Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
Report No. 2743
PROJECT PERFORMANCE AUDIT REPORT Public Disclosure Authorized ISRAEL SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
Public Disclosure Authorized November 19, 1979 Public Disclosure Authorized
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
FOR OFFICIAL USE ONLY
Project Performance Audit Report
ISRAEL SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
TABLE OF CONTENTS
Page
Preface i Basic Data Sheet ii Disbursement Table iii Highlights iv
PROJECT PERFORMANCE AUDIT MEMORANDUM
I. Summary 1 II. Main Issues 4
A. Extension Services 4 B. Research Program 6
Appendix I - Government's Comments 9
PROJECT COMPLETION REPORT
I. Introduction 15 II. Project Implementation 17 III. Agricultural Impact 20 IV. Goals and Beneficiaries 24 V. Performance 25 VI. Conclusions 27
Annex 1 - Tables 1-15 29 Annex 2 - Second Agricultural Credit Project - Completion Report (Ministry of Agriculture - Israel) 44 Annex 3 - Supplement to Completion Report of IBRD Second Agricultural Credit Project (Ministry of Agriculture - Israel) 140 Annex 4 - Agricultural Extension Service 227 Table 1: Ministry of Agriculture - Extension Service, Available Manpower and its Distribution 229 Chart 1: Organization Chart - Extension Service 230 Annex 5 - Project Related Research Component 231 Table 1: Expenditures Agricultural Research Component 238
Map
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Project (Peiformance Audit Report
ISRAEL SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
PREFACE
This is a performance audit of the Second Agricultural Credit Project in Israel for which Loan 972-IS was approved in March 1974 in the sum of US$35.0 million. The final disbursement in respect of this loan was made on September 20, 1977.
The audit report consists of an audit memorandum prepared by the Operations Evaluation Department and a Project Completion Report dated June 1979. The PCR was prepared by the Europe, Middle East and North Africa Regional Office on the basis of a Completion Report prepared by the Government of Israel and a country visit in February-March 1978.
The audit memorandum is based on a review of the Appraisal Report (No. 234 R) dated March 13, 1974, the President's Report (P-1317A) of the same date, the Loan Agreement of April 3, 1974 and the PCR; corre- spondence with the Borrower and internal Bank memoranda on project issues as contained in relevant Bank files have also been consulted and Bank staff associated with the project have been interviewed.
An OED mission visited Israel in May 1979. The mission held discussions with officials of the Ministries of Finance and Agriculture, the Rural Planning and Development Authority and the Israel Bank of Agri- culture. Field trips to visit some participating farmers were undertaken. The information obtained during that mission was used to test the validity of the conclusions of the PCR and permitted discussion of research and extension issues.
A copy of the draft report was sent to the Borrower on September 6, 1979. Comments received are reproduced at Appendix I.
The audit finds the PCR comprehensive and accurate with respect to the project'-s principal achievements and shortcomings. The points discussed by the audit have been selected because of their importance to this and to other Bank-assisted projects.
The valuable assistance provided by the Government of Israel, the Israel Bank of Agriculture and their staffs as well as the farmers met during the preparation of this report is gratefully acknowledged.
PROJECT PERFORMANCE AUDIT REPORT BASIC DATA SHEET
ISRAEL - SECOND AGRICULTURAL CREDIT PROJECT (LOAN 972-IS)
KEY PROJECT DATA
Appraisal Actual or Item Expectation Current Estimate
Total Project Cost (US$ million) 80.9 88.8 Overrun () - 10.0 Loan Amount (US$ million) 35.0 Disbursed )- 35.0 Cancelled ) June 30, 1979 - - Repaid to )- 3.97 Outstanding to )- 31.03 Date for Completion of Physical Components Proportion Completed by Appraisal Target Date (%) - 100 Proportion of Time Overrun () - 0 Incremental Economic Rate of Return (%) 21 19
OTHER PROJECT DATA
Original Actual or Item Plan Revisions Current Estimate
First Mention in Files or Timetable - 02/15/72 Government's Application - - 11/29/72 Negotiations 09/19/73 - 09/19/73 Board Approval 03/27/74 - 03/27/74 Loan Agreement Date 04/03/74 - 04/03/74 Effectiveness Date 07/03/74 - 07/01/74 Closing Date 06/30/78 - 09/20/77 Borrower Israel Bank of Agriculture, Ltd. Executing Agency Fiscal Year of Borrower April 1 - March 31 Follow-on Project Name none
MISSION DATA
Month, No. of No. of Date of Item Year Days Persons Manweeks Report
Pre-appraisal 06/72 8 2 3 06/15/72 Appraisal 03/73 30 4 24 03/13/73
Supervision I 09/74 11 1 2 10/29/74 Supervision II 06/75 15 2 6 06/16/75 Supervision III 12/76 10 2 4 12/13/76 Completion 02/78 17 2 7 03/27/78
Total 46
COUNTRY EXCHANGE RATES
Name of Currency (Abbreviation) Israeli Pound (IL) Year: Appraisal Year Average Exchange Rate: US$1 = IL 4.20 Intervening Years Average US$1 = IL 6.20 Completion Year Average US$1 = IL 8.90
- iii -
Project Performance Audit Report
ISRAEL - SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
DISBURSEMENT TABLE (US$ million, cumulative)
Period Appraisal Actual Actual as % Ending Estimate Disbursement of Estimate
12/31/74 5.85 10.58 181 06/30/75 11.69 17.36 149 12/31/75 15.82 25.98 164 06/30/76 23.73 32.50 137 12/31/76 28.13 34.30 122 06/30/77 33.77 34.80 104 09/30/77 35.00 35.00 -
- iv -
Project Performance Audit Report
ISRAEL SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
HIGHLIGHTS
The Second Agricultural Credit Project provided funds for support of flower and fruit production, export handling facilities, :er development and livestock development. It also assisted an applied iearch program. The project was a major part of a 5-Year Economic Plan.
The project had a considerable impact especially on Israel's wer and fruit production. Total agricultural output during the 1971/72 1975/76 period increased by 25%, slightly below the 28% assumed at oraisal. This was in part due to a slower than expected domestic market * dairy produce and turkey meat. The increase in production costs due to Elation contributed to an economic rate of return of 19%, which is .ghtly below the appraisal estimate of 21%.
The following points may be of special interest:
- the comprehensive planning of the agricultural sector no longer allows for interest rates performing an allocative function (PPAM, para. 2; PCR, para. 1.01);
- high standard of planning contributed to project success (PPAM paras. 6, 7; PCR, paras. 1.01, 4.02, 6.01, 6.03, 6.05);
- despite excellent performance of the agricultural sector, extension services continue to perform a useful function (PPAM, paras. 9 to 14; PCR, para. 3.05, Annex 4); and
- an interesting methodology to assess the economics of agricultural research programs has been developed in Israel (PPAM, paras. 15 to 21; PCR, Annex 5, paras. 1, 2).
Project Performance Audit Memorandum
ISRAEL - SECOND AGRICULTURAL CREDIT PROJECT
(Loan 972-IS)
I. SUMMARY 1/
1. The project was a repeater project following the very successful First Agricultural Credit Project (Loan No. 709-IS). In addition to con- tinued support for flower and fruit production, export handling, and water development components of the first project, it included a livestock com- ponent and support for applied research in agriculture. The project was an integral part of a 5-Year Economic Plan and was prepared entirely by the Ministry of Agriculture. Detailed long-term economic planning and development formed the basis for identification.
2. The on-lending rate was the only substantive pre-project issue arising from the appraisal. In view of the prevailing rate of inflation (10-12% p.a.), the appraisal mission recommended interest rates to be increased to 11% but the Government insisted on maintaining them at 9% as part of its overall subsidy package to agriculture. Because the degree of planning and centralized allocation of credit left interest rates with no allocative function in Israeli agriculture, and because Government could not alter the price of one input without restructuring the entire input-output price package, the Bank accepted the 9% rate. Subsequently, due to con- tinued increases in domestic inflation, the interest rate was raised twice (to 11% and 12.5%) during the project, but at no time did it perform any allocative function. Although a novel concept at the time and involving some discussion in the Bank, the mission's recommendation to include the research component was accepted. Project organization remained exactly as for the first project with the Israel Bank of Agriculture being the borrower and principal on-lender, together with two other participating commercial banks. The Project Coordination Committee of the first project remained in place to act as general coordinator and policy-maker as required. Funds were allocated among components and subprojects by the Ministry of Agricul- ture in accordance with the overall economic plan. Subloans were restricted to investments approved by the Ministry of Agriculture as part of overall farm development plans, which ensured the availability of the necessary physical inputs. The three participating banks were responsible for assess- ing the financial aspects of the subloans. In fact, the Committee's role was minimal. The objectives of the project were purely economic; namely to improve the balance of trade by producing more export (flowers and fruit) and import substitute (meat and milk) products and to improve the efficiency of the use of water, the scarcest resource in Israeli agriculture.
1/ Adapted from the PCR. - 2 -
3. Implementation was problem-free and generally ahead of sched- ule. The extent of the background economic analysis and the excellent implementation organization created and sustained the confidence of the sub-borrowers in the approved investments, leading to rapid uptake of funds. The composition of the project remained as appraised, but the volume of implementation of some sub-components was, for valid reasons, less than estimated at appraisal; however, this was more than offset by the greater than estimated volume of implementation of others. The overall record of physical implementation, together with expenditure data, indicate that the completed project marginally exceeded the appraisal estimate. Cost increases in terms of local currency totalled 62% but domestic inflation in the period at 296% was far higher. In US dollar terms cost increases amounted to only 10% while the US dollar based International Index of Inflation rose by 60%. Thus, there apparently were foreign exchange savings over the appraisal estimate which permitted the increased overall volume of implementation despite the high rates of inflation.
4. No procurement through ICB was required under the project and no procurement problems arose. Most of the construction and equipment assembly and installation and in many instances equipment manufacturing was undertaken by the specially skilled labor of the various subborrowing kibbutzim and moshavim, 1/ requiring purchases for components only. This and the rapid industrialization of Israel are believed to be the source of much of the perceived reduction in the project's foreign exchange costs. Disbursement was rapid and, for all but the research component, finished well ahead of schedule.
5. Total agricultural output during the 5-Year Plan period (1971/ 72-1975/76) increased by 25% as compared with a planned increase of 28%. Since the project contributed 25% of the capital cost of the plan, at mini- mum a similar share of the output increase can be attributed to it, although it was probably greater due to the higher than average value of the output financed under the project. Significant yield increases occurred in project- financed crops, particularly flowers and subtropical fruits. Export volume and earnings from project-related output continued to expand over the period. The domestic market for dairy products and turkey meat proved less expansionary than originally estimated, leading to the development of production quotas for milk and an apparently highly successful export market development for turkey meat.
6. The economic goals were generally well achieved, the overall economic rate of return being estimated by the Ministry of Agriculture to be 19% as compared with the appraisal estimate of 21%. The minor reduc- tion is attributed to increased operating costs as a result of the oil crisis. The financial rates of return for the various types of subproj- ects, while all satisfactory, also generally reflect a similar reduction. There were no social or institutional goals. Due to the rather unique socio-economic settlement structure of Israeli agriculture, a discussion of income distribution goals and impact of the project is not meaningful,
1/ Kibbutz (pl. kibbutzim), a collective farm; moshav (pl. moshavim), a cooperative village with 50-150 independent farming families. - 3 - but the provision of income earning assets to settlements in an equitable manner has a high priority both in official policy and in the goals and values of the society. Consequently, the Ministry of Agriculture, takes great care in approving farm development plans to ensure that rich settle- ments do not get richer at the expense of the poorer settlements. This is achieved by incorporating high-value production activities into the develop- ment plans of the less advanced settlements and ensuring through the exten- sion service their ability to execute these plans. Naturally this income distribution effort must be balanced against the need for continued rapid increase in output.
7. Performance by the Government, the Borrower, the allied Govern- ment agencies and the Bank was pragmatic. In its repeater position the project had momentum from the outset, benefitting from that of the first project. A highly commendable and extensive Completion Report and Supple- ment (Annex 2 and Annex 3) were prepared by the Borrower's Ministry of Agriculture. The general conclusion is that the depth of planning and the training and operational capability of all involved were responsible for the success of the project. Replication is believed possible provided these factors are present, the extent of the success subsequently depending upon the quality of the implementing labor force and the confidence of the sub-borrowers in the project. II. MAIN ISSUES
8. Similar to the Completion Report for the First Agricultua,l Credit Project, the PCR for the Second Agricultural Credit Project con- tains an exceptionally wide range of information on project implementatirn and its results. Due to the high standards of Israel's agriculture and supporting services, the Bank finds itself restricted to lending activities and in a reversed role in sectors of traditional Bank assistance such as project preparation and technical and managerial advice, where experience gained during project implementation will have a beneficial effect on future Bank work. The audit does not fully agree with the PCR's implication that the lessons of the unique extension and research experience gained from this project are not transferable. While the project's major accomplishments and deviations from the original project concept are adequately dealt with in the Government's as well as the staff's PCR, the audit tries to highlight some extension and research aspects which may have a bearing on future Bank work in other countries.
A. Extension Service
9. The director of the Israeli extension service made the following statement in a publication: 1/ "Our Extension Service plays an important role in further promoting an already developed agriculture. To go on facing this challenge, the Service maintains its staff at a high pro- fessional level and uses effective extension methods, guided 'by modern, dynamic concepts of organization and management." In the audit's view the importance of this statement is the fact that further technical advice and support is required for a sector that has already achieved a high level of output. The statement also underscores the fact that agriculture is a dynamic, constantly developing sector. Agricultural extension continues to receive Government attention and support in a country which already obtains some of the world's highest average yields for certain crops and livestock.
10. The audit agrees with the PCR (Annex 4, para. 7) that the Israeli extension system could not be transferred to another country, but believes that several lessons can be learned from its success. These lessons are that (i) extension is required not only at project start-up and during an initial implementation period; (ii) planning of extension programs and activities is important; and (iii) extension plays an important feedback role, conveying the farmers' views to the planning and research institutions and facilitating the determination of priorities.
1/ Agriculture in Progress. A publication of the Israeli Extension Service, 1972. - 5 -
11. Discussions on the most appropriate institutional arrangements for extension services are still in progress within the Bank, 1/ mainly focussing on the advantages and disadvantages of autonomous versus ministry integrated extension services. An argument frequently heard in favor of ministry integrated services is that it would be difficult to absorb or re-integrate an autonomous service into a ministry once "a project has been completed." The Israeli experience demonstrates that there is no end to a project. Even in dealing with highly trained farmers and kibbutz managers, extension officers are still in a position to give valuable advice on improved technology, and there is no foreseeable end to the need for their services in the future.
12. To accomplish the high level of performance considerable atten- tion is paid to planning extension programs. Based on the organizational structure, with three layers of responsibility (Ministry Directorate, Extension Head Office and District Offices), the work program is initiated at top ministry level in accordance with existing development plans or plan revisions made necessary. After receiving directives from the Ministry, the Extension Head Office establishes the overall targets of the work program and submits them to the Ministry; simultaneously District Offices continue farm data collection. Following the approval of targets by the Ministry the Extension Head Office initiates discussions with branch committees (specia- lized branches of the extension service) on their branches' work objectives in light of the national targets. The suggested branch objectives are con- sequently approved again by the Ministry, and directives for preparing task proposals are given to the District Offices. Relating the objectives to the collected farm data, the District Offices determine the tasks for their respective districts. These tasks are then incorporated in the work plan which is submitted by the Head Office to the Ministry for final approval.
13. The procedure described above has many advantages. It per- mits a complete subordination of extension activities to the development plan, is based on information obtained through farm data collection, and assures the most efficient use of agricultural specialists through "annual manpower planning."
14. Farmers play an important part in determining extension objec- tives. Extension in the Israeli context is never a one-way street. Problems encountered at farm level are continuously discussed with extension agents who in turn keep District Offices and Head Office informed about farmers' views on what kind of technical and managerial advice is needed. This feed- back from farm level through the extension service to the Ministry is also important in determining agricultural research programs.
1/ See among others: Rural Development Projects: A Retrospective View of Bank Experience in Sub-Saharan Africa, OED Report No. 2242 of October 20, 1978. Sierra Leone Integrated Agricultural Development (Cr. 323-SL), OED Report No. 2066 of May 22, 1978. Turkey Seyhan Irrigation Project Stage II (Ln. 587/Cr. 143-TU) and Lesotho Thaba Bosiu Agricultural Development Project (Cr. 369-LSO) audits under preparation. -6-
B. Agricultural Research
15. "The generation of new technology has come to be viewed as an economic activity to which scarce resources can be devoted, and for which measurable output can be defined."1/ Society, either individually or collectively, makes conscious investment decisions to allocate resources to research activities with the expectation that the present value of some future income streams resulting from the technological advances will exceed the cost of their generation. This should lead to the concept of efficiency of resource use and the evaluation of whether the research expenditures constituted a socially profitable use of resources.2/ The project provided US$1.5 million for the financing of agricultural research, but no economic benefit calculation was carried out at appraisal. The appraisal accepted the then prevailing procedure: "ARO (Agricultural Research Organization) would follow its normal evaluation procedures for subproject research programs and, if requested by the Bank, would include a monitoring system satisfactory to the Bank which would permit cost/benefit evaluations of such programs."3/
16. Israel has developed a method to appraise the economic benefits of agricultural research programs and to establish research priorities. The existence of such a method is mentioned by the appraisal and the PCR (Annex 5, para. 2) but no critical analysis of it has been undertaken and no conclusion about its replicability have been reached. The PCR (Annex 5, para. 27) refers only to the transferability of research informa- tion and not to the replicability of the evaluation method in other coun- tries as well as in the Bank's work.
17. The Israeli evaluation of research projects starts at the level of the commodity advisory boards. Membership of the boards (there are at present 25 covering most crops and livestock) includes farmer repre- sentatives, extension officers and researchers. The boards identify production problems, opportunities (i.e. the scope of a research program in light of market prospects) and inter-disciplinary action (programs that will require support also by non-agriculture research, for instance nuclear research, etc.). In line with the priorities as established by the national economic development plans, the boards establish research possibilities on a broad basis without any specific analysis.
1/ Schultz, T.W. Investment in Human Capital: Role of Education and Research. N. Y. Free Press 1970.
2/ See Scobie, G. M. Demand for Agricultural Research: A Colombian Illustration in American Journal of Agricultural Economics, Volume 61, Number 3, August 1979.
3/ AR, para. 3.18. - 7 -
18. Following the preliminary discussion of all prospective re- search subjects, individual projects are assigned to each board member for further analysis. This analysis encompasses not only likely impact of a successful outcome on production, but also a cost/benefit evalua- tion. The evaluation differentiates also between the (i) research; (ii) pre-development,1/ and (iii) development phase of the issue to be studied. It assigns research subjects to one of these phases; assesses present value of benefits for subjects in the final development (iii) category; estimates the research subjects; calculates their benefits per unit cost; ranks the subjects on a scale in declining order of benefit per unit cost; ranks the same subjects on a scale in declining order of probability of technical success as judged by Scientific Evaluation committees; and ranks them on a scale in declining order of chance of commercial success.
19. As a consequence of this elaborate evaluation process all committee members are familiar with the problems and issues of "their" analyzed projects. They also become more aware of problems and issues of the other projects when all research proposals are discussed in the boards' round-up meetings. In these final meetings all research subjects are sorted into four groups:
(a) high rank on all three scales (benefit cost, probability of technical success, probability of commercial success);
(b) high rank on cost-benefit scale but low on others;
(c) low rank on cost-benefit scale but high on others;
(d) low rank on cost-benefit scale and on at least one of the others.
20. Based on this ranking research proposals grouped under (a) are accepted and those under (b) rejected. Acceptance of proposals in group (c) is dictated by budgetary considerations, and further information aimed at reducing uncertainty is required for research subjects of group (d).2/
1/ pre-development phase determines after research results have become available Ci) what would be the most promising approach to apply the results; (ii) what is the probability of technical success; (iii) what are the commercial application costs.
2/ Va'adia, Y., Spharim, Y. A Quantitative Approach to Planning Agricul- tural Research, The Case of Citrus. Special Publication No. 76, Division of Scientific Publications, Bet-Dagan, Israel 1976. - 8 -
21. Since the Bank is promoting agricultural research in many ways, through cooperation with international research organizations, through research projects and through research sub-components in agricultural projects like this one, application of economic analysis nf r-co---h pro- grams and establishing research priorities according to criteria described above would be warranted. Contacts with the Israeli Agricultural Research Organization should be continued, not only to obtain information on trans- ferable research recommendations but also to study results of their evalua- tion procedures. -9- Appendix I -,u)n) 7 mpage 1 STATE OF ISRAEL INISTRY OF AGRICULTURE RURAL PLAIN11-G A:T DEVELOP!ENT AUTHCRITY HAKIRYA, TEL AVIV
Do September, 1979
Ref.
Mr. Shiv S. Kapur Director, Operations Evaluation Department The World Bank 1818 H Street N.W., Washington D.C. 20433
Dear Mr. Kapur,
Re.: Project Performance Audit Report on Israel Second Agricultural Credit Project (Loan 972-15)
We acknowledge with thanks receipt of the draft of the 972-15 Loan Report. We would be all the more obliged to you if you could send us several copies of the final report.
I wish to point out that I and my colleagues have been reading very carefully your highly professional report. It is our opinion that the report in question gives a very true account of the relevant developments. This leaves us no room for further comment, except for admitting that we are highly complimented by your reports' esteem for the Israeli agriculture and its administration.
I hope that the mutual relations between the Israel agriculture and the World Bank will find common ground for joint operations in the future.
Yours sincerely,
Prof. S. Pohory es, Director
Copies: Mr. A. Sharon, Minister of Agriculture Mr. A. Ben-Meir, Director General, Ministry of Agriculture Mr. D.'Kalderon, Director General, Bank of Agriculture. 4d~145 ~- 10 -
un 7v '' 90 ' Y:A73 /2 Appendix I page 2 TELAVIVFYA90 45/141 14 125ri
LT
?-,4Jy S ,iA lS!, ý T 0:1DC I ACtINnL'GE RECEIPT OF Yo)JR LETTE'm S"PT ST! 1970 AS'AIJLI!T R[:Pn,'T rfnAFT ST,)P ! F11!3 TAtE AU')IT AIlD PCR YIles AVID CO: '3C[ITI SATISF.ACTnQY 'T-,P nrST G SIAS4?3A ISRAEL 3A!X OF AGRIC'ILTURE 64145 '4'RLr2A&!< ,Jul MYK - 11 - Appendix I page 3, 4UI 014 IlYr3733 JNY315 i1103 U'.4A HL ILTY 039 TELAVIVYAFO 30/36 16 1240 LT SHIV S KAPUR OPERNTIONS EVALUATIO: r)EPT !TTAFlAD RE YR LETTER DTD SEPT 6TH 197q AwlD AUDIT RE?PORT DRAFT I FIND THE AUDIT AND PCR VIEWS AND CO1ENTS SATISFACTORY RGDS CALDERO'I ISRAEL RANK OF AGRICULTUIE COL 1979 6 - 13 - COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS June 1979 Regional Projects Department Europe, Middle East and North Africa Agricultura III - 15 - 1. INTRODUCTION Background 1.01 As part of a nation-wide agricultural credit program the project was a repeater project, following directly the First Agricultural Credit Project (Loan No. 709-IS), and with similar components plus the addition of a livestock component and a small component to support research in agriculture. The project was prepared by the Ministry of Agriculture in mid 1972 and sent to the Bank in early 1973. The Preparation Report was accepted without change and appraisal took place in March 1973. The project was completely integrated into Israel's economic planning system, credit being allocated to activities based on their net contributions to export earnings or import reductions. As such, the project was part of Israel's 1971/72 to 1975/76 Five-Year Plan and amounted to 25% of Planned Gross Investment for agriculture under the Five-Year Plan. The on-lending rate was the single substantive issue; the appraisal mission recommended 11% while the Government during negotiations insisted on retaining the existing 9% rate, which, in view of the prevailing high rate of inflation (10-12%), gave a negative real rate of interest. The EMENA Region's recommendation was to accept the 9% rate for the following reasons; (i) the expected long-run inflation rate was only 6-7% leaving a positive real interest rate; (ii) given the Israeli credit allocation system based on long-run planning the interest rate served no major allocative function and so did not contribute to significant resource misallocation; (iii) the inability of the GOI to alter the on-lending rate without altering all producer input and output prices, combined with the lack of leverage by the Bank due to its anticipated phasing out of operations in Israel, led it to conclude that the GOI would not accept any proposed change. The Region's recommendation was accepted. Subsequently, due to rapid increase in the rate of inflation 1/ the interest rate was increased twice during the course of the project, first to 11% and then to 12% to 12.5%. The sole effect of this was to reduce the level of interest rate subsidy and associated budgetary deficits and subborrower returns. Since the rate of inflation was increasing so rapidly these rate increases were minuscule in their effect on the real rate of interest. Thus, they had little effect on investment and producer income. Funds were allo- cated completely in accordance with the directives of the Ministry of Agri- culture which were based on the planning process. As planned by the authori- ties the interest rate had no allocative function during the disbursement period. The Appraised Project 1.02 The project consisted of 5 components: I. Export Production of flowers, fruits, vegetables and goose liver. 1/ See Annex 1, Table 3 for details. - 16 - II. Export Handling Facilities for the above production. III. Livestock Development for production of beef, milk and turkey meat. IV. Water Development to increase the availability or improve the efficiency in use of water for irrigation, through pro- vision of (i) more efficient irrigation systems (water manage- ment); (ii) reservoirs to collect run-off winter rains; (iii) systems to permit reuse of urban effluents; and (iv) local drainage. V. Project-related Research to develop more efficient production systems and introduce new higher valued crops. Components I through IV comprised 97% of project cost and were selected on the basis of the demand for investment financing, combined with their estab- lished high contribution to the economy. Thus, a new component, livestock development, was included as the demand for milk, milk products and meat was growing substantially in Israel. In this turkey production was seen as an important substitute for beef, domestic production of which was con- strained by a lack of resources and for which the import cost was substantial. The other new component was to support project-related research designed to further improve productivity and export earnings in citrus, other subtropical fruits, turkeys and mutton. Organization: 1.03 The Israeli Bank of Agriculture (IBA) was the Borrower, while two other banks, YAAD and NIR, also participated. The Bank loan was paid into a Project Fund in IBA and partially onlent to the two participating banks under subsidiary loan agreements. The project Account was maintained by IBA. Each bank was individually responsible for approval, administration and collection of its subloans. These subloans were restricted to investments under farm development plans approved by the Ministry of Agriculture. The role of the lead bank is noteworthy expanding the use of a computerized accounting system 1/ that greatly facilitated day-to-day management, subloan administra- tion/supervision, reporting and preparing withdrawal applications on a timely basis. The Proiect Coordination Committee (PCC) established under the first project had functioned well and was continued under this project. Membership comprised representatives of the Ministry of Finance ,and of the Credit, Planning and Development and Extension Departments of'the Ministry of Agricul- ture as well as each of the three banks. The Director General of the Ministry of Agriculture was the chairman while IBA provided the-secretary. For this project a representative of the Agricultural Research. rganization (ARO) was added. As under the first project the functions of the PCC were (i) to advise an overall project lending policies, (ii) standardizeroan application, export- ing and supervision procedures, (iii) coordinating the'services provided by the participating agencies. 1/ Introduced under the First Agricultural Credit Project (709-IS). - 17 - Objectives 1.04 The principal objectives, as listed in the appraisal report, were to assist in the expansion of agricultural exports, increase production of import substitutes and improve the efficiency of water use. As measured in terms of allocation of investment, 56% of the effect was directed towards improving the Israeli balance of trade and 44% towards improving technical efficiency (including 3% to be spent on applied research). The final alloca- tion was extremely close to this with 58% of investment directed towards improving the trade balance and 42% towards improving technical input output coefficients. Comparison with the First Agricultural Credit Project 1.05 The two projects were identical in their aims and, with the excep- tion of the new components, livestock and research, in overall content. Fruit and flowers continued to be high income and foreign exchange earning crops, as well as being labor intensive and thus suited to immigrant rural settlers with large families. Water is the single greatest constraint to increased output in Israeli agriculture, thus the continued emphasis on increasing its efficient use and expanding its supply at the margin, via run off reservoirs. No objectives were explicitly stated for the first project. Both projects were successfully completed. While three reallocations of funds were required under the first project, none were required under the second. With experience gained the second credit project in general needed less supervision efforts. As for the first project, a highly commendable and extensive Completion Report and a supplement to this, Annex 2 and Annex 3, were prepared by the Borrower's Ministry of Agriculture. II. PROJECT IMPLEMENTATION Overview 2.01 In terms of the selection of components and subprojects and the component shades of total investment cost the completed project remains virtually the same as the appraisal version. With respect to physical imple- mentation the lack of data does not permit any comparison but the indirect evidence suggest that there was no major difference. Project Costs, Financing and Foreign Exchange 2.02 A comparison of appraised and actual investment costs and financing, broken down by components and both in Israeli pounds (IL) and US dollars (US$), is given in Annex 1, Table 1. 1/ The two right hand columns show the actual cost as a percent of the appraised cost. In Israeli pounds the actual 1/ A more detailed breakdown of investment costs is given in Annex 1, Table 2, including the foreign exchange content. In many cases cost data for individual types of investment is not available for the completed project. - 18 - cost shows a 62% increase over the appraised cost, while in US dollar terms, the cost increase is only 10%. This cost overrun was largely the result of substantial international and domestic inflation. During the period from appraisal to completion of disbursements the US dollar based Index of Inter- national Inflation rose by 60% or 12.5% annually while the Israeli General Wholesale Price Index rose by 286% or 40% annually. But, during the same period the Israeli pound devalued by 241%, thus permitting the Bank funds to cover much of the cost increase. In line with guidelines for credit projects the appraisal report cost table does not include an allowance for price con- tingencies, however it does include a 10% physical contingency allowance suggesting a slightly larger cost increase than indicated above. 2.03 Actual Bank financing was 40% of total cost as compared to a planned 43% at appraisal. The contribution of the three participating Banks and the Government also declined slightly from 19% and 18% to 18% and 17% respectively. But, the subborrower contribution rose from 20% to 26% offsetting these reductions. 2.04 The actual foreign exchange component is not known but the actual foreign exchange content of some completed subprojects indicates a substantial reduction (14% to 71%) over appraisal estimates for the Export Production and Export Handling Facilities Categories which comprised 32% of total investment. Even in the unlikely event of no similar reduction in the foreign exchange content of other categories this represents a substantial foreign exchange saving. As a result it is likely that Bank funds financed some local as well as all foreign exchange costs for the project. The apparent sources of this saving are the increasing industrialization of Israel, particularly development of the agricultural inputs industry and the resourceful and highly skilled members of kibbutzim and moshavim. The former provides more off-farm inputs manufactured in Israel while the latter provides the enterprise to construct much of its own inputs from raw materials and components. Physical Implementation and Cost Increases 2.05 Comparison of appraisal and actual implementation is given in terms of Project Cost by component, Number of Loans and Physical Volume in Annex 1, Tables I and 2. Major deviations in physical volume between appraisal and completion are detailed below. When the actual investment cost of IL 550 million is deflated by the increase (1.48) of the weighted actual exchange rate for disbursements (6.2:1) over the appraisal exchange rate (4.2:1) 1/ this gives a cost of IL 372 million. This indicates an increase in expendi- ture of about IL 20 million in 1973 (appraisal) terms over the actual appraisal cost and suggests that, in constant terms, actual investment under the project was 6% greater than planned. As a result, overall physical implementation was greater than foreseen at appraisal. 1/ This deflation is considered more appropriate than the Israeli General Wholesale Price Index as it better related to the basket of inputs, parti- cularly those with an import content, and it also directly reflects the phasing of purchase of the inputs. - 19 - Export Pro action (i) Number of hothouses for roses was lower than estimated whereas th- area of carnations and gladioli was considerably higher. This can be traced to higher operational costs for roses due to increased cost of heating oil. A similar effect was seen under the First Credit Project. Overall investment volume in flower production was 70% higher than appraisal estimate based on high export earnings, steady market expansion and growers familiarity. (ii) Smaller acreage of tangerines planted than estimated by 24% due to falling export prospects. This decline however was offset by plantations of 280 ha of mangoes for which export chances had improved. The appraisal report had estimated that about 550 ha of tangerines and mangoes would be planted and actual figures consist of 420 ha tangerines and 280 ha mangoes. Shortfall in grapefruit investment was deliberate due to the declining market prospects. Celery investment was zero explained by the much slower development of necessary and suitable mechanical equip- ment for cultivating and harvesting. (iii) Goose liver shows a 40% shortfall in targeted investment output due to uncertain export market prospects and due to the objec- tionable nature of the basic production process. Export Handling Facilities. Apparently there was an overestimate of the incremental capacity of export handling facilities required as a result of the projects production. With the exception of the goose liver facility investment was restricted to modernization of existing handling facilities. No investment was realized in the case of the goose liver facilities. Livestock Development. The appraisal target for volume of beef investment exceeded by 10% while for dairy cows it was exceeded by 125%. In the case of turkeys investment volume was less than 10% of target. The phenomenal increase in volume of dairy investment resulted from the discontinuation of milk production quotas at the end of 1973 and the development of the dairy industry in the moshav sector. Shortfall in turkey volume investment was due to an over- estimate at preparation/appraisal of market demand combined with substantial in the volume of non project production early in the project life. Water Development. Improved and new irrigation areas covered 25,000 hectares and exceeded appraisal estimate by 25%, indicating the con- tinuing need for improved water management and water conservation. Sprinkler automatization and drip irrigation expanded faster than anticipated. The total number of reservoirs constructed (43) was about equal to appraisal estimate (45); however the area irrigated was only 70% of the appraisal estimate due to increased unit cost and reduced run-off water availability. Local drainage areas completed exceeded appraisal estimate by about 40%. This subproject carried the highest rate of return (30%). Only'one reservoir for effluents was constructed under the project due to delayed development of urban effluent treatment schemes. - 20 - Allocation of the Loan 2.06 The Bank loan was disbursed as originally allocated among the cate- gories. The question of reallocation did not arise at any time. Procurement 2.07 No procurement problems arose during the project. The range of items to be financed was wide and few planned investments were suitable for procure- ment under ICB. The appraisal report referred to some possible ICB procurement in connection with new central export handling facilities. However, the already mentioned technical abilities of the members of concerned enterprises permitted them to undertake construction and equipping of these facilities, most of which under the project were investments in expansion and moderniza- tion and all costing less than the maximum of $250,000 for construction and $50,000 for equipment above which ICB procurement was required. Thus under the project no ICB procurement took place. This was not seen as any concerted approach to avoid ICB. The relatively atomistic structure of the agricultural processing industry would have precluded this. Besides, the local input industry being export biased, appears quite competitive. Thus, little or no domestically manufactured items would have been procured from outside Israel. Rather this is seen as a rational use of available resources by the individual firms. Disbursements 2.08 Implementation was smooth and rapid. Total disbursements, at any point in time, were generally well ahead of appraisal estimates and were com- pleted on schedule. In fact with the exception of the Research Component all disbursements were completed some 9 months ahead of schedule, the research component being delayed as a result of a longer than appraisal estimated time required for the design of rather sophisticated equipment for turkey research and the absence of key personnel on military duty. The project's disbursement record is summarized in Annex 1, Table 3. 2.09 The entire proceeds of the first project were committed some 6 months prior to effectiveness of this project and the resultant shortage of funds in the face of continued demand by subborrowers created a backlog of subloan applications. This, combined with the repeater nature of the project, ensured a rapid start to disbursements, the only task being to finalize pro- cessing the backlog of subloan applications. III. AGRICULTURAL IMPACT Production Markets 3.01 As seen from published national statistics and the Israeli Supple- mentary Completion Reports 1/, production exports of, and exports earnings 1/ Annex 1, Tables 9 through 15 and Annex 3, pages 61 and 62. - 21 - from, flowers, fruit and goose liver have increased dramatically. Produc- tion of beef and turkeys has also increased substantially. No vegetables were produced under the project as the mechanized systems originally intended to be introduced by kibbutzim under the project were not made operational in time. Yields did increase over the project period. Vox6s >__d L__dase. by 25% as a result of development of more productive varieties, similarly carnations yield rose by 14%. Under the Water Management investments, the major item in the Water Development component, the aim was to reduce water input per given output. This brought about a saving of some 40 million cubic meters of irrigation water annually, permitting expansion in the area of irrigated cropland. Thus the yield from a given volume of water increased significantly. Cotton yield rose by 11% as a result of local drainage invest- ments. 3.02 Yield change through augmented irrigation from run off reservoirs under the project is not specified. Rate of return calculations indicate that this water was used principally on cotton. In the case of avocados yield increased by 22% at full production and full production developed in year 6 instead of year 12 as estimated in appraisal. However, tangerine yields were 6% below the appraisal estimate at full development. The vari- ations between appraisal estimated and actual fruit yields are to be expected as at the time of appraisal cultivation of many of these fruits was not wide- spread. Milk yields at full production were in line with appraisal estimates but were higher in the initial years and peaked at year 5 instead of year 6 as estimated in appraisal. This is attributed in part to improved management and nutrition and in part to continued improved breeding. Total agricultural production between 1971/72 and 1975/76 increased by about 25% or very close to the 28% target of the 5-Year Plan. 3.03 The export market remained generally buoyant and expansionary throughout the project. Problems with subsidized exports from Central Euro- pean countries hindered progress in goose liver exports early on, but in recent years this problem has declined and exports are now increasing. Exports of grapefruit have faced increased competition, particularly from US exports, in recent years. Increased marketing efforts have enabled the Israelis to maintain export volume but no further growth is foreseen. As a result, young plantations have, for the most part, been regrafted to produce later ripening soft fruits. However, the domestic market for turkey meat began to stagnate towards the end of the project due to over expansion as a result of an overestimate of domestic consumer demand. In response to this, turkey meat processors have begun exporting turkey meat which now exceeds both gladioli and carnations in export earnings and threatens to rival export earnings from roses. Similar overestimates of demand and subsidized produc- tion and prices led to a surplus of milk and milk products and required the imposition of quotas on producers and restrictions on further investment in dairying. 3.04 In October 1977, the new Government announced a radical change in the agricultural price policy. The previous policy was one of subsidized input and output prices and variable exchange rates. This enabled consumer - 22 - good prices to be kept at a low level but overtime gave rise to an increas- ingly great tax burden. The new policy completely freed the currency from all exchange rate controls and supports, increased subsidized output prices by 15% and undertook a gradual reduction in subsidies on these to 20% of the market price and the gradual elimination of input price subsidies particularly on water and petroleum. Misallocation, as a result of the price subsidies, was not a serious issue as production was generally well directed by the Ministry of Agriculture and based on free market prices. The result of this change will be to reduce margins especially on field crops such as wheat and cotton and lead to increased output of high valued crops such as fruits and vege- tables. Highly perishable soft fruits and exotic subtropical fruits will likely receive an increasing degree of attention and enable the work of the project-supported research program to pay off much more rapidly. One note of caution should be sounded as a result of lessons learned upon introduction of turkey production on a wide scale. Initially results were excellent as no diseases were endemic. Production grew rapidly both in intensity and exten- sity. The intensity grew to 2 production cycles per house per annum which proved too great to permit proper disease control once diseases became endemic. Also localized concentrations of moshav producers grew to the point where flock isolation became very difficult, leading to rapid spreading of diseases. The final result of the rapid expansion, disease interrupted production and a satiated demand was predictably the classic cyclical pattern of production and prices. It is hoped, with improved disease control measures and the develop- ment of an export market, that the cycle will now be abated. Similar produc- tion, though not marketing, problems occurred with flowers with soil compac- tion and disease build up. But, as the build up was slower and solutions developed sooner than for turkeys, the problems were less intense. Biological insect control is being used in avocados and so far it has successfully main- tained an acceptable level of disease incidence. But, should the pathogens ever get the upper hand, the result would be financially and economically disastrous. Extension 3.05 The manpower of the Israeli extension services actually declined by almost 2.5% over the period of the project 1/ due to budgetary constraints. Nonetheless, it was found that a redirection of manpower to focus better on the priorities, which are basically the economic plan preferred and promoted activities, ensured no adverse reaction. The staff turnover of about 5% annu- ally together with some retraining provides for smooth redirection of effort. Maximum cooperation by the Agricultural Research Organization, both formally and informally has greatly aided the work of the extension service. Manpower planning and direction is well developed with coefficients of extension man- power needs by type of activity and type of manpower specialist well determined. These coefficients vary for different phases of development of the various activities being high in the initial establishment phase and thereafter tapering off quite rapidly to the maintenance phase. The man- power needs of the extension service are supplied by the universities and receive extension induction training within the service. It is felt 1/ Annex 4, Table 1. - 23 - that the success of the esion service is amply demonstrated by the success of the new activities, particularly flowers and fruit, and by its success in developing the new settlers. Much of this success is attributed to the dedication and determination of all involved, both the extension personnel and the farmers. The settlement structure of Israeli agPwalture is extremely supportive of the individual and new settlements are liberally supported by the Jewish Settlement Agency through farm planning services and grant financing of investments. These factors combined with a carefully planned and thoroughly executed extension effort are the core of the successful develop- ment of Israeli agriculture. Research 3.06 At the time of appraisal Bank loan financing of country specific research was a novel concept and although not raised as an issue involved some internal discussion prior to its inclusion sanctioned. This discussion appears to have centered on the need for further clarification and assessment rather than opposition. This resulted from its not having been included in the preparation report, thus leaving the appraisal mission unprepared for it. The aims of the research component mirrored those of the overall project, they were to improve the balance of trade and improve productivity. The lines of research were plan rather than project specific, aimed at continuing pro- grams established to support the implementation of the economic plan. In the final analysis all were integrated through the planning system. The citrus research program contributed to both through breeding and selection of pre- ferred export varieties and improvement of packaging, transportation and storage and through the development of virus-free budwood, improved water management and mechanized harvesting. Results of varying significance emerged continuously as would be expected of one of the longest established lines of research. 1/ Research work on turkeys had an ambitious program involving extremely sophisticated and expensive facilities. Design and construction of these took far longer than originally estimated and they were not quite oper- ational at completion of the project. As a result no findings have emerged from the project as yet but can be expected to. Mutton research has concen- trated largely on breeding and hormone treatment to increase annual lamb pro- duction per ewe. Experiments have consistently yielded 3 lambs per ewe per year as compared to the national average of 2.4. Some nutrition and desert flock management work has been carried out. Subtropical fruit research has concentrated on improving productivity and post-harvest keeping quality of the two major fruits, avocado and mango and the development of additional product lines new to Israel. This latter effort is extremely interesting. It involved collection, around the world, of exotic fruits of possible commercial value and suitable to the Israeli climate and conditions, experimentally growing these in Israel and making further observations and selections. A number of these will soon be released into preliminary commercial production. This pro- gram is creating much excitement among established commercial producers, who are unwilling to further delay the commercial development of the products. A 1/ For details, see Annex 5. - 24 - major problem of low yields still persists, nonethel(. The researchers find the strong commercial interest extremely stimulating. The general impression of the research program is that it is quite successful but that time is neces- sary to enable concrete results to emerge. IV. GOALS AND JUSTIFICATION Institutional and Social Goals 4.01 Since the existing institutional structure of Israeli agriculture was well established, smoothly functioning and highly sophisticated, the project had no institutional goals. With respect to equity considerations, the existing structure of Israeli agriculture was quite satisfactory so that no adjustments were targeted in this respect, although the availability of funds did facilitate settlement of new immigrants in agriculture in conjunc- tion with special efforts by the Ministry of Agriculture's Extension Service. However, this was part of the total agricultural policy package and not a project specific goal. 4.02 One indirect institution building effect to emerge from the project was the further professional development of the Economic Survey and Advice Department of the Ministry of Agriculture through the development of financial and economic analyses requested by the Bank in conjunction with the prepara- tion and completion of the project. This effect is really a continuation of that started under the first project. While the capacity to execute this work was in the department and would have developed it is fair to say that Bank project requirements gave impetus and direction to the development. As a result the Ministry of Agriculture is in a position to respond positively to requests, from other developing countries, for assistance in preparing projects for possible financing by institutions such as the Bank. Such requests have been received from Latin American countries and assistance is being given in particular to Costa Rica and Nicaragua. Economic Goals 4.03 The economic goals of improving the balance of trade (through in- creased exports and reduced imports) and of improving input-output efficiency with respect to irrigation water are implicit in the project's objectives. Production and trade performance is only available on a national basis. But, based on the fact that the project contributed 25% of the investment a simi- lar share of the performance can be attributed to it. No overall quantitative goals were established for the project with the possible exception of the estimated economic rates of return for the overall project and the individual subprojects. The 5-Year Plan did establish a target of 25% real growth in the value of agricultural output for the period. - 25 - Beneficiaries 4.04 The total reported number of loans was 10,694 as compared to an appraisal estimate of 2,060. However this should not be taken to imply a vast increase in the number of beneficiaries. The appraisal number is the estimate of the number of loans to settlements (kibbutzim and moshavim) and individual farmers while the number of loan approvals figure contains loans to moshavim disaggregated into loans to individual members of moshavim. Additionally, it was explained that financing for large scale investments, such as reservoirs, and central packing houses, often developed into a series of loans as funds were required or became available and, in some cases, due to initial underestimation of investment costs or overestimates of the sub- borrowers own resources. Also in the case of loans to individuals these were hardly ever to an individual person but rather to a company formed by one or more settlements for the purposes of combining resources in some off- farm processing venture or a capital intensive production venture such as day-old chick or broiler production. Consequently, the relationship between the number of loans and the number of beneficiaries is indeterminate. 4.05 The distribution of the loan proceeds is given in Annex 1, Table 7. Kibbutzim received 40% and moshavim 50% and others 10%. This contrasts with 39%, 38% and 23% under the first project. The major reason for the substan- tial decline is the reduction in the expensive export handling facilities under this project compared to the first. Only 2% of the loans under this project were for export handling facilities while 13% was the share under the first project. Within the beneficiary groups the priorities remained as under the first project. Kibbutzim concentrated on loans for capital intensive activities while moshavim, although leaning towards production activities, did achieve a more even balance than kibbutzim. Loans to the others category were mainly for livestock development followed by export production, with water development and export handling facilities far behind. Nonetheless loans to this group for export handling facilities were 4 times greater than to kibbutzim and 8 times greater than moshavim. The low figure merely indicates the low level of demand for the facilities. The design of the financial intermediary's computerized recording system is restricted to the financial accounting and recording needs of the intermediary. It does not easily lend itself to analysis of the physical implementation of the project. At the time of appraisal, unlike the present, a complete project monitoring and recording system was generally omitted. Consequently, there appears to be no record of the number of borrowers and thus no estimate of the number of beneficiaries can reasonably be made. V. PERFORMANCE Financial and Economic 5.01 These aspects of performance are quantitatively summarized in terms of the internal rates of return by type of subproject and overall in Annex 1, - 26 - Table 8. These rates of return, estimated by the Israeli Ministry of Agri- culture, are all quite satisfactory. The overall economic rate of return to the project at completion was 19% as compared with 21% at appraisal. The economic rates of return at completion for the individual subprojects range from 10% for grapefruit to 30% for local drainage while the similar financial rates of return range from 10% again for grapefruit to 30% for run off reser- voirs. Subproject economic rates of return were not given in the appraisal report but the financial results range from 14% for a tangerine packing house to 32% for water management/efficient irrigation systems. The reduction in completion compared to appraisal rates of return is generally attributable to the "energy crisis" which caused a major increase in operating costs. As noted in the review of production, physical input-output efficiency was generally higher than the appraisal estimate, thus offsetting to some extent the increased operating cost. Government and Borrower 5.02 The Government and the Borrower complied fully with all loan cove- nants. The three particating banks, including the Borrower, executed their roles smoothly and with complete cooperation. As their financial statements 1/ show, they have all increased their level of operations and profitability. Their knowledge of their subborrowers is impressive and they continue to be managed excellently. Reporting to the Bank has been satisfactory and on schedule. As evidenced from the periodic reports, subloan payment has been very good with half yearly recovery rates ranging from 97% to 100% and with negligible defaults. Although as mentioned to the completion mission, given the high rate of inflation, this was reasonable to expect provided the invest- ment was fundamentally profitable. This was ensured through correct planning. 5.03 This high level of overall performance was to be expected in view of the project's repeater position, following directly on an almost identical highly successful project. The Project Coordination Committee (PCC) had func- tioned well under the first credit project and was continued under the second credit project with addition of one representative of the Agricultural Research Organization (A.R.0.). 5.04 Every three months PCC held a meeting on the project progress. The agenda also included discussions of economic issues that were not necessarily directly connected with the project. PCC particularly noted Bank's comments following supervision missions. Function of PCC was felt useful as it estab- lished for the first time a direct contact between the three banks and min- istries involved. After completion of the second agricultural credit project it was decided to disband the formal activity of PCC as its role in a formal sense was minor. However, its development of a strong working relationship between the parties concerned was felt to be a significant contribution. 1/ On file. - 27 - Bank Performance 5.05 As with the Israeli agencies the Bank's role in the project was also low key. The division's projects are generally supervised twice a year, but on this project supervision averaged once a year. Supervision was quite ade- quate in view of the trouble-free nature of the project throughout its imple- mentation. Continuity of personnel was excellent. The Bank readily agreed to the requested increases in interest rate changes of November 1974 and January 1976. These did significantly increase the interest rate. But, in view of the high rate of domestic inflation, it still remained negative. The in- creased spread was taken by the Government, but this was considered acceptable in view of the increased foreign exchange risk being borne by the Government. The accuracy of the work of the appraisal mission was excellent. Errors in estimating yields were small and acceptable in view of the novelty of the ' crops. The comparison of the appraisal and completion economic and financial analysis indicates that, with the exception of the oil crisis which few fore- cast, the anticipation was excellent. Had an allowance for price contingen- cies been included, the cost overrun in US dollars would have been negligible. However, in accordance with Bank practice of the time for agricultural credit projects, as set out in the now discontinued Central Project Memoranda (CPM No. 2.10 para 10) no price contingency allowance was made. But, this allow- ance is now increasingly a standard Bank practice. The inclusion of a research component was a logical step for this project, but a special effort was required to introduce it and to supervise it. The remaining components were identified and appraised by Israel and proved highly viable. Project organization was not an issue being sensibly left to continue in the success- ful path of the first project. VI. CONCLUSIONS 6.01 It is difficult to see how the project might have had more success. It was based on pragmatic long-term economic analysis and detailed planning utilizing fully the socio-economic structure of the sector and the quantity and quality of labor and management. The agencies responsible for its execu- tion, both directly and indirectly, were highly motivated and well staffed and well trained from production through processing and marketing. Problems when encountered were generally exogenous to the project and in any case were attacked constructively with the aim of resolving them as efficiently as possible. 6.02 In its repeater role, the project continued to boost Israeli agri- cultural production and exports and to assist in settlement of new immigrants. Productivity gains also continued. Lessons Learnt 6.03 As concluded above the key to the success of the project-lay in the depth of economic analysis and planning, and subsequent Government commit- ment. Since this should not be a lesson to be learnt by the Bank, it is more - 28 - constructive to dwell briefly on the possibility of replicating the project elsewhere. The Completion Mission asked this question widely in Israel. The responses fell into two groups; one which said "not unless the entire Israeli package is replicated," and the other which said "yes with the right combina- tion of credit and extension." The first group intimated that the supportive socio-economic structure and the extremely high quality labor force, in terms of being intelligent, hard working, well trained and determined and each willing to subsume personal interest for the national interest, was the unique variable contributing to the success of the project. Since this was highly unlikely to be replicated, the project could not be replicated. The second group, containing many associated with extension, observed that the value of informal input from neighbours in the initial years of a development invest- ment is low and given the right credit package extension is the key to success. 6.04 A former senior official of the Ministry of Agriculture also felt strongly that replication was possible with the right credit and extension package and pointed to successful crop developments outside the project area. Surprisingly no one stressed either the level of Government commitment or the demonstrative effect of the successful innovations as sources of Project success, but rather, took these for granted as a way of life in Israel. 6.05 The Completion Mission is of the view that, since its design is in no way unique nor dependent upon country specific factors, the project gen- erally can be successfully replicated. The degree of this success will depend on the extent to which certain factors, other than credit and extension, are present. Most important among these are for the overall project a sound economic basis, complete Government commitment, and a well developed imple- mentation plan, thus precluding unnecessary but extremely discouraging fail- ures, and, from the specific subproject viewpoint, an adequate number of successful, strictly commercial, demonstrations of all innovations. The level of success in any replication will be modified by the extent of the presence or absence of these factors. COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS PHJKCT COST A PlIRA ISA1, COMPE1TON ofCloaot/Apprainal Ata (ar 7 TKL11 mill.-i 11i Share % No. of loans I1 mill. 21 mill. Sare No. o loans : tJincti 8 .h 2 L. 27 749 151.8 ) 27.1 30 6,05t 169 105 I-:xJot hadliqg facilities 18.1 11.3 5 10 10.9 ) 2 239 60 ) kiv"sltck devel opmlent 81. 1u).5 24 914 156.0 25.3 28 8h8 190 130 water -:velopmetit 1110.' 33.5 41 387 212.0 34.1 39 3,55 150 102 ;ubuttal 330.3 y8.' 97 2,060 530.7 86.5 97 10,694 160 110 Hesearch - Investment coast 9.1 2.2 3 - 19.3 2.3 3 - 205 104 - Current cost 12.9 3.1 - - 44.4/1 7.2 - - 244 232 Iotal 352.6 114.o - 2,060 594.4 96.0 - 10,694 168 114 rotal (excl. current costs of 339.7 80.' 100 - 550.0 88.8. 100 - 162 110 research) PROJECT FINANCING APPHAfSAL COMPLETION Subborrowers TBA/YAAI/NTf 001 IBRD Total Subborrowers IBAIYAAD/NIR GOI IBRD Total ------IL mill------ Export production 18.o 18.0 15.6 38.2 89.8 )63.U 151.8 1-:Al-rt handling realities 3.o 3.6 3.2 7.7 18.1 n.a. 10.9 Livestock development 16.3 16.3 14.3 34.8 81.7 60.4 156.0 Water development 28.2 28.2 24.4 59.9 140.7 82.1 212.0 :ubtotal 66.1 66.1 57.5 1h0.6 330.3 142.6 97.2 85.4 205.5 530.7 .hare % 20 20 17.4 42.6 - 26.9 18.3 16.1 38.7 - Re.-earch - Investment cost - - 3.2 6.2 9.4 - - 6.6 12.7 19.3 - rurrent oost - - 12.9 - 12.9 - - 44.4 - 44.4 Tota] (4.1 66.1 73.6 146.8 352.6 142.6 9,1.2 136.14 218.2 594.4 mare " 18.75 18.75 20.9 41.6 100 211.0 16.4 22.9 36.7 100 Total (.xcl.aurrent costs of resear.) ,1,.1 66.1 60.7 146.8 339.7 142.6 9.2 92.0 218.2 550.0 mare 19.) 19.5 17.9 43.1 100 25.9 17.7 16.7 39.8 100 /1 Appraisal estLimate adjusted by the ibtaeli Conisumer Price Index. n.a. not avdila6le. COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAF 9 72-1 Detailed Project Cost Project Investment Cost Number of Loans Physical Volume Appraisal FE Completo-n FE Appraisal Completion Appraisal Completion lb mi l.I us mill. % IL mill. us$ mill. Y Export Production 89.8 21.4 40.0 151.8 24.3 749 6,057 Roses 48.1 11.5) 22.8 204 1,368 40.8 ha 33.9 ha Carnations' 47.0 138 1,389 27.6 ha 53.0 ha Gladioli 15 804 9.0 ha 44.1 ha Avucadoes 35.6 8.4 25.0 78 527 780.0 ha 700 ha Tangerines )29.0 54 731 540.0 ha 420 ha Mangoes 50 280ha Grapefruit 150 1,127 1,500.0 ha 1,120 ha Celery 6.1 1.5) 2 - 224.0 ha zero Goose liver ) 51.0 108 61 38.880 birds /1 21,960 /1 Export Handling Facilities 18.1 4.3 45 10.9 10 239 £ Flowerb . 0.5 41.0 )24.0 2 223 80 millionW Avocadoes 1).9 3.3 ) 29.0 2 7 6,800 tons modernization omly Tangerines )47 2 - 6,400 tons o Grapefruit 2 9 90,000 tons to Goose liver 2.0 0.5 40.0 23.0 2 240,000 birds 2 Nothing Livestock Development 19.5 1560 914 848 Beef 142 34 23 163 5,750 head 6,350 head Dairying 43.7 10.4 471 653 6.000 cows 13,515 cows : Torkeyb I'kya23. 8 5.7 420 32 420,000 birdaL 32,000 birdsr Water Development 140.7 33.5 212.0 34.1 387 3,550 inler management )2.6 17.3 220 2,997 19,360 ha 25,000 ha Reservoirs 360 8.5 45 43 4,500 ha(45 units) 3,090 ha (43 uniti) Effluents 209 5.0 10 26 4,000 ha 294 ha Drainage 11.2 2.7 50 381 5,600 ha 7,720 Resarch 22.3 5.3 19.3 2.3 - - TOTAL. 352.6 84.0 550.0 88.7 2,060 10,694 Annual production batch per annum.Persouming I Blanks Indicate data notU avaSlable. /2Annual Oiroughput capacity. - 31 - ANNEX 1 Table 3 CONPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS Price Indexes and Wage Data 1973 1974 1975 1976 1977 General wholesale price index of industrial output for the domestic market (not including printing and publishing) (1968 = 100.0) 157.9 239.2 336.7 440.6 610.5 General Consumer Price Index (1969 = 100.0) 160.9 224.8 313.1 411.2 553.5 Daily wage per agri- cultural employee (IL.) (permanent, without veteran rights) 22.60 35.10 44.82 67.95 80.20 Source: Central Bureau of Statistics. - 32 - ANNEX 1 COMPLETION REPORT Table 4 SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS Exchange Rates Reimbursement Date US Dollar/IL. 11.7.74 4.2000 19.7.74 4.1600 27.8.74 4.2000 24.9.74 4.2000 31.10.74 4.2000 20.11.74 6.0000 18.12.74 6.0000 27.1.75 5.8550 24.2.75 6.0000 21.3.75 6.0000 30.4.75 6.0000 29.5.75 6.0000 19.6.75 6.0000 25.7.75 6.1200 18.8.75 6.2400 24.9.75 6.3600 25.9.75 6.3600 17.10.75 7.0000 21.11.75 6.9600 22.12.75 7.1000 21.1.76 7.2470 20.2.76 7.3200 26.3.76 7.4680 26.4.76 7.6700 24.5.76 7.8385 23.6.76 7.8200 22.7.76 8.1300 16.8.76 8.0950 23.8.76 8.0820 20.9.76 8.1870 22.10.76 8.3860 1.3.77 8.9200 10.6.77 9.4200 20.9.77 10.1050 Oct. 1977 Free rate introduced, but in fact, Central Bank operates to dampen the fluctuations. Weighted Average 6.20 Source: Israel Bank of Agriculture, December 12, 1977. - 33 - ANNEX 1 Table 5 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS Actual and Estimated Disbursement Bank/IDA Actual Disbursements Fiscal Year Actual Total Appraisal as a Percentage of and Quarter Disbursements Estimate Appraisal Estimates 1975 09.30.74 6.46 2.50 258 12.31.74 10.58 5.85 181 03.31.75 13.89 8.92 156 06.30.75 17.36 11.69 149 1976 09.30.75 21.58 14.08 153 12.31.75 25.98 15.82 164 03.31.76 28.83 19.95 145 06.30.76 32.50 23.73 137 1977 09.30.76 34.18 26.25 130 12.31.76 34.30 28.13 122 03.31.77 34.50 32.54 106 06.30.77 34.80 33.77 103 1978 09.30.77 35.00 35.00 100 12.31.77 - - - - 34 - lable 6 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS /1 Disbursement By CategorZ- Disbursement Category Date Appraisal Actual I Export Production II Livestock III Water IV Research Development ------US$ Million ------ 6.30.74 0.00 0.00 0.00 0.00 0.00 0.00 9.30.74 2.50 6.46 2.61 1.57 2.28 0.00 12.31.74 5.85 10.58 4.01 2.39 4.18 0.00 3.31.75 8.92 13.90 4.98 3.01 5.91 0.00 6.30.75 11.69 17.36 6.00 4.24 7.12 0.00 9.30.75 14.08 21.58 7.02 6.38 8.00 0.19 12.31.75 15.82 25.98 7.92 8.01 9.85 0.19 3.31.76 19.95 28.83 8.66 9.00 10.96 0.19 6.30.76 23.73 32.50 10.26 9.65 12.07 0.58 9.30.76 26.25 34.18 10.50 9.78 13.15 0.75 12.31.76 28.13 34.30 10.50 9.80 13.20 0.80 3.31.77 32.54 34.50 10.50 9.80 13.20 1.00 6.30.77 33.77 34.80 10.50 9.80 13.20 1.20 9.30.77 35.00 35.00 10.50 9.80 13.20 1.50 Total Allozated 35.0 35.0 10.50 9.80 13.20 1.50 /1 Subcategories not available. - 35 - ANNEX 1 Table 7 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS Shares of Loan Proceeds (%) /1 A. By Type of Subproject Loans for Kibbutzim Moshavim Others Total Export Production 16 71 13 29 Export Handling Facilities 43 17 40 2 Livestock Development 43 54 3 29 Water Development 54 34 12 40 Total 40 50 10 B. By Type of Subborrower Export Export Handling Livestock Water Loans to Production Facilities Development Development Total Kibbutzim 12 2 54 32 40 Moshavim 40 1 27 32 50 Others 36 8 46 10 10 Total 29 2 29 40 /1 Excludes funds for research. - 36 - ANNEX 1 Table 8 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS Table Financial and Economic Analysis Rate of Return Appraisal Completion Financial Economic Financial Economic Component % % % % Roses 18 - 12 /1 15 /1 Carnations 20 - 16 /1 19 /1 Gladiolis - - 19 /1 Avocadoes 18 - 20 /1 18 1 Mangoes - - 23 22 Tangerines 16 - 20 /1 22 /1 Grapefruit 17 - 10 10 /1 Celery 20 - - - /2 Goose liver 30 - 15 /1 19 /1 Beef 17 - 13 15 Dairying 16 - 16 18 Turkeys 22 - 13 17 Water management 32 - 24 Reservoirs 21 - 30 16 Effluent 20 - - - /2 Drainage 29 - 30 Flower packing house 19 - 19 Avocado packing house 16 - 18 Tangerine packing house 14 - 11 Grapefruit packing house 16 - 11 Geese slaughterhouse 19 - Project - 21 19 /1 Includes off farm packing house. /2 Volume of investment insignificant or nil. - 37 - ANN!EX 1 COMPLETION REPORT Table 9 SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS ISRAEL: Place of Agriculture in International Trade CY 1975-78 ('000 Dollars) Re vised D'ata 1975 1976 1977 1978 est. Total Imports 4,172,611 4,132,432 4,809,885 5,680,000 Agric. Imports 758,890 688,556 708,599 690,000 4 of Agric. in Total 18.2 16.7 14.7 12.2 Total Exports 1,940,721 2,415,198 3,080,579 3,700,000 Agric. Exports 409,677 450,784 526,721 580,000 % of Agric. in Total 21.1 18.7 17.1 13.7 % of Agric. Self-Sufficiency-1 54.0 65.5 74.3 84.1 /1 Agricultural Exports as % of Agricultural Imports. SOURCE OF BASIC DATA: Central Bureau of Statistics Computations, Arrangement, Estimates: Agricultural Attache Office. - 38 - ANNEX 1 COMPLETION REPORT Table 10 SECOND AGRICULTURAL CREDIT PPOJECT ISRAEL LOAN 972-IS ISRAEL: Land Use (000' Dunams 1973/74 1974/75 rev. 1975/76 rev. 1976/77 Field Crop 2,739 2,624 2,595 2,662 Area in Preparation /1 40 -230 252 147 Vegetables, potatoes, melons 376 368 339 367 Fruit Plantations 870 861 870 885 Fish Ponds 56 51 51 49 Miscellaneous .189 191 193 190 TOTAL 4,270 4,325 4,300 4,300 /1 Fallow, prepared for sowing in following year. SOURCE: .Annual Abstract of Statistics, Vol. 29 - 39 - COMPLETION REPOPT ANNEX 1 Table 11 SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS Fruit Production 1973/74 1974/75/1 1975/76 1976/77 Citrus 420 425 430 420 Pome fruit 58 50 48 50 Stone fruit 36 30 29 32 Table grapes 33 28 29 30 Wine grapes 51 so so 50 Bananas 19 17 17 17 Olives 99 112 110 112 A]3onds 49 48 48 Nuts 71 23 26 28 Subtropical fruit 38 38 45 56 Other 45 39 38 42 TOTAL 870 861 870 885 /1 From 1974/75 a new method of computation and estimation was adopted. SOURCE: Annual Abstract of Statistics, Vol. 29 - 40 - ANNEX 1 COMPLETION REPO=T Table 12 SECOND ACRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS ISRAEL: Area Under Irrigation (000' Dunai.s) 1973/74 1974/75 rev. 1975/76 rev. 1976/77 Field Crops 615 684 709 757 Vegetables, potatoes, melons 283 272 278 306 Fruit Plantations 700 686 694 709 Fish Ponds 56 51 51 49 Misc. 101 107 107 99 TOTAL 1,755 1,800 1,835 1,920 SOURCE: Annual Abstract of Statistics, Vol. 29 - 41 - ANNEX 1 Table 13 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PFOJECT ISRAEL LOAN 972-IS ISRAEL: Agricultural Water Consum.LTption (Million Cubic Meters) Field Vegs. Orchards Crops Potatoes, (incl. Fish Ponds Misc. Total Cucurbits citrus) 1969/70 470 130 525 150 65 1,340 1970/71 425 125 490 145 60 1,245 1971/72 445 130 490 150 60 1,275 1972/73 455 130 505 145 60 1,295 1973/7- 380 120 460 140 60 1,160 1974/75 435 120 485 130 60 1,230 1975/76 465 120 545 130 65 1,325 1976/77 480 120 500 130 70 1,300 SOURCE: Annual Abstract of Statistics, Vol. 29 - 42 - ANNEX 1 Table 14 CC'TLETION RZPORT SECOTD ArPICULTURAL CREDIT rPrOJECT ISRAEL LOAN 972-IS ISRAEL: Consumption of Fertilizers in Agriculture Metric Tons. (Years beginning July 1) Fortilizcr 1975/76 1976/77 rev. 1977/78 Net Content NITROGENOUS 36,700 37,500 39,158 N PHOSPHATE 19,350 18,650 19,800 P 0 POTASH 17,900 18,500 17,615 K2 05 Nitrogenous %N .Ammonitum sulphate 78,240 75,480 80,000 20.5 Calci,n ammonium nitrate 3,190 - 3,000 21 Urea 15,140 15,750 14,500 46 Aqueous amonia 27,000 30,490 34,000 20 Other liquid fertilizers 22,000 30,450 28,800 18-21 PhosDhate %P 0 2 5 Superphosphate, single 335 210 800 18-20 Superpha.sphate, enriched 75,050 79,700 84,000 21-22 Svperrhos-phatc, triple 4,330 110 - 40-43 Potash % K 0 PotassiumL sulphate 560 410 800 48-50 Muriat2 24,400 27,900 27,000 60-62 Complex % N-P 0 -K 0 Liquid 795 600 800 12.5-12.5-0 " 9,770 10,740 12,000 16 - 8 -0 " 2,950 3,380 3,500 8 -24 -0 " 60 25 - 10 -10 -5 Potassium nitrat 1,690 2,580 1,340 13 - 0 -46 MiscelIaneous 560 480 600 SOURCE: Annual Abstract of Statistics, Vol. 28 - 43 - ANNEX I coNr)TTTO! REPORT Table 15 SECOND ACRICULTURAL CREDIT PrOJECT ISRAEL LCAN 972-IS ISRAEL: Volume of Agricultural Production (Including Intermediate Products) 000' Metric Tons, unless otherjise stated 1977/78 Crop 1974/75 1975/76 1976/77 rev. prel. Wheat 243.3 205.5 220.0 17.0 Barley 20.6 18.2 16.6 12.5 4.0 Sorghum 32.2 12.6 13.5 Other cereals 4 pulses for grain 25.1 22.4 22.3 21.7 Cottcnlint 48.8 53.7 64.0 78.5 125.0 Cottonseed 82.0 87.0 108.0 320.0 116.7 Sugar beet 259.0 323.6 Groundnu,s 18.8 23.5 22.5 23.0 Tobacco 0.6 0.8 1.0 1.0 Sunflower 6.4 8.5 8.3 3.0 Other industri-il oil crcps 8.9 4.9 5.5 6.9 Hay 148.4 140.1 111.1 105.0 Green folder 1,445.7 1,289.5 1,374.0 1,300 Srraw 234.4 201.7 222.3 160 Green nanue (1,000 D-ams) 15.0 13.6 7.7 n.a. Vecet--bles 609.2 581.1 582.1 590 Potatcas 163 174.7 214 220.7 143.9 Cucurbits 134.8 134.8 132 Citrus 1,506 1,531.2 1,528.1 1,479 118.1 Pome fruit 124 124.2 140.3 Stone fruoit 52.6 54.3 45 50.3 Table gra-es 32.2 31.6 . 29.4 32.8 40.6 42.5 Wine grapes 43.3 . 45.9 Ban3nas 52.2 57.4 61.7 54.5 Avoc, does 17.1 13.5 21.3 24.3 Olives 4.9 . 19.5 8.1 37.0 A-1mnds and Nuts S 5.5 5.9 6.1 Other fruit 16.7 17.8 17.9 13.3 Pou1tryr.. meat, LW 172.9 187.5 192.1 196.0 Cattle for meat, LW 37.1 44.1 47.0 40.2 S.4 Sheep and Goats for meat, LW 8.4 8.6 8.9 Other meat 11.8 11.7 13.2 12.7 Cow's milk (million litrs) 582.2 655.7 671.5 670.4 Sheep & Goat's milk (million ltrs) 43.6 45.2 48.5 45.7 Tabic eggs (millions) 1,442.2 1,523.9 1,552.0 1,640 Hatching eggs 127.7 152.6 152.3 120 Chicks (-millicns) 78.9 87.5 -90.8 - n.a. Fish 22.0 24.2 24.6 n. h ,;v1.7 17 1.5 a. Cr mtL-alure illion in) 2.8 2.9 3.0 a , SOURC7: Annual Abstract of Stati.s tics, Vol. 29 -- atd Y'in,.mztrv o.' . i.n t:r -44- ANNEX 2 STATE OF ISRAEL Page 1 MINISTRY OF AGRICULTURE RURAL PLANNING AND DEVELOPMENT AUTHORITY SECOND AGRICULTURAL CREDIT PROJECT LOAN NO. 972-IS COMPLETION REPORT Submitted to the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT .1sric;1a0m. Fhriarv 1q7R - 4- ANNEX 2 Page 2 TABLE OF CONTENTS INTRODUCTION A. RECENT ECONOMIC DEVELOPMENT IN THE AGRICULTURAL SECTOR B. LOAN DISBURSEMENT AND ALLOCATION C. LOAN DISTRIBUTION BY MAIN CATEGORIES D. EXPORT DEVELOPMENT E. ECONOMIC EVALUATION a. Flowers: Carnation Project b. Avocado c. Mango d. Tangerins e. Livestock Development f. Water Saving g. Reservoirs i. Water Development Loans' Application Annex 1: The Settlement Structure of Israeli Agriculture Annex 2: Incentives, Subsidies and Taxation Annex 3: Cumulative Quarterly Distribution Annex 4: Distribution of Loans by Categories -46 - ANNEX 2 Page 3 INTRODUCTION The Second Agricultural Credit Project (Loan No.902-IS) by the Inter- national Bank for Reconstruction and Development in the year 1973/74- 1975/76, totalling333.5millions, was composed of three major sub- projects. The first subproject related to e x p o r t c r o p s, mainly flowers and off-season vegetables, including infrastructure and export handling facilities. The second subproject related to 1 i v e s t o c k d e v e 1 o p - m e n t aimed at two targets: 1. Creating larger production units, especially in the family farms, in order to benefit by economies of scale. 2. Increasing local meat production as a substitute for meat imports. The third subproject related to raising the level of w a t e r u s e e f f i c i e n c y, as well as developing new water sources (reservoirs, regional drainage system, recycling of effluents, etc.). The herewith submitted Completion Report consists of four parts: The first part presents the recent developments in Israel's agri- culture along with an illustration of the IBRD's contribution for Israeli agricultural progress. The second and third parts of the Completion Report present the Project's performance data, including figures of the loans distribution by the various borrowing categories (settlement types, ecological regions and number of approved loans). The f o u r t h and central part of this report presents the export economic analysis of the Project's implementation stage. The figures derived here of the internal rates of return - both financial and economic - are compared against the figures derived at the - 47 - ANNEX 2 Page 4 Project's planning stage. They all indicate a profitability level considerably higher than forecasted. The analysis was modelled on data of the Project's last year of implementation, i.e. 1975/76. Hence the analysis' profitability basis was almost in all cases the current 1975/76 price level. The Completion Report was prepared by Dr. A. Szeskin, Mrs. C.Haberman, Mr. H. Kenan, Dr. L. Shashua, Mr. I. Garti, Mrs. H. Stakher, Mrs. R. Cohen, Mr. S. Cohen, Mr. G. Kadmon, Mrs. S. Yudohowitz, Mr. A. Lanckron, Mrs. S. Hezroni, Mrs. 0. Harel, Mr. Z. Kloner. PROF. SAMUEL POHORYLES A/Director, Rural Planning and Development Authority -48 - ANNEX 2 Page 5 A. RECENT ECONOMIC DEVELOPMENTS IN THE AGRICULTURAL SECTOR 1. The Agricultural Sector and National Economy Agricultural production value in 1976/77 amounted to IL.15.5 billion - an increase of 32.1 per cent over last year's figure. This change was mainly due to the rise in the producer price level (+26.8%), whereas physical growth rate amounted to 4.2% only. This growth rate gains significance when compared with the real change in the GNP (+0.8%). During the year under review the economic developments in the agricultural sector were subject to inflation, which affected both input and output levels. However, as agricultural producer prices rose a little more rapidly (31.8%) than input price level (30.2%), the "terms-of-trade" slightly improved. a. Dynamic Overseas Marketing: The expansion of agricult- ural exports is a prime condition for maintaining Israel's rural development, as well as increasing the national foreign currency supply. Development of branches and products offering attractive export prospects are there- fore given priority in respect of production, price, invest- ment and financing policies. Israel's agricultural export has been rapidly expanding in recent years. Most remarkable for a high export growth rate are the branches which largely benefited from the World Bank's loans, i.e. avocado, flowers, etc. Relevant figures show that on the average the value of overseas flowers shipments throughout 1970-1976 increased by 24% annually. Parallely, avocado export volume soared by 35% per annum. This is shown by the following data. - 4- ANNEX 2 Page 6 Table 1: Flowers and Avocado as Illustration of Agricultural Export Upward Trend (1970 - 1976) Flowers Avocado Indexes: ($ million) (thous. tons) Flowers Avocado 1970 5.2 2.5 100 100 1971 7.3 4.4 140 176 1972 8.7 7.5 167 300 1973 10.8 7.8 208 312 1974 10.6 10.6 203 424 1975 16.8 13.4 323 536 1976 18.8 15.0 362 600 Source: Central Bureau of Statistics b. Technological Progress: The development pace of agricultural technology has also been quite spectacular in-this country. Since 1960, over 1,000 tractors and 20 cotton pickers were averagely added each year. Table 2: Tractors and Cotton Pickers 1960-1976 (End of year, units) Units: Indexes: Tractors Cotton Pickers Tractors Cotton Pickers 1960 7,425 50 100 100 1970 16,360 353 220 706 1974 20,275' 366 273 732 1975 22,400 380 302 760 1976 24,470 385 330 770 Source: Central Bureau of Staitstics - 50 - ANNEX 2 Page 7 2. The Rural Settlement Structure There are mainly three socio-economic patterns of rural settlement in Israel: (1) Kibbutz; (2) Moshav; (3) Moshav Shitufi. a. The Kibbutz: A Kibbutz is a community whose members voluntarily abide by the principles of equality, mutual responsibility, and negation of private ownership. The socio-economic system of the Kibbutz is the cooperative framework based mainly on collectivism. Since it can afford relatively large production units, the Kibbutz has been taking much advantage of modern scale economies; scale and advanced technology have together propelled the currently dominant trend of transition from agriculture to industry. Whereas in the past Kibbutzim were based mainly on agriculture - in recent years they have become considerably industrialized, manufacturing and even exporting irrigation equip- ment, plywood, plastics, kitchen equipment and canning sets for fruits and vegetables. Oriented by economic considerations, Kibbutzim have organized to run regional enterprises such as cotton gins, poultry slaughter- houses, packing plants and feed mills. At the outset of 1977 there were 226 Kibbutzim in Israel with a population of about 98,800. b. The Moshav: A moshav is a village where each settler independent- ly farms his individual holding with the help of his family. The cooperative principles are normally applied to such spheres as the sale of produce, the purchase of supplies and equipment, the operation of agricultural machinery, the provision of credit, accounting services, and the allocation of water. - 51 - ANNEX 2 Page 8 There are about 350 moshavim in Israel at present, each with between 50 and 150 family farming units, and supporting a total farming population of about 133 thousands. c. The Moshav Shitufi: Moshavim Shitufiim are an intermediate form between Moshavim and Kibbutzim. All farm land is operated under cooperative management and on joint account. However, consumpt- ion is determined by individual family preference. There are 27 Moshavim Shituflim with a total farm population of about 6,800. For statistical data on rural settlement structure see Annex 1. 3. The New Economic Policy On the 28th :F October 1977 the government pronounced radical measures for achieving a new economic policy. Some of these measures are likely to have a considerable impact upon agriculture, namely: a. Abolition de-facto of Israel's foreign currency-control; b. Allowing national currency to be freely exchanged on the inter- national market; c. Unification of the Israeli currency exchange rates (whereas formerly numerous rates existed under various categories of effective export or import exchange rates); d. Reduction of subsidies for basic food commodities following a 15% price rise; e. Raising water prices for all uses as determined by the new cost level of water production and conveyance; f. Raising up petrol prices by an average of 25%. - 52 - ANNEX 2 Page 9 4. The Supoort Policy Problem Keeping up the prices of agricultural produce has so far been carried out by means of direct subsidies to the product or to agricultural inputs. Hence a relatively low price level was indeed guaranteed for a considerable number of agricultural products; but in effect the result of this policy has been similar to the levying of indirect taxes. Namely, the low price of food products benefited the entire consumer population regardless of whether or not the food component had a significant impact on their budget. Thus, the prevailing support policy has been basically regressive, whereupon it called for a thorough revision. The major outcome of the above mentioned policy was that on one hand the prices of some basic food commodities in Israel were the lowest in the world; on the other hand, the ever growing allocation for price supports became an excessive drain on the national budget, which obviously called for a long-range new strategy. It seems that the "new economic policy" offers a sound remedy for the price support system in general by confining the boundaries of the problem to gradually lowering the support level. The Government decided that throughout a "creeping" graduality the support rate will diminish to 20% of the real price level. This is likely to obviate distortions which cannot be helped when support- level percentages are exceedingly high. A statistical series of subsidies for agricultural inputs and out- put products is presented in Annex 2. 5. R & D : The Southern Project The Southern Project is the nane given to Israel's largest agricult- ural development undertaking. It is the R&D project for the Negev region, which actually began before the establishment of the State, but gained its present dimensions only recently. Under this project, -53ANNEX 2 Page 10 the area presently suitable for cultivation in the region is about 120 thousand hectares, or some 30% of all arable land. The momentum of agricultural growth in the Negev can be clearly illustrated by two facts: (1) Since 1950, total arable land in the Negev region grew by a factor of 2.7 whereas total arable land in the country increased by only 1/4. (2) The growth of irrigation in the Negev has been over 5 times greater than that in the country as a whole, and has reached 15% of the total irrigated area. The problem of water, however, remains the key factor constraining the potential growth of the Negev. Only some 30% of suitable land is actually under cultivation in the region - as against 40% in the other regions of the country. However, as a result of new desalination, waste water and irrigation technology, it is expected that cheaper water will be available, so that, for example, the price of desalin- ated water would be some 18 cents per cubic meter instead of 24 cents - which is the cheapest existing desalinated-water cost today. By the creation of a large bloc of settlements based on intensive agriculture, a proper support infrastructure could be created, including packing houses, transportation facilities, and extension services. The project foresees 10,000 new farming units based on glass- house cultivation (3 dunam per unit). For each farm unit (family), two additional units are expected to be required to provide services, with the total number of families in the project amoul'ting to 30,000, or, in other words, an increase in the Negev's population of up to 150,000 persons. - 54 - ANNEX 2 Page 11 6. The International Market Impact Major trends in the agricultural world market are quite trans- parently reflected in Israel's agricultural economy. For example, the continued downward trend of grains' price level has benefited Israel's imports of wheat and livestock feed, namely: (1) In 1976/7 1.69 million tons of grain were imported by Israel - as againstl.61 million tons in 1975/6; (2) Foreign currency expenditure on grain imports in the year under review was reduced by 6 million dollars, or 2.5% as against last year's figures; (3) A sharp increase in the volume of sorghum imports (+19%) was clearly a direct result of its international price drop (-9%). Table 3: Selected Grain Imports in 1975/6 and 1976/7 1 9 7 5 / 6 Total Wheat Sorghum Maize Barley Quantity (thous' tons) 1,614 489 622 287 216 Value ($ million, c.i.f.) 232 81 81 39 31 Price ($ per ton) 166 130 136 143 1 9 7 6_/ 7 Quantity 1,685 485 740 329 131 Value 226 76 88 44 18 Price 157 119 134 137 Indexes for 1976/7 (Base 1975/6 = 100) Quantity 104.4 99.2 119.0 114.6 60.7 Value 97.4 93.8 108.6 112.8 58.1 Price 93.3 94.6 91.3 98.5 95.8 Source: Ministry of Comnerce. - 55 - - ANNEX 2 Page 12 B. LOAN DISBURSEMENT AND ALLOCATION According to the IBA data, IL.111.0 millions were allocated for Export Crops Development, IL.8.0 millions for Export Handling Facilities, IL.155.0 millions for Water Development, and IL.114.0 millions for Livestock Development. The largest single item was Water Management, for which IL.113 miilions were allocated through 2,290 loans. The second largest item was dairying, with IL.95 millions and 650 loans. The relevant figures are contained in the following table. Table 4: Second Credit Project (972-IS) Loan Allocation (IL.millions) I. Export Production a. Flowers 73.6 b. Fruit 36.8 c. Goose liver 0.6 Subtotal 111.0 II. Export Handling Facilities a. Fruit 7.4 b. Flowers 0.6 Subtotal 8.0 III.Water Development 155.0 IV. Livestock Development 114.0 Tota 1 388.0 Source: Israel Bank of Agriculture. More detailed figures are presented in the following table. - 56 - ANNEX 2 Page 13 Table 5: Second Agricultural Credit Project 972-IS Distribution of Lending Operations by Categories Code of Amount Category Category IL. No.of Loans Export Production Roses 11 40,364,100 1368 Carnations 12 27,461,150 1388 Gladioli 13 5,730,050 804 Avocados 21 12,211,350 527 Mangoes 22 636,850 50 Tangerine 23 6,267,300 731 Grapefruit 24 17,776,400 1125 Goose liver 29 586,600 61 Subtotal 111,033,800 6054 Export Handling Facilities Grapefruit 32 5,627,450 223 Flowers 33 576,900 9 Avocados 34 1,753,700 7 Subtotal 7,958,050 T2f Water Development Water Management 51 113,272,600 2987 Reservoirs 52 31,120,000 146 Drainage, local 53 7,333,800 381 Effluents 54 2,858 200 26 Subtotal T, 63 Livestock Development Beef 61 13,336,600 163 Dairying 62 94,607,550 653 Turkeys 63 6,145,500 32 Subtotal 114,089,650 T 0 T A L 388,066,100 10681 Source: Israel Bank of Agriculture. For further details see Annex 3. - 57 - ANNEX 2 Page 14 Studying the data of the lending operations as regards amount of allocation, we find out that the major item - Water Development - reached 40%, the other considerably large items are Export Production and Livestock Development (29%). A thoroughly different order marks out the lending operations dist- ribution when presented by number of loans. Here allocations under the category of Export Production constitute an absolute majority (57%), whereas Water Development is the second largest item (33%). Table 6: Distribution of Lending Operations by Categories (percentage) Category Amount, IL. No. of Loans Export Production 29 57 Export Handling Facilities 2 2 Water Development 40 33 Livestock Development 29 8 Total 100 100 Source: ibid. - 58 - ANNEX 2 Page 15 C. LOAN DISTRIBUTION BY MAIN CATEGORIES The major category by which the loan distribution figures will be here. presented is the above 4-destination group. Other main categories are: 1. Type of settlement financed by IBRD credit allocation; 2. Ecological region where sponsored projects are situated. I. Type of Agricultural Settlement The major loan share - IL.194 millions, or 50% of the entire loan sum - was borrowed by Moshavim, with the others comprising mainly of Kibbutzim (39%). Loans for Export Production projects are overwhelmingly borrowed by Moshavim - IL.78.5 millions, or 71% of the entire sum allocated for this purpose. Of the sum allocated for Water Development - IL.155 millions - IL.83 millions, or 54%, weire borrowed by Kibbutzim. Table 7: Second Credit Project (972-IS) Loan Distribution by Type of Settlement (IL.thous.) Total Kibbutzim Moshavim Others Amount % Amount % Amount % Amount % Export Production 111,034 100 17,798 12 78,464 40 14,772 36 Export Handling Facilities 7,959 100 3,393 2 1,317 1 3,249 8 Water Development 154,985 100 83,384 54 52,713 27 18,888 46 Livestock Development 114,091 100 48,638 32 61,688 32 3,765 10 T o t a 1 388,069 100 153,213 100 194,182 100 40,673 100 Source: Ibid For further details see Annexes 4 - 5- ANNEX 2 Page 16 II. The Settlement-Region Cross Section Breaking down the loan distribution figures into a Kibbutz-region subdivision, we learn that the Afula Kibbutz farms were the largest borrowing party - IL.51 million, or one-third of the total Kibbutz farms' share. Water Development allocation for these farms reached IL.31 millions, or 37% of this item's total allocation. The second largest borrowing party was the Negev Kibbutz farms - IL.28.5 millions. Table 8: Second Credit Project (972-IS) Loan Distribution in Kibbutzim by Region (IL. thous.) Export Water Livestock Export Handling Develop- Develop- Total Production Facilities ment ment Galil 20,970 2,360 980 10,893 6,737 Acre 20,452 4,923 374 11,212 3,943 Afula 50,911 3,378 712 30,985 15,836 Hadera 17,174 1,943 478 9,721 5,032 Raanana 6,569 723 166 3,199 2,481 Rehovot 8,638 1,101 137 3,450 3,950 Negev 28,499 3,371 545 13,924 10,659 Total 153,213 17,798 3,393 83,384 48,638 Source: Ibid. - 60 - ANNEX 2 Page 17 A Moshav-region cross section shows that the major loan borrowers were thi Negev Moshav farms - IL.66 million4, or 34% of the total Moshav farms' share. Altogether,the Negev settlements borrowed IL.105 millions* or 27% of the entire loan sum, which is the relatively largest share. In the second largest borrowing group - the Afula region settlements - the dominant subgroup was Kibbutzim (IL.51 m.), whereas Moshavim borrowed a great deal less (IL.38 m.). Table 9: Second Credit Project (972 - IS) Loan Distribution in Moshavim by Region (IL. thous.) Export Water Livestock Export Handling Develop- Develop- Total Production Facilities ment ment Galil 9,053 413 130 7,153 1,357 Akko 8,696 2,878 431 2,486 2,901 Afula 38,011 5,563 44 14,074 18,330 Hadera 19,919 8,979 195 5,242 5,503 Raanana 18,824 11,545 69 4,814 2,396 Rehavot 33,540 9,325 345 8,764 15,106 Negev 66,139 39,761 103 10,181 16,094 Total 194,182 78,464 1,317 52,714 61,687 Source: Ibid. * IL. 28.5 m. borrowed by Kibbutzim, IL.66m. by Moshavim, and IL.10.5 m. by others. - 61- ANNEX 2 Page 18 To complete the data presentation, here are overall figures com- prising all settlement types (Kibbutzim, Moshavim and others). Table 10: Second Credit Project (972-IS) Total Loan Distribution by Region (IL.thous.) Export Water Livestock Export Handling Develop- Develop- Total Production Facilities ment ment Galil 33,047 3,229 1,261 20,294 8,263 Akko 30,201 7,980 1,173 14,061 6,987 Afula 95,010 9,638 882 49,400 35,090 Hadera 43,690 13,006 1,321 18,471 10,892 Raanana 29,922 13,329 345 11,371 4,877 Rehovot 51,077 12,613 1,678 15,557 21,229 Negev 105,123 51,240 1,298 25,832 26,753 Total 388,070 111,035 7,958 154,986 114,091 Source: Ibid. 0. EXPORT DEVELOPMENT As already mentioned,in the first chapter, a dynamic expansion of agricultural export is a prime condition for maintaining the current momentum of Israel's agricultural growth and rural pioneering. The IBRO Loan contributed significantly to export development - altogether L111 millions, t1:re3fML74 m. to export flowers and $37 m. to export fruit. In 1976/7 the total value of fresh agricultural produce in this country reached $429.3 millions, thereof $241 m. - or 56%- worth of citrus. - 62 - ANNEX 2 Page 19 The 1977/8 export plan totals $492.5 m. (including $245 of citrus worth); the 1978/9 plan totals $501 m.(inc. $260 m. citrus ), the 1980/1 plan totals $683 m. (inc. $302 m. citrus). Table 11: Projected Exports of Fresh Agricultural Produce over the Plan Period 1976/7-1980/1. (Million Dollars) 1976/7- 1976/7 1977/8 1978/9 1980/1 1980/1 (performance) (plan) (plan) (forecast) growt Total Exports 429.3 492.5 561.1 683.0 16 Citurs 240.9 245.0 260.0 302.0 25 Vegetables 38.1 53.0 77.0 105.0 276 Fruits 27.2 35.0 41.7 53.0 195 Flowers 31.4 50.0 65.0 90.0 287 Field crops & seeds 61.8 76.5 78.1 85.5 38 Poultry 23.7 25.0 30.0 36.5 54 Other livestock 6.2 8.0 9.3 11.0 77 Source: Foreign Trade Center, Ministry of Agriculture. Following is a description of exports of fresh produce by agricultural branch. Citrus Citrus export growth is primarily the outcome of recent new plantings, hence new crops' maturity cycles. Growth is projecded mainly in grapefruit, Valencia oranges, tangerines and lemons. - 63 - ANNEX 2 Page 20 Vegtbles This branch will be subject to the relatively largest development scale. In real terms, vegetable exports in 1980 will become 180% higher than in 1976/7; in physical terms - 320 thousand tons as against 114 in 1976/7. Fruits The leading crop in the fruits' export group is avocado. In 1976/7 avocado exports totalled some 19 thousand tons, worth $19 millions. The figures forecasted for 1980 are double in quantity (38 thousand tons) and more than double in value ($43 m.). Growth is due mainly to new plantings at an approximate rate of 9,000 dunams per year. This has become possible thanks to expert agrotechnical knowhow developed recently in this country, which permits the planting of avocado in regions hitherto regarded as completely unsuitable. Also wine grapes are becoming a significant export crop. From a modest volume of 635 tons, worth $0.6 millions in 1976/7, this branch is expected to expand into exporting some 3,000 tons worth $2.4 m. in 1980. Flowers Flowers export figure in 1980 is expected to be nearly 3 times higher than in 1976/7 - $90m. as against $31.4 m. Roses export receipts will grow from $12.7m, to $26 m., and carnations from $12 m. to $27 m. - 64 - ANNEX 2 Page 21 E. ECONOMIC EVALUATION a) FLOWERS: CARNATION PROJECT In the IBRD Carnation Project(1973/74-1975/6), planning figures have proved to be rather modest as compared with performance figures. This applies to both financial and economic rates of return notwithstanding the high rate of inflation. Table 12: IBRD Carnation Project 1973/4-1975/6 (Performance compared with planning) I t e m Planning Performance Financial rate of return 15.6% 16.1% Economic rate of return 18.7% 19.3% Investments in hothouses per 1 dunam IL.28,050 IL.74,000 Yields per 1 dunam 110,000 flowers 125,000 flowers Price per 1 flower in t t5.5 t7.0 An explanation offered here is that throughout the years under review the carnation branch underwent technological improvements which brought about higher yields and higher flower quality. Also, demand for dwarf carnations in the importing countries increased to the extent that the price paid per flower unit rose above the forecast level. Table 13: Development of Carnation Exports in the Period 1971/72-1976/7 I t e m 1971/72 1972/73 1973/74 1974/75 1975/6 1976/7 Export (in milIiii flowers) 16.0 22.0 35.0 50.0 63.3 140.7 Total value F.0.8.('000 $)0,880 1,388 2,345 3,500 5,302 13,019 Average price per flower (in cents) 5.5 6.3 6.7 7.0 8.4 9.3 -65 - ANNEX 2 Page 22 Export Carnation Feasibility Following are feasibility calculations of cultivating carnations for export. The calculations are based on a model of 480 dunams of carnation hothouses comprising of a central packing house. Both financial and economic rates of return were computed, with account taken of the various investments and costs, covering all stages (initial cultivation through final export stage). The IRR findings are as follows: Internal rate of return by financial analysis - 16.1% Internal rate of return by economic analysis - 19.3% - 66 - ANNEX 2 Page 23 Table14 : Investments in a Central Packing House No. Size Price Total Long- Depr Investment Item of of Per unit sum evity Units unit in IL. (IL.'000) (years) ciation Buildings 800 m2 750 600 20 Sheds 500 " 300 150 Office 50 " 900 45 Site preparation 2,000 " 120 Water and sewage instal- lation 70 Electricity 120 Planning and control 114 Total investments per 209ears 1,219 20 60,950 Equipment:, Refrigeration, including 750 cm 3 450 10 Aircondition 250 " Total investments _r_Q_Zears 700 10 70,000 Forklifts 50 7 Office equipment 54 Total investments erm7nears 104 7 14,850 Work desks 48 units 416 20 5 Buckets 1,000 " 15 15 " Platform carts 100 " 400 40 Wooded platforms 4 Miscellaneous equipment 78 " Total investments per 5 years 157 5 31,400 GRAND TOTAL 2,180 177,200 - 67 - A1NNEX 2 Page 24 Table 15: Investments per 1 dunam of Carnations Sum Long- Direct Foreign currency component Item of evity deduct- % IL. Investment (years) ion $ Nurseries 40,000 12 3,330 21.8 8,720 Arrangements for drip irrigation 5,500 6 920 24.7 1,360 Sprayer and fer- tilizer 2,000 6 330 50.4 1,000 Trellising 6,000 12 500 30.7 1,840 Drainage 6,500 12 540 18.5 1,200 Control and miscellaneous 1,000 12 80 - - Cooling 8,000 12 670 25.0 2,000 Packing 5,000 12 420 15.0 750 Total investments per 10 dunams 74,000 6,790 16,870 2,812 Total investments per 480 dunams 35,520,000 3,529,200 8,097,600 1,349,760 - 68 - ANNEX 2 Page 25 Table 16: Current Expenses per 1 dunam Financial Economic Expenditure item(I)(L. analysis analysis IL.) (IL. _ Plantings: 40 ag. x 16,000 6,400 6,400 Soil disinfection 1,000 1,000 Pesticides 440 440 Fertilizers 1,000 1,000 Site preparation equipment 300 300 Water 400 900 Plastics 2,900 2,900 Cordons 400 400 Taxes, insurance and miscellaneous 650 300 Maintenance and repairs 400 400 Interest on working capital 550 - Total per 1 dunam 14,440 14,040 Total per 480 dunams 6,931,200 6,739,200 Table 17: Labor Costs Price per Number of Total Worker work day work work (IL.) days costs (IL.) Farmer 91 125 11,375 Wife 62 40 2,480 Children 51 40 2,040 Hired labor 51 80 4,080 Total per 1 dunam 285 19,975 Total per 480 dunams 9,588,000 Notes: Number of permanent work days 129 Number of work days in picking and sorting 156 - 69- ANNEX 2 Page 26 Table 18: Marketing and Delivery Expenses on the Central Packing- House Sum Expenditure item ('000 IL.) Packing materials: 3 ag. x 60 million flowers 1,800 Current handling: 2.2ag.x 60 million flowers 1,320 Transportation: 2.2ag.x 60 million flowers 1,320 Total expenses on Packing House 4,440 Table 19: Income per 1 dunam, 1976 Income from flower export: 125,000 flowers x 7.0 cent $ 8,750 Income in IL. - $8,750 x 7.64 IL.66,850 Less marketing commission - 15.5% IL.10,360 Gross income balance IL.56,490 Additional income from local market IL. 4,500 Total net income per 1.0 dunam IL.60,990 Total income per 480 dunams IL.29,275,200 Table20 : Calculation of Financial Rate of Return Investments(IL.'000) Current Expenses (IL.'000) Net Capitalization at Year Income Grand cash In In In In Income Total Total flow - - Lot- Packing Total Hot- Packing Tax 15% 20% touses Houses houses Houses 0 35,520 2,180 37,700 37,700 -37,700 -37,700 -37,700 1 29,275 16,519 4,440 687 21,646 21,646 7,629 6,637 6,355 2 29,275 16,519 4,440 687 21,646 7,639 5,768 5,295 3 29,275 16,519 4,440 687 21,646 7,629 5,020 3,959 4 29,275 16,519 4,440 687 21,646 7,629 4,364 3,677 5 29,275 157 157 16,519 4,440 687 21,803 7,472 3,714 3,004 6 29,275 3,600 3,600 16,519 4,440 687 25,246 4,029 1,741 1,350 7 29,275 104 104 16,519 4,440 687 21,750 7,525 2,829 2,099 8 29,275 16,519 4,440 687 21,646 7,629 2,495 1,778 9 29,275 16,519 4,440 687 21,646 7,629 2,167 1,480 10 29,275 857 851 16,519 4,440 687 22,503 6,772 1,673 1,097 11 29,275 16,519 4,440 687 21,646 7,629 1,640 1,030 12 29,275 35,520 35,520 16,519 4,440 687 57,166 -27,891 -5,216 -3,124 13 29,275 16,519 4,440 687 21,646 7,629 1,244 717 14 29,275 104 104 16,519 4,440 687 21,750 7,525 1,061 587 15 29,275 157 157 16,519 4,440 687 21,803 7,472 919 486 16 29,215 16,519 4,440 687 21,646 7,629 816 412 17 29,275 16,519 4,440 687 21,646 7,629 709 343 18 29,275 3,600 3,600 16,519 4,440 687 25,246 4,029 326 153 19 29,275 16,519 4,440 687 21,646 7,629 534 236 N 20 1230 16,519 4,440 3,298 24,257 24,257 18,073 1,102 470 I.R.R. 155 1843=1 1,843 -6,346 8,189 Table 21: Calculation of Economic Rate of Return Investments (IL.'00) Current expenses(IL.'000) Grand Net Capitalization Year Income In In In In at Hot- Packing Total Hot- Packing Total flow 15% 20% house house house house 0 35,587 2,184 37,771 37,771 -37,771 -37,771 -37,771 1 29,275 16,342 4,448 20,790 20,790 8,485 7,378 7,070 2 29,275 16,342 4,448 20,790 20,790 8,485 6,416 5,892 3 29,275 16,342 4,448 20,790 20,790 8,485 5,579 4,910 4 29,275 16,342 4,448 20,790 20,790 8,485 4,851 4,092 5 29,275 157 157 16,342 4,448 20,790 20,947 8,328 4,140 3,347 6 29,275 3,609 3,609 16,342 4,448 20,790 24,399 4,876 2,108 1,633 7 29,275 104 104 16,342 4,448 20,790 20,894 8,381 3,150 2,339 8 29,275 16,342 4,448 20,790 20,790 8,485 2,774 1,973 9 29,275 16,342 4,448 20,790 20,790 8,485 2,412 1,644 10 29,275 858 858 16,342 4,448 20,790 21,648 7,627 1,885 1,232 11 29,275 16,342 4,448 20,790 20,790 8,485 1,824 1,142 12 29,275 35,587 35,587 16,342 4,448 20,790 56,377 -27,102 -5,065 -3,040 13 29,275 16,342 4,448 20,790 20,790 8,485 1,379 793 14 29,275 104 104 16,342 4,448 20,790 20,894 8,381 1,184 653 15 29,275 157 157 16,342 4,448 20,790 20,947 8,328 1,023 540 16 29,275 16,342 4,448 20,790 20,790 8,485 907 458 17 29,275 16,342 4,448 20,790 20,790 8,485 788 382 18 29,275 3,609 3,609 16,342 4,448 20,790 24,399 4,876 394 183 19 29,275 16,342 4,448 20,790 20,790 8,485 596 265 20 42,717 16,342 4,448 20,790 20,790 21,927 1,340 1.114 7,292 -1,149 I.R.R. 15+5 *7,292 19,3 = 8,441 = - 72 - ANNEX 2 Page 29 b) AV 0 CA 0 0 Background In recent years avocado crops developed according to planning targets, with most of the harvest shipped for export. Last year 80% of the crops were exported. The following tables describe avocado development in detail. Table 22: Development of Avocado Export in the Period 1971/72- 1976/77 Year Quantity V a 1 u P (F.0.B.) (tons\ Total Average price ('000 $) per ton ($) 1971/72 7,520 3,908 520 1972/73 7,820 5,314 680 1973/74 10,700 6,700 626 1974/75 13,000 10,700 820 1975/76 15,150 15,150 1,000 1976/77 18,980 18,866 994 Table 23:Area Plantations in the Period 1975/76-1978/79 (dunams) (Implementation and Forecast) 1975/76 2,500 1976/77 2,500 1977/78 2,500 1978/79 2,500 Source: Foreign Trade Centre. - 73 - ANNEX 2 Page 30 Table 24: Forecai: of Avocado Export in the Period 1977/78-1980/81 Quantity Value F.0.B. Year (tons) ('000 $) 1977/78 23,000 18,400 1978/79 25,000 20,000 1979/80 27,000 21,600 1980/81 29,000 23,200 Feasibility Calculation The economic and financial analyses relate to the entire project scope, i.e. initial cultivation through final exporting stage. The model is based on an avocado packing-and-sorting plant, the capacity of which is 4,800 tons yielded from 4,400 dunams under full maturity. The internal rates of return derived by the analysis are: Economic IRR - 18% as against the projected 17%. Financial IRR - 19.5% as against the projected 17%. It appears that profitability level was higher than expected because receipts increased at a swifter rate than production costs due both to yields improvement (1.1 ton as against 0.8 ton per dunam) as well as to a significant increase in export prices ($800 as against $520 per ton). Table 25: Calculation of Financial Rate of Return for Avocado including Plantations and Packing Houses Pa yments Present value ReceiptsNet CaDital- Capital- Year from Investments Current expenses and income tax Total cas iiao Cataon cash ization ization Sales Grove Packing Total Plant- Packing& Income Total pay- flow at 20% at 19% House ation marketing Tax ments (1) (2) (3) (2)+(3) (5) (6) (7) '5f6) (4)+(8) (1)-(9) 20% 19% =(4) +7)=(8 = (9) = (10) 0 2,930 2,930 2,930 - 2,930 -2,930 -2,930 1 11,708 11,708 11,708 -11,708 -9,753 -9,834 2 2,028 2,028 2,028 -2,028 -1,407 -1.432 3 2,213 2,213 2,213 -2,213 -1,149 -1,312 4 5,357 3,076 6,940 10,016 1,463 779 2,242 12,258 -6,901 -3,326 -3,444 5 12,857 6,182 3,326 64 9,572 9,572 3,285 1,321 1,376 6 23,376 6,974 5,989 1,477 14,440 14,440 8,936 2,994 3,145 7 23,376 6,974 5,989 1,477 14,440 14,440 8,936 2,493 2,645 8 23,375 6,974 5,989 1,477 14,440 14,440 8,936 2,082 2,225 9 23,376 6,974 5,989 1,477 14,440 14,440 8,936 1,734 1,868 10 23,376 6,974 5,989 1,477 14,440 14,440 8,936 1,448 1,573 4 11 23,376 5,280 5,280 6,974 5,989 1,477 14,440 19,720 3,656 494 541 12 23,376 6,974 5,989 1,477 14,440 14,440 8,936 1,001 1,108 13 23,376 6,974 5,989 1,477 14,440 14,440 8,936 840 929 14 23,376 3,220 3,220 6,974 5,989 1,477 14,440 17,660 5,716 446 503 15 23,376 6,974 5,989 1,477 14,440 14,440 8,936 581 661 16 23,376 6,974 5,989 1,477 14,440 14,440 8,936 483 554 17 23,376 6,974 5,989 1,477 14,440 14,440 8,936 402 465 18 23,376 6,974 5,989 1,477 14,440 14,440 8,936 340 393 19 23,376 6.974 5,989 1,477 14,440 14,440 8,936 277 331 20 23,376 6,974 5,989 1,477 14,440 14,440 8,936 232 277 21 23,376 5,280 5,280 6,974 5,989 1,477 14,440 19,720 3,656 82 95 22 23,376 6,974 5,989 1,477 14,440 14,440 8,936 161 197 23 23,376 6,974 5,989 1,477 14,440 14,440 8,936 134 161 24 23,376 3,220 3,220 6,974 5,989 1,477 14,440 17,660 5,716 74 86 25 23,376 6,974 5,989 1,477 14,440 14,440 8,936 98 116 26 23,376 6,974 5,989 1,477 14,440 14,440 8,936 80 98 27 23,376 6,974 5,989 1,477 14,440 14,440 8,936 62 80 28 23,376 6,974 5,989 1,477 14,440 14,440 8,936 54 71 29 23,376 6,974 5,989 1,477 14,440 14,440 8,936 45 54 30 25,192 6,974 5,989 1,477 14,440 14,440 10,752 43 54 14 R-564 654 1.R R. = 19% -' 1 126548 19.5% - 75 - ANNEX 2 Page 32 Table 26: Receipts from 4,400 Dunam Avocado Plantation age Detai l s 4 5 6-30 Yield per dunam (tons) 0,250 0,600 1,100 Total yield of 4,400 dunams 1,110 2,640 4,800 Sales to local market (30%) (tons) 330 792 1,440 Exports (70%) (tons) 770 1,848 3,360 Receipt from sales (IL.'000) Local market (a) 660 1,584 2,880 Export(b) 4,697 11,273 20,496 5,357 12,857 23,376 (a) IL.2,000 per ton. (b) IL.6,100 per ton ($800 per ton xIL.7.64 per $). -76 - ANNEX 2 Page 33 Table 27 Investment in Plantation (including irrigation) A. Investment per dunam in IL. Expenditure item Plantation age 0 1 2 3 4 Total Measurements,planning and control 84 84 Man work 227 130 163 227 747 Machine work 214 119 89 89 129 640 Temporary shielding from wind 100 100 Plantings 729 54 783 Plantings' cordons 51 6 57 Dung and fertilizers 27 31 47 55 160 Pesticides 50 50 50 50 200 Water A) Financial analysis 22 44 88 132 286 B) Economic analysis 61 122 244 366 793 Transport and hauling 40 27 33 60 160 Miscellaneous and general 21 96 30 33 46 226 Water rights 197 197 Irrigation network 150 1,200 1,350 Subtotals: Financial analysis 666 2,661 461 503 699 4,990 Economic analysis 666 2,700 539 659 933 5,497 Adjustment of rate of exchange 18 71 16 21 29 155 Grand total: Financial analysis 666 2,661 461 503 699 4,990 Economic analysis 684 2,771 555 680 962 5,652 B. Investment per 4,800 dunams (480 ha). Financial analysis 2,930 11,708 2,028 2,213 3,077 21,956 Economic'analysis 3,010 12,192 2,442 2,992 4,233 24,869 -77 - ANNEX 2 Page 34 Table 28: Specification of Investments per 4,800 tons .Unit Price Total. Investment item Partial size per unit expenditure Total (IL.) (IL.'000) 1. Infrastructure and buildings 1.1 Site preparation 8,000m3 42 336 1.2 Access roads(+ crossroads) 3,800m2 38 144 1.3 Water installation 145 1.4 Electricity 220 1.5 Central building for sorting 2 and packing 3,200m 600 1,920 1.6 Shed for packing materials 800m2 450 360 1.7 Offices and services 160m 2 2,000 320 Total (1) 3,445 3,445 2. Internal equipment - sorting and packing outfit 2.1 Feeding equipment 295 3.3 Initial culling equipment 130 2.3 Culling and brushing equipment 290 2.4 Central sorting outfit 420 2.5 Export packing outfit 310 2.6 Sorting outfit for local market 140 2.7 Miscellaneous 120 2.8 Office equipment 55 Total internal equipment 1,760 1,760 3. External equipment 3.1 Forklifts 3 110 330 3.2 Vehicles 1 70 70 3.3 Fruit containers (15% of fruit space) 1,600 370 592 Total external equipment 992 992 4. Planning, control and equipment assembling (12%) 743 743 Total investments - financial analysis 6,940 6,940 to prevailing rate of exchange per $ 245 245 Total investments - economic analysis 71§§__ 7,185 - 78 - ANNEX 2 Page 35 Table 29: Yearly Current Expenses for Plantations (IL.) A. Per dunam Financial analysis Economic analysis Item 5 6-30 5 6-30 years years years years Manual work 360 425 360 425 Machines, including tractors 318 413 317 413 Dung and fertilizers 116 116 116 116 Pesticides and spraying materials 106 106 106 106 Water 189 189 525 525 Tools and materials 54 54 54 54 Transport and passenger carriage 121 121 121 121 Miscellaneous and general 88 100 81 100 Interest on working capital -8% 54 61 - - Subtotal 1,405 1,585 1,687 1,860 Adjustment of rate of exchange - - 50 53 Total current expenses per dunam 1,405 1,585 1,737 1,913 B. Per 4,400 dunams 6,182 6,974 7,643 8,417 -79 - ANNEX 2 Page 36 Table 30: Packing and Marketinxpenses IL.000 Expenditure item Plantation age Ee 5 6-30 Yield (tons)(1) 1,100 2,640 4,800 Transport to packing house IL.80 per ton 88 211 384 Salary - 1.1 days of work per ton x IL.91 per day of work 110 264 480 Other variable expenses - 27 IL. per ton 30 71 130 Total variable expenses 228 546 994 Indirect and general Administration 108 108 180 Current expenditure 50 90 120 Total indirect and general 158 198 300 Packing materials - IL. 400 per ton 440 1,056 1,920 Total (1) 826 1,800 3,214 Marketing expenses IL. 57 per ton IL.431 per ton 63 150 274 Commission for Board, Agrexco and marketing, 1L.431 per ton 474 1,138 2,069 Funds - IL.91 per ton 100 238 432 Total 637 1,526 2,775 Subtotal 1,463 3,326 5,989 Adjustment of rate of exchange 29 68 124 Grand Total Financial analysis 1,463 3,326 5,989 Economic analysis 1,492 3,394 6,113 (1) 4th year 250 kg. per dunam. 5th year 600 kg. per dunam. 6th year 1,100 kgs. per dunam. - 80 - ANNEX 2 Page 37 Table 31: Calculation of Income Tax Item Plantation age 4 5 6-30 Receipts 5,357 12,857 23,376 Less: expenses Current expenses: for plantations 6,182 6,974 for packing and marketing 1,463 3,326 5,989 Depreciation 1,598 1,598 Interest 1,430 1,430 Total 12,536 15,971 Taxable income 3,894 321 7,385 20% income tax 779 64 1,477 Table 32: Calculation of Foreign Currency Component for Avocado Foreign Currency Compoiient for Investments in Plantation Plantation age Foreign 0 1 2 3 4 Expenditure item currency Total Foreign Total Foreign Total Foreign Total Foreign Total Foreign component expenses currency expenses currency expenses currency expenses currency expenses currency (%) (IL.) component (IL.) component (IL.) component (IL.) component (IL.) component Measurements planning and control 84 Manwork 227 130 163 227 Machine work 44 214 94 119 52 89 39 89 39 129 57 Temporary shielding against wind - 100 Plantings 25 729 182 54 14 Cordons 20 51 10 6 1 uuug and tertilizers 38 27 10 31 12 47 18 55 21 a Pesticides 38 50 19 50 19 50 19 50 19 a Water 35 61 21 122 43 244 85 366 128 Transport and workers' carriage 19 40 8 27 5 33 6 60 11 Miscellaneous & general - 21 96 - 30 - 33 - 46 - Water rights - 197 Heavy network 32 150 48 Constant Irrigation network 23 1,200 276 Total 666 142 2,700 578 539 133 659 167 933 236 Foreign currency expenses $ $24 $96 $22 $28 $39 In terms of real rate of exchange 18 71 16 21 Total expenses per dunam - economic analysis 684 2.771 555 680 962 Total expenses per 4,400 dunamus 22 3,010 625 12,192 2.543 2,442 585 2,992 785 4,233 1,038 m Foreign currency component $106 $422 $97 $123 $172 for 4.400 dunanis(-$'000) OD - 82 - 8 -ANNEX2 Page 39 Table 33: Foreign Currency Component of Packing House Total Foreign Currency I t er mExpenditure Component (IL.'000) I IL.'000 1. Infrastructure and buildings 1.1 Site preparation - ground works and levelling 336 32 107 1.2 Access roads (+ crossroads) 144 32 46 1.3 Water installations 145 40 58 1.4 Electricity 220 40 88 1.5 Central building for sorting and packing outfit 1,920 15 288 1.6 Shed for packing materials 360 15 54 1.7 offices and services 320 15 48 Subtotal 3,445 689 2 Internal equipment - sorting and packing outfit 2.1 Feeding equipment 295 33 97 2.2 Initial culling equipment 130 33 43 2.3 Culling and brushing equipment 290 33 96 2.4 Central sorting outfit 420 33 139 2.5 Export packing outfit 310 33 102 2.6 Packing outfit for local market 140 33 46 2.7 Miscellaneous 120 33 40 2.8 Office equipment 55 35 19 Total internal equipment 1,760 33 582 3. External equipment 3.1 Conveyancc and transport equipment 400 92 368 3.2 Fruit containers 592 59 349 Total external equipment 992 717 4. Planning, control and assembly 743 - - Grand Total 6,940 29 1,988 Foreign currency component in $ '000 by 6 IL. per $ 331 Adjustment of rate of exchange. 245 Total investments - economic analysis .7,185 -83- ANNEX 2 Page 40 Table 34: Foreign Currency Component of Current Expenses in Plantations. 5th year Year: 6-30 Item of Total Foreign currency Total Foreign Currency expenditure expenses Component expenses Component IL. (IL.) IL. A. Per 1 dunam Manual work 360 - - 425 - - Machines, inc. tractors 317 32 101 .413 32 132 Dung and fertilizers 116 38 44 116 3B 44 Pesticides and spraying materials 106 38 40 106 3B 40 Water 525 35 183 525 35 183 Tools&materials 54 20 11 54 20 11 Transport and transportation 121 19 23 121 19 23 Miscellaneous. and general 88. - 100 - - Total 1,687. 24 402 1,860 23 433 Foreign currency rat4 in $ $67 $72 Adjustment of rate of exchange 50 53 Total 1,737 1,913 B. Per 4,400 dunams 7,643 8,417 Table 35 : Calculation of Economic Rate of Return for Avocado -Receipt Investments Current expenses Net Capitalization Capitalization Year from (IL.'000) (IL.'OO00_ cash at 17% at 18% sales PackiAg Packing& Total flow Coeff.of Present Coefficient Present Plant- House Total Plant- Marketing Total Expense (IL.'000) pre ent value Dr sen value (IL.'000) ation ation vaaue ue 0 3.010 3,010 3,010 -3,010 1,000 -3,010 1,000 3,010 1 12,192 12,192 12,192 -12,192 0,855 -10,424 0,847 -10,327 2 2,442 2,442 2,442 -2,442 0,731 -1.785 1,785 1,753 3 2,992 2,992 ?.992 -2.992 0.624 -1.867 0,609 -1,822 4 5,357 4,233 7,185 11,418 1,492 1,492 12'910 -7,553 0,534 -4,033 0,516 -3,897 5 12,857 7,643 3,394 11,037 11.037 1,820 0,456 830 0,437 795 6 23,376 8,417 6,113 14,530 14,530 8,846 0,390 3,450 0,370 3.273 7 23,376 8,417 6,114 14,530 14.530 8,846 0,333 2,946 0,314 2,778 8 23,376 8,417 6,113 14,530 14,530 8,846 0,285 2,521 0,266 2,353 9 23,376 8,417 6,113 14,530 14,530 8,846 0,243 2,150 0.255 2,256 10 23,376 8,417 6,113 14,530 14,530 8,846 0,208 1,840 0,191 1,690 o0 11 23,376 5,430 5,430 8,417 6,113 14,530 19,960 3,416 0,178 608 0,162 553 12 23,376 8,417 6,113 14,530 14,530 8,846 0,152 1,345 0,137 1,212 13 23,376 8,417 6,113 14,530 14,530 8,846 0,130 1,150 0.116 1,026 14 23,376 3.381 3,381 8.417 6,113 14,530 17.911 5,465 0,111 607 0.099 541 15 23,376 8,417 6,113 14.530 14,530 8,846 0,095 840 0,084 743 16 23,376 0.417 6,113 14,530 8,846 0,081 717 0,071 628 17 23,376 8.417 6,113 14,530. 8,846 0,069 610 0,060 531 18 23,376 8,417 6,113 14.530 8,846 0,059 522 0.051 451 19 23,376 8,417 6,113 14,530 - 8,846 0,051 451 0,043 380 20 23,376 8,417 6.113 14,530 8,846 0,043 380 0,037 327 21 23,376 5,430 5,430 8,417 6,113 14,530 19,960 3,416 0,037 126 0,031 106 22 23,376 8,417 6.113 14,530 14,530 8,846 0,037 283 0,026 230 23 23.376 8,417 6,113 14,530 14.530 8,846 0.027 239 0,022 195 24 23,376 3,381 3.381 8.417 6,113 14,530 17,911 5,465 0,023 126 0,019 104 25 23,376 8,417 6,113 14,530 14,530 8,846 0,020 177 0,016 142 26 23,376 8,417 6,113 14,530 14,530 8,846 0,017 150 0,014 124 27 23,376 8,417 6,113 14,530 14,530 8,846 0,014 124 0,011 97 28 23,376 8,417 6,113 14,530 14,530 8,846 0.012 106 0,010 88 29 23,376 8,417 6,113 14,530 14,530 8,846 0,011 97 0,008 70 ' 30 25,271 8,417 6,113 14,530 10,741 0,009 94 0,007 75 -41 ,.I.R.R.= 17% + 1 1373 1,373 1373+41 Table 33 . Foreiqn Currency Component of Orchard Inyestment (per dunam) Per lotal Year 0 Year 2 rear3 Year 4 Year ( cent Foreign Foreign foreign Foreign Foreign Foreign Foreign foreign Currency Currency Currency Currency "urrency Currency Currency Cur- Total Component Total Cosponent Total Component Total Component Total Component Total Component Total CoPoent retrcy IL. 6L* 1 IL.IL. & IL. IL.6 51 IL. L.6 * SI IL. IL. I IL. $~LIL L J in orchard anwork - 1.104 - - 110 - - 270 - - 179 - - 179 - - 179 - - 179 - - achines and laplements 41 650 256.50 44.42 58 23.78 3.96 131 53.71 8.95 98 40.18 6.10 109 44.69 7.45 109 44.69 7.45 145 59.45 9.91 ertiLiters and feedstuffs 39 361 140.79 23.46 - - - 35 13.65 2.28 42 16.38 2.73 69 26.91 4.49 76 29.64 4.94 1)9 54.21 9.03 ater 98 466 46.68 76.11 - - - 22 21.56 3.59 44 43.12 7.19 8d 86.24 14.37 132 129.3j 21.56 180 176.40 29.40 prays and insecticides 38 314 142.12 23.69 - - * 30 11.40 1.90 50 19.- 3.11 66 25.68 4.18 78 29.64 4.94 150 51.- 9.50 lants (setms and grafts) 18 900 162.- 27.- - - - 840 151.20 25.20 60 10.80 1.80 - - . ------ rVllises and binding materials 31 180 55.80 9.30 - - - 168 52.08 8.68 12 3.12 0.62 ------ools and branch vehicle 40 190 76.- 12.67 - - - 25 14.- 2 33 35 14.- 2.33 40 16.- 2.67 40 16.00 2.67 40 16.- 2.67 iscallaneous 15 94 14.10 2.35 2 0.30 0.05 38 5.70 0.95 10 1.50 0.25 11 1.05 0.27 13 1.9' 0.32 20 3.- 0.50 nterest on working capital - 166 - - - . - 63 - - 21 - - 23 - - 25 - - 34 - ools' shad 30 12 3.60 0.60 12 3.60 0.60 ------varheads 231 - - 7 - - 91- - 27 - - 28 - - 33 . - 45 - - ubtotal 4.728 1.317.59 219.60 189 21.68 4.61 1731 323.30 53.80 570 148.70 24.79 613 Z00.5 33.43 685 251.28 41.88 932 366.06 61.01 rrigation network 32 1,325 424.- 70.67 155 49.60 8.27 1170 374.40 62.40 - &ter rights - 291 207 - - - )tal o.2o. 1.141.59 290.07 551 77.28 12.88 2901 697.70 116.28 578 14S.79 24.79 613 200.57 33.43 685 251.28 41.88 932 366.06 61.01 o]o Table 37 : Foreign Currency Component of Current Expenditure in Orchard and Mdrketing Per Year 5 Year 6 Year 7 Year 8 Year 9-30 cent Foreign Cur- Foreign Cur- Foreign Cur- Foreign Cur- Foreign Cur- Foreign Currency For.Total rency compon- Total rency compon-Total rency compon- Total rency compon- Total rency compon- Total Component Cur- IL. nent IL.6-$1 IL. ent IL.6-$I IL. ent IL.6-$1 IL. ent IL.6=$1 IL. ent IL.6=$1 IL. IL.6 1 rency IL. $I. $ L. IL. a. Orchard Manwork in orchard ------211 - - 211 - - 211 - - 211 - - Manwork in ptcking - 22 - - 65 - - 109 - - 174 - - 239 - - 304 - - Machines&implements 42 6 2.52 0.42 19 7.98 1.33 176 73.92 12.32 195 81.90 13.65 215 90.30 15.05 234 98.28 16.38 Fertilizers and feedstuffs 40 ------139 56.60 9.27 139 55.60 9.27 139 55.60 9.27 138 55.60 9.27 Water 98 ------180 176.40 29.40 180 176.40 29.40 180 176.40 29.40 180 176.40 29.40 Sprays&insecticides 38 ------150 57.- 9.50 150 S7.- 9.50 150 57.- 9.50 150 57.- 9.50 Materials, tools and branch vehicle 43 3 1.29 0.32 9 3.87 0.65 54 23.22 3.87 63 27.09 4.52 71 30.53 5.09 80 34.40 5.73 Miscellaneous 15 - - - 1 - - 21 3.15 0.53 22 3.30 0.55 23 3.45 0.58 23 3.45 0.58 Interest on working capital - 1 - - 4 - - 42 - - 45 - - 49 - - 53 - - Overheads - 2 - - 5 - - 54 - - 59 - - 64- - 68 - - Use of trellises 31 ------20 6.20 1.03 20 6.20 1.03 25 7.75 1.29 25 7.75 1.29 Total in orchard 34 3.81 0.64 103 11.85 1.8116369 59 1 b8 4796721364l03 01816 3.8 72.15 b. Sortin and Packing oflng andPacking - 10 - - 31 - - 51 - - 82 - - 112- - 143 - - Use of packing shed and facilities 35 15 5.25 0.88 25 8.75 1.-j 30 10.50 1.75 30 10.50 1.75 30 10.50 1.75 30 10.50 1.75 Total 25 5.25 0.88 56 8.75 1.46 81 10.50 1.75 112 10.50 1.75 142 10.50 1.75 173 10.50 1.75 c. Marketing Donestic marketing costs 23 5.20 0.8/ 68 15.60 2.60 114 26.- 4.33 182 41.59 6.93 250 57.19 9.53 318 72.79 12.13 Export costs up to F.O.B. 65 17.26 2.88 195 51.77 8.63 325 86.28 14.38 520 138.04 23.01 715 189.81 31.64 910 241.58 40.26 f Totdl 88 22.48 3.75 263 67.37 11.23 439 112.28 18.71 702 179.63 29.94 965 247.- 41.17 1,228 314.37 52.39 Loj' Total Current Expenses 147 31.52 5.21 422 87.97 14.6 1.676 518.27 86.38 2.072 597.62 99.61 2,473 F78.53 113.10 2,868 757.75 126.29 Table 38: Foreign Currency Component of Packing and Marketing Expenses Plantation age 4 5 6-30 Item of expenditure Foreign Total Foreign Total Foreign Total Foreign Currency expend- Currency expend- Currency expend- Currency Component iture Component iture Component iture Component 1. Packing expenses (IL.'OOO) A. Variable expenses sport to Packing House 19 88 17 211 40 384 73 Salary - 110 264 480 Other variable expenses 20 30 6 71 14 130 26 Total variable expenses _M8 23 546 54 994 99 B. Indirect and general Administration - 108 108 180 Current expenditure 8 50 4 90 7 120 10 Total indirect and general 158 4 198 300 10 C. Packing materials 35 440 154 1,056 370 1 920 672 Total 826 181 1,800 431 3,214 781 2. Marketing expenses (IL.'000) Transport 19 63 12 150 29 274 52 Commissions for Board . Agrexco and marketing 8 474 38 1,138 91 2,069 166 Funds 100 - 238 - 432 - Total 637 50 1,526 120 2,775 218 Grand Total-financial analysis 1,463 231 3,326 551 5,989 999 Foreign currency e(penses ($'000) $31 $92 $167 Adjustment of rate of exchange 29 68 124 Grand Total - econ3mic analysis 1,492 3,394 6,113 - 88 - - 88 -ANNEX Z Page 45 Table 39: Calculation of Foreign Currency Component - Financial Analysis Expend- Foreign Foreign Item of investment Unit iture Currency Currency (IL.) Component Component (IL.) (%) Avocado plantations Irrigation dunam 1,350 324 24 Plantation dunam 3,640 932 26 Total investment in plantation 4,990 1,256 25 Packing Houses Buildings (1) 5,660 1,064,000 19 Equipment (1) 4,800 1,920,000 40 Technological improvements 4,600 1,840,000 40 (1) Distribution of investments by buildings and equipment was calculated according to the components of investment in packing house in the model. 2) Percentage of foreign currency component in investments in technological improvements was calculated according to foreign currency component in equipment. -89 - ANNEX 2 Page 46 Table : Calculation of Investment Salvage Value Invest- Life- I t e m Long- Total ment Jme Salvage evit per per 4,400 remainder value Y dunam dunams (years) (IL.'000) (years) (IL.) (IL.'000) Financial analysis Irrigation network 10 1,200 5,280 1 528 Equipment for packing house 10 3,220 4 1,288 Total - financial analysis 1,816 Economic analysis Irrigation network 10 1,234 5,430 1 543 Equipment for packing house 10 3,381 4 1,352 Total - economic analysis 1,895 - 90 - ANNEX 2 Page 47 c) M A N G 0 Israel's warm climate offers certain advantaces for subtropical fruit cultivation. This gains importance in view of the proximity of the major markets. Thus, apart from avocado, mano is also considered to be of good export prospects. There is a significant advantage concerning mango growing: it requires relatively little labor-input in both tree handling, picking and sorting. In the period between 1964/5 and 1975/6 mango physical production increased 8 times, whereas production value soared up 28 times. The following table contains data on mango exports in the years 1966/7 - 1976/7. Table 41: Mango - Exports in 1966/7 - 1976/7 and Forecasts for 1977/8 - 198U/1 Year Quantity Price Total FOB (31.3-1.4) (tons) ($ per ton) value (S) 1966/7 5 380 1,900 1967/8 54 426 23,000 1968/9 31 453 14,057 1969/70 16 670 10,720 1970/1 21 596 12,521 1971/2 57 466 26,562 1972/3 101 412 41,612 1973/4 9 1,241 11,170 1974/5 46 820 37,720 1975/6 132 944 124,600 1976/7 180 1,079 194,220 Forecast: 1977/8 250 950 237,500 1980/?1 500 1,000 500,000 Source: Actual exports - Fruit Marketing Board. Forecasts - Foreign Trade Center, Ministry of Agric. -91 - ANNEX 2 Page 48 The fact that there is a high demand for mango in Europe - where shipments can be made by sea - renders export chances for this fruit very favorable. Projections point out at the probability of exporting up to 1,000 tons of mango per year. Investments feasibility analysis Mango sorting and packing are carried out in the plantation proper. Hence feasibility analysis is based on one dunam plantation including sorting and packing costs in the plantation proper. The internal rates of return analyses data appear in the tables, with the following result: Economic IRR - 22.3% Financial IRR - 22.6% These figures indicate higher profitability than the plan figures (18.5% for Economic IRR and 22.6% for Financial IRR). This was caused as a result of output-input price ratio becoming more favorable. Table4Z : Lcononitc Internal ate of Ieturn tor Mango turcnara, sortin, PaCKIng an0 IIdrreLIllyj (IL. per dunain) u t 1 a y Net Capitalzaion Capitalization Sales investment Current expenditure Total cash at 22 per cent at 23 per cent Year Receipts in in orchard,sortin Outlay flow Present Present Present Present a) orchardb) packing&marketing worth worth worth worth factor factor (3) (2)+(3) (1)-(4) (5)x(6) ( (5)x(8) (1) (2) -(5) ((4) -(7) -(9) 0 561 561 -561 1.000 -561 1.000 -561 1 2,963 2,963 -2,963 0.820 -2.430 0.813 -2.409 2 653 653 -653 0.672 -439 0.661 -432 3 771 771 -771 0.551 -425 0.537 -414 4 495 925 150 1,075 -580 0.451 -262 0.437 -253 5 1,485 1,263 429 1,692 -207 0.370 -77 0.355 -74 6 2,475 2,018 2,018 457 0.303 139 0.289 132 7 3,959 2,421 2,421 1,538 0.249 383 0.235 361 8 5,444 2,828 2,828 2,616 0.204 534 0.191 500 9 6,929 3,228 3,228 3,701 0.167 618 0.158 574 10 6,929 d) 3,228 3,228 3,701 0.137 507 0.126 466 11 6,929 1,229' 3,228 4,457 2,472 0.112 277 0.103 255 12 6,929 3,228 3,228 3,701 0.092 341 0.083 307 13 6,929 3,228 3,228 3,701 0.075 278 0.068 252 14 6,929 3,228 3,228 3,701 0.062 229 0.055 204 15 6,929 3,228 3,228 3,701 0.051 189 0.045 167 16 6,929 3,228 3,228 3,701 0.042 155 0.03 133 17 6,929 3,228 3,228 3,701 0.034 126 0.030 111 18 6,929 3,228 3,228 3,701 0.028 104 0.02: 9 19 6,929 3,228 3,228 3,701 0.023 85 0.020 74 20 6,929 d) 3,228 3,228 3,701 0.019 70 0.01 59 21 6,929 1,229' 3,228 4,457 2,472 0.015 37 0.013 32 22 6,929 3,228 3,228 3,701 0.013 48 0.01 41 23 6,929 3,228 3,228 3,701 0.010 37 0.00 33 24 6,929 3,228 3,228 3,701 0.009 33 0.00!, 25 6,929 3,228 3,228 3,701 0.007 26 0.006 22 26 6,929 3,228 3,228 3,701 0.006 22 0.00 19 27 6,929 3,228 3,228 3,701 0.005 19 0.00 1 15 28 6,929 3,228 3,228 3,701 0.004 15 0.003 11 - 29 6,929 3,228 3,228 3,701 0.003 11 0.001 11 " 30 6,929 3,228 3,228 3,701 0.003 11 0.00 7 Source: 100e) -242e) a) Table 50 b) Table 49 c) Table 51 d)Renewal of irrigation network including tool shed. % W1- - 4 ...- .- ,4 - .- , - . ...- 4.-. ) 0/ 1IQ/ IAAI')A) - ')')0/' 4- n '40 - 99 -40 (IL. per dunam) 0 unt 1 a y Net Capitalization Capitalization Sales a)Investment CurrentExp. Income Tax Total cash at 22 per cent at 23 per cent Year Receipts In Orchard,sorting, Income outlay Present Present Present Present orchard packing& market. Tax flow worth worth worth worth factor factor (1) (2) (3) (4) (2)+(3)+ (6)=(1)-(5) (7) (6)x(7) (9) (6) x(9) 4) =(S) =(8) =)10) 0 551 551 -551 1.000 -551 1,000 -551 1 2,901 2,901 -2,901 0.820 -2.379 0.813 -2.359 2 578 578 -578 0.672 -388 0.661 -382 3 613 613 -613 0.551 -338 0.537 -329 4 495 685 147 832 -331 0.451 -152 0.437 -147 5 1,485 932 422 122 1,476 9 0.370 3 0.355 3 6 2,475 1,676 99 1,775 700 0.303 212 0.289 202 7 3,959 2.072 316 2,388 1.571 0.249 391 0.235 369 8 5,444 2.473 533 3,008 2,438 0.204 497 0.191 466 9 6,929 2,868 751 3,619 3,310 0.167 553 0.155 513 10 6,929 e) 2,868 .751 3,618 3.310 0.137 453 0.126 417 11 6,929 1,182 2,868 751 4,801 2,128 0.112 238 0.103 219 12 6,929 2,868 751 3.619 3,310 0.092 305 0.083 275 13 6,929 2,868 751 3.619 3,310 0.075 248 0.068 225 14 6,929 2,868 751 3,619 3,310 0.062 205 0.055 182 15 6,929 2,868 751 3,619 3,319 0.051 169 0.045 149 16 6,929 2,868 751 3,619 3,310 0.042 139 0.036 119 17 6,929 2,868 751 3.619 3,310 0.034 113 0.030 99 18 6,929 2,868 751 3,619 3,310 0.028 93 0.024 79 19 6,929 2,868 751 3,619 3.310 0.023 76 0.020 66 20 6,929 e) 2,868 751 3,619 3,310 0.019 63 0.016 53 21 6,929 1.182 2,868 751 4,801 2,128 0.015 32 0.013 28 22 6,929 2,868 751 3,619 3,310 0.013 43 0.011 '36 23 6,929 2,868 751 3,619 3,310 0.010 33 0.009 30 24 6,929 2,868 751 3.619 3,310 0.009 30 0.007 23 25 6,929 2,868 751 3,619 3,310 0.007 23 0.006 20 26 6,929 2,868 751 3.619 3,310 0.006 20 0.005 17 27 6,929 2,868 751 3,619 3,310 0.005 17 0.004 13 28 6,929 2,868 751 3,619 3,310 0.004 13 0.003 10 m 29 6,929 2,868 751 3,619 3,310 0.003 10 0.003 10 30 6,9?9 2,868 751 3,619 3,310 0.003 10 0.002 7 Source: 181f) -138f) a) Tible 50 , b) Table £? , c) Table 44 - 94 - ANNEX 2 Page 51 Table_ 6: Financial Internal Rate of Return for Addina a 20-cows Unit in bbutz Dairy Farm (IL.)- Inter- Capita.zation national Invest- Incre- Net at 15.5 er .ent Year receipts ment mental Total cash Present Present expend.& balance worth Income factor Tax 0 - 175,900 - 175,900 -175,900 1.000 -175,900 1 157,768 137,400 125,194 262,594 -104,826 0.866 -90.779 2 266,532 22,635 193,080 215,715 50,817 0.750 38.113 3 266,532 - 215,715 215,715 50,817 0.650 33.031 4 266,532 - 215,715 215,715 50,817 0,558 28.356 5 266,532 - 215,715 215,715 50,817 0.487 24,748 6 266,532 - 215,715 215,715 50,817 0.421 21.394 7 266,532 - 215,715 215,715 50,817 0.365 18.548 8 266,532 9,500 215,715 225,215 41,317 0.316 13.056 9 266,532 - 215,715 215,715 50,817 0.274 13.924 10 266,532 - 215,715 215,715 50,817 0.237 12.044 11 266,632 26,000 215,715 241,715 24,817 0.205 5.087 12 266,532 - 215,715 215,715 50,817 0.178 9.045 13 266,532 - 215,715 215,715 50,817 0.154 7.826 14 266,532 - 215,715 215,715 50,817 0.133 6.759 15 266,532 9,500 215,715 225,215 41,317 0.116 4.793 16 266,532 - 215,715 215,715 50,817 0.100 5.081 17 266,532 - 220-,151 220,151 46,381 0.087 5.601 18 266,532 - 220,151 220,151 46,381 0.075 3.479 19 266,532 - 220,151 220,151 46,381 0.065 3.015 12.431 20 442 ,127a) - 220,151 220,151 221,976 0.056 -348 a) Includes: IL. Salvage value of structure and equipment 2,715 Value of livestock: 20 cows at IL.4,500 each 95,000 18.4 heifer calves at IL.2,850 each 52,440 9.6 bull calves at IL.2,650 each 25 440 Total - 95 - ANNEX 2 Page 52 A. Expenditures and Income: Table 44 : Current Annual Expenditure in Orchard, sorting and packing (IL. per dunam) Financial Analysis Age of orchards (years) 4 5 6 7 8 9-30 Yield per dunam (tons) 0.1 0.3 0.5 0.8 1.1 1.4 Manwork in orchard 211 211 211 211 Manwork in picking 22 65 109 174 239 394 Machines and implements 6 19 176 195 215 234 Fertilizers and feedstuffs 139 139 139 139 Water 180 180 180 180 Sprays and insecticides 150 150 150 150 Materials, tools and branch vehicle 3 9 54 63 71 80 Miscellaneous - 1 21 22 23 - 23 Interest on working capital 1 4 42 45 49 53 Overheads 2 5 54 59 64 68 Use of trellises - - 20 20 25 25 Total in orchard 34 108 1,156 1,258 1,366 1,467 Sorting and packing 10 31 51 82 112 143 Use of packing shed and facilities 15 20 30 30 30 30 Total in orchard including sorting and packing 59 159 1,237 1,370 1,508 1,640 - 96 - ANNEX 2 Page 53 Table 4S: Domestic Marketing Costs Financial Foreign currency component analysis a IL.6/$1 IL.per tona, per cent b) IL. $ Packing materials 258 35 90.30 15.05 Carriage to domestic market 72 19 13.68 2.28 Development fund and Board fee 104 - - - Growers' organization fee 20 - - - Total 454 23 103.98 17.33 Source: a) Fruit Production and Marketing Board b) According to IL.6 a $1, Overall Planning Department, Ministry of Agriculture. Table 4o: Export costs up to F.O.B. Financial Foreign currency component analysis a) IL. IL. per ton per centb) IL. Packing materials including transport 670 35 234.40 39.09 Carriage to port with controlled ventilation 103 19 20.52 3.42 Storage and carton binding 24 21 5.04 0.84 Port fees and services 60 15 9.- 1.50 Agrexco commission 200 25 50.- 8.33 Marketing Board export services 100 25 25.- 4.17 Development fund and board fees 104 - - - Growers' organization fee 27 - - Miscellaneous 7 15 1.05 0.i8 Total 1,300 27 345.11 57.52 Source: a) Fruit Production and Marketing Board b) According to IL.6=$1; Overall Planning Department, Ministry of Agriculture. - 97 - ANEX 2 Page 54 Table 47 Income Tax Computation (IL. per dunam) - For Financial Analysis Age of orchard (years) 4 5 6 7 8 9-30 Receipts 495 1,485 2,475 3,959 5,444 6,929 Less: Deductable expenses 271 728 1,982 2,378 2,779 3,174 Current expenditures 147 422 1,676 2,072 2,473 2,868 Depreciation of orchard 124 306 306 306 306 306 Taxable income -148 609 493 1,581 2,665 3,755 Income tax at 20 per cent - 122 99 316 533 751 -98 - ANNEX 2 Page 55 Table 48: Current Annual Expenditure to Orchard and Marketing per dunam Aq of orchard (vears) 4 5 6 7 8 9-30 Crops (tons) 1. Total 0.1 0.3 0.5 0.8 1.1 1.4 2. Domestic sales (50 per cent) 0.05 0.15 0.25 0.4 0.55 0.7 3. Export (50 per cent) 0.05 0.15 0.25 0.4 0.55 0.7 Producer's marketing costs 4. Domestic costs 23 58 114 182 250 318 5. Export costs up to F.0.B. 65 195 325 520 715 910 6. Total 88 263 439 702 965 1,228 7. Orchard expenses (including sorting and packing) 59 159 1,237 1,370 1,508 1,640 8. Total current expenses 147 422 1,676 2,072 2,473 2,868 -99 - ANNEX 2 Page 56 Table49 Investment in orchard (including irrigation) (IL. per dunam) Economic Analysis Total Age of orchard (years) 0 1 2 3 4 5 Investment by financial analysis 6,260 551 2,901 578 613 685 932 Addition of foreign currency component adjustment from IL.6.90 =$1 to IL.7.64 = $1 215 10 86 18 25 31 45 Subsidy on water 827 - 39 78 156 234 320 Less byinterest on working capital 166 - 63 21 23 25 34 Investment by economic analysis 7,136 561 2,968 653 771 925 1,263 Table 50: Receipts per dunam - of Economic and Financial Analysis Age of orchard (years) 4 5 6 7 8 9-30 Yield per dunam (tons) 0.1 0.3 0.5 0.8 1.1 1.4 Domestic sales (50 per cent) 0.05 0.15 0.25 0.4 0.55 0.7 Export (50 per cent) 0.05 0.15 0.25 0.4 0.55 0.7 Sales receipts (IL) Domestic salesa) 228 683 1,138 1,820 2,503 3,185 Exportb) 267 802 1,337 2,139 2,941 3,744 Total receipts 495 1,485 2,475 3,959 5,444 6,929 a) At IL.4,550 per ton. b) At $700 per ton and IL.7,64 per $1 comes to IL.5,348 per ton F.0.B. - 100 - ANNEX 2 Table51: Current exoenditure in orchard and marketing Page 57 (IL. per dunam) Economic Analysis Age of orchard (years) 4 5 6 7 8 9-30 Current expenditure in orchard and marketing 147 422 1,676 2,072 2,473 2,868 Addition of Foreign Currency Component Adjustment from IL.6.90=$1 to IL.7.64=$1 4 11 64 74 84 92 Subsidy on water - - 320 320 320 320 Less by interest on working capital 1 4 42 45 49 53 Current expenditure for economic analysis 150 429 2,018 2,421 2,828 3,228 -101 - ANNEX 2 Page 58 B. Investment Table 52: Investment in Orchard (including irrigation) (IL. per dunam) Financial Analysis Total Age of orchard (years) 1 2 3 4 5 Manwork in orchard 1,104 110 278 179 179 179 179 Machines and implements 650 58 131 98 109 109 145 Fertilizers ana feedstuffs 361 - 35 42 69 76 139 Water 466 - 22 44 88 132 180 Sprays and insecticides 374 - 30 50 66 78 150 Plants (stems and grafts) 900 - 840 60 - - - Trellises and binding materials 180 - 168 12 - - - Tools and branch vehicle 190 - 35 35 40 40 40 Miscellaneous 94 2 38 10 11 13 20 Interest on working capital 166 - 63 21 23 25 34 Tools' shed 12 12 - - - - - Overheads 231 7 91 27 28 33 45 Subtotal 4,728 189 1,731 578 613 685 932 Irrigation network 1,325 155 1,170 Water rights 207 207 - Total 6,260 551 2,901 578 613 685 932 - 102 - ANNEX 2 Page 59 Table 53: Foreign Currency Component of Orchard Investment Summary of Table (per dunam) Total Age of orchard (years) 1 2 3 4 5 Investment (IL) Orchard (excluding irrigation) 4,935 2,127 578 613 685 932 Irrigation network 1,325 1,325 - - - - Total 6,260 3,452 578 613 685 932 Foreign currency comoonent ($) Orchard (excluding irrigation) 219.60 58.49 24.79 33.43 41.88 61.01 Irrigation network 70.67 70.67 - - - - Total 290.27 129.16 24.79 33.43 41.88 61.01 - 103 - ANNEX 2 Page 60 d)TANGERINES Actual feasibility analysis of tangerines yielded results that were much more favorable than the previously forecasted figures of the project. Thus, the actual IRR figure by economic analysis is 22% (as against 14%), and the financial IRR figure - 20% (as against 15%). These differences are the outcome of a significant output- input ratio improvement. The average export price for tangerines (all varieties) in the year under planning was $4.75 per box, During the project implementation period tangerine prices rose 5 times higher - whereas input price index rose up 3.8 times only. Table 54:: Total Receipts for Economic and Financial Analysis Total per ton TtT Price Aerrton Income Income per Yield Average pr Epr per rice per Export Year per Export Fresh Processing price one Receipts dunam per dunam 8,000 d. % % % ton (IL.) ('000 IL.) 4 0.25 - 50 50 1,555.0 388.75 311 5 1.00 - 50 50 1,555.0 1,555.- 1,244 6 1.75 - 50 50 1,555.0 2,721.25 2,177 7 2.50 40 30 30 2,917.0 7,292.50 5,834 8 3.25 50 25 25 3,257.5 10,586.88 8,470 9-19 4.00 60 20 20 3,598.0 14,392.- 11,514 20-25 3.00 60 20 20 3,598.0 10,794.- 8,635 26-29 2.50 50 25 25 3,257.5 8,143.75 6,515 30-36 2.00 40 30 30 2,917.0 5,834.- 4,667 - 104 - ANNEX 2 Page 61 Table55: Income Tax Computation (IL. Thousands) Deductible Expenses Taxable Income Yield Receipts Total Current Expenses Depreciation Income tax at Year Orchard Enterprise Orchard Enterprise 20 Per cent (1) (2) (3) (4) (5) (6) (1)-(2) (7) xO.2 =(7) = (8) 4 311 223 86 - 137 - - . 5 1,244 483 346 - 137 - - 6 2,177 746 609 - 137 - - - 7 5,834 4,142 2,769 933 449 - 870 a) 174 8 8,470 5,140 3,056 1,489 440 155 3,330 666 9 -19 11,514 6,098 3,327 2,176 440 155 5,416 1,083 20-25 8,635 5,192 2,954 1,643 440 155 3,443 689 26-29 6,515 4,520 2,769 1,156 440 155 1,995 399 30-36 4,667 3,920 2,569 756 440 155 747 149 Notes: a) After deduction of IL.822,000 cumulated depreciation (137,000 annually) for years 1-6 (5,834-4,142 - 828 = 870). Table 56. Financial Internal Rate of Return for Tangerines Project (Orchard and Packing Enterprise) IL. Thousands Ut U Aet Capitalization Year Sales Investment Current Expenditure and Income Tax Total cast) at 201 Receipt Orchard Enterprise Total Orchard Enterprise Income Tax Total oty flow resent Present worth wot factor worth ()2)(3) (4)=(2)+(3) (S) (6) (7) (8)=(S)+(6T (9)- 1n) (ll) (12)=- 00)x(ll) +(7) (4) +[(3) 1I)-(9) 0 738 738 738 -738 1,000 -738 1 2.801 2.801 2,801 -2.801 0,83! -2.333 2 1.017 1,017 1.017 -1.017 0.694 -706 3 1,724 1.724 1,724 -1.724 0,579 -998 4 311 1.273 1.273 86 86 1.359 -1.043 0.482 -505 5 1.244 1.642 1.642 346 346 1.988 -744 0,402 -299 6 2.177 1.893 1,893 609 609 2,502 -325 0.335 -109 7 5,834 2,769 93 174 3.876 3,876 1,958 0.279 546 8 8,470 2.561 2,561 3.056 1,489 666 5,211 7.772 698 0.233 163 9 11,514 3,327 2.176 1,083 6,586 6.586 4,928 0.194 956 10 11.514 3.327 2,176 1,083 6,585 6,586 4.928 0.io2 798 11 11.514 1.206 1,206 3.327 2.176 1.083 C.586 7,792 3,722 0.135 502 12 11,514 3.327 2,176 1.083 6.586 6.586 4.928 0.112 552 13 11,511 3.327 2,176 1,083 6.586 6,586 4.928 0.094 463 14 11,514 3,327 2.176 1,083 6,586 6,586 4.928 0,078 384 15 11.514 162 162 3.327 2,176 1,083 6.586 6,748 4,766 0.065 310 16 11,514 3.327 2.176 1,083 6,586 6.586 4,928 0,054 266 17 11.514 3,327 2,76 1,083 6.586 6,586 4.928 0,045 222 18 11,514 45 45 3,327 2,176 1,083 6,586 6,631 4.883 0.038 186 19 11,514 3,327 2.176 1.083 6,586 6,586 4,928 0.031 153 20 8.635 2,954 1,643 689 5,236 5,236 3.349 0.026 87 21 8.635 1,206 1,206 2,954 1,643 689 5,286 6.492 2,143 0.022 47 22 8.635 162 162 2.954 1,643 589 5,286 5.448 3,187 0,018 57 23 8.635 1,443 1.443 2.954 1,643 689 5,286 6,729 1,906 0.015 29 24 8,635 2,954 1.643 689 5,286 5,286 3.349 0.013 44 25 8,635 2,354 1,643 689 5.286 5,286 3.349 0,011 37 26 6,515 2,769 1.1:- 399 4.324 4,324 2.191 0,009 20 27 6,515 2,769 1,156 399 4,324 4,324 2,191 0.007 15 28 6,515 45 45 2.769 1,156 399 4.324 4,369 2.146 0.006 13 29 6,515 162 162 2.769 1.156 399 4,324 4.46 2,029 0.005 10 30 4,667 2,569 756 149 3,474 3.474 1,193 0,004 5 31 4.667 1.206 1,206 2,559 756 149 3.474 4,680 -13 0.004 0 OQZ 32 4.667 2,069 756 ' 149 3,474 3,474 1.193 0,003 4 33 4,667 2,569 756 149 3,474 3.474 1,193 0.002 2 34 4,667 ?,569 756 149 3,474 3,474 1,193 0.002 2 4,667 35 ?.569 756 149 3,474 3,474 1,193 0.002 2 36_ 4 ,67 (-4-3) -1 W) -2.69 i65) 756 149 - 3074_ 2,859 1,308 0 001 2 +189 Table 57: Economic Internal Rate of Return for Tangerines Project (Orchard and Packing Enterprise) IL. Thousands 0 T_L_AY-OU NeLAt Capitalization at Year Sales Investment Current expenditure Total Net 22 per cent Receipts 6rchard Enterprise Total Orchard Enterprise Total Outlay flow Present Present worth worth factor (1) (2)(3) -(4)=(2)+(3) (5) (6) (7)=(5)+(6) '8)=(4)+(7)( 9)=( 1)-(8) (10) (11)=(9)x(10) 0 738 738 738 -738 1,000 -738 1 2,757 2,757 2,757 -2,757 0,820 -2.261 2 1,049 1.049 1.049 -1,049 0,672 -705 3 1,878 1.878 !.878 -1,878 0.551 -1,035 4 311 1.512 1.512 86 86 1,598 -1.287 0,451 -580 5 1,244 1,929 1,929 346 346 2,275 -1,031 0,370 -381 6 2,177 2.164 2.164 609 609 2,773 -596 0,303 -181 7 5,834 2.942 933 3,875 3,875 1,959 0,249 488 8 8,470 2,561 2.561 3.197 1,489 4,686 7,247 1,223 0,204 249 9 11,514 3,445 2,176 5,621 5,621 5.893 0,167 934 10 11.514 3.445 2,176 5,621 5,621 5.893 0,137 807 11 11,514 1,206 1,206 3,445 2.176 5,621 6.827 4,687 0,112 525 0 12 11.514 3.445 2,176 5,621 5,621 5.893 0,092 542 a 13 11,514 3,445 2,176 5,621 5,621 5,893 0,075 442 1 14 11.514 3,445 2,176 5,621 5,621 5,893 0.062 365 15 11,514 162 162 3,445 2,176 5,621 5.7S3 5,731 .,051 292 16 11,514 3,445 2.176 5,621 5.621 5,893 0,042 24S 17 11.514 3,445 2,176 5,621 5.621 5,893 0,034 200 18 11.514 45 45 3,445 2.176 5,621 5,666 5,846 0,028 164 19 11,514 3,445 2.176 5,621 5,621 5,893 0.023 136 20 8,635 3,111 1,643 4,754 4.754 3.881 0,019 74 21 8,635 1,206 1,206 3,111 1,643 4,754 5,960 2,675 0.015 40 22 8,635 162 162 3,111 1,643 4,754 6,122 2,513 0,013 33 23 8,635 1,443 1.443 3.111 .1,643 4,754 6,197 2.438 0,010 24 24 8.635 3,111 1,643 4,754 4.754 3,881 0,009 35 25 8,635 3,111 1,643 4,754 4,754 3,881 0,007 27 26 6,515 2,820 1,156 3.976 3,976 2,539 0,006 15 27 6,515 2,820 1,156 3,976 3,976 2,539 D,005 13 28 6.515 45 45 2,820 1,156 3,976 4.021 2,494 0,004 10 29 6,515 162 162 2,820 1.156 3,976 4,138 2,377 0,003 7 30 4,667 2,726 756 3,482 3,482 1,185 0,003 4 ] 31 4.667 1,206 1,206 2,726 756 3,482 4.688 -21 0,002 0 OQ 32 4,667 2.726 756 3,482 3.48 1,185 0,002 2 33 4,667 2,726 756 3,482 3,482 1,185 0,001 1 34 4,667 2,726 756 3,482 3,482 1,185 0,001 1 35 4,667 2,726 756 3,482 3,482 1,185 0,001 1 36 4,667 -483) -132 615 2,726 756 3,482 2,867__ 1 800 01001 2 -150 - 107 - ANNEX 2 Page 64 e) L1ve-toc Development During the 2nd Credit Project period the livestock branch underwent a considerable expansion. Consequently, the livestock product increased at a rather high rate (6% per year - a figure similar to that of the national agricultural product's growth rate). A more detailed description is given below: Total poultry-meat production increased during the period under review from 145 thousand tons to 190 thousand tons (+31%). There was no significant change though in cattle-meat production,owing to constrained calves' fattening diets which followed output-feed ratio deterioration. Also the dairying branch expanded during the period under review, mainly after the production quotas were ruled out in late December 1973. This is clearl'y indicated by the following figures of production growth rate: 1973/4 - 5%; 1974/5 - 9.3%; 1975/6 - 13%. Another reason for the dairying expansion was the maturing of investments in moshav farms. Till the end of 1974/5 about 92% of production growth originated from kibbutz farms, with only 8% originating from moshav farms. But in 1975/6 53% of production growth originated from moshav farms (or family farms), which indicates the maturing of investments in moshav farms. During the aforesaid.years dairy production efficiency increased in both moshavim and kibbutzim according to surveys which indicate that a considerable increase was achieved in milk yield per cow, and also labor input per cow was much reduced. The economic analysis points out that the actual figure for the inter- nal rate of return was 1.5% higher,as against the lower figure of the original plan's calculation. Table 58 : Economic Internal Rate of Return for Development of Family Farm Dairy (IL.) Unit Increase from IS to 25 Cows Unit Increase from 20 to 30 Cows Year Incre- Expenditure :apitalization Incre- Expenditure Capitalization mental Invest- incre- Net at 14.5 per cent mental Invest- Incre- Net at 18 per cent receipts ment mental Total cash Prisent Present, receipts ment mental Total cash Present P t expend- balance worth Prt, expend- balance worth resent iture factor worth iture factor worth 1 23.792 104,250 20.769 125,019 -101,227 0 .9 36a) -94.748 24.353 98,550 18.466 117.016 -92,663 0.92 4 -85621 2 83.248 65,390 67,116 132.506 -49.258 0 .8 18a) -40,293 85,087 66.090 64.979 131,069 -45.982 0.783 -36.003 3 115.211 8.580 89.163 97,743 17,468 0.666 11.634 118,051 8,580 87.404 95,984 22,067 0.609 13.439 4 128.967 - 101,527 101.527 27,440 0.582 15.970 132.517 - 99,735 99,735 32,782 0.516 16.916 5 132.517 - 162,662 102.662 29.855 0.508 15.166 136.777 - 101.097 101,097 35,680 0.437 15.592 6 132,517 - 102.o62 102,662 29,855 0.444 13.256 136,777 - 101.097 101,097 35,680 0.370 13.202 7 132.517 - 102,662 102.662 29.855 0.388 11.583 136,777 - 101,097 101,097 35,680 0.314 11.204 8 132.517 5.500 102.662 108.162 24,355 0.338 8.232 136,777 8,500 101,097 19.597 27,180 0.266 7.230 9 132.517 102,662 - 102,662 29.855 0.296 8.837 136,777 - 101.097 101,097 35,680 0.225 8.028 H 10 132,517 - 102,662 102,662 29,855 0.258 7.703 136.777 - 101,097 101,097 35,680 0.191 6.815 OD 11 132.517 9.500 102.662 112,162 20,355 0.225 4.580 136.777 17,500 101,097 118.597 18.180 0.162 2.945 1 12 132,517 - 102.662 102.662 29,855 0.197 5.881 136,777 - 101.097 101,097 35.680 0.137 4.888 13 132,517 - 102.662 102,662 29,855 0.172 5.135 136,777 - 101,097 101.097 35,680 0.116 4.139 14 132,517 - 102.662 102,662 29,855 0.150 4.478 136,777 - 101,097 101.097 35,680 0.099 3.532 15 132.517 5.500 102.662 108.162 24,355 0.131 3.190 136.777 8.500 101.097 109.597 27,180 0.0d4 2.283 16 132,517 - 102,662 102,662 29,855 0.115 3.433 136.777 - 101,097 101,097 35,680 0.071 2.533 17 132.517 - 102.662 102,662 29,855 0.100 2.985 136,777 - 101,097 101,097 35.680 0.060 2.141 18 132.517 - 102.662 102,662 29,855 0.087 2.597 136.777 - 101.097 101.097 35,680 0.051 1.820 19 132.517 - 102.662 102,662 29,855 0.076 2.269 136,777 - 101,097 101.097 35,680 0.043 1.534 20 , b) 2 18 0 2 7 - 102,662 102,662 115,365 0.067 7.729 2 23 ,1 4 7c) - 101,097 101.097 122,050 0.037 4.516 -383 +1.133 a) Mid-year coefficient b)c) Includes: b) IL. c) IL. Salvage value of structure and equipaent T,570 7430 M Value of livestock: 10 cows at IL.4.500 each 45.000 45,00t 0 9.2 heifer calves at " 3 IL.2,850 each 26,220 26,220 4.8 bull-calves at IL.2,650 each 12,720 12,720 Total _3,10 86.370 Table 59: Financial Internal Rate of Return for Development of Family Dairy (lL.) Unit increase from 15 to 25 CoWs Unit increase from 20 to 30 Cows Capitalization Year -_ Expenditure CaptalizatTon Expenditure Incre- Incre- Net at .4 per cent Invest- Incre- Net at 16 per cent mental mentalent Tota cash resent Present mental ment mental Total cash Present worth expend- balance worth expend- balance worth Present factor iture& factor worth re- iture& factor worth Income tax ceipts Income tax 1 23,792 104.250 18.563 122,3-13 -99.021 0 .939a) -92.980 24.353 98,550 16,769 115,319 -90,966 0.93 a) -84.689 2 83,248 65,390 65,299 130.689 -47,441 0 .02 3a) -39.043 85,087 66,090 64,760 130.850 -45.763 0.803 -36.748 3 115.211 8,580 88.178 96,758 18.453 0.675 12.456 118,051 8,580 b8,293 96,873 21,178 0.641 13.575 4 128,967 - 102.537 102,537 26,430 0.592 15.647 132,517 - 102,767 102,767 29,750 0.552 16.422 5 132.517 - 104.155 104.155 28,362 0.519 14.720 136,777 - 104,708 104,708 32,069 0.476 15.265 6 132.517 - 104,155 104,155 28,362 0.456 12.933 136,777 - 104,708 104,708 32,069 0.410 13.148 7 132,517 - 104,155 104,155 28.362 0.400 11.345 136.777 - 104,708 104,708 32,069 0.354 11.352 8 132.517 5,500 104.155 109.655 22.862 0.351 8.025 136,717 a.500 104,708 113,208 23.569 0.305 7.188 %0 9 132,517 - 104.155 104.155 28,362 0.308 8.735 13b,777 - 104,708 104,708 32,064 0.263 8.434 1 10 132,517 - 104.155 104.155 28.362 0.270 7.658 136.777 - 104,708 104,708 32,069 0.227 7.280 11 132.517 9,500 104,155 113.655 18.862 0.237 4.470 136.777 17,500 104,708 122,208 14,569 0.195 2.841 12 132.517 - 104,155 104,1SS 28,362 0.208 5.899 136,777 - 104,708 104,708 32,069 0.168 5.388 13 132,517 - 104.155 104,155 28.362 0.182 5.162 136,777 - 104.708 104,708 32,069 0.145 4.650 14 132,517 - 104,155 104.155 28,362 0.160 4.538 136,777 - 104,708 104,708 32,069 0.125 4.009 15 132.517 5.500 104.155 109,655 22,862 0.140 3.200 136.777 8,500 104.708 113.208 23.569 0.108 2.545 16 132,517 - 106.497 106,497 26,020 0.123 3.200 136,777 - 106.901 106,901 29,876 0.093 2.778 17 132,517 - 106.497 106,497 26,020 0.108 2.810 136,777 - 106,901 106,901 29,876 0.080 2 .30 18 132.517 - 106.497 106,497 26,020 0.095 2.472 136,777 - 106.901 106,901 29.876 0.069 2.061 19 132,517 - 106,497 106.497 26,020 0.083 2.160 136,777 - 106,901 106.901 29,876 0.060 1.73 20 2 18 ,02 7b) - 106,497 106.497 111,530 0.073 8.142 223,147 c) Is6,901 106,901 29,876 0.051 1.5?4 0J + 1,549 +1,206 OM9 a) Mid-year coefficient cm b) c) Includes: b) IL. c) IL. Salvage value of structure and equipment 1,570 2.430 Value of livestock 83,940 83,940 Totai 85,510 d6,170 Table 60 : Investment for Development of Family-Farm Dairy Unit increase Unit increase from 15 to 25 cows from 20 to 30 cows I t e m Invest- Distribution Invest- Distribution ment according to years ment according to years IL. 1st 2nd 3rd IL. 1st 2nd 3rd Total year year year Total year year year 1. DaiE Structures and Equipment Addition to dairy building 31,500 31,500 - - 31,500 31,500 - - Heifers house (0.9 calves per cow) 18,900 18,900 - - 18,900 18,900 - - Bull-calves house (0.5 per cow) 10,500 - 10,500 - 10,500 - 10,500 - Suckling calves cages 900 - 900 - 1,200 - 1,200 - Enlargement of barn 5,000 - 5,000 - 5,000 - 5,000 - Milking parlour (extension, adaptation or equipment) 20.500 13,000 7,500 - 15,000 10,000 5,000 - Container for concentrates 1,800 1,800 - - 3,600 - 3,600 - Container for milk 1.800 1,800 - - 1,800 1,800 - - Additional equipment 4,100 2,150 1,950 - 2,500 1,250 1,250 - Total 95,000 69,150 25,850 - 90,000 63,450 26,550 - 2. Livestock Cows 50,000 25,000 25,000 - 50,000 25,000 25,000 - Young stock 33,220 10,100 14,540 8,580 33,220 10,100 14,540 8,580 Total 83,220 35,100 39,540 8,580 83.220 35,100 39,540 8,580 M4 3. Total investment 178,220 104,250 65,390 8,580 173,220 98,550 66,090 8,580 of which loan capital IL. 146,400 136,700 Table 61: Current Expt:nditure: Upit 25 com PeUore unit Ivar l Yeir 2 Y2ar 3 Year 4 Year 5-15 Year 16-20 Price i.creasz__ Item Unit per Value Vale Vale Value Value Value Value Unit ty 1 . ty IL. Qty. (IL.) Qty. IL.) Qty. (IL.) Qty. (IL.) Qty. (IL.) 1. FINANCIAL ANALYSIS Homegrown roughage and Feed greenfodder units 24,600 29,542. ,),930 34,700 32,975 36,825 32,975 36.825 32,975 36,825 32,975 36,825 32,975 36,B25 3,605 Orange peel 0.515 3,750 1,931 4,800 2,472 6.500 3,348 7,000 3,605 7,000 3,605 7,000 3,605 7,000 Hay " 1.450 9,750 14,138 11,870 17,21? 16,800 24,360 19,250 27,913 22,000 29,000 20,000 29,000 20,000 29,000 Straw or other by-products G.975 4,33o 4,729 4,125 4,022 7,725 7,532 9,795 9,550 10,100 9,847 10,100 9,847 10,100 9,847 Concentrates 1.135 59.270 57,271 71,830 81,527 95,050 107,882 103,190 117,121 105,305 119,521 106,305 120,656 106,305 120,656 Milk substitute " :.000 1,000 5,000 1,320 6,600 1,600 8,000 1,660 8,300 1,660 8,300 1,660 8,300 1,660 8,300 500 Minerals 300 365 480 500 500 500 Miscellaneous 9,375 11,406 16,800 17,500 17,500 17,500 17,500 Labour in da-ry mandays 91.0 270 24,570 310 28,210 350 31,850 350 31,850 350 31,850 350 31,850 350 31,850 General expe:.Jiture 1,800 1,900 2,000 2,000 2,000 2,000 2,000 Total farm expenditure 158,657 188,414 239,077 25 .164 258,948 260,083 260,083 Income tax 1,094 - 513 1,345 3,340 3,823 6.165 Total expenditure and income tax 159,751 188,414 239,590 250,509 262,288 263,906 266,248 Increase over base year 28,663 79,839 96,75R 102,537 104,155 106,497 Transter to young stock investment account 10,100 14,540 8.580 Net increase over base year 18,563 65,299 88,178 102,537 104,155 106.497 ------2. ECONOMIC ANALYSIS Total farm expenditure 158,657 188,414 239,077 255.164 258,948 260,083 260,083 Water subsidy M.cu. 0.39 12,885 5,025 15,735 6,137 16,055 6,261 16,055 6.261 16,055 6,261 16,055 6,261 16,055 6.261 Total expenditure 163,682 194,551 245,338 261,425 265.209 266.344 266,344 Increase over base year 30,869 81,656 97,743 101,527 102,662 102,662 Transfer to young stock Investment dccount 10,100 14,540 8,580 01 Net increase over base year 20,769 67,116 89,163 101,527 102,662 102,662 Table 62; Current Expenditure Unit Increase from 20 to 30 Cows eBee unIt Year I Year 2 Year 3 Year 4 Years 5-15 Years Price Increase 16-20 Item uiit pei Value Value Value Value Value Value Value u__t__ty. (IL.) Qtyy (IL.) (IL.) qtt. (IL.) qty. (IL qty.Qtye _(L.) Qty. (IL.) 1. FINANCIAL ANALYSIS Homegrown roughage and feed green fodder units 29.930 34.713 32,975 36.825 32,975 36.825 32.975 36,825 32,975 36,825 32.975 36.825 32.975 36.825 drange peel 0.515 5,300 2,729 6.300 3.244 8,000 4.120 8,400 4,326 9.400 4.326 8.400 4.326 8,400 4,326 tay 1.450 14,000 20,300 16.275 23.599 24,650 35.742 27,000 39,150 27.000 39.150 27,000 39,150 27,000 39.150 Straw or other by-products 0.975 7,020 6,844 8,050 7,849 12.150 11,846 13.400 13,065 14.500 14.137 14.500 14.137 14.500 14.137 Concentrates 1.135 82.470 93,603 95,585 108.489 118.265 134.231 121,615 144,843 129.975 147.522 131,175 148,884 131.175 148.884 Milk substitute 5.000 1,320 6,600 1,660 8,300 1.940 9.700 2,000 10,000 2,000 10,000 2,000 10,000 2,000 10.000 Minerals 400 465 580 600 600 600 600 Miscellaneous 12.500 14.530 20.300 21,000 21,000 21.000 21,000 Man-. Labour in dairy mn 91 0 320 29,120 350 31.850 360 day 32,760 360 32,760 360 32,760 360 32.760 360 32.760 General expenditure 1,900 2,000 2.000 2,000 2,000 2,000 2.000 Total farm expenditure 208.709 237,151 288.104 304.569 308.320 309.682 309.682 Income tax 3,545 1.972 3.450 4,558 6,101 7.280 9,473 Total expenditure&income tax 212.254 239,123 291,554 309,127 315,021 316.962 319.155 Increase over base year 26.869 79.300 96,873 Iranster to young stock, investment account 10.)00 14,S40sUag Net increase over base year 16,769 64.760 88,293 102,767 104,708 106.901 ------2. ECONOMIC ANALYSIS Total farm expenditure 208,709 237.151 288.104 304,569 308,320 309,682 309,682 Water subsidy m.cu. 0.39 15.735 6,137 16,055 6,261 16 055 6,261 16,055 6,261 6,055 6,261 16,055 6,261 16.055 6,261 8 46 total expenditure ____ 214, 243,412 294,365 310830 314,581 315,943 315,943 Increase over base year 28.566 19.519 95.984 99.735 101.097 101.097 Transfer to young stock OQ Investment 10,100 14,540 8,580 Net increase over base year. 18,466 64,9,9 87,404 99.735 101.097 101.097 louse ti:j. rwcL IFlL. Ul.. &f~S.. Before Price unit increase Year I Year 2 Year 3 Year 4 Year 5 It ea Unit per Value Value Value Value Value unit Qty. Value (IL.) Qty. (1.) Qty. (IL.) Qty. (IL.) Qty. (IL.) Qty. (IL.) 1. MILK Number of cows at beginning of year head 20 20 25 30 30 30 Yield per cow litre 5,300 5,400 5,500 5,600 5,700 5,dOO Additional cows head 2 2 Yield per cow litre 5.000 5.000 Additional cows head 3 3 Yield per cow litre 1,750 3,500 Total milk yield litre 1J6,000 123,250 158.000 168,000 171,000 174,000 Less for calves litre 3.000 2.500 2.900 3,000 3.000 3.000 Milk for sale and own consumption litre 1.42 104.000 141.680 120.750 171.465 155.100 220.242 165.000 234.300 168,000 238,560 171,000 242.835 ------!------2. BEEF Cows head 5.5 5.65 5.8 6.85 6.25 8.25 Beef (at 570 kg. per head) kg. 3.135 3.220 3.306 3.905 4,703 4,703 Heifer calves head 1.3 1.3 1.35 1.6 1.95 1.95 Veal (at 285 kg. per head) kg. 370 370 385 456 556 556 Total meat fro females kg. 6.8 3.505 23.834 3.530 24.412 3.691 25,099 4.361 29,655 5,259 35,761 5.259 35,761 Bull calves for fatting head 9.6 9.6 12.0. 14.1 14.4 14.4 Beef (at 450 kg. per head) kg. 4.320 4.320 5.423 6,345 6.480 6.480 Culled bull calves head 0.4 0.45 0.5 U.6 0.6 0.6 Veal (at 180 kg. per head) kg. 72 81 s0 108 108 108 To F At from bull culves. kg.. 1.0 4 M --- 43.9z 4.401 44.ulUJ b. i - .30-Yb,43 14.53a. 6.588 65.J00 6.5d8 Ms880 Total meat from dairy herd kg. 7,897 67.754 7.991 68.422 ------9.204 80,229 10.814 94,185 11,847 101,641 11,847 101,641 3. SALE OF HEIFERS head 5000.0 2.3 11.500 2.15 10.750 1.95 9.750 2.9 14,500 ------3.45 17.250 3.45 17,250 O0 ------0Mf 4. DUNG (at 20 m.cu. per cow) m.cu. 10.0 400 4,000 465 4,650 580 5.800 600 6.000 600 6.000 ------600 6,000 Total Receipts IL. ?30.934 .53.287 316.021 348,985 363.451 367,711 Increase over base year II 24,353 85,087 118.051 132,5i7 136,777 .nUD i . ecejjläk uni. i m ge umw ta euw, Price une ease Year 1 Year 2 Year 3 Year 4 Since Year 5 per Value Value Value Vaue Value Vaue unit -qty. (liL.) Qty. (IL. Qty. (0L.) Qty. (IL.) Qty. (IL.) Qty. (liL.) 1. MILt Number of cows at beginning of year head 15 15 20 25 25 25 Yteld per cow 5.000 5. 59 5.300 5.400 5.500 5.600 Addittonal cows head 2 2 Yleld per cow litre 4.750 4.750 Additional cows head 3 3 Yield per cow 1ltre 1,700 3,400 Total milk yield litre 75,000 91,850 125.700 135.000 137.500 140.000 Less for calves titre 1,500 2,000 -2,400 2,500 2.500 2.500 Milk for sale and own consunption litre 1.42 7.350 104.370 89.850 127.587 123,300 175,086 132.500 188,150 135.000 191,700 137,500 195.250 ------2. BEEF Cows head 4.15 4.3 4.45 5.5 6.9 6.9 Beef (at 51i kg. per head) kg. 2.365 2.451 2,537 3,135 3.933 3.933 Heifer calves head 0.95 9.95 1.03 1.25 1.6 1.6 Veal at 285 kg. per head& kg. 270 270 285 356 456 456 Total meat from females kg. 6.8 2.635 17.918 2.721 18,503 2.822 19.190 3,491 23.739 4.389 29.845 4,389 29.845 Bull calves for fatting 'head 7.2 7.2 9.65 11.7 12.0 , 12.0 Beef (at 450 kg. per head) kg. 3.240 3,240 4,343 5.265 5,400 5,400 Cu)led bull calves head 0.3 0.35 0.4 0.5 0.5 0.5 Veal at 180 kg. per head kg. 4_ 63 72 90 90 30 Total nea from bull ca]ves kg. 3,294 329440.0 3,303 33,030 4,415 44,150 5,3 3,550 5,490 54.900 5,490 54,900 Total weat from dalry herd kg. 5,929 6.024 7,237 8.846 9.879 9,879 3. SALE OF HEIFERS 5,000 1.75 8,750 1.6 8,000 1.4 7.000 2.35 11.750 2.9 14.500 2.9 14.500 4. 0»NG (at 20 m. cu. per cow) m Cu. 10.0 300 3.000 365 3.650 480 4,800 500 5,000 500 5.000 500 5,000 Total Receipts It. 166,978 190.770 250,226 282,189 295.945 299.495 iterease over base year IL. 23,792 83.248 115.211 128,967 132,517 - 115 - ANNEX 2 Page 72 Table 65: Economic Internal Rate of Return for Adding a 20-cows Unit in Kibbutz Dairy Farm (IL.) Inter- Expenditure Net Capitalization Year national Invest- Incre- Total cash Prsnat 16.5 per cent receipts ments mental Present expena-balance wrh Present expena- worth wot iture factor 0 - 175,900 - 175,900 -175,900 1.000 -175.900 1 157,768 137,400 129,914 267,314 -109,546 0.859 -94.100 2 266,532 22,625 188,548 211,183 55,349 0.737 40.792 3 266,532 - 211,193 211,183 55,349 9.632 34.981 4 266,532 - 211,183 211,183 55,349 0.543 30.054 5 266,652 - 211,183 211,183 55,349 0.466 25.793 6 266,532 - 211,183 211,183 55,349 0.400 22.140 7 266,532 - 211,183 211,183 55,349 0.344 19.040 8 266,532 9,500 211,183 220,683 45,849 0.295 13.525 9 266,532 - 211,183 211,183 55,349 0.253 14.003 10 266,532 - 211,183 211,183 55,349 0.218 12.066 11 266,532 26,000 211,183 237,183 29,349 0.187 5.488 12 226,532 - 211,183 211,183 55,349 0.160 8.856 13 266,532 - 211,183 211,183 55,349 0.138 7.638 14 266,532 - 211,183 211,183 55,349 0.118 6.531 15 266,532 9,500 211,183 220,683 45,849 0.101 4.631 16 266,532 - 211,183 211,183 55,349 0.087 4.815 17. 266,532 - 211,183 211,183 55,349 0.074 4.096 18 266,532 - 211,183 211,183 55,349 0.064 3.542 19 266,532 - 211,183 211,183 55,349 0.056 3.100 20 44 2 ,12 7a) - 211,183 211,183 230,944 0.047 10.854 +1.945 a) Includes: IL. Salvage value of structure and equipment 2,715 Value of livestock 172,880 Total 175,595 - 116 - ANNEX 2 Page 73 Table_66: Financial Internal Rate of Return for Adding a 20-cows Unit in Kibbutz Dairy Farm (IL.) Inter- "__Capitalization national Invest- Incre- Net at 15.5 per cent receipts ment mental Total cash Present Present expend balance worth worth Income factor Tax 0 - 175,900 - 175,900 -175,900 1.000 -175,900 1 157,768 137,400 125,194 262,594 -104,826 0.866 -90.779 2 266,532 22,635 193,080 215,715 50,817 0.750 38.113 3 266,532 - 215,715 215,715 50,817 0.650 33.031 4 266,532 - 215,715 215,715 50,817 0.558 28.356 5 266,532 - 215,715 215,715 50,817 0.487 24.748 6 266,532 - 215,715 215,715 50,817 0.421 21.394 7 266,532 - 215,715 215,715 50,817 0.365 18.548 8 266,532 9,500 215,715 225,215 41,317 0.316 13.056 9 266,532 - 215,715 215,715 50,817 0.274 13.924 10 266,532 - 215,715 215,715 50,817 0.237 12.044 11 266,632 26,000 215,715 241,715 24,817 0.205 5.087 12 266,532 - 215,715 215,715 50,817 0.178 9.045 13 266,532 - 215,715 215,715 50,817 0.154 7.826 14 266,532 - 215,715 215,715 50,817 0.133 6.759 15 266,532 9,500 215,715 225,215 41,317 0.116 4.793 16 266,532 - 215,715 215,715 50,817 0.100 5.081 17 266,532 - 220,151 220,151 46,381 0.087 5.601 18 266,532 - 220,151 220,151 46,381 0.075 3.479 19 266,532 - 220,151 220,151 46,381 0.065 3.015 20 442 ,12 7a) - 220,151 220,151 221,976 0.056 12.431 -348 a) Includes: IL. Salvage value of structure and equlpment 2,715 Value of livestcck: 20 cows at IL.4,500 each 95,000 18.4 heifer calves at IL.2,850 each 52,440 9.6 bull calves at IL.2,650 each 25,440 Total 175,595 Table 67 : Receipts and Current Expenditure of a 20-cows Unit in Kibbutz Dairy Farm Net Second year Years 3-15 I t e m Unit price First year per Quantity Value Quantity Value Quantity Value unit IL. IL. IL. 1. Receipts Milk litre 1.42 108,000 153,360 128,000 181,760 128,000 181,760 Meat from females kg. 6.8 60 408 3,790 25,772 3,790 25,772 Veal from bull calves kg., 10.0 4,500 45,000 4,500 45,000 Sale of heifers head 5000 2 10,000 2 10,000 Dung m.cu. 10.0 400 4,000 400 4,000 400 4,000 Total Receipts 157,768 266,532 226,532 2. Current Expenditure Feed Roughage&concentrates units 1.135 117,810 133,714 148,320 168,343 148,320 168,343 Milk substitute 5.000 1,320 6,600 1,320 6,600 1,320 6,600 Minerals 380 400 400 Miscellaneous 14,000 14,000 14,000 Cows substitution head 1.000 2 2,000 Labour in dairy manday 91.0 220 20,020 240 21,840 240 21,840 Total Expenditure 176,714 211,183 211,183 Transfer to young stock investment account 46,800 22,635 Net total expenditure 129,914 188,548 211,183 A Income tax -4,720 4,532 4,532 p Net total expenditure and income tax 125,194 193,080 215,715 - 118 - ANNTEX 2 Page 75 Table 68: Investment for Adding a 20-cows Unit in Kibbutz Dairy Farm Invest- Distribution I t e m ment according IL. to years total 0 1 2 1. Structures and equipment Dairy building 62,500 62,500 - - Heifers' house (0.9 calves per cow) 37,800 - 37,800 - Bull-calves house (0.5 calves per cow) 21,000 - 21,000 - Sucking calves cages 1,800 - 1,800 - Barn 10,000 - 10,000 - Milking parlour (adaptation)8,000 - 8,000 - Additional equipment 20,000 10,000 10,000 - Container for concentrates and mIsc. equipment 5,400 3,400 2,000 - Total 166,500 75,900 90,600 - 2. Livestock Cows 100,000 100,000 - - Young stock 69,435 - 46,800 22,635 Total 169,435 100,000 46,800 22,635 3. Total investment 335,935 175,900 137,400 22,635 of whIch loan capital IL. 275,000 - 119 - AnEX 2 f) WATER SAVING Page 76 The project of which an economic analysis is presented below includes investments in an improved irrigation technology aimed at water saving. The improved irrigation system, which at the project implementation stage was considered a technological change, has become, however, an integral part of the existing irrigation system. The significance of the new technology was the saving of water per given output. The model under analysis is related to a subproject for which total investments amount to IL.142 millions in prices of June 1977. This investment scope has already brought about the saving of some 40 million cubic meters of water per year. The saved water is being transferred to newly irrigated areas. The crops included in the model represent the recently developing trend of inter-branch water allocation. These crops are: avocado (63% of given water), cotton (25%) and wheat (12%). The weighted average internal rate of return - economic and financial - is approximately 24%. Note: The internal rate of return for the project when considering water allocated for avocado only, is 23.5%. This is a higher figure than the "export avocado" project's. It results from the difference existing between the water resources allocated for the two projects. Namely, in the "water saving" project the applied water's production costs were lower due to technological changes, whereas the "export avocado" costs figure represents the average costs of water applied from various sources. - 120 - ANNEX 2 Page 77 Table 69 Investment in Water Saving Project (1977 prices) Total Price investment Quantity IL/ Unit IL. Millions Volumetric valves 34,000 750 25.5 Discharge regulators 200,000 20 4.0 Sprinklers 200,000 25 5.0 Sector sprinklers 10,000 40 0.4 Sector sprinklers and plastic pipes 22,700 100 2.3 Metering systems 1,450 3,500 5.1 Main pipes 235 km. 160,000 37.6 Secondary pipes 350 km. 90,000 31.5 Cooling system for poultry 30.6 Total 142.0 -121 - ANNEX 2 Page 78 Table 70: Cost Computation for Water Saved by Project IL. thousand Volume Distri- Convey- Cooling Cost of control bution ance system for Total water system poultry IL./m.cu. Investment 25,500 11,700 74,200 30,600 142,000 Lifespan (years) 10 5 35 10 Annual repayment at stated rate of interest 5 3,315 2,703 4,526 3,978 14,522 0.36 10 4,157 3,089 7,717 4,988 19,951 0.50 15 5,075 3,487 11,204 6,089 25,855 0.65 20 6,095 3,908 14,840 7,313 32,156 0.80 25 7,140 4,352 18,550 8,568 38,610 0.97 30 8,237 4,809 22,260 9,884 45,190 1.13 35 8,951 5,242 25,970 11,108 51,271 1.28 - 122 - ANN~EX 2 Page 79 Table 71: Calculation of Balance for Water and Capital The Quantity Price Avocado Cotton Wheat The item unit (units per (IL.per (IL.per (IL. per (IL. er dunam) unit) dunam) dunam) dunam Output tons 0,415 6,750 2,801 tons '0,450 seeds 1,825 821 tons 0,350 hay 320 +112 tons 0,800 total 1,166 933 tons 1.1 8,100 8,910 Current expenditure (excluding water) Packing, storing and marketing tons 1.1 1,200 1,320 Machinery and equipment 941 403 277 Dung and fertilizers 424 108 116 Pesticides and spraying materials 130 280 51 Seeds - 17 36 Work, management and general 1,133 300 96 Interest on working capital 234 116 33 Miscellaneous 263 70 28 Total current expenditure 4,445 1,294 587 Balance for capital, water and land 4,465 1,507 346 Land rent 200 200 110 Balance for capital and water 4,265 1,307 236 - 123 - AN"NEX 2 Page 80 Table 72: Calculation of Capital Repayment on Crop Investments as Function of Interest Rate The item Avocado Cotton Wheat Young plantation Investments (IL.per dunam) 12,780 - - Irrigation network Investments (IL. per dunam) 2,010 1,310 355 Total annual capital (IL. per repayment at interest dunam) rates of: 5% (213+ 831) 1,044 139 38 10% (284+1,355) 1,639 185 50 15% (360+1,943) 2,303 235 64 20% (444+2,569) 3,013 290 78 25% (533+3,195) 3,728 347 94 30% (623+3,834) 4,457 406 110 35% (713+4,473) 5,186 465 126 - 124 - ANEX 2 Page 81 Table 73: Calculation of Balance and Value of Marginal Product of Water The Item Avocado Cotton Wheat Balance for capital and water (IL.per dunam) 4,265 1,307 236 Balance for water at interest rates of: 5% 3,221 1,168 198 10% 2,626 1,122 186 15% 1,962 1,072 172 20% 1,252 1,017 158 25% 537 960 142 30% -192 901 126 35% -921 842 110 Water quantity (cu.m. per dunam) 860 450 150 Value of marginal product of water at interest rates of: 5% 3.75 2.60 1.32 10% 3.05 2.50 1.24 15% 2.28 2.38 1.15 20% 1.46 2.26 1.05 25% 0.62 2.13 0.95 30% -0.22 2.00 0.84 35% -1.07 1.87 0.73 Table 74 : Annual Net Value per Cu.m. and Internal Rates of Return for the Water Saving Project Area Water Value of Marginal Product Cost and Net Annual Internal Rate: rate of Cro ('000 Quantity Value of Water (IL./Cu.m.) at Interest rpdunams) (M.C.M.)*P duams)(m.cm.)*return5% 10% 15% 20% 25% 30% 35% Avocado 3.75 3.05 2.28 1.46 0.62 -0.22 -1.07 0.36 0.50 0.65 0.80 0.97 1.13 1.28 29.0 25 62.5 3.39 2.55 1.63 0.66 -0.35 -1.35 -2.35 23.5 Cotton 2.60 2.50 2.38 2.26 2.13 2.00 1.07 0.36 0.50 0.65 0.80 0.97 1.13 1.28 22.2 10 25.0 2.24 2.00 1.73 1.46 1.16 0.87 0.59 45.0 Wheat 1.32 1.24 1.15 1.05 0.95 0.84 0.73 0.36 0.50 0.65 0.80 0.97 1.13 1.28 33.3 5 12.5 0.96 0.74 0.50 0.25 -0.02 -0.29 -0.55 25.0 Total project 3.16 2.69 2.16 1.61 1.04 0.47 -0.11 0.36 0.50 0.65 0.80 0.97 1.13 1.28 84.5 40 100.0 2.80 2.19 1.51 0.81 0.07 -.066 -1.39 24.0 *million cubic meters. - 126 - ANNEX 2 Page 83 g) Reservoirs Background During the years 1972-1975, 54 reservoirs were set up, with total capacity of 18,702,000 cu.m. of water that served for irrigating some 20,000 dunams of cotton. Distribution by years was as follows: In 1972,15 reservoirs were set up with total capacity of 5,905,000 cu.m. In 1973, 8 reservoirs were set up with total capacity of 2,235,000 cu.m. In 1974,18 reservoirs were set up with total capacity of 6,930,000 cu.m. In 1975,13 reservoirs were set up with total capacity of 3,632,000 cu.m. Thus 1974 was a peak-year for construction of new reservoirs. Distribution of regions was as detailed below: The Valley Region Qishon river basin 24 reservoirs Harod river basin 4 reservoirs Tavor river basin 4 reservoirs Subtotal 32 The Sharon Region Hadera river basin 3 reservoirs Alexander river basin 5 reservoirs Subtotal 8 The other 14 reservoirs are spread all over the country. Thus, reservoir greatest concentration regions are the Valley and Central Coastal Plain. - 127 - NNEX 2 Page 84 Distribution of water sources was as specified below: 41 reservoirs sustained on floods, drainage, wells, etc. 13 reservoirs sustained on various effluents (urban, regional, individual farms' and adjacent plants'). It should be pointed out that the tendency to utilize effluents prevailed mainly towards the end of the Project period, hence, 10 out of 13 effluent reservoirs were built during the years 1974-1975. The momentum in setting up reservoirs has been continued. During the years 1976-1977, i.e. after the Project completion, 35 reservoirs were built with total capacity of 15 million cu.m., whereof effluent reservoirs have been occupying an increasingly important place each year. The construction of new reservoirs over the last two years was based on the accumulated knowhow and experience in the field, particularly on the successful performance throughout the Project period. Table 75: Reservoir 400,000 cu.m. for the Irrigation of 1,000 Dunams of Cotton Economic Internal Rate of Return 154% Invest- Total Net cash Capitalization at 15%-16% Present worth Receipts nent outlay flow Present worth Present worth Year IL. IL. (IL.) (IL.) factor (15%) 16% (IL.) 15% (IL.) 16% a)*O - 1,500,000 1,500,000 -1,500,000 1.000 1.000 -1,500,000 -1,500,000 1 280,000 - 180,000 100,000 0.870 0.862 87,000 86,200 2 460,000 - 180,000 280,000 0.756 0.743 211,680 208,040 3 460,000 - 180,000 280,000 0.658 0.641 184,240 179,480 4 460,000 - 180,000 280,000 0.572 0.552 160,160 154,560 5 460,000 - 180,000 280,000 0.497 0.476 139,160 133,280 6 460,000 - 180,000 280,000 0.432 0.410 120,960 114,800 0 7 460,000 - 180,000 280,000 0.376 0.354 105,280 99,120 8 460,000 130,000 310,000 150,000 0.327 0.305 49,050 65,750 9 460,000 - 180,000 280,000 0.284 0.263 79,520 73,640- 10 460.000 - 180,000 280,000 0.247 0.227 69,160 63,560 11 460,000 - 180,000 280,000 0.215 0.195 60,200 54,600 12 460,000 - 180,000 280,000 0.187 0.168 52,360 47,040 13 460,000 - 180,000 280,000 0.163 0.145 45,640 40,600 14 460,000 - 180,000 280,000 0.141 0.125 39,480 35,000 15 460,000 - 180,000 280,000 0.123 0.108 34,440 30,240 16 460,000 130,000 310,000 150,000 0.107 0.093 16,050 13,950 17 460,000 - 180,000 280,000 0.093 0.080 26,040 22,400 18 460,000 - 180,000 280,000 0.081 0.069 22,680 19,320 19 460,000 - 180,000 280,000 0.070 0.060 19,600 16,800 b)*20 520,000 - 180,000 340,000 0.061 0.051 20,740 17 340 a) In the first yeaw the receipts reach only about 2/3 of the annual amount. 44 b) Includes res.idual value of investment (4 years-after the research-value of pipelines). LAI" - 129 - ANNEX 2 Page 86 Table 75: Investments in Reservoir Alonim, 4001000 cu.m. for Irrigation of 1,000 Dunams Cotton Total Investment (IL.) Planning and supervision 70,000 Soil survey 15,000 Total 85,000 Earthwork 465,000 Spillway and Structures 250,000 Pumps (Filling the reservoir) 250,000 Pipelines 143,000 Pumping system 270,000 Control system 37,000 Total reservoir without drainage 1,500,000 Year of . Capacity Year of cCapacity Basin const- Location Water source (*000 Basin const- Location Water Source (6000 ruction point cA..) ruction point Cu.m.) Shlowl 1975 163.1/213.J effluents 370 Misharot 1974 153.1/?12.2 drainage 100 Gaaton 1972 162.7/2b6.8 GUaton River 490 Ein Sheiner (b) 1974 149.6/205.2 regional effluents 250 Shomrat 1974 159.d/262.0 Yasat River Scot Yam 1975 190.0/150.2 Hadera River 760 farm effluents 300 Talmet Eliezer 1975 147.3/205.3 drainage 150 Qfar nasarik 1972 161.2/255.1 Hilazon River 500 Hamaapil (b) 1973 147.6/197.4 NAhat Ouez 200 Ofek 1974 160.4/251.0 Naann River 300 Hogla 1973 144.1/197.5 urainage 75 Allonim (a) 1972 168.6/23b.) Nahalal River 215 Haabarot 1973-74 146.0/196.7 Alexander River 400 liazore'a (b) 1972 162.6/270.0 Hazoreca River 360 liaogen 1975 146.7/193.5 Alexander River 400 liayogev (a) 1972 169.3/222.7 springs, effluents 330 Nalishonim 1974 143.3/163.0 t6zor River, drainage 155 Qfar Yehoshua (b) 1972 164.Z/230 2 Nahalal River 320 Yesodot 1972 134.6/132.2 Jerusalem effluents 140 Mizra ) 1972-75 177.3//1.8 Mizra River. Nazareth 450 Revadim 1974 133.3/133.2 drainage. springs 250 effluents dahaal 1972 167.0/231.6 Nahalal River 320 Nirim 1972 098.d/086.2 Besor River 900 500 Sarid 1972 174.4/225.0 Yifat River. effluents 420 Revivini-Hash'abe Sade 1974 133.2/071.0 Beer Sheva effluents 22 1 Tel Adashim (a) 1972 178.4/22d.d Adashim River. Nazareth 310 Rosh Pine 1975 205.7/265.6 flatzor effluents effluents Hazor'in. Lavi 1974 196.1/239.1 Vavnlel River 300 g Shaar flaamaqim (b) 1973 165.3/24.4 drainage. canal 9-10 250 Gazit (a) 1972 193.5/228.4 Tabor River. springs 140 C Givat Oz (b) 1973 171.1/2I-J.0 farm effluents, drainage 260 Ein Dor 972 106.7/229.2 Tabor River. springs 240 Gvat (b) 1973 169.6/230.7 farm & Industrial 100 Belt Keshet. Dovrat 1974 186.1/230.1 Tabor River, springs 500 effluents Gazit (b) 1974 193.2/22J.9 labor River, springs 75 Viat, Ranat David 1973 167.9/225.5 sprinas 650 Belt Alfa 1972 192.7/214.6 Harod River, drainage 750 MLgidi (b) 1973 169.6/220.7 farm effluents.drainage 350 iefliba 1973 190.5/215.3 Harod giver. drainage 350 Allonilm (b) 1974 164.9/119 5 drainage, national 400 Beit Iashita 1974 190.0/217.9 farm effluents, drainage 290 carrier 194 173.6/228.2 Migddl effluents 900 Jezeal 1974 131.9/219.0 Harod River springs3 Ganigar Hdeoieq farm effluents 330 Rawt Vohananl 1974 160.6/241-9 Ztporl River 730 Gesher 1976 202.5/224.7 Tabor River. Jordan River 600 Sde Vaaov 1974 163.0/233.0 Betleiem River, springs 650 Ilishwar Haeneq (d) 1976 164.6/224.3 farm eftluents 120 Tel Adashim (b) 1974 179.0//230.7 Nazareth, effluents. 500 *iationl carrier 13.702 w Allone Abba 1975 228.6/164.3 drainage, springs 250 Total Balfouria 1975 177.1/22t 6 Balfouria effluents 500 iayogev (b) 1976 110.5/'4.7 springs, duainag 230 CID lazoie'a (d) 1975 b.1/22i J livon effluents 460 Yukne'an (d) 19/6 161.J/! 11.S Tivon f!ln0-41S 70 Qtar bialk 1975 lbo 5/!Ij 2 moa i a. gjvz-.; .oJ j) d,ili): - 131 - ANNEX 2 Page 88 i) Water Development Loans' Application a. Table 78: Comparison between Approval and Disbursement by SubcategorL (IL. millions) Item No. Subcategory Approved Disbursed 51 Irrigation efficienty 89.2 124.1 52 Reservoirs 38.9 19.1 53 Drainage 9.3 8.0 54 Effluents 17.2 2.9 Total 154.6* 154.1 b. The reasons for a different distribution of "Water Development" subcategories are: 1. The effluents' subproject had to be postponed owing to retardation in investments for urban canalization systems, hence also retardation in supply of recycled water, so there was no point in separate investments for the rura'-agricultural segment of the entire system. Now that the urban systems do not any more lag behind - investments for effluents were performed also in the agricultural areas, but these were not financed by the World Bank. 2. There were temporary difficulties concerning the Reservoires subproject, owing to technical reasons such as high rates of evaporation, evapotranspiration and soil perforation. However, * By exchange rate at end of Credit Project time. - 132 - ANNEX 2 Page 89 this subproject was performed through loans supplied by Israeli funds, after which all technical problems were solved. 3. The actual investment required for the "Irrigation Efficiency" subproject was 39% higher than planned, owing to two reasons: (a) Enlargement as against the planned size of the irrigated area; (b) Technological improvements which raised up costs level. Annex 1 SECOND AGRICULTURAL CREDIT PROJECT The Settlement Structure of Israeli Agriculturel) (1976) Villages PFarm 5) Cultivated Irrigated Agricultural S Po ulation Labor Force Land Land Output Settle- % 000 % 0o0 2 ) % %O0dIY ments '000d % '000 % 000d2 % Cooperative Farming Moshavim 350 44.4 132.8 26.9 25.7 35.4 1,227 29.6 626 35.5 41.0 Kibbutzim 226 28.7 98.8 20.0 16 .3 22 .511,483 35.8 7021 39.9 33.3 Moshavim Shitufilm 30 3.8 6.8 14J_ ) 2.8 Sub-total 606 76 93W. 48.3 57.9 2,710 65.4 1,328 75.4 77.1 Private Farming Jewish 3)43 5.5 22.4 4.6 15.8 21.8 520 12.6 331 18.8 16.0 Minorities 89 11.3 215.6 43.7 14.7 20.3 855 20.6 65 3.7 5.6 Agric.schools and institutions 50 6.3 16.7 3.4 .. .. 60 1.4 38 2.1 1.3 Sub-total 1U7 lTT15. 51.7 30.5 42.1 1,435 34.6 434 T4.6 22.9 4) 6) 7) Grand Total 788 100.0 493.1 100.0 72.5 100.0 4,145 100.0 1,762 100.0 100.0 1) Excludes the occupied territories. 2 "d" denotes dunam; 1 dunam = 0.1 ha. 3 Excluding Institutions 4 Excludes Bedouin tribes 5 Sy locality of residence 6 In addition to that there are 165 thousand dunams with breakdown unavailable. 7) Like 6) - 103 thousand dunams. Sources: 1) Statistical Abstract of Israel, 197.7, Central Bureau of Statistics. 2) Agricultural Plan for the year 1976/77; Ministry of Agriculture and Settlement Planning and Development Center, July, 1977. -134- ANNEX 2- Page 91 Annex 2 SECOND AGRICULTURAL CREDIT PROJECT Incentives, Subsidies and Taxation Output and Input Subsidies (All amounts in IL million at current prices) 1971/ 1972/ 1973/ 1974/ 1975/ 1976/ OUTPUT 1972 1973 1974 1975 1976 1977 Eggs (Table& Hatching) Subsidy 24.2 48.9 62.9 144.1 240.2 275.: Production value 239.2 290.4 435.9 739.6 812.6 935.3 % subsidy 10.1 16.8 14.4 19.5 29.6 29.4 Poultry meat Subsidy 35.3 -15.6 30.9 176.4 296.5 476.C Production value 382.5 472.9 730.3 1,165.3 1,610.3 2,228.9 % subsidy 9.2 3.3 4.2 15.1 18.4 21. Milk(Cow's,sheep & goats) Subsidy 64.5 131.5 225.2 292.0 498.1 764.6 Production value 264.1 344.9 556.5 952.4 1,377.0 1,782.8 % subsity 24.4 38.1 40.5 30.7 36.2 42.9 Beef Subsidy 0.3 - - 9.9 15.6 4.5 Production value 140.5 180.3 254.6 329.4 460.7 570.5 % subsidy 0.2 - - 3.0 3.4 1.0 Cotton (Lint+Seed) Subsidy ------Production value 157.8 224.3 464.0 598.4 1,021.8 1,436.8 % subsidy ------Vegetables & Potatoes Subsidy 3.4 13.0 1.6 18.2 24.8 36.1 Production value 270.6 337.7 491.6 703.5 998.4 1,449.1 % subsidy 1.3 3.9 0.3 2.6 2.5 2.5 Fruits (other than Citrus) Subsidy 5.0 6.1 10.0 16.5 23.0 28.8 Production 319.3 379.9 554.4 853.4 1,981.1 1,706.3 % subsidy 1.6 1.6 1.8 1.9 1.9 1.7 INPUTS Fertilizer Subsidy 3.4 2.1 - - - Total cost 48.4 55.2 73.5 139.2 210.2 250.1 % subsidy 7.0 3.8 - - - - Feed Subsidy 55.5 75.1 246.7 311.0 510.9 516.- Total cost 521.7 667.3 991.0 1,686.4 2,246.8 1,974.2 % subsidy 10.6 11.3 24.9 18.4 22.7 26.2 Water Subsidy 20.0. 35.0 43.2 71.2 104.0- 20.0 Total cost 82.8 104.2 128.2 254.9 464.1 553.2 % subsidy 24.2 33.6 33.7 27.9 22.4 3.6 Source: Prices and Subsidies Dept., Ministry of Agriculture ANNEX CUMULATIVE QUARTERLY DISBURSEMENT (Thousands IL.) Quarter Ended CATEGORY AND Code Up to Up to Up to Up to Up to Up to Up to Up to Up to Up to SUBCATEGORY 6.74 9.74 12.74 3.75 6.75 9.75 12.75 3.76 6.76 9.76 Export Production Roses 11 3,766 10,485 16,538 20,975 23,931 27,908 32,277 35,085 40,066 40,365 Carnations 12 572 1,728 3,616 4,941 8,133 10,058 13,031 18,001 27,236 27,463 Gladioli 13 306 611 1,722 2,256 3,211 3,358 3,940 5,323 5,726 5,732 Avocados 21 667 2,283 3,168 4,766 6,216 7,448 8,840 10,780 12,173 12,210 Mangos 22 26 85 168 282 336 432 504 601 635 636 Tangerine 23 180 642 1,220 2,188 3,011 3,628 4,348 5,532 6,253 6,267 Grapefruit 24 1,267 4,884 7,255 9,513 11,751 13,253 14,578 16,338 17,736 17,778 Goose Liver 29 31 102 375 537 544 561 581 587 587 Subtotal 6,784 20,749 33,787 45,296 57,126 66,629 78,079 92,241 110,412 111,038 n Export Handling-Facilities Grapefruit 32 933 1.367 2,392 2,716 2,791 3,540 4,242 4,929 5,629 5,629 Flowers 33 42 177 452 481 481 481 558 564 578 578 Avocados 34 955 1,130 1,130 1,130 1,130 1,130 1,662 1,662 1,754 1,754 Subtotal 1,930 2,674 3,974 4,327 4,402 5,151 6,462 7,155 7,961 7,961 Water Development Water-Management 51 9,276 15,662 35,002 46,957 53,308 64,688 83,964 93,807 106,593 113,273 Reservoirs 52 2,240 4,705 7,700 13,289 15,875 17,978 20,909 24,202 30,364 31,120 Effluents 53 143 801 1,238 1,910 2,758 3,132 4,179 6,008 7,441 7,734 Drainage, local 54 181 587 890 1,112 1,686 1,996 2,166 2,522 2,725 2,858 Subtotal 11,840 21,755 44,830 63,268 73,627 87,794 111,218 126,539 147,123 154,985 Livestock Development Beef 61 448 526 4,718 5,513 5,573 6,881 7,819 10,078 13,136 13,336 Dairying 62 11,129 12,451 16,285 20,737 45,717 59,573 80,574 90,696 94,115 94,608 Turkeys 63 843 2,808 3,225 3,747 4,447 4,772 5,592 6,147 6,147 M Subtotal 11,577 13,820 23,811 29,475 55,037 70,901 93,165 106,366 113,398 114,091 T 0 T A L 32,131 58,998 106,402 142,366 190,192 230,475 288,924 332,301 378,894 388,075 Annex 3 DISTRIBUTION OF LOAN PROCEEDS K I BUT Z I M No.of Amount Disbursed (Thousands IL.) Total CATEGORY AND Code Loans Galil Akko Afula Hadera Raanana Rehovoth Negev Disb. SUBCATEGORY Export Production Roses 11 29 7 283 44 146 80 18 19 596 Carnations 12 3 5O 178 228 Avocados 21 168 1,924 3,238 1,250 1,233 294 416 491 7,946 Mangos 22 10 33 200 285 Tangerine 23 120 12 319 79 159 75 293 528 1,468 Grapefruit 24 283 1,312 1,083 1,923 405 224 341 1,957 7,246 Goose Liver 29 2 31 Subtotal 615 2,360 4,923 3,378 1,943 723 1,101 3,371 17,798 Export Handling Facilities Grapefruit 32 147 980 374 712 460 166 137 412 3,241 Flowers 33 1 42 42 Avocados 34 2 18 92 110 Subtotal 150 980 374 712 478 166 137 545 3,393 Water Development Water Management 51 779 9,817 6,773 16,517 5,362 2,012 3,195 10,428 54,104 Reservoirs 52 113 422 3,469 12,413 4,297 856 24 1,755 23,236 Effluents 53 239 654 970 1,849 62 163 50 919 4,667 Drainage, local 54 15 207 168 181 821 1,378 Subtotal 1146 10,893 11,212 30,985 9,721 3,199 3,450 13,924 83,384 Livestock Development Beef 61 113 3,278 669 3,516 184 125 1,205 8,977 Dairying 62 313 3,459 2,958 11,463 4,848 2,481 3,016 8,504 36,729 Turkeys 63 14 316 857 809 950 2,932 Subtotal 440 6,737 3,943 15,836 5,032 2,481 3,950 10,659 48,638 TOTAL 2351 20,970 20,452 50,911 17,174 61570 8,638 2,499 153,213 L Annex 3 DISTRIBUTION OF LOAN PROCEEDS MO S H A VIM No.of Amount disbursed (Thousands IL.) Total CATEGORY AND Code Loans Galil Akko Afula Hadera Raanana Rehovoth Negev Disb. SUBCATEGORY Export Production Roses 11 1078 664 3,291 941 406 2,766 23,898 31,966 Carnations 12 1291 327 183 5,393 9,509 2,914 7,284 25,610 Gladioli 13 772 9 156 52 654 4,494 5,364 Av6cados 21 282 256 1,182 485 518 388 205 405 3,439 Mangos 22 29 26 35 21 48 35 31 195 Tangerine 23 501 .6 158 222 414 379 951 1,642 3,771 Grapefruit 24 652 151 521 1,263 1,500 763 1,613 1,861 7,671 Goose liver 29 45 76 37 187 146 447 Subtotal 4650 413 2,878 5,563 8,979 11,545 9,325 39,761 78,464 Export'Handling Facilities Grapefruit 32 45 130 329 44 195 69 260 22 1,084 Flowers 33 6 85 85 82 252 Avocados 34 1 18 18 Subtotal 52 130 431 44 195 69 345 103 1,317 Water Development Water management 51 1469 7,078 1,809 6,806 4,392 4,745 7,154 9,777 41.761 Reservoirs 52 30 560 5,316 598 802 7,275 Effluents 53 108 75 117 1,298 77 35 369 405 2,375 Drainage, local 54 10 654 175 33 439 1,301 Subtotal 1617 7,153 2,486 14,074 5,242 4,814 8,764 10,181 52,713 Livestock Development Beef 61 39 361 118 1,166 1,078 ?,723 Dairying 62 318 997 2,720 17,110 5,413 2,396 14,615 13,431 5n,688 OQ Turkeys 63 16 64 54 90 491 1,57' "M1 ?2. e Subtotal 373 1,357 2,901 18,330 5,503 2,396 15,106 16,09- 6 ,6- P NJ TOTAL 6692 9,053 8,696 38,011 19,918 18,823 33,540 66,13 19+,,18I Annex 3 (cont.) DISTRIBUTION OF LOAN PROCEEDS No.of Amount Disbursed (Thousands IL.) Total 0 T H E R S Code Loans Galil Akko Afula Hadera Raanana Rehovoth Negev Disb. CATEGORY AND SUBCATEGORY Export Production Roses 11 261 63 49 342 327 7,020 7,802 Carnations 12 95 905 312 386 21 1,624 Gladioli 13 32 26 63 277 366 Avocados 21 77 153 73 88 170 110 232 827 Mangos 22 11 29 25 63 40 157 Tangerine 23 110 10 106 194 119 357 243 1,028 Grapefruit 24 192 302 33 399 412 129 1,038 547 2,860 Goose liver 29 14 73 109 Subtotal 792 456 179 697 2,084 1,061 2,187 8,108 14,772 00 Export Handling Facilities Grapefruit 32 31 151 18 126 244 110 39 650 1,338 Flowers 33 2 284 284 Avocados 34 4 ' 350 120 1,157 1,627 Subtotal 37 151 368 126 648 110 1,196 650 3,249 Water Development Water Management 51 749 2,212 362 3,247 3,492 3,358 3,131 1,607 17,408 Reservoirs 52 3 609 609 Effluents 53 34 37 1 485 16 33 120 692 Drainage, local 54 1 179 179 Subtotal 787 2,248 363 4,341 3,508 3,358 3,343 1,727 18,888 Livestock Development Beef 61 11 59 68 99 82 1,330 1,637 Dairying 62 22 110 75 395 275 336 1,191 Turkeys 63 2 430 507 937 Subtotal 35 169 143 924 357 2,173 3,765 TOTAL 1651 3,024 1,052 6089 69L 4,528 8 104A85 IQjI - 139 - ANNEX 2 Page 96 Annex 4 Distribution of Loans by Categories and Types of Settlement Export Water Livestock Export Handling 3evelop- Develop- Total Production Facilities ment ment Galil 33,047 32229 1,261 20,294 8,263 Kibbutzim 20,970 2,360 980 10,893 6,737 Moshavim 9,053 413 130 7,153 1,357 Others 3,024 455 151 2,248 169 ------Akko 30,201 7,980 1,173 14,061 6,987 Kibbutzim 20,452 4,923 374 11,212 3,943 Moshavim 8,696 2,878 431 2,486 2,901 Others 1,053 179 368 363 143 ------Afula 95,010 9,638 882 49,400 35,000 Kibbutzim 50,911 3,378 712 30,985 15,836 Moshavim 38,011 5,563 44 14,074 18,330 Others 6,088 697 126 4,341 924 ------Hadera 43,690 13,006 1,321 18,471 10,892 Kibbutzim 17,174 1,943 478 9,721 5,032 Moshavim 19,919 8,979 195 5,242 5,503 Others 6,597 2,084 648 3,508 357 ------m------m------Raanana 29,922 13,329 345 11,371 4,877 Kibbutzim 6,569 723 166 3,199 2,481 Moshavim 18.824 11,545 69 4,814 2,396 Others 4,529 1,061 110 3,358 ------m------Rehovot 51,077 12,613 1,678 15,557 21,229 Kibbutzim 8,638 1,101 137 3,450 3,950 Moshavim 33,540 9,325 345 8,764 15,106 Others 8,899 2,187 1,196 3,343 2,173 Negev 105,123 51,240 1,298 25,832 26,753 Kibbutzim 28,499 3,371 545 13,924 10,659 Moshavim 66,139 39,761 103 10,181 16,094 Others 10,485 8,108 650 1,727 - Grand Total 388,070 111,035 7,958 154,986 114,091 Types of Settlement Kibbutzim 153,213 '17,799 3,392 83,384 48,638 Moshavim 194,182 78,464 1,317 52,714 61,687 Others 40,675 14,771 3,249 18,888 3,766 - 140 - ANNEX 3 Page 1 STATE OF ISRAEL MINISTRY OF AGRICULTURE RURAL PLANNING AND DEVELOPMENT AUTHORITY SUPPLEMENT TO COMPLETION REPORT OF IBRO SECOND AGRICULTURAL CREDIT PROJECT LOAN No.972-IS Submitted to the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Jerusalem, May 1978 - 141 - ANNEX 3 Page 2 TABLE OF CONTENTS A. Export Production A.1 Roses A.3 Grapefruit A.4 Gooseliver A.5 Flowers A.6 Citrus - Tangerines A.7 Subtropical Fruits - Avocado A.8 Water Developments - Drainage Livestock Development - A.11 Beef A.12 Turkeys E.&F. Annual National Production and Exports by Sub-categories G. Overall Economic Rate of Return of the Project H. Price Data J&T. Price Indexes and Wage Data L. Export-Incentive Exchange Rates M. Loans for Reservoirs in IBRD 2nd Credit Project N. Performance of Project Coordination Committee 0. Settlement Structure of Israeli Agriculture P. Number of Cattle Imported S. Water Prices 1973-1978 Explanatory Notes - 142 - 3 Page 3 A.EXPORT PRODUCTION A.1 ROSES Export Roses Develooment Throughout 1973/74-1975/76 (Implementation Vs. Planning) During the project period (1973/74-1975/76) the oil crisis significantly constrained roses profitability level. The crisis triggered off a considerable increase of current expenses and investments, which were only partly offset by the 50% rise of export flowers' prices in European markets, and also due to transition towards new varieties, which raised flowers' yield by 25%. Following is a comparison between implementation and planning data updated for the beginning of 1975. I term Planning Implementation Financial Rate of Return 15.6% 12.04% Economic Rate of Return 18.7% 15.3% Investments per 1 dunam roses IL.74,700 IL.71,000 Yields per 1 dunam roses 95,720 flowers 120,000 flowers Price F.O.B. per rose (in cents) 7.5 t11.0 Roses Exports in the years 1971/72-1976/77 Year 1971/ 1972/ 1973/ 1974/ 1975/ 1976/ Item 1972 1973 1974 1975 1976 1977 Quantity of exported flowers (mill.u.) 73.9 78.5 85.6 88.6 90.7 95.6 Total Receipts ('000 $) 5,498 5,723 6,822 9,933 9,884 12,739 Average prices per flower(() 7.4 7.3 8.0 11.2 10.9 13.3 - 143 - ANNEX 3 Page 4 Investments in Central Packing House No. unit Prices Life- Depre- Investment Item of size per Sum span tiation units unit IL. I.L. (vyars} Building 800 sq.m. 750 600,000 20 500 " 300 150,000 20 Office 50 " 900 45,000 20 Area planning 2,000 " 120,000 20 Installation of water and canalization 70,000 20 Electricity 120,000 20 Planning and Supervision 114,000 20 Total investments for 20 years 1,219,000 20 60,950 Equipment: Refrigeration including 750 cm. 450,000 10 Air conditioning 250,000 10 Total investments for 10 years 700,000 10 70,000 Lifting fork 50,000 7 Office equipment 54,000 7 Total investments for 7 years 104,000 7 14,850 Work tables 48 units 416 20,000 5 1,000 " 15 15,000 5 100 " 400 40,000 5 d,000 5 Miscellaneous equipment 78,000 5 Total investments for 5 years 157,000 5 31,400 GRAND TOTAL 2,180,000 177,200 - 144 - ANNEX 3 Page 5 Foreign Trade Center - Ministry of Agriculture Investments in Roses' Hothouses - 1.0 dunam Investment Item Sum Life- Direct Foreign Currency IL. span Depreciation Comoonent (years) % IL. Planting House 61,000 12 5,080 21.8 13,300 Airing arrangements 5,000 12 420 30.7 1,540 Electricity connection 6,000 12 500 42.0 2,520 inner installation 6,000 12 500 42.0 2,520 Control board 3,000 12 210 26.5 800 Drainage 6,500 12 540 18.5 1,200 Packing store 6,000 12 500 15.0 900 Refrigeration 8,000 12 670 25.0 2,000 Trellising 5,000 12 420 30.7 1,540 Planning & Supervision 2,000 12 170 - - Total investment for 12 years 108,500 9,010 26,320 Plantings 24,000 6 4,000 5.0 1,200 Land preparation 4,000 6 670 11.3 450 Land 1,000 6 170 7.6 80 Hot air installation 25,000 6 4,170 31.1 7,780 Irrigation and 5,500 6 920 24.7 fertilizing instal. 1,360 Sprayer&Fert.container 2,000 6 330 50.4 1,010 Evaporator 1,000 6 170 30.7 310 Total investment for 6 years 62,500 10,430 12,190 Total investment per 1 dunam 171,000 19,440 38,510 Total investment per 480 dunams 82,080,000 9,331,200 18,484,800 - 145 - ANN 3 Page 6 Production Expenses per 1 dunam of Roses I te Financial Economic Analysis Analysis Fuel 15,100 13,900 Electriciy 2,000 2,000 Water - 1,800 cu.m.* 400 900 Fertilizers 1,000 1,000 Pesticides 400 400 Plastic 2,900 2,900 Maintenance and repairs 800 800 Insurance and miscellaneous 1,200 600 Interest on working capital 950 - Total production expenses per 1 dunam 24,750 22,500 Total production expenses per 480 dunams 11,880,000 10,800,000 * cubic meters. 146 - ANNEX 3 Page 7 Labor Expenditure Price per Number of Labor The worker work day work expenses (IL) days The farmer 91 125 11,375 His wife 62 40 2,480 Children 51 40 2,040 Hired work 51 80 4,080 Total 285 19,975 Total per 480 dunams 9,588,000 Notes: Number of permanent days of work 120 Number of workdays in packing and sorting. 150 Marketing Expenses for a Central Packing House Expenditure Item Packing Materials (3.3 ag. x 60 mill. flowers) 1,980 Current treatment (3.2 ag. x 60 mill. flowers) 1,920 Transport (2.6 ag. x 60 mill. flowers) 1,560 Total expenses of packing house 5,460 - 147 - ANNEX 3 Page 8 Receiots on Roses' Hothouses Per dunam Receipts from roses" exports (12,000 flowers x 11t per flower ) $ 13,200 Receipts in IL. (1$ = IL.7.64) I.L.100,840 Less marketing commission 15.5% 15,630 Gross Balance of Receipts 85,210 In addition: receipts from local marketing 6,790 Total receipts per 1 dunam 92,000 Total receipts per 480 dunams 44,160,000 Calculation of Financial Rate of Return Grand Balance Capitalization Receipts Investnents('0001.L) Current Expenses ('000 1.L.) ('000 In In In In Income Total Total on Expend- 14% 12% Year I.L.) Hot- Packing Total Hot- Packing Tax iture houses Houses houses Houses 0 82,080 2,180 84,260 84,260 -84,260 -84,260 -84,260 1 44,160 21,468 5,460 904 27,832 27,832 16,328 14,321 14,577 2 44,160 21,468 5,460 904 27,832 27,832 16,328 12,562 13,015 3 44,160 21,468 5,460 904 27,832 27,832 16,328 11,019 11,620 4 44,160 21,468 5,460 904 27,832 27,832 16,328 9,666 10,376 5 44,160 157 157 21,468 5,460 904 27,832 27,989 16,171 8,479 9,175 A 6 44,160 30,000 30,000 21,468 5,460 904 27,832 57,832 -13,672 - 6,227 - 6,926 O 7 44,160 104 104 21,468 5,460 904 27,832 27,936 16,224 6,483 7,338 8 44,160 21,468 5,460 904 27,832 27,832 16,328 5,722 6,593 9 44,160 21,468 5,460 904 27,832 27,832 16,328 5,020 5,887 10 44,160 857 857 21,468 5,460 904 27,832 28,689 15,471 4,172 4,980 11 44,160 21,468 5,460 904 27,832 27,832 16,328 3,863 4,692 12 44,160 82,080 82,080 21,468 5,460 904 27,832 109,912 -65,752 -13,632 -16,871 13 44,160 21,468 5,460 904 27,832 27,832 16,328 2,971 3,740 14 44,160 104 104 21,468 5,460 904 27,832 27,936 16,224 2,590 3,319 15 44,160 157 157 21,468 5,460 904 27,832 28,689 16,171 2,263 2,952 16 44,160 21,468 5,460 904 27,832 27,832 16,328 2,005 2,663 17 44,160 21,468 5,460 904 27,832 27,832 16,328 1,760 2,377 18 44,160 30,000 30,000 21,468 5,460 904 27,832 57,832 -13,672 - 1,292 - 1,777 19 44,160 21,468 5,460 904 27,832 27,832 16,328 1,353 1,895 20 81,535 21,468 5,460 8,378 35,306 35,306 46,229 3,360 4,789 - 7,813 163 12 + 2 7,37- 12.04% 7,976 m Calculation of Economic Rate of Return Investments( '000 I0) 0 Grd Balance of Capitalization Year Receipts In In TotalIn In income on at ing hot- packing expenses 16% 14% houses houses houses houses 0 82.2"4 2,184 84,418 84,418 84,418 -84,418 -84,418 1 44,160 20,433 5,470 25,903 25,903 18,257 15,737 16,011 2 44,160 20,433 5,470 25,903 25,903 18,257 13,566 14,046 3 44,160 20,433 5,470 25,903 25,903 18,257 11,684 12,321 4 44,160 20,433 .5,470 25,903 25,903 18,257 10,077 10,808 5 44,160 157 157 20,433 5,470 25,903 26,060 18,100 8,615 9,399 6 44,160 30,049 30,049 20,433 5,470 25,903 55,952 -11,792 - 4,839 - 5,371 7 44,160 104 104 20,433 5,470 25,903 26,007 18,153 6,422 7,253 8 44,160 20,433 5,470 25,903 25,903 18,257 5,568 6,399 9 44,160 20,433 5,470 25,903 25,903 18,257 4,799 5,614 10 44,160 858 858 20,433 5,470 25,903 26,761 17,399 3,942 4,692 11 44,160 20,433 5,470 25,903 25,903 18,257 31567 4,319 12 44,160 82,234 82,234 20,433 5,470 25,903108,137 -63,977 -10,773 -13,275 13 44.160 20,433 5,470 25,903 25,903 18,257 2,650 3,322 14 44,160 104 104 20,433 5,470 25,903 26,00/ 18,153 2,270 2,899 15 44,160 157 157 20,433 5,470 25,903 26,060 18,100 1,952 2,534 16 44,160 20,433 5,470 25,903 25,903 18,257 1,697 2,241 17 44,160 20,433 5,470 25,903 25,903 18,257 1,464 1,968 18 44,160 30,049 30,049 20,433 5,470 25,903 55,952 -11,792 - 814 - 1,143 19 44,160 20,433 5,470 25,903 25,903 18,257 1,088 1,513 20 81,535 20,433 5,470 25,903 25,903 55,632 2,853 4,044 - 2.893 5,176 14 + 2 52176 = 15.3% 8,069 - - 150 - ANNEX 3 Page 11 ANNEX 1 Calculation of Residual Value for Investments Investments in Hothouses for 12 years IL. 52,080,000 Investments in Hothouses for 6 years IL. 30,000,000 Total investments in Hothouses IL. 82,080,000 Investments in Packing Houses for 7 years 104,000 52,080,000x 12 = 17,360,000 30,000,000x 6 = 20,000,000 Total for Hothouses 37,360,000 Total for Packing Houses 104,000 x 7 15,000 Grand Total 37,375,000 Residual Value is Added to Income on 20th Year. -151 - ANNEX 3 Page 12 ANNEX 2 Annual Deoreciation Rates and Financing Exoenditure for Calculating Income Tax Life- Amort1- Investment span Annual zation Investment item sum (years) Depreciation costs (I.L. .(I.L.) Packing House 157,000 5 31,400 41,448 Hothouses 30,000,000 6 5,000,000 6,870,000 Packing house 104,000 7 14,850 21,320 Packing house 700,000 10 70,000 114,100 Hothouses 52,080,000 12 4,340,000 7,655,760 Packing house 1,219,000 20 60,950 142,322 Total 84,260,000 9,517,200 14,845,250 Less: Depreciation 9,517,200 Total Financing Expenses 5,328,050 60% Financing Expenses for calculating Income Tax 3,196,830 - 152 - ANNEX 3 Page 13 ANNEX 3 Income Tax Calculation IL. 1) Current expenses on hothouses 11,880,000 2) Work expenses 9,588,000 3) Marketing expenses and delivery by packing houses 5,460,000 4) Depreciation on hothouses and packing houses 9,517,200 5) 60% of total Financing Expenses 3,196,800 Total Expenses for Calculating Income Tax 39,642,000 Total Receipts 44,160,000 Balance for Income-Tax Calculation 4,518,000 Total Incone Tax (4,518,000 x 20%) = 903,600 Income Tax Calculation on 20th year Total Receipts 81,535,000 Less E Total Income Tax (20%) 8,378,000 - 153 - ANNEX 3 Page 14 ANNEX 4 Foreign Currency Comoonent of Investments in Packing Houses Total Imoort Component in Investmear Investment Item Investment in % in I.L. in $ IL. Buildings 795,000 15 119,250 Land preparation 120,000 32 38,400 Installation of water and canalization 70,000 40 28,000 Electricity 120,000 40 48,000 Refrigeration and Airconditioning 650,000 25 162,500 equipment 207,000 33 68,310 Office equipment 54,000 33 18,900 Lifting forks 50,000 92.4 46,200 Planning and Supervision 114,000 - - Total 2,180,000 529,560 $ 88,260 - 154 - ANNEX 3 Page 15 A.3. GRAPEFRUIT During the period 1971/72 - 1976/77 the grapefruit terms-of- trade underwent a certain deterioration as production costs rose faster (over 3.6 times) than output prices (below 3.4 times). In several cases output price level rose 2.7 times only. This how- ever was slightly offset-by the rise of average yield by 0.5 ton per dunam. The overall effect of the above deterioration is reflected in the internal-rate-of-return figures: 9% - by economic analysis; 10% - by financial analysis. It should however be pointed out that in recent years positive trends have emerged, which are likely to improve grapefruit profitability level within the immediate or near future: 1) In European countries per-capita grapefruit consumption is constantly growing; 2) Israel's high annual growth rate of grapefruit export to Europe is steadily and considerably exceeding the corres- ponding rate of American export. 3) Israel gradually acquires new grapefruit markets such as Japan; 4) Israel continues to maintain its position as biggest grape- fruit exporter to European countries, constantly gaining reputation due to its "white" grapefruit and paralelly expanding its shipments volume; 5) Israel manages to extend its export season up to 9 months due to cold storage, whereas its rivals operate over a much shorter period. Due to the above developments, Israeli grapefruit throughout the current season (1977/78) have received 50 cents more per box. 14 Table 1: Economic Internal Rate of Retuir for Grapefruit Project (orchard and Packing Enterprise) - IL. thousands Year Sales 0 utta y s Total Net -Capitalization at 10% Capitalization at 8% receipts investment Current expenditures PttPresept outlay Cash Idfh1t Present r Present Orc n p T Orchard Enter rise lotaI Flow factoe worth aC or worth (1) (2) (3) (2)+(J) (5) (6) (5(6) ( ()((10) (9)x 10) (13) (0) (13) 0 /.223 7,223 7.223 - 7.223 1.0 - 7,223 1.0 - -7.223 1 22.591 22.591 22,591 -22,591 0.9091 -20,531 0.9259 -20,917 2 11,465 11.465 11,465 -11.465 0.8264 - 9.475 0.8573 - 9,829 3 .17,120 17.120 17.120 -17,120 0.7513 -12,862 0.7938 -13,690 4 5.352 14.323 14.323 1.475 1.475 15.798 -10.446 0.6830 - 7.135 0.7350 - 7,678 5 14.912 19.640 19.640 5.594 5.594 25.234 -10.322 0.6209 - 6.409 0.6806 - 7,025 6 22.368 19.640 13.165 32.805 9.221 9.221 42.026 -19,658 0.5645 -11.097 0.6302 -12.388 7 38.682 26,556 9,289 35.845 35,845 2,837 0.5132 1.457 0,5835 1,656 8 48,520 29.445 12.383 41.828 41,828 6,692 0.4665 3.122 0.5403 3,616 9 64.944 31.566 17.473 49.039 49.039 15,905 0.4241 6.745 0.5002 7,956 10 64.944 31.566 17.473 49.039 49,039 15.905 0.3855 6,131 0.4632 7,367 11 64,944 9,006 9.006 31.566 17.473 49.039 58,045 6.895 0.3505 2,418 0.4280 2,953 1 12 64,944 31.566 17,473 49,039 49.039 15.905 0.3186 5,067 0.3971 6.316 13 64.944 843 843 31,566 17,473 49.039 49.882 15,062 0.2897 4,363 0.3677 5,538 1- 14 64.944 31,566 17.473 49,039 49,039 15,905 0.2633 4.188 0.3405 5.416 15 64.944 31.566 17,473 49,039 49.039 15.905 0.2394 3,808 0.3152 5.013 16 64.944 1.925 1,925 31,566 17.473 49.039 50.964 13.980 0.2176 3,042 0.2919 4,081 17 64.944 31.566 17,473 49.039 49,039 15.905 0.1978 3.146 0.2703 4.299 IB 64.944 31,566 17,473 49.039 49.039 15.905 0.1799 2.861 0.2502 3.979 19 64.944 31.566 17.473 49.039 49.039 15,905 0.1635 2.600 0.2317 3,685 20 64,944 843 843 31,566 17,473 49.039 49.882 15,062 0.1486 2,238 0.2145 3,231 21 64.944 9,006 5.563 14.569 31.566 17,473 49.039 63,608 1.336 0.1351 180 0.1987 265 22 64,944 31.566 17.473 49,039 49.039 15.905 0.1228 1.953 0.1839 2,925 23 64.944 31.566 17.473 49,039 49,039 15,905 0.1117 1,777 0.1703 2,709 24 64.944 31.566 17.473 49,039 49,039 15,905 0.1015 1,614 0.1577 2.508 25 64.944 31.566 17.473 49,039 49,039 15.905 0.0923 1.468 0.1460 2,322 26 64,944 1.925 1,925 31.566 17,473 49,039 50,964 13.980 0.0839 1.173 0.1352 1,890 27 64.944 843 843 31.566 17.473 49,039 49,882 15,062 0.0763 1,149 9.1252 1,886 28 59.532 30.521 15,922 46.443 46.443 13,089 0.0693 907 0.1159 1.517 29 59.532 30.521 15.922 46,443 46,443 13.089 0.0630 825 0.1073 1,404 30. 54.120 28.677 14.375 43.052 43.052 11,068 0.0573 634 0.0994 1,100 oQ 31 54,120 9,006 9.006 28.677 14.375 43.052 52,058 2.062 0.0521 107 0.0920 190 m 32 41,088 26,433 10,506 36,939 36,939 4,149 0.0474 197 0.0852 353 I- 33 41,088 26.433 10,506 36.939 36,939 4,149 0.0431 179 0.0789 327 ON W 34 41,088 843 843 26,431 10.506 36.939 37,782 3,306 0.0391 129 0.0730 241 35 41,088 26.433 10,506 36,939 36,939 4,149 0.0356 148 0.0676 280 36 41.088(- 3,604) (- 480) (- 4.04) 26.413 10.506 36,939 32,855 8,233 0.0323 266 0.0626 515 +231,106 -10,846 6,888 Financial Internal Hate of Return for firapefruit Project (orchard and packing enterprise)-IL. thousands Nt Capitalization at 10% Capitalization at 91 Seutl y s Year SaeNe resent Present Prsn receipts Investwnts Current expenditures and Income Tax Total Cash worth Present worth Present SrEnter- Income Total outlay Flow actor worth factor worth Orchard prise Total Orchard prise ( = 8)* 9 = 10)= 11) (12 * (1) (2) (3) M2A 3) (5) (6) (7) (5)+(6)+(1)(4)+18) (1 ( (1 (10)x 13) 7,223 7.223 7,223 - 7.223 1.000 - 7,223 1.000 - 7.223 0 -21.007 1 22.898 22.898 22,898 -22.898 0.9091 -20,816 0.9174 9.417 2 11.188 11.188 11,188 -11.188 0.8264 - 9,246 0.8417 - -12.057 3 15.614 15.614 15.614 -15,614 0.7513 -11,731 0.7722 5,745 4 5.352 11.987 11.987 1,475 1,475 13.462 - 8.110 0.6830 - 5,539 0.7084 - 0.6499 - 5.981 5 14.912 16.935 16.935 5,594 1,586 7.180 24,115 - 9,203 0.6209 - 5,714 6 22,368 16,935 13.164 30.099 9,221 2.419 11.640 41.739 -19.371 0.5645 -10,935 0.5963 -11,551 3.007 7 38,682 23.790 9.288 166 33,184 33.184 5.498 0.5132 2,822 0.5470 6,774 0.5019 7.288 8 48.520 26.679 12.383 937 33.999 33,999 14,521 0.4665 6,735 0.4604 7,316 9 64.944 28.800 17,473 2.780 49,053 49.053 15.891 0.4241 10 64.944 28.800 17.473 2,780 49,053 49.053 15.891 0.3855 6,126 0.4224 6,712 2.413 0.3875 2.668 11 64.944 9.006 9,006 28,800 17.473 2,780 49,053 58,059 6.885 0.3505 5.063 0.3555 5,649 12 64.944 28.800 17.473 2.780 49,053 49.053 15.891 0.3186 4.909 13 64.944 843 843 28,800 17,433 2.780 49.053 49.896 15,048 0.2897 4.359 0.3262 0.2992 4,755 14 64.944 28.800 17,473 2.780 49.053 49.053 15,891 0.2633 4.184 15 64.944 28.800 17.473 2,780 49.053 49.053 15.891 0.2394 3,804 0.2745 4.362 3.518 16 64,944 1,925 1,925 28.800 17.473 2,780 49,053 50.978 13,966 0.2176 3.039 0.2519 0.2311 3.672 17 64.944 28.800 17,473 2,780 49.053 49,053 15,891 0.1978 3.143 18 64.944 28,800 17.473 2.780 49.053 49,053 15,891 0.1799 2.859 0.2120 3.369 3,091 19 64.944 28.800 17,473 2.780 49.053 49,053 15.891 0.1635 2,598 0.1945 20 64.944 843 843 28,800 17.473 2,780 49.053 49,896 15.048 0.1486 2,236 0.1784 2,685 216 21 64.944 9,006 5,563 14,569 28,800 17.473 2,780 49.053 63,622 1.322 0.1351 179 0.1637 22 64.944 28,800 17,473 2,780 49.053 49,053 15,891 0.1228 1,951 0.1502 2,387 23 64.944 28.800 17.473 2,780 49.053 49,053 15,891 0.1117 1,775 0.1378 2.190 24 64.944 28,800 17,473 2,780 49.053 49,053 15,891 0.1015 1,613 0.1264 2.009 25 64,944 28,800 17,473 2,780 49,053 49.053 15.891 0.0923 1,466 0.1160 1,843 26 64.944 1,925 1,925 28.800 17.473 2.780 49.053 50,978 13,966 0.0839 1.171 0.1064 1.486 27 64,944 843 843 28.800 17.473 2.780 49,053 49.896 15,048 0.0763 1,148 0.0976 1.469 28 59.532 27.755 15.922 2.216 45,893 45.893 13.639 0.0693 945 0.0895 1.221 0o 1,121 m 29 59,532 27.755 15,922 2,216 45,893 45,893 13.639 0.0630 859 0.0822 30 54.120 25.910 14.375 1,812 42,097 42,097 12,023 0.0573 689 0.0754 907 208 31 54,120 9,006 9.006 25,910 14.375 1.812 42.097 51,103 3,017 0.0521 157 0.0691 32 41,088 23,667 10,506 428 34,601 34.601 6.487 0.0474 307 0.0634 411 378 33 41.0118 23.667 10.506 428 34,601 34,601 6.487 0.0431 280 0.0582 41.088 843 843 23.667 10,506 428 34.601 35,444 5.644 0.0391 221 0.0534 301 34 318 35 41.088 23,667 10,506 428 34,601 34,601 6.487 0.0356 231 0.0490 0.0449 475 36 41.088 (- 3,604)(- 410) (- 4,0U4) 23.667 10.506 428 34,601 30,517 10,571 0.0323 341 - - 1.716 46,960 - 157 - ANNEX 3 Page 18 Table 3: Income Tax Comoutation (IL. thousand) Deductibie expenses Income Yield Current Exp. Depreciation Taxable tax at year Receipts Total Orchard Enter- Orchard Enter- income 20% prise orise (1) (2) (3) (4) (5) (6) (1)-(2) = .2 4 5,352 2,528 1,475 - 1,053 - - 335e) 5 14,912 6,647 5,594 - 1,053 - 7 ,930 1,586 6 22,368 10,274 9,221 - 1,053 - 12,094 2,419 7 38,682 37,851 23,790 9,288 3,930 843 831 166 8 48,520 43,835 26,679 12,383 3,930 843 4,685 937 9-27 64,944 51,046 28,800 17,473 3,930 843 13,898 2,780 28-29 59,532 48,450 27,755 15,922 3,930 843 11,082 2,216 30-31 54,120 45,058 25,910 14,375 3,930 843 9,062 1,812 32-36 41,088 38,946 23,667 10,506 3,930 843 2,142 428 Note: e) After deduction of IL.3,159,000 accumulated depreciation (IL.1,053,000 annually) for years 1-3 (5,352-2,518-3,159 = -30) f) As in note e, namely: IL.14,912 - 6,647 - 335 = 7L.7,920. - 158 - ANNEX 3 Page 19 Table 4 Receipts by Yield Year Yie 1 d Receipts Total B destination, er cent Average For Year (tons Ey Per dunam 8,000 p Exports Domestic sales price dunamP Fresh For pro- (IL)ton dunams dunam)g cessing (IL.) (IL.'000) (1) (2) (3) (4) (5) (6) (7) 4 1.0 20 10 70 669 669 5,352 5 2.0 40 5 55 932 1,864 14,912 6 3.0 40 5 55 932 2,796 22,368 7 4.5 50 5 45 1,075 4,835 38,682 8 5.0 60 4 36 1,213 6,065 48,520 9-27 6.0 70 3.5 26.5 1,353 8,118 64,940 28-29 5.5 70 3.5 26.5 1,353 7,442 59,532 30-31 5.0 70 3.5 26.5 1,353 6,765 54,120 32-36 4.0 65 4.0 31.0 1,284 5,136 41,088 - 159 - ANNEX 3 Page 20 A.4. Gooseliver A. Background Data Geese raising, which is concentrated in family farms, serves for the sole aim of exporting gooseliver. Exports include also goose meat, goose fat and feathers, all of which are considered as by-products. In 1974/75 a total of 117 tons gooseliver worth of $1,521,000 F.0.S. were exported. The following table shows gooseliver export data throughout 1971/72-1974/75: Receipts Average Price Year Exports (tons) ($'000 F.0.B) ($ per ton) 71/72 106 1,400,000 13,207 72/73 122 1,768,000 14,490 73/74 136 2,263,000 16,640 74/75 110 1,736,000 15,780 Source: Foreign Trade Center. Following are data indicating the share of gooseliver within the national agricultural exports basket in 1974/75: Gooseliver production 117 tons Exports value $1,521,000 Share of total agr. vaiut cxpur:s 0.6% Share of poultry branch exports 20% - 160 - ANNEX 3 Page 21 Actual performance in 1975/6 and forecasting for 1978/9: Average Price Year Exports (tons) Receipts(S'000 F.0.8) (S oer ton) 75/76 143 2,745,000 19,195 76/77 154 3,620,000 23,500 77/78 (estimate ) 260 4,900,000 24,500 78/79 (estimate ) 235 5,500,000 23,400 B. Gooseliver Investments Analysis Following are the economic data of investment in gooseliver. The financial and economic data were prepared for the entire system, from initial geese breeding up to export stage, including slaughterhouse. In 1974/75, production costs rose up, following feed price-rise. This, however, was partly set off by feeding methods' efficiency and also by higher export prices gained in 1975/76. The IRR figures are as follows: By economic analysis 19.3% By financial analysis 15.2% Table 1 : conotic Internal Rate of Return (60 tons Gooseliver at $19,19 F.O.B. per kilogram) In come lnvestient( .L.'000 Current expen.(IL.'000) Net cash Capitalization Year (IL. Breed- Green Fatten- Slaugh- Total Slaughter lotal flow '000) ing geese ing ter invest- Farms houses Total expend- (IL.'000) at 20% at 16% houses ments iture 0 771 2,495 3.120 2,187 8,573 -8,573 -8,573 -8,573 -8,573 1 8,585 5,137 1,575 6,712 6,712 1,873 1,614 1,560 2 8,585 5,137 1,575 6,712 6,712 1,873 1,392 1,300 3 8.585 5,137 1,575 6,712 6,712 1,873 1,199 1,083 4 8,585 5,137 1,575 6,712 6,712 1,873 1,034 903 5 8,585 265 265 5,137 1,575 6,712 6,977 1,608 765 .646 6 8,585 5,137 1,575 6,712 6,712 1,873 768 627 7 8,585 5,137 1,575 6,712 6,712 1,873 662 522 8 8,585 70 362 437 541 1,410 5,137 1,575 6,712 8,122 463 141 107 9 8,585 5,137 1,575 6,712 6,712 1,873 492 363 10 8,585 265 205 470 5,137 1,575 6,712 7,182 1,403 ^18 226 11 8,585 5,137 1,575 6,712 6,712 1,873 365 252 12 8,585 5,137 1,575 6,712 6,712 1,873 315 210 13 8,585 5,137 1,575 6,712 6,712 1,873 272 175 14 8,585 5,137 1,575 6,712 6,712 1,873 234 145 15 8,585 508 2,134 2,683 5,325 5,137 1,575 6,712 12,037 -3,452 - 372 - 224 16 8,585 70 362 437 541 1,410 5,137 1,575 6,712 8,122 463 43 25 17 8,585 5,137 1,575 6,712 6,712 1,873 150 84 18 8,585 5,137 1,575 6,712 6,712 1,873 129 70 19 8,585 5,137 1,575 6,712 6,712 1,873 Ill 58 20 12,663* 5,137 1,575 6,712 6,712 5,951 305 154 *) Includes residual value 1,364 - 287 M Economic IRR 16% + 4 * 1,651 Table 2: Financial Internal Rate of Return (60 tons gooseliver at $19.19 F.0.B. per kg.) Income Investment(I.L. '000 gxpenditure(IL.1000) Net cash Capitalization Year (IL. Breed-Yer GreenncmeSaugh- Fatten- Slaugh- Total rIncome(1) Inometald fIlow '000) ing geese ing ter invest- Farms he Soa Tax itue 0) a1 t6 houses ments house total iture '000) at 15% at 16% 0 771 2,495 3,120 2,187 8,573 -8,573 -8,573 -8,573 1 8,585 5,278 1,575 6,853 149 7,002 1,583 1,376 1,364 2 8,585 5,278 1,575 6,853 149 7,002 1,583 1,196 1,176 3 8,585 5,278 1,575 6,853 149 7,002 1,583 1,040 1,014 4 8,585 5,278 1,575 6,853 149 7,002 1,583 905 874 5 8,585 265 265 5,278 1,575 6,853 149 7,267 1,318 655 627 6 8,585 5,278 1,575 6,853 149 7,002 1,583 684 649 7 8,585 5,278 1,575 6,853 149 7,002 1,583 595 560 8 8,585 70 362 437 541 1,410 5,278 1,575 6,853 149 8,412 173 56 52 9 8,585 5,278 1,575 6,853 149 7,002 1,583 450 416 10 8,585 265 205 470 5,278 1,575 6,853 149 7,472 1,113 275 252 11 8,585 5,278 1,575 6,853 149 7,002 1,583 340 309 12 8,585 5,278 1,575 6,853 149 7,002 1,583 295 266 13 8,585 5,278 1,575 6,853 149 7,002 1,583 257 230 14 8,585 5,278 1,575 6,853 149 7,002 1,583 223 198 15 8,585 508 2,134 2,683 5,325 5,278 1,575 6,853 149 12,327 -3,742 - 460 - 403 16 8,585 70 362 437 541 1,410 5,278 1,575 6,853 149 8,412 173 18 16 17 8,585 5,278 1,575 6,853 149 7,002 1,583 147 127 18. 8,585 5,278 1,575 6,853 149 7,002 1,583 128 109 19 8,585 5,278 1,575 6,853 149 7,002 1,583 Ill 94 20 12,663* 5,278 1,575 6,853 149 7,002 5,661 _ 345 290 + 63 - 353 A *) Includes residual _ value. 63 _ 15 + 0.15 = 15.15% Financial IRR=15% + 1 416 15 5 (1) Total current expenditure. - 163 - ANNEX 3 Page 24 Table 3: Investnent in slaughterhouse for 60 tons of acoseliver and calculation of Foreign Currency Comonent. I t e M investmentTotal F.C.C.,v F.C.C.,I.L. (I.L.) Develooment and infrastructure Water installations, local drainage, and effluents sewage 135,500 40 54,200 Site clearing, electricity, paths and roads 106,800 32 34,175 2421300 882375 Structures-oroduction Airconditioned area-100sq.m. 211,900 15 31,785 Standard built area-115sq.m. 162,000 15 24,300 Platform - 60 sq.m. 42,400 15 6,360 Structures-servi ces and management Standard-built area-115sq.m. 162,000 15 24,300 Showers and workers' facilities -40sq.m. 135,600 15 20,340 Prefabricatd structure for feathers-40sq.m. 33,900 15 5,085 331,500 49,725 Refri caration A cooling room of Go 60sq.m. 169,500 12.6 21,360 Cold storage at 260 for 30 tons 118,600 12.6 14,945 Freezing apparatus 188,700 34.9' 65,355 tef.for liver szorace at 00 16.300 34.? 5.365 Production ecuiorent Slaughtering apparatus and feeding conveyor 25,200 33 8,315 Accessories for handling carcass and *ings 36,700 33 :2,110 Conveyor&testinj scale 33,500 33 11,090 Equip.for.opening departmen;s 17,800 33 5,375 Ecuio. for Kosner-keeoing aepartment. 52,.100 33 17,290 Ezuio. for .;nloading and packing 23,00 50.5 14,00 - 164 - ANNEX 3 Page 25 Investment in Slaughterhouse for 60 tons of gooseliver and calculation of Foreign Currency Component (cont.) Total I t e m investment F.C.C.,% F.C.C.,I.L. (I.L.) Transport vehicles and auxiliary equipment 150 cages for geese delivery 69,600 33 22,970 2 vehicles for geese delivery 61,200 40 24,480 Hot water and high-pressure rinsing facilities 75,300 40 30,120 20 trolleys for hanging geese 75,700 33 24,980 Pallets 20,600 33 6,800 Spare parts, metal fixture equipment 13,600 33 4,490 Office and canteen furniture 22,800 35 7,980 Containers and trolleys for rubbish 14,200 33 4,685 353,000 126,505 Planning and n.e.s. 162,000 Total investment (4) 2,187,500 503,755 Foreign Currency Component = $83,960. AnTEX 3 -165- Page 26 Table 4: Cost of fattenina and slauahtering (per E0 kq. liver) Price Total (I.L.) I t e m Unit Qty. (IL) Financial Econoii per analysis analy,!! unit Green geese bird 100 36.67 3,667 3,534 35.35(*) Transport bird 100 0.90 90 90 Maize kg. 1,764 1,175 2,072 2,072 Misc.: sawdust, heating,etc. bird 100 1.20 120 120 Labor 100 13.25 1,325 1,325 Marketing fees 216 "16 Sub-total (fattening costs) 7,490 7,358 Slaughtering (labor and current costs) bird 94 15.66 1,472 1,472 Total 8,962 8,830 (*) For economic. Outout of by-oroducts oer 9 birds- excludina liv:r. Meat kg. 404 5,37 2,170 2,170 Fat kg. 47 1,17 55 55 Feathers bird 94 3,53 332 332 Total 2,557 2,557 Net current cost of producing 56 kg. liver 5,105 6,273 - 166 - ANNEX 3 Page 27 Table t: Current Expenses Tur Production of 60 tons Gooseliver Ite m Totai (IL) Financial Economic analysis analysis (a) Total current expenses (slaughterhouse + farms) for 56 kg. 6,405 6,273 for 60 tons (x1,070) 6,853,000 6,712,000 (b) Total current expenses for slaughterhouse for 56 kg. 1,472 1,472 for 60 tons (x1,070) 1,575,000 1,575,000 (c) Farms' current expenses (a-b) a) for 56 kg. 6,405 6,273 b) less: expenses for slaughterhouse 1,472 1,472 4,933 4,801 Total for production of 60 tons gooseliver (x1,070) 5,278,000 5,137,000 - 167 - ANEX 3 Page 28 Table 6: Cost of raising 100 oreen geese (3 months on the averace) Price Total (I.L.) m Unit Qty (I.L Financial Economic I t e per analysis analysis un it) Goslings (inc. transport) gosling 106 9,06 960 924 8,72(*) Feed kg. 1,500 1,237 1,855 1,855 Green fodder kg. 5,300 0,054 286 286 Misc.: sawdust, heating.etc. 115 115 Labor man day 5 71 355 355 Interest on working capital (6 months at 6%) 96 - Total 3,667 3,535 Total per a green goose 36.67 35,35 (*) For economic. -168 - ANNEX 3 Page 29 Table 7: Gosling Production - Current Expenses Net cost of 1 hatching egg 5.37 5,07 Transport to hatchery and marketing fees 0.16 0.16 Total 5.53 5.23 76% hatching - 1.32 hatching coefficient 7.30 6.90 Hatching expenses 1.50 1.50 Transport 0.22 0.22 Total 9.02 8.72 - 169 - ANNEX 3 Page 30 ANNEX 1 Current Cost of Producing 56 kg. Liver a. Maintenance of 100 laying geese cer annum olus 28 ganders Price Total (IL.) I t e m Unit Qty per By By Unit Financial Economic (IL.) Analysis Analysis Goslings (incl. transport) gosling 70 10.62 743 743 Feed kg. 10,500 1.307 13,723 13,723 Greenfodder kg. 10,000 0.054 540 540 Sawdust & heating 106 106 Misc.: water, electricity 72 72 Labor manday 25 71 1,775 1,775 Interest on working capital (six months at 12%) 911 - Total 17,870 16,959 Production - not including hatching eggs Green ganders gander 33 32 1,056 1,056 goose 23 23.5 540 540 Geese after laying period 6 25.8 155 155 Total hatching eggs value 1,751 1,751 Total expenses for 300 hatching eggs 15,19 5,2C8 Total costs per a single hatching egg 5.37 5.07 - 170 - ANNEX 3 Page 31 ANNEX 2 Cashflow for 60 tons gooseliver 1) Gooseliver price per 1 kg. (1975/76) $ F.0.B.19.195 2) At 1$ = IL.7.64 gooseliver price per kg. I.L. 146 3) Total receipts for 60,000 kg. I.L. 8,760,000 4) Less - 2% Poultry Board and Agrexco expenses I.L. 175,200 5) Total annual receipts I.L. 8,584,800 -171 - ANNEX 3 Page 32 ANNEX 3: Income Tax Comoutation IL. IL. Receipts 8,584,800 Less: acknowledged expenses Current expenses 6,853,000 Depreciation 659,325 Interest 326,740 7,839,065 Total 7,839,065 Taxable income 745,735 20% Income Tax 149,147 ANNEX 3 - 172 - Page 33 ANNEX 4 1. Investment Requirements for 60 tons of Liver A. Breeding flock: 60 ganders oer unit of 400 breeding geese (Annual forecasted production of 400 geese's hatching eggs- 4,250 kg). Total Forecasted Investment I t e m investment per annual required for 400 breeding production 60 tons of geese of same liver Structures: Shed 5,720 Brooderhouse 22,880 Yards 4,940 Mating pool 2,080 35,620 508,600 Equipment: Cages & Miscel. 4,940 4,940 70,600 Subtotal 40,560 Livestock 13,440 192,000 Grand Total 54,000 425 tons 771,200 B, Green geese (unit - same as green geese before fattening) (Annual output at the final stage is forecasted as 442kg, liver) Total Forecasted Ivestment I t e m investment per annual required for 400 breeding production 60 tons of geese of same liver Brooderhouse, shed and yard 17,780 2,133,600 Equipment 3,015 361,800 Total 20,795 500 kgs. 2,495,400 - 173- An 3 Page 34 ANNEX 4 (cont.) C. Fattening Total Forecasteo investment t e M investment per annual required for I 400 breeding production 60 tons of geese of same liver Structures - Storage pit, cement floor, shutters 20,150 Electricity 2,418,000 Feeding vessels 2,210 265,000 Drinking vessels 3,640 437,000 Total 26,000 500 kg. 3,120,000 Investment for 60 tons of liver Total I term investment (IL,) Development and infrastructure 242,300 Structures - production 416,300 Structures- services and management 331,500 Structures- refrigeration 288,100 Cooling and freezing installation 205,500 Production equipment 188.800 Vehicles and auxiliary equipment 353,000 Planning and n.e.s. 162,LC Total 2,187,500 ANNEX 5 Depreciation and Interest onTnvestments Total Life- Direct 60% of Loan Direct Interest investment span, deduction invest- repayment deduction Pay- I t e m years on total ment at 10% (ion ments (IL.) investment (IL.) (IL.) * (IL.) (IL.) A. Breeding flock Structures 508,600 15 33,900 305,600 40,110 20,330 19,780 Equipment 70,600 8 8,825 42,000 7,870 5,250 2,620 Total* 579,200 42,725 347,000 47,980 25,580 22,400 B. Greengeese Structures 2,133,600 15 142,240 1,280,000 168,320 85,330 82,990 Equipment 362,000 8 45,250 217,000 40,665 27,125 13,540 Total 2,495,600 187,490 1,497,000 208,985 112,455 96.530 C. Fattening Structures 2,418,000 15 161,200 1,451,000 190,800 96,730 94,070 Water and drinking installation 437,000 8 54,625 262,000 50,000 32,750 17,250 Fattening machine 265,000 5 53,000 159,000 41,940 31,800 10,140 Total 3,120,000 268,825 1,872,000 282,740 161,280 121,460 D. Slaughterhouses Development & infra- structure 242,300 20 12,115 145,000 17,030 7,250 9,780 Structures-production 416,300 20 20,815 250,000 29,365 12,500 16,865 Buildings-services and managemenc 331,500 20 16,575 199,000 23,375 9,950 13,425 Refrigeration building 288,100 20 14,405 173,000 20,320 8,650 11,670 Refrigeration installation 205,500 10 20,550 123,000 20,020 12,230 7,790 Production equipment 188,800 8 23,600 113,000 21,175 14,125 7,050 Vehicles&auxil. equipment 353,000 8 44,125 212,000 39,730 26,500 13,230 Planning and n.e.s. 162,000 20 8,100 97,000 11,390 4,850 6,540 Total 2,18 7 ,500 160,285 1,312,000 182,405 96,055 86,350 GRAND TOTAL 8,382,300 659,325 5,028,000 722,110 395,370 326,740 Note: Investment costs were calculated on the assumption that 60% of the total investment are finaniced Ly ]ow' s, tile interPst of which is recognized by the Income Tax Authorities as fax-dodulctdtie expenl' s (*) 60%X of the investient sum. -175- ANNEX 3 Page 36 ANNEX 6 Residual Value Comoutation 1CO / B ranch Item's life- Hatch- Green- Fatten- Slaughter- Total Investment span remainder house (years) ing geese ing Structures 10 339 1,422 1,512 - 3,373 Equipment 4 35 181 218 - 434 Sl aughterhouse production equip- ment and vehicles 4 - - - 271 271 Total 374 1,603 1,830 271 4,078 - 176 - ANNEX 3 Page 37 ANNEX 7 Foreign Currency Component of Investment 1. Breeding flock = 400 geese, annual output I t e m Total investment F.C.C.,I.L. C.C. (I.L.) 1$=6 I.L. Structures: Shed 5,700 Brooderhouse 22,900 15 Yards 4,900 Mating pool 2,100 35,600 5,340 Equipment: Cages and misc. 4,900 33 1,620 Total investment (1) 40,500 17.2 6,960 1,160 2. Greengeese - a flock of 100 birds, annual output Total investment F.C.C.,S It e (I.L.) F.C.C.% F.C.C.,I.L. 1$=6 I L Brooderhouse and sheds 16,100 15 2,415 Yards 1,700 255 Equipment: Feeding and drinking vessels, and heating equipment 3,000 33 990 Total investment (2) 20,800 17.6 3,660 610 - 177 - ANNEX 3 Page 38 3. Fattening - a flock of 100 birds, annual output I mt e otal invest-ment Item o.L.)F.C..C.,% F.C.C.,1.L. Structures - Building 4,700 15 705 Cement floor 2,300 15 345 Storage pit 7,800 40 3,120 Shutters 2,600 15 390 Access road 300 32 95 Equipment - Drinking vessels 1,000 33 330 Cages 2,600 33 860 Fattening machine 2,200 45 990 Electricity 1,300 40 520 Cooking installation 1,200 33 400 8,300 Total investment (3) 26,000 30% 7,755 F.C.C. = $1,292. ANNEX 3 - 178 - Page 39 EXPORT HANDLING FACILITIES A.5. FLOWERS Investments and Capital Return in a Central Packing House Capital Capital Life- Total Recovery Recovery I t e m span Invest- Per Ton Per Year ments (10% (IL. '000) (years) (IL.'000) interest) 1. Buildings, water and sewage installations, electricity, etc. 20 1,221 0.117 143 2. Equipment including air- conditioning 10 701 0.163 114 3. Forklifts and office equipment 7 105 0.205 22 4. Miscellaneous 5 157 0.264 41 Grand Total - 2,184 - 320 Calculation of Economic Rate of Return - Flowers (A.5) Ex penses Year Income Expenses(IL.'000) Net Capitalization Ivst- Current Expenses Net at ments In Hot- Total Grand cash at - Hot house Total flow Houses 0 35,587 35,587 (-)35,587 (-)35,587 (-)35,587 1 29,275 16,342 4,768 21.110 21.110 8,165 6,861 6,804 2 29,275 16,342 4,768 21,110 21,110 8,165 5.766 5,670 3 29,275 16,342 4,768 21,110 21,110 8,165 4,845 4,725 4 29,275 16,342 4,768 21,110 21,110 8,165 4,077 3,938 5 29,275 16,342 4,768 21,110 21,110 8,165 3,421 3,282 6 29,275 3,609 16,342 4,768 21,110 24,719 4,556 1,604 1,526 7 29,275 16,342 4,768 21,110 21,110 8,165 2,416 2,278 8 2 .275 16,342 4,768 21,110 21,110 8,165 2,058 1,898 9 9,275 16,342 4,768 21,110 21,110 8,165 1,706 1,582 10 29,275 16,342 4,768 21,110 21,110 8,165 1,434 1,319 11 28,275 16,342 4,768 21,110 21,110 8,165 1,205 1,099 12 28,275 35,587 16,342 4,768 21,110 56,697 (-)27,422 (-) 3,400 (-) 3,077 13 29,275 16,342 4,768 21,110 21,110 8,165 851 763 14 29,275 16,342 4,768 21,110 21,110 8,165 715 636 15 28,275 16,342 4,768 21,110 21,110 8,165 601 530 16 28,275 16,342 4,768 21,110 21,110 8,165 505 442 17 28,275 16,342 4,768 21,110 21,110 8,165 425 368 18 28,275 16,342 4,768 21,110 21,110 8,165 357 307 19 28,215 16,342 4,768 21,110 21,110 8,165 300 256 20 42,101 16,342 4,768 21,110 21,110 8,165 251 213 (+)379 (-)1,026 41 ( ncluding C dj)ita1 return ANNEX 3 Page 41 - 180 - A. 6. CITRUS Tangerines Investment and Caoital Return in Packing House Total Capital Capital em Invest- Life Recovery. Recovery Ite ment Span Factor per year (IL.'000) (years) (10% (IL. '000) interest) 1. Structures 911 30 0.106 97 2. Equipment 1,443 15 0.131 189 3. Office equipment 45 10 0.163 73 4. Fork lift and vehicles 162 7 0.205 33 Total 2,561 392 - 181 - ANNEX 3 Page 42 Calculation of Economic Rate of Return- Citrus (A.6) 0 u t 1 a v Net Capitalization Sales invest-Current Exoenditure , Net at 11% receipts ments Orchard Enter- Toal cs Present Present in Or- prise Total worth worth chard (*) factor U 71 d 1 2,757 2,5 2-72'1 8I,81 2 1,049 1,049 (-)1,049 0 5 3 1,878 1,878 (-)1,878 0.551 (-)1,035 4 311 1,512 86 86 1,598 (-)1,287 0.450 (-) 580 5 1,244 1,929 346 346 2,275 (-)1,631 0.370 (-) 381 6 2,177 2,164 609 609 2,773 (-) 596 0.303 (-) 181 7 5,834 2,942 933 3.875 3,875 1,959 0.249 488 8 8,470 3,197 .,881 5,078 5,078 3,392 0.204 692 9 11,514 3,445 2,568 6,013 6,013 5,501 0.167 919 10 11,514 3,445 2,568 6,013 6,013 5,501 0.137 754 11 11,514 1,206 3,445 2,568 6,013 7,219 4,295 0.112 481 12 11,514 3,445 2,568 6,013 6,013 5,501 0.092 506 13 11,514 3,445 2,568 6,013 6,013 5,501 0,075 413 14 11,514 3,445 2,568 6,013 6,013 5,501 0.062 341 15 11,514 3,445 2,568 6,013 6,013 5,501 0.051 281 16 11,514 3,445 2,568 6,013 6,013 5,501 0.042 231 17 11,514 3,445 2,568 6,013 6,013 5,501 0.034 187 18 11,514 3,445 2,568 6,013 6,013 5,501 0.028 154 19 11,514 3,445 2,568 6,013 6,013 5,501 0.023 127 20 8,635 3,111 2,035 5,146 5,146 3,489 0.019 66 21 8,635 1,206 3,111 2,035 5,146 6,352 2,283 0.015 34 22 8,635 3,111 2,035 5,146 5,146 3,489 0.013 45 23 8,635 3,111 2,035 5,146 5,146 3,489 0.010 35 24 8,635 3,111 2,035 5,146 5,146 3,489 0.009 31 25 8,635 3,111 2,035 5,146 5,146 3,489 0.007 24 26 6,515 2,820 1,548 4,368 4,368 2,147 0.006 13 27 6,515 2,820 1,548 4,368 4,368 2,147 0,005 11 28 6,515 2,820 1,548 4,368 4,368 2,147 0.004 9 29 6,515 2,820 1,548 4,368 4,368 2,147 0.003 6 30 4,667 2,726 1,148 3,874 3,874 793 0.003 2 31 4,567 1,206 2,726 1,148 3,874 5,080 (-) 413 0.002 (-) 32 4,667 2,726 1,148 3,374 3,87d 793 0.002 33 4,667 2,726 1,148 3,874 3,874 793 0.001 1 34 4,667 2,726 1,148 3,874 3,874 793 0.001 1 35 4,667 2,726 1,148 3,874 3,874 793> 0.001 1 36 4,667 (- 483) 2,726 1,148 3,874 3,391 1,276 0.001 1 (*) Including capital return (-)25 -182 - ANNEX 3 Page 43 A.7. SUBTROPICAL FRUITS AVOCADO Total Life- Capital Capital Invest- span Recovery Recovery It e m ment (years) Factor per year (IL.'000) (er) (10% (IL.'000) interest) 1. Infrastructure and buildings 3,804 27 0.108 411 2. Equipment 3,381 10 0.163 551 Total 7,185 962 - 183 - ANNEX 3 Page 44 Calculation of Economic Rate of Return - Avocado (A.7) Sales 0 u t i a y Capitaliza:ion Year Ses Invest- Current Exoenses Net at Re- ment in Plant- Packing Grand cash ceipts plant- ation & Total Total flow 18% 19% ation marketina 0 3,010 3,010 (-) 3,010(-) 3,010 (-) 3,010 1 12,192 12,192 (-)12,192(-)10,327 (-)10,241 2 2,442 2,442 (-) 2,442(-) 1,753 (-) 1,724 3 2,992 2,992 (-) 2,992(-) 1,827 (-) 1,774 4 5,357 4,233 2,454 2,454 6,687 (-) 1,330(-) 686 (-) 664 5 12,857 7,643 4,356 11,999 11,999 858 375 360 6 23,376 8,417 7,075 15,492 15,492 7,884 2,917 2,775 7 23,376 8,417 7,075 15,492 15,492 7,884 2,476 2,334 8 23,376 8,417 7,075 15,492 15,492 7,884 2,097 1,963 9 23,376 8,417 7,075 15,492 15,492 7,884 1,774 1,648 10 23,376 8,417 7,075 15,492 15,492 7,884 1,506 1,388 11 23,376 5,430 8,417 7,075 15,492 20,922 2,454 398 363 12 23,376 8,417 7,075 15,492 15,492 7,884 1,080 978 13 23,376 8,417 7,075 15,492 15,492 7,884 915 820 14 23,376 8,417 7,0-5 15,492 15,492 7,884 781 694 15 23,376 8,417 7,075 15,492 15,492 7,884 662 583 16 23,376 8,417 7,075 15,492 15,492 7,884 560 489 17 23,376 8,417 7,075 15,492 15,492 7,884 473 410 18 23,376 8,417 7,075 15,492 15,492 7,884 402 347 19 23,376 8,417 7,075 15,492 15,492 7,884 339 292 20 23,376 8,417 7,075 15,492 15,492 7,884 292 244 21 23,376 5,430 8,417 7,075 15,492 15,492 2,343 76 64 22 23,376 8,417 7,075 15,492 15,492 7,884 205 173 23 23,376 8,417 7,075 15,492 15,492 7,884 173 147 24 23,376 8,417 7,075 15,492 15,492 7,884 150 118 25 23,376 8,417 7,075 15,492 15,492 7,884 126 107 26 23,376 8,417 7,075 15,492 15,492 7,884 110 87 27 23,376 8,417 7,075 15,492 15,492 7,884 87 '1 28 23,376 8,417 7,075 15,492 15,492 7,884 79 29 23,376 8,417 7,075 15,492 15,492 7,884 63 30 23,919 8,417 7,075 15,492 15,492 8,427 =9 +577 (*) Including Capital Return. - 184 - ANNEX 3 Page 45 WATER DEVELOPMENTS A.8. Drainage In compliance with the request of the IBRO representatives, we hereby present the list of reservoirs where hitherto fish ponds had been operated: 1. Gaaton 2. Qfar Masarik 3. Ofek 4. Hazore'a 5. Hamaapil 6. Haogen 7. Beit Alfa 8. Hefziba 9. Beit Hashita During the IBRO's Second Agricultural Credit Project in Israel (1972-1975) drainage works were carried out over approximately 40 thousand dunams of cotton. It was suggested to the World Bank though to perform drainage works for 34,300 dunams cotton and 7,700 dunams grapefruit; but owing to the cotton prosperity and vigorous demand for new plant- ings, the entire loan for drainage was used for cotton areas. Actually, IL.7,733,800 were disbursed for cotton areas' drainage as against the originally presented figure of IL.8,004,500 (IL.6,002,500 for cotton and IL.2,002,000 for grapefruit). Loan distribution by region was as follows: Afula - IL.3,632 thousands Negev - IL.1,544 Akko - IL.1,088 Galil - IL. 766 - 185 - ANNEX 3 Page 46 The remainder was distributed among the other regions. The largest recipient region (about 50 per cent) was thus the Jesreel Valley. whereas the Negev received about 20 per cent and the Western Galilee about 15 per cent. Local Drainace Comparison of 2nd IBRD Project fioures and Actual Imolementation I t e m Project estimate Imolementation 1974 Crop Cotton and grapefruit Grapefruit Area 34 thous. dunam cotton (+7.7 thous.d. grapefruit) 40,000 dunam Internal Rate of Return 22% 30% Total Investnent : IL.6,002,500 (+ IL.2,002,000 grapefruit) IL.7,733,800 Total receipts increment per year IL.1,972,250 IL.5,760,000 Total expenditure in increment per year IL. 480,200 IL.2,740,000 Total annual expenditure increment cer dunam IL.14 IL. 685 Total annual receipts increment per dunam IL 57.5 IL. 144 Prica (per 1 kilogram) IL.1.15 IL. Economic Rate of Return. Cotton 30% 40,000 dunams (in 1974 Prices)(IL.) Present worth Present Year Receipts Investment Total Outlay Cash flow factor 30% worth 0 7,733,800 -7,733,800 1,000 -7,733,800 -7,733,800 1 *2,880,000 2,740,000 140,000 0,769 107,660 2-20 5,760,000 2,740,000 3,020,000 2,547 7,691,940 +7,799,600 + 65,800 * In the first year of drainage the receipts are only about of the usual annual amount. Additional Income Due to Project (40,000 dunams) Per dunam Yield (kg) - Before project 400 After project 445 Additional yield 45 Price 3.20 IL.(kg). Additional income per dunam: 3.20 IL/kg x 45 kg/dunam = 144 IL/dunam Total additional income: 144 IL/dunam x 40,000 dunams = 5,760 IL/year Current Expenditure Fann expenditure per dunam: 34.5 IL. Maintenance per dunam 34.0 IL. Total expenditure 68.5 IL. Total expenditure in project: 68,5 IL./dunam x 40,000 dunams 2,740,000 IL. - 187 - ANNEX 3 Page 48 LIVESTOCK DEVELOPMENT A. 11. BEEF The Israel beef-cattle herd has in recent years considerably expanded, largely due to investments under the 2nd IBRD Agricult- ural Credit Project. The number of cows in the beef herd increased from 19,500 in 1972/73 to 26,000 in 1975/6. A similar develop- ment rate is set as a target for the present 5-year plan. However, this target can only be achieved if the beef-cattle farmers are credited with the large investments required for the aforesaid rapid development. The swift beef-cattle expansion trend has been stimulated by the unfavorable forecasts of meat supply in the world market through- out the few years of the immediate future. With demand subject to a strongly upward trend, the constrained supply is likely to trigger off price rises up to 40 per cent in the world market, within the next five years. It has evidently been a proper decision to encourage the development of the beef-cattle herd by including this branch as sub-project of the Second IBRD Project. It should be pointed out that apart from the purely economic significance of the beef-herd expansion, this target is also aimed at social and agro-industrial goals, which considerably increase its importance. The Project Aporaisal The beef-cattle development project is aimed specifically to increase the number of cows in the beef herds in all parts of the country, namely - to carry on the orevailing trend. :n 1975 the average number of cow heads per herd reached 400, as agains: 280 in 1972. In some outstanding herds, though, this figure exceeds 1,000. In 1975, the beef cattle project's internal rate of return was approximately 15' by economic analysis and around 13% by financial 3 - 188 -ANNEX Page 49 analysis. These rates are somewhat (3%-4%) below the 1972 Credit Project's figures. Notwithstanding these are quite reasonable rates considering the fact that beef output prices rose rather slowly whereas production costs soared rapidly. Both price levels were affected by the changes in the world market and also by the sig- nificant rise in investments' costs. Also, it should be noted that marginal costs for expanding an existing herd unit are usually lower than the costs for setting up a new herd. Since most investments are earmarked for expanding existing herds, the above rates of return are actually biased downward. Cost and Receipts in Beef-Cattle Farming at 1975 Prices Per Herd Per cow of I term unit Price Total 600 cows Qty (IL.) (IL.) Total (IL.'000) Current costs Feed Concentrates Feed units 350 1.12 352 196 Grains " " 490 1.10 539 270 Poultry manure " " 350 0.36 126 63 Straw " " 100 1.16 116 58 Pasture " " 1800 0.05 90 45 Miscellaneous " " 35 17 Labor work days 1.8 90 162 81 Materials & services 200 100 Bulls renovation 0.01 9000 90 45 General costs 100 50 Total 1,850 925 Receipts Cows and bulls kg. 60 6.8 408 204 Calves kg. 190 10.2 1,938 969 Beef heifers kg. 70 7.6 532 266 Breeding heifers units 0.03 2,500 75 38 2,73 1,477 - 189 - ANNEX 3 Page 50 Note: Beef cattle production coefficients are somewhat different from those presented to the World Bank in 1972. This is because in recent years new farm management and feeding methods have been introduced, which serve as the basic data for this survey (with the figures adjusted for 1975). INVESTMENTS Natural Pasture investment investment Investment herd I te Mper per 1 cow per 1 dunam (45 dunams) of 500 cows (IL.) (IL.) (IL. '000) Fence fastening 30 1,350 675 Water and drinking system 4 180 90 Access roads 5 225 113 Management 2 90 45 Total investment 41 1,845 923 Annual depreciation (15 years) 3 123 62 - 190 - ANNEX 3 Page 51 Beef Herd Investment Investment Years Yearly Yearly per per depreciation depreciation Item cow herd existence per cow per herd (IL.) (IL. '000) (IL.) (IL. '000) Cows 3,000 1,500 Bulls 360 180 Constructions 1,000 500 15 67 33 Vehicles 100 50 8 13 6 Equipment 200 100 8 25 13 Total - Beef herd 4,660 2,330 105 52 Pasture 1,845 923 123 62 GRAND TOTAL 6,505 3,253 228 114 - 191 - ANNEX 3 Page 52 Economic Analysis of a Beef Herd of 500 Cows (Including Pasture) (IL. '000) Total Present Present Invest- Current Invest- Net value value Year Receipts mnvts Ent ments Cash co- of mensts and Flow efficient Net Cash exoenses (151) Flow 0 3,253 3,253 -3,253 1.000 -3.253 1 1,477 925 925 552 .870 480 2 1,477 925 925 552 .756 417 3 1,477 925 925 552 .658 363 4 1,477 925 925 552 .572 316 5 1,477 925 925 552 .497 274 6 1,477 925 925 552 .432 238 7 1,477 925 925 552 .376 208 8 1,477 150* 925 1,075 402 .327 131 9 1,477 925 925 552 .289 157 10 1,477 925 925 552 .247 136 11 1,477 925 925 552 .215 119 12 1,477 925 925 552 .187 103 13 1,477 925 925 552 .163 90 14 1,477 925 925 552 .141 78 15 1,477 -1,680** 925 -755 2,232 .123 275 132 * Renewal of equipment and vehicles. Livestock value at end of period. - 192 -ANNEX 3 Page 53 Financial Analysis of a Beef Head of 500 Cows (Including Pasture) (IL. '000) Present Present Invest- Current Income Total Net value value Year Receipts ments ex- tax ex- Cash Coeff. of penses (20%) penses Flow (13%) Net Cash Flow 0 3,253 3,253 -3,253 1.000 -3,253 1 1,477 925 88 1,013 464 .885 411 2 1,477 925 88 1,013 464 .783 363 3 1,477 925 88 1,013 464 .693 322 4 1,477 925 88 1,013 464 .613 284 5 1,477 925 88 1,013 464 .543 252 6 1,477 925 88 1,013 464 .480 223 7 1,477 925 88 1,013 464 .425 197 8 1,477 150* 925 88 1,163 314 .376 118 9 1,477 925 88 1,013 464 .333 155 10 1,477 925 88 1,013 464 .295 137 11 1,477 925 88 1,013 464 .261 121 12 1,477 925 88 1,013 464 .231 107 13 1,477 925 88 1,013 464 .204 95 14 1,477 925 88 1,013 464 .181 84 15 1,477 -1,680** 925 88 1,013 2,144 .160 343 -41 * Renewal of equipment and vehicles. ** Livestock value at end of period. ANNEX 3 - 193 - Page 54 A.12. TURKEYS Geneml Backcround The turkeys sub-branch, which was initiated in this country as a commercial undertaking in the early sixties, retained its progress momentum also in recent years. In 1972/73, 28,300 tons of turkeys were sold at the local market as against 20,900 tons in 1971/72. In 1975/76 local marketing figure jumped to 37,100 tons, with the upward trend still, continuing although at a lower rate. Also, efforts have been carried on for furthering turkey-meat exports, especially as regards processed turkey products. Several capital-intensive modern enterprises have in recent years been set up in Israel, with as high a quality as can compete with rival products in European markets. It is currently expected that in the immediate future Israel's per-capita consumption of turkey meat will not undergo any significant increase. Parallel to the meat turkeys, another sub-branch - turkey hatching eggs - has been developing. In 1972/73 some 8.8million turkey hatching eggs were produced in this country. The 1975/76 figure soared to 11.8 million (i-34'), of which one third was exported. Swift production growth was greatly facilitated by both expansion of the existing turkey farms as well as setting up new ones, where severe sanitary conditions prevail along with the use of improved feed. Notwithstanding, considerable investments are still required for achieving satisfactory conditions throughout the countrywide turkey hatching egg industry. - 194 - ANNEX 3 Page 55 Project Aporaisal The turkey meat and hatching eggs project aimed at increasing local meat production partly achieved its target (it reached a level lower than the 5-year plan's figure). The project can be considered successful, though, as it managed to retain reasonable profitability despite hardships constraining its development throughout the project period. The hatching eggs project, by economic analysis, resulted in an internal rate of return of 17%, and a financial analysis yielded 13%. These rates are 5% lower than the originally computed ones, but are quite reasonable yet. The lower rates were caused by a considerable rise of inputs level, due to domestic market and international inflation affecting local and imported feed costs. Investment costs also rose quite highly. On the other hand, output prices lagged behind costs. The above IRR figures are incidentally identical to the actual rates yielded by the meat turkey project (which are 2% lower than the corresponding appraisal figures). Agrotechnical progress in recent years is likely, however, to make the turkeys sub-branch more efficient so as to reduce costs per prduction unit and thereby raise profitability level. - 195 - ANNEX 3 Page 56 Costs and Receiots for Turkeys Breeding Suboroject (1,000 Laying Birds) Price Total I term Unit Quantity per unit Value (IL.) (IL.'000) Costs Poults: hens units 1,250 12.2 15.3 toms units 150 21.2 3.2 Feed; concentrates for poults tons 35 1,300 45.5 concentrates.. for hens tons 97 1,150 111.6 Labor work days 300 90 27.0 Other costs 12.0 Subtotal 214.6 General expenditures 10.0 Marketing costs 6.0 Total current costs 230.6 Working capital costs 6.4 Total costs 237.0 Receiots: Hatching eggs '000 units 66 3.9 257.4 Table eggs '000 units 7 0.2 1.4 Meat, toms tons 1.7 8.2 13.9 Meat, hens tons 9.1 7.1 64.6 Total Receipts 337.3 Note: Acrotechnical coefficients and prices are based on 1975 data. - 196 - ANNEX 3 Page 57 Tnvestm2nts for Turkey Laying Flock (per 1,000 laying birds) lotal Years of Yearly I t e M Investment existence Depreciation ('000) (life soan) (IL.'000) Brooderhouse 60 15 4.0 Dark rooms 65 15 4.3 Bearing sheds 180 15 22.0 Shed for laying birds 4 15 0.3 Shed for toms 16 15 1.1 Equipment 125 8 15.6 Management costs 10 15 0.7 Total 460 38.0 - 197 - ANNEX 3 Page 58 Economic Analysis of Raising a Turkeys Laying Flock (1,000 Laying Birds) CCC? ./ Invest- Current Total Net Present Year Receipts ments Expenses InvestmentsadCash Value Pres. and Coefficient Value Exoenses Flow (17%) 0 460 75* 535 -535 1.000 -535 1 337 231 231 106 0.855 91 2 337 231 231 106 0.731 77 3 337 231 231 106 0.624 66 4 337 231 231 106 0.534 57 5 337 231 231 106 0.456 48 6 337 231 231 106 0.390 41 7 337 231 231 106 0.333 35 8 337 125 231 356 -19 0.285 -5 9 337 231 231 106 0.243 26 10 337 231 231 106 0.208 22 11 33T 231 231 106 0.178 19 12 337 231 231 106 0.152 16 13 337 231 231 106 0.130 14 14 337 231 231 106 0.111 12 15 337 156 156 181 0.095 17 Total 1 * Flock raising . *Equipment renewal. 3 - 198 - ANNEX Page 59 Financial Analysis of Raising Turkeys for Breedina (1,000 Laying Birds) Income Total Net Pres ex- cash worW Present Year Receipts Investments Current tax Coefficient expenses* (20%) penses flow (13%) worth 0 460 77* 537 -537 1.000 -537 1 337 237 12 249 88 0.885 78 2 337 237 12 249 88 0.783 69 3 337 237 12 249 88 0.693 61 4 337 237 12 249 88 0.613 54 5 337 237 12 249 88 0.543 48 6 337 237 12 249 88 0.480 42 7 337 237 12 249 88 0.425 37 8 337 125* 237 12 374 -37 0.376 -14 9 337 237 12 249 88 0.333 29 10 337 237 12 249 88 0.295 26 11 337 237 12 249 88 0.261 23 12 337 237 12 249 88 0.231 20 13 337 237 12 249 88 0.204 18 14 337 237 12 249 88 0.181 16 15 337 160 12 172 165 0.160 26 Total -4 * Raising of bixds * Equipment renewal. - 199 - ANNEX 3 Page 60 Costs and Receipts in Meat Turkeys Suboroject (1,000 poults) Unit Quantity Unit Total value Item price (IL.) Expenses Poults Units 1,000 8 8,000 Feed tons 34 1,250 42,500 Work work days 45 90 4,000 Other expenses units 1,000 3 3,000 Subtotal 57,550 General expenses units 1,000 2 2,000 Marketing expenses tons 8.8 250 2,200 Total current exoenses 61,750 Working capital expenses 2,450 Total Expenses 63,200 Receipts Meat tons 8.8 8,900 78,300 Note: Agrotechnical data and prices are based on 1975 data. Investment in Raising Turkeys for Meat I t e m Total Annual Annual Investments Depreciation Depreciation Rate IL. Brooderhouse 19,500 15 1,310 47,800 15 3,190 Equipment 10,100 8 1,260 Administration 5,500 15 370 Total 83,000 6,130 - 200 - ANNEX 3 Page 61 Economic Analysis of Raising Turkeys for Meat Total Net Present Year Receipts expenInvst CrrntworthInvestments cash co t Presentwrt ments expenses &epnsflw coefficient worth S&expenses flow (17%) 0 83.0 83.0 -83.0 1.000 -83.0 1 78.3 61.8 61.8 16.5 0.855 14.1 2 78.3 61.8 61.8 16.5 0.731 12.1 3 78.3 61.8 61.8 16.5 0.624 10.3 4 78.3 61.8 61.8 16.5 0.534 8.8 5 78.3 61.8 61.8 16.5 0.456 7.5 6 78.3 61.8 61.8 16.5 0.390 6.4 7 78.3 61.8 61.8 16.5 0.333 5.5 8 78.3 10.1* 61.8 71.9 6.4 0.285 1,8 9 78.3 61.8 61.8 16.5 0.243 4.0 10 78.3 61.8 61.8 16.5 0.208 3.4 11 78.3 61.8 61.8 16.5 0.178 2.9 12 78.3 61.8 61.8 16.5 0.152 2.5 13 78.3 61.8 61.8 16.5 0.130 2.1 14 78.3 61.8 61.8 16.5 0.111 1.8 15 78.3 61.8 61.8 16.5 0.099 1.6 Total t1.8 *Equipment renewal. - 201 - ANNEX 3 Pap, Financial Analysis of Raising Turkeys for Meat (C 0 L/. I Re- Invest- Current Net Presenr Income Total worth Present Yates tax expenses cash Coefficient wort.. penses 20% flow 13% 0 83.0 83.0 -83.0 1.000 -83.0 1 78.3 63.2 1.8 65.0 13.3 0.885 11.8 2 78.3 63.2 1.8 65.0 13.3 0.783 10.4 3 78.3 63.2 1.8 65.0 13.3 0.693 9.2 4 78.3 63.2 1.8 65.0 13.3 0.613 8 2 5 78.3 63.2 1.8 65.0 13.3 0.543 7.2 6 78.3 63.2 1.8 65.0 13.3 0.480 6.4 7 78.3 63.2 1.8 65.0 13.3 0.425 57 8 78.3 10.1* 63.2 1.8 75.1 3.2 0.376 1.2 9 78.3 63.2 1.8 65.0 13.3 0.333 4.4 10 78.3 63.2 1.8 65.0 13.3 0.295 3.9 11 78.3 63.2 1.8 65.0 13.3 0.261 3.5 12 78.3 63.2 1.8 65.0 13.3 0.231 3.1 13 78.3 63.2 1.8 65.0 13.3 0.204 2.7 14 78.3 63.2 1.8 65.0 13.3 0.181 2.4 15 78.3 63.2 1.8 65.0 13.3 0.160 2.1 Total -0.8 *Equipment renewal. -202- ANNEX 3 Page 63 E.&F. Annual National Production and Exports by Sub-categories Forecast 1973 1974 1975 1976 1977 1981 Avocado Production ('000 tons) 12.3 15.0 17.1 18.5 21.8 40 Value of prod. (IL.mill. cur. prices) 28.2 35.0 84.3 139.5 193.5 Exports ('000 tons) 7.8 10.7 13.6 15.2 19.9 38.0 Value of exp.(Mill.$ F.0.B) 5.3 7.1 12.0 15.4 18.7 34.2 Man go Exports (tons) 10 46 60 132 180 350 Value of exp. (1000$ F.0.B) 12 38 60 124.4 194.2 500 Grapefruit Production ('000 tons) 390.8 395.5 416.8 458.5 497.2 550 Value of prod. (IL. mill. cur. prices) 191.8 204.8 358.8 379.3 543.0 Exports ('000 tons) 248.1 232.7 259.1 249.8 258.1 300 Value of exp. (mill.$ F.0.8.) 36.7 33.7 45.7 40.6 43.1 Tangerines Export ('000 tons) - - 0.9 1.9 3.7 Value of exp. (mill .$ F.0.B.) - - 0.4 0.9 1.6 Gooseliver Exports (tons) 122 137 110 147 154 250 Value of exp. (mill $ F.0.B.) 1.8 1.5 1.7 2.7 3.6 5.8 - 203 - ANNEX 3 Page 64 Forecast 1973 1974 1975 1976 1977 1981 Beef Production ('000 tons) 35.7 38.9 37.1 44.1 47.0 49.1 Value of prod.(IL.mill. 180.3 254.6 329.4 460.7 572.8 current prices) Turkeys Production ('000 tons) 31.5 36.3 44.0 45.6 49.8 50.4 Value of production (IL.mill.current prices) .. .. 328.8 457.6 609.8 ** Value of exp. (mill.$ F.0.8) .. .. 3.1 6.4 10.3 17.0 Roses Exports (mill.units) 78.5 85.6 88.6 90.8 95.7 225.0 Value of export (mill.$ F.0.B.) 5.7 6.8 9.9 9.9 12.7 26.0 Carnations Exports (mill. units) 22.0 35.0 42.1 63.8 140.0 360.0 Value of exp. (mill.$ F.0.B.) 1.4 2.3 4.8 5.4 8.6 27.0 Gladioli* Exports (mill.units) 11.7 20.6 31.1 25.4 28.3 *100.0 Value of exp. (mill.$ F.0.S.) 1.0 1.4 2.6 2.2 3.0 10.0 * Grandiflora only. Source: Foreign Trade Canter, Ministry of Agriculture. ** Turkey meat. - 204- ANNEX 3 Page 65 G. Overall Economic Rate of Return of the Project Code of Amount Economic Category Category IL. Rate of Return Export Production(* Roses 11 41.0 15.3 Carnations 12 27.5 19.3 Gladioli 13 5.7 19.3 Avocados 21 13.8 18.0 Mangoes 22 0.6 22.3 Tangerine 23 6.3 22.0 Grapefruit 24 23.4 10.0 Goose liver 29 0.6 19.3 Subtotal 118.9 Water Develooment Water Management 51 113.6 24.0 Reservoirs 52 31.1 15.5 Drainage, local 53 7.3 30.0 Subtotal 152.9 Livestock Development Beef 61 13.3 15.0 Dairying 62 94.6 18.0 Turkeys 63 6.1 17.0 Subtotal 114.0 TOTAL 385.1 19.0 Overall weighted Exonomic Rate of Return - 19.0 (*) Including export handling facilities. (*) Excluding effluents - see note A.9, Explanatory Notes. - 205 - ANNEX 3 Page 66 H. Price Data 1973 1974 1975 1976 1977 Roses (cents F.O.B. - average per flower) 7.3 8.0 11.2 10.9 13.3 Carnations (cents F.0.B.-average per flower) 6.3 6.7 11.5 8.4 8.6 Cow milk - producer price (IL. per kiloliter) 598 916 1,467 1,924 2,524 - consumer price (pasteurized in plastic bag) (IL. per liter) 0.63 1.07 1.60 1.94 2.70 Beef - production price (IL. per ton live weight)5,062 6,695 8,835 10,046 12,575 - consumer price - (IL. per kg. on average) 18.66 24.70 30.44 39.02 50.22 Turkeys - producer price (IL. per ton) 4,086 5,178 7,542 10,119 12,326 - consumer price (breast - IL.per kg.) 13.69 17.05 23.41 32.65 40.37 Goose liver - consumer price (frozen, IL. per kg.) 10.19 14.02 17.07 21.13 25.90 Avocado - ($ F..B. per ton) 679 663 885 1,014 994 Mango - ($ F.B. per ton) 1,247 820 1,000 944 1,079 Tangerines ($ F.0,3. per ton) - - 412 492 447 Grapefruit ($ F.0.3. per ton) 129 145 176 162 167 Source: Foreign Trade Center. ANNEX 3 - 206 - Page 67 J.& T.Price Indexes and Wace Data 1973 1974 1975 1976 1977 General wholesale price index of industrial output for the domestic market (not including printing and publishing) (1968 = 100.0) 157.9 239,2 336.7 440.6 610 5 General Consumer Price Index (1969 = 100.0) 160.9 224,8 313,1 411.2 553.5 Dayly wage per agricultural employee (IL.) (permanent, without veteran rights) 22.60 35.10 44.82 67.95 80,20 Source: Central Bureau of Statistics. - 207 - ANNEX 3 Page 68 L. Export-Incentive Exchange Rates (I.L. per 1$) Official Excnange Rate exchange Export including Year Period rate incentive exoort incentive 1960 - 1.80 - 1.80 1962 - 3.00 - 3.00 1967/69 1.3.67 - 31.3.69 3.50 - 3.50 1969 1.4.69 - 18.2.70 3.50 0.35 3.85 1970 19.2.70 - 18.8.70 3.50 0.55 4.05 1970 19.8.70 - 31.12.70 3.50 1.05 4.55 1971 1.1.71 - 21.8.71 3.50 1.12 4.62 1971 22.8.71 - 31.12.71 4.20 0.89 5.09 1972 1.1.72 - 31.12.72 4.20 0.99 5.19 1973 1.1.73 - 31.8.73 4.20 1.14 5.34 1973 1.9.73 - 4.11.73 4.20 1.21 5.41 1973/74 5.11.73 - 2.7.74 4.20 1.42 5.62 1974 3.7.74 - 9.11.74 4.20 1.84 6.04 1974 10.11.74 - 31.12.74 6.00 1.30 7.30 1975 1.1 - 31.3 6.00 1.64 7.64 1975 1.4 - 30.4 6.00 1,74 7.74 1975 1.5 - 31.5 6.00 1.78 7.78 1975 1.6 - 17.6 6.00 1.82 7.32 1975 18.6 - 4.8 6.22 1.85 7.97 1975 5.8 - 8.9 6.24 1.85 8-09 1975 9.9 - 27.9 6.36 1.85 8,21 1975 28.9 - 23.11 7.00 1.35 S.35 1975/6 24.11.75 - 3.1.76 7.10 1.85 8.95 Source: Bank of Israel. - 208 - ANNEX 3 Page 69 L. Export-Incentive Exchange Rates (cont,) (I.L. per 1$) Official Exchange Rate Year Period exchange Export including rate incentive export incentive 1976 4.1 - 10.2 7.24 1.85 9,09 1976 11.2 - 29,2 7.38 1.85 9,23 1976 1.3 - 14.3 7.38 2.03 9,41 1976 15.3 - 18.4 7.52 2.07 9,59 1976 19.4 - 19.5 7.67 2.11 9.78 1976 20.5 - 23.6 7,82 2.15 9.97 1976 24.6 - 18.7 7.97 2,19 10,17 1976 19.7 - 24.8 8.12 2.23 1035 1976 25.8 - 28.9 8.25 2.27 10.52 1976 29.9 - 14.10 8.40 2.31 10.71 1976 15.10 - 30.10 8.40 2.48 1088 1976 31.10 - 23.11 8.56 2.53 11,nq 1976 24,11 - 23.12 8.73 2.58 1131 1976/7 24.12.76 - 16.1,77 8.90 2.63 11 53 - 209 - ANNEX 3 Page 70 M. Loans for Reservoirs in IBRD 2nd Credit Project (1972-1975) 1. Under the IBRO 2nd Credit Project (1972-1975) a total of IL.31,120,000 was disbursed. 2. In the Allonim reservoir, which was selected as a model for our present follow-up, the disbursed sum (IL.1,166,300), constitutes 77.75% of the total investment in the reservoir (IL.1.5 million), 3. Out of 54 reservoirs constructed throughout 1972-1975, the IBRD participated in financing 43 reservoirs with a total of IL.29,142,100, as follows: Year of Number of Number of Reservoirs Construction Reservoirs Receiving IBRO Loan Constructed Loan (1L) 1972 15 9 1,763,300 1973 8 8 4,571-200 1974 18 17 15,256,200 1975 13 9 7,551,400 Total 54 43 29,142,100 3 - 210- ANNEX Page 71 4. In addition to the above, 10 reservoirs were granted loans, totalling IL.1,977,900, as follows: Year of No.of Reservoir Loan Construction I t e m reservoirs location (IL ) 1970 Loans completion 1 Hamadia 570,600 1971 Loans conpletion 4 Mishmar Haemeq, Mayan Zvi, Gan Hashomron, Zor'a 304,400 1976 Loans for reser- Nir David and later voirs under Reshafim* construction 2 548,500 Effluents reser- voir-completion of 1st IBRD Project 1 Yagur 178,400 Operative reser- Moledet, voirs 2 Gadot* 376,000 Total 10 1,977,900 Following are the total sums of loans credited for reservo'rs during the 2nd Credit Project period (1972-1975): I t e m No.of Reservoirs Total Loan(IL) Reservoirs under 2nd Project 43** 29,142,100 Reservoirs under 1st Project- completion 5 875,000 Reservoirs under 2nd Project- outset 2 548,500 Operating reservoirs 2 376,000 Effluents reservoirs 1 178,400 Total 53 31,120,000 * Not included in the list of reservoirs set up in Israel prior to 1975. ** Enclosed here is a list of all reservoirs for which loans were given under IBRD 2nd Credit Project. Reservoirs - BIRD loans for 2nd Credit Project 1972- 1976 IL. IL. IL. IL. 1972 1973 1974 1975 Gaaton (inc.Evron) 480,000 Siaar Haamaqin 519,800 Shomrat 1,050,500 Shlomil - Kfar Masariq 26,000 Givt Oz 498,800 Afek 633,800 Allonei Abba 1,088,000 Allonim a YMtat 277,700 Allonim b 1,166,300 Balfouria 1,297,600 llazorea b Rdma t David 601,900 Genigar b 531,700 Hayogev b 67,100 Ilayogev a 7,000 Midrach Oz 608,800 Qfar klahoresh 694,100 Hazorea d Qfar Yehoshua b 116,000 Megido b 359,200 YMfat 402,700 Yoqneamu d Mizra Gilead 193,000 Ramat Yohanan 819,000 Qfar Biallq 560,000 Ndhalal Raiat Hlashofet 185,800 Sde Yaaqov 1,585,600 Sdot Yamu 1,465,600 Sarid Gvat 175,600 Tel Adashim b Taluci Ellezer 435,100 ]el Adashimn a 312,000 Haimdapil b 306,000 Ein Shemer b 343,400 Haogen 800,000 Yesodot 10,000 H1ogla 26,800 Maabarot 547,800 Tiimtorim 792,000 Nirim 425,300 Hefziba 817,200 Nahshonim 855,500 Rosh Pina Gazit a 96,200 ______4,571,200 Revadim 704,000 Gesher 1,046_000 E0n Dor 290,800 Masheabei Sade 7,551,400 Beit Alfa Revivim 626,000 1,763,300 Hazoreim 261,500 1976 Lavi 406,800 lamnadia 570,600 Kfar Hittim 388,900 IL Beit Qeshet 489,800 1971 Dovrat 897,800 Mishmr Haeneq 17,600 Gazit b 211,200 Maaydln Zvi 127,100 Beit Hashita 588,000 GRAND TOTAL 31,120,000 Gdn lashkomronl 135,700 Yizrael 1,345,700-======-===== Zor'c 24,000 Mishmeret 706,100 304 400 15,256,200 Ole ANNEX 3 - 212 - Page 73 N. Performance of Project Coordination Committee The Coordination Committee was set up as an organizational frame- .rk alrea,y upon the approval of the Firs , r.: e: Project. This project, financed by the :'RD, was aimed to coordinate all ne organizational&administrational operations as well as planning and financial activities, related to the project's current implement- ation. The aforesaid framework has encompassed all institutions and units of the Ministry of Agriculture involved in the project's preparation and implementation, namely: Israel Bank of Agriculture, Yaad Agricultural Development Bank, Nir Ltd., Rural Planning and Development Authority, Department for Development and Credit, Agricultural Extension Service, representatives of the Ministry of Finance and the Bank of Israel. The Coordination Committee chairmanship was held by the Director General of the Ministry of Agriculture. Every three months,parallel to the convening of a financial team of the Israel Bank of Agriculture, the Coordination Committee held a discussion on the project's progress as well as the organizational and operational implications involved. The agenda often included discussions on postponements (performance vs. plan) and the need to alter certain targets due to unexpected developments. Also, the Committee members analysed trends in the world market which had a considerable impact on the project's progress. It should be noted that the above Committee has been using the Ministry of Agriculture as the main forum for its operations ,which sometimes included discussicns of economic issues that were not necessarily a direct outcome of the project developments. As already mentioned, the Coordination Committee was set up within the period of the First Agricultural Credit Project (IS-709) in accordance with the personal changes in the list of the represent- atives of the abovementioned institutions. 0. Settlement Structure of Israeli Agiriculture 1.Total per Country - 19/6 datd Agriculture Physical Thereof: Villge Rural Farm- work days Cultivable area by irrigation Output Value Settle-_ Popu- in I00 I -O L mients lation unt % 000% da % % .000) units '000 dunams dunams million Grand Total 830 100.0 493.1 18,339.4 100.0 4,385.0 100.0 22193.5 100.0 10P365.6 100.0 Cooperative agri- culture,total 645 77.0 247.2 53,448 12,490.7 68.1 2,876.2 65.6 1,739.3 79.3 8,455.3 81.6 KibbuzIm 240 28.6 111.1 27)683 474391,503.5 34.3 895.4 40.1 MoshavIm shituflim 32 3.8 6.1 1,611 4,43925.9 53.111.9 2.643 64.59. 2.94 ,4158.8(40.1( Moshaviin 373 44.6 130.0 24,154 7,746.8 42.2 1,260.8 28.7 779.4 35.6 4,296.5 41.5 Private agri- I: culture, total 193 23.0 5,848.7 31.9 1,508.8 34.4 454.2 20.7 1,910.3 18.4 Moshavot 51 6.1 3 510.9 11.7 363.3 16.6( Others 47 5.6 52.7 1.2 37.8 1.7( Minorities 95 11.3 2,523.1 13.8 945.2 21.5 53.1 2.4 531.0 5.1 2. Golan 1eiihits V 2iaes Rural Fa rm- Agriculture Physical Thereof: Settle- ~ Popu- i work days Cultivable -area by irrigation Stl- % lation ing ---rg 0oo IL. mnen ts % ainunits '000 % 00 % 00 % I. me00 C O t- dunams dunats m11i1 ion % Grand Total 16 10W00 148.2 100.0 47.0 100.0 17.8 100.0 107.6 100.0 Coo perative a ri- cl ture, tota 16 100.0 148.2 100.0 47.0 100.0 17.8 100.0 107.6 100.0 Klbbuzi m 7 43.8 24.2 51.5 7.9 649 ( Moshavimi shi tufhi m 3 18.7 73.7 49.7 5.1 10.8 1.2 6.7 ( 619 57.5 Moshavinm 6 37.5 74 5 50.3 17 7 37.7 8.7 48.9 45.7 42.5 Soure. Rural Plamini A!ithor i ty 3. Iu a Villages Rural. FdM Agriculture Physical Thereof; Output Val"e Sette- % Popu- ing work days Cultivable area b irrgation ments lation ning units'0000 % '%0%0000 %000 IL. ('000) dunams dunams million Grand Total 29 100.0 642,3 100.0 127.5 100.0 104.0 100.0 432.8 100.0 Cooperative agri- culture, total _26 89.7 12.3 3,033 504.9 78.6 105_2 82_5 _91.6 877 372,8 86.1 Kibbuzim 20 69.0 10.6 2,653 412.3 64.2 91.8 72.0 81.4 78.0 317.9 73.4 Moshavim 6 20.7 1.7 380 92.6 14.4 13.4 10.5 10,2 9.7 54.9 12.7 Private agri- culture, total 3 10.3 137.4 21.4 22.3 17.5 12.8 12.3 60.0 13.9 3 10.3 137.4 21.4 22.3 17.5 12.8 12.3 60.0 13.9 4. Merom Hagalil Villaqes Rural Agriculture Physical Thereof: SPop"- Far- - work days Cultivable area by irrigationutput Value ments lation ing '000 000 IL. 000units '000 dunanis dunams million GrandTotal 23 100.0 403.1 100.0 54.0 100-0 48.1 100.0 261.0 100.0 Cooperative agri- culture, total 23 100.0 8_5 1 564 403.1 100,0 54.0 100,0 48.1 100.0 261,0 100.0 Kibbuzim 8 34.8 3.0 626 151.5 37.6 27.7 50.7 24.8 51.6 114.8 44.0 x MMshavim 15 65.2 5.5 938 251.6 62.4 26.6 49.3 23.3 484 146.2 56.0 5.Maaleh lagalil Villages Rural Agriculture Physical Thereof Value Settle- Popu- iarm work days cultivable area by irrigation utputV Inents lation i %00 '000 % IL. ut000) dunams dunams million Gridd Total 14 .100.0 188.8 100.0 10.5 100.0 8.4 100.0 146.6 100.0 Cooperative agri- culture, total 14 100.0 3.8 649 188.8 100.0 10.5 100.0 8.4 100.0 146.6 100.0 Moshavim 14 100.0 3.8 649 188.8 100.0 10.5 100.0 8.4 100.0 146.6 100.0 6.Acre Villages Rural F Agriculture Physical Thereof Settle- Popu- Fan- work days cultivable area by irrigation Output value inents lation Uri t '000 60 000 IL. dunans dunanms million Grand Total 56 100.0 933.1 100.0 198.3 100.0 112.0 100.0 603.2 100.0 Cooperative agri- cul1ture, total- 35 62.5 15.8 4~0 9§6286 67.4 131.3 .2~ 103.4 92.3 529.3 8. Kibbuzim 23 41.1 12.1 3,220 J449. 4 96.1 48.5 74.5 66.5 (41450 687 Moshavimn shituflim 3 5.3 0.7 223 4 48' 7.4 3.7 6.8 5.2 (. Moshavim 9 16.1 3.0 606 179.6 19.3 27.8 14.0 23.1 20.6 114.8 19.0 Private airi- culture, total 21 37.5 304.5 32.6 67.0 33.8 8.6 7.7 73.9 12.3 Mosvot 1.7 (42.7 1.9 1.0 1.9 17 26.3 Other Jewish settl. 3 5.4 6.7 3.4 5.3 4.7 4.4 Minorities 17 30.4 261.8 28.0 58.4 29.4 1.4 1.3 47.6 7.9 7. Nazareth Villages Rural Farm- Agriculture Physical Thereof Output value Settle- Popu- Fag work days cultivable area irrigation Output_value ments lation unit '000 00 IL. ('000) dunams dunams million Grand Total 50 100.0 897.4 100.0 340.4 100.0 10.7 100.0 193.0 100.0 Private agri- culture, total 50 100.0 897.4 100.0 340.4 100.0 10.7 100.0 193.0 100.0 Minorities 50 100.0 897.4 100.0 340.4 100.0 10.7 100.0 193.0 100.0 8. Kinerot Valley Villages Rural Farn- Agriculture Physical Thereof Settle- Popu- wojLdays cultivable area. by irrigation Output_value ments lation ing 0000 IL. ('000) u 000 dunams dunams mill ion % Grand Total 22 100.0 438.5 100.0 81.3 100.0 56.4 100.0 296.7 100.0 Cooperative agri- Cu ture total 19 86.4 9.5 21490 358.3 81.7 73.3 90.2 48.6 86.2 269.3 90.8 Kibbuzim 17 77.3 9.0 2,391 333.3 76.0 67.4 82.9 44.3 78.5 256.5 86.5 Moshavim 2 9,1 0.5 99 25.0 5.7 5.9 7.3 4.3 7.7 12.8 4.3 Private a ri- culture _total 3 13.6 80.2 18.3 8.0 9.8 _7.8 13.8 27.4 9.2 Moshavot&other Jewish settlements 3 13.6 80.2 18.3 8.0 9.8 7.8 13.8 27.4 9.2 9. Jordan Valley Vilaes Rural Fa Agriculture Physical Thereof Output value ett e- Popu- work days cultivable area byirrigation ments lation n '000 a 000 i IL. - '000) units '000 dunams dunams million IL Grand Total 11 100.0 45.9 100.0 13.0 100.0 10.3 100.0 21.5 100.0 Coo erative agri- e1ture, total 11 100.0 0.8 239 45.9 100.0 13.0 100.0 10.3 100.0 21.5 100.0 Kibbuzim 3 27.3 0.2 63 248 (5A0 3.8 29.2 2.1 20.4 J ( Moshavim shituflim 2 18.2 0.3 70 2 5.6 43.1 4.6 44.6 11.7 54.4 Moshavim 6 54.5 0.3 106 21.1 46.0 3.6 27.7 3.6 35.0 9.8 45.6 0 10. Bet She'an Basin Villages Rural Farm Agriculture Physical Thereof eftle- % Popu- Fnn work days cultivable area by irrigation Output value ments lation ing '000 '000 ('000) units 000 dunams dunams million IL* Grand Total 20 100.0 369.2 100.0 122.4 100.0 95.4 100.0 295.0 100.0 Cooerative agri- cul ture, total- 19- 95.0 -8.2 11§29_ 364.0 98.6 121.7 99.4 94.7 99.3 290.17 AL. Kibbuzim 14 70.0 6.2 1,522 292.0 79.1 104.2 85.1 80.3 84.2 258.9 87.7 Moslravimi 5 25.0 2.0 308 72.0 19.5 17.5 14.3 14.4 15.1 31.8 10.8 Private agri- culture, total 1 5.0 5.2 1.4 0.7 0.6 0.7 0.7 4.3 1.5 OQ Jewish settlements other than o0 w moshavot 1 5.0 5.2 1.4 0.7 0.6 0.7 0.7 4 3 1.5 11. Harod and Gilboa Villages Rural Farm- Agriculture Physical Thereof 0 Settle- pPopu- 1 work days cultivable area by irrigation nts ation '000 '000 IL. 000 units '000 dunams dunams million Grand Total 8 100.0 219.6 100.0 83.4 100.0 44.4 100.0 205.6 100.0 Coop.agr., Total - 8 100.0 57 1,454 216.5 98.6 83.1 99.6 44.4 100.0 202.0 98.2 Kibbuzim 7 87.5 5.3 1,383 182.1 82.9 75.5 90.5 40.8 91.9 173.0 84.1 Moshavim 1 12.5 0.4 71 34.4 15.7 7.6 9.1 3.6 8.1 29.0 14.1 Private agri- culture, total 3.1 1_4 0.3 0.4 3.6 1.8 Moshavot and other Jewish settlements 3.1 1.4 0.3 0.4 3.6 1.8 12. Lower Galilee Villages Rural Farm- Agriculture Physical Thereof Output value Settle- popu- Fam work days cultivable area by irrigation ments lation uits '000 '000 IL. '00000 units '000 % dunamsd%n%m% dunams million Grand Total 20 100.0 419.2 100.0 128.8 100.0 48.6 100.0 258.2 100.0 Cooperative agri- culture, total 15 75.0 4.8 1,235 291.1 69.4 100.3 77.9 36.7 75.5 209.1 81.0 Kibbuzim 4 200 2.1 520 ( (270 29.8 23.1 13.0 26.7 (10. (38.7 Moshavim shitufilim 2 10.0 0.7 227 113.1 2. 15.7 12.2 5.3 10.9 (1.0 Moshavim 9 45.0 2.0 488 178.0 42.4 54.8 42.6 18.4 37.9 109.1 42.3 Private agri- culture, total 5 25.0 128.1 _30,6 28.5 22.1 11.9 24.5 49.1 19.0 Moshavot 3 15,0 128.1 30.6 26.5 20.6 10.9 22.4 491 (190 Other Jewish settle.2 10.0 - - 2.0 1.5 1.0 2.1 41 13. Yizre'el Basin VTa Rural Farm- Agriculture Physical Thereof Settle- % popu- in work days cultivable area by irrigation Output value ments lation u ' '000 '000 IL. u000 dunams dunams million Grand Total 52 100.0 1,082.2 100.0 280.1 100.0 151.4 100.0 845.0 100.0 Cooperative agri- culture, total 47 90.4 21.3 4,658 962.7 93.6 261.8. 93.5 145.8 96.3 805.1 95.3 Kibbuz im 21 40.4 12.3 3,166 141.8 50.6 73.7 48.7 Mosavi shtuM2400.9 39.0 J395.5 (46.8( Moshavni shitufilm 2 3.8 0.3 80 1 7.3 2.7 5.2 3.4 ( Moshavim 24 46.2 8.7 1,412 561.8 54.6 112.7 40.2 66.9 44.2 409.6 48.5 Private aqri- culture, total 5 9.6 65.5 6.4 18.3 6.5 5.6 3.7 39.9 4.7 Moshavot 2 3.8 65.5 6.4 14.3 5.1 4.3 2.8 39.9 4.7 ther Jewish settle.3 5.8 4.0 1.4 1.3 0.9 - - 14. Hadera Villags Rural Farm- Agriculture Physical Thereof Setle- popu- ing work days cultivable area b irrigationOutputval mentsme . lationato unitsin '000, % 100000 % I 00O_% rgtin IL. %L u000 dunams dunams mill ion % Grand Total 113 100.0 2,820.5 100.0379.9 100.0 210.5 100.0 1362.0 100.0 Cooperative agri- culture, total 72 63.7 28 4 621525 1,371.4 48.6 187.5 49.4 165.0 .58.8 947.5 69.6 Ki 27 232 :10 ,474 ------01:2 -24.6 -7A.2 -27.9 T---- Moshavim shitufilm 3 26 07 190 ( .1 (.7 7.0 1.9 5.5 1.9 4. 3. OQ4 Moshavim 42 37.2 13.8 2,861 900.3 31.9 87.3 23.0 81.3 29.0 525.3 38.6 CO Private aqri- oL.J culture total 41 36 3 1,449.1 51.4 192.4 50.6 115.5 41.2 414.5 30.4 Wos_h avo -Ot7 11_ -651A 123.1 -02.3 24.3 -74.8 ~26.7 243. 17.~ Other Jewish settle.6 5 3 ( 6 4.7 1.2 3.0 1.1 ( 1 MinoriIies 24 21 3 798.0 28.3 95.4 25.1 37.7 13.4 171.3 12.6 15. Raananah Villages Rural Iarm- Agriculture Physical Thereof Settle- popu- Fam work days cultivable area by irrigation Output value ents lation ung 000 '000 I. u000 dunams dunams million Grand Total 77 100.0 2,207.6 100.0 233.6 100.0 218.9 100.0 1,162.4 100.0 Cooperative agri- culture, total 55 71.4 20.5 4,640 1,221.8 55.3 130.9 56.0 122.2 55.8 714.8 61.5 Kibbuzim 12 15.6 4.8 1,289 (242 (0.9 38.4 16.4 35.4 16.2 ( 2064 (17.8 Moshavim shitufilm 3 3.9 0.7 199 ( 2 6.9 3.0 6.0 2.7 ( 2 Moshavim 40 51.9 15.0 3,152 979.8 44.4 85.6 36.6 80.8 36.9 508.4 43.7 Private agri- culture, total 22 28.6 985.8 44.7 102.7 44.9 96.7 44.2 447.6 38.5 Moshavot IS -16.9 (1-7 ~ -~~~92.7 -19.7 . -840.2 -- - - (- - Other Jewish settle.9 11.7 ( 95 4.7 10.0 4.3 8.8 4.0 ( 16. Rehovoth Villages Rural Agriculture Physical Thereof Settle- % popu- ing work days cultivable area by irrigation Output value mnslto 000 '000 IL. metslaio units 1000 % _T60 e000 dunams % _TCIOdunams % million. * % Grand Total 118 100.0 2,904.2 100.0 406.9 100.0 355.0 100.0 L 494.5 100.0 Coo/erative agri- culture, total 97 82.2 39.3 8,129 2,068.2 71.2 279.2 68.6 42.8 68 4 1,190.9 79.7 Kibbuzim 12 10.2 7.2 1,837 (350.0 ( 60.5 14.9 46.3 13.0 (287.9 Moshavim shitufilm 6 5.1 1.4 319 ( 22.6 5.6 17.0 4.8 ( 219.3 Moshavim 79 66.9 30.7 5,973 1,718.2 59.2 196.1 48.1 179.5 50.6 903.0 60.4 * 8 Private agricul- 17 ture, total 21 17.8 _836.0 2.8 177 31.4 112.2 31.6 _303.6 20.3 O Moshavoth 13 11.0 836 0 (28.8 123.1 30.3 108.4 30.5 (303 6 (203 Other Jewish settle.8 6.8 ( 8 4.6 1.1 3.8 1.1 ( ( 17. Jerusalem Corridor Villaqes Rural Faroi Agriculture Physical Thereof etle- opu- Farm- work days cultivable area by irrigation Output value menISunits 000 % % % L. % '000 dunams dunams mi Ilion Grand Total 54 100.0 709.7 100.0 137.6 100.0 72.7 100.0 551.7 100.0 Cooer_ative a ri - culture, total 48 88.9 16.2 2,853 643.2 90.6 129.8 94.3 67.9 93.4 531.4 96.3 Kibbuzim 11 2!.4 3.7 781 5 47.5~ -20.8 -41:0 ~~6. (9 Moshavim shitufilmin 2 3.7 0.4 78 ( 68.4 23.7 10:5 7.6 1.4 1.9 164.0 297 Moshavi 35 64.8 12.3 1,990 474.8 66.9 54.0 39.2 36.7 50.5 367.4 66.6 Private agri- culture, total 6 11.1 66.5 9.4 7.8 5.7 4.8 6.6 20.3 3.7 Moshavot 1 3. 15 1.1 -12. Other Jewish settle.1 1.9 ( 2 3 0.3 0.2 0.1 0.1 ( Minorities 4 7.3 43.4 6.1 6.0 4.4 3.2 4.4 11.9 2.2 18. Lakhish VIll ages Rural Agriculture Physical Thereof Settle- % popu- ing work days cultivable area b irrigation ments lation units '000 % 00 IL. 000 dunams dunams million Grand Total 54 100.0 1,442.2 100.0 369.9 100.0 211.8 100.0 759.8 100.0 Cooperative agri- cul ture, total 50 92.6 20.8 31942 1,179.1 81.7 315.7 85.3 168.2 79.4 660.2 86.9 Kibbuziin 14 25.5 _-6.5 1,18 8 22-- 120 - 5 ~-7- -27-.3 P96i ( Moshavin shitufiim 4 7.4 0.8 202 (31.7 23.4 6.3 11.9 5.6 39.0 MoShdvlI 32 59.3 14.5 2,372 860.4 59.6 171.7 46.4 98.4 46.5 363.6 47.9 Private agri- 0 t culture, total 4 7.4 263.3 18.3 54.2 14.7 43.6 20.6 99.6 13.1 Moshavot 1 ----- (4 -..18.8 ( ( - - Otier Jewish settle.3 5.6 ( 2 4.5 1.2 3.8 1.8 ( 9 Source: Department of De-tailed Planning, Rural Planning Authority, Ministry of Agriculture. 19. Negev Villages Rural Farm- Agriculture Physical Thereof Output value Settle- popu- F work days cultivable area by irrigation nents lation Ing , '000 '000 IL. 1000 units '000 dunams dunams million Grand Total 87 100.0 2,379.7 100.0 1,358.4 100.0 335.4 100.0 1_298.5 100.0 Cooperative agri- culture, total 76 87.4 29.1 5,654 1,754.4 73.7 819.9 60.4 312.1 93.1 11125.6 86.7 Kibbuzim 54~ 9.1 -14.1 I4 -699. -29.4 -- 498.2 33?.7 200: :98 - 643-2-49-5 Moshavima 42 48.3 15.0 2:530 1,054.8 44.3 361.7 26.7 111.6 33.3 482.4 37.2 Private agri- culture, total 11 12.6 625.3 26.3 538.5 39.6 23.3 6.9 172.9 13.3 Moshavot - - 72.-754 -2 -9------Other Jewish sett. 11 12.6 ( 120.6 1.5 14.4 4.2 165.75.0 0 Minorities - - 522.5 22.0 445.1 32.7 - - 107.2 8.3 20. Arava Villages Rural Agriculture Physical Thereof Sette- popu- arm work days cultivable area by irrigation Output value ments lation ui '0 '000 '000 IL. '000 dunams dunams million Grand Total 14 100.0 141.8 100.0 12.5 100.0 11.7 100.0 70.5 100.0 Coope6rafve agri- culture, total 14 100.0 2.4 510 140.5 99.1 - - - - 69.9 99.1 Kibbzimm47.9 428 :.-~28 61.4 -4. - - - - 3zi Moshavim shitufiim 2 14.4 0.1 25 ------Moshavim 6 42.8 1.0 219 79.1 55.8 - - - - 36.1 51.2 Private agri- CQ culture, total 1.3 0.9 12.5 100.0 11.7 100.0 0.6 0.9 C4 Other Jewish settle. ITS 69 -1275 10070 -11:7 100-0 ~:63 -6:00 W1W ANNEX 3 - 223 - Page 84 P. Number of Cattle Imported Throughout the years 1973-1977 only 588 cattle heads for breeding were imported to this country from West Germany and France. Following are the annual data: Year Cattle Heads 1973 - 1974 355 1975 113 1976 60 1977 60 Total 588 Source: Cattle Breeders Association. ANNEX 3 - 224 - Page 85 S. Water Prices 1973 - 1978 Date of Change Low prices ag/m 3 High prices ag/m 3 1.4.1973 Price A 7.00 11.00 Price B 10.50 19.80 1.12.1973 Price A 8.50 12.50 Price B 12.00 22.50 1.4.1974 Price A 11.00 17.00 Price B 16.00 30.60 1.4.1975 Price A 20.00 25.00 Price B 32.00 45.00 1.12.1975 Price A 25.00 30.00 Price B 42.00 54.00 1.7.76 Price A 33.00 40.00 Price B 50.00 72.00 1.7.77 Price A&B 52.50 75.00 1.10.77 Price A&B 60.00 90.00 1.1.78 Price A&B 70.00 100.00 Notes: (1) Price A refers to 85% of water quota and Price B to the 15% residual of water quota. (2) The low prices are in the following regions: Bet She'an Basin, Jordan Valley, Coast Area, West Galilee, Central Region. (3) The high prices are in high mountains regions: Jerusalem Corridor, Negev , Upper Galilee Source: Water Commissioner. 1 - 225 - -225- ANNEXA .3 Page 86 EXPLANATORY NOTES Supolement to Comoletion Reoort Loan 972-IS A.2 - Gladioli - Models for the project's financial and economic r: return. Note: Computations of the Internal Rate of Return greatly resemble those of the carnations' project. Hence, as agreed upon with the IBRO Mission, they were not computed separately. A.5.6.7-8 - Exoort Handling Facilities Notes: 1. In the above projects' IRR computations a 10% rate of return was assumed; more specifically, it was assumed that for Export Handling Facilities the internal rate of return amounted to 7.5% capital cost plus 2.5% return for risk. The IRR computation for the grower was based on this assumption, considering also the fact that packing- houses are owned by the farmers and have no market value for their services. 2. As agreed upon with the IBRO Mission, one-representing project was selected out of each sub-group under this category. A.9 - Effluents Note: As explained to the IBRD Mission, this project - according to implementation data - was carried out to a smaller extent than originally planned (see Completion Report, p.83). It was therefore impossible to construct a complete model of the project's feasibility. A.10 - Water Manacement Note: The required IRR model is identical to the one presented in the Completion Report (p.71). C and 0 Physical investment for each category (comparison between appraised and actual volumes and distribution over disbursement period). Note: The required data are included in each of the projects under A., as well as in the Completion Report. IANNEX3 226 - - 226 -Page 87 I.- Farm Wholesale Prices Note: No index of farm products wholesale prices is published in Israel. K. - Aggrecate Wholesale Prices Note: No aggregate wholesale price index is published here. R. - ARO Reoort Note: The required report had been submitted to the IBRD Mission before departure from Israel. U. - Physical Yield Coefficients Note: There are no specific data on yields in the project financed by the IBRD. The project's computations were based on figures of national yield averages. - 227 - ANNEX 4 Page 1 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN 972-IS Agricultural Extension Service 1. Much has been said and written about the apparent efficiency and success of the extension service in Israel. This annex summarizes some of the findings of the completion mission which visited Israel in February 1978 and tries to draw preliminary conclusions about the transferability of the system or certain components of it. 2. The Extension Service in Israel, a branch of the Ministry of Agri- culture, comprises of 10 district offices beside the main center in Tel Aviv with seven specialized departments. (Chart I of this annex). Extension work is carried out by district advisors. Together with the subject matter specialists of the departments at the head office, they form national branch teams. The Extension Service has a staff of about 600 officers of which roughly 460 are specialized professionals, about 30% of total staff is working in the center, and 70% in the districts. During recent years (1974-1977) the number of staff, particularly in administration had to be reduced due to budgetary constraints. 3. Efficient allocation of available manpower steering committee has been established. Allocations are made in accordance with overall government policies, as well as on regional needs and requirements. Due to existing constraints the presently existing extension service is strictly production oriented. Table 1 of this annex, e.g., shows that major shifting of manpower from Farm Management (-4), Irrigation (-7), Citrus (-5), Industrial crops and dry farming (-4) took place in favor of Subtropical Fruits (+3), Flowers (+16), Vegetables (+4), and Poultry (+2), clearly indicating the importance the Ministry is giving export-oriented production. About 30 staff members are leaving the department each year. Replacement staff are selected according to the forecasted priorities. They enter the service with good theoretical background, and are trained for 3-6 months in the field before they are assigned to their final positions. 4. The department has developed certain key indicators for required manpower in certain crops like, citrus, cotton, poultry and flowers. The key indicator for flowers is one extension officer for about 100 farmers. On district level the department favors the establishment of so called extension nuclei, in particular for new crops like flowers. In order to tackle the - 228- ANNEX 4 Page 2 problems involved in e.g., growing roses in hothouses, multidisciplinary district teams are created composed of advisors in rose growing, plant protec- Lion, irrigation and fertilization, farm management aad Thiuser machinery- together with a rose researcher and an engineer. A group of 50-80 farmers interested in production of roses receive intOnsive group t-aining during a 3-4 day course. The extension officer then visits the farmers up to two times a week watching each operation carefully; sometimes advice is given by tele- phone. When the farmer has gained sufficient experience, the visits then become less frequent. A close contact with the simultaneously ongoing research on roses allows the extension team to transmit rapidly new findings. 5. The existence of collective and cooperative farm organization, Kibbutzim and Moshavim respectively, facilitates the extension efforts of the department. There are presently about 230 Kibbutzim and 370 Moshavim in the country, supporting a farm population of some 200,000 farm people. Both types employ graduated agriculturists, economists and other well trained personnel, who participate and collaborate with the extension service who in turn has to deal with reduced number of people to contact. 6. A unique feature of agricultural lending in Isreal is characterized by the fact that the technical, financial and economic evaluation of each investment project is the responsibility of specialized staff within the Ministry of Agriculture, leaving only the appraisal of subborrowers' credit worthiness to the onlending bank. The socalled "Supervised Credit" was intro- duced in Israel in 1964 and considerable experience has been gained since then. Subprojects under the first as well as the second Bank loan have bene- fitted from the supervised credit program while it was ensured that funds are used consistent with national planning targets and the best interest of the farmers. 7. The activities of the agricultural extension service in Isreal are found embedded in a long range and heavily export production oriented agri- cultural policy of the country. The work of a small cadre of experienced and highly qualified specialists is supported by advanced research facili- ties and is also facilitated through an existing collective and cooperative farm system. Good communications together with short distances in the small country are of advantage. Results from research and extension are spectacular because they are oriented to the immediate needs of an aggressive export- oriented agroindustry which has opened and expanded new markets, especially for subtropical fruits and flowers. It can be seen that policy planning, research, extension, collective or cooperative farm types, agroindustry and existing market outlets consist of one long interconnected chain where each link has its role. It would be dangerous to think that the extension service system per se could be transferred to another setting. Its success is sub- stantially attributed to the Israeli conditions which may be non replicable. - 229 - An FX 4 Table 1 COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN- 972-IS Ministry of Agriculture - Extension Service Available Manpower and its Distribution Category Total Center District 1974 1977 1977 ------ Management 37 37 27 10 Extension 51 43 33 10 Administrative Services 63 55 36 Subtotal 151 135 96 39 Professionals Orchards 27 30 6 24 Citrus 35 30 4 26 Livestock 36 34 6 28 Sheep 12 10 2 1/2 7 1/2 Bees 3 3 - 3 Fish ponds 3 3 1/2 1 2 1/2 Poultry 32 34 4 30 Field crops 2 1 1 - Industrial crops 18 16 3 13 Dryland crops 12 10 3 7 Forage crops 14 14 1/2 3 11 1/2 Vegetable 44 48 7 41 Flowers 28 44 1/2 7 37 1/2 Plant protection 19 18 4 14 Farm management 19 15 1/2 7 8 1/2 Machinery 27 30 12 18 Irrigation 57 50 9 41 Laboratories 27 27 6 21 Home economics 21 18 4 14 Foreign training 17 17 17 - Landscaping 12 12 2 10 Subtotal 465 466 108 357 Total 616 601 204 1/2 396 1/2 % 100 97 34 66 COMPLETI1N REPOR1 SECOND AGRICULTURAL CREDIT PROJECT ISRAEL LOAN - 972-IS Organization Chart - Extension Service FOHELUN 'HAINING EXTENSION 'UEL.D CROP ORCHARDS LVESTOCK Solf & THRIGATIOC Chno- DEPT. DPT. DEPT. DEPT. -IDEPT. FIEI) SENVICE A NISTRATION X ~~ N ~ D0ST ~ ~ T~ E C a l R a ad aa ID < L4 ' 0 R,1 ~4.~ 044 x 'r E N s i o N D) 1 S T h I C S b T - ~ 1 k tkh 1Ra*aila I er + jjj jjj jjJ N aet COMPLETION REPORT SECOND AGRICULTURAL CREDIT PROJECT ISRAEL Loan 972-IS Project Related Research Component Introduction 1. Agricultural Research in Israel is seen as well advanced. It con- centrates on direct constraints to Israel agriculture. While the country has limited resources it wisely is trying to concentrate its agricultural research efforts towards solution of well defined, restricted number of objec- tives. Selection of these objectives is being based on anticipated develop- ment in the national economy, world economy and the agricultural industry of Israel. Research subjects are carefully screened for new products which could be of interest for export contributing to the balance of payment. 2. Dr. Y. Vaadia and Dr. Y. Spharim from the Volcani Center, Bet Dagan, are producing a report entitled "A Quantitative Approach to Planning Agricultural Research" 1/ describing the procedures now being implemented for planning agricultural research and allocating scarce resources. It is an attempt to quantify the expected benefits for each dollar of input into research. It includes estimates of the chances of achieving technical and economic success. Water is one of the very scarce resources and returns per cubic meter of water required for a crop are included in the computations. Review processes have been established which include potential users of research information on review boards. The entire procedure is now in the experimental phase using citrus research as the first area of application. The document very clearly defines the total process in detail, using prac- tical examples for explaining the program. The procedure being adopted by Israel appears to be practical for their situation. While the final decision is still subjective it is set in an excellent analytical background. Project Implementation 3. Project related research was carried out by the Agricultural Research Organization (A.R.O.) located at the Volcani Center in Bet Dagan. ARO deployed multidisciplinary research teams on four clearly defined commodity priorities--citrus, turkeys, subtropical crops and mutton. Bank's participation was limited to investments in buildings, laboratory equipment, materials, consultant services and study tours. 1/ Draft is with Central EMENA Files. - 232 - ANNEX 5 Page 2 4. The rate of implementation for the various components varied pri- marily because of the time factor involved in getting new facilities and equipment. Some programs such as citrus benefitted from work that had already been in progress. The turkey program was essentially a completely new, and at the same time fairly ambitious activity, involving new labora- tories and special environmental facilities, therefore, actual results are limited. Mutton component was the smallest of the special research programs in terms of investment and it received a lower priority than other components. Facilities for the mutton project has lagged behind the plan as the barns used formerly for the artificial insemination program were only vacated in the third year and are presently under reconstruction. 5. Progress reports have been prepared by ARO for each project year including statements on research accomplishments and development relating to construction of new facilities and purchase of equipment. These annual project reports are available from EMENA Central Files for further reference if required. Project Costs 6. All subproject investments were completed after year 4 of the project and amounted to IL 19.3 million (US$2.2 million) excluding operat- ing costs which were born by government funds. The average exchange rate for the research component was computed at IL 8.5 to 1US$. In comparison the appraisal had estimated the investment cost at IL 9.4 million (US$2.2 million) at an exchange rate of 1US$ = 4.2 IL. The increase in investment cost from IL 9.4 million to IL 19.3 million can be therefore exclusively attributed to the depreciation of the Israeli pound during the project life. A summary of expenditures for the project related research component is shown in Table 1 of this Annex. Citrus 7. The principal objectives of the citrus research program included breeding and selection of varieties and production of high quality fruit that would better compete on the world markets, developing a dependable supply of virus-free budwood for planting, improving water management methods, developing mechanical pickers, improving packaging, storage and transport of fruits. 8. During project implementation the scientists have drawn freely from other citrus research. In summary the following progress is reported: (i) Further progress has been made in the breeding program for tangerines and tangors. During 1977 additional crosses were made, especially with Temple tangor for late ripening and with Satsuma mandarin for seedlessness in the progency. Application of girdling and gibberellin treatment have shown increased fruit set in "Topas" tangor. An extensive selec- tion breeding program is in progress. In 1969 about 12,000 ANNEX 5 - 233 - Page 3 mandarin seedlings were set out for trial. About 8,000 are now at the fruiting stage. Some of these plants started to fruit after 2 1/2 years. Selection of the most promising candidates is in progress based on early bearing, flower, size and skin quality. The best of these will be made avail- able to growers. This entire program appears to be well managed and should be of direct benefit in a few years. (ii) In an attempt to advance flowering age, a growth retardant (CCC) applied to the soil has been found to stimulate flower and formation and earlier bearing. (iii) Significant progress have been made in establishing quick tests for routine identification of infected plants by Tristeza virus, little leaf and malsecco fungal disease. (iv) Irrigation trials and experiments with different water qualities for irrigating grapefruit trees have been con- tinued. Partial wetting of the soil surface by drip irri- gation compared to sprinkling resulted in water economy. 664 mm water was applied on the most economical treatment compared to 830 mm with full irrigation. By proper manage- ment salinity hazard was greatly reduced. A 10% decrease in production was observed in plots irrigated with 700 mg/I (22 mmhos/cm) saline water compared to irrigating with water containing 400 mg Cl/1. (v) Optimal conditions for storage of grapefruit, both on the tree and in the cold store, as well as during shipment have been defined. Fruit coatings have been developed and commer- cial test in some packing houses. 9. Total cost of the component amounted to Israeli pounds 10.2 million out of which 7.6 million (75%) were spent on facilities, 2.5 million (24%) on equipment and 0.09 million (1%) on consultancy. Citrus component absorbed 53% of total project related research cost compared with 54% at appraisal. Turkeys 10. Major research objectives into turkeys included the development of efficient feed formulations for various climatic conditions, reducing the cost of hatching through improved nutrition, management and fertility of breeding flocks, controlling disease and developing new and improved con- sumer products using turkey meat. 11. In line with these objectives ARO decided to start first with con- struction of adequate research facilities which turned out probably to be the most advanced and sophisticated ones in the world. They include 4 cli- matic control chambers (Phytotron),-4 large brooder houses and complete labora- tory. As some of the facilities and equipment had to be specifically designed ANNEX 5 - 234 - Page 4 and developed, construction was only completed in spring 1978. Scientists claim that newly developed portable cages sufficiently large and adaptable to keep growing and adult turkeys permit various manipulations such as weigh- ing, insemination or transport to be carried out without the cumbersome pro- cess of removing the bird from the cage. Cages can be assembled on batteries where productivity of layers was found to be considerably higher than those kept on the floor. 12. The Poultry Department is shifting its emphasis to turkeys nutri- tion problem and it is expected that 8-10 scientists will be involved in the research in the next few years. Research would concentrate on mineral metabolism of turkeys as well as on energy and amino acid requirements of turkeys. 13. Total investment in turkey research component amounted to Israeli pounds 5.4 million (US$636,000) which were spent exclusively in research facilities. Turkey component absorbed 28% of total project related research cost compared with 25% at appraisal. Mutton 14. Most of the research is being done at the experimental farm at Gilat as the existing facilities at Bet Dagan are insufficient and are pre- sently being reconstructed. Long range and major efforts in mutton research are devoted to improve the local fat-tailed breed. Both Romanov rams and Finn rams were used based on existing evidence that these breeds were hardier in resisting environmental stresses. Experimentally the scientists have been successful in reaching a goal of lambing every nine months and aver- aging 3 lambs/ewe/year. This compared to average of about 2.3 to 2.4 lambs/ ewe/year nationally. This work will continue in the future. 15. Some promising research is in progress on the use of hormones to improve fertility and prolificity (number of lambs per lambing ewe). Nutri- tional investigations are concerned with using more local available high energy feed (fresh citrus peel) as well as recycling of poultry waste in sheep nutrition. 16. Scientists are testing sheep management programs at the experiment station of Migda in view of using sheep more efficiently on about 150,000 ha of semiarid land presently underutilized. There, a combination of natural pasture with wheat is under investigation. In a good year with adequate moisture there would be satisfactory pasture and grain crop. In a poor year the sheep would also graze what is produced on the wheat area and at least stave off the need to slaughter large numbers of sheep as is now the situa- tion. 17. Total investment cost in mutton research amounted to IL 966.700 (US$113.600) out of which IL 45.100 (5%) was spent for fellowships, IL 541.300 (56%) equipment and IL 380.300 (39%) for facilities. Mutton component absorbed 5% of total research related project cost, compared with 6% of appraisal estimate. ANNEX 5 Page 5 Subtropical Fruit 18. The main objectives of the program included the introduction of new fruit crops and improving productivity of avocado and mango orchards and improving post harvest keeping quality. Based on the annual reports from ARO the major achievements can be described as follows. 19. The new crops in the research program include Chinese gooseberry (Actinidia) lychee, macadamia nuts, carambola and guava. All varieties imported in 1975 and 1976 have been released from quarantine and are now in various stages of propagation an distribution. They will be planted in 1979 in several experimental plots in different parts of the country. All of the best known varieties of macadamia nuts have.been brought from Hawaii. Attempts are being made to develop adaptable high yielding, fast maturing varieties. More than 20 experimental plots were planted with Actinidia in different parts of the country. Pay-off of these new commodities is less sure than the well established subtropical fruits and the gestation period is longer, however the market potential appears to be favorable. 20. Propagation of new avocado and mango varieties (introduced in 1975 and 1976 and released from quarantine in 1976 and 1977) will enable planting-of experimental plots during autumn 1978 and spring 1979. Pre- sently about 2,500 seedlings are prepared and planted per year. A major prob- lem is low yields. The average yield is about 11 ton/ha which is averaged world wide. Scientists are attempting to develop varieties that will pro- duce at least twenty to thirty tons/ha. There are currently some varieties available that will produce at these levels but fruit quality is low and they do not store well. 21. Work on the effect of self and cross pollination on avocado and mango is being continued as well as work on vegetative propagation. The latter one is facilitated through completed construction of an automatic irrigation and fertilization system inside a new glass roof plastic house with regulated light conditions. Preliminary results indicate that under long day conditions rooting of avocado cuttings is improved. 22. Storage and transportation problems of avocado and mango were studied. Work is in progress on controlled atmosphere storage of mangos to extend the marketing season. So far as avocado is concerned it was concluded that the longer the fruit is held at ambient high temperatures, the faster it becomes soft and the sooner the fruit is refrigerated the longer it will remain firm. 23. Total investment cost in subtropical fruit research component amounted to IL 1.3 million out of which IL 560,000 (41%) were spent on study tours, IL 455,000 (34%) on equipment and IL 337,800 (25%) in facilities. The subtropical fruit component absorbed 7% of the total research expenditure compared with 6% at appraisal stage. - 236 - ANNEX 5 Page 6 Special Equipment 24. The project provided for the purchase of special equipment which would be useful for many areas of research. A.R.O. has acquired a scanning electron microscope and a mass spectrograph, this equipment serving the entire center. The scanning electron microscope has been widely used for studies in food technology, field crops, animal science, soil and water and horticulture. Total cost of special equipment amounted to IL 1.3 million (US$152,815) representing 7% of total project related research costs, com- pared with 6% of appraisal estimate. Applicability of Research Information 25. The rate of adoption of new research results in Israel appears to be rapid. There is a well organized and efficient extension service which works closely between the researcher and the farmers. Another reason is that the collective and cooperative types of farm organizations lend them- selves more easily to rapid dissemination and adoption. A third factor is probably the innovative and commercially pioneering character of many Israeli farmers and agricultural enterprises coupled with a strong will to develop their holdings. 26. Animal nutrition information can be quickly passed on to the farmer since they rely upon cooperative feed mills, the management of which is in close contact with researchers. The same refers to newly developed packing and storage procedures for subtropical fruits which are almost immediately transferred to centralized export-oriented market organizations. A third area where rapid application is evident is the use of modern water saving irrigation methods. The switch from sprinkler irrigation to the more sophis- ticated trickle irrigation was done at remarkable speed and efficiency. Transferability of Research Information 27. While research is primarily directed at the needs of the country, it has obviously application in other countries with similar climatic and soils conditions. For example the work on sheep should be of benefit a number of countries in the region and also the new subtropical fruit vari- eties. The latter ones could benefit specifically many of the mediterranean countries. Israeli scientists publish in recognized international profes- sional journals, attend international congresses and work in many developing countries. They have an interest in sharing results with the world. 28. Transfer of new technology in the field of water management, handling subtropical fruit and animal nutrition is an ongoing process and most likely can be expected to continue. The level of management required to hasten adoption and maximize the usefulness of new discoveries however is not as readily exportable, neither would be the innovative character and motivation of people. ANNEX 5 Page 7 Conclusions 29. Research is aimed at meeting the needs of the farmers in Israel taking into account the climatic and soil variations found in different par of the country. Research has direct relevance to the agricultural goals of the country to increase productivity for domestic and export markets. The scientists have drawn freely upon research from other countries and incor- porated the results in their ongoing experiments. They are concentrating on those areas that appear to have highest potential pay-off. 30. The largest research component focussed on citrus (mandarin, oranges and grapefruit) for the export market. The next largest component was con- cerned with turkeys, a commodity for local consumption, but one which requires large amounts of imported feed grains for production. The consistent success of avocado and mango export has tended to encourage many farmers to plant these crops all over the country. The success story of these two established subtropical fruits has also tended to encourage small-scale commercial planting of less known subtropical fruits like lychee, actinidia and maca- damia nuts. One concern expressed by scientists was that research results often are picked up and adopted.too quickly, that is before varieties or production methods have been completely tested under a number of different conditions. 31, The construction of new facilities, purchase of new equipment, training of individuals and the establishment of new experimental orchards must be considered as long-term investment that will have pay-off more readily measured in the years ahead than during the project life. The nature of the research objectives as outlined in the appraisal report is long term. Develop- ing a new variety of crop like wheat or potatoes normally requires about 10 years from the time a cross is made until a new variety is released. Tree crops normally can be expected to take longer. The progress made with mandarins is impressive, even though the trees now being considered as candi- dates for new varieties were planted some years before this project started. Developing new herds of sheep is also a long-term plan and the progress being made is remarkable. COMPLETTON REPORT SECOND ArIU LTTRAL CRPDTT PROJECT TSKtAFM LOAN - 972-IS Expenditures Agricultural Research Component roiectComponent Facilitles Equipment Fellowship Consultants Total Cost Bank Component Expenditure . Financed in % of Total Cost ------ISRAELI Pounds '000 ------us 0)0)]--1 US$ '000 Actual Appraisal Citrus 7,661.9 2,487.4 - 90.2 10,239.5 1,203.6 794.4 53 54 Tunkeys 5,413.5 - - - 5,413.5 636.4 420.0 28 25 Mutton 380.3 541.3 45.1 - 966.7 113.6 75.0 5 5 Subtropical fruits 337.8 455.0 560.7 - 1,353.5 159.1 105.0 7 9 Special equipment - 1,348.3 - - 1,348.3 158.5 104.6 7 6 Total 13,791.5 605.8 90.2 19,321.5 2,271.2 1,499.0 100 42.0 ____ 10000 00 % 71.4 25.0 3.1 0.5 100 - - - - /1 Average Exchange Rate 1US$ 8.5 It. M I0k1 IBRD 10480 (PCR APRIL 1979 390 IS RA EL SECOND AGRICULTURAL CREDIT LEBANON PROJECT GENERALAREA FOR DRAINAGESUB-PROJECTS ADDITIONAL LOCALDRAINAGE AREAS 5 Y Rl A 330 lva 33° RESERVOIRSITES ADDITIONAL RESERVOIRS --- EFFLUENT RE-USE FOR IRRIGATION RH1e NATIONALWATER CARRIER SYSTEM WADIS H A AIVERS - INTERNATIONALBOUNDARIES S0 CITIES,TOWNS Had rI TEL AVIV-JAFF 320 32-- Ashdod JO.A JERUSALEM Ashqel. D-d OAr.d e e NEGEV IRRIGA'TION SYSTEM mna Sod -, O id N E G E V Amon 0 E,cn0Yah.v0/ / 00 KrLOMETERS M.LES TURKEY .30- O \ S CVý j SYRIA .4. ed,,emrneanI , IRAO ISRAE I \yI IJORDAN~ THIS MAP 15 BASEDON IBRD 10480, E MAY, 1973 PROJECT IMPLEMENTATION DETALlS, NOT INCLUDED IN ORIGINAL ARAB SAUDI ARARIA GoI - ARI_k APPRAISAL REPORT, HAVE BEEN ADDED . REPUBLIC IN GREEN, EGYPT 35. 1S.