequately maintained, and for this purpose, shall make adequate and timely provision of necessary foreign exchange for the purchase of materials and spare parts required for the proper operation and maintenance of all equipment and facilities of the Project (Loan Agreement, Schedule 6, para. 9). 43 -

APPENDIXES

Appni Page

1 WSTEC Organization Chart 44

2 WSTEC Financial Statements - 1973-78 45

3 Organization of the Department of Agriculture and Forests 47

4 Land Use Pattern of Seven Estates 50

5 Facilities to be Provided 52

6 Terms of Reference for the Consultants 58

7 Maps Showing Research and Extension Centers on Upolu and Savai'i 63

8 Details of Project Cost Estimates 65

9 Project Implementation Schedule 76

10 Loan Allocation by Category and Source of Funds 80

11 Compliance with Bank' s Earlier Covenants 81

12 WSTEC' s Projected Financial Statements, 1979-2006 83

13 Assumptions and Computations Underlying Financial and Economic Analyses 86 ORANZATION CHART OF WESTERN SAMOA TRUST ESTATE CORPORATION

GCENES L %IANAGER| Hi. A- ,z l Mw.3.P.

MtDaloEln 3JlV(CNhaLMQAb*U,L Puawd. Swht T..fduLa Lqa fktr I m l .. tuf, 1.. L . _ _ _

- - - -- u I

,. i, "|i S f : .:f:' ktmm -I i. It.qn

3. rp 1 C - al 2 , . r - - Q j,, u t.P. A C 2., I S.-cnUaT I . flw.,&C i. -kc S Ai-- - .dI 1 - LaPh.l ! 5 WId- N J 2 b I j,AV -. II -W 4. .y(oT)p..W.A. wmI.s A~~~* P, Ckp i

- Us Auaby Refere nce in text: page 6, para. 20 5

. .r . WESTERN SAMOA TRUST ESTATES CORPORATION INCOME STATEMENTS -1973-1978 (WS$) -- 93 1974 5IV % ._1Z 1978 X WS$ % S$

Gross Margin

CroiP s & Livestock Coconut 959769 54 460,995 84 274,595 72 134,660 30 295,611 23 276,153 24 Cocoa 199304 11 118,193 22 11,367 3 55,278 12 514,273 41 393,256 35 Coffee (798) - (4,580) (1) (5,369) (1) 16,942 4 8,717 1 14,774 1 Banana 520 - 5,879 1 479 - 11,071 2 5,210 1 21,697 2 Meat & Livestock 662) 6. (Z) 2O7 66526 14 2L6 1 9 102,142 58 567,513 104 2609412 69 284,477 62 916,947 73 801,746 71 Ar-Industries. Timber - - - . - 40,922 3 37,050 3 Wood By-Product - - 1,543 - Feedmill 19403 - 8,980 1 Piggery ------6,282 - h Hides 7,149 4 2,831 1 914 - 4,337 1 1,397 - 12,460 1 Store 13,962 8 (79,503) (15) 33t897 9 45,519 10 78 092 6 98,895 9 Service Station 737 - (9,685) ( 2) 69041 2 29,136 3 42 139 3 179736 2 Engineering Shop 69991 4 11527 2 19685 - 14,768 1 34,636 3 12,616 1 Axfciilary Services 73,208 4 (236) - (2,p539) (1) 3,468 1 ) 109,O56 9 118,903 11 Miscellaneous Income 32,075 18 27,144 5 56,164 15 45,547 10 ) Soap Factory __6n823,81526 28 858 3 62 12 12 __ -6. 6 - D3 - 1 1 Total -gross Profits 177,128 100 547,060 100 380,389 100 456,090 100 19264,354 100 1,128,923 10 0 Administration Costs 68 24 1,0 33 1150 16 25 23 Margin Before Tax 108t448 61 415,258 76 253,308 67 341,055 75 ltO67,991 84 873,748 77 Tax 4204 25 217.013 40 7.57.3 3 23.93 2 2 Net Profit -22a. 733 1 3456 2 62 315.405 ,8 849,816 5a

Profit before tax as sreturn to total capital- employed 3.6% 13% 7.9% 9.3% 20.2% 13.5% (D

Rents, commissions and interest receivable on bank deposits. ,'/ 9.0% of total cost of sales.

Reference in text: page 7, para. 25 WESERSAMOA TRUJST E§ZtAES CORPORATIO BQALACE SHEETS,

1273 1974 1975 1976 1977 1978

Fixed Assets Estate land and buildings 1,220,379 1,272,995 1,2839816 1,709,510 2,2149730 3,176,028 Estate plant, equipment & improvements 186,457 185t952 196,799 570,093 1,604,928 2t072,571 Leased land, buildings & improvements 122,961 122,648 122,446 - - - Soap factory buildings and plant 98,992 929797 90,983 - - - Other lands buildings and equipment 367,849 321,188 282,094 - - Deferred debts owing by Government 433..200 567 3376 32 , 412 0 228 636 Total Fixed Assets 23 38 2.333 2 31 260 4 231.668 23 Current Assets Cash at bank and on deposit 20,000 125,264 145,385 457,325 1381LO 75t242 Stocks 279,538 583,051 576,489 413,904 703,729 752,440 Debtors1 pre-payments, etc. 295 809 154.011 --213.362 Total Current Assets 862.326 8 3. 84 1 0641 1 032 Total Assets 3.031.185 31195.473 3 3,671.546 5 24 6J 62468LO08 Liabilities Current 305,992 322,991 111,253 66,286 3159395 540,164 Long-term - - - 255,000 322,129 Share Capital 1,221,340 1,221,340 19221,340 1I221,340 1,221,340 1,397,185 Reserves Reevs15 15 3.858 1,651j142 1 874--.5428 2383.920 3492,630 4208 30 Total Liabilities and Capital 3.031.185 3,195.43 3 2.3262 1&46 5243 60

Current Ratio 2:1 2.7:1 8:1 16:1 3,3:1 L18:1 Equity (%) (Capital & Reserves: Total Assets) 90% 90% 97% 98% 89% 87% Fixed Assets/Total Assets 80% 73% 72% 71% 80% 85%

R e 0i Reference in text: page 7, para. 25 N1 .

I I ORGANIZATION OF THE DEPARTMENT OF AGRICULTURE AND FORESTS

CABINE

MINISTER

Department of Department of Agriculture Boards: Meteorology and Hydrology and Forets Agrostore, Economic Development

DIRECTOR

BOARD AND COMMITTEES DEPUTY DIRECTOR DEPUTY DIRECTOR I (SAVAI'I) IUPOLU) Banana,b-Aosre Agrostore, (SAVI'I (UPLU)Developtnent Bank, Handicrafts Corp., L Land Boards: Stes., Agriculture Advisory Committees

Economic Analysis Research and Extension and Servics Forestry and Planning Technical Services lnfor-ationServices Regulatory

AccountsL g >

Administration W

Reference in text: page 8, para. 26 ORGANIZATION OF THE RESEARCH AND TECHNICAL SERVICES DIVISION

Assistant Director

RESEARCH AND TECHNICAL SERVICES DIVISION

Chief Chief Chief Chief Livestock Officer Crops Officer Agricultural Engineer Food Technologist

LIVESTOCK SECTION LiVETCKSCICOSSCINAGRICULTURALCROPS SECTION ENGINEERING SECTION PRESERVATIONFOOD SECTION

ri | Xr I rI*1 i |1 Senior Senior Senior Senior Senior Senior Senior Senior Livestock Animal Health Crops Crop Protection Agricultural Agricultural Project Food Officer Officer Officer Officer Engineer Engineer Officer Technologist

ANIMAL I NIMAL CROP CROP SMALL SCALE LARGE SCALE PRJCSFOOD PRODUCTI ON HALTH PROTECTION PROTECTION AGR..MACH. AGR. MACH. PRE~SRATION REJSEARCH

Superintendent Superintendent Supervisor Supervisor

ADMIN6STTION ADMINIRATION ADMINISTRATION ADMINSTRATION OF OF OF OF P ' LIVESTOCK CROP TECHNICAL TECHNICAL M -l FARMS FARMS SERVICES SERVICES M CD

9 Reference in text: page D para. 28 ORGANIZATION O' THE EXTENSION AND INFORMATION SERVICES DIVISION

Assistant Director EXTENSION ANDINFORMATION SERVICES0IVISiON

ChMf Chief Agricultural Officer Agriculturri Officer

SAVAI'I SECTION UPOLUSECTION

Senior Senior Senir Scniu Senior Agricultural Officwr Agricultural Officer Infornatian Officer Agricultra Officer Agricultural Officer

SOUTH-WESTSAVAI'l NORTH-EAST SAVAI'l SRIN ESRMATIOH and RESTOF UPOLU RAPIA URBANAREA

Agricbtural Agricultural Agricultural Agricutiuml Infornmtion Information Agicrstuj Agricultural Agricultural Agricultural Officer Offir.r Officer Officeu Offece Offie Offcer Officer Officr Officer

SAVAI'l SAI SAVAI SAVAII APIA URA NOTWS PLU UPOLU AAI 'I AREA UPL U EAST WEST 1S5UTH WEST NORTH EAST

RpQ

Reference in text: page 10, para. 30 LAND USE PATTERN OF SEVEN WSTEC ESTATES ON UPOLU AND PROPOSED ACTIVITIES (Acres)

Total Tuanal Tafai- Project Vaipapa Tausagi Faleata Casala imato Lesea gata Area

Coconuts

Coconuts & Grass 1, 635 790 1, 128 293 - - - 3,846 Coconuts & Cocoa - - - 82 100 150 693 1,025 Coconuts & Coffee - - 17 59 - - 76 Total 1, 635 790 1,128 392 159 150 693 4,947

Proposed Activities Replant Coconuts 1,000 1,000 Fertilize Existing Coconuts 635 790 1, 128 392 159 - 693 3, 797 Pasture Improvement 300 490 790

Cocoa

Mono Cocoa - - - - 830 74 - 904 Cocoa & Coconuts - - - 82 100 150 693 1, 025

Total - - 82 930 224 693 1, 929 J .

OQ Proposed Activities Plant Cocoa 320 350 150 180 1,000 Fertilize Existing Cocoa 82 II 930 74 693 1, 779

Reference in text: page 19, paras. 59 and 61 k 4 a.K

LAND USE PATTERN OF SEVEN WSTEC ESTATES ON UPOLU AND PROPOSED ACTIVITIES (Acres)

Total Tuana' Tafai- Project Vaipapa Tausagi Faleata Casala imato Lesea gata Area

Coffee

Mono coffee 75 - - 75 Coffee & coconuts - - - 17 59 - - 76 Total - - 17 134 - - 151

Bananas

Mono Bananas 120 - - - - 25 - 145 Ln

Macadamia (coconuts) - - - (96) 104 - - 200

Nutmeg - - - 4 - - 4

Waste Land 180 250 - 32 - - - 462

Total Areas of Plantation 1,935 1,040 1,128 424 1,172 249 693 6,641 a/ The total area of all seven estates is 6, 641 acres, when double counting is excluded. mI. - 52 - Appendix 5 Page 1

FACILITIES TO BE PROVIDED - PART A.: WSTEC

A. VAIPAPA ESTATE

1. Civil Works

a. 8.3 miles new fencing and 27 miles refencing b. Provision domestic and livestock water supply piping, tanks troughs, pump and pump house c. Construct 2 miles new roads and upgrade 5 miles d. Provide gates and cattle grids e. Construct managers' and overseers' houses, labor quarters, office/store, copra shed and copra drier and tractor shed

2. Equipment

a. Six-ton cattle truck - 1 unit b. Nine-ton dump truck - 1 unit c. 3/4 ton pick-up - 1 unit d. Slasher e. Fertilizer spreader f. Spare parts g. Livestock equipment

B. TAUSAGI ESTATE

1. Civil Works

a. 4.5 miles new fencing and 15 miles refencing b. Provision of domestic and livestock water supply tanks, piping, troughs, pump and pump house c. Construct 1 mile new road and upgrade 6 miles d. Provide gates and cattle grids e. Renovate managers' house, construct labor quarters, office/store, copra shed and tractor shed 2. Equipment

a. Six-ton hiside truck - 1 unit b. 3/4 ton pick-up - 1 unit c. 70 HP tractor - 1 unit d. Six-ton trailer e. Fertilizer spreader f. Spare parts g. Livestock equipment

R eference in text: page 19, para. 59 page 21, paras.68 and 70 page 22, para. 77. page 24, para. 82

. ..- -.- . - --.-.... - - - - 53 Appendix 5 Page 2

C. FALEATA ESTATE

1. Civil Works

a. 2.9 miles new fencing and 11.2 miles refencing b. Provision of domestic and livestock water supply tanks, piping, troughs, pump and pump house c. Construct.2 miles new roads and upgrade 5 miles d. Provide gates and cattle grids e. Build overseer's house, labor quarters, office, copra shed and copra drier

2. Equipment

a. Six-ton stakeside truck - 1 unit b. Nine-ton.dump truck - 1 unit c. 3/4 ton pick--up - 1 unit d. 70 HP tractor - 1 unit e. Six-ton trailer - 1 unit f. Slasher - 1 unit g. Fertilizer spreader - 1 unit h. Spare parts i. Livestock equipment, dip, crush and head bail, portable scale and fencing equipment

D. CASALA ESTATE

1. Civil Works

a. 1 mile new fencing and 4.2 miles refencing b. Provision of-domestic and livestock water supply tanks, piping, pump, pump house and troughs c. Construct 2 miles new road and upgrade 5 miles d. Provide gates and cattle grids e. Build manager's house, labor quarters and office/store

2. Equipment

a. Three-ton lowside truck - 1 unit b. 3/4 ton pick-up - 1 unit c. H/D spring release cultivator - 1 unit d. Slasher - 1 unit e. 70 HP tractor - 1 unit f. 3.5-ton trailer g. Spare parts h. Livestock equipment 54 - Appendix 5 Page 3

E. TUANA'IMATO ESTATE

1. Civil Works

a. 2.1 miles new fencing and 6.3 miles refencing b. Domestic water supply tanks, piping c. Construct 1.5 miles new roads and upgrade 6 miles d. Provide gates e. Build overseer's houses, labour quarters and office/store

2. Eguipment

a. Six-ton stakeside truck - 2 units b. 3/4 ton pick-up - 1 unit c. 70 HP tractor - 2 units d. Six-ton trailer - 2 units e. Slasher - 1 unit f. Spare,parts g. Coffee processing equipment

F. LESEA ESTATE

1. Civil Works

a. 0.5 miles new fencing and 2 miles refencing b. Domestic water supply tanks, piping, pump and pump house c. Upgrade 1 mile of road d. Provide gates e. Build manager's house, labour quarters an'd office/store

2. Equipment

a. 3/4 ton pick-up - 1 unit b. Spare parts

G. TAFAIGATA ESTATE

1. Civil Works

a. Two-miles refencing b. Domestic and processing water supply tanks, piping, pump and pump house c. Construct 0.5 miles new road and upgrade 6 miles d. Provide gates e. Build overseer's house, labour quarters and office/store Appendix 5 Page 4

2. Equipment

a. Six-ton hiside truck - 1 unit b. 3/4 ton pick-up - 1 unit c. 70 HP tractor - 1 unit d. Six-ton trailer - 1 unit e. Slasher - 1 unit. f. Spare parts

H. WSTEC OVERALL

1. Civil Works

a. Construction of cocoa and copra storage sheds, banana shed b. Construct 2 miles new roads and upgrade 4 miles

2. Equipment

a. 3/4 ton pick-up - 3 units b. 6 ton hiside truck c. 70 HP tractor d. 6 ton trailer e. Spare parts

I. SOAP PROCESSING

1. Civil Works

a. Factory building (same size and adjacent to the existing factory building) b. Mezzanines, floors, walls, woodwork, etc.

2. Equipment

a. Steam boiler, 2,000 kg/h capacity b. Jacketed soap storage tank (10,000 liters) c. Soap granulator (2 ton/hour capacity) d. Laundry soap finishing line., consisting of:

1 stainless steel amalgamator 1 existing four-roller mill 1 soap plodder 1 cutting machine

e. Toilet soap finishing line, consisting of:

1 amalgamator 1 existing duplex refiner 1 simplex plodder with refiner roll 1 cutter 1 stamping machine 4 moulds, engraved as required - 56 - Appendix 5 Page 5

f. Detergent/soap powder plant, consisting of:

1 vibration screen, dustproof covered 1 spray mixer, stainless steel 1 pressure proof WAS liquid container, stainless steel 1 dust absorber 2 silos with mucon valve, PE 2 Tilting cars 1 electric hoist 1 scale, fully automatic 1 filling device

g. Soap Pumping System, stainless steel consisting of:

1 submersible soap pump with motor and hoist and spare parts

h. Pipes, valves, conveyors and fittings

i. Three-ton truck - 1 unit

j. 3/4 ton pick-up - 1 unit

3.' Experts

a. Building erection engineer (2 man-months) b. Engineer for machinery assembly (4 man-months) c. Expert for start-up and training (6 man-months)

J. COCONUT STEM UTILIZATION

1. Civil Works

a. Site work (log yard and timber yard improvement) b. Alteration and foundation to sawmill building c. Extension to drying shed roof and concrete apron for treatment plant

2. Equipment

a. Circular headrig with rail-mounted log carriage and electric motor b.. Docking saw c. Maintenance parts for existing benchsaw and spare saws d. Electrical equipment including switchboards, grinding wheels and tools e. Six-ton log truck with three-ton crane and winch f. Three-ton delivery truck g. Chainsaws and spares h. Treatment plant replacement parts, spares and tools 57 -Appendix 5 Page 6

FACILITIES TO BE PROVIDED PART B : AGRICULTURAL RESEARCH AND EXTENSION

1. Civil Works

a. Central Agricultural Extension Training Center at Nu'u - 3,600 ft and facilities

b. 21 Field Extension Centers - each station 1272 ft2 and facilities

c. Field Laboratory Building at Togitogiga Crop Experimentation Center 600 ft2 and facilities

d. Plant Propagation Unit at Togitogiga Crop Experimentation Center

e. Two Modular House Units and facilities at Nu'u Agricultural Station

f. Upgrading of Siumu and Palauli - West Field Extension Centers

2. Vehicles

a. 2 - four-wheel drive Jeeps b. 12 - four-wheel drive Small Jeep-Trucks c. 1 - four-wheel drive Double Cab vehicle

3. Machinery and Equipment

a. One Audio-visual aid unit comprising - Cine/Overhead Projector, Screen, Slide Projector, Blackboards, Tape recorder, etc.

b. Two 65 HP Tractors, Trailers and Implements

c. Laboratory Equipment and Furniture for Togitogiga Crop Experimentation Center

d. Farm implements for 23 Field Extension Centers

e. Office Equipment for Project Office - 58 - Appendix 6 Page I

Terms of Reference for the Consultants

The following terms of reference are proposed for the consultants. These terms of reference may be subject to further refinement at the time of recruitment.

A. Consultants for Part A * WSTEC

1. Financial Controller (24 manmonths)

This consultant will be required continuously for a period of 24 months. His main responsibility will be to assist WSTEC with long- term financial planning and cash management. He will report directly to the General Manager of WSTEC and will:

(i) examine WSTEC's annual budget preparation activities and introduce refinements as necessary;

(ii) develop the necessary steps for the preparation of a five-year development and operating plan for WSTEC, including an accompanyiiig financial plan;

(iii) evaluate WSTEC's operating performance against the annual budget targets and report variances to management;

(iv) supervise the treasury and accounting functions of WSTEC; and

(v) develop a suitable training program to upgrade the qualifications of local accounting staff.

2. General Plantation Administrator (24 manmonths)

This consultant will be required for a continuous period of 24 months. His main responsibility will be .to supervise the operation of all of WSTEC plantations. He will report directly to the GenoAral Manager and will:

(i) examiinie the plantation operations of WSTEC and identify any constraints limiting production;

(ii) institute measures for overcoming these constraints by reorganization of plantation operations, including fertilizer application, as required;

(iii) establish long-term plantation development plans, taking into account land use potential and possibilities for intensifying agriculture;

(iv) estimate costs and supervise the budgetinIg for these plans;

Reeference in text: page 23, para. 80 page 24, para. 84 page 25, para. 88 - 59 - Appendix 6 Page 2

(v) assist in the day-to-day operations of the plantation and train local staff in plantation management; and

(vi) establish a system of monitoring on-going and planned plantation activities to assist WSTEC Management in the long term.

3. Sawmill Management Specialist (for the Coconut Stem Utilization Facilities) (12 manmonths)

This consultant will be required for a continuous period of 12 months. His main responsibility will be to assist WSTEC with mill expansion, installation of equipment and start-up of the improved mill. He will report directly to the General Manager of WSTEC and will:

(i) assist local engineers in the proper installation of the milling equipment to assure efficiency in the process flow;

(ii) prepare, in consultation with WSTEC management, plans which will meet the demand for various coconut timber products, and which specify in detail the raw materials, fuel and personnel required;

(iii) prepare and implement, in close cooperation with the local supervisors, plans for running the mill and the impregnation plant;

(iv) select and train qualified local workers in milling and treatment operations,,particularly in saw maintenance, sawing techniques to improve lumber recovery, sorting, yard handling, and quality control;

(v) perform other tasks related to mill operations, which the WSTEC management may require; and

(vi) at the end of his term, to submit a report to WSTEC management on mill performance, including specific recommendations for further improvements in mill efficiency.

4. Coconut Estate Technician (24 manmoilths)

This technician will supervise the.coconut planting program, including the establishment of a nursery, the preparation of the area to be planted, fencing, transplanting seedlings, fertilizing, pest and disease control, and general maintenance of the planted area. He will also supervise the fertilizer application program for existing coconuts and provide on-the-job training for counterpart staff.

5. Cocoa Estate Technician (24 manmonths)

This technician will supervise the cocoa planting program including establishing a nursery, preparation of the area to be planted, 60 - Appendix 6 Page 3 fencing, transplanting seedlings, pest and disease control, fertilizing and maintenance. He will also supervise the fertilizer application program for existing cocoa, and provide on-the-job training for counterpart staff.

B. Consultants for Part B : Agricultural Research and Extension

The following general terms of reference are proposed for the consultants. These terms may be subject to further refinement at the time of recruitment.

1. Extension Program Organizer (48 manmonths)

This consultant will be required for a continuous period of 48 months. His main responsibility will be to assist the Department of Agriculture and Forests to plan, organize and implement an efficient extension service. In working towards these objectives, the consultant will:

(i) examine the current agricultural (including livestock) extension activities in Western Samoa and identify any constraints limiting the effectiveness of the extension service;

(ii) make proposals to the Government for overcoming these constraints and assist in the planning and implementation of a program designed to obviate these problems;

(iii) organize and conduct in-service training programs for field extension workers, agricultural officers and farmers;

(iV) develop suitable curricula and materials for training field extension workers, agricultural officers and farmers;

(v) develop suitable mass-media communication materials for strengthening the field level extension program;

(vi) formulate and implement an extension program appropriate to the conditions of Western Samoa to accelerate the adoption of modern farm technology and better farming practices;

(vii) select suitable candidates for overseas fellowship training under the Project and provide appropriate orientation before the commencement of this training;

(viii) assist in the development of the National Extension Training Center at Nu'u and the Field Extension Centers being established under the Project; and

(ix) assist the Economic Analysis and Planning Division of the Department of Agriculture and Forests in planning and executing a benefit monitoring system for the Agricultural Research and Extension component of the Project. - 61 - Appendix 6 Page 4

2. Tree Crop Agronomist (36 manmonths)

This consultant will be required for a continuous period of 36 months. His main responsibility will be to assist the Departiment of Agriculture and Forests to plan, organize and conduct agronomic investigations into the problems and potential for commercial cultivation of crops such as coffee, rubber, oil palm and spices. In working towards these objectives, the consultant will:

(i) collect and report on the problems and potential of cultivating coffee, rubber, oil palm and spices in Western Samoa, after taking into account local ecological factors;

(ii) make proposals for the improvement and expansion of existing coffee plantations and initiate suitable programs towards this end;

(iii) import suitable planting materials for coffee, rubber, oil palm and spices ad-dconduct investigations into their suitability for commercial cultivation;

(iv) draw up and initiate suitable agronomic investigations, such as spacing, fertilizer and plant protection trials, particularly for coffee but also for other tree crops being introduced;

(v) assist in the organization and implementation of tree crops pilot projects for smallholders and plantation organizations in the country;

(vi) propose an economic land use map for tree crop cultivation in Western Samoa;

(vii) train local staff in conducting tree crop research; and

(viii) assist in the selection of suitable candidates-for overseas training under the Project and make arrangements at suitable overseas institutions for training in tree crop agronomy.

3. Banana Agronomist (36 manmonths)

This consultant will be required for a continuous period of 36 months. His main responsibility will be to assist the Department of Agriculture and Forests to plan, organize, and conduct agronomic investigations into the problems and potential for the commercial cultivation of bananas and other fruit crops such as mangoes, pineapples, passion fruit, a;.,Lado, macademia nuts, citrus etc. In working towards these objectives, the consultant will: -62 Appendix 6 Page 5

(i) collect and report on the available information on the problems and potential for cultivating bananas and the other fruit crops mentioned above;

(ii) make proposals for the improvement and expansion of existing banana plantations and initiate suitable programs towards this end;

(iii) conduct suitable agronomic investigations, such as spacing, fertilizer and plant protection trials particularly for bananas but also for other fruit crops;

(iv) provide information to the extension service and assist in the organization and conduct of extension programs in improved techniques.for banana cultivation and also for the other fruit crops investigated;

(v) assist in the organization and implementation of pilot projects for the expansion of banana and other fruit crop cultivation by smallholders and plantation organizations in the country;

(vi) make an evaluation of the soil and climatic suitability for the commercial cultivation of bananas and other fruit crops in Western Samoa;

(vii) make an economic land use map for orchard farming in Western Samoa and provide a comprehensive report on the problems and potential for large scale fruit farming;

(viii) train local staff in conducting horticultural research; and

(ix) assist in the selection of suitable fellows for overseas training under the Project and make arrangements at suitable overseas institutions for training in horticultural science. .- -;...; . . .. ,'; 0 ., -- 1.- w 171 45'W 171 0 30'W

UPOLU - LOCATIONY OF RESEARCH AND FIELD EXTENSION STATIONS

13045S 13045S GAGA'EMAU,-GA

'USOGA

0FGanws -AMATAUA PIo LEPA ALAE--AT

, ' ,. ,=,!' A'N| AET VAM UA FA/ LL ,',.0T,''. IT PAIUG

* WEST EAST~ton

Nuu Ariultural Station G Orch

|: S h\~~Togltoglb Crop Development Center ;- 0f 09 Olo CoconutSed Garden @ VallelFALATPasMr Re-at

A -- - .. wdn - -... .. -. . .- ,t~ , ;CLE - .

',, -- Falpub lleDstit -wnr -, V z , - = 10^ MILES

-, , , , , -, 17tl4' ,,0,,, , , e , 1,7145W, ,, ,, '71 0 30'W

Reference in text: page 2 5 ,para. 87 0 172 45'W 172°30'W 1720 15'W

SAVAII -LOCATIONS OF RESEARCH AND FIELD EXTENSION STATIONS

13030'5 130305S

VAISAGANO EAST *

/ GAGAIFOMAUGA GAGAEMAUGA

SATUPA'ITEA

SALEGA /n

APALAULI WEST k C

SCALE FALEFA 0 12 3 4 5 10 23 i LELELOGA ! g- - * i 13030'5 MOILES LEG EDN.,

A Valaata Crop Development Center

A Asao Crop Development Center

- -Existing Station

-Ol Proposed Station

Require Upgrading Political District Boundary Falpule District Boundary -172030'W 172015'W - 65 - Appendix 8 Page 1

DETAILS OF PROJECT COST ESTIMATES PART A WSTEC

(WS $ '000) Foreign Local Total

I. Facilities by Estate:

Vaipapa Estate

1. Civil Works 209.2 335.1 544.3

(i) Fencing

27 miles of refencing 8.3 miles of new fences

(ii) Water Supply

Pump house; tanks; troughs

(iii) Roads

Upgrade 5 miles; New Cons- truction 2 miles; gates & cattle grids.

(iv) Buildings

Staff housing; labour quarters; Office/store; copra shed; tractor shed; copra drier

(v) Replanting Coconuts

2. Equipment 42.0 17.5 59.5

(i) 6 ton cattle-truck (ii) 9 ton dump truck (iii) 3/4 ton pick-up (iv) slasher (v) Fertiliser spreader (vi) Spare parts (20%) (vii) Livestock Equipment; ramp, holding yard and bail Total - Vaipapa 251.2 352.6 603.8

Reference in text: page 26, para. 90 - 66. - Appendix 8 Page 2

(WS $ '000) Foreign Local. Total

Tausagi Estate

1. Civil Works 60.9 105.1 166.0

(i) Fencing

15 miles refencing; 4.5 miles new.fences.

(ii) Water Supply

Pump house; tank; troughs

(iii) Roads

Upgrade 6 miles; New construction - 1 mile; Gates & Cattle grids

(iv) Buildings

Renovate Manager's House; Labour Quarters; Office/Store; Copra shed; Tractor shed

2. Equipment 48.7 18.2 .66.9

(i) 6 ton hiside truck (ii) 3/4 ton pick-up (iii) 70 HP tractor (iv) 6 ton trailer (v) Fertiliser spreader (vi) Spare parts (vii) Livestock equipment

Total - Tausagi 109.6 123.3 232.9 - 67 - Appendix 8 Page 3

(WS $ '000) Foreign Local Total

Faleata Estate

1. Civil Works 67.7 125.5 193.2

(i) Fencing

11.2 miles refencing; 2.9 miles new fences.

(ii) Water Supply

Pump house; tanks; troughs

(iii) Roads

Upgrade 5 miles; New construction - 2 miles; Gates & Cattle grids

(iv) Buildings

Overseer's house; labour quarters; office; Copra shed; copra drier.

2. Equipment 71.5 21.1 92.6

(i) 6 ton stakeside truck (ii) 9 ton dump truck (iii) 3/4 ton pick-up (iv) 70 HP tractor (v) 6 ton trailer (vi) slasher (vii) Fertiliser spreader (viii) Spare parts (ix) Livestock equipment (Yard, dip modification, crush & head bail, portable scale and fencing equipment)

Total - Faleata 139.2 146.6 285.8 -68 Appendix 8 Page 4

(WS $ '000) Foreign Local Total

Casala Estate

1. Civil Works 37.8 84.7 122.5

(i) Fencing

4.2 m. refencing; 1 m. new fences.

(ii) Water Supply

Pump house; tanks; troughs

(iii) Roads

Upgrade 5 miles; New construction - 2 miles; Gates; Cattle grids

(iv) Buildings

Manager's house; Labour quarters; Office/Store

2. Equipment 44.7 5.7 50.4

(i) 3 ton lowside truck (ii) 3/4 ton pick-up (iii) spring release cultivator (iv) Slasher (v) 70 HP tractor (vi) 3.5 ton trailer, (vii) Spare parts (viii) Livestock equipment

Total - Casala 82.5 90.4 172.9 69 Appendix 8 Page 5

(WS $ 1000) Foreign Local Total

Tuana'imato

1. Civil Works 42.9 98.8 141.7

(i) Fencing

6.3 m. of refencing; 2.1 m. new fences.

(ii) Water Supply

Tanks

(iii) Roads

Upgrade 6 miles; new construction - 1.5 miles; Gates.

(iv) Buildings

Overseer's house; labour quarters; Office/Store

2. Equipment 107.6 12.9 120.5

(i) 6 ton stakeside truck (2 units) (ii) 3/4 ton pick-up (iii) 70 HP tractors (2 units) (iv) 6 ton trailers (2 units) (v) Slasher (vi) Spare parts (vii) Coffee Processing equipment

Total - Tuana'imato 150.5 111.7 262.2 -7) Appendix 8 Page 6

(ws $ '000) Local Total

Lesea Estate 25.2 48.1 73.3 1. Civil Works

(i) Fencing

Refence 2 miles; 0.5 m. new fences.

(ii) Water Supply

Pump house; 5,000 gal., tanks (3 units)

(iii) Roads

Upgrade 1 mile; Gates

(iv) Buildings

Manager's house; Laboi;r quarters; Office/Stor 7.8 1.0 8.4 2. Equipment

(i) 3/4 ton pick-up (ii) spare parts 82.1 Total - Lesea 33.0 49.1

Tafaigata Estate 28.7 66.2 94.9 1. Civil Works

(i) Fencing

Refence 2 miles

(ii) Water Supply

Pump house; tanks - 71 - Appendix 8 Page 7

(WS $ '000) Foreign Local Total

(iii) Roads

Upgrade 6 miles; New - 0.5 miles; Gates

(iv) Buildings

Overseer's house; Labour quarters; Office/Store

2. Equipment 48.4 6.2 54.6

(i) 6 ton hiside truck (ii) 3/4 ton pick-up (iii) 70 HP tractor (iv) 6 ton trailer (v) Slasher (vi) Spare parts

Total - Tafaigata 77.1 72.4 149.5

TOTAL - I 843.1 946.1 1789.2

II. WSTEC Overall Facilities

1. Civil Works 80.4 69.6 150.0

(i) Copra storage shed (ii) Cocoa storage shed (iii) Banana storage shed (iv) Upgrade 4 miles road (v) New road - 2 miles

2. Equipment 62.4 8.0 70.4

(i) 3/4 ton pick-up (3 units) (consultants/ coordinator) (ii) 6 ton hiside truck (iii) 70 HP tractor (iv) 6 ton trailer (v) Spare parts

TOTAL - II 142.8 77.6 220.4 - 72 - Appendix 8 Page 8

(WS $ '000) Foreign Local Total

III. Soap Processing a 699.4 58.9 758.3

IV. Coconut Stem Utilisation- 116.0 24.8 140.8

V. Planting Cocoa 235.4 253.9 489.3

VI. Fertiliser 611.0 218.3 829.3

VII. Water Supply 178.6 18.7 197.3

VIII. Consultants 437.0 83.0 520.0

TOTAL - I-VIII 3263.3 1681.3 4944.6

a/ See Appendix 8 p. 9 for details.

b/ See Appendix 8 p. 10 for details. - 73 - Appendix 8 Page 9

Equipment, Civil Works and Technical ExpTytise for the Soap Processing Facilities-

WS$ FC LC

1. Equipment

a) steam boiler 2 to/h at 13 atm. incl. water filtering and softening plant 47,852 b) submersible soap pump 3,884 c) jacketed soap storage tank 10 cbm 19,649 d) neat soap expansion drying plant including prefabricated soap granulation tower, noodle plodder, conveying and cooling plant for soap granules and noodles 178,211 e) laundry soap processing line 76,996 f) toilet soap processing line 124,135 g) complete powdered detergent production line 73,715 h) pipes, valves, conveyors, fittings 16,450 - i) 3-ton truck 6,284 899 j) 3/4 ton pick-up 5,962 855

2. Civil Works

a) prefabricated building with dividing wall 91,390 57,110 similar to existing building, length 120 ft., width 40 ft. and height 24 ft.

3. Technical Expertise

a) engineer for machinery assembly (4 months) 18,278 b) expert for operation, start up and training (estimated 6 months) 27,417 c) building erection engineer 9,139

TOTAL $699,362 $ 58,864

TOTAL $758,226

1/ Supply, installation and start-up of the soap processing facilities will be done on a "turnkey basis" after international competitive bidding. - 74 - Appendix 8 Page 10

EQUIPMENT AND-CIVIL WORKS FOR THE COCONUT STEM UTILIZATION COMPONENT WS$ FC LC

1. Equipment

a) Circular heading with rail-mounted $ 47,320 log carriage and electric motor

b) Docking Saw 2,730

c) Maintenance parts for old benchsaw and spare saws 2,820

d) Electrical equipment (including switchboards), grinding wheels and tools 22,300

e) 6-ton logging truck with 3-ton crane and winch 25,000

f) 3-ton delivery truck 9,000

g) Chainsaws and spares 715

h) Treatment plant replacement parts, spares and tools 3,185

2. Civil Works

a) Main sawmill building concrete found4tion and spares 1,440 $ 10,310 b) Drying shed roof extension and treatment plant apron 1,500 10,500

c) Timberyard improvement - 4,000

TOTAL $116,010 $ 24,810

TOTAL $140,820

...... - 75 - Appendix 8 Page 11

COSTS OF AGRICULTURAL RESEARCH AND EXTENSION (Ws$ V000)

Foreign Local Total Component Costs Costs Costs

I. CIVIL WORKS Central Extension Training Centre at Nu'u 48.0 39.0 87.0 2 Modular Houses at Nutu 90.0 10.0 100.0 Farm Manager's House at Asau 19.5 16.0 35.5 Field Labs at Togitogiga and Asau 11.4 9.6 21.0 PlLant Propagation Unit at Togitogiga 25.0 7.0 32.0 23 Field Extension Centres 154.1 225.5 379.6 / 348.0 307.1 655.1 II. VEHICLES 2 Short-Wheel Base 4-W Drive Jeeps 13.2 2.0 15.2 12 Small 4-W Drive Jeep Trucks 58.8 4.8 63.6 1 4-W Drive Double Cab 6.0 0.8 6.8 78.0 7.6 85r6 III. MACHINERY AND EQUIPMENT Farm Equipment for Extension Centres 8.2 - 8.2 Audio Visual Aids for Nu'u Extension Centre 5.0 - 5.0 2-65 HP Tractors and Attachments 42.0 3.0 45.0 Laboratory Equipment 3.0 - 3.0 Office Equipment for Project Office 3.0 1.0 4.0 61.2 4.0 65.2 IV. OPERATION AND MAINTENANCE 0 & M at Togitogiga and Asau 25.0 28.0 53.0 0 & M for Vehicles 85.0 15.0 100.0 0 & M at Nu'u Extension Centre - 16.0 16.0 0 & M at Project Office - 12.5 12.5 110.0 71.5 181.5 V. CONSULTANTS Extension Program Organiser 240.0 100.0 340.0 Banana ~,Aror .,list 180.0 75.0 255.0 Tree Crop Agronomist 18C..0 75.0 255.0 606.0 250.0 850.0 VI. FELLOWSHIPS 120 Man-months 120.0 - 120.0 15 Man-months Short-term Training 30.0 - 30.0 150.0 - 150.0 VII. CONTINGENCIES Physical 161.8 128.2 290.0 Price 318.8 165.2 484.0 480.6 293.4 774.0 T 0 T A L 1827.8 933.6 2761.4 - 76 -

iMPLEMENTATION SCHEDULE Appendix 9 PART A: WSTEC Page 1

1981 1982 1983 1984 198W OPERATION 1 2 3 4 3 4 - 2 3 4 1 - - 4- 1 2 - 4

I.Estates A. Vaipapa Fencing Wm Water Supply Roads Buildings Vehicles & Equipment Fertilising existing coconuts Replarnting 1000 ac. coconuts

Planting 320 ac. cocoL Pasture Improvement

B. Tausagi Fencing Water Supply Roads Buildings Vehicles & Equipment Fertiiising existing coconuts Planting 350 ac. cocoa * *

C. Faleata Fencing Water Supply Roads Buildings Vehicles & Equipment Fertilising existing coconuts | Planting 150 ac. cocoa Pasture Improvement

1Refercrnee in text page 32, paras. 101 and 10Z 77 -

Appendix 9 Page 2

1981 1982 1983 1984 1985 OPERATION 1 2 3 4 1 2 3 4 t 2 3 4 1 2 3 4 t 2 3 4

D. Casala Fencing Water Supply Roads Buildings Vehicles & Equipment Fertilising Existing Coconuts Fertilising Existing Cocoa Planting 180 ac, cocoa I A

E. Tuana'imato Fencing Water Supply mm Roads Buildings Vehicles & Equipment Fertilising Existing Coconuts Fertilising Existing Cocoa

F. Lesea Fencing Water Supply Roads Buildings Vehicles & Equipment Fertilising 75 ac. cocoa

G. Tafeigata Fencing Water Supply Roads Buildings Vehicles & Equipment Fertilising Existing Coconuts Fertilising Existing Cocoa

.~ ~~~ L - 78 -

Appendix 9 Page 3

1981 1982 1983 1984 1985 OPERATION- 12A 34 1 2 3 4 1 2 3 4 1 4 122 343

II. WSTEC Overall Storage Sheds Vehicles

111. Soap Processing Building Equipment Vehicles

IV, Coco-Stem Utiiization Buildings Equipment VeThicles

V, Consultants . . . . - Appendix 9 IMPLEMIENTATION SCHEDULE p?ge 4

PART B: RESEARCH AND EXTENSION

COMPONENTS 1981 1982 1983 1984 1985

______--- - - . . - - .-- - - -i-

1. Consultants Recruitment of consultants Engagement of consultants

(a) Extension Program Organizer - - f-- - - (b) Tree Crop/Horticulture Agronomist U U E U U U E U U I

2. Overseas Training Degree/Diploma level training U - E E u ..... Short term training E i

3. Civil Works Construction of Nu'u Extersion Center Construction of field lab at Togitogiga Construction of 2 houses at Nu'u Construction of 24 Field Ext. Centres

Upgrading 2 Field Extension Centres

4. Vehicles Procurement of vehicles

5. Machinery and Far. t&'quipment Farm equipment for extension centres

Equipment for Nu'u E,st. Centre Procurement of tructor, Equipment for Project Office - 80 - Appendix 10

LOAN ALLOCATION BY CATEGORY AND SOURCE OF FUNDS ($ '000)

Category ADB ADAB IDA TOTAL

I. Civil Works- a) Buildings 239.6 69.5 380.8 689.9 b) Fences 84.5 - - 84.5 c) Roads 102.6 - - 102.6 d) Water Supply 105.2 - - 105.2 Sub-Total 531.9 69.5 380.8 982.2 II. Equipment & Vehicles a) Soap Factory 651.8 - - 651.8 b) Coffee Processing 21.9 - - 21.9 c) Coconut Woy Utilization - 126.9 - 126.9 d) Machinery - 182.1 - 67.0 249.1 e) Vehicles 202.8 - 85.3 288.1 f) Miscellaneous 31 78.4 195.4 120.4 394.2 Sub-Total 1137.0 322.3 272.7 1732.0

III. Plantation Supplies -/ 102.9 257.6 - 360.5

IV. Fertilizer - 668.6 - 668.6

V. Fellowships - - 164.1 164.1

VI. Consultants 478.2 - 656.5 1134.7

VII. Unallocated 750.0 682.0 525.9 1957.9 T o t a 1 3000.0 2000.0 2000.0 7000.0

1/ Foreign cost content of civil works will be financed on fixed percentages as follows: a) Buildings - Soap Factory and cocoa and copra storage sheds - 88%; other WSTEC buildings - 25%; buildings for research and extension - 40%. b) Fences - 50% c) Roads, except gates and cattle grids - 20% of total construction cost per mile; gates and grids - 90% d) Water Supply - Pump house - 25%; tanks - 90%; troughs - 50%. 2/ Machinery includes tractors, trailers, slashers, fertilizer spreaders and other farm equipment. 3/ Miscellaneous equipment includes pumps, water pipes, coffee hullers and driers, livestock equipment, spare parts, audio visual equLiprment and office equipment. 4/ Plantation supplies includes seeds, polybags, chemicals, etc.

Reference in text: page 28, para. 91 page 32, para. 104 page 33, para. 108 - 81 - Appendix 11 Page 1

STATUS OF WSTEC'S COMPLIANCE WITH PREVIOUS LOAN COVENANTS

STATUS OF COVENANT COMPLIANCE

1. Engagement of beef cattle management and other consultants (L.A. Schedule 5) Complied with.

2. Establishment of a Project Office within Complied with. 90 days of the date of the Loan Agreement (28 March 1977), headed by a Project Manager acceptable to the Bank; any change of Project Manager to be effected after prior Bank consultation (L.A. Schedule 6, para. 1).

3. Preparation of detailed program for the Complied with. rehabilitation of each estate and inform- ing the Bank about such programs (L.A. Schedule 6, para. 2).

4. WSTEC to purchase cacao pods and wet cacao Not complied with. WSTEC from smallholder producers (L.A. Schedule began such a program, but the 6, para . 3). practice was stopped at the request of the Government because some villagers selling cacao pods were not bona fide growers of cacao and pilfering was taking place on recognized smallholder cacao plantations.

5. WSTEC to inform Bank of names of Complied with. candidates selected for fellowship training and institutions where training is to be done. (L.A. Schedule 6, para. 4).

6. Site for the Agricultural Research Complied with. Station to be proposed to the Bank (L.A. Schedule 6, para. 5(a)).

7. Establishment of a Research Committee Complied with. within 90 days of the date of Loan Agreement (L.A. Schedule 6, para. 5(b)).

8. WSTEC to supply cattle to Department of Complied with. Agriculture for distribution to smallholders through the extension program implemented by the DOA (L.A. Schedule 6, para 6).

Reference in text: page 31, para. 99 - 82 - Appendix 11 Page 2

9. WSTEC to be exempt from Customs duties. Complied with.

10. Auditing of accounts annually and Partly complied with. Copies furnishing to the Bank copies of the of accounts furnished late by accounts within 6 months of the closing one year. of the fiscal year (P.A. Section 2.09).

11. Maintenance of the consolidated debt/ Complied with. equity ratio of not higher than 70:30 (P.A. Section 2:12).

12. Maintenance of a current ratio of 1.5:1 Complied with. (P.A. Section 2.13).

13. Notifying the Bank of any proposal to Complied with. amend, suspend or repeal any provision of the Ordinance or Regulations (P.A. Section 2.17). WVESTERN SAMIOA TRUST ESTATES CORPORATION PROJECTED CASH FLOW 1979 - 2006 (WS$ '000)

1979 1980 1981 1982 1983 1984 1985 1990 1995 2000 2006

UNFLOW Net Profit 1068.9 1082.4 1133.8 1484.6 1729.2 1959.1 2141.7 1762.6 2251.8 2276.6 2290.6 ADB Loan, WSTEC 1 743. 1 1045.0 186.0 186.0 15U.0 -ADB Loan, WSTEC II 1570.8 485.9 166.3 50.1 37.0 DBWS Loan (2nd) 150.0 ADAB Grant 183.3 406. 6 333.4 281 2 335.0 RONFIUN 1811.4 IDA Loan 724.0 827.0 944.0 857.0 840.0 440.0 Depreciation 90.5 100.7 204.5 230.5 280.0 302.0 346.3 354.3 367.8 367.2 310.7 Total Inflow 3713.9 3102.1 4105.4 3737.6 3515.9 3432.4 3300.0 2116.9 Z619.6 2643.8 2601.3

OUTFLOW Investment Cost WSTEC I 1577.4 218.5 218.5 169.5 00 Investment Ccst WSTEC II 2706.1 1812.3 1122.3 709.2 747.6 Investment Cost, Savai'i 724.0 827 0 944.0 857.0 840.0 440. 0 RepLacement Cost WSTEC others 162.0 311. 7 162.0 Replacement Cost WSTEC 1 99.0 509. 1 99.0 Replacement Cost WSTEC II 63. 0 376. 2 376.2 376. 2 439. 2 Soap Processing - Plant 938.3 - Vehicles 17.0 Wood-by-Products - Civil Works 31. 9 - Equipment 124.4 4. 7 5. 3 - Consultant Services 25. 6 25. 6 Debt Servicing WSTEC r 154.0 154.0 154.0 154.0 154.0 Debt Servicing WSTEC II *154. 0 154.0 154.0 Debt Servicing N. P. F. -Ologogo 10.4 10.4 10.4 10.4 12.3 6.1 6.1 6. 1 6. 1 Debt Servicing N. P. F. -Meat Proc. 3.2 6.4 6.4 6.4 6.4 11. 6 8.4 8.4 Debt Servicing D. B. W. S. (lst) 20.0 20.0 20.0 20.0 20.0 20.0 20.0 Debt Servicing D.B.W.S. (2nd) 18.0 19.0 23.0 24.0 28.0 Debt Servicing RONFIN 45.3 271.7 271.7 271.7 950.9 Debt Servicing IDA 33.0 96.0 160.0 220.0 264.0 285.0 293.0 198.0 136.0 136.0 Contribution to Government 60.0 60.0 60.0 60. 0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 Total Outflow 90.4 3383.3 4353.6 3859.6 3019.9 2927.6 3241.4 1051.7 1061.0 789.2 196.0

Net Cash Flow 3623.5 (281.2) ( 248.2) (122.0) 496.0 504.8 58.6 1065.2 1558.6 1854.6 2405.3 Cumulative Cash Flow 3698.7 3417,5 3169.3 3047.3 3543.3 4048.1 41O6.7 8074.4 15437.8 24679.3 37443.55 rX l)ebt Service Coverage 20.0 4.3 2.7 2.2 2.1 2.3 1.6 2.7 4.2 8.7 19.1 -x

-- I - Reference in text: page 29, para. 94 page 31, para. 98 page 39, para- 125. WESTERN SAMOA TRUST ESTATES CORPORATION PROJECTED INCOMNE STATEMIENTS 1979 - 2006 (WSS '000)

1979 1980 1981 1982 1983 1984 1985 1990 1995 2000 2006

GROSS MARGIN

Copra WSTEC I 618. 6 361.5 438.2 540. 6 617. 3 618. 7 620.8 622.9 622. 9 622.9 622. 9 Cocoa WSTEC I 276. 3 117.1 130.2 130.2 130.2 130.2 130.2 130.2 130.2 130.2 130. 2 Copra & Cocoa WSTEC II - 503.0 605. 5 846. 3 1004.5 1124. 1 1270.3 1350.0 1494.6 1494. 6 1494. 6 Copra. Cocoa & Coffee IDA - (54.0) (66.0) (88.0) (134.0) (123.0) (207.0) 634.0 815.0 725.0 725.0 Coffee 28.5 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32. 0 Bananas 2.0 3.0 3.3 3.6 4.0 4.4 5.0 5.0 5.0 5.0 5.0 Taro 88.3 88.0 96.8 106.5 117.1 128.8 141.7 141.7 141.7 141.7 141.7 Beef Livestock & Hides 104.7 120.0 150.0 180.0 180.0 180.0 180.0 180.0 180.0 180.0 180.0 Piggery .9.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Feedlmilt (4.5) (2.0) - - - 4.0 4.0 4.0 4.0 4.0 4.0 00 Timber 29.9 31.0 65.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 Butchery 26.9 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 .Store 82.6 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 120.0 Service Station 60.5 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Engineering Shop 1.8 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Ancillary Service 31.9 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 Miscellaneous 122.0 140.0 140.0 140.0 140.0 140.0 140.0 140.0 140.0 140.0 140.0 Auckland ------Soap Factory 26.8 87.8 87.8 118.6 155.5 189.5 214.5 284.5 284.5 284.5 284.5 Wood By-products 6.7 6.0 6.0 56.2 56.2 80.5 80.5 105.4 105.4 105.4 105.4

Total Gross -Margin 1512.0 1768.4 2023.8 2461.0 2697.8 2904.2 3008.0 4024.7 4350.3 4260.3 4260.3 Admninistration Costs 388.2 400.0 400.0 400.0 400.0 400.0 400.0 400.0 400.0 400.0 400.0 Margin before interest & taxes 1123.8 1368.4 1623.8 2061.0 2297.8 2504.2 2608.0 3624.7 3950.3 3860.3 3660.3 Interest 29.0 275.1 471.0 503.5 485.7 450.7 411.4 269.8 128.8 14.0 - Taxes 25.9 10.9 19.0 72.9 82.9 94.4 54.9 1592.3 1569.7 1569.7 1569.7 C g Net Profit 1068.9 1082.4 1133.8 1484.6 1729.2.. 1959.1 2141.7 1762.6 2251.8 2276.6 2290.61z WESTERN SAMlOA TRUST ESTATES CORPORATION PROJECTED BALANCE SHEETS 1979 - 2006 (WS$ '000)

1979 1980 1981 1982 1983 1984 1985 1990 1995 2000 2006

Fixed Assets Estate land and buildings 3619.0 4394.4 5567.2 6392.9 6864.7 7012.7 7324.0 7344.0 7432.5 7486.4 8610.0 Estate plant, equipment & improvements 4177.2 5638.6 7658.9 9295.5 10348.0 11118.9 12856.6 15494.9 17622.9 19593.3 26782.0 Soap factory buiLdings &plant 938.3 970.0 994.7 1010.B 1010.6 1030.1 1038.2 1054.3 1128.5 1341.3 Deferred debts owing by I Government 517.8 766.4 1082.9 1329.9 1489.8 1489.8 1684.3 1536.0 1424.2 1382.9 1203.2 00 Total FixedAssets 8314.0 11737.7 15279.0 18014.0 19713.1 20632.0 22695.0 25413.4 27533.9 29591.1 37936.55n Current Assets Cash at bank and on deposit 221.9 160.6 171.5 161.5 283.2 '491.1 344.5 672.4 1559.4 2725.1 4411.6 Stocks 813.7 576.2 615.5 579-5 1016.2 1762.2 1236.2 2563.5 5944.9 10389.5 10818.9 Debtors, pre-payments. etc. 295.9 207.8 222.0 209.0 366.5 635.5 445.9 966.8 2241.6 3917.4 6341.6 Total Current Assets 1331.5 944.6 1009.0 950.0 1665.9 2888.8 2026.6 4202.5 9745.9 17032.0 21572.1

Total Assets 9645.5 12682.3 16288.0 18964.0 21379.0 23520.8 24721.6 29615.9 37279.8 46623.1 59508.6

Liabilities C urrent 217.6 111.9 424.5 487.5 707.4 1425.5 504.7 615.5 520.5 290. 1 136.0 Long-term 2828. 9 4889. 0 7048. 3 8176. 7 8642. 6 8107. 2 8087.1 5409. 7 2624. 2 704. 0 - Share-capital 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 1397.2 Reserves 520,1.8 6284.2 7418.0 8902.6 10631.8 12590.9 14732.6 22193.5 32737.9 44231.8 57975.4 Total Liabilities and Capital 96i .5 12682.3 16288.0 18964.0 21379.0 23520.8 24721.6 29615.9 37279.8 46623.1 59508.6

Current Ratio 6.1:1 8.4:1 2.4:1 1.9:1 2.4:1 2.0:1 4.0:1 6.8:1 18.7:1 58.7:1 - : Equity (%7)(Capital & Reserves: 0 Total Assets) 68% 61% 54% 54% 567e 59% 65% 80% 92% 98% 99% X Fixed Assets/Total Assets 86f% 93% 94% 95% 92% 88% 92% 86% 74% 63% 64-%, - 86 - Appendix 13 Page 1

ASSUMPTIONS AND COMPUTATIONS UNDERLYING FINANCIAL AND ECONOMIC EVALUATION

I. Yield Projections and Technical Coefficients

II. Assumptions Regarding Costs of Project Components

III. Product Prices

IV. Assumptions of the Financial and Economic Analyses

V. Financial Internal Rates of Return and Sensitivity Tests

VI. Economic Internal Rate of Return and Sensitivity Tests

Reference in text: page 38 paras. 120, 121 and 122 - 87 -Appendix 13 -87 -Page 2

I. YIELD PROJECTIONS AND TECHNICAL COEFFICIENTS

A. COPRA (i) Existing Coconuts Projections of yield improvements due to fertilizer application for existing coconut plantations have been based on current productivity and management capability on individual estates taking into consideration the maturity of the palms, genetic variability and soil conditions.

Table 1 ESTIMATES OF COPRA YIELD IN POUNDS/ACRE FOR EXISTING COCONUTS

Increase in Copra Yield due to Fertilising by Estate a! VAIPAPA TAUSAGI FALEATA CASALA TUANA'IMATO LESEA-/ TAFAIGATA

Acreages Under Project: 635 790 1,128 392 159 150 693

Present Yield: 667 1,000. 774 177 774 424 100

With Project: Year 1 667 1,000 774 177 774 424 100 2 667 1,000 774 177 774 424 200 3 825 1,200 1,000 275 1,000 424 400 4 1,075 1,400 1,250 475 1,250 424 600 5 1,250 1,500 1,500 600 1,500 424 800 6 1,250 1,500 1,500 600 1,500 424 1,000 7 1,250 1,500 1,500 600 1,500 424 1,200 Onwards

a/ Lesea coconuts were not considered worth fertilizing. - 88 - Appendix 13 Page 3

(ii) New Coconut Plartitis

Yield projections for new plantings have been based on observations made on selected "Samoan Tall" mother palms on WSTEC estates, suitably adjusted for variability in soil conditions and management capability.

Table 2: ESTIMATES OF COPRA YIELD FOR NEW COCONUT PLANTINGS IN POUNDS/ACRE

EXISTING SELECTED YEAR STA SAMOAN TALL

1 667 2 667 3 650 4 625 5 600 6 575 100 7 550 250 8 525 400 9 500 550 10 375 950 11 250 1,100 12 125 1,300 13 1,500 14 1,700 15-25 1,750

a/ The existing stand is thinned out in Years 10, 11, 12 and 13. - 89 - Appendix 13 Page 4

B. COCOA (i) Existing Cocoa

Projections of yield improvements due to fertilizer application for existing cocoa plantations have been based on the current productivity and management capability on individual estates, taking into consideration the debility of the plantations due to Phytophthera damage, genetic variability and soil conditions.

Table 3: ESTIMATES OF COCOA YIELD IN POUNDS DRY BEAN/ACRE'FOR'EXISTING COCOA

Increase in Cocoa Yield due to Fertilizing by Estate

CASALA TUANA'IMATO LESEA TAFAIGATA

Acreages Under Project: 82 930 74 693

Present Yield: 301 279 0 a! 308

With Project:

Year 1 301 279 - 308 2 430 430 - 475 3 480 480 120 530 4 300 5 450 6 600 7 6.75 8 750 9 800 Onwards

a/ Only the immature cocoa on Lesea is considered worth fertilizing. -90 Appendix 13 Page 5

(ii) New Cocoa Plantings

Yield projections have been made on the basis of planting Amelonado seedlings. Experimental results and. commercial plantation performance of Amelonado indicate its precociousness and disease resistance, particularly to Phytophthera. Yields of 2200 pounds of dry bean per acre have been noted under experimental conditions in the Solomon Islands while yields of 1900 pounds of dry bean per acre have been noted in Malaysia.

Table 4: ESTIMATES OF COCOA YIELD FOR NEW PLANTINGS IN POUNDS DRY BEAN/ACRE

YEAR NEW COCOA (AMELONADO)

1- 2 3 4 180 5 450 6 675 7 900 8 1,200 9 1,300 10 1,400 Onwards - 91 - Appendix 13 Page 6

C. CATTLE IMPROVEMENT

The improvement in carrying capacity of the pastures is brought about by:

(i) provision of water; (ii) planting improved pasture species; (iii) fertilizing the pasture; and (iv) improved fencing and handling facilities.

This improvement in carrying capacity results in the following benefits:

(i) increase in stocking rates; (ii) increase in carcass weight; (iii) decrease in mortality rate; and (iv) increase in calving percentage.

The estates where the carrying capacity of the pastures is to be improved will have a greater turnoff capacity.

Table 5: ESTIMATES OF STOCKING RATES IN ACRES PER 'LIVESTOCK UNIT (Steer Equivalents - SE)

Without Fertilizing With Fertilizing Type of Pasture No Water Water No Water Water

Improved Pasture 2.0 1.5 -1.5 1.1 Good Native Pasture 2.3 1.7 2.0 1.5 Poor Native Pasture 4.0 3.0 3.6 2.6 92 -Appendix 13 Page 7

The following benefits using constant 1979 prices would result from the. pasture improvement programme:

Table 6 : BENEFITS ACHIEVED THROUGH PASTURE IMPROVEMENT

300 Acres 490 Acres Vaipapa Faleata

Without Project

Carrying capacity 75 SE 213 SE Carcass weight- 290 lbs. 290 lbs. Annual turnoff carcass beef 10 tons 28 tons

With Project

Carrying capacitv 273 SE 445 SE Carcass weight.- 330 lbs. 330 lbs. Annual turnoff carcass beef 40 tons 66 tons

Incremental Beef 30 tons 38 tons

a/ Carcass weights are for 21 months old steers grazing under coconuts.

Value of 68 tons of incremental beef production resulting from pasture improvement is obtained assuming a price of WS$800 per ton, which is the average price received by WSTEC. For both the financial and economic analyses, the same price has been used since there is no international trading of beef. - 93 -Appendix 13 Page 8

D. COCONUT TIMBER PRODUCTION

Expected coconut timber production based on the WSTEC's replanting program is given in Table 7:

Table 7: PROJECTED COCONUT TIMBER PRODUCTION

Period 1982-1983 1984-1986 1987 Onwards

a) Acreage cleared/year 200 250 300 b) Trees available/year 8,000 10,000 12,000 c) Annual timber production based .on 12 fee-t length and 8 inch average diameter:

(i) lumber (mbf) export grade (50%) 80 100 120 local grade (50%) 80 100 120

(ii) posts & poles (mbf) 360 450 540

a/ mbf means a thousand board feet. - 94 - Appendix 13 Page 9

Basic Information and Production Assumptions

1. Total acreage of coconut above 50 years of age:

Mulifanua plantations 7,651 x 25% - 1913 Faleata plantation = 200 Casala plantation . 150 Experimental plot - 80 2343 acres

2. Number of old trees per acre: 40

3. Average usable length of coco stem: 36 feet (excluding trim allowances) of which: the first 12 feet (at 3 feet above base) are high-density. the second 12 feet are medium density wood. the third 12 feet are low density wood.

4. Average diameter per tree: First 24 feet is 8 inches = 100 board feet/log Next 12 feet is 6 inches = 28 board feet/log

5. Felling and bucking rates: 5 trees/hr x 7 hrs = 35/day

6. Hauling rate: 4 trips/day of 6-ton truck over 20 miles of road, carrying 1.2-foot logs, 25 logs/trip

7. Charcoal yield: 12-foot low-density log 6 inch average diameter has 2.36 cu. feet/log (.07 cu.meters). Assuming a density 300 kgs/cu.m., one ton of coco wood will require 3.33 cu.m.; at 20% recovery a ton of the wood will yield 200 kilograms of charcoal.

8. Fuelwood yield: The slabs and trimmings from coco lumber manufacture are high-density wood. Assuming a recovery of 20% fuelwood in milling and a density of 500 kgs/cu.m., every cubic meter of round logs sawn will yield 100 kgs. of fuelwood.

9. Number of days operating: 240 which is assumed to be divided into: 160 days for lumber production 80 days for post production

10. Maximum number of 12 foot logs that can-be milled:

80 logs/8 hour day for lumber 120 logs/8 hour day for posts (quarter)

11. Mill Capacity: Lumber: 80 x 50 bd.ft./log x 40% recovery = 1,600 bd.ft. at 160 days = 256,000 bd.ft./year 120 x 50 bd.ft./log x 90% recovery = 5,400 bd.ft. at 80 days = 432,000 bd.ft./year 95 - Appendix 13 Page 10

ASSUMPTIONS REGARDING COSTS OF PROJECT CO1PONENTS

A. COPRA

The cost of production and selling of copra has been determined from WSTEC accounts. A figure reflecting current costs has been computed from the 1979 costs and used as a constant in all calculations.

Table 8: ESTABLISHING PRODUCTION & SELLING COSTS OF COPRA (WS $) 1979 (10 months to October) Cost of Production

Labour 205,119 Stores 99,697 Insurance 3,275 Total 308,541

Tonnage 2520.85

Cost of Production per Ton 122r40

Cost of Selling

Salaries and wages 22,640 Transport and handling 12, 270 Empty sacks and twine 8,250 Electricity 390 Insurance 2,640 Sundries 200 Total 46,390

Tonnage 2520.85

Cost of Selling per Ton 18.40

Total Cost of Production & Selling $140.80 - 96 - Appendix 13 Page 11

Table'9: Cost of Production & Selling Per Acre WSTECGEstates

Copra Yield Cost Per Acre Estate lb/acre (WS $)

Vaipapa 667 41.92 Tausagi 1,001 62.91 Faleata 774 48.65 Casala 177 11.13 Tuana'imato 774 48.65 Lesea 424 26.65 Tafaigata 100 6.29

Average Cost/Acre $ 35.17

This cost per acre is assumed to remain constant since it is assumed that with increases in production there would be greater efficiencies in the use of resources and consequent economies of scale.

B. COCOA

The cost of production and selling cocoa has been determined from current selling costs and are reported in Table 10. - 97 - Appendix 13 Page 12

Table 10: ESTABLISHING PRODUCTION AND SELLING COSTS OF COCOA (WS $)

1979 (10 months to October)

Cost of Production

Labour 108,520 Stores 30,949 Insurance 1 650 Total 141,119

Tonnage 203

Cost of Production per Ton 695.17

Cost of Selling

Salaries and Wages 9,857 Levy, wharfage, Inspection fee, etc. 27,550 Transport and Handling 4,920 Electricity 500 General repairs and maintenance 750 Insurance 420 Total 43,997

Tonnage 181.8

Cost of Selling per Ton 242.01

Total Cost of Production & Selling $937.18

Cost of Production per Acre WSTEC II Estates

Copra Yield Cost per Acre Estate lb/acre (WS $)

Casala 301 125.93 Tuana'imato 279 116.73 Lesea 319 133.46 Tafaigata 308 128.86 Average Cost/Acre $126.25

This cost per acre is assumed to remain constant as with inrreases in production will come greater efficiencies in the use of resources and consequent economies of scale. - 98 - Appendix 13 Page 13

COCOA PLANTING COSTS

Planting cocoa under coconuts.

A. Nursery Costs

1. Cost of Seed

Amelonado to be imported from Vascular Streak Dieback free islands. WS $ 200 pounds a'c $4.61 per pound freight 922.00 1,000 pods at 20 cents per pod 200.00' TOTAL 1,122.00

Cost per sced - 4 cents (30 seeds per pod)

2. Size of Nursery

With a planting distance of 7.5 feet x 10 feet amongst coconuts planted 30 feet on the square, the cocoa density will be approximately 530 per acre. At a planting rate of 200 acres per annum, 106,000 seedlings will be required each year for five years to plant 1,000 acres. With supply requirements of 10% and poor germination, culling and death losses at 25%, the number of seed required per annum will be 157,000, with nursery space required for 140,000 seedlings;

An acre of nursery land provides for about 400,0004 seedlings (in two batches), therefore a 0.4 acre nursery is required for five years.

3. Costs of Half Acre Nursery

(a) Labour

Soil collection, sowing, fertilizer application, weeding, irrigation, spraying, selection & culling, maintenance & miscellaneous. WS $

Labour 583 man-days at $2.50 1,457.50 Foreman 60 man-days at $4.00 240.00 Total $ 1,697.50 - 99 - Appendix 13 Page 14

(b) Materials

Seeds, polybags, chemicals, fertilizer, spraying equipment, irrigation equipment, tools, shade, store, running costs and transport.

Cost per Annum WS $ 24,716.00

140,000 seedlings 24,716 1,698 26,414 Per seedling 18 cents 1 cent 19 cents

B. Windbreak Planting Costs for 200 Acres

Foreign Local Total

Labour - 481 481 Dadap cuttings - 613 613 Paraquat .4448 - 41448

4_448 1,094 5,542

C. Lining & Holing Costs (530 points)

Labour/Acre WS$/Acre

26 md at $2.50 65.00 2.6 md at $4.00 10.40 $75.40

D. Planting Costs (Including Fertilizer Application)

1. Labour WS $

Labour 7 md at $2.50 17.50 Foteman 0.7 md at $4.00 2.80 20.30

2. Materials (Fertilizer, Chemicals, tools) 48.00 13 - 100 -pendix Page 15

E. Weeding WS$/Acre 1. Labour 23.20 Years 2-5, 8 md at $2.50; 0.8 at $.400 Years 5 onwards, I md at $2.50; 0.1 md at $4.00 2.90

2. Materials 22.00 Tools & Chemicals - Years 2-5 Years 5 onwards 0.20

F. Fertilizing WS $ 1. Labour 15.00 Year 1, 6 md at $2.50 0.6 md at $4.00 2.40 17.40

5.00 Year 2 onwards, 2 md at $2.50 0.2 md at $4.00 0.80 5.80

WS$/Acre 2. Materials Foreign Local

2.00 Years 1-3, 200 lb/acre 21.00 2.00 Years 4 onwards - 220 lb/acre 23.00

G. Pruning WS $ 1. Labour 11.60 Year 1 - 4 x 2.50 + .4 x 4.00 14.50 2 - 5 x 2.50 + .5 x 4.00 3- 6 x 2.50 + .6 x 4.00 17.40 4 - 8 x 2.50 + .8 x 4.00 23.20 $2.00 per acre 2. Materials (tools, etc.) - 101 - Appendix 13 Page 16

H. Pest & Disease Control

1. Labour WS$/Acre

Year 1 4 x 2.50 + .4 x 4.00 11.60 Year 2 onwards 2 x 2.50 + 0.2 x 4.00 5.80

2. Materials WS$/Acre

Year 1 - fungicide and pesticides 20.00 Year 2 onwards 10.00

I. Cocoa Planting Schedule

Year 1 Year 2 Year 3 Year 4 Year 5

Tausagi 200 150 Faleata 50 100 Casala 100 80 Vaipapa 120 200

COCONUT REPLANTING COSTS (WS$)

A. Nursery Costs

1. Seed Costs: WS$

Cost per nut including transport to nursery 0.02 Total Cost per nut 0.02

2. Seed Numbers

A field spacing of coconuts at 30 feet on the triangle to allow for intercropping gives a plant density of 56 palms per acre. With 5% infilling and 30% culling from the nursery, 84 nuts are required per acre to be planted.

3. Nursery Size

At a planting rate of 200 acres per annum 16,800 seedlings are required or about four acres-of nursery and germination beds. (4,800 seedlings per acre of nursery) - 102 - Appendix 13 Page. 17

4. Cost per Acre of Nursery

(a) Labour:

(i) Germination Bed

Preparation of seed bed & seed nVts, planting seed nuts, watering, culling and selec.tion

(ii) Nursery

Soil collection, filling bags, manual weeding of bags, chemical weeding between bags, watering, fertilizing, pest & disease control, selection & culling, miscellaneous. WS$

Labour 325 man days 813 Foreman 32 man days , 128 $1041

(b) Materi,.;2s

Seed, polybags, chemicals, fertilizer, tools, irrigation and transport. $ 1,278

For 3,192 seedlings Cost per polybag seedling $0.70 (Foreign Cost $0.40; Local Cost $0.30)

B. Lining, Holing & Planting Costs: (Year 1)

Labour Costs:

Labour 4.0 md at $2.50 $ 10.00 1.60 Foreman 0.4 md at $4.00 $ 11.60 - 103 -

Appendix 13 Page 18

C. Thinning Costs (Years 10, 11, 12 & 13)

1. Labour Costs:

Labour 14.8 md at $2.50 $ 37.00 Foreman 1.48 md at $4.00 6.00 $ 43.00

2. Materials

Purchase & Operation of Chain Saws 4.00 Chemicals & innoculum 3.00 $ 7.00

D. Weeding Costs: (Years 1-8)

1. Labour WS$/Acre

Year 1 Labour 10 md at $2.50 25.00 Foreman 1 md at $4.00 4.00 29.00

Years 2 Labour 8 md at $2.50 20.00 to 8 Foreman 0.8 md at $4.00 3.20 23.20

2. Materials:

Chemicals - Year 1 only 23.00

E. Fertilizing Costs:

1. Labour WS$/Acre

Labour 1.5 md/acre at $2.50 3.75 Foreman 0.15 md/acre at $4.00 0.60 4.35

2. Materials WS$/Acre FC LC

Year 1 44 lb, 12-5-20/acre at 259/ton 4.70 0.40 Year 2 88 lb, 12-5-20/acre at 259/ton 9.30 0.90 Year 3 132 lb, 12-5-20/acre at 259/ton 14.00 1.30 Year 4 176 lb, 12-5-20/acre at 259/ton 18.60 1.70 Year 5 220 lb, 12-5-20/acre at 259/ton 23.30 2.20 YIYO 220 lb, 12-5-20/acre at 259/ton 23.30 2.20

(FC $237; LC $22) - 104 -

Appendix 13 Page 19

F. Pest & Disease Control:

1. Labour WS$/Acre

Labour 1 md at $2.50 2.50 Foreman 0.1 md at $4.00 0.40 $2.90

2. Materials

Chemicals Year 1 22.00 Year 2 18.50 Year 3 & onwards 15.00 - 105 - Appendix 13 Page 20

FERTILISING EXISTING COCONUTS:

A. Rate:

220 pounds per acre of 12N: 5P:20K is to be applied to existing coconuts which have a planting distance of 30 ft. on the square or 48 palms per acre.

B. Cost of Fertilizer:

The current cost of fertilizer CIF Apia is WS$233 per ton. To this a local cost of $18 per ton for handling, wharfage and transport to store and $8 per ton (FC $4; LC $4) to cover movement to plantation and into the field. This gives a total cost of $259 per ton consisting of $237 foreign cost and $22 local cost.

C. Cost of Application:

1.5 mandays per acre are required to apply the fertilizer.

WS/Acre

1.5 md at $2.50 3.75 0.2 md at $4.00 0.80 $4.55

D. Time of ApElying:

Application will commence in Year 2.

FERTILISING EXISTING COCOA

A. Rate:

The original stands of cocoa trees were planted at 306 per acre (12 feet square) and at this density an application rate of 220 pounds per acre is equivalent to 0.72 pounds per tree. Due to wind damage and tree mortality, the existing stands of cocoa now only hold about 200 trees per acre on the average and to broadcast fertiliser at 220 pounds per acre would be wasteful. But applying 0.72 pounds per tree to the existing stands results in an application rate of 145 pounds/ acre, which is adequate. - 106 - Appendix 13 Page 21

B. Fertilizer Cost:

As determined for coconuts, the cost would be WS$259 per ton including $237 per ton Foreign Cost and $22 Local Cost. This includes delivery to the field.

C. Cost of Application:

1.5 mandays per acre are required to fertilise cocoa at this density.

D. Time of Application:

Application will commence in Year 2. - 107 - Appendix 13 Page 22

Recommended Formula and Cost Per Ton of Laundry Soap

1 Ton of Laundry Soap = 65% FAT 684 kg FAT Mix per ton.

Raw Materials Unit Cost Total WS$ WS$

70% Tallow 479 kg 0.638 305.60 30% CNO 205 kg 0.33 67.65 Caustic soda 109 kg 0.374 40.77 Salt 102 kg 0.135 13.85

Additives

Sodium Hvdrosulphite 0.85 kg 2.5 1.70 Perfume 7.50 kg. 4.42 33.15 Colour 0.2 kg 26.53 5.12

Packing: 47 outer cartons 0.22 10.34 Sub-Total 478.18 Overheads 95.64 Contingencies 12.00 586.82

1 Ton of Laundry Soap WS$ 586.82 - 108 - Appendix 13 Page 23

Recommended Formula and Cost Per Ton of Toile t Soap

1 Ton of Toilet Soap Base = 78% FA = 82.1% FAT M x per ton.

Raw Materials Unit Cost Total WS$ WS$

30% coconut oil 246.3 kg 0.33 81.28 70% beef tallow 574.7 kg 0.80 459.76 Caustic soda 132 kg 0.374 49.37 Salt 123 kg 0.135 16.60

Additives

Sodium Hydrosulphite 0.85 kg 2.0 1.70 Marlon AS/3 acid 7.5 kg 1.80 13.50 Preventol 0.5 kg 5.00 2.50 Mg Sulphite 0.25 kg 0.80 0.20 Sodium silicate 10.0 kg 0.36 3.60 Perfume 10.0 kg 29.92 299.20 Lanoline 5.0 kg 2.00 10.00 Colour 0.2 kg 26.53 5.30 Titanium dioxide 2.0 kg 1.36 2.72 Sub-Total 945.73

Estimated 10,000 inner cartons 0.03 300.00 or wrappers

Estimated 140 outer cartons 0.20 28.00

Estimated manufacturing expenses 244.74

Contingencies 10.00

1 Ton of Toilet Soap WS$ 1,528.47 - 109 - Appendix 13 Page 24

Recommended Formula and Cost Per Ton of Soap Powder

Raw Materials Unlit Cost Total WS$ tWS$

40% Coconut oil - soap granules 400 kg 0.36 144.00 25% Sodium toipolyphosphate 250 kg 1.00 250.00 15% Sodium carbonate 150 kg 0.35 53.00 10% Sodium sulphate 100 kg 0.36 36.00 5% Ninionic material 50 kg 2.00 100.00 0.1% Optical bleacher 1 kg 25.00 25.00 0.5% Perfume 5 kg 5.00 25.00 Sub-Total 633.00

2,000 inner cartons for avg. 500 gr. est. 0.10 200.00

400 outer cartons for 50 pack 0.50 20.00 853.00

Contingencies (20%) 179.00 1 Ton of Soap Powder WS$ 1,031.00 - 110 - Appendix 13 Page 25

III. PRODUCT PRICES

A. COPRA

WSTEC markets its copra through the Copra Board of Western Samoa. The destinations of the copra exports from Western Samoa vary from year to year. At present the distribution of copra exports is as follows: 50% Europe, 25% New Zealand, and 25% Japan. The export figures indicate a decrease in sales to Europe and New Zealand (previously 60% and 33% respectively) and an increase in sales to Iypan (previously 7%) since the 1977 Appraisal for WSTEC I. - In the computation of the price to be paid to the producer, the following cost adjustments are applied by the Copra Board to the international price for copra:

(a) Government tax (levy) of 7% of the FOB price in excess of WS$ 100 per ton;

(b) A deduction for meeting the actual operating costs of the Board;

(d) Freight, shipping charges, etc.;

(e) Inspection fee, wharfage and weightbridge;

(f) Warehouse costs, and

(g) A profit/loss element used for price stabilization.

WSTEC receives the buying price paid by the Copra Board to producers in the warehouse at Apia, with a special allowance of $2 per ton added as a premium for the large quantities of good quality copra produced. It would be pertinent to note that other producer prices are lower due to handling charges etc. The "in warehouse price" is determined by deducting the following charges from the net (after 7% export duty) FOB price at Apia.

1/ WSTEC Agricultural Development Project in the Independent State of Western Samoa - Rep. No. SAM: Ap-8, 1977. - 11 1 - Appendix 13 Page 26

Current % Net FOB Price-

Transfer to Copra Reserve 8.26 Administration 3.19 Rent, storage, carriage, sundries 0.80 Fire insurance 0.32 Labour (screening, bagging, stacking, marking, unstacking) 1.07 Shrinkage allowance (4%) 3.32

The price that WSTEC receives for copra expressed as a percentage of the net FOB price at Apia varies from year to year as shown in Table 11.

Table 11: PRICES OF COPRA RECEIVED BY WSTEC

(WS$ TOO0) PER CENT Aetrage Net FOB WSTEC Ptice NET FOB

1976 150 133 89 1977 232 208 90 1978 260 225 87 1979 440 349 79 1980 (April) 313 262 84

For the purposes of the financial analysis the price received by WSTEC for its copra is taken as 80% of the projected net FOB price.

Price projections have been made using the "World Bank Price Prospects for Major Primary Commodities" published in January 1980. To determine the net FOB price at Apia, adjustments have been made for transit loss in weight (3 per cent), freight (cu5yently $85.30 to Hamburg) and 5% for insurance and other charges.-

1/ Copra Board of Western Samoa: Price Order, 29 April 1980.

2/ These are the charges currently used by the Copra Board in Western Samoa to determine the FOB price at Apia for purposes of determining appropriate producer prices. - 112 - Appendix 13 Page 27

Table 12: PRICE PROJECTIONS FOR COPRA

World Bank FOB Price Net FOB Ptice to Projected Prices Apia Price Apia WSTEC YEAR (Constant 1980 US$/MT) (WS$/Ton) (WS$/Ton) (80% Net FOB)

1980 594 426.93 399 319 1981 609 439.77 411 329 1982 587 421.58 394 315 1985 666 488.99 457 363 1990 616 446.19 417 333

For purposes of the economic analysis the FOB price at Apia has been computed based on the World Bank Projections as they represent the appropriate border price for Samoan copra exports.

B. COCOA

WSTEC markets its cocoa directly through brokers, not through the Cocoa Board and is not expected to pay Cocoa Board Expenses. However, WSTEC do pay a 3% stabilization levy to the Board and expect to receive a subsidy if prices decrease. In addition there is an export tax of 7% of the FOB price over WS$800 per ton.

Price projections have been made using the "World Bank Price Prospects for Major Primary Commodities" published in January, 1980. To determine the net FOB price at Apia, adjustments are made for transit loss in weight (2%), freight (currently $106.70) 7% exportl ax, 3% stabilization levy and 15 per cent for insurance and other charges.-

Table 13: PRICE PROJECTIONS FOR COCOA

World Bank FOB Prices Projected Prices Projected Prices Apia to WSTEC YEAR (Constant 1980 US cts/kg) (WS$/MT) (WS$ / MT)

1976 352 2,703.80 2,458 1981 333 2,552.00 2,320 1982 323 2,472.80 2,248 1985 268 2,036.10 1,851 1990 183 1,360.70 1,237

1/ These are the charges currently used by the Cocoa Board in Western Samoa to determine FOB price at Apia for purposes of determining appropriate producer prices. -113 - Appendix 13 Page 28

On examining the World Bank projections and the prices received by WSTEC for Cocoa for the period 1976-79, it was evident that the two price series compared favourably (Table 14).

Table 14: PRICE SERIES COMPARISON FOR COCOA

WORLD BANK Price Received Current Dollars Net FOB by WSTEC Year cts/kg WS$/M.T. Apia WS$/MNT.

1976 205 1,911 1,433 1,258 1977 379 3,533 2,682 2,711 1978 340 3,169 2,391 2,600 1979 327 3,048 2,290 2,383

In view of the close historical relationship between the projected international prices (net FOB Apia) and the price received by WSTEC, the World Bank projected price series apprppriately adjusted for freight, insurance, handling-and other charges was used in the financial analysis. In the case of the economic analysis, the net FOB price presented above was adjusted for the levies charged as export duty (7%) and 3% to the price stabilization fund.

C. BEFF

The average beef price (WS$ 800 per ton) obtained by WSTEC in 1979 was used in both the financial and economic analyses since no international trading of carcass beef takes place in Western Samoa.

D., SOAP

The prices used in the financial and economic analyses are export prices received by WSTEC in their current operations for laundry and toilet soap. Although the domestic market price is slightly lower, it was reasonable to use in the financial analysis since an upward revision in prices was likely with improvements in quality envisaged with the commissioning of the new plant. For soap powder, a conservative price has been used based on current prices for imported soap powder on the domestic market. The prices used in the analyses are given in Table 15. - 114 Appendix 13 Page 29

Table 15: SAMOA BRAND SOAPS EXPORT PRICES (US$)

Export Price Per Carton Toilet Soap 72 per ctn Bath Soap $ 16.65 - 100 per ctn Laundry $ 32.65 Soap - 28 per ctn Soap Powder $ 17.50 - Price/ton $1,200 (proj ected)

E. COCONUT STEM PRODUCTS

The main products from use the coconut stem available and exports are lumber, fence for domestic posts, charcoal and fuelwood. case of fence posts and fuelwood, In the for the since the product would be local market, current domestic entirely both the market prices have been financial and economic analyses. used in charcoal, In the case of lumber the current local and internatipnal and products prices for Western have been used in the financial Samoa economic analysis. In the case analyses, the border prices of the (FOB Apia) have been used. - 115 - Appendix 13 Page 30

IV. Assumptions Made in the Financial and Economic Evaluation

1. The economic life of the project components viz. estate rehabilitation, soap manufacture and coco stem product utilization have been assumed to be 25 years. It would be pertinent to note that the physical life of the plantations and the machinery provided would extend beyond the project life assumed for purposes of analyses. No salvage values have been assumed at the end of the project life. Replacement costs for machinery and equipment have been included in the analysis.

2. The project has been evaluated on a incremental basis over the economic life of the project. The incremental benefits and costs have been computed using existing costs and benefit streams of the respective project components as the datum.

3. The assumptions relating to yield and other technical coefficients

are discussed in Appendix 13, pages 2-9. . The projections are conservative estimates taking into consideration relevant technical parameters and existing management capacity in the country.

4. The prices of output for the respective project components are discussed in Appendix 13, pages .25-29. In the financial analysis, the prevailing market prices i.e., local and international prices where appropriate have been used.

In the economic analysis, all traded goods have been valued at their marginal (border) prices i.e., FOB Apia price converted to domestic currency at the OER. In cases where there is no comparable international price (non-traded goods) e.g. fence posts, the current purchasing price indicating consumer willingness to pay was used.

5. The prices of inputs for the respective project components are discussed in Appendix 13, pages 10-24. For all goods and services which are traded, the prices used in both the financial and economic analyses have been the marginal international (border) prices adjusted for the resource costs of individual transport, handling and distribution. Since, there are no import restrictions on the goods required for the project and no domestic industries producing item. which could provide any sizeable requirements of the project, it was considered convenient and appropriate to use CIF prices suitably adjusted for local costs of handling and distribution in both the financial and economic analyses. Non-tradable items such as buildings were also broken down into tradable and non-tradable items and accordingly priced. Non- tradable items were priced at the local purchase price. -16 - Appendix 13 Page 31

In the case of unskilled labour, the market wage rate of WS$ 2.50 per day was used in the financial analysis. However, in the economic analysis this was considered to be above the opportunity cost for rural labour. According to a recent study in Western Samoa, the subsistence production per capita amounted to WS$ 1.50 per day. In view of the social organization which prevails in Samoa where there are considerable transfer payments within families and the psychological preferences for leisure vis-a-vis work, the shadow wage rate was imputed to be WS$ 1.75. A conversion factor of 0.7 was therefore applied in the economic analysis to the market wage rate for unskilled labor used in the financial analysis.

6. No import duties and taxes will be charged on capital goods and production goods imported for the project as in the case of the other loans to Western Samoa. No adjustment for transfer payments were therefore necessary in the economic analysis.

7. The official exchang! rate used in the analyses is US$1.00 WS$ 0.9139 which was the mid-rate prevailing over the three months up to the time of appraisal. The unofficial rate for the US Dollar was very close to the OER. In view of the lack of any serious distortion in the exchange rate, no shadow exchange rate was computed for the analysis.

8. The following contingency factors were used in the analyses:

1980 1981 1982 1983 1984 1985

Price Rise Index: 10.5% 9% 8% 7% 7% 7%

Physical Contingencies

Civil Works at 15/ Equipment and Materials at 10% Consulta\lcy Services at 5%

9. A Sensitivity Analysis to determine the financial and economic viability of the project to changes in key aggregate variables was conducted and are reported in Appendix 13, page 43, Table 27.

10. In the case of the Agricultural Research and Extension component, no cost-benefit analysis was conducted, since the benefits of the project could not be precisely estimated. Details of the cost appear in Appendix 8. TABLE 16;, FINANCIAL ANiALYSIS VAIPAPA ESTATE

ITFWHYEAR 1 2 3 4 5 6 7 8 9 10 WJITHiOUTPROJECT it 12 13 14 15-25 INCOME (Ws$ 16000) Coconuts: Copra Yield (lb/acre) 667 667 650 625 600 575 550 525 500 475 450 400 400 400 400 Production, 1,635 ac. (tons) 487 487 474 456 438 420 401 383 365 347 328 292 ?q7 292 292 Price per ton 329 315 331 347 363 357 351 345 339 333 333 333 333 Tocal Tncome Copra 333 331 160.2 -153.4 156.9 158.2 159.0 149.9 140.8 132.1 123.7 115.6 109.2 97.2 97.2 Cattle 97.:? 97.'. Income Cattle 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 343 Total Income Witrhout Project 168.2 161.4 164.9 166.2 167.0 157.9 148.8 140.1 13t.7 123.6 117.2 105.2 105.2 105.2 COSTS (WS$ '000) 10_. P?roduction & Selling Costs-Copra($35.17) 57.5 5745 57.5 57.5 57.5 57.5 57.5 57,5 57.5 57.5 57.5 57.5 57.5 `7. 5 57.5 Cattle Hlusbandry 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1. 7 0. Total Costs Wi-hout Project 58.2 58.2 58.2 58.2 58.2 58.2 58.2 58.2 .58.2 58.2 58.? 58.2 WIHPROJECT 58.2 53.2 58.2 INCOM (ws$ '000) Coconuts: 535 Acres Fertilised Copra Yield (Ilbacre) 667 667 8`5 1.075 1,250 1.250 1,250 1,250 1,250 1,250 1,250 1,250 1.25:)1 1,250 1.250 Production (tons) 189 189 234 305 354 354 354 354 354 354 354 354 354 354 1,0 ce elne 354 Copra Yield (lb/acre-new plantings) 20 70 150 260 450 650 860 1,.080 .1.10 1.470 Copra Yield (lb/acre - existing stand) 667 667 650 625 600 575 550 525 500 375 250 125 -- Production (tons) 298 298 290 279 268 266 277 301 339 368 402 440 482 585 656 Total Production of Coors 487 487 524 584 622 620 631 655 693 722 756 794 836 939 1.010 Price aer, ton 329 315 J311 347 363 357 351 345 339 333 33 13 3133 Total Income Copra (WS5$ '000) 13 160.2 153.4 173.4 202.6 225.8 221.3 221.5 226.0 234.9 240.4 251.7 264.4 278.4 Cocoa: 312.6 336.3 120 Acres New ?lantinxs Cocoa Yield (lb/acre 180 450 675 900 1.200 1,300 1,400 1,4,00 1,400 Production (tons) t0 24 36 48 64 70 75 75 20ArsNew Plantin a 75 1 Cocoa Yield (lb-/acre I80 450 675 900 1,200 1,300 1,4.00 1,400 Production (tons) 16 40 60 80 107 .116 125 1.25 Total Production of Cocoa 10 40 76 108 144 177 191. 200 200 Price per ton 1.606 1.483 1.360 1.237- 1.237 1.237 1,237 1.237- 1,'37 Total Income Cocoa CWJS$'000) 16.1 59.3 103.4 133.6 178.1 218.9 236.3 247.4 247.4 income from Cattle 8.0 15.2 24.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 Total Income With Project 168.2 168.6 197.4 234.6 257.8 253.3 269.6 317.3 370.3 406.0 461.8 515.3 546.7 592.0 615.8 COSTS (WS$-000) Production & Selling Coats Copra 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 Production &Selling Costa Cocoa ------15.2 40.4 40.4 40.4 40.4 40.4 40.4 40.4 40.4 Cattle 'Hu-bandry 0.7 1.3 1.9 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Colt of Fertilising 635 Acres Coconuts 4.3 4.3 4.3 4.3 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 Co.,tof Replanting 1,000 acres Coconuts 25.3 35.1 44.2 53.3 62.4 65.6 67.9 69.9 66.4 64.4 62.4 60.4 58.4 58.4 55.8 Cost of Planting 320 acres Cocoa - - - 37.7 73.0 34.4 35.9 37.4 32.5 24.0 24.2 24.0 24.2 24.0 24.2 Cost of Pasture Improvement - 3.0 6.0 9.0 1.4 4.9 4.9 4.9 4.9 4.9 4.9 4.9 4.9 4.9 4.9 d FertiLiser Investment Costs 2.2 21.6 25.9 36.4 47.7 Fencing 16.7 33.5 16.7 Wa ter Supply 52.3 41.3 (lq~ : Roads 58.4 C Buildings 74.6 74.6 ).. Vehicles & Equipment 59.5 - - - - 60.4 -- 25.4 - 60.4 - Cntingencies 86.7 85.4 48.6 84.4 132.2 Tot~al Costs With Project 433.9 357.6 205.1 285.1. 381.0 245.8 204.41 233.1 250.1 214.2 '772.8 210.2 '08.4 208.2 205. icremental Income 0 7.2 32.5 68.4 90.8 95.4 120.8 177.2 238.6 282.4 344.6 410.1 441.5 486.8 5106 Incremental Cost 375.7 299.4 146.9 226.9 322.8 187.6 146.2 174.9 191.9 156.0 214.6 152.0 150.7 150.0 147.6 -Wet Cash Flow (375.7) (292.2) (114.4) (158.5) (232.0) (92.2) (25.4) 2.3 46.7 126.4 130.0 258.1 '91.3 336.8 363. 0 l Financial Internal Rate of Return: 9.8% a! Net Increment in:-

Years 16& 21 : 302.6 YearA 17 & 5: 337.6 TABLE 17: FINANCIAL ANALYSIS - TAUSAGI ESTATE

1981 7 8 9 o10 i 12 13 14 15-25 r T EM/ Y EARA 1 2 3 4 5 6

WIT-OUT PROJECT I !;o, ( WS $S-roo Coconuts: 1,000 1,000 1,000 I,OW 1.000 1,000 L,000 1.000 Coprs Yield (lb/acre) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 353 353 353 353 353 153 353 353 353 353 Production-tons (790 ac) 353 353 353 353 353 351 345 339 333 333 333 333 333 333 .. rice per ton 329 315 331 347 363 357 119,7 117.5 117.5 117.5 117.5 117.5 117.5 7otal Income Copra 116.1 111.2 116.8 122.5 128.1 126.0 123.9 121.8

C15is 0("SS '000) Coccnuts 27.8 27.8 27.8 27.8 27.8 27.8 27.8 27.8 27.8 Production & Selling Costs -Copra '7.8 27.8 27.8 27.8 27.8 27.8

W'ITH PROJECT Xl2Cc.e (iS- ' 000) 790 Ac Coconucs Fertilise 1,500 1,500 1,500 1,500 1,500 1,500 1,500 L,500 Coors Yield (lb/acre) 1,000 1,000 1,200 1,400 1,500 1,500 1,500 529 529 529 529 529 529 529 529 ?roduction-tons 353 353 423 494 529 529 529 345 339 333 333 333 333 333 333 Price pPr ton 329 315 331 347 363 357 351 182.5 179.3 176.2 176.2 176.2 176.2 176.2 176.2- moral Income Copra 116.1 111.2 140.0 171.4 192.0 188.9 185.7

OCOA 2'0 ac 1,200 1,300 1,400 1,400 1,400 1,400 1,400 1,400 0 'Cocoa Yteld (lblacre 180 450 675 900 107 116 125 125 125 125 12 5 125 'roduction tons 16 40 60 80 150 aC 1,200 1,300 1,400 1,400 1,400 1.400 1,400 Cocoa Yield (lb/acre) 180 450 675 900 94 94 Q4 Production-tons 12 30 45 60 80 87 94 94 196 212 219 219 219 219 219 "Total Production 16 52 90 125 167 1.360 1.237 1.237 1.237 1.237 1,237 1,?37 Price ger ton 1.984 1IS51 1.729 1.606 1.483 266.6 262.2 270.1 270.1 270.1 270.1 270.1 Total Income Cocoa 31.7 96.3 155.6 200.8 247.6 445.9 438.4 446.3 446.3 446.3 446.3 4L6.3 Total Income - With Project 116.1 111.2 140.0 203.1 288.3 344.5 386.5 430.1

COSTS (wS$'"000) 27.8 27,8 27.8 27.8 27.8 27.8 27.8 27.8 Pro>duction & Selling Costs - Copra 27.8 27.8 27.8 27.8 27.8 27.8 27.8 44.2 44.2 44.2 44.2 44.2 44.2 44.2 44.2 Production & Selling Costs - Cocoa 25.2 44.2 44.2 44.2 23,7 23.7 23.7 23.7 23.7 23.7 23.7 Fertilise 790 Ac Coconuts - 3.6 3.6 3.6 3.6 23.7 23.7 23.7 26.4 26.3 26.4 26.3 26.4 26.3 -S.4 Plant 350 Ac Cocoa 62.9 63.9 29.8 31.4 32.2 32.6 26.4 26.3 Fertiliser Investment Costx 8.8 31.3 28.2 28.6 28.9 Fencing 18.5 18.5 Water Supply - 73.9 Roads 54.7 Buildings 15.1 15.1 15.0 65.0 - 31.2 Vehicles & Equipment 66.9 - - - - 31.2 - - Cantingencies 68.0 82.5 38.3 38.2 45.3 187.1 153.3 122.0 122.1 122.0 122.1 Total Costs - With Project 322.7 316.6 342.1 154.8 182.0 159.5 122.1 122.0 122.0 320.9 328.8 328.8 328.8 328.8 328,8 Incremental Incose 0 0 23.2 80.6 160.2 218.5 262.6 308.3 326.2 159.3 94.2 125.5 94.2 94.3 94.2 94.3 incremental Costs 294.9 288.8 114.9 127.0 154.2 A31.7 94.3 94.2 226.7 203.3 234,6 234.5 234.6 234.5 af Cash Flov fSee(294.9) (288.8) (91.7) (46.4) 6.0 868 168.3 214.1 166.9 Financial Internal Rate of Return: 15.7' a/ Net Incremnt In: Years 16 & 21: 203.3 Years 17 & 25: 169.5

.,, TAILE I &: ' INAtNCIAL ANALYSEIS - FALEATA ESTATE

1981 MtEM/YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15-25 Z1r1,01VT PROJECT N;CWYE(WS$'000) Coconu,ts Ccpra Yield (lb/acre) 774 774 774 774 774 774 774 774 774 774 774 774 774 774 771. Prcduction, 1,128 ac (tons) 390 390 390 390 390 390 390 390 390 390 390 390 390 390 390 Price -er ton 329 315 331 347 363 357 351 345 339 333 333 333 333 333 333 Total Tncome - Copra 128.3 122.9 129.1 135.3 141.6 139.2 .136.9 134.6 132.2 129.9 129.9 129.9 129.9 129.9 129.9 Cattle Inco.e 22.4 2 2.4 22.4 22.4 22.4 22.4 22.4 22.44 2Z.4 i2.4 22.4 22.4 22.4 22.4 22.4 .otal Income Without Pr.ject 150.7 145.3 151.5 157.7 164.0 161.6 159.3 157.0 154.6 152.3 152.3 152.3 152.3 152.3 152.3 SJTS (ws$'000) Production & Selling Costs - Copra 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 Cattle Husbandry 1.8 1. 8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 otal Costs Without Project 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5 1Thn?2ROJECT :sC'.ME (SS$°000) Coconu ts -?ra Yield (lb/acre) 774 774 1,000 1,250 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Prcduction, 1,128 ac (tons) 390 390 504 630 755 755 755 755 755 755 755 755 755 755 755 Prize aer ton 329 315 331 347 363 357 351 345 339 333 333 333 333 333 333 rotal Income - Copra 128.3 122.9 166.8 218.6 274.1 269.5 265.0 260.5 255.9 251.4 251.4 251.4 251.4 251.4 251.4 ocoa 50 Acres New Plantings Yield (lb/acre) - - - - 180 450 675 900 1,200 1,3G0 1,400 1,400 1,400 1.,-30 1,'00 Production (tons) - - - - 4 10 15 20 27 29 31 31 31 31 31 100 Acres New Plancin a Yield (lb/acre) - - - - - 180 450 675 900 1,200 1,300 1,400 1,400 1,400 1,400 Production (tons) - - - - - 8 20 30 40 54 58 62 62 62 52 rct. - - - - 4 18 35 50 67 83 89 93 93 43 93 Cocoa Production 7 Price ner ton - - - 1.851 1,729 1,606 1.483 1,360 1,237 1.237 1.237 1,237 t,23 1,237 Income from Cocoa - - - - 7.4 31.1 56.2 74.2 91.1 102.7 110.1 115.0 115.0 115.0 115.0 income from Cattle 22.4 29.6 36.8 44.0 52.8 52.8 52.8 52.8 52.8 52.8 52.8 52.8 52.8 52.3 52.8 Total Income With ProJect 130.7 152.5 203.6 262.6 334.3 353.4 374.0 387.5 399.8 406.9 414.3 419.2 419.2 419.2 419.2 COSTS (2.S$'000) Production & Selling Costs - Copra 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 Production & Selling Costs - Cocoa - - - - 6.3 18.9 18.9 18.9 18.9 18.9 18.9 18.9 18.9 18.9 18.9 Cattle Husbandry 1.9 2.4 2.9 3.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Cost of Pasture Improvenent - 3.9 4.5 5.1 4.8 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 Plantin3 150 Acres Cocoa - 15.8 35.7 12.7 13.3 17.6 15.5 11.3 11.4 11.3 11.4 11.3 11.4 11.3 11.4 Fertilise 1,128 Ac Coconuts - 5.1 5.1 5.1 5.1 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 Investment Cost of Fertiliser - 32.3 37.4 37.0 38.8 - Fencing - 13.3 13.3 - Water Supply 54.3 27.6 - - Roads - 58.1 - - 3uildings - 38.8 38.7 - Vehicles & Equipment 92.6 - - - - 39,2 73.4 - 59.2 Contingencies 44.0 78.0 67.4 35.9 43.4 Total Costs With Project 232.5 315.0 244.7 139.0 155.4 181.9 120.6 116.4 189.9 116.4 175.7 116.4 116.5 116.4 116.5 Incre:rental Income 0 7.2 52.1 104.9 170.3 191.8 214.7 230.5 245.2 254.6 262.0 266.9 266.9 266.9 266.9 Increcental' Costs 191.0 273.5 203.2 97.5 113.9 140.4 79.1 74.9 148.4 74.9 134.2 74.9 75.0 74.9 75.0

St Ch Flo (191.0) (266.3) (151.1) 7.4 56.4 51.4 135.6 155.6 96.8 179.7 127.8 192.0 191.9 192.0 191.9

Financial Internal Rate of Return: 1S.Z a/ Net Increment In:

Years 16 & 21 : 132.7 Years 17 & 25 118.5

(D CD

Tr TABLE 19. FINANCTAL ANALYSIS -CASALA fSTATE

1981. ITEM/YEAR 1 2 3 4 5 6 7 8 9 10 1.1 12 13 14 15-25

.'3'T'iT PROJECT ticCCx (14S$COO) Copra Yield (lb/acre) 177 177 177 177 L77 177 177 177 177 177 177 177 177 177 1,77 7r~~'4uction,392 at (tons) 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 Price per ton M1J5) 329 315 331 347 363 357 351 345 339 333 333 333.- 333 333 333 -income from Coprz 10.2 9,8 10.3 10.8 11.3 lilt 10.9 10.8 10.5 10.3 10.3 103 10.3 10.3 10.3 Cozaa Yield (blbacre) 301 301 301 301 301 301 301 301 301 301 301 301. 301 301 331i

P: e c 229 ,1 -$230l8,851- 17 29 1.606 1,D.60 1 ____ 1,237 1."'' 1,237 1,237 :.z2 ' 1--:fro-iCnzoa 25.5 24.7 23.7 21.8 20.4 19.0 17.7 16.3 15.0 13.6 13.6 i,.6 13.6 . 'j noelftotPoect 35.7 34.5 34.0 32.6 31.7 30.1 2,8.6 2). 25j 3.9 23.9.. 2).15 _2

Frz-duction & Selling Costs - Copra 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13,8 13.8 13,0 13.8 13.n3 13.8 13.? i7.P Prodaiction & Selling Copts - Cacon 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10,3 10.3 ..0 3 10.3 1.0.3 X.0. irotalCosts Without Pro;ect 24.1 24.1 24.1 24.1. 24.1 24.1 24,1 24.1 24.1 24.1 24.1 24,1 24.1 24Al 2-..

'7TV PROJECT .NOCHE (,.JS$'000) zcpo-3 Yield (blbacre) 177 1.77 275 475 600 600 600 600 600 600 600 600 600 600 '600 Productio,-n. 392 ac (tons) 31 31 48 83 105 105 105 105 1.05 105 105 1.05 105 1.05 105 Price pet ton - !L4S$ 329 31.5 331 347 363 357 351 345 339 333 333 333 333 333 333 Income from Copra 1.0.2 9.8 15.9 28.8 38.1 37.5 36.9 36.2 35.6 35.0 35.0 35,0 35.0 35.0 35.0 Cocoa: "=kgres Existing Cocoa Cocoa Yield (1b/acr.) 301 430 480 480 480 480 480 480 480 480 480 4R0 48Q0 480 480 production -tons 11 15 17 1.7 17 17 17 17 I 7 17 17 17 17 17 17 N 100 Acres Neil Plantings Yf.ld (Ib/scre) - - - - - 180 450 675 900 1, 200 1.300 1,400 1,400 1,400O 1,400 Production - - --- 8 20 30 40 54 58 62 62 62 52 £ 80 -9resNewPlanting Yield (lb/ acre ------180 450 675 900 1,200 1,300 1,400 1,400 1,400 Production ------6 16 24 32 43 46 50 50 50 Total Cocoa Production it 15 17 17 17 25 43 63 81 103 118 125 129 129 129 j'riceper ton 2,320 2.248 2,115 1.983 1,851 1.729 1.606 1,483 1.360 1.237 1,237 1.237 1,237 1,237 1,237 Income frosm Cocoa 25.5 33.7 36.0 33.7 31.5- 43.2 69.1 93.4 110.2 127.4 146.0 154.6 159.6 159.6 159.6 Total Income With Project 35.7 43.5 51.9 62.5 69.6 80.7 106.0 129.6 145.8 162.4 181.0 189.6 194.6 194.6' 194.6 M~STS (WJS$'ODO) Production & Selling Costs - Copra 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13,8 Prodiction & Selling Costs - Cocoa 10.3 10.3 10.3 10.3 10.3 23.0 33.1 33.1 33.1 33.1 33.1 33.1 33.1 33,1 33.1 Fertilise 392 Ac Coconuts - 1.8 1.8 1.8 1.8 11.7 11.7 11.7 11.7 11.7 1.1.7 11.7 11.7 11.7 11.7 Fertilise 82 ac Cocoa - 0.4 0.4 0.4 0.4 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1L8 1.8 1.8 Planting 180 acres of Cocoa - - 31.5 33.5 15.3 20.5 21.1 16.9 13.6 13.5 13.6 13.5 13.6 1.3.5 13.6 Fertiliser Investment Coats - 11.3 15.7 17.2 1.5.5 Fencing - - 9.8 Water Supply 9.6 9.4 - - Roads - 53.6 - - Su 1z!tngs 15.6 15.5 15.4 Vehicles & Equipement 50.4 - - -- 25.2 - 44,9 - 25.2 Contingencies 22.6 36.8 37.3 31.7 23.1 'otai Costs With Projlect 122.3 152.9 136.0 108.7 80.2 96.0 81.5 77.3 118.9 73.9 99.2 73,9 74.0 73.9 74.0 Incren-ental Income 0 9.0 1.7.9 29.9 37.9 50.6 77.4 102.5 120.3 138.5 157.1 165.7 170.7 170.7 170.7 Incremental Costs 98.2 128.8 111.9 84.6 56.1 71.9 57.4 53.2 94.8 49.8 75.1 49.8 49.9 49.8 49.9 N4etCash FIov (98.2) (119.8) (94.0) (54.7) (18.2) (21.3) 20.0 49.3 25.5 88.7 82.0 115.9 120.8 120.9 1.20.8 &L

Financial Internal Rate of Return: 11.9% a/Nat Increment in: [

Years 16 & 21.: 95.6 years 17 & 25: 75.9

I 1 TABLZ 0: FINANCIAL ANALYSIS - TlANA'IMATO eSTATE

1961. ITEM/YEAR I 2 3 4 5 6 7 8 9 10 tl 12 13 14 15-25

'ITHOCT PROJECT tNCOE (WsSS'°°°) 930 Acres Coco&: Cocoa Yield (lb/acre) 279 279 279 279 279 279 279 279 279 279 279 279 279 279 2?9 Production (tons) 115 115 115 115 115 115 115 115 115 115 115 115 115 115 115 Price per ton 2.320 2.248 2.165 1.963 1.851 1.729 1.606 1.483 1.360 *1.237 1.237 1,237 1.237 ;,237 1,237, Ircorne from Cocoa 266.8 258.5 243.2 228.0 212.9 198.8 184.7 170.5 156.4 142.3 142.3 142.3 142.3 142.3 142.3 159 Acres Coconuts: Copra Yield (lb/ac) 774 774 774 774 774 774 774 776 774 774 774 774 774 774 774 Production (tons) 55 55 55 55 S5 55 55 55 55 55 S5 55 S5 ;5 ;5 Price per ton 329 315 331 347 363 357 351 345 339 333 333 333 333 333 333 incone from Copra 18.1 17.3 18.2 19.1 20.0 19.6 19.3 19.0 18.6 18.3 18.3 18.3 18.3 18.3 18.3 Total Income Without Project 284.9 275.8 261.4 247.1 232.9 218.4 204.0 189.5 175.0 160.6 160.6 160.6 160.6 160.6 16'.6 COSTS & Selling Cocoa 117.4 117.4 117.4 117.4 llJ.4 1rodution117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.- 117.4 Pruning (4.0 .:) 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 Production & Selling Copra 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 Total Costs Without Project 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2 132.2

'WT PROJECT ixCOME (WS$'000) 930 Acres Cocoa: Cocoa Yield (lb/acre) 279 430 480 480 480 480 480 480 480 480 480 480 480 480 480 Preduction (tons) 115 179 199 199 199 199 199 199 199 199 199 199 199 199 199 Inco. from Cocoa 266.8 402.4 420.9 394.6 368.3 344.1 319.6 295.1 270.6 246.2 246.2 246.2 246.2 246.2 246.2 159 Acres Coconut: Copra Yield (lb/acre) 774 774 1,000 1,250 1,500 1,500 1,500 1,500 1.500 1,500 1,500 1,500 1,500 1,500 1,500 'z Production (tons) 55 55 71 89 106 106 106 106 106 106 106 106 106 106 106 Incene from Copria 18.1 17.3 23.5 30.9 - 38.5 37.8 37.2 36.6 35.9 35.3 35.3 35.3 35.3 35.3 35.3 Total Income With Project 284.9 419.7 444.4 425.5 406.8 381.9 356.8 331.7 306.5 281.5 281.5 281.5 281.5 281.5 281.5 COST5 (WS$'000) production & Selling Costs - Cocoa 117.4 117.4 17.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 117.4 Production & Selling Costs - Copra 5.6 5.6 5.6 5.4 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 Pruning Cocoa 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 Fertilise 930 Ae Cocoa - 4.2 4.2 4.2 4.2 19.8 19.8 19.8 19.8 19.8 19.8 19.8 19.8 19.8 19.8 Fertilise 159 Ae Cocornts - 0.7 0.7 0.7 0.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 Fertiliser Invetment Costs - 19.6 19.6 19.6 19.6 Fencing - - 16.0 Water Supply 10.1 10.1 Roads - - 53.8 suildings 21.2 21.2 21.1 Vehicles & Equipment 120.5 - - - - 50.5 - - 86.6 - 50.5 Contingencies 45.5 22.3 57.7 14.7 17.2 Total Costs With Project 329.5 210.3 305.3 171.4 173.9 207.2 156.7 156.7 243.3 156.7 207.2 156.7 156.7 156.7 156.7 Incrcmental Income 0 143.9 183.0 178.4 173.9 163.5 152.8 142.2 131.5 120.9 120.9 120.9 120.9 120.9 120.9 Incrental Costs 197.3 78.1 173.1 39.2 41.7 75.0 24.5 24.5 111.1 24.5 75.0 24.5 24.5 24.5 24.5 -et Cash Flow (197.3) 65.8 9.9 139.2 132.2 88.5 128.3 117.7 20.4 96.4 45.9 96.4 96.4 96.4 96.4 a/

Financial Internal Rate of Return: 39.9% a/ Net Increment In: >

Years 16 & 21 45.9 Q r' Years 17 & 25 9.8 i(D 1S g TAILE 2 1: FINANCIAL ANALYSIS - LESEA ESTATE 1981 ITEM/YEAR 1 2 3 4 5 6 7 8 3 10 11 12 13 14 15-25 WITHOUT PROJECT INCOtE Coconuts - 150 Ac Copra Yield (lb/acre) 424 424 424 424 424 Production 424 424 424 424 424 424 424 (tons) 28 28 28 28 424 424 424 28 28 28 28 28 28 28 Price per ton 329 315 331 28 28 28 28 347 363 357 351 365 339 333 Total Income from Copra 9.2 333 333 333 333 333 8.8 9.3 9.7 10.2 10.0 9.8 9.7 Cocoa - 150 AC 9.5 9.3 9.3 9.3 9.3 9.3 9-3 Cocoa Yield (lb/acre) 319 303 288 274 260 247 235 223 212 201 191 181 Produiction - tons 21 20 19 172 163 155 18 17 17 16 15 14 13 Price per ton 2,320 2.248 2,115 13 12 12 11 10 1.983 1[851 1,729 1,606 1.483 1.360 1,237 Total Income - Old Cocoa 48.7 45.0 1,237 1,237 1.237 t,237 1,237 40.2 35.7 31.5 29.4 25.7 22.2 19.0 Cocoa - 75 Ac 16.1 16.1 14.8 14.8 13.6 12.4 Yield (lb/acre) - - 60 150 225 300 350 400 400 400 400 Production - tons - - 400 400 400 400 2 5 8 10 17 13 13 13 Total Income - Nlew Cocoa - 13 13 13 13 13 - 4.2 9.9 14.8 17.3 19.3 19.3 Total Income - Cocoa 17.7 16.1 16.1 16.1 16.1 16.1 16.1 48.7 45.0 44.4 45.6 46.3 46.7 45.0 rotal Income Without Project 41.5 36.7 32.2 32.2 30.9 30.9 29.7 57.9 53.8 53.7 55.3 56.5 56.7 54.8 51.2 28.5 COSTS: 46.2 4L.5 41.5 40.2 40.2 39.0 37.8 Production & Selling Costs - Copra 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 Production 5.3 5.3 5.3 5.3 5.3 5.3 & Selling Costs - Cocoa 18.9 18.9 28.4 28.4 5.3 28.4 28.4 28.4 28.4 28.4 28.4 28.4 Pruning Cocoa 0.8 0.8 28.4 28.4 28.4 28.4 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Total Costs Without Project 25.0 0.8 0.8 0.8 0.8 0.8 25.0 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5- 34.5 34.5 34.5 34.5 VITH PROJECT INCOME 150 Acres Cocoa/Coconuts 57.9 53.8 49.5 45.4 41.7 39.4 35.5 31.9 Cocoa 75 Acres 28.5 25.4 25.4 24.1 24.1 22.9 21.7 Cocoa Yield (lb/acre) - - 120 30Q 450 600 675 750 800 800 Production - tons - 800 800 800 800 800 t> - 4 10 15 20 23 25 27 Price per ton 27 27 27 27 27 27 'V - - 2.063 1.957 1.851 1.729 Income 1.606 1,483 1.360 1.237 1.237 1.237 1.237 from New Cocoa - - 8.3 19.6 1,237 1.237 27.8 34.6 36.9 37.1 36.7 33.4 33.4 Total Income With Project 57.9 33.4 33.4 33 53.8 57.8 65.0 69.5 74.0 72.4 69.0 COSTS: 65.2 58.8 58.8 57.5 5 75 56.3 55.1 Production & Selling Costs - Copra 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 - 5.3 Production & Selling Costs - Cocoa 18.9 5.3 5.3 5.3 5.3 18.9 28.4 28.4 28.4 28.4 28.4 28.4 Prune Cocoa 28.4 28.4 28.4 28.4 28.4 28.4 28.4 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Fertilise 75 Ac Cocoa 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 - 0.3 0.3 0.3 0.3 1.6 1.6 Fertiliser Investment 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Costs - 1.3 1.3 1.3 1.3 1.6 Fencing - - - 4.7 Water Supply - 25.7 9.8 - Roads - 7.3 Buildings - 52.0 - Vehicles & Equipment 8.8 - - - - 10.7 Continencies - - 10.7 2.6 31.7 9.4 3.8 1.1 Total Costs With ?ro1iect 36.4 136.0 62.6 44.6 37.2 46.8 36.1 36.1 Incremental Income 36.1 36.1 46.8 36..1 36.1 36. 36.1 0 0 4.1 9.7 13.0 17.3 17.6 17.8 Incremental Costs 19.O 17.3 17.3 17.3 17.3 17.3 17.3 11.4 111.0 28.1 10.1 2.7 12.3 .Nt lash tLom (11.4) 1.6 1.6 1.6 1.6 12.3 1.6 [61.6 (111.0) (24.0) (0.4) 10.3 5.0 16.0 16.2 1.6 17.4 15.7 5.0 15.7 15. 7 15.7 15. 7

Ftnanctal Internal Rate of Return: 5.52 a/Net Increment In: 1 Years 16 & 21: 5.0 ro *8 I^P

; C A I. TAILE Z2: FINANCIAL ANALYS IS- TAFAir.ATA ESTATE

1981 ITEM/YE-AR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 L5-25

WITHOUT PROJECT

Coconuts - 693 ac Copra Yield (LbTacre 100 200 3C0 400 500 600 700 700 700 700 700 700 700 700 700 Production (tons) 31. 62 93 124 1.55 186 217 217 2 L7 21.7 217 21.7 217 217 21.7 ?ice per ton 329 315 331 347 363 357 351 345 339 333 333 333 333 333 333 icome from Copra 1.0.2 19.5 30.8 43.0 56.3 66.4 76.2 74.9 73.6 72.3 72.3 72.3 72.3 72.3 72.3 Cocoa - 693 Ac Cocoa Yield (lb/acre) 308 3b8 308 308 308 308 308 308 308 308 308 308 308 308 305 Poduction - tons 95 95 95 95 95 9 95 59 59 59 59 Pice per ton 2.320 2,246 2,115 1.983 1,851 L,729 1.606 1.483 1.360 1,237 1,237 1.237 1.237 1.237 1.237 icone from Cocoa 220.4 21.3.6 200.1. 188.4 175.8 1.64.3 1.52.6 140 .9 129.2 117.5 117.5 117.5 117.5 1.17.5 117.5 Total Income Without Project 230.6 233.1 230.9 231.4 232.1 230.7 228.8 21.5.8 202.8 1.89.8 189.8 189.8 189.8 189.8 189.8 COSTS Production & Selling Costs - Copra 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24..-. tm rzduction & Selling Costs - Cocoa 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 837. 5 87.5 87.5 87.5 f 7.i Pruning Cocoa 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total Costs Without Project 1.16.9 1.16.9 116.9 116.9 116.9 116.9 1.16.9 116.9 116.9 116.9 116.9 11.6.9 116.9 116.9 116.9

WIYPROJECT I\NCCIE Coconuts - 693 Ac Cpra Yield (lb/acre) 100 200 400 600 800 1,000 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1.zoo Pro-duction - tons 31. 62 124 186 258 319 371 371 371 371. 371 371 371 371. 371 Price per ton 329 315 331 347 363 357 351 345 339 333 333 333 333 333 333 Incoc:e from Copra 10.2 19.5 41.0 64.5 93.4 1.10.3 1.30.2 128.0 M?.8 123.5 123.5 123.5 135 L23.5 123.5 Cocoa :- 693 Ac "4 Ccoa Yield (lb/acre) 308 475 530 530 530 530 530 530 530 530 530 530 530 530 530 UL- Production - tons 95 147 164 164 164 164 1.64 164 164 164 164 164 164 t64 164 Pice per ton 2,320 2.248 2,115 1,983 . 1,851 1,729 1.606 1,483 1.360 1.237 1,237 1.237 1,237 1,237 1,237 Income from Cocoa 220.4 330.5 346.9 325.2 303.6 283.6 263.4 243.2 223.0 202.9 202.9 202.9 202.9 202.9 202.9 Total Income With Project 230,6 350.0 387.9 389.7 397.0 393.9 393.6 371.2 348.8 326.4 326.4 326.4 326.4 326.4 326.4, OOSTS5: Production & Selling - Coconut 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 24.4 Production & Selling - Cocoa 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 87.5 Prune Cocoa 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Fertilise 693 Ac Coconuts - 3.2 3.2 3.2 3.2 20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 Fertilise 693 Ac Cocoa - 3.2 3.2 3.2 3.2 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 Fertiliser Investment Costs - 29.2 29.2 29.2 29.2 Fencing - - - 3.7 Water Supply - 23.7 -- Roads - - - 43.8 luildings 12.5 12.5 12.5 - Vehicles & Equipment 54.6 - - - - 31.2 -- 44.6 - 31.2 Contingencies 20.1. 28.7 24.1 49.9 24.9 Total Costs With Project 204.1 217.4 189.1 249.9 177.4 183.7 152.5 152.5 197.1 152.5 183.7 152.5 152.5 152.5 152.5 Incremental Income 0 116.9 1.57.0 158.3 1.64.9 163.2 164.8 1.55.4 146 .0 136.6 136.6 136.6 136.6 136.6 136.6 Incremental Cost 87.2 100.5 72.2 133.0 60.5 66.8 35.6 35.6 80.2 *35.6 66.8 35.6 35.6 35.6 35.6 Net Cash Flow (87.2) 16.4 84.8 25.3 104.4 96.4 129.2 119.8 65.8 101.0 69.8 1.01.0 101.0 101.0 101.0 at

Financial Internal Rate of Return: 62.4% a! Net Increment In: .dI Years 16 & 21 69.8 Q- Years 17 & 25 56.4 ZABLE 23 WESTERN SAMDATRUST ESTATES CORPORATION SOAP PROCESSINC FINANCIAL ANALYSIS

1991 1986 1987 1988 1989 1990 1981 1982 1983 1984 1985 YEAR 10 YEARS 11-25 YEAR 5 YEAR 6 YEAR 7 YER 8 YEAR 9 YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4

1400 1500 1500 1500 1500 1500 SALES V0LLSS (ToNS) 1140 1225 355 400 115 150 200 250 285 320 Toiler Soap 350 400 100 ISO 200 250 300 Soap Powder - 1091000 1091000 1091000 1091000 1091000 ALES (a S Soap 835000 896000 1019000 800000 300000 400000 500000 570000 640000 710000 Toilet Soap 230000 429000 498000 570000 - 150000 216000 1879000288000 2021000360000 2160000 2299000 2461000 SoapTole PolerSowp 1065000 1346000 1635000

LESS: COST1OF SALES 879000 879000 879000 879000 Sop 667800 718200 819000 879000 382000 435500 489000 542500 611200 TLundr 175700 130229200 305600560 260 Toilet Soap 206200 257800 309300 360900 412400 Soap Powder - 103100 154600 1902600 843500 1050500 1279200 1467200 1572300 1677300 1782400 273900 200300 222300 234200 247300 258400 Factory Ove1head 133700 176900 2040800 2176500 1227400 1479500 1689500 1806500 1924600 Total Coats of Production 977200 258200 284500 118600 155500 189500 214500 235400 Net Profit Before Depreciation 87800 87800 87800 87800 87500 87800 87800 87800 Leap: Profit Without Project 87800 170400 196700 196700 196700 196700 30800 67700 101700 126700 147600 Net Incremental Cash Fl -

Investmnt - Plant 938370 28125 28125 - Vehicles 17045 Coat 955415 196700 196700 168575v- 196700 Total Investment 67700 101700 126700 119475 170400 196700 NET CASH F (95S415U 30800

al Year 1S - 168575 FIRR - 13.7n

I-0

A A, TABLE 24: WESTERN SAIA TRUST ESTATES CORPORATION COCONUT STEX UTILIZATION COHPONENT

8 9 10 11 12 13* 14+ 15 .0 YEAR 0 (1981) 1 2 3 4 5 6 7 155335 155335 155325 155335 89747 121945 121945 121945 155335 155335 155335 155335 155335 155335 155335 l. ~evenue 89747

2. 'raduction Cost-/ 13920 13920 13920 16704 16704 1670L 16704 16704 16704 16704 i) Labor 11136 11136 20750 25937 25937 25937 31494 31494 31494 31494 31494 31494 31494 Li) Fuel, Materials & Supplies 20750 1689 1689 1689 1689 1689 1689 1689 1689 1689 1689 Administrative Overhead 1689 1689 49887 *.tl) 41456 49987 49887 49&87 &9887 49887 49887 49887 49857 49887 49887 TotaL Production Cost 33575 33575 41456 41456

FC LC 3. :nvestment Cost - - - 2940 24810 ------i) Civil Works 3215 38000 41215 3215 - - 41215 - - 32tS 38000 3215 - ii) Equipment & Spares 113070 - - Services 21000 4595 25595 'it4 Consultant's - 3215 - 38000 3215 - 3215 38000 Sub-total 137010 29405 25595 3215 - - 41215

4. Fhysical Concingencies i) Civil Works (157) 441 3722 4122 4122 322 3800 322 322 3800 Li) Equipment & Spares (107.) 11307 322

1736 20520 22256 1125 22256 1736 20520 1736 5. Price Escalation 17402 3722

investment plus Physical & Price 5273 62320 67591 4652 - - 67793 - - 5273 62320 5273 Contingencies 166160 36849 25595 105448 100175 43128 37837 51520 80489 80489 12696 105448 105448 100175 105448 43128 100175 105448 6. Net Incremencal Cashflow (203.009 30577

FMU - 31%

a! In years 3 to 5, costs of labor, fuel, materials and supplies were increased by 25% from previous years to match the increase 'a in timber volume processed. For years 6-25, these costs were 5) for the same increased by 20Z from the previous year (Year o reason. cashflows. * Years 13, 16, 18, 19, 21, 22, 24 & 25 have similar

+ Years 14, 17 & 23 have similar cashflova. TABLE 25: FI!AtICIAL AN4ALSIS 0! ISTEC:COHOINNT (WS$000)

lavestment and . rncremental Re~2acemont Costs yesi2. Costs.... Total Inersimetal Costs Thetrmental Benefit* Zftt Casih Flow. Soap Pro- Coco, ° Soap Pro- Coca Soap Pro- Coco Soap Pro- Coco Soap Pro- Coco Total -et YEiAR xtate. ces.mR 5e Estates- cessing Stet. Estotaad cessing Stem tstat-e ceasing St" Estatezy ceasing Stem Cash Ftow

l 1347.1 955.4 203.0 0.1 1347.2 955.4 203.0 (1347.2) ( 955.4) ( 203.0) (2505.6) 2 1425.6 25.6 1.2 250.2 33.; 1426.8 250.2 59.2 284.2 281.0 93.1 (1142.6) 30.8 30.1 (1077.9) 3 915.8 4.6 2.3 252.1 33.6 918.1 252.1 38.2 469.8 319.8 89.7 ( 448.3) 67.7 51.5 ( 329.1) 5 689.6 28.7 210.0 41.5 718.3 210.0 41.5 630.2 311.1 122.0 ( 88.1) 101.7 S05S 94.1 5 697.4 54.5 117.0 41.5 751.9 117.0 41.5 811.0 243.7 122.0 59.1 126.7 80.5 Z66.3 6 268.4 28.1 67.8 417.3 218.L 41.5 68S.? 146.2 109.3 900.3 265.7 122.0 214.6 119.5 12.7 346.P 7 43f0.7 116.2 49.9 438.7 116.2 49.9 1010.7 286.6 155.3 572.0 170A. 105.4 847.8 8 458.9 135.7 49.9 &58.9 135.7 49.9 1133.9 332.4 155.3 675.0 196.7 105,4 977.1 9 339.9 5.3 "4474 135.7 49.9 787.3 135.7 55.2 1226.8 332.4 155.4 439.5 196.7 100.2 736.4 10 436.6 135.7 49.9 436.6 135.7 49.9 1271.2 332.4 155.3 834.6 196.7 105.4 1136.7 1i 268.4 28.1 62.3 435.1 135.7 49.9 703.5 163.6 112.2 1367.3 332.4 155.3 663.8 168.6 43.1 875.5 12 5.3 432.6 135.7 49.9 432.6 135.7 55.2 1446.3 332.4 155.4 1013.7 196.7 100.2 L310,6 13 431.1 135.7 49.9 431.1 135.7 49.9 1482.7 332.4 155.3 1051.6 296.7 105.4 U53.1 14 430.6 135.7 . 49.9 430.6 135.7 49.9 1528.0 332.4 155.3 1097.4 196.7 105.4 1399.5 15 5.3 428.5 135.7 49.9 428.5 135.7 55.2 1551.8 332.4 155.4 1123.3 196.7 100.2 1420,2 16 268.4 28.1 62.3 428.5 35.7 49.9 696.9 163.8 112.2 1283.4 332.4 155.3 854.9 168.6 43.1 798,2 17 339.9 428.5 135.7 49.9 768.4 135.7 49.9 1196.2 332.4 15.3 427.. 196.7 105.4 729.9 18 5.3 428.5 135.7 49.9 428.5 135.7 55.2 155.8 332.4 155.4 1123.3 196.7 10. 2 1420.2 19 428.5 135.7 49.9 428.5 135.7 49.9 1551.8 332.4 155.3 1123.3 196.7 105.4 1425.4~ 20 428.5 135.7 49.9 426.5 135.7 49.9 1551.8 332.4 155.3 1123.3 196.7 105.4 1425.4*- 21 268.4 67.6 428.5 135.7 49.9 696.9 135.7 117.5 1283.4 332.4 155.3 .586.5 294.7 37.8 821.0 22 428.5 135.7 49.9 428.5 135.7 49.9 151.8 332.4 155.3 1123.3 196.7 105.4 1425.4 a 73 428.5 135.7 49.9 428.5 13S.7 49.9 1551.8 332.4 155.3 1123.3 196.7 105.4 1425.4 24 5.3 428.5 135.7 49.9 428.5 135.7 55.2 1551.8 332.4 155.4 1123.3 196.7 100.2 1420.2 23 428.5 135.7 49.9 426.5 135.7 49.9 1196.2 332.4 155.3 767.7 196.7 105.4 1069.8

a: Includes IaSEvC Overall facilities. (L) FM for 58TEC Estates 14.1t Valuez used are in constant 1980 (it) FM for Soup ProceeWi - 13.71 1westerm Samoa Tals. (Ui) Fin for Co4 Stm ProeessLn: 31.01

PIER FOR OVERALL WIEC aOtQP0I2 : 15.01 .

.4w 4 TABLE 26 ECONOHIC ANALYSIS OF VWSTEC COMPONENT (WS$ '000)

Investment and Incremental Replacement Costs Operating Costs Total Incremental Coats Incremental Benefits Net Cash Flow Soap Pro- CoCo Soap Pro- Coco Soap Pro Coco Soap Pro- Coco Soap Pro- Coco Total Set Y-AR Estates/ ceasing Setaf Estatea. / ceasing Stem Estatest! ceasing Stem Estatee!/ ceasing Stem Estates- cesing Stem Cash Flow

1 1347.1 955.4 203.0 0.1 1347.2 955.4 203.0 (1347.2) (955.4) (203.0) (2505.6) 2 1425.6 25.6 1.1 235.2 30.3 .1426.7 235.2 55.9 346.3 281.0 89.8 (1080.4) 45.8 33.9 (1000.7) 3 915.8 4.6 2.1 237.0 30.3 917.9 237.0 34.9 5f2.4 319.8 89.7 ( 345.5) 82.8 54.8 ( 207.9) 4 689.6 28.1 197.4 37.4 717.7 197.4 37.4 771.3 311.7 122.0 53.6 114.3 84.6 252.5 5 697.4 52.5 109.9 37.4 749.9 109.9 37.4 992.6 243.7 122.0 242.7 133.8 84.6 461.1 6 268.4 28.1 67.8 399.2 111.0 37.4 667.6 139.1 105.2 1102.0 265.7 122.0 434.4 126.8 16.8 577.8 7 405.8 109.2 44.9 405.8 109.2 44.9 1237.0 286.6 155.3 831.2 177.4 110.4 1119.0 8 424.5 127.6 44.9 424.5 127.6 44.9 1387.8 332.4 155.3 963.3 204.8 110.4 1278.5 9 339.9 5.3 413.8 127.6 44.9 753.7 127.6 50.2 1501.2 332.4 155.3 747.5 204.8 105.1 1057.4 10 403.8 127.6 44.9 403.8 127.6 44.9 1515.9 332.4 155.3 1112.1 204.8 110.4 1427.3 11 268.4 28.1 62.3 402.5 127.6 44.9 670.9 155.7 107.2 1558.7 332.4 155.3 887.8 176.7 48.1 1112.6 12 5.3 400.2 127.6 44.9 400.2 127.6 50.2 1681.3 332.4 155.3 1281.1 204.8 105.1 1591.0 13 398.8 127.6 44.9 398.8 127.6 44.9 1723.7 332.4 155.3 1324.9 204.8 110.4 1640.0 14 398.3 127.6 44.9 398.8 127.6 44.9 1176.2 332.4 155.3 1377.4 204.8 110.4 1689.6 15 5.3 396.4 127.6 44.9 396.4 127.6 50.2 1803.9 332.4 155.3 1407.5 204.8 105.1 1717.4 16 268.4 28.1 62.3 396.4 127.6 44.9 664.8 155.7 107.2 1463.1 332.4 155.3 798.3 176.7 48.1 1023.1 - 17 339.9 396.4 127.6 44.9 736.3 127.6 44.9 1390.6 332.4 155.3 654.3 204.8 110.4 969.5 N) 18 5.3 396.4 127.6 44.9 396.4 127.6 50.2 1803.9 332.4 155.3 1407.5 204.8 105.1 1717.4 - 19 396.4 127.6 44.9 396.4 127.6 44.9 1803,9 332.4 155.3 1407.5 204.8 110.4 1722.7 20 396.4 127.6 44.9 396.4 127.6 44.9 1803.9 332.4 155.3 1407.5 204.8 110.4 1722.7 21 268.4 67.6 396.4 127.6 .44.9 664.8 127.6 112.5 1463.1 332.4 155.3 798.3 204.8 42.8 1045.9 22 396.4 127.6 44.9 396.4 127.6 44.9 1803.9 332.4 155.3 1407.5 204.8 110.4 1722.7 23 396.4 127.6 44.9 396.4 127.6 44.9 1803.9 332.4 155.3 1407.5 204.8 110.4 1722.7 24 5.3 396.4 127.6 44.9 396.4 127.6 50.2 1803.9 332.4 155.3 1407.5 204.8 105.1 t717.4 25 396.4 127.6 44.9 396.4 127.6 U.9 1390.6 332.4 155.3 994.2 204.8 170.4 1309.4

a. Includes facilities for overall WSTEC facilities. (i) Economic Internal Rats of Return for Estates Component 19.1% Values used are in constant 1980 Western Samoa Tals. (li) Economic Internal Rsts of Return for Soap Processing 14.6% component (Mil) Economic Internal Rats of Return for Coco Stea component- 32.2%

PIRlk FOR OVERALL WSTEC O9APONENT 18.8%

5 P 05 Pm -sJ Appendix 13 Page 43

Table 27: SENSITIVITY ANALYSIS

Change in Rate of Change in Variable Return Rate of Return Sensitivity - Indicator * Case (%) (%) (%)

A. Financial Rates of Return

(i) Base Case 15.0 0.40 (ii) Decrease in benefits 15 9.0 6.0

(iii) Increase in investment 0.17 cost 10 13.3 1.7 0.22 (iv) Increase iii - sts 12 12.4 2.6 12.8 2.2 (v) Delay in Imp] -. 1 year

(vi) Combination of >. 11.0 4.0

B. Economic Rates of Return

(i) Base Case 18.8 0.51 (ii) Decrease in benefits 15 11.2 7.6

(iii) Increase in investment 0.19 cost 10 16.9 1.9 0.23 (iv) Increase in 0 & M costs 12 16.0 2.8

(v) Delay in Implementation 1 year 16.4 2.4 - 4.2 (vi) Combination of (iii & iv) 14.6

of return to the a! The Sensitivity Indicator shows the change in the rate change in variable. TABLE 28: SUMMARYOF COSTS IN WS $ AGRICULTURAL RESEARCH AND EXTENSION

TOTAL COSTS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 T BASE COSTS CONTINGENCIES FC LC FC LC FC LC COMPONENT FC LC FC LC FC LC FC LC FC LC

I. CIVIL WORKS (incld. facilities) Central Extens ion Training Centre 48.0 39.0 at Nu'u 48.0 39.0 90.0 10.0 2 Modular Houses at Nu'u 90.0 10.0 19.5 16.0 Farm Managers' House at Asou 19.5 16.0 11.4 9.6 Field Labs at Togitagiga and Asau 11.4 9.6 7.0 Plant Porpagation Unit at Togitogiga 25.0 7.0 25.0 20.1 45.1 154.1 225.5 23 Field Extension Centres 33.5 45.1 33.5 45.1 33.5 45.1 33.5 45.1 307.1 93.1 105.5 Physical Contingencies 24.8 15.8 10.7 14.4 17.4 7.7 25.1 33.8 i5.1 33.8 348.0 71.8 81.2 Cost Escalation 26.5 10.0 8.1 11.3 11.7 15.8 14.7 19.8 10.8 24.3 Sub-total 278.7 152.5 52.3 70.8 62.6 68.6 73.3 98.7 46.0 103.2.

VEHICLES 1I. 13.2 2.0 2 Short-Wheel Base 4-W Drive Jeeps 13.2 2.0 58.8 4.8 12 Small 4-W Drive Jeep Trucks 58.8 4.8 6.0 0.8 1 4-W Drive Double Cab 6.0 0.8 7.6 7.8 0.8 Physical Contingencies 7.8 0.8 78.0 12.6 1.2 Cost Escalation 12.6 1.2 Sub-total 98.4 9.6

III. .AICHINERY & EQUIPEENT Farm Equipment for Extension Centres 1.8 1.8 1.8 2.8 8.2 5.0 Audio Visual Aids for Nu'u Ext. Centre 5.0 3.0 2-65 HP Tractors and Attachments 42.0 3.0 42.0 3.0 1O Laboratory Equipment 3.0 1.0 Office Equipment for Project Office 3.0 1.0 3.0 61.2 4.0 9.7 0.6 Physical Contingencies 6.2 0.6 0.5 0.9 2.1 9.5 0.6 Cost Escalation 7.3 0.6 0.4 0.6 1.2 Sub-total 68.3 5.2 2.7 3.3 6.1

IV. OPERATION AND MAINTENANCE 25.0 28.0 O & M at Togitogiga and Asau 5.0 5.6 5.0 5.6 5.0 5.6 5.0 5.6 5.0 5.6 85.0 15.0 0 & N for Vehicles 17.0 3.0 17.0 3.0 17.0 3.0 17.0 3.0 17.0 3.0 16.0 0 & H at Nu'u Extension Centre 3.2 3.2 3.2 3.2 3.2 12.5 O & H at Project Office 2.5 2.5 2.5 2.5 2.5 71.5 23.3 19.2 Cost Escalation 2.7 1.2 2.3 2.8 4.3 4.0 6.0 5.0 8.0 6.2 110.0 Sub-total 24.7 15.5 24.3 17.1 26.3 18.3 28.0 19.3 30.0 20.5

V. CONSULTANTS 240.0 100.0 >> Extension Program Organiser 60.0 25.0 60.0 25.0 60.0 25.0 60.0 25.0 180.0 75.0 Banana Agronomist 60.0 25.0 60.0 25.0 60.0 25.0 180.0 75.0 5 8 Tree Crop Agronomist 60.0 25.0 60.0 25.0 60.0 25.0 250.0 51.2 21.3 Physical Contingencies 9.4 3.9 12.0 5.0 20.4 8.5 9.4 3.9 600.0 151.2 63.0 Cost Escalation 32.4 13.5 38.4 16.0 58.0 24.2 22.4 9.3 Sub-total 221.8 92.4 230.4 96.0 258.4 107.7 91.8 38.2

VI. FELIOWSHIPS 120.0 120 Man-months 24.0 24.0 24.0 24.0 24.0 15 Man-months short-term training 6.0 12.0 6.0 6.0 30.0 Cost Escalation 4.8 9.0 10.5 13.2 12.9 150.0 50.4 Sub-total 34.8 45.0 40.5 43.2 36.9 1827.8 933.6 726.7 275.2 354.7 183.9 391.1 194.6 242.4 156.2 112.9 123.7 1347.2 640.2 480.6 293.4

Physical 161.8 128.2 Price 318.8 165.2