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C.'>> RESTRICTED ReportNo. SOL.: Ap-7A MsThi8Report.has beon propered for ASIAN D)EVEI:LOPMENT BFANiK the extclusiveuse of the Bankc. Public Disclosure Authorized ASIAN DEVELOPMENT BANK APPRAISAL Public Disclosure Authorized OF THE RURAL SERVICES PROJECT IN SOLOMON ISLANDS (PART A OF AGRICULTURAL DEVELOPMENT PROJECT) Public Disclosure Authorized September 1983 Public Disclosure Authorized CUIRRN(;Y Mr1!TVAL.t*rTS (Af. of Ir) Atuguett, 1983) Currency Unit - Solomon Telands Dollar (SI$O SE$1.0o - US$0.83 1is$l . nn - IST1.2Q For purposes of calculation in this Report, a rate of US$1.00 to ST81.15 has been used. The Solomon Islands Dollar was introduced in 1977. The exchange rate is determined on the basis o4 a weighted basket of currencies of the major trading partners or the Solomon Islands. ABBREVIATIONS ATIJ - Agriculture Information IJnit AR - Afio-Rokera, Malaita Province CFO - Chief Field Officer CRO - Chief Research Officer FA - Field Assistant FTC - Farmer Training Center t.K - Hakama, Central Province JDA - International Development Association (World Bank) IFAD - International Fund for Agricultural Development W{AND - Ministry of Home Affairs and National Development MS -larau Sound, Guadalcanal Province NATI - National Agricultural Training Institute NCG - Natlonal. Coordinating Croup NWP - Northwest Peninsula, Hakira Province PII - Prolect Implementation UJnlt RDC - Rural Development Center RH - Rendova Harbor, Western Province SC - Santa Cruz, Temotu Province SK - Susubona-Kaevanga, Santa Isabel. -VI N y T E The Government's fiscal year ends on 31 December. 'I P1W,rgcr FOCUS, DFSIt(U AN) RAVt0OAL.P Agriculture provides over 90 per cent of Solonon Islands exports, contributes 70 per cenrt to its GDP and is the source of livelihood to the 90 per cent of the covuntry'spopulatiorn that lives in rural areas. Against the t,ackgroundor a limited agricultural land base, the population is increasing at a rate of 3.4 per cent per annum; its staple foods are sweet lpotato, taro and yam, but productivity is low because technical inputs are non-existent and traditional cultural practices still prevail. As the populatUon increases, the food crop cultivation cycle decreases; thus, in the suallholder traditional farming sestem, the soil is impoverished and rural poverty is aggravated. The main source of cash earning has traditionally been copra, whose productivityin older plantations is declining at a time when the- international price of copra has been continuously falling since the peak of t979. Vithin such a framework the focus of the Project i.s on increased productivity and inconie from agricultural productionsthrough crop diversificationand intensification. Another major constraint to development is the scattered and wides-iread location of populatloni over the country'. seven provinces which themselves are located, far apart. Trainsportation and communicationfacilities are limited and there are w-.de variatlons in culture and language, not to mention differences in agro-climatic features and soil conditions. To cope with such a situation, the Project is designed to develop appropriate infrastructuTe, with features suited to local needs in each of the seven provinces, to help the local population participate in its owE development and thereby provide the means of producing and marketing more and better fooderopsand earning additional cash income. It is the policy of the Government to decentralize its development program as expeditiously as possible; however, resources and manpower are limited nor is much experience available of implementing decentralized development programs. The Project is specificallydesigned to cope with these difficultiesand to proomote the Government's developimentstrategy, but because of the constraints,it has been kept modest in scale, its scope.including: (a) the establishmentof seven Rural DevelopmentCenters -- one in each of the seven provinces,to provide the facilitiesnecessary for stimulating the development of rural settlements/villages; (b) strengthening research in major agro-clinatic2ones on staple and new foodcrops and cash crops; (c) strengthening a-nd improvement of the training of extension personnel and farmers; (d) establishing an Agricultural Infor-mation Unit; and (e} establishing a Project Implenentation Unit in the Ministry of -HomeAffairs and National Development, the Executing Agencv for the Project. The total cost of the Project, which will be implementedover six years, is estimated at tUS$11.65million comprising tTS95.93 million in foreign exchange cost and USS5.72 million in local cost. of this, external financing is estimated at the equivalentof ITSSln0.15million. The Bank will finance the equivalent of US$5.15 million coniprising USS2.95 million in foreign exchange cost and the equivalent of USS2.20 million in local carTency cost. IDA and IPAD will respectivelyfund the equivatent of US$3.5 million and 1.5 million. Taking the type of Project components and Its implementRtion schedule into conslderation, parallel F iiancing by the co-financiersis proposed. The Project benefits are both non-quantifiable as well as quantifiabl.e. Benefits from Project investment in agricultural research, extension training and information, though immense, are largely of long-term nature. For selected components of the Project on which the returns are amenable to quantification, EfRR is high. A typical subsistence smallholder participating in the Project or taking advantage of Project facilities would get a net benefit of US$181 per Year. The :>roJect, which constitutes Part A of the loan for Agricultural Development (Part B being the Livestock Development Project, also to be financed by the Bank) will provlde several other benefits including additional employment, the participation of the rural population, the creation of decentralized centers for economic and social activities, the creation of an institutional base in the rural areas, and the emergence of a trained and skilled supply of manpower. The Project will thus have a multiplier effect in many fields of economic and social development. The main risks likely to be encountered in Project implementation relate to: (a) the availability of land for siting the RDCs and other Project facilities; and (b) the implementation capacity of the Government. The Project incorporates measures to guard against these risks. The availability cf land has been reasonably well assured except for two RDC sites where, nevertheless, given a little time, the covernment is confident of acquiring the necessary land (it is proposed to start these two RDCs in the 4th year). Consultancy services, training, fellowship, study tours, etc. have been provided in the Project to meet the risk of manpower shortages. * (~~i) TABLE OF CONTENTS PaYe ~4P(ii, I. INTRODUCTION 1 II. BACKGROUND 2 A. Characteristicsof the Rural Economy 2 B. The Agricultural Sector 3 C. Marketing and Pricing of Agricultural Produce 4 D. Constraints to Agriculture Development 5 E. Agricultural Development Policy and Strategy 6 F. The Project Area 7 III. THE PROJECT 11 A. Objectives and Scope 11 B. Project Description 11 C. Cost Estimates and Financing Plan 18 D. Environmental Impact 22 E. Energy Impact 22 IV. PROJECT INPL*IlENTATION 23 A. Executing Agency 23 B. National Coordinating Group 23 C. Project Organization 23 D. ImplementationSchedule 24 E. Project ImplementationArrangements 24 F. Manpower Requirements 26 G. Procurement 27 R. Imprest Account 28 I. Account, Audits and Reports 29 J. Project Benefit Monitoring and Evaluation (PBNE) Unit 30 K. Operation and Maintenance 30 V. PROJECT JUSTIFICATION 31 A. Overall Justifi-.^ation 31 B. Benefits and Benoficiaries 31 C. Economic Analysis 33 D. Project Risks 33 VI. CONCLUSIONS AND RECOMENDATIONS 34 LIST OF APPENDIXES 37 J I I * SOLOMONISLANDS RURAL SERVICESPROJECT J, ONTONG JAVA ATOLL o50 l00 150M3L5ss aISEUL Korovou 1 h | - } ~~~~~~~~~~~~SOUTH PA CIFI C OcEANX . o ^ 9>nsD4 s I H~~~~~~AAMA ¢ Ono QK SANTA YSA EL fN\~ ~~ ~ ~ ~ ~~~~~O ¶O\ 1 ~|)IA t ct;3t>XA SusubetKaovat -RESEARCHSU0STATION' NEW GEORGIA I FLORAI . Kwkaru. RENOOVA HARBOR C ° OMAAIIAA -FARMERS' TRAINING CENTER TrO H -RLC -RESEARCH SUBSTATION HONIARANORTHWEST :PFNJN~SULA eUADALCAXAL / -RK f'EEF IS - AIU /r -J r(C5\x Q o S^NTA-C- V - DODOCREEK / MARAUSOUNI .kir --RDC- .UJt(} . ) *IV 1S.A RESEARCH RIESEAr - =U EASTERNOUTER IS. SUSTATINO tw £NNELL -N~ ~ ~ ~ ~ 1 I. INTRODUCTION Concerned over the declining .productivity and income from agricultural products, the Government requested Bank's technical assistance in 1981 for a study on research, extension and support facilities. Thi7 technical assistance was approved by the Bank in Septembex 1981.- International Services for National Agricultural Research (ISNAR) from Netherlands was engaged to conduct the feasibility study which began in October 1982 and was completed in December 1982. The Bank received the final report in February 1983. In April 1982, the Government requested another technical assistance for the establishment of Rural Development Centers throughout the irntry.The Bank approved this technical assistance in July 1982.- The services of an international consuLting firm (DevelopmentAlternatives, Inc. - U.S.A.) were engaged for the conduct of a feasibility study which was completed by the consultants during March-June 1983, the draft final report being received by the Bank early in June 1983. Following the receipt of two feasibility reports (on Research, Extension and Support Facilities and Rural Development Centers) and the review
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