World Bank Document

Document of The World Bank FILECOPY

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No.3.360-PAK

PAKISTAN Public Disclosure Authorized

GRAIN STORAGEPROJECT

STAFF APPRAISAL REPORT Public Disclosure Authorized

May 11, 1981 Public Disclosure Authorized

Agriculture D Division South Asia Projects Department

This document has; a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS

Currency Unit = Pakistan Rupee (Rs) Rs 9.90 = US$1.00 Rs 1.00 = US$0.101 Rs 1 million = US101,000

WEIGHTS AND MEASURES

1 kilogram (kg) = 2.2 pounds 1 maund (md) = 37.3 kg = 82.3 pounds 1 metric ton (MT) = 1,000 kg = 0.98 long tons 1 millimeter (mm) = 0.39 inches (in) 1 meter (m) 2 = 3.29 feet (ft) = 1.09 yards 1 square meter (m ) = 1.19 square yards 1 kilometer (km) 2 = 0.62 miles 1 square kilometer (km ) 2 = 0.386 square miles 1 hectare (ha) 3 = 10,000 m = 2.47 acres 1 cubic meter (m ) = 35.31 cubic feet

ABBREVIATIONS AND ACRONYMS

ADBP - Agricultural Development Bank of Pakistan ECNEC - Executive Committee of the National Economic Council GOP - Government of Pakistan MFAC - Ministry of Food, Agriculture and Cooperatives NESPAK - National Engineering Services (Pakistan) NLC - National Logistic Cell NWFP - North West Frontier Province Pak PWD - Pakistan Public Works Department PARC - Pakistan Agricultural Research Council PASSCO - Pakistan Agricultural Storage and Services Corporation PIU - Project Implementation Unit PMCC - Project Management and Coordination Committee RECP - Rice Export Corporation of Pakistan

GLOSSARY

Arthi - Foodgrain merchant Atta - Whole wheat flour Bajra - Millet Godown - House-type storage facility Jowar - Sorghum Rabi - Winter season

FISCAL YEAR

July 1 - June 30 FOR OFFICIAL USE ONLY

PAKISTAN

GRAIN STORAGE PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

I. PROJECT BACKGROUND...... 1

II. THE AGRICULTUJRALAND FOODGRAIN SECTORS ...... 1

A. The Agricultural Sector ...... 1 B. The Foodgrain Sector ...... 2 Production Characteristics ...... 2 Consumption, Exports, Imports ...... 4 Marketing ...... 5 Transport ...... 6 Grain Storage Resources and Losses ...... 7 C. Government Foodgrain Policies and Practices ...... 10 Policy Objectives and Responsibilities ...... 10 Foodgrain Price Policy ...... 10 Foodgrain Distribution Policy ...... 12 Foodgrain Export Policy ...... 13 Food Security Policy ...... 13

III. INSTITUTIONS ...... 13

A. Federal Directorate General of Food ...... 13 B. Provincial Food Departments ...... 14 Organlization and Management ...... 14 Operations ...... 14 C. Pakistan Agricultural Storage and Services Corporation (PASSCO) ...... 17 Background ...... 17 Major Operations ...... 17 D. Rice Export Corporation of Pakistan (RECP) ...... 19

IV. THE PROJECT ...... 19

Project Concept and Objectives ...... 19 Major Features ...... 20 Project Area, Storage Needs and Project Storage Provisions.. 21 Detailed Features ...... 23 Project Cost Estimates ...... 30 Financing ...... 31 Procurement ...... 32 Disbursement ...... 33

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I1tscontents may not otherwise be disclosed without World Bank authorization. - ii -

Table of Contents (Continued) Page No.

V. MANAGEMENT AND ORGANIZATION ...... 34

General .*..*...... **.O. 00..0...... 34 Project Management and Coordination ...... 35 Project Implementation ...... 35 Storage Maintenance ...... *...... 38 Accounts and Audits ...... 38 Project Monitoring and Evaluation ...... 39

VI. FINANCIAL PROJECTIONS ...... 39

VII. ECONOMIC BENEFITS AND JUSTIFICATION ...... 40

Benefits ...... 40 Beneficiaries ...... 41 Economic Rates of Return ...... 41 Sensitivity Analysis and Project Risks ...... 42

VIII. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ...... 43

ANNEXES

1. Foodgrain Sector - Statistical Data 2. Storage Resources 3. Project Institutions 4. Storage Requirements and Project Proposals 5. Specifications and Civil Works Cost 6. Project Cost 7. Grain Storage Research and Extension Proposals 8. Disbursement Schedule 9. Organization and Management 10. Financial and Economic Analyses 11. Selected Documents and Data Available in Project File

CHARTS

Design for 1,100 Metric Ton Godown 22457 Implementation Schedule 22540 Proposed Organization Chart for the Food Wing of the Ministry of Food, Agriculture and Cooperatives 22541

MAPS

Location of Existing and Proposed Public Sector Grain Storage in NWFP 15571 Location of Existing and Proposed Public Sector Grain Storage in Baluchistan 15572 Location of EstistingandL ?Toposed 2'Pbl-ic Sector GrainT Storage in Sind 15573 Location of Existing and Proposed Public Sector Grain Storage in Punjab 15574 PAKISTAN

GRAIN STORAGE PROJECT

STAFF APPRAISAL REPORT

I. PROJECT BACKGROUND

1.01 In 1976.,after Pakistan had harvested a bumper wheat crop, a study on grain storage was carried out by a team from Kansas State University under the direction of IJSAID. Based on the team's recommendationsthe Canadian InternationalDevelopment Agency, with the assistanceof Carr & Donald and Associates,ConsuLting Engineers, prepared a plan for developingthe grain storage and handling sub-sector. The plan, submittedto GOP in January 1980, provided valuable background information,but did not identify specific grain storage projects.

1.02 At the request of GOP, an IDA mission visited Pakistan in March 1980 to review with GOP public sector storage needs and the possible scope and content of a Bank Group assisted project. This mission was followed in June by an IDA preparationmission which submittedits preparation report in October 1980.

1.03 This report is based on the findings of an IDA appraisal mission comprisingMessrs. W. Schwermer, B. Ophuis, M. Usman (IDA), U. Acasio and T.O. Thatcher (Consultants),which visited Pakistan in October/November1980.

II. THE AGRICULTURAL AND FOODGRAIN SECTORS

A. The AgriculturalSector

2.01 The Islamic Republic of Pakistan has a population of about 81.5 million and covers a total land area of some 79 million (M) ha. Because of the arid climate, only about 19 M ha are cultivable;of these 13 M ha are irrigated, mainly within the Indus River System, the largest single irrigation system in the worLd. Among Pakistan's four provinces, Punjab is agriculturally the most productive,and has the largest share of cultivated (11.2 M ha) and irrigated (9.6 M ha) land and traditionallyproduces a surplus, especially in foodgrains,for the other parts of the country and for exports. Sind, with about 5.5 M ha of cultivated and 3.2 M ha of irrigated land, ranks second in agriculturalproduction and is nearly self-sufficientin foodgrains. The North West Frontier Province (NWFP) and Baluchistan,covered mainly by mountains and arid lands, are food deficit areas. In NWFP, cultivated area is less than 20% of the Province's surface area, while in Baluchistan, only 4% of the land is cultivated. In both NWFP and Baluchistan,more than 60% of cultivated land is rainfed.

2.02 Agriculture is the most important sector in the Pakistan economy, providing employment to about 55% of the labor force, accounting for about 30% of GNP and producing nearly 70% of Pakistan's export earnings,principally - 2 - from cotton and rice. Crops provide 69% and livestock28% of agricultural GDP; the remainder comes from fisheries and forestry. Performance of the agriculturalsector has varied over the last two decades. While agricultural growth averaged almost 6% per year during the 1960's, reflecting mainly the introductionof high yielding varieties of rice and wheat, growth rates during the first seven years of the 1970's declined to 1.5% per annum, failing to keep pace with the population growth of about 3%. In the last three years, agriculturehas staged a recovery,with value added increasing by 2.5% in FY78, 4.2% in FY79 and about 6.0% in FY80. With very good summer crops already harvested, the outlook for FY81 is again promising. The encouraging performance in recent years is due in part to favorable weather conditions, but it also reflects a number of initiativestaken by the Government. In particular,the Government has been giving increasedattention to improving farmer incentivesand input supplies. Support prices for all major crops have been raised; steps have been taken to ensure adequate and timely delivery of fertilizers;institutional credit to agriculturehas been increased; and irrigationwater availabilityhas been improved.

2.03 However, although Governmentpolicies have contributedto output growth, agriculturalyields are still well below achievable levels, and a number of factors responsiblefor the low productivityat the farm level persist. A start in removing some of the constraintshas been made by intro- ducing programs to improve extension services. 1/ The Government has also initiated reforms in agriculturalresearch 2/ and has developed programs for improvingon-farm water management.3/ Furthermore it has recognized the need for redefiningpriorities in its agriculturaldevelopment program and is shifting the emphasis from subsidies and long-gestationprojects to programs designed to improve cropping practices, water conservationand maintenanceof the existing infrastructurethat will generate benefits quickly. This revised strategy and the continued importance given to price incentives,credit and improvementsin input supply will have a positive impact on agricultural production.

B. The Foodgrain Sector

Production Characteristics

2.04 Foodgrainproduction is the most important activity in the agricultural sector, accounting for 55% of the total cropped area and 36% of the sector's value added. Cereals, especially wheat, constitute the major portion of the Pakistan diet, and rice exports have averaged about 20% of Pakistan's merchandise exports over the last three years. The major foodgrains are

1/ Punjab Extension and AgriculturalDevelopment Project, Credit 813-PAK; and Sind AgriculturalExtension and Adaptive Research Project, Credit 922-PAK.

2/ AgriculturalResearch Project; appraised in September/October1980.

3/ On Farm Water Management Project; appraised in November/December1980. wheat, rice and maize, followed by jowar (sorghum), bajra (millet) and barley. (Details on production, cultivated area and yields are in Annex 1, Table 1). During the period 1965-79 foodgrain production has grown annually by about 5.1%. Much of the increased production is attributable to the expansion in cultivated area (averaging 1.8% per year) and improvements in yields, mainly of wheat. Wheat is Pakistan's main crop, cultivated on almost 65% of the total area under foodgrains. Production, which reached almost 10.8 million MT during the 1979/80 crop year, is concentrated in Punjab (accounting for more than 70% of total wheat output) and northern Sind. Wheat is grown in the rabi (winter) season mostly under irrigation but in NWFP, Baluchistan, and parts of Punjab rainfed wheat cultivation is important. From 1970/71 to 1979/80, the area under wheat expanded at about 2.1% per year, and yields increased at an average rate of 3.9% from 1.08 to 1.53 MT/ha. The yield increase is mainly due to more extensive use of chemical fertilizers and improvements in water availability, and to the wider use of rust resistant HYV. Chemical fertilizer use in foodgrain production more than tripled from 283,000 nutrient tons in 1970/71 to 879,000 nutrient tons in 1978/79, and water availability for irrigation increased from about 70 million acre-feet to some 81 million acre-feet during tlhe same period. Fertilizer sales declined temporarily foLlowing the Government's 50% increase in fertilizer prices in February 1980 but subsequently rose resulting in fertilizer demand in 1980 growing only at about 4% compared with an average of 16% in recent years. With GOP's substantial increase in support prices for foodgrains (para 2.30) and the improved availability of production credit, it is anticipated that fertilizer sales will expand again..

2.05 Rice is Pakistan's second most important crop and a major foreign exchange earner. Largely as a cash crop, it is grown in about 19% of the cropped area. Punjab and Sind account for about 95% of the total rice production, which has increased since 1970/71 (when 2.2 million MT were produced) at an annual rate of 5.6% and averaged some 3.2 million MT during the last two years. The increase in production has been achieved mainly through extending the area under rice, from 1.5 M to 2 M ha; average yields have grown by only 0.6% annually since 1970/71. Rice produced in Pakistan is primarily of IRRI varieties and Basmati. Over the last ten years, the relative importance of Basmnati has grown, mainly as a result of attractive Government procurement prices, and the share of Basmati in the cultivated rice area has risen from 22% in 1970/71 to 33% in 1979/80. (Details on wheat and rice production, area and yields by Province are in Annex 1, Table 2).

2.06 Maize, barley, jowar and bajra have contributed a combined total of about 1.5 million MT to foodgrain production each year during the last decade. These crops have declined in relative importance and currently account for less than 10% of total foodgrain output. Maize, which constitutes about half of the production of foodgrains other than wheat and rice, and barley have shown increases in area and yields over the last ten years, while for bajra and jowar, both area and yields declined during this period. (Details are in Annex 1, Table 1). -4-

2.07 Overall, foodgrain production trends in recent years have been encouraging. But yields are still considerably below their potential and much lower than in other areas with similar agro-climatic conditions. In the Indian Punjab for instance, the average wheat yield was about 2.5 MT/ha in 1978/79 compared with 1.52 MT/ha in the Pakistan Punjab for the same year.

Consumption, Exports, Imports

2.08 Cereal consumption is currently estimated to constitute some 60% to 70% of the population's caloric intake, with wheat forming the staple of the Pakistan diet and providing about 60% to 65% of the protein intake. (The food balance sheet shows that in 1977/78 per capita availability of protein was 59.8 grams per day against the per capita requirement of 42.3 grams per day. A large proportion of the population, however, appear to have a very low level of protein intake.) Annual per capita consumption of total foodgrains has risen from some 150 kg in 1969/70 to about 163 kg in 1978/79.

2.09 Overall, Pakistan is self-sufficient in foodgrains; but wheat output even in recent high production years has been barely adequate to meet local consumption requirements. However, there is a surplus of rice, and as a result, Pakistan is importing wheat and exporting rice. The physical substitution of rice for wheat to satisfy consumption needs, while possible, would not be economical. The average export price of Pakistan rice in 1979 was US$355 per MT f.o.b. Karachi, while the average cost of imported wheat c.i.f. Karachi was less than US$180 per MT.

2.10 Importation of wheat is the exclusive responsibility of the Federal Government. Import needs are determined by GOP in accordance with the requirements of the Government's wheat ration system (paras 2.34 through 2.36) rather than on the basis of the overall gap between internal demand for wheat and indigenous production. However, since the amount of wheat which the Government is able to procure domestically for the ration program generally reflects the country's wheat supply situation, wheat imports are closely linked to the total supply gap. For example, in 1976/77, after a bumper wheat crop, domestic wheat procurement by the Government of 2.3 million MT exceeded procurement targets, and GOP imported only about 500,000 MT of wheat; but two years later, subsequent to the severe rust attack suffered by the 1977/78 wheat crop, the Government could procure domestically only about 1.1 million MT and had to import more than 2.1 million MT to meet the needs of the wheat ration system. Wheat imports have been averaging about I million MT per year during the last decade, fluctuating between 269,000 MT in 1970/71 and 2,112,000 MT in 1978/79 (US$354 million). During the current year, GOP intends to import 500,000 MT but, as in the previous year, most of the imports would be used to increase public sector carry over stocks and to establish a food security reserve (para 2.39). (Details on annual wheat imports are in Annex 1, Table 3).

2.11 Rice exports are the second most important source of foreign exchange earnings, after cotton exports, constituting about US$341 million in 1978/79. Rice exports increased more than five-foLd from lea% thazn 1QQ,QY WT i 1970/71 to slightly more than 1 million MT in 1978/79. This year's rice exports are anticipated to approach 1.1 million MT. In 1978/79, about 80% of rice exports was IRRI varieties which have a larger export market than Basmati - 5 - which is limited mainly to the Middle East. However, 32% of export earnings was contributed by Basmati as the international price for Basmati is about double the price for IRRI. (Details on annual rice exports are in Annex 1, Table 3).

Marketing

2.12 The marketable foodgrain surplus varies with farm size and is different for different foodgrains. Except for local barter trade, the quantity of foodgrains entering commercial marketing channels from farms with up to three acres appears to be negligible. By constrast, farms with landholdings in excess of 50 acres market more than 50% of their production. For wheat and rice, marketable surplus is estimated at about 40% to 45% of total production, while for other foodgrains, less than 30% of production enters commercial marketing channels.

2.13 The majority of farmers sell their surplus foodgrains immediately after harvest. Although prices are usually lowest during that time, because of the need for cash, grain quality control problems in on-farm storage (para 2.21) and a lack of storage facilities, most farmers are unable to hold stocks over an extended period. Farmers storing grain for later sale, release their produce gradually in the open market where prices normally increase between harvests. In the case of wheat, for example, wholesale prices in the open market during the last two years have been up to 46% higher towards the end of the crop year than at the time of harvest. Thus the open market prices provide incentives to the farmer for storing grain. Government grain procurement prices, as in other South Asian countries, remain fixed throughout the year (Annex 1, Table 4).

2.14 In the case of wheat, most small farmers sell their produce in village markets which are dominated by foodgrain merchants (arthis) who often are also money lenders, advancing farmers cash against future grain. The arthis then sell the grain either to wholesalers or millers who buy at prevail- ing open market prices, or to Provincial Food Departments or the Pakistan Agricultural Storage and Services Corporation (PASSCO) which procure wheat at GOP procurement prices (paras 2.30 and 2.31). Large farmers generally sell to the Food Departments or PASSCO directly. While complete data are not available, it appears that about 40% to 50% of total public sector wheat procurement comes directly from farmers. The public sector share in the marketing of domestically produced wheat fluctuates, increasing in years of high production and declining in years with poor harvests. In normal production years, about 55% to 65% of the marketed wheat is bought by the public sector. In 1980, wheat procurement by the Provincial Food Departments and PASSCO reached 2.95 million MT, more than 27% of production of some 10.8 million MT.

2.15 Government wheat is mostly milled into atta (whole wheat flour) which is sold at concessionary prices through the ration system in urban centers and food deficit areas (paras 2.34 through 2.36). In addition, Government wheat is used for release onto the open market to stabilize open market wheat and flour prices. Wheat procured by the private sector is milled into flour of grades higher than atta and sold in the open market which runs parallel with the public sector distribution system. -6 -

2.16 Marketing of paddy and rice is tightly controlled by the Governments of the two major paddy growing Provinces, Punjab and Sind, where paddy may be procured only by Government-authorized rice dealers and millers, PASSCO and the Rice Export Corporation of Pakistan (RECP). In Punjab, movement of paddy and rice is restricted, and the authorized dealers and millers and PASSCO must sell all milled rice for export to RECP, excluding only 10% of Basmati and 25% of other varieties which may be marketed domestically. In Sind, there are no intraprovincial movement restrictions, but the authorized traders and millers are obligated to sell to RECP specified rice quantities which are agreed upon annually with the Government on the basis of district-wise Government procurement targets. Marketing of the rice retained for sale in the domestic markets is in the hands of the private sector. The private sector handles also the marketing of foodgrains other than wheat and rice.

Transport

2.17 Of the major foodgrains, almost five million MT of wheat are moved yearly from the farm to urban food deficit areas, and more than one million MT of rice are transported annually to Karachi for export. Transportation of foodgrains from the farm to local markets and to Food Department and PASSCO procurement centers is mainly by tractor and truck. Transportation by donkey, bullock or camel cart is also common. Many of the large farmers have their own transport equipment, but small farmers often rely on arthis who frequently procure the foodgrains on the farm and arrange transportation. This initial movement of foodgrains is handled entirely by the private sector except for a small quantity procured and transported by PASSCO from the farm to the Corporation's storage facilities.

2.18 Movement of foodgrains to wholesale markets and to mills by merchants and millers is handled mostly by truck. Food Departments and RECP use a combination of truck and train transport depending on distance, train availability and cost. Provincial Food Departments and PASSCO impose a heavy load on the transportation system immediately after the wheat harvest (from May through July) when about 90% of public sector wheat procurement takes place and the procured wheat needs to be transported to covered storage before the arrival of the monsoon. The demand on the system is high especially because existing storage facilities are not ideally distributed between wheat procurement and distribution areas. Storage in consumption centers is generally adequate, but there is a lack of storage in the procurement districts, so that a very large proportion of the procured wheat needs to be moved immediately after procurement to distant distribution centers. The requirements for long distance wheat movement in the months from May through July exceed the transportation capacity which the Pakistan Railways can make available for this purpose, and, as a result, the Food Departments have to resort to less economical transport by truck which is arranged either through private operators or the National Logistic Cell (NLC) which has its own fleet of road vehicles.

2.19 Imported wheat is transported from Karachi to consumption centers by train and NLC trucks. The same transportation means are used for moving rice from procurement centers to RECP storage in Karachi. Wheat imports have been moderate during the last two years and have been accommodated without undue strain on the transportation network. In 1978/79, however, when more than 2.1 million ]AT of wheat had to be imported, transportation capacity of the Railways proved inadequate, leading to the establishment of NLC which now commands some 1,000 trucks.

Grain Storage Resources and Losses

2.20 On-farm foodgrain storage is mainly for grain needed for family consumption, locaL bartering and seed. A number of medium and large farmers store grain, mostly wheat, also for sale in the open market when prices are more attractive than at harvest. Complete data are not available, but it appears that most of the wheat in the private marketing system is stored on farms. For storing small quantities of grain, containers made of woven plant material plastered with mud, and wooden boxes are common. Larger amounts of grain are stored usually in separate rooms in the farm house or in outdoor or indoor bins constructed of mud and straw or of brick. Large farmers store grain sometimes also in house-type storage structures (godowns).

2.21 In general, the condition of farm level storage appears adequate for storing wheat up to about three months. For longer storage, however, grain losses have been reported to be significant. The main reasons for the losses seem to be most farmers' unfamiliarity with appropriate on-farm storage technology, and poorly constructed and maintained stores. These problems in turn are at least in part the result of inadequate attention given so far in Pakistan to grain storage research and extension (para 4.16).

2.22 Off-farm foodgrain storage is maintained by arthis, wholesalers and millers; Provincial Food Departments, PASSCO and RECP; and to a limited extent, cooperatives. Grain is stored mostly in bags, but shortage of bags or storage space sometimes dictates storage in bulk. Arthis and wholesalers do not generally store foodgrain for more than ten days and pay little attention to the quality of storage facilities or proper quality control practices. They store the grain mainly in rooms in houses and small house-type godowns made of mud plastered brick or rock wall, with storage capacities of up to 200 MT. Storage owned by flour and rice millers is mostly for operational stocks. The stores, which are generally house-type structures, can hold from two to four weeks supply of grain, and are usually an integral part of the mill. Mill storage is often of poor quality offering insufficient protection against moisture and pests. However, because of the quick grain turnover, millers do not appear to perceive a need for good storage or for systematic quality control. Fumigation is attempted only in extreme cases; birds and rodents often have easy access to the grain; and dunnage is used only occasionally. Storage losses at:arthi, wholesaler and miller levels have not been studied but are thought to be significant especially relative to the short time grain is usually stored at these levels.

2.23 The Provincial Food Departments presently own storage warehouses, bin storage and silos at almost 400 locations with a total capacity of 1,900,000 MT. Most of the storage is in Punjab (1,167,000 MT) followed by Sind (502,000 MT), NWFP (159,000 MT) and Baluchistan (72,000 MT). In addition, storage of 450,000 MT is being constructed or planned under approved programs, and GOP plans to construct a further 300,000 MT storage for food security - 8 -

purposes. (Details by district are in Annex 2, Tables 1 through 4). PASSC0 owns storage warehouses of 303,000 MT capacity, mainly in Punjab (271,000 MT), and has 52,000 MT under construction or included in the current year's construction program. Provincial Food Departments and PASSCO are also renting storage facilities (about 300,000 MT at the end of July 1980); however, these facilities are generally of substandard quality and usually have not been constructed for grain storage purposes.

2.24 Existing storage facilities owned by Provincial Food Departments and PASSCO are of various designs. Predominant is the house-type godown for bag storage. Capacities of individual godowns range from about 500 MT to 16,000 MT. Most common are the sizes of 500 MT and 1,000 MT. Recently a new design for bag storage, the "Binishell", has been introduced in Pakistan. The "Binishell" is a dome-shaped reinforced concrete structure with a storage capacity of about 1,500 MT. The Provincial Food Departments own also bin storage units of concrete/brick construction and a 42,000 MT grain silo where grain is stored in bulk. Bin storage facilities are no longer constructed because of their high construction cost and the high labor requirements for loading and emptying the bins (para 4.14). Storage buildings owned by the Provincial Food Departments and PASSCO are generally suitable for long-term foodgrain storage, but a number of facilities visited by the mission were not adequately bird and rodent-proof, and difficult to ventilate or seal for fumigation. Several godowns also have structural cracks, floors which are not level, and outside platforms sloping towards the godown letting water into the storage, deficien- cies which are all due to defective design and poor construction workmanship. Maintenance of the storage facilities is generally not satisfactory (para 5.12) and, as a consequence, many roofs are leaking, and effective fumigation and ventilation of the stores is often impossible.

2.25 Existing owned and rented storage capacity of the Provincial Food Departments and PASSCO is inadequate for storing the volume of wheat that they are now required to handle. At the end of June 1980, when the first monsoon rains arrived, about 600,000 MT of wheat were stored in the open despite considerable efforts by the Food Departments and PASSCO in renting private sector storage space and requisitioning public buildings, including schools. When several hundred thousand tons of Government procured wheat had to be stored outside in a similar situation in 1976/77 an estimated 40,000 MT was damaged during the monsoon and rendered unfit for human consumption.

2.26 Data on storage losses are incomplete and of doubtful accuracy. The Food Departments do not permit weight discrepancies to occur from the time wheat is received at a store to the time it is distributed. Since losses are not accounted for, malpractices are employed to make up any weight loss. Based on sample surveys, mission observations and discussions with storage personnel and research staff of agricultural universities, the mission has estimated that quantitative and qualitative losses for wheat under existing Food Department storage conditions are as follows: - 9 -

Storage Period Warehouses Silos/Bins Plinths/Platforms (in months) quan. qual. quan. qual. quan. qual.

3 (in monsoon) 0.75 0.25 0.25 - 2.00 1.25 3 (dry season) 0.50 - 0.25 - 1.75 0.50 6 (incl. monsoon) 1.50 0.50 0.75 0.25 3.75 1.75 6 (dry season) 1.25 0.25 0.75 - 3.50 1.00 12 3.00 1.00 1.50 0.25 7.25 2.75

With the facilities proposed under this project and improved storage quality control and maintenance, total storage losses should not exceed 0.75% after six months and 1.5% after one year.

2.27 The Rice Export Corporation of Pakistan (RECP) owns near Karachi rice export storage for bagged rice of almost 690,000 MT; about 150,000 MT are under construction and plans for constructing another 75,000 MT are being finalized with GOP. By mid-1981, RECP would thus have a storage capacity of some 915,000 MT which appears adequate to accomodate annual rice exports of 1.5 million MT projected for the end of the Fifth Five Year Plan in 1982/83.

2.28 In the Punjab rice procurement area, RECP operates seven rice mills which have a combined storage capacity of about 39,000 MT comprising 10,000 MT for the storage of bagged rice and about 29,000 MT for paddy in bulk. The existing capacity does not meet RECP's storage requirements in the procurement area. Paddy is often stored in the open before milling, and rice also sometimes needs to be stored outside while awaiting shipment to export storage. In addition, rice milling equipment is underutilized at times to avoid open storage of rice. On the basis of mission observations and RECP estimates, storage losses at the mills have been estimated by the mission for relevant storage periods as follows:

Storage Period Warehouses Bins Plinths/Platforms (in months) quan. qual. quan. qual. quan. qual. _ _ _…______%…______

RICE 1 (in monsoon) 0.15 - N/A N/A 0.60 1.00 1 (dry season) 0.15 - N/A N/A 0.50 0.50

PADDY 3 (dry season) 0.35 0.10 0.20 0.05 1.50 1.50 6 (dry season) 0.75 0.25 0.50 0.10 3.25 3.50 12 1.50 0.50 1.00 0.25 6.75 8.75

With the storage proposed under this project total storage losses for rice should not exceed 0.125% per month, and storage losses for paddy should be less than 0.75% and 1.5% after six and twelve months, respectively. - 10 -

C. Government Foodgrain Policies and Practices

Policy Objectives and Responsibilities

2.29 Foodgrain policy in Pakistan has the following main objectives:

(a) to increase foodgrain production by providingprice incentives to producers;

(b) to ensure equitable distributionby making foodgrains available at reasonable prices in food deficit and urban areas;

(d) to promote foodgrain exports.

Food policy is both a Federal and a Provincial Government subject. The Ministry of Agriculture,Food and Cooperativesat the Center plays the major role in determiningpolicy, but the Ministry consults the Provincial Governmentsbefore any major decision. Responsibilityfor executing policy decisions rests mainly with the Federal DirectorateGeneral of Food, the four Provincial Food Departments,Pakistan AgriculturalStorage and Services Corporation(PASSCO) and the Rice Export Corporationof Pakistan (RECP).

Foodgrain Price Policy

2.30 The Government'sprice policy for foodgrains is dictated by the twin objectives of assuring low and stable consumer prices while providing incentivesto producers adequate to encourage production. To achieve the former objective the Government is operating a ration system (paras 2.34 through2.36) under which wheat flour is distributedto consumers in urban centers and food deficit rural areas at subsidizedprices. Production incentives offered by GOP are mainly in the form of procurementprices which are fixed annually for wheat, rice and paddy. To maximize the impact of the procurementprices on producer decisions, the Government announces the prices before the respective growing season. The announcementof the new wheat price for this year's crop was somewhat delayed, but since a price similar to the one fixed now by GOP had already been expected, this does not appear to have affectedwheat sowings. Procurementprices through the mid 1970's were generallyinadequate to motivate farmers, but the situation has since changed. Between October 1978 and the beginning of 1980 procurementprices for wheat and rice were raised by some 22%. In February 1980 fertilizer prices were increasedby about 50%, to reduce the heavy burden of the fertilizer subsidy on the budget, but this was more than compensatedby an increase in the procurementprice for rice and paddy of 17% for Basmati and of 20% for IRRI varieties. For wheat, a nominal price increase of about 3.6% took effect in April. This was fallowed in October by a further price increase of 16.3% to Rs 54.2 pea: maun-l, w'nic\x appears to be suaiiiciern1 to oiiset recernt irncreases in production costs. Support prices for wheat are now in line with world market prices, but for rice they are still considerablybelow international - 11 - prices (para 3.21)). GOP has recently announced the establishment of an Agricultural Prices Commission charged with the responsibility of preparing recommendations for pricing agricultural inputs and outputs with the objective to maintain farmer incentives and reduce Government subsidies while containing inflationary pressures and keeping exportable products competitive in world markets. (Details on GOP procurement prices are in Annex 1, Table 4).

2.31 The procurement price of wheat is also a support price. The Provin- cial Food Departments and PASSCO have a well developed network of procurement centers (paras 3.06 and 3.14) which have the dual responsibility of procuring domestic wheat required for public sector distribution and ensuring that producers receive:incentive prices. While the former is generally the main responsibility,in years of a favorableharvest, wheat procurement is determined mostly by price support considerations. For example, in 1976/77, as a result of large wheat deliveries to the Government following a good crop year, procurementwas about 200,000 MT above the Government procurement target. Similarly,during the current procurementseason, the procurement target of 2.755 million MT was achieved by the end of June, but the Provincial Food Departments and PASSCO continued to procure wheat to support farmgate prices. To the dismay of farmers and with the result of a drop in farmgate prices below the support price, procurement was stopped in early September because the shortage of storage facilities had already made it necessary to store large amounts of wheat outdoors, and the Government did not consider it prudent to incur ever increasing storage losses from outdoor storage (para 2.26). Additional Government storage facilities are therefore essential to enable GOP to continue its policy of providing producer incentives through procurement of aLl wheat offered at attractive support prices.

2.32 In the past, the Provincial Governments have frequently imposed restrictions on the movement of wheat from surplus to deficit areas. Such restrictions depress the open market wheat price in surplus zones down to the Government procurement price and, thus, tend to discourage production in the surplus area. In deficit zones, the movement restriction leads to high open market prices and, as a result, increases the pressure on the Government's rationing system. Since last year, the Government is no longer restricting the movement of flour; but the transport of wheat by truck across Provincial borders continues to require licenses administered to prevent smuggling of wheat to Iran and Afghanistan.

2.33 Unlike wheat, most of the marketed rice must be sold to the government (para 2.16). As a result, the prices received by rice sellers are depressed and producers are indirectly taxed. GOP attempts to set rice procurement prices at a level which, after allowing for trading, milling and transportation margins, should enable traders and millers to pay enough for paddy to provide satisfactory production incentives. The effectiveness of the rice procurement price as a means of providing producer incentives is, however, questionable. Data on paddy farmgate prices are incomplete, but it appears that prices paid to farmers have often been lower than expected by GOP. The Government, therefore, since 1977/78 fixes also paddy procurement prices for Basmati and IRRI varieties and has instructedPASSCO to procure paddy at the procurement prices in competitionwith private traders. PASSCO's involvement in paddy procurement, to the tune of 146,000 MT and 224,000 MT in 19T[T78 and 1978(79 respectively,seems to have improved producer prices. - 12 -

Foodgrain Distribution Policy

2.34 GOP is operating a rationing system for wheat and sugar. Under the wheat ration system, which is known as the Partial Provisioning System, the Government makes whole wheat flour (atta) available at subsidized prices in urban centers and food deficit rural areas. Ration atta distribution reached 2.4 million MT in 1978/79. Day-to-day operation of the system is the responsibility of the four Provincial Food Departments which release wheat from their stocks for milling and subsequent sale to licensed ration shops. The ration shops supply atta to ration card holders, usually on the basis of 3.75 kg per adult per fortnight, half this quantity per child and nothing for infants. This entitlement compares with an overall estimated per capita wheat consumption of 4.70 kg per fortnight in recent years.

2.35 Ration atta is sold at concessionary prices. The current issue price is Rs 50.4 per maund which is Rs 3.75 above the wheat procurement price (Rs 46.65) for last year's crop. The margin covers wheat milling costs (Rs 3/maund) and the commission paid to ration shop owners, but it does not cover the transportation, storage and other incidental expenses averaging about Rs 13.5 per maund (Annex 3, Table 1). The subsidy, though still substantial, has decreased from levels of previous years when the issue price was lower than GOP's wheat procurement price. On imported wheat, the subsidy is generally higher because of higher world market prices. The Federal Govern- ment, which has the monopoly on wheat imports, sells the internationally procured wheat to Provincial Governments at Rs 46.65 per maund free on rail at Karachi and absorbs: (i) the difference between this price and actual cost; and (ii) the expenses for gunny bags. All other costs associated with the operation of the Partial Provisioning System are covered by Provincial Governments.

2.36 Operation of the system has become a considerable financial burden on the Federal and Provincial Governments. When GOP had to import 2.1 million MT of wheat for the ration system following the bad harvest in 1978, the reported subsidy exceeded Rs 2.4 billion, almost 4.5% of the total Government expenditures for that year. The actual amount of subsidy was even higher since interest charges on funds borrowed for procuring and storing the wheat were not accounted for as subsidy. (Details on the subsidies for the years 1972/73 through 1978/79 are in Annex 3, Table 1). To reduce this drain on financial resources, GOP has raised the atta issue price in May 1979 from about Rs 35.4 per maund to Rs 45 and again in June 1980 to Rs 50.4. Addi- tional price increases are contemplated for future years in an effort to narrow the gap between prices of open market flour and atta and thereby stabilize or reduce the demand for ration atta.

2.37 In addition to operating the Partial Provisioning System, the Government supplies the wheat requirement of the armed forces and releases wheat onto the open market to stabilize consumer prices. Open market sales are made generally to millers at prices which reflect all cost incurred by the Government iam9tocurin, storing and transqortin_ the wheat. The usual condition of such sales is that the flour milled from the Government-supplied wheat must be sold at retail prices determined by the Government. - 13 -

Foodgrain Export Policy

2.38 Until 1971, the only foodgrain exported in significant quantities was Basmati. Surpluses of other rice varieties produced in West Pakistan were absorbed by East Pakistan. This arrangement had to change as a consequence of the separation of East Pakistan, and in 1972 both private and Government trading agencies substantially expanded their rice export activities. To fully exploit the export potential, GOP considered it desirable to concentrate all rice exports in one central agency and in 1974 established the Rice Export Corporation of Pakistan (RECP) to which it granted a monopoly of rice exports. Annual exports have about doubled since RECP was established. The Corporation sold about 1 million MT of rice in 1978/79 and earned more than Rs 3 billion equivalent in foreign exchange.

Food Security Policy

2.39 In view of the frightening experience Pakistan had following the poor 1977/78 wheat crop, which was 8.5% below the production of the previous year and made it necessary to import 2.1 million MT of wheat, and of the greatly improved domestic wheat supply situation over the last two years, GOP is contemplating the establishment of a food security reserve. The Government is considering a reserve which would be adequate to make up for production shortfalls of two consecutive poor wheat crops. On the basis of a 10% drop from present wheat production levels for two years, GOP projects food security requirements at 2 million MT and is considering setting up a reserve of such size. The amount is currently being reviewed by GOP in consultation with FAD. Storage for such a reserve is not available; but the Government has decided to construct, as a first step, 300,000 MT storage capacity for this purpose (200,000 MT in Punjab; 100,000 MT in Sind) and has entrusted the National Logistic Cell with the responsibility for the construction program.

III. INSTITUTIONS

A. Federal Directorate General of Food

3.01 The main responsibilities of the Federal Directorate General of Food are the importation of wheat (para 2.10) and sugar. The Directorate is headed by a Director General reporting to the Joint Secretary (Food) of the Ministry of Food, Agriculture and Cooperatives. The Director General is supported by a Director and three Deputy Directors in charge respectively of Finance, Administration and Operations. All operating sections are in the port of Karachi.

3.02 The Federal Ministry of Food, Agriculture and Cooperatives (MFAC), in consultation with the Provincial Food Departments, determines annually the quantity of wheat to be imported, on the basis of (i) agreed targets for procurement of indigenous wheat and (ii) estimated wheat requirements for the public sector distribution system. MFAC procures the required imports in - 14 - the internationalmarkets and schedules the wheat arrivals at Karachi. The DirectorateGeneral of Food arranges the unloading of the ships and bagging of the wheat in the port, and organizes transport from Karachi to the Provinces. The Directorate'sresponsibility ends with the loading of the wheat on trucks or trains for inland destinations. MFAC and the Directoratehave similar responsibilitieswith regard to sugar.

3.03 Ships are unloaded in Port Karachi using vacuum equipment which blow the wheat on to the dock. A crew of up to 2,000 laborers then fills the wheat manually into bags and loads the grain onto trucks or trains for immediate transport to Provincial Food Departments'stores. Grain losses incurred in the present handling system are not recorded but are considered to be substantial. There are neither port storage facilities for wheat nor operativemechanized bagging equipmentwhich could reduce the losses. Mechanized bagging equipment was tried for a short period but had to be discontinuedbecause of repeated breakdownsand a lack of spare parts. GOP now intends to shift wheat imports to the nearby Port Qasim for which plans for a 50,000 MT wheat import terminal have been prepared. The terminal would provide for automatic offloading and automatic bagging of the wheat. It is anticipatedthat financing for the terminal,if approved by GOP, would be provided by the Asian Development Bank.

B. Provincial Food Departments

Organizationand Management

3.04 The Provincial Food Departmentsare responsiblefor the operation of the public sector wheat and atta distributionsystem and of GOP's sugar rationing program. Together with PASSCO they are also responsiblefor the domestic procurementof wheat to supply the system and to provide price support to growers. In addition, they procure rice on behalf of RECP for export (para 2.16). Each of the Provincial Food Departments is headed by a Director, Food, who reports to the Secretary in charge of food matters in the respective Province. The Director is supported by a number of technicalspecialists and Deputy Directors responsiblefor such matters as procurementand distribution planning, and finance and accounting. For field operations,Deputy Directorshave been assigned to designatedareas where they are responsible for day-to-day grain procurement,storage and distributionactivities. Total staff strength of the Provincial Food Departments is about 2,600 (excluding guards and office helpers), with Punjab having the highest number of Food Department personnel (1,230) and Baluchistan the lowest (240).

Operations

3.05 Wheat Procurementand Quality Control. Wheat procurement is con- centratedin Punjab and Sind. The Food Departmentsof these two Provinces and PASSCO, which procures wheat only in Punjab, normally constitute about S9%iOof total publit septtor'wheat procurement; the Food Departments of both NWFP and Baluchistan generallyprocure less thian 20,000 WA annaaa A-y. A significantprocurement operation by the Government from domestic wheat producers was undertaken for the first time in 1968, when the Green Revolution produced a 50% increase in domestic wheat output and the Government stepped in - 15 - to support prices received by farmers. GOP also raised the procurement price substantially to make it an effective support price, and to increase domestic procurement of wheat required for the public sector distribution system. Procurement, which was I million MT in 1968, declined in the subsequent two years, when wheat production decreased from the 1967/68 level, but then increased and after a bumper crop reached 2.2 million MT in 1977. In the following year, due to a 8.5% drop in wheat production after a severe rust attack on the 1977/78 crop, and because of a low procurement price, public sector wheat procurement (including procurement by PASSCO) was reduced to 1.1 million MT, less than 50% of the Government procurement target. With the subsequent increase in the wheat procurement price and as a result of favorable wheat harvests, procurement climbed to about 2.4 million MT in 1979 and almost 3 million MT in 1980. (Details on annual wheat procurement in the four Provinces is in Annex 3, Table 2).

3.06 Procurement is carried out through 255 permanent wheat procurement centers and 635 temporary centers which are open only during the months following the wheat harvest, generally from May through September. Procurement operations are governed by procurement targets set for each center and directives issued annually by the Provincial Governments. The directives addlressall relevant aspects of wheat procurement including grain testing, sampling, transportation, payment procedures, and inspection. Although generally similar, the directives show some significant differences between Provinces. For instance, while in Punjab wheat samples are to be drawn from all lots, in Sind, wheat sold directly by farmers is not to be sampled. The directives establish also wheat grading standards and discounts to sellers for low quality grain (Details are in Annex 3, Appendix 1). The standards are, however, very complex and all but impossible to implement. Grain testing equipment is not adequate; procurement staff is not sufficiently trained; and quality inspection is entirely visual. As a result, the prescribed grading standards are only partly applied and actual grain quality is often below the levels permitted under Government regulation. Weighing practices are similarly deficient. Due in part to insufficient weighing equipment, only part of the grain is weighed during procurement or when the grain is put into storage. Consequently, weights recorded at procurement and later storage levels are not accurate. A review of the extent of current problems in quality inspection and weight control is urgently required.

3.07 Quality control during storage consists mainly of fumigating the storage facilities in intervals of up to six months. For fumigation, phos- toxine tablets are used exclusively, and the doors and windows of an entire godown are sealed with mud. Fumigation practices including interval between fumigations vary considerably between the different storage complexes. So do inspection practices for checking for signs of grain infestation. General housekeeping and sanitation within godowns is often not satisfactory. Quality control has not reached desired levels largely due to a shortage of trained technical staff for carrying out independent grain quality analyses at the various storage centers and providing on-the-job training for grain procurement and storage personnel. Punjab is the only Province which has engaged a Grain Technologist and set up four grain testing laboratories, to establish and enforce improved quality control practices at the procurement, handling and storage levels. - 16 -

3.08 Rice Procurement and Quality Control. Rice is procured mainly by the Provincial Food Departments of Punjab and Sind; the Food Department of Baluchistan also procures a small amount of rice. Procurement is exclusively for export by the Rice Export Corporation of Pakistan (RECP) and is governed by the Provincial Governments' procurement schemes (para 2.16). During the period 1970/71 to 1978/79 rice procurement (including procurement by PASSCO) more than tripled from about 400,000 MT to more than 1.2 million MT. (Annual procurement details are in Annex 1, Table 3.)

3.09 Procurement is carried out through about 180 procurement centers which are generally located close to mills and rail-heads. Immediately after procurement, the rice is transported, mainly by train, to RECP storage and cleaning facilities near Karachi. Intermediate storage of the rice in Food Department stores is uncommon and generally limited to periods when RECP storage capacity in Karachi is inadequate to accommodate all procured rice. Procurement is governed by regulations issued annually by the Provincial Governments which specify (i) movement and procurement and sales restrictions for paddy and rice, and (ii) procurement procedures for rice, including responsibilities for sampling, transportation, payment and inspection. They also establish grading standards and price discounts for low quality rice. Rice quality is generally determined jointly by officials of the Food Depart- ments and RECP. The same officials are responsible also for weighing the procured rice. Partly as a result of the joint responsibility, and also because standards are more strictly enforced, and better trained personnel is engaged in rice procurement than in the procurement of wheat, quality testing and weighing of rice appear to be more reliable than in the case of wheat. However, most of the procured rice does not meet export quality standards and requires additional cleaning and grading at RECP cleaning facilities.

3.10 Wheat and Atta Distribution. Wheat and atta are distributed by the Provincial Food Departments under the Government's rationing system and to stabilize wheat prices in the open market (paras 2.34 through 2.37). The ration system was initiated in its present form during World War II in response to foodgrain scarcity. The amount of whole wheat flour (atta) distributed in the four Provinces under the system has been increasing since, and by 1978/79 reached a total of 2.4 million MT. In 1979/80, ration distribution has declined to about 2.3 million MT as a result of a reduction in bogus ration cards and improved wheat availability in the open market after the good wheat harvest in 1979, and because ration prices were increased in May 1979 by almost 30% from about Rs 35.4/maund to Rs 45/maund. Wheat releases in the open market, which run parallel with the ration system, have been negligible. In 1978/79 they totaled about 285,000 MT, still a modest amount in comparison with the rationing system. (Details on ration atta distribution and open market wheat sales are in Annex 3, Table 2.)

3.11 Atta is distributed under the rationing system through Provincial Government licensed ration depots, each serving between 2,000 and 3,000 people in urban areas and, where they exist, about half this number in rural areas. In urban areas, the head of a family is issued a ration card which entitles him to fortnightly atta rations for all dependent family members. Each ration issue is recorded on the card. In rural areas, a register is maintained by - 17 -

each depot for residents who have been assigned to it for their supplies; in these areas, ration issues are made monthly and an appropriate entry is made in the register. Depot holders are supplied by mills operating under Govern- ment contract. The mills in turn receive their wheat from Food Departments' stocks. In the case of open market releases of wheat, the Government generaly sells to millers under agreements fixing the retail price of the flour milled from Government wheat.

C. Pakistan Agricultural Storage and Services Corporation (PASSCO)

Background

3.12 General. PASSCO was created in 1973 under the Companies Act 1913 as a joint venture of GOP, owning 25% of the Company's shares, and the National Bank of Pakistan, the Agricultural Development Bank of Pakistan (ADBP), and six nationalized commercial banks which together hold the remaining 75% of PASSCO's share capital. The Company owes its origin to GOP's desire to (i) have the nationalized commercial banks participate more actively in the agriculture sector and (ii) strengthen public sector marketing activities in order to ensure that producers earn adequate returns and consumers do not pay unreasonable prices. The establishment of PASSCO under the Companies Act as a semi-private organization, with its greater freedom of action, was seen as a suitable means for promoting efficient procurement and distribution operations. Initially, PASSCO confined its operations to procurement of wheat, but it has considerably expanded its activities which now include procurement of paddy, domestic marketing of rice, pulses, potatoes and onions, storage operations and construction, and leasing of agricultural machinery.

3.13 Management and Organization. The control of PASSCO is vested in the Board of Directors comprising two members appointed by GOP, the managing director and representatives of the National Bank of Pakistan, ADBP and the nationalized banks. Both the chairman of the Board and the managing director, who is also the chief executive officer, are appointed by the Board. PASSCO's organization is based on a line-staff structure patterned in accordance with the geographical distribution of PASSCO operations, which cover all four Provinces.

Major Operations

3.14 Wheat Procurement. PASSCO's major activity is the procurement of wheat, mainly for the Food Department of NWFP and to supply Azad Kashmir, the Northern Areas and the armed forces. PASSCO acts as an agent of the Provincial Food Departments and MFAC procuring at the Government procurement price and charging a commission for its procurement and storage services. Wheat is procured in designated areas in Punjab where PASSCO is operating 162 procurement centers in addition to procuring directly on the farm. The Punjab Food Department has discontinued wheat procurement in these areas. Part of the wheat procured is transported immediately to NWFP, the Northern Areas, Azad Kashimir or defence establishments; the remainder is temporarily stored in PASSCO's 28 godown complexes in Punjab. Transportation of the wheat from - 18 -

PASSCO's procurement and storage centers is the responsibilityof the receiv- ing agency. PASSCO started to procure wheat with a modest program of 27,000 MT in 1974. Since then this activity has expanded rapidly, reaching 576,000 MT in 1979 and over 700,000 MT in 1980. (Wheat procurement details are in Annex 3, Table 2.)

3.15 Paddy/Rice Operations. After a limited involvement in paddy procurement during 1974/75 and 1975/76, PASSCO, at the request of the Government, initiateda substantialpaddy procurement program in 1977 in Sind and Punjab. Paddy is bought at the Government support price in competitionwith private Government-authorizedpaddy/rice dealers and millers, and it appears that the procurementoperation has been successful in supporting farmgate prices. A total of 146,000 MT of paddy was procured in 1977/78which was followed by 224,000 MT in 1978/79. Paddy procurement is carried out through 53 procurement centers and direct purchases from farmers at the farmgate. PASSCO operates 47 rice mills. Two of these mills are owned by PASSCO, and the others are rented. The milled rice is sold to RECP except for a limited quantity which PASSCO is allowed to market domestically(para 2.16).

3.16 Storage Construction. In 1976, PASSCO commenced a program of constructingstorage to meet its increasing storage needs, and established an engineeringdivision headed by an Engineering Advisor. The Corporation developed its own house-type godown design which has proven to be most suitable for grain storage under Pakistan conditions (Design details are in Annex 5). By now, PASSCO has completed constructionof 303,000 MT (272,000 MT nominal capacity) at 28 locations in Punjab and at two locations each, in Sind and NWFP. In Lahore, it constructeda 3,000 MT cold storage for storing potatoes. Additional grain storage capacity of 52,000 MT is under construction or included in the current year's constructionprogram. The godowns owned by PASSCO are used mainly for the storage of wheat and pulses and for a small amount of rice. Paddy and rice are generally stored in storage facilities at the PASSCO operated mills.

3.17 Finances. By the end of June 30, 1979, PASSCO had a paid-up capital of Rs 30 million. Outstanding long term loans amounted to Rs 66 million and short-termbank borrowings were Rs 872 million. PASSCO has earned profits every year since its inception (ranging between Rs 0.7 million and Rs 15.8 million),except the financial year 1977/78, when it lost Rs 1.8 million. (Financialstatements are in the Project File.) The main operations are profitable,but some of the secondary activities,such as machinery leasing and marketing of potatoes, entail losses. For procuring and storing wheat, PASSCO receives a commission fixed at Rs 308/MT, which is adequate to cover all cost associatedwith this activity. Since the commission is independent of the period during which the wheat is stored by PASSCO, the profitabilityof the operationvaries with the storage duration in PASSCO's own stores. In the case of paddy, PASSCO procures at Government procurementprices, and mills the paddy into rice, most of which is sold to RECP (para 3.15) at prices fixed by GOP. The operation has been profitable in Punjab but suffers losses in Sind, where paddy is generallyof lower quality. Since PASSCO has to pay the same paddy procurementprice in Sind as in Punjab, GOP has agreed to cover PASSCO's losses incurred in its paddy/rice operations in Sind during the last years. - 19 -

D. Rice Export Corporationof Pakistan (RECP)

3.18 In 1974, GOP establishedthe Rice Export Corporationof Pakistan (RECP) under the CompaniesAct 1913 and granted a rice export monopoly to the Corporation. RECP is fully owned by GOP and responsible to the Ministry of Commerce. The firm is managed by a Board of Directors comprising an executive chairman and a director each for field operations,administration, and finance. The directors are appointed by GOP, and are supported by five general managers and a secretary. The total RECP staff strength is about 2,200.

3.19 RECP procures most of its rice through the Provincial Food Depart- ments of Punjab and Sind which share with RECP the responsibilityfor proper quality inspectionand weighing of the grain. RECP purchases rice from PASSCO also and operates a sizable procurementcenter of its own near Karachi. Much of the rice fails to meet export quality standards and needs additional cleaning,grading2 and polishing. This is accomplishedat RECP cleaning plants near Karachi, which have a combined annual cleaning capacity of about 750,000 MT. RECP procures paddy, also, which it mills at its seven rice mills in Pinjab and at onesmill in Sind. The mills in Punjab mill exclusivelyBasmati paddy, while the mill in Sind processes IRRI varieties. The combined annual milling capacity of these operations is about 250,000 MT of paddy.

3.20 Rice exports have increasedconsiderably since the establishment of RECP, growing from 426,000 MT in 1974/75 to an estimated 1.1 million MT in 1979/80. Export activities are highly profitable. In 1978/79, RECP earned almost Rs 1.1 billion before taxes on a turn-over of Rs 3.4 billion. The correspondingfigures for 1977/78 are Rs 0.4 billion and Rs 2.4 billion. The margins are large, especially for Basmati, which in 1978/79 had an average export price of Rs 7,356/MT while the procurementprice was set at Rs 2,936/MT for the same year. The tradingmargin thus amounted to Rs 4,420/MT or 60% of the export price. For IRRI varieties, the margins have been smaller, but still they exceeded 45% in 1978/79.

IV. THE PROJECT

Project Concept and Objectives

4.01 Under GOP's program to provide producer incentives through support prices and to make foodgrains available at reasonableprices in urban and food deficit rural areas, public sector procurementof domestic wheat has increased rapidly during the last years. The increase has been stimulated by two good crops and attractive Government procurementprices that have encouraged increasedproduction. With the investmentstaken in the agriculturalsector (para 2.03) and GOP procurementand pricing policies, this favorable trend in production and procurementis expected to continue. With the increase in procurement,existing foodgrain storage capacity of the Provincial Food Depart- ments and PASSCO has become increasinglyinadequate and a constraint on the Government'sability to maintain its commitment to procuring all wheat offered at the procurementprice (para 2.31). The Government'sprocurement commitment - 20 -

has gained added importance as private grain traders and millers have been reluctant, especially in good crop years, to procure and store over an extended period significant quantities of wheat (para 2.22). The private sector lacks the resources and does not have sufficient storage to hold large quantities of grain. In addition, private traders and millers seem to be hesitant to assume the storage risk. The Government is now encouraging greater participation of the private sector in grain trade, and the project would finance a study which would address private sector storage needs and possible GOP policy measures for increasing the involvement of the private trade in grain marketing (para 4.25). While the private sector may therefore in the future expand its role in the procurement and storage of foodgrain, this is not anticipated to happen soon. Until such time storage requirements would be mainly in the public sector from where at a later date storage facilities could be sold or leased to private grain dealers. The lack of sufficient public sector storage is also a constraint to the establishment of the food security reserve now contemplated by GOP (para 2.39). Furthermore, under the earlier storage construction programs preponderant shares of construction went to major urban centers, with the result that the need for additional storage is most acute in the producing and procurement areas (para 2.18). For storing rice for export, the public sector storage located near Karachi appears to be adequate, but storage capacity at RECP rice mills in Punjab is insufficient to meet operational storage needs (para 2.27). To overcome these constraints and permit GOP to increase foodgrain procurement operations in support of expanding foodgrain production, additional storage facilities are required beyond the capacity being provided under the ongoing storage construction programs (para 4.04).

4.02 The main objective of the project would be to assist GOP in the implementation of its foodgrain policy by providing additional grain storage facilities and improving the operational efficiency of the Provincial Food Departments, PASSCO and RECP, so that these institutions can meet foodgrain procurement, distribution and export requirements more effectively and reduce quantitative and qualitative storage losses. In addition, the project would aim at strengthening grain storage research and extension.

Major Features

4.03 The project, which would be carried out over a four year period, would comprise:

(i) construction of 500,000 M1T of bagged grain storage facilities, mainly for the storage of wheat by the four Provincial Food Departments and PASSCO;

(ii) construction of 40,000 MT grain storage for RECP at seven rice mills in Punjab;

(iii) provision of warehousing, grain testing and quality control equipment for storage facilities and grain procurement cetntets an) ity si-i%grain testing Alaboratories to be established under the project;

(iv) pilot facilities for mechanical grain handling; - 21 -

(v) provision of financialassistance to the Pakistan Agricul- tural Research Council (PARC), universitiesand agricultural research institutes for carrying out grain storage research and extension training programs in grain storage technology;

(vi) technicalassistance for studies in grain transportation economicsand logistics;for improvementof practices in grain procurement,grading and testing, and storage quality control; for developing design of systems for mechanical grain handling; and for grain storage research and extension;

(vii) training and study tours for officers of the Ministry of Food, Agricultureand Cooperatives,the Provincial Food Departments,PASSCO, RECP, PARC, universitiesand agricultural research institutes;and

(viii) a study on further storage requirements(especially in the private sector, on farms and at village level) and on grain processing needs.

Project Area, Storage Needs and Project Storage Provisions

4.04 The project area would comprise all districts in the four Provinces in which the Provincial Food Departmentsprocure and/or distributewheat and the districtswhere PASSCO is procuring wheat and paddy. Also included are the areas in Punjab where RECP is operating its rice mills. Storage facilities owned by these institutionstogether with storageunder construction or already included in approved programs are summarizedbelow. (Details on PASSCO's and the Food Departments'storage by district are in Annex 2, Tables 1 through 4).

PUBLIC SECTOR GRAIN STORAGE CAPACITY (in '000 MT)

Punjab Sind NWFP Baluchistan Total

Provincial Food Departments Existing 1,167 502 159 72 1,900 Under Constructionor Planned 387 16 19 28 450 Subtotal 1,554 518 178 100 2,350

PASSCO Existing 271 18 10 4 303 Under Constructionor Planned 39 9 - 4 52 Subtotal 310 27 10 8 355

RECP Existing 39 690 - - 729 Under Construction or Planned - 225 - - 225 Subtotal 39 915 - - 954

Total Public Sector 1,903 1,460 188 108 3,659 - 22 -

4.05 Grain storage requirementsof the Provincial Food Departments and PASSCO for the operation of their wheat procurement and distributionprograms (excludingfood security stocks) have been projected on the basis that GOP will continue its stated policies in the areas of grain pricing, procurement and distribution. For the months of peak storage need for 1985/86, storage requirementsare estimatedat 3.8 million MT, if the wheat crop is normal in 1984/85, and at 4.5 million MT, if it is a bumper crop because of particularly favorableweather. Taking into account existing storage facilities which are suitably located, and storage under constructionor included in already approved constructionprograms, additional storage requirementsin 1985/86 are projected at 1.3 million MT and 2.0 million MT for a normal and a bumper crop respectively. These requirementscan be reduced to 1.1 million MT (for normal crop) and 1.8 million MT (for bumper crop), if maximal use is made of the storage in districtswith excess storage capacities. About 80% of the additional storage requirementsare in the wheat producing areas. Additional storage for distributionpurposes is needed only in NWFP and Baluchistan. Details on production,procurement and distributionprojections and on projections for storage requirementsare in Annex 4.

4.06 The project would provide 500,000 MT storage capacity in 35 of the 64 districts in the project area, covering about 47% of the projected additional storage needs of the Provincial Food Departmentsand PASSCO by 1985/86. Almost 400,000 MT of project storage would be located in wheat procurement areas (about 200,000 MT of this would be constructedat 60 new storage locationswhere presently no storage is owned by Food Departments). The remainderwould provide for most of the additional storage requirementsin food deficit districts in NWFP and Baluchistan. The project storage facilities would be distributedamong the Provinces as follows (details by district are in Annex 4, Tables 5 through 8):

PROJECT STORAGE FACILITIES FOR PROVINCIAL FOOD DEPARTMENTSAND PASSCO (in '000 MT)

Projected StorageNeeds Project Storage 1985/86 Project as a Percentage of Province (Normal Crop) Proposals Storage Needs

Punjab 580 290.4 50 Sind 302 104.5 35 NWFP 105 50.1 48 Baluchistan 87 55.0 63

Total 1,074 500.0 47

Project storage facilitieswould be located on the basis of projected district- by-districtwheat procurementand distribution,availability of transportation facilities,-PTt'it to toa1ian) tail netwotk, atx e istiTg zttl&g c.apacity. Locations, together with storage capacities,have been agreed upon during appraisal and confirmed during negotiations(details are in Annex 4, Tables 9 - 23 - and 10 and on Maps 15571-74). Project storagewould be owned by the Provin- cial Food Departments,but those to be constructedin Punjab in areas where PASSCO is responsiblefor wheat procurementwould be leased to PASSCO. While project storage would provide only 47% of projected incrementaloperational storage needs in 1985/86, large scale public sector constructionof grain storage facilities,in addition to those to be constructedunder this project and under other programs considered in this report, might jeopardize economic utilization of the project facilities. An assurancewas therefore obtained from GOP during negotiationsthat GOP consult with IDA annually on the Govern- ment's foodgrain storage constructionprograms.

4.07 Storage needs for paddy and rice at the seven RECP rice mills in three districts in Punjab have been estimatedat 122,900 MT for 1985/86. Taking into account the existing storage capacity of 38,700 MT, additional storage requirementsare estimatedat 84,200 MT. The project would provide storage facilitiesat each mill for a total of 40,000 MT or about 48% of additional storage needs. Details on projectionsfor paddy procurement and milling together with projections for storage needs are in Annex 4, Table 11. Project storage to be provided to the seven mills would be as follows:

PROJECT STORAGE FOR RECP RICE MILLS (in MT)

Project Storage Projected Storage Project as a Percentage Storage Location Needs 1985/86 Proposals of Storage Needs

Hafizabad 7,200 4,000 56 Sheikhupura 14,200 6,000 42 Siranwali 6,600 4,000 61 Eminabad 8,100 4,000 49 Faizabad 9,400 5,000 53 Mubarikpur 8,600 5,000 58 Dhaunkal 30,100 12,00 40 Total 84,200 40,000 48

Detailed Features

4.08 Storage Warehouses for Provincial Food Departmentsand PASSCO. Since grain would be handled in bags in the forseeable future, project storage facilitieswould be conventionalbag storage warehouses. The warehouse design developed by PASSCO has a proven record of successful constructionand is most suitable for Pakistan conditions. With some small improvementsit would be used as the standard design for project storage. The design meti- culously takes into considerationall operationalneeds for effectivestorage quality control and proper stock inspection,while at the same time providing for easy constructionwith locally available constructionmaterial and equipment, and permitting easy operation without sophisticatedgrain handling equipment. The basic design would provide for a capacity of about 1,100 MT of wheat in 95 kg bags stacked 14 layers high. The buildingswould be rec- tangular with inside dimensions of 62 ft x 100 ft (18.9 m x 30.5 m) and inside - 24 -

height clearance of about 18.8 ft (5.7 m). Footings would be of plain concrete; walls of brick masonry; and the roof with a 1:40 pitch and of reinforced concrete either cast in situ or with pre-cast beams and girders. A central row of columns inside the building would support the roof. The floor would be raised 3.5 ft (1.1 m) above the ground level on a foundation of compacted layers of earth sealed with a polyethylenesheet to prevent moisture migration. The floor topping of cement concrete would be laid in panels which would demarcate the bag stacking pattern to facilitate the best use of the available space. Each building would be provided with hinged steel doors mounted in steel frames with sealing rubber strips to facilitate fumigation. Screened windows made of damage proof plastic glass, and continuous loading platforms on two sides of the godown would be standard features. (Design specificationsfor the godown are in Annex 5; the layout is presented in Annex 5, Chart I. Cost estimates are in Annex 5, Table 1.) In seismic areas (in Baluchistan)and at remote locations where small capacity godowns would be constructued(in Chitral district, NWFP) or where stones instead of bricks would need to be used for construction,the standard design would be suitably modified or, if necessary, a separate design developed.

4.09 Ancillary buildingswould be constructedat each site, depending on the size of each storage complex and available existing facilities. These would comprise an office, a laboratory,staff facilities and a guard house. Storage sites would need to be improved. Improvementswould be provided also under the project and include all-weatheraccess roads to the storage site and inside the storage complex, a parking lot and perimeter walls. Other improvements would be land filling, land levelling, sanitation,water and power supply and drainage. (Cost estimates for storage complexes of different capacities and for ancillary facilities and site improvementsare in Annex 6, Table 2. A cost summary by Province is in Annex 6, Table 1.) To design the storage and ancillary facilities and carry out the constructionprogram, the Ministry of Food, Agriculture and Cooperativeswould engage PASSCO which would establish a Project ImplementationUnit (PIU) attending exclusivelyto project matters (paras 5.04 through 5.06).

4.10 Storage Warehouses for RECP. The paddy/rice storage facilities, which would be provided at seven RECP mills, would be bag storagewarehouse- type structures. The design would be similar to the one adopted for storage facilities at the RECP rice cleaning plants near Karachi, but it would differ from location to location because of the limited space availabilityat each of the mills. Tentative site layouts have been completedfor each location and detailed designs for the stores are being prepared. Constructionwould be a reinforced concrete column, beam frame with 20 cm thick block masonry walls and a 6 m span reinforced concrete shell roof. The roof would be water proofed with a three-plybituminous felt treatment. The floor, 1.2 m above grade, would have a 3 m wide continuous platform outside around the building. Inside height would be at least 6 m under the roof beams and 7.8 m under the roof shells, allowing for stacking paddy 18 layers high and for future use of mechanical handling equipment. (Detailedconstruction cost estimates for 1,000 MT storage capacity have been VarVated Qn the basis of a wC&oX8 io 1 andiate ?resente.&in &a--xeyc 5., Ta A e 2. Cor--t-ctior cost estixstat.s frro eac of the proposed paddy/rice storage facilities and for necessary site improvements are in Annex 6, Table 3.) RECP has engaged National Engineering Services - 25 -

(Pakistan)Ltd. (NESPAK) for designing the storage warehouses and for supervising their construction(para 5.07).

4.11 Warehousing,Quality Control and Laboratory Equipment. Storage facilities for the Provincial Food Departmentsand PASSCO would be provided with grain testing and quality control equipment includinghand sprayers, fumigant applicators,moisture meters and miscellaneousother equipment items, as detailed in Annex 6, Table 4. The facilitieswould be equipped also with platform scales. Truck scales would be installed at project storage complexes with capacities greater than 9,000 MT, and grain cleaners would be provided for project godowns at procurementcenters.

4.12 Existing procurement centers and storage facilitiesoften lack quality testing and grain cleaning and weighing equipment. This has been one of the main causes of the quality problems in wheat procurement,inaccuracies in weighing and reportedmalpractices in storage and distributionoperations (para 4.19). To improve quality inspection,especially at the time of procurement, the project would provide grain testing and warehousing equipment for those existing storage facilities and procurement centers which are presently not adequatelyequipped. In addition,for existing storage complexes with capacities in excess of 9,000 MT, truck scales would be provided where these are now lacking.

4.13 While quality control procedures of the Provincial Food Departments provide for an independentquality assessment (super inspection)of the procured grain at the time of procurementand during storage, the Food Departments do not have adequately trained staff nor sufficientgrain testing equipment to carry out this function effectively. So far, only the Food Department in Punjab has establishedfour grain testing laboratoriesand engaged a trained Grain Technologist. Six additional grain testing laboratorieswould be set up, three in Sind and one each in the other Provinces, for which the project would finance equipment and training of the six Grain Technologistswho would be in charge of the facilities (para 4.23). (Cost details on warehousing, quality control and laboratory equipmentare in Annex 6, Tables 1, 2 and 4).

4.14 Pilot Projects. About 16% (303,000 MT) of the wheat storage facilities owned by the Provincial Food Departmentsare interconnectedhexagonal concrete bins with concrete hopper and top deck. The bins, each with a capacity of about 35 MT, are grouped into storage units of some 500 MT or multiples thereof. Access to the top deck, about 30 ft above grade, is by an exterior stairway. To fill the bins, bags are carried manually to the top and emptied into hatch openings. When emptying the bins, the grain is rebagged. The manual loading of these storage facilities requires large labor crews who are engaged by the contractorsresponsible for transportingthe grain to the storage site. High labor requirements,substantial grain losses in handling and considerablewear and tear of gunny bags make this operation costly; sufficient labor is not always available; and carrying the 95 kg bags 30 ft up the staircase is extremely arduous. As a result, the Food Departments, despite lower grain losses in bin storage, usually wait until all other storage facilities are filled before using the bins. To explore possibilities of improvedutilization of bin storage, the project would provide, on a pilot basis, semi-mechaLnicaland pneumatic handling systems for loading the bins at - 26 - five storage sites in each of the three Provinces where bins are being used. The semi-mechanicalhandling system would consist of a platform at truck deck height around a dump sink in which the bags would be emptied. From there the wheat would be elevated with an electricallypowered elevator and discharged into a surge bin installed on the top deck of the storage bins. From the surge bin the wheat would be moved by cart to the various hatch openings. The pneumatic conveying system would be a combinationvacuum/pressure type machine which would be self-contained,mounted on wheels and powered by a diesel or gasoline engine. To load the bins, bags would be emptied into a hopper installed on the machine at truck deck height. From the hopper the grain would be blown into the bins via vertical and horizontal piping and an air separating cyclone. The equipment could be used also for emptying bins into a bagging hopper and would provide for the possibilityof unloading bins into bulk trucks. The machine would load as well as unload bins and is easy to move, so that it could be used at a number of bin complexes at different locations.

4.15 Stacking practices at bag storage warehouses vary considerablyfrom region to region. While the stack height is normally thirteen to fifteen layers, generally it is only ten layers high in Baluchistan. Laborers often resist stacking higher than what is commonly practiced in the immediate vicinity;and, if higher stacking is agreed to, labor costs frequentlymore than double. There are a number of godowns, especially the large facilities constructedby the Pakistan Public Works Department (Pak-PWD),which would permit stacks of 20 layers. But labor resistance combined with the increased risk of accidentsgenerally prevents full utilization of the existing capacity. The large warehouses also require long walking distances (the 16,000 MT godown designed by Pak-PWD is 120 ft wide), making manual carrying and stacking of the bags very streneous. To explore ways of making fuller use of the existing capacity and to reduce the need for carrying bags manually over long distances, some mechanical bag handling equipment would be provided for a pilot project in five storage complexeswith large Pak-PWD godowns. Each of the complexes would be equipped with two mechanical handling systems, each comprising one conveyor with adjustableheight to elevate bags up to about 20 ft and five horizontal conveyors,each about 30 ft long. All units would be mobile and electricallypowered. (Details on the equipment proposed for the pilot schemes are in Annex 5. Cost estimatesare in Annex 6, Table 5.) Selection of the most suitable systems and preparationof detailed designs and specifications would be finalized by PASSCO in consultationwith the Provincial Food Departments,and with the assistance of a project consultant (para 4.20).

4.16 Grain Storage Research and Extension. Grain storage research so far has received little attention in Pakistan. Some research on identification of insect pests and fungal damage in grain storage, and on insect control has been carried out by agriculturaluniversities and research institutes,partly under the auspices of programs directed by the Pakistan AgriculturalResearch Council (PARC). However, these efforts have been too limited to generate a significantimpact on the control of storage pests or on the development of improved storage procedures and structures. Considerableadditional research is required in such areas as storage losses from various pests and the effectiveness of different pest control methods, before a comprehensivestrategy for storage loss prevention can be developed. Adaptive research is required also on the suitabilityof different storage designs to minimize grain damage - 27 -

from moisture, rodents and pests. Such research appears to be needed especially for on-farm and village level storage where losses seem to be high (para 2.20).

4.17 Extension programs have so far paid little attention to grain storage technology. While the need for disseminating information on such matters as identification of pests, application of chemicals and storage sanitation is widely recognized, efforts in developing suitable extension programs in these areas have been negligible. The project would provide funds to PARC for storage research and extension training to be carried out under a coordinated program by agricultural research institutions and universities. To develop a suitable program and coordinate its implementation, PARC would establish and maintain for about four years a Program Coordination Unit. The project would finance (i) the operating cost of the Program Coordination Unit, (ii) six man-months of consultancy services necessary to set up the program, and (iii) vehicles, equipment and training (para 4.24) required to carry it out. A draft program proposal is in Annex 7. (Cost estimal:es are in Annex 6, Tables 6 and 7.)

4.18 Technical Assistance. Recent growth in public sector wheat procurement and distribution has made the movement, especially of indigenous wheat, an increasingly complex task. The Provincial Food Departments and PASSCO have to decide daily on timing, transport mode, origins and destinations of a very large number of wheat shipments. Transportation expenditures are a major budget item of these institutions, exceeding, for example, 16% and 20% of the procurement price for indigenous and imported wheat, respectively in NWFP. The cost is high,, partly because the shortage of storage facilities in the procurement area often make it necessary to use very costly transportation means (para 2.18). Poor planning and coordination have also been the causes of the very high transportation and handling costs. Wheat shipped to distribution centers does not always originate from the closest procurement storage; wheat is sometimes transported back in the direction from where it came; and instead of sending wheat directly to where it is required, shipments are often made to intermediate storage facilities, resulting in very round-about transportation. The complexity of wheat transport operations involving more than 1,000 procurement and over 400 storage centers calls for better transport planning and coordination and information systems design. To address current problems in wheat transportation, the Food Wing of the Ministry of Food Agriculture and Cooperatives (MFAC) would be strengthened (para 5.01) and develop a plan for improvements in foodgrain transport operations (including economics, logistics, coordination and information systems). The project would finance a specialist in transport economics and logistics who, working closely with the Provincial Food Departments, PASSCO, RECP, the Railway Board and National Logistic Cell, would assist the Ministry for about 24 months in this effort.

4.19 Wheat quality testing and weighing practices do not always comply with Government directives (para 3.06). Much of the wheat procured is not sampled and only a limited number of bags are weighed. Also, the quality of grain at procurement is evaluated only visually so that the exact quality differentiation prescribed by the Governments is impossible. As a result, the quality of the procured wheat is not always satisfactory and the quantity is frequently inaccurate. Since quality and quantity inspection is similarly inadequate at later stages of storage, problems get aggravated up to the - 28 - milling stage. Inspection problems have also given rise to a number of reported malpractices,such as adulterationof wheat with dust and other foreign matter. The impurities,which on the average may be as high as 5%, are removed before milling, and millers are reported to practice adding water to the flour to make up for the weight loss. Reliable informationon losses accruing to the Government as a result of these practices is not available. Existing problems in wheat inspection are due partly to a lack of testing, cleaning and weighing equipment (paras 4.11 through 4.13), but the poor quality of staff engaged in procurement and storage, the laxity in enforcing the Food Departments'directives, and the excessive complexity of the quality standards and the related price discounts are also responsiblefor the deplor- able situation. There are problems in grain quality control also, mainly due to a lack of technical staff and to insufficienton-the-job training of storage personnel (para 3.07). To improve grain testing, weighing and quality control operations,the Food Wing of MFAC would be strengthened(para 5.01) and be required to carry out a detailed analysis of the current practices and problems, and prepare recommendationsfor improvementsof wheat procurement and inspection and quality control procedures. The project would finance an internationallyqualified consultant in grain quality standards, and grain testing and quality control who would assist the Food Wing for about eighteen months in preparing the analysis and recommendations. He would also assist in preparing operationalmanuals for grain procurementand inspection and in developing training programs for procurement and warehousingstaff to improve grain testing and quality control practices. 4.20 PASSCO's Project ImplementationUnit (PIU) would be responsiblefor equipment procurementand systems design for the pilot projects on mechanical grain handling (paras 4.14 and 4.15). Since PASSCO's engineeringstaff has only limited expertise in these areas, the assistance of an internationally qualified engineeringconsultant experiencedin the design of mechanical handling systems would be required for about six months. The project would provide such a consultant. 4.21 Technical assistance is required for PARC and participatinguniversities and agriculturalresearch institutes to develop the grain storage research and extension training programs envisagedunder the project (paras 4.16 and 4.17). The project would provide for an internationallyqualified grain scientistwho would be engaged by PARC for about six months for this purpose. 4.22 Total cost for 54 man-months of technicalassistance is estimated at about US$430,000 on the basis of a man-month cost of US$7,500 including fees, subsistanceand allowances. (Details are in Annex 6, Table 8). Assur- ances were obtained from GOP and PASSCO at negotiationsthat technicalassistance consultantswould be engaged by January 31, 1982 under terms and conditions satisfactoryto IDA. (Draft Terms of Reference for the consultants are in the Project File). 4.23 Training. The storage constructionprogram and the grain testing laboratoriesfinanced under the project would increase the need for trained staff in grain handling, storage, transport and quality control. The provisions would be made under the project to train 16 officers of MFAC (2), Provincial Food Departments (10, including six Grain Technologiststo head the project financed grain testing laboratories),PASSCO (2) and RECP (2) for about 3 months each in these fields. This training could be given by the - 29 -

AgriculturalUniversity at Faizalabadwhich has suitable courses in Grain Technology. The project would also provide overseas study tours for about seven senior officers of the Ministry of Food, Agricultureand Cooperatives, the Provincial Food Departments,PASSCO and RECP to examine grain procurement, handling, transport and storage systems in other countries. On-the-job training for grain procurementand storage personnel in grain quality inspection and control would be provided by the Grain Technologistsheading the grain testing laboratoriesand by the laboratory assistants during their inspectionvisits to storage facilities. The Grain Technologistswith the assistance of the project consultant for grain quality inspection and control (para 4.19) would also organize two week training courses in procurement procedures and quality testing and control for procurement and storage personnel. These courses would be conducted by each grain testing laboratory about four times a year with some 20 participantsper course. 4.24 Provision would be made for overseas training of scientificpersonnel of PARC, agriculturalresearch institutesand universitiesparticipating in the project grain storage research and extension component. In addition, the project would provide funds for thirty-fivegraduates to undertake post- graduate study programs at participatinguniversities. Upon completion of their studies, these traineeswould be expected to make valuable contributions to the Provincial Food Departments,PASSCO and RECP, and to the extension services of the Provincial Departmentsof Agriculture as subject matter specialists. An assurancewas obtained from GOP at negotiationsthat foreign training end study tours satisfactoryto IDA would be arranged by March 31, 1982. (Cost details on training are in Annex 6, Table 8). 4.25 Grain Storage and Processing Study. The project would provide funds for a study on further needs for grain storage and foodgrain processing facilities. The study would address storage requirementsespecially on the farm and village levels and in the private sector and: (i) provide a compre- hensive picture of storage facilities available in Pakistan; (ii) make projections for future storage requirementsat all levels; and (iii) prepare recommendationsfor further storage constructionprograms and improvements in grain transport,handling and quality control. For the preparationof investmentprograms for the private sector, the study would evaluate also the developmentneeds in the area of foodgrainprocessing and include: (i) a survey of existing rice and flour mills; (ii) a review and analysis of present milling and grain drying practices; and (iii) recommendationsfor improvements of existing facilities and operations and for additionsof new processing capacity. The study recommendationswould be prepared within the framework of alternativeGovernment policies regarding: (i) grain procurementand distribution pricing includingseasonal price differentiationfor public sector grain procurement;(ii) private sector involvementin grain marketing and processing, and credit provisions for the private trade; (iii) food security; (iv) grain imports and exports; and (v) transportation. The economic costs and benefits of the alternativeGovernment policies would be analyzed and recommendations would be made for the adoption by GOP of the most suitable policy alternatives. The study would be carried out by a multi-disciplinaryteam of project consultants under the direction of the Food Wing of MFAC. An assurancewas obtained from GOP at negotiationsthat engagement of consultantsfor carrying out the study would be completed by March 31, 1982, on terms and conditionssatisfactory to IDA. (Draft Terms of Reference for the study are in the Project File. Cost estimates are in Annex 6, Table 9.) - 30 -

Project Cost Estimates

4.26 Total project costs, including taxes and duties of about Rs 31.0 M (US$3.1M), over the four year developmentperiod, are estimated at Rs 673.6 (US$68 M equivalent)of which about US$15 M is foreign exchange. Details of project costs, summarized below, are in Annex 6. 4.27 Cost estimates are based on the findings of the appraisalmission and have been updated to December 1980. Physical contingenciesof 10% have been provided for all civil works and equipment costs. Price contingencies amounting to 28.2% of the sum of the base costs and the physical contingencies are also included. Annual inflation rates assumed in estimating the price contingenciesare 12% for 1981, 11.5% for 1982, 10.5% for 1983, 9.5% for 1984 and 9% for 1985 for local costs; and 9% and 8.5% for 1981 and 1982, respectively, and 7.5% for 1983 through 1985 for foreign costs.

SUMMARY OF PROJECT COST Foreign Local Foreign Total Local Foreign Total Exchange --- kRs Million------US$ Million----- %

1. Wheat Storage Facilities Land 8.2 - 8.2 0.8 - 0.8 - Civil Works 310.1 81.3 391.4 31.3 8.2 39.5 21 Equipment 9.3 10.5 19.8 0.9 1.1 2.0 53 Subtotal 327.6 91.8 419.4 33.0 9.3 42.3 22 2. Paddy/Rice Storage Facilities 29.0 9.2 38.2 2.9 1.0 3.9 24 3. Pilot Projects 2.2 3.3 5.5 0.2 0.3 0.5 60 4. Grain Storage Research and Extension Equip. & Vehicles 1.7 1.3 3.0 0.2 0.1 0.3 43 PARC Coord. Unit -1.6 0.1 1.7 0.2 - 0.2 6 Subtotal 3.3 1.4 4.7 0.4 0.1 0.5 30 5. TechnicalAssist- ance and Training 3.5 5.3 8.8 0.4 0.5 0.9 60 6. Study 2.3 0.8 3.1 0.2 0.1 0.3 26

BASE COST ESTIMATE 367.9 111.8 479.7 37.1 11.3 48.4 23 7. Contingencies Physical 35.2 10.6 45.8 3.6 1.1 4.7 23 Price 122.1 26.0 148.1 12.3 2.6 14.9 18 Subtotal 157.3 36.6 193.9 15.9 3.7 19.6 19

TOTAL PROJECT COST 525.2 148.4 673.6 53.0 15.0 68.0 22 Project Cost Excluding Taxes and Duties 494.2 148.4 642.6 49.9 15.0 64.9 23 - 31 -

Financing

4.28 The project financing plan would be:

------US$ M---4…--- Fed. Prov. Swiss Govt. IDA Total Govt. Govts. RECP US$I M US$ M %

Wheat Storage Co plexes and Equipment Land 1.0 - 1.0 - - - Civil Works and Equip. 59.1 25.2 - - 7.7 13 26.2 44 Paddy/Rice Storae 5.0 - - 1.5 - - 3.5 70 Pilot Projects 0.7 0.3 - - - - 0.4 57 Grain Storage Research >^< and Extension 0.7 0.3 - - - - 0.4 57 Technical Assistance and Training 1.1 - - - - - 1.1 100 Study 0.4 - - - - - 0.4 100

Total 68.0 25.8 1.0 1.5 7.7 32.0

Percent of Total 100.0 37.9 1.5 2.2 11.3 47.1

4.29 The Swiss Government and IDA together would provide a total of about US$39.7 M, representing some 61% of project cost net of duties and taxes. The proposed IDA Credit of SDRs 26.1 M (equivalent to US$32 M as of the date of negotiations) would cover 89% of foreign exchange costs and about 35% of local costs. The Swiss Government grant of Swiss Francs 15 M (about US$7.7 M equivalent) would finance 11% of foreign exchange costs and about 12% of local costs. The Swiss Government funds and part of the IDA Credit (US$28.5 M) would be channel]ed through the Ministry of Finance, Planning and Economic Affairs to the Ministry of Food, Agriculture and Cooperatives (MFAC). The remaining IDA funds (US$3.5 M) would be onlent by the Ministry of Finance, Planning and Economic Affairs to RECP. Onlending to RECP for financing the construction of paddy/rice storage and ancillary facilities would be for up to 12 years includ:ing a maximum grace period of two years. RECP would repay the loan at 11% interest, the basic lending rate charged by Pakistan development banks and commercial banks for fixed investment loans. GOP would carry the foreign exchange risk. These onlending terms are comparable with those of other IDA assisted projects in Pakistan. Bank Group projected inflation rates for Pakistan are generally in line with anticipated world inflation rates falling gradually from about 10% at present to about 6% by 1987/88. The interest rate chargied to RECP would thus be positive in real terms. Execution of a subsidiary loan agreement, satisfactory to IDA, between GOP and RECP would be a condition of Credit effectiveness. To permit early construction of the paddy rice storage facilities for which detailed designs are being completed, retroactive financing of up to US$1 M is proposed for expenditures appro- priately incurred for this component after January 1, 1981. - 32 -

4.30 The funds channeled to MFAC would be passed on in part to:

(i) PASSCO for financing the construction of wheat storage complexes (US$32.2 M) and for the procurement of equipment for storage facilities, grain procurement centers, grain testing laboratories and the pilot projects (US$2.1 M). MFAC would establish for this purpose a revolving fund which would be utilized by PASSCO to make payments for project expenditures. It would be a condition of Credit effectiveness that the revolving fund had been established with an initial deposit of Rs 50 M. An assurance was obtained from GOP during negotiations that the revolving fund would be replenished every six months in amounts sufficient to meet PASSCO's estimated project expenditures during the forthcoming six-month period.

(ii) PARC for financing the operating costs of its Program Coor- dination Unit and the procurement of equipment and vehicles (US$0.4 M), and the technical assistance and training (US$0.4 M) related to the project's grain storage research and extension component.

The remaining funds provided to MFAC (US$1.1 M) would finance other technical assistance and training (US$0.7 M) and the study (US$0.4 M) outlined in para 4.25.

4.31 GOP's contribution of Rs 255.4 M (US$25.8 M equivalent) would finance about 38% of project cost. It would cover the Government's contribution to wheat storage construction, equipment and vehicles procurement and the operations of PARC's Coordination Unit. The Provincial Governments' contribution of Rs 10.4 M (US$1.0 M equivalent) would finance the purchase of land for new wheat storage facilities. RECP would provide Rs 14.9 M (US$1.5 1M equivalent) as equity contribution covering 30% of construction cost for the project financed paddy/rice storage warehouses. A PC-i consistent with this report would be prepared, and its approval by ECNEC would be a condition of Credit effectiveness. 1/

Procurement

4.32 Civil Works. Although in the aggregate, total cost of storage and ancillary facilities and site improvements would be large (US$ 61.3 M; including US$5.4 M engineering charges), international competitive bidding would not be suitable for civil works contracts. Construction would be scattered at 131 locations across the country; the contracts would vary in size; bulking of contracts into large packages would not be practical; and Pakistan contractors are considered very competitive. Contracts for civil works would therefore be let under local competitive bidding procedures which are satisfactory to IDA. To the extent practical, tenders would be in packages of

I/ A PC-1 (Planning Commission Proforma Number One) is an outline of the project including project costs. Approval of the PC-1 by ECNEC is required under GOP's project approval procedures. - 33 - several contracts. Tenderers would be invited to bid for any one contract of the package individuallyor for a combinationof contracts or for the entire package. Bidders would be prequalifiedby PIU for wheat storage construction and by RECP for the constructionof paddy/rice storage facilities.

4.33 Equipment and Vehicles. Equipment and vehicles (US$4.0M; including US$0.3 M engineering charges)would be mostly imported and procured under ICB in accordancewith Bank Group guidelines. To the extent practical items to be procured would be bulked to attract bidders. Items expected to cost less than US$100,000,singly if they do not lend themselves to bul'lingor in bulk if they do, would be procured under local competitivebidding procedures. Minor items costing less than US$10,000 each for which bulking into contracts of at least US$10,000would not be practicalwould be procured by prudent shopping with due regard to efficiency and economy, up to a total of US$300,000. Procurement contractsfor weighbridgesand grain cleaners would include initial operator training and preparationof detailed operatingprocedures by the supplier. The technicalassistance services to be engaged, and the arrangementsfor overseas training and the project study, and the staffing of PARC's Program CoordinationUnit (US$1.7M) would be on terms and conditions to be agreed with IDA. Engagement of PASSCO and NESPAK by MFAC and RECP, respectively,to provide engineeringand supervisoryservices for the construction of storage facilitiesand equipment procurementand installation(US$5.7 M service charges are included in civil works and equipment cost) would be under contractualarrangements satisfactory to IDA (paras 5.05 and 5.07). The balance of project cost (US$1.0M) would cover land purchases. An assurance was obtained from GOP at negotiationsthat for all contracts in excess of US$300,000 draft tender documents and bid evaluationwould be submittedfor IDA review prior to contract award.

Disbursement

4.34 Disbursementsunder the proposed IDA Credit and the Swiss Government grant would cover:

(i) 75% of expendituresfor RECP civil works contracts (excludingNESPAK engineeringcharges) (US$3.5M);

(ii) 60% of expendituresfor civil works contracts for wheat storage complexes (excludingPIU engineeringcharges) (US$31.3 M);

(iii) 100% of foreign expendituresfor directly imported equipment and vehicles, or 60% of expendituresfor locally procured items (US$3.3M);

(iv) 60% of the staff cost of PARC's Program CoordinationUnit (US$0.1M); and

(v) 100% of expendituresfor technical assistance,training and the project study (US$1.5M).

The Swiss Government grant would be disbursed against expendituresunder item (ii) only. IDA would review GOP's withdrawal applicationsand request the - 34 -

Swiss Government from time to time and in accordance with an agreed disbursement schedule to make payments on withdrawal applicationsapproved by IDA. Procurement procedures for the Swiss contributionwould be the same as those applying to the proposed Credit. The conditions of the Swiss Government granL as negotiated between GOP and the Swiss Government are detailed in the "Swiss ContributionAgreement." Fulfillmentof the effectivenessconditions of this Agreementwould be a condition of Credit effectiveness.

4.35 Disbursementfor items (i), (ii), (iii) and (v) would be made against full documentation. For expendituresin (iv) disbursementswould be made against certified statements of expenditure. Documents supporting the latter type of disbursementswould not be submitted to IDA for review but retained by PARC and made available for inspectionby IDA during supervision mission visits. A schedule of estimated disbursementsis given in Annex 8.

V. MANAGEMENT AND ORGANIZATION

General

5.01 Successful developmentof the post-harvestfoodgrain sector would depend heavily on the organizationaland managerial strength of the Food Wing in the Ministry of Food, Agriculture and Cooperatives(MFAC). The decentral- ized nature of grain procurement,wheat distributionand storage operations, involvingall the four Provincial Food Departments,PASSCO and RECP makes it necessary that planning and coordinationresponsibilities are carried out effectivelyat central level. Inadequate central planning and coordination in the past have resulted in a rather ad hoc developmentof grain storage constructionin the Provinces, multifariousgrain testing and storage quality controlprocedures in the various Provinces, uneconomic grain transportation, and failure to achieve multi-purposestorage utilization. To permit effective planning and coordinationat central level, the Food Wing of MFAC would be strengthened. First, a Storage Cell would be established,which would be headed by a Director or Deputy Secretary reporting to the Joint Secretary (Food) and staffed with two Section Officers, an Accounts Officer and support personnel. The Officer on Special Duty (Wheat)who has been responsibleso far for all storage matters is assisted by only one Section Officer and in view of his other duties has not been able to pay enough attention to matters concerningstorage. The Cell would be responsiblefor project matters (paras 5.04, 5.10 and 5.11), and for the preparation of recommendationson future storage constructionprograms, storage maintenance,multi-purpose storage utilization,grain storage management,and grain handling methods. Second, MFAC's Food Wing would engage a Grain Quality Technical Officer, and a Grain TransportationTechnical Officer, trained in grain quality inspection and control, and in transportationeconomics and logistics,respectively. The Officers would report directly to the Joint Secretary (Food) and advise him on these subject matters. They would work closely with the two project ctyonsultants -two wouxa assist 'ft&YC in improving grain quality inspection and control and transportationoperations (paras 4.1a and 4.19). An assurance was obtained from GOP at negotiationsthat MFAC would establish the Storage Cell and that the Director (or Deputy Secretary)heading the Cell and the two - 35 -

Technical Officers would be engaged by December 31, 1981. The proposed organizationof MFAC's Food Wing is presented in Annex 9, Chart I.

Project Management and Coordination

5.02 The overall responsibilityfor project executionwould rest with the Ministry of Food, Agriculture and Cooperatives(MFAC). Within the Ministry, the SecretarywouLd be responsiblefor effectiveproject implementationand for ensuring coordinationamong the various GOP agencies concerned and between GOP, the Provincial Governments,PASSCO and RECP. Because of the large number of entities involved in project implementationand the large number of project storage sites, coordinationrequirements would be very great. To meet these needs, a Project Management and CoordinationCommittee (PMCC) would be established under the chairmanshipof the Secretary,MFAC, comprising the Joint Secretary(Food), the head of the Storage Cell, the Officer on Special Duty (Wheat) and representativesof the Ministries of Finance and Commerce, the Planning Division, the Provincial Food Departments,PARC, PASSCO, RECP, Pakistan Railways and the National Logistic Cell. The head of the Storage Cell would serve as the secretary to the Committee. Administrativesupport to PMCC would be provided by the Storage Cell.

5.03 PMCC would meet as necessary, but at least quarterly, to review project progress and help formulatepolicies and directiveson project implementation. In particular,PMCC would: (i) monitor physical implementation; (ii) review implementationbottlenecks and recommendsuitable corrective actions; (iii) review plans and recommendationsfor improvementsin grain transportation(para 4.18) and in grain quality inspectionand control (para 4.19); (iv) guide preparationof the study provided under the project (para 4.25) and upon completionof the study make appropriaterecommendations for further sub-sectcordevelopment; (v) ensure timely land acquisitionfor the project; (vi) coordinatestorage utilization among various public sector agencies; (vii) monitor continuallygrain supply and consumptiontrends and trends in grain procurementby the public sector; and (viii) help formulate policies on foodgrain procurementprocedures, quality standards,inspection and quality control practices and on grain transportation. Establishment of PMCC with compositionand responsibilitiessatisfactory to IDA would be a condition of Credit effectiveness.

Project Implementation

5.04 Storage Warehouses and Equipment for ProvincialFood Departments and PASSCO. The program for constructingstorage facilitiesand procuring equipment for the Provincial Food Departmentsand PASSCO, and implementation of the pilot projects would be under the overall direction of the Storage Cell in the Food Wing of MFAC. MFAC would engage PASSCO for carrying out the programs and the pilot schemes. All importantactivities would need to be agreed between MFAC, PASSCO and the Provincial Food Departmentsand would require the cooperationof the Provincial Food Departments. The individual responsibilitiesof these institutionsunder the project and coordinationand implementationarrangements would be detailed in an agreement the general outline of which has been discussed and agreed upon during negotiations. Com- pletion of such agreement, satisfactoryto IDA, between MFAC, the Provincial Food Departmentsand PASSCO would be a condition of Credit effectiveness. - 36 -

5.05 PASSCO, which has considerable experience in godown construction (para 3.16) and prepared the standard design for project storage facilities, would establish a Project Implementation Unit (PIU) to carry out the responsibilities assigned to it under the project. PIU would operate under the direction of PASSCO's Engineering Advisor reporting to the Managing Director, and would be headed by a Chief Engineer (General Manager) who would be supported by Executive Engineers responsible for different construction phases, contracts and design. Assistant Engineers together with Sub-Engineers (Overseers) would supervise construction at the construction sites. A Deputy General Manager would be in charge of project activities in Punjab and NWFP and another in Sind and Baluchistan. Adequate support personnel would be provided. Details on PIU staffing which would be included in the agreement between MFAC, the Provincial Food Departments and PASSCO (para 5.04), are in Annex 9, Table 1. Establishment of PIU and engagement of the Chief Engineer and of the two Deputy General Managers would be conditions of Credit effectiveness.

5.06 PIU would have three sections: (i) storage design and construction; (ii) handling systems design and equipment procurement; and (iii) finance and administration, responsible for accounts, audits, personnel and legal matters related to the project. To assist PIU in designing mechanical handling systems, PASSCO would engage an engineering consultant (para 4.20). In addition to preparing designs, including structural drawings, specifications and cost estimates, PIU would: (i) assist Provincial Food Departments in site selection, and arrange site surveys and soil investigations; (ii) prepare site layouts; (iii) prequalify civil works contractors; (iv) prepare tender documents for civil works and equipment; (v) evaluate bids and prepare bid evaluation reports; (vi) supervise construction; (vii) administer contracts; (viii) manage project funds for construction, equipment procurement and PIU operations; (ix) maintain project accounts and provide MFAC with quarterly account statements; (x) submit disbursement requests; and (xi) prepare quarterly progress reports for PMCC consideration and IDA review. For determining construction programs including site selection, site layouts and construction scheduling, PIU would consult with MFAC and the four Provincial Food Depart- ments. For awarding civil works construction and equipment procurement contracts, a Tender Evaluation Committee would be set up, which would include officials of MFAC, the concerned Provincial Food Department and PASSCO. Land acquisition would be the responsibility of the Provincial Food Departments. PASSCO would turn over the storage facilities to MFAC as construction is completed, and MFAC would transfer the completed godowns and ancillaries to the Provincial Food Departments. In areas in Punjab where PASSCO is responsible for wheat procurement, the Food Department would lease back the stores to PASSCO. Assurances were obtained from GOP and PASSCO at negotiations that transfer and leasing arrangements would be made under terms and conditions satisfactory to IDA.

5.07 Paddy/Rice Storage Facilities for RECP. Construction of paddy/rice storage at RECP rice mills would be the responsibility of RECP. RECP has engaged the Natioaal EenV,teeriag_Servtces (Paktstam) Ltd. (UVgPkK) fcr designing the facilitiesand supervising construction umnder a contract satisfactory to IDA. NESPAK has prepared site layouts and a basic design for a 1,000 MT storage model. Design details including structural drawings, specifications and cost estimates are under preparation. - 37 -

5.08 Grain Storage Research and Extension. The Pakistan Agricultural Research Council (PARC) would be responsible for organizing and coordinating the grain storage research and extension program and establish a Program Coordination Unit for this purpose. A draft proposal for staffing the unit is in Annex 6, Table 7. The unit, in consultation with participating universities and agricultural research institutes, would finalize the project supported grain storage research and extension program including personnel requirements and investment needs. Other responsibilities of the unit would be: (i) procurement of vehicles and equipment, except for small items which would be more conveniently procured by the participating institutions themselves; (ii) arraLngement of overseas training courses in grain storage technology (para 4.24); (iii) ensuring timely flow of funds for project financed graduate study programs; (iv) engagement of the consultant to assist in developing the project supported grain storage research and extension training programs (para 4.21); (v) management of project funds; (vi) maintenance of project accounts; (vii) submission of disbursement requests; and (viii) preparation of quarterly progress reports for PMCC and IDA review. Finalization of a grain storage research and extension training program satisfactory to IDA, and establishment of a Program Coordination Unit with composition and responsibilities acceptable to IDA would be conditions of disbursement against expenditures-incturredunder the project's research and extension component.

5.09 Improvements in Grain Transportation and Grain Quality Inspection and Control; Training and Overseas Study Tours; and Project Study. The development of plans and systems for rationalizing grain transportation to reduce transportation and handling costs (para 4.18), and preparation of an analysis and recommendations for improving grain quality inspection and control, and for establishing suitable grading standards (para 4.19) would be the responsibility of MFAC's Food Wing. The Joint Secretary (Food) would be in charge of these activities and coordinate closely with the Provincial Food Depart- ments, PASSCO and RECP on this assignment. He would be assisted by two Technical Officers (para 5.01) and two project consultants (paras 4.18 and 4.19) who would be engaged by MFAC to assist in the preparation of the analyses and recommendations. On each of the two subject matters a report would be prepared by MFAC detailing current practices and problems and specify- ing actions to be taken and systems to be implemented to improve grain transportation, and grain inspection and quality control, respectively. The reports would be made available to IDA for comments by March 31, 1983. An appropriate assurance was obtained from GOP during negotiations.

5.10 The Storage Cell in MFAC's Food Wing (para 5.01) would coordinate the training programs and the overseas study tours for officers of MFAC, the four Provincial Food Departments, PASSCO and RECP (para 4.23). The Cell would be responsible a:lsofor engaging consultants to carry out the project study on foodgrain storage and processing (para 4.25). Furthermore, it would maintain project accounts and prepare quarterly progress reports on its own activities and coordinate the preparation of the quarterly reports by PIU, RECP and PARC's Program Coordination Unit.

5.11 Implementation Schedule. The project would be implemented over a period of about four years. PIU, MFAC and the four Provincial Food Depart- ments would agree annually on yearly programs for wheat storage construction - 38 -

which would be carried out simultaneouslyin all four Provinces. An assurance was obtained from GOP at negotiationsthat such programs would be prepared each year by July 31 and copies be made available to IDA for approval. Early land acquisitionwould be crucial for timely implementationof the wheat storage component. Provincial Food Departmentshave land available sufficient for the first year constructionprogram of 100,000 MT storage capacity. For the remainingprogram, an assurancewas obtained from GOP at negotiationsthat land for additional 200,000 MT capacity would be acquired by each August 31, 1982 and 1983. A project implementationschedule, which has been agreed upon during negotiations,is presented in Annex 9, Chart II.

.StorageMaintenance

5.12 Storagemaintenance in godowns operated by the Provincial Food Departmentsis generallypoor. A considerablenumber of godowns have leaking roofs, cracked floors and walls, damaged internal roof support columns and broken windows. Windows often do not open for ventilation,and a large number of doors and windows do not seal sufficientlyfor fumigation. As a result of these maintenanceproblems, grain is being damaged by moisture penetrating the buildings; grain is not protected adequately against rodents and birds; and insect pest control tends to be ineffective. Existing maintenanceproblems are mostly due to insufficientfunds provided for building maintenance. Also, repairs are usually late and restricted to storage facilitieswith signs of advanced deterioration;and preventivemaintenance is not carried out. The backlog of unattended repair work is considerableand requires urgent attention to prevent further deteriorationof existing stores. An assurancewas obtained from GOP at negotiation that: (i) a comprehensivesurvey be carried out by October 31, 1981 to determine necessary repairs of the Provincial Food Departments'existing grain storage facilities;and (ii) necessary repairs be completed by December 31, 1985 in accordancewith a phased program to be agreed with IDA upon completion of the survey.

5.13 In addition to carrying out the repair program, annual budgetary provisionsfor regular repair and maintenancework would need to be increased. Present annual provisions of some Rs 8 million amount to only 0.3% of current storage replacementcosts and are totally inadequate. An increase to about 1.5% of replacementcosts would be necessary. An assurancewas obtained from GOP at negotiationsthat it would cause the Provincial Governments to raise budgetaryprovisions for regular grain storage and maintenance to levels satisfactoryto IDA. The increasewould cover both the allocation to Provin- cial Public Works Departmentsfor major repairs and general maintenance,and to Provincial Food Departments for minor repair works such as the repair of windows, doors and other fittings.

Accounts and Audits

5.14 GOP would cause MFAC and PARC to establishand maintain separate accounts for the project in accordancewith sound accounting practices and -mstre-that these accou_ntswould be aN&ited anneal'y b-y the kuditor General. The accounts of both PASSCO and RECP are audited annually by private auditing firms which are satisfactoryto IDA. Certified copies of the audited accounts and auditors' reports would be furnished to IDA not later than six months - 39 - after the close of each financial year. The audit reports on PARC project accounts would be required to include a statement that funds disbursed against statementsof expenditureshad been used for the purpose for which they were provided. Assurances from GOP, PASSCO and RECP were obtained at negotiations that these accounting,audit and reportingprocedures would be adopted.

Project Monitoring and Evaluation

5.15 PMCC would monitor project implemenationon the basis of detailed implementationp:Lans which would be prepared for their respective sub-projects by PIU, RECP, The Food Wing of MFAC, and PARC's Program CoordinationUnit. PMCC would also review implementationand coordinationproblems and assist in solving them to avoid unnecessary cost or slippage. Day-to-day monitoring would be conducted by the Joint Secretary (Food) of MFAC's Food Wing, the heads of PIU and PARC's Program CoordinationUnit,and RECP management.

5.16 In addition, the Implementationand Progress Section of GOP's Planning Division would monitor progress and evaluate the project's impact on the developmentof the sub-sector. Evaluation would concentrateon operatingefficiency of project institutionsincluding storage utilization; storage losses; turnover and age of stocks; procurementarrangements; grain quality testing and weighing procedures;quality control during storage and distribution;cost of storage operations;and transportcost. Evaluation would also address organizational,managerial and staff developmentaspects of the project and usefulness and impact of the project'sgrain storage research and extension component. The Implementationand Progress Section would prepare written reports, at least annually,detailing: (i) developments in the above areas; and (ii) deviations from appraisal estimates regarding benefits,cost and implementationscheduling. Copies of these reports would be made available to PMCC and IDA. The Sectionwould also prepare a Project Completion Report and furnish the report to IDA not later than six months after the Credit Closing Date. Appropriateassurances were obtained from GOP at negotiations.

VI. FINANCIAL PROJECTIONS

6.01 The purpose of the financialprojections is to show that the financial benefits accruing to RECP from the project's paddy/rice storage component would yield a satisfactoryrate of return and that they would be adequate to permit debt service on terms and conditionsproposed under the project.

6.02 The major benefits of the paddy/rice storage component for RECP would be the reduction in quantitativepaddy storage losses and the improve- ment in the quality of the milled rice. Present conditions requiringoutside storage of Basmati paddy under tarpaulinslead to excessivediscoloration of the milled rice, and to rice quality deteriorationdue to high susceptibility of the paddy to insect attack (details on estimated losses are in para 2.28). Project godowns would reduce also paddy handling and quality control costs and enable milling operations to be organizedmore economically. To cope with the shortage of storage facilities and avoid outside storage of high value Basnati - 40 - rice, RECP now slows down the milling of paddy when transport for milled rice cannot be secured in time. On the other hand, to minimize the period of outside storage for paddy, if transport is available, the mills operate at full capacity in the months following paddy procurement, while towards the end of the crop year the milling capacity is idle. Benefits from improved scheduling of milling operations, although considered significant, have not been quantified.

6.03 As detailed in Annex 10, Table 2, the quantified benefits would be adequate to service the debt under the proposed lending terms and conditions. The financial rate of return (ROR) would be about 37%. ROR remain satisfactory if expected benefits are reduced or investment costs increased within realistic boundaries. Storage construction costs, which already include physical contingencies of 10%, would have to go up by 204%, or the combined benefits from reductions in storage losses and operating costs would have to decrease by 67%, to reduce ROR to 11%, the interest rate which would be charged by GOP on the loan. The major uncertainty facing RECP with regard to this investment would be excess storage capacity due to low paddy procurement by the mills. This is, however, unlikely since storage capacity is inadequate even if procurement is not increased from present levels. Paddy purchases would have to decline by 18% from the average procurement in 1977/78 and 1978/79 before ROR would be reduced to 11%.

VII. ECONOMIC BENEFITS AND JUSTIFICATION

Benefits

7.01 The project would strengthen procurement and storage operations of the Provincial Food Departments, PASSCO and RECP and assist in implementing GOP foodgrain policy more effectively. Without the project, a substantial part of the grain procured by public sector institutions would have to be stored in the open under cover on plinths and platforms. Grain storage losses would be extensive (paras 2.26 and 2.28). Handling losses as well as storage operating costs for the grain stored outdoors would be high (Annex 10, Tables 3, 4 and 5). Also some of the grain would need to be moved from the procurement to distribution centers at high cost immediately after procurement (Annex 10, Table 5). The principal economic benefits would therefore be the reduction in grain storage and handling losses and savings in storage operating and transportation costs. At full development, safe storage provided by project godowns would reduce annual storage losses by about 26,000 MT of wheat and some 2,500 MT of paddy. Handling losses also would be reduced by about 2,000 MT and 100 MT of wheat and paddy, respectively. 30,600 MT of grain which would thus be saved annually are valued at US$7.9 million. Annual foreign exchange earnings would increase by about US$8.7 million. Savings in operating cost, including transportation expenditures, are estimated at about US$2.0 million per year at full development. Total annual cost savings resulting from the protect thuas would be almost US$10 miIlion.

7.02 An important additional but unquantifiable benefit stemming from the project would be the Government's ability to implement its support price and - 41 - price stabilization policies more effectively. Project storage would permit Provincial Food Departments, PASSCO and RECP to expand their grain procurement operations, which would assist in providing additional farmgate price support, and thereby encourage increased foodgrain production. Benefits from strengthening MFAC's Food Wing and from training and technical assistance in grain transportation economics and logistics and in grain inspection and quality control are difficult to quantify. However, these components are expected to produce appreciable savings through improved planning and coordination, more efficient operational management, and further reductions in transportation costs. Important additional benefits, including reductions in on-farm storage losses, would be expected from the project's grain storage research and extension component. These benefits have not been quantified. Benefits from improved storage maintenance also have not been quantified. In the present situation, characterized by inadequate maintenance, grain losses are excessive. The increase in budgetary provisions for maintenance coupled with timely execution of repairs, and increased emphasis on preventive maintenance would permit a reduction in grain losses from the levels now experienced.

Beneficiaries

7.03 Benefits would accrue primarily to the Government in the form of reduced grain storage losses, resulting in additional foreign exchange earnings, higher income from public sector export operations and/or reduced deficits in subsidized foodgrain distribution. The project would also benefit farmers. Additional storage especially in the wheat procurement areas would enable the Provincial Food Departments and PASSCO to expand procurement operations which would increase competition for the farmers' produce. As a result, farmgate prices would be expected to rise. Reduced storage losses and improvements in grain transportation and grain inspection and quality control would result also in less costly and more efficient public food distribution. During construction, the project would provide employment opportunities for 2,975 man-years and 5,550 man-years of skilled and unskilled labor, respectively. At full development the project would offer permanent job opportunities for about 680 personnel.

Economic Rates of Return

7.04 Economic cost and benefit values have been calculated at estimated border prices. Prices of internationally traded goods have been converted at the official exchange rate (US$1.00 = Rs 9.9). For calculating the economic value of non-traded goods, a standard conversion factor of 0.9 has been applied. The shadow wage rage for unskilled labor has been estimated at 85% of the financial wage rate. All costs and benefits are expressed in 1980 constant Rupees. Economic rates of return (ERR) have been calculated separately for four wheat storage models, the total wheat storage component, each of the seven paddy/rice storage facilities, the total paddy/rice storage component, the three pilot schemes and the entire project. ERR for the entire project is estimated at about 28% with individual ERR of 26% and 43% for the wheat storage and paddy/rice storage component, respectively. Details on assumptions used in ERR calculations are in Annex 10. To take into consideration the differences in construction costs and operating conditions in the four Provinces, and to account for the Jifferent impact of the various prozJ>ew - 42 - storage complexes on transportationcosts, the 124 wheat storage complexes have been categorizedand grouped into four models. Models A and B are applicable to project storage facilitieswhich would be constructed at existing storage locations;Models C and D are for new storage locations. Model A con- cerns project storage for NWFP and Baluchistan,the other three models relate to storage for both Punjab and Sind. The difference between Models C and D is that in the "without project" situationwheat is transportedimmediately after harvest long distance to consumptionareas under Model D conditions,while it is moved to nearby procurement storage where Model C applies. ERR have been calculatedfor different storage capacities for each model and are estimated to range between (i) 26% and 36% for Model A; (ii) 23% and 24% for Model B; (iii) 24% and 25% for Model C; and (iv) 30% and 32% for Model D (details are in Annex 10, Table 6). IndividualERR for the paddy/rice storage facilities are estimated to vary between 35% and 51%, and the three pilot projects have estimatedERR of 19% and 23% (details are in Annex 10, Tables 3 and 7).

SensitivityAnalysis and Project Risks

7.05 ERR remain satisfactoryeven if benefits were significantlydelayed. If benefits streams were to lag by one full year, ERR would be reduced but only four percentage points, from 26% to 22% for the wheat storage component and only eleven percentage points from 43% to 32% for the paddy/rice storage provided under the project. Utilizationof the storage to be constructedin the Punjab and Sind wheat procurementareas could vary considerablyfrom year to year depending on the crop size (Annex 4). Even if once every four years project storage in Punjab and Sind were not to be used at all due to bad harvests, ERR for wheat storage in these two Provinces would still be 19%.

7.06 Switchingvalues have been calculated to determine the sensitivity of the project's storage components to changes in major cost and benefit streams. The followingpercentage changes in costs or benefits would have to occur before ERR is reduced to 10% which would still be satisfactory.

% Increase (Decrease)Required to Reduce ERR to 10% Cost or Benefit Wheat Storage Paddy/Rice Total Component Component Storage Component Project

InvestmentCost 108 286 124

Savings in Storage Losses (81) (81) (81) Savings in Operating Cost (204) (867) (241) Total Benefits (58) (74) (61)

The analysis shows that ERR is not very sensitive to changes in investment costs and savings in operatingcosts. Investment cost overruns by 124% for the entire project are highly unlikely. Civil works costs accountingfor 90% of total project costs have been estimated on the basis of detailed storage model designs (Annex 5, Chart I), and physical contingenciesof 10% have al.readybeeni atie tD all majot cost items. Yconoumlc viaDlity oi tnF ptoje- c is most sensitime to beieits iv- o -'ce stoa: toes. roXC Icvos reductions could be lower than anticipatedif project storage would create an excess capacity, due to low levels of grain procurementby the Provincial Food - 43 -

Departments,PASSCO and RECP. However the utilization of the wheat and the paddy/rice storage facilitieswould have to decrease by almost 60% and about 75%, respectively,from projected levels before ERR for these componentswould fall off to 10%. In the case of paddy/rice storage, this would require a reduction in annual paddy procurementby RECP of more than 20% from present procurementlevels. For wheat, public sector procurementwould have to be lower than 18% oifproduction, compared to 27% during the last year, 24% in 1978/79and an average of 22% over the last five years. Such reductions from present procurementlevels are unlikely given the stated Government grain procurement,distribution and pricing policies. Also, should public sector grain procurementactually be significantlylower than projected, continuous procurementmonitoring by PMCC (para 5.03) would ensure that the project storage constructionprogram could be adjusted as necessary. With a change in GOP's policy to offer incentiveprices to producers,public sector grain procurementwould decline. However, such a change is not anticipatedfor the near future. If the private sector were to take over a larger share of grain marketing, the storage facilitieswould still be required and could be made available to private traders and millers. Foreseeablerisks would therefore not jeopardizeproject success. The project would have no adverse environ- mental effects.

VIII. RECOMMENDATIONS

8.01 During negotiations,assurances were obtained from GOP, PASSCO and RECP on the following:

(i) IDA to be consulted annually on the Government'sgrain storage constructionprograms (GOP) (para 4.06);

(ii) technicalassistance consultantsto be engaged by January 31, 1982 on terms and conditionssatisfactory to IDA (GOP and PASSCO) (para 4.22);

(iii) foreign training (includingstudy tours) and the project study to be arranged by March 31, 1982 under terms and conditions satisfactoryto IDA (GOP) (paras 4.24 and 4.25);

(iv) the head of the Storage Cell and two Technical Officers to be engaged by December 31, 1981 (GOP) (para 5.01);

(v) copies of reports and recommendationson grain transportation and quality inspectionand control to be furnishedto IDA by March 31, 1983 (GOP) (para 5.09);

(vi) copies of annual project storage constructionprograms to be submitted to IDA for approval by July 31 of each year (GOP) (para 5.11);

(vii) land for 200,000 MT storage capacity to be acquired by Provin- cial Food Departments by each August 31, 1982 and 1983 (GOP) (para 5.11); - 44 -

(viii) survey on unattended repairs of existing grain storage facilities to be completed by October 31, 1981, and repairs to be carried out by December 31, 1985 under a program to be agreed with IDA (GOP) (para 5.12); and

(ix) budgetary provisions for regular storage repair and maintenance to be increased by ProvincialGovernments to levels satisfactory to IDA (GOP) (para 5.13).

8.02 Agreement has been reached also on the following conditions of Credit effectiveness:

(i) execution of a subsidiary loan agreementbetween GOP and RECP, satisfactoryto IDA (para 4.29);

(ii) establishmentof a project revolvingfund and making an initial deposit of Rs 50 million (para 4.30);

(iii) PC-1 approval by ECNEC (para 4.31);

(iv) fulfillmentof the effectivenessconditions of the "Swiss ContributionAgreement" (para 4.34);

(v) establishmentof PMCC with compositionand responsibilities satisfactoryto IDA (para 5.03);

(vi) completion of an agreement, satisfactoryto IDA, between MFAC, Provincial Food Departmentsand PASSCO detailing coordination and implementationarrangements (para 5.04); and

(vii) establishmentof PIU and appointmentof PIU's chief engineer (general manager) and two deputy general managers (para 5.05).

8.03 Establishmentof a Program CoordinationUnit by PARC with composition and responsibilitiessatisfactory to IDA and finalizationof a grain storage research and extension training program acceptable to IDA would be conditions of disbursementfor the project's grain storage research and extension component (para 5.08).

8.04 It is recommendedthat retroactivefinancing up to a total of US$1 million be made available for RECP expendituresafter January 1, 1981 on appropriatelyprocured civil works for paddy/rice storage construction(paras 4.10 and 4.29).

8.05 With the above conditionsand assurances,the project would be suitable for an IDA Credit of SDRs 26.1 million (US$32 million) to GOP on standard terms. PAKISTAN

GRAIN STORAGE PROJECT

Production ('000 MT), Cultivated Area ('000 ha) and Yield (MT/ha) for Foodgrains

Wheat if Rice 1/ Bajra (Millet) Jowar (Sorghum) Maize Barley Total Foodgrains 1-tr Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area

1970/71 6,476 5,978 1.08 2,200 1,503 1.47 355 750 .470 329 558 .5-K 717 640 1.13 91 141 .64 10,168 9,570

1971/72 6,890 5,797 1.19 2,262 1,456 1.55 360 759 .470 312 507 .62 705 633 1.12 103 157 .65 10,632 9,309

1972/73 7,442 5,971 1.24 2,330 1,480 1.58 304 612 .50 302 500 .60 706 645 1.10 109 164 .66 11,193 9,372

1973/74 7,629 6,113 1.24 2,455 1,512 1.62 351 733 .48 378 589 .65 767 632 1.21 140 205 .68 11,720 9,784

1974/75 7,674 5,812 1.32 2,314 1,604 1.44 266 545 .49 266 445 .60 747 614 1.15 137 194 .71 11,461 9,214

1975/76 8,691 6,111 1.42 2,618 1,710 1.53 308 624 .49 281 476 .59 803 620 1.29 130 186 .70 12,831 9,727

1976/77 9,144 6,390 1.43 2,737 1,749 1.56 311 648 .48 261 447 .58 764 624 1.22 124 174 .71 13,341 10,032

1977/78 8,367 6,360 1.32 2,950 1,899 1.55 318 641 .49 284 520 .55 821 656 1.25 121 167 .72 12,861 10,243 1

1978/79 9,948 6,687 1.49 3,274 2,026 1.61 317 659 .48 252 469 .54 799 650 1.23 129 177 .73 14,719 10,668 .-

1979/80 10,760 7,021 1.53 3,186 2,036 1.56 277 562 .49 250 454 .55 875 770 1.14 129 177 .73 15,477 10,981

Average Annual arowth Rate (.) 2

1970/71 to 1979/80 6.8 2.1 4.2 5.6 4.62 .62 (2.13) (2.38) (.38) (2.72) (1.67) (1.25) 2.21; 1.44 1.55 4.11 2.34 1.64 5.71 1.83

1/ Detail by Province in Table 2. T/ The average of 1970/71 and 1971/72 is compared with the average of 1978/79 and 1979/80.

Source: Agricultural Statistics of PAkistan, 1978, Ministry of Food, Agriculture and Cooperatives, Food and Agricultural Division (Planning Unit), Islamabad. PAKISTAN

GRAIN STORAGE PROJECT

Gross Production ('000 MT), Area ('000 ha), Yield (IIT/ha)for Wheat and Rice by Province 1970/71-1978/79

Wheat

Punjab Sind N.W.F.P. Baluchistan Total Year Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield

1970/71 4,948 4,390 1.12 1,121 837 1.34 331 590 .56 76 161 .47 6,476 5,978 1.08 1971/72 5,291 4,229 1.25 1,081 780 1.38 440 593 .74 78 195 .41 6,890 5,797 1.19 1972/73 5,694 4,366 1.30 1,096 771 1.42 584 684 .86 68 150 .45 7,442 5,971 1.24 1973174 5,665 4,413 1.28 1,246 841 1.48 607 692 .88 111 167 .66 7,629 6,113 1.24 1974/75 5,786 4,216 1.37 1,144 755 1.51 613 695 .88 131 146 .90 7,674 5,812 1.32 1975/76 6,572 4,472 1.47 1,321 797 1.57 660 707 .93 138 135 1.02 8,691 6,111 1.42 1976/77 6,808 4,598 1.48 1,478 927 1.60 712 717 .99 146 148 .99 9,144 6,390 1.43 1977/78 6,090 4,601 1.32 1,427 906 1.58 689 696 .99 161 157 1.03 8,367 6,360 1.32 1978/79 7,322 4,806 1.52 1,682 1,009 1.67 740 705 1.05 204 168 1.24 9,948 6,687 1.49

Rice

1970/71 982 738 1.33 1,123 671 1.67 66 54 1.23 28 40 .71 2,200 1,503 1.47 1971/72 993 688 1.44 1,168 672 1.73 59 54 1.09 43 42 1.02 2,262 1,456 1.55 1972/73 1,001 688 1.46 1,222 702 1.74 66 52 1.26 41 38 1.06 2,330 1,480 1.58 1973/74 1,115 713 1.56 1,235 706 1.75 72 57 1.26 33 36 .94 2,455 1,512 1.62 i974/75 1,152 821 1.40 1,049 687 1.52 77 61 1.25 36 35 1.02 2,314 1,604 1.44 1975/76 1,207 877 1.37 1,286 731 1.76 85 63 1.34 40 38 1.03 2,618 1,710 1.53 1976/77 1,332 920 1.45 1,292 747 1.73 85 63 1.35 28 19 1.48 2,737 1,749 1.56 1977/78 1,508 1,048 1.44 1,315 747 1.76 88 66 1.33 39 38 1.02 2,950 1,899 1.55 1978/79 1,767 1,182 1.50 1,342 735 1.82 104 68 1.53 61 41 1.48 3,274 2,026 1.61

source: Agricultural Statistic of Pakistan, Ministry of Food, Agriculture and Cooperatives, Food and Agricultural Division (Planning Unit), Islamabad.

mIx - 47 - ANNEX- 1 Table 3

PAKISTAN

GRAIN STORAGE PROJECT

Foodgrain Imports and Exports, and Rice Procurementby Rice Export Corporationof Pakistan (in '000 MT)

Foodgrain Imports and Exports

Rice Exports Net Foodgrain Year Wheat Imports Basmati Others 1/ Total Imports (Exports)

1970/71 :269 161 26 187 82 1971/72 439 180 17 197 242 1972/73 1,418 61 656 717 701 1973/74 1,0)79 178 310 488 591 1974/75 1,:173 153 273 426 747 1975/76 1,273 236 526 762 511 1976/77 .505 402 481 883 (378) 1977/78 821 247 557 804 17 1978/79 2,112 181 829 1,010 1,102 1979/80 678 250 2/ 850 2/ 1,100 (422)

Procurementof Rice by Rice Export Corporationof Pakistan -

Punjab Sind Total Year Food Dept. PASSCO Food Dept. PASSCO

1970/71 72 - 324 - 396 1971/72 40 - 297 - 337 1972/73 139 - - - 139 1973/74 226 - 308 - 534 1974/75 350 - 312 - 662 1975/76 390 - 320 - 710 1976/77 302 - 279 - 581 1977/78 416 24 404 48 892 1978/79 662 44 458 68 1,231

1/ Mainly IRRI varieties. 2/ Estimate. 3/ Rice is procured mainly through ProvincialFood Departmentsand from PASSCO.

SOURCE: Ministry of Food, Agricultureand Cooperativesand Rice Export Corpora- tion of Pakistan. ANNEX 1 -48- Table 4

PAKISTAN

GRAIN STORAGEPROJECT

Grain Prices (in Rs/maund)

1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/801980/81 GovernmentProcurement Prices

Wheat 22.50 25.50 37.00 37.00 37.00 37.00 45.00 54.20 Paddy Basmati 1/ - - - - 60.00 60.00 60.00 76.00 IRRI 1/ - - - - 30.00 30.00 30.00 36.00

Rice Basmati 60.00 90.00 90.00 90.00 95.00 110.00 110.00 128.00 IRRI 24.00 40.00 40.00 40.00 46.00 49.00 49.00 59.00

Average Wholesale Prices (Punjab)

Wheat 27.00 34.78 39.59 38.48 39.96 47.74 48.84 n.a. Rice Basmati 73.26 99.16 99.53 101.75 118.03 123.21 126.54 n.a. IRRI 34.78 45.14 45.51 53.28 56.98 64.75 73.26 n.a.

Average Monthly Wholesale Prices for Wheat

1978/79 May June July Aug. Sep. Oct. Nov. Dec. - Jan. Feb. March April

Karachi 52 52 57 57 58 54 54 60 61 57 52 51 Lahore 42 40 45 48 51 48 52 52 52 51 50 46 Multan 38 40 40 45 47 45 49 48 49 51 47 44

1979/80

Karachi 50 53 57 59 58 56 61 65 65 63 60 58 Lahore 47 46 46 46 49 48 48 51 52 51 53 54 Multan 44 46 47 48 48 47 48 50 51 53 51 50

1/ GOP started issuing support prices for paddy in 1977/78

Source:Ministry of Food, Agricultureand Cooperatives. PAXISTAN

GRAIN STORAGEPROJECT

Grain Storage Facilities of Provincial Food Departments and PASSCO (in '000 MT) Punjab

Provincial Food Department PASSCO Existing Storage Existing Storage Total Enclosed Under Enclosed Under Storage District Storage 1/ Construction 2/ Total Storage 1/ Construction 2/ Total Capacity

1. Rawalpindi Division Attock 23 - 23 - - - 23 Rawalpindi 113 - 113 - - - 113 Jhelum 28 - 28 - - - 28 GuJrat 22 - 22 - 22 Subtotal 186 - 186 - - - 186

2. Sargodha Division Sargodha 82 1 83 15 - 15 98 Jhang 44 3 47 - - - 47 Faisalabad 146 22 168 36 - 36 204 Mainvali 16 3 19 - - - 19 Subtotal 288 29 317 51 - 51 368 $

3. Lahore Division Sialkot 32 1 33 - - - 33 Gujranwala 61 17 78 - 7 7 85 Sheikhupura 60 23 83 - - - 83 Lahore 81 - 81 19 2 21 102 Kasur 16 10 26 - - - 26 Subtotal 51 301 19 9 -28 329

4. Multan Division Sahival 130 80 210 90 11 101 311 Vehari 46 79 125 35 4 39 164 Multan 141 24 165 70 15 85 250 Muzaffargarh 18 13 31 - _ 31 D. G. Khan 11 1 12 - - 12 Subtotal IY7 195 30 225 7[W

5. Bahawalpur Division Bahavalpur 29 79 108 6 . _ 6 114 Bahawalnagar 43 20 63 - - - 63 Rahimyar Khan 25 11 36 - - _ 36 Subtotal -T7rj110 207 6 - 6 213

Prevince Total 1,167 387 1,554 271 39 310 1.864

1/ Includes storage warehouses, silos and bins. 'Where necessary, under-rated nominal capacities have been adjusted on the basis of the floor area of different godown designs and assuming a stack height of 14 layers. 2/ Includes storage construction planned under approved programs through June 30, 1982. PAKISTAN

GRAIN STORAGE PROJECT

Grain Storaee Facilities of Provincial Food Departments and PASSCO (in 000 MT)

Sind

Provincial Food Department PASSCO Existing Storage Existing Storage Total Enclosed Under Enclosed Under Storage District Storage 1/ Construction 2/ Total Storage 1/ Construction 2/ Total Capacity

1. Sukkur Div~ision Jacobabad 22 - 22 - - - 22 Khairpur 29 1 30 - - - 30 Larkana 36 _ 36 - _ _ 36 Nawabshah 38 6 44 - _ _ 44 Sukkur 18 1 19 9 - 9 28 Shikarpur 5.- 5. SubtotOl 148 8 156 9 9 165 o

2. Hyderabad Division Sanghar 32 3 35 - - - 35 Tharparkaf 62 3 65 - _ - 65 Dadu 38 - 38 - _ - 38 Badin 5 - 5 - _ _ 5 Thatta 12 - 12 - - 12 Hyderabad 49 2 51 _ _51 SubtotAl 198 206 - - 206

3. Karachi pivision Karachi 156 156 9 9 18 174

Province Total 502 16 518 18 9 27. 545

1/ Includes Storage warehouses, silos and bins. Where necessary, under-rated nominal capacities have been adjusted on the basiS of the floor area of different godown designs and assuming a stack height of 14 layers. 2/ Includes Storage construction planned under approved programs through June 30, 1982. PAKISTAN

GRAIN STORAGEPROJECT

Grain Storage Facilities of Provincial Food Departments and PASSCO (in '000 MT)

NWFP

Provincial Food Department PASSCO Existing Storage Existing Storage Total Enclosed Under Enclosed Under Storage Storage 1/ Construction 2/ Total Storage 1/ Construction 2/ Total Capacity

1. Pesbavar Division Pesbhaar 62 6 68 10 10 78 Mardan 9 5 14 - - 14 Kohat 11 2 13 -- 13 Kurram Agency 1 - 1 - 1 Khyber Agency 1 1 1 Mobmand Agency I 1 - 1 Orakzai Agency I Subtotal 85 13 98 10 _ 10 108

2. Hazara Division Abbottabad 29 1 30 - - 30 Mansehra 3 - 3 3 Kohistan -- Subtotal 32 1 33 - - 33

3. Malakand Division Malakand 2 1 3 - - 3 Swat 2 2 4 - 4 Dir 2 - 2 _ 2 Chitral 4 1 5 -- 5 8ajour Agency - - - Subtotal 10 4 14 14

4. D. I. Khan Division D. I. Kian 18 - 18 - - 18 Bannu 12 1 13 - - 13 N. W.Agency 1 - 1 -- 1 S. W. Agency 1 _ 1 - 1 Subtotal 32 1 33

Province Total 159 19 178 10 _ 10 188

1/ Includes storage warehouses, silos and bins. Where necessary, under-rated nominal capacities have been adjusted on the basis of the floor area of different godown designs and assuming a stack height of 14 Layers. 2/ Includes storage construction planned under approved programs through June 30, 1982.

WS PAKISTAN

GRAIN STORAGE PROJECT

Grain Storage Facilities of Provincial Food Departments and PASSCO (in '000 MT)

Baluchistan

Provincial Food Department PASSCO Existing Storage Existing Storage Total Enclosed Under Enclosed Under Storage Storage 1/ Construction 2/ Total Storage 1/ Construction 2/ Total Capacity

1. Quetta Division

Quetta 26 8 34 4 - 4 38 Pishin 4 2 6 - - - 6 Loralai 4 1 5 - - - 5 Zhob 3 - 3 - - - 3 Chagai 2 - 2 - - - 2 Subtotal 39 T1 50 4 - 4 54

2. Sibi Division

Nasirabad 8 - 8 - 4 4 12 Kohlu I 1 2 - - - 2 Kachhi 3 - 3 - - - 3 Sibi 2 1 3 - - - 3 Subtotal 14 2 16 - 4 4 20

3. Kalat Division

Khusdar 3 1 4 - - - 4 Kharan 2 - 2 - - - 2 Lasbella 1 1 2 - - - 2 Kalat 3 6 9 - - - 9 Subtotal 9 8 17 - - -17

4. Mekran Division

Turbat 4 2 6 - - - 6 Gwader 5 3 8 - - - 8 Panjgoor 1 2 3 - 3 Subtotal lo 7 17 - - 17

Province Total 72 28 100 4 4 8 108

1/ Includes storage warehouses, silos and bins. Where necessary, under-rated nominal capacities have been adjusted on the basis of the floor area of different godown designs and assuming a stack height of 14 layers. 2/ Includes storage constructionplanned under approved programs through June 30, 1982. a- - 53 ANNEX 3 Table 1 PAKISTAN

GRAIN STORAGE PROJECT

Subsidies aLnd Operating Cost in Public Sector Theat Distribution

Subsidies (in million Rs)

Federal Provincial Governments Year Government Punjab Sind NWFP Baluchistan Total

1972/73 767.2 99.2 28.1 27.9 16.3 938.7 1973/74 1,669.1 129.7 45.7 33.8 26.5 1,904.8 1974/75 1,900.9 151.8 92.3 68.5 30.0 2,243.5 1975/76 1,128.8 204.3 106.2 65.4 48.0 1,552.7 1976/77 1,176.1 237.9 43.1 65.4 69.9 1,592.4 1977/78 899.9 314.8 131.8 120.4 104.6 1,571.5 1978/79 1,723.1 283.6 175.5 121.8 116.2 2,420.2

Source: Federal an":Provincial Food Departments.

Operating Cost 1/ (in Rs/maund)

Cost Item Punjab NWFP

Gunny Bags 4.09 Delivery Expenses 0.45 Bank Commission 0.17 - Taxes and Duties 0.15 0.11 Transport at ion - Rail 1.87 1.90 - Road 0.37 3.21 Handling Charges 0.22 - Godown Expenses 0.82 0.04 Shortages and Unforseen Expenditures 0.07 - Storage Surcharge 0.07 0.05 Departmental Charges 0.52 0.23 Interest 2/ 2.74 0.57 Punjab Food Dept. Charge - - 11.54 Total 11.54 17.65

Source: Ministry of Food, Agriculture and Cooperatives,and Provincial Food Departments.

1/ For indigenous wheat during 1979/80. 2J Charge levietdby Punjab Food Department and PASSCO oh wheat procured in Punjab and transported to NWFP. The transportation costs are covered by NWFP separately. PAKISTAN

GRAIN STORAGE PROJECT

Public Sector Wheat Procurement and Distribution (in '000 MT)

Wheat Procurement by Provincial Food Departments and PASSCO

------Punjab------Year Food Dept. PASSCO Sind NWFP Baluchistan Total

1970/71 827 - 188 - - 1,015 1971/72 642 - 84 - 726 1972/73 120 - 84 - - 204 1973/74 1,122 - 212 7 - 1,334 1974/75 826 - 400 - 16 1,242 1975/76 894 27 328 1 46 1,291 1976/77 1,790 15 498 24 19 2,346 1977/78 1,231 204 394 5 8 1,842 1978/79 424 229 423 1 10 1,087 @ 1979/80 1,242 576 531 15 14 2,378

Wheat and Atta Distribution by Provincial Food Departments

Sales to Ration Distribution N. Areas1I Open Market Sales Total year Punjab Sind NWFP Baluch. Total & Defense- Punjab Sind NWFP Baluch. Total Distribution

1970/71 520 263 215 68 1,066 N/A _ _ _ _ _ N/A 1971/72 574 256 253 93 1,176 N/A _ _ _ _ _ N/A 1972/73 621 312 284 155 1,372 N/A _ _ _ _ _ N/A 1973/74 815 543 352 183 1,893 254 _ _ _ _ _ 2,147

1974/75 900 533 380 173 1,990 286 - -- - 2,272 1975/76 919 432 382 170 1,903 299 - 52 - - 52 2,254 1976/77 1,003 510 484 159 2,156 246 201 49 - - 250 2,652 1977/78 1,144 494 567 199 2,404 277 102 123 7 - 225 2,906 1978/79 1,029 566 599 236 2,430 390 78 200 7 - 285 3,105

1/ Includes Sales by PASSCO c|

SOURCE: Provincial Food Departments - 55 - ANNEX3 PAKISTAN Appendix 1

GRAIN STORAGEPROJECT

Governnent Grading Standards for Wheat

Grading Factor Standards Discount

1. Foreign Matter

<.52 No discount

.5%-1% %foreign matter x procurement price; plus Rs 30

per 100 bags for cleaning

>1Z 2 x %foreign matter x procurement price; plus Rs 30

per 100 bags for cleaning

2. Admixture

43% No discount

3%-5% ;5 x %admixture x procurement price

.>3X .75 x %admixture x procurement price; plus Rs 30

per 100 bags for mixing

I/ 3. Damaged Grains-

43% No discount

32-4% .5 x %damaged grain x procurement price

4X-5% %damaged grain x procurement price

215% 1.5 x Zdacaged grain x procurement price

4. Insect Infestation

a) up to end of August #.O% Reject

b) September - October (.5% No discount

.5Z-1% %infested grain x procurement price

>1% Reject

c) November - December <1% No discount

l-2% %infested grain x procurement price

>2% Reject

d) January and later C1.5% No discount

1.5%-3% % infested grain x procurement price

>3% Reject

II Broken grain"s are 'lot discounted as long as they are zzoe damaged by Insects, moZds, fungi or heat.

SOURCE: Punjab Food Department,Wheat Procurement Policy, 1980-81. - 56 - ANNEX 4 Page 1

PAKISTAN

GRAIN STORAGE PROJECT

Projections for llheat Storage Requirements by 1985/86

A. Wheat Production

1. Wheat production has grown from 6,476,000 MT in 1970/71 to 10.76 million MT in 1979/80. The increase corresponds to an annual growth rate averaging 6.2%. Excluding the years 1977/78 and 1978/79, when growth rates have been unusual as a result of a severe rust attack in 1977/78, annual production growth has been fluctuating between a low of 0.6% in 1974/75 and a high of 13.3% in the following year. The 1979/80 wheat harvest exceeds the 1978/79 crop by 8.2%. Details on wheat production are in Annex 1, Tables 1 and 2.

2. Wheat production has been projected for the crop year 1984/85 on the basis of the actual production in each district since 1970/71, and assuming that wheat output would continue to grow linearly at the average annual growth rate achieved in each district over the last ten years.

3. An exception has been made for NWFP and Baluchistan. In NWFP, the years 1970/71 and 1971/72 have been excluded from the calculation of projected production growth rates because growth has been unusually high during these years. In Baluchistan, where wheat production has been fluctuating erratic- ally in the various districts during the last ten years, projections have been made on the basis of the average output during the crop years 1976/77 through 1978/79 and assuming a 5% linear annual growth.

4. Projections based on the above assumptions reflect expected production in a normal crop year. For a bumper crop, output has been estimated to be 5.5% higher than in the normal production year. The 1984/85 wheat crop has been extrapolated to reach about 13.6 million MT for a normal harvest and about 14.3 million MT in the case of a bumper crop. Production projections by district are in Tables 1 and 2.

B. Public Sector Wheat Procurement

5. During the last four years, public sector wheat procurement, as a percentage of wheat production, has been fluctuating between 20.1% and 26.8% except for 1978, when, following the rust attack suffered by the 1977/78 crop, procurement was down 41% from the 1977 level. Last year's public sector procurement was 2.95 million MT, about 27% of production. Procurement details by Province are in Annex 3, Table 2. - 57 - ANNEX 4 Page 2

6. Assumbing that 1984/85 would be a normal crop year, public sector wheat procuremenlt in 1985 has been projected for each district on the basis of the district's forecasted 1984/85 wheat production and on the assumption that the Government will procure a similar percentage of the crop as in 1977 and 1979. 1977 and 1979 have been selected for projection purposes because Government procurement during these years followed two harvests which were fairly normal, deviating little from the historical production trend. For projecting the procurement for 1985, the average of the 1977 and 1979 procurement percentages has been taken. Total public sector wheat procurement forecasted on this basis for 1985 is 2.931 million MT or 21.6% of the projected 1984/85 crop. For a bumper crop, the percentage of public sector wheat procurement has been estimated to be 15% higher than in a normal year. Accordingly, for a bumper crop in 1984/85, wheat procurement by Provincial Food Departments and PASSCO in 1985 has been forecasted at 3.555 million MT or at 24.8% of the projected production. Details on procurement projections by district are in Tables 1 and 2.

C. Public Sector Wheat Distribution

7. Wheat and atta distribution by Provincial Food Departments has increased from 2.147 million MT in 1972/73 to 3.105 million MT in 1978/79. For 1979/80, the amount has been estimated to have declined to about 2.8 million MT. The decline has been due to a reduction in open market sales and in sales to NorlthernAreas and Defense, and also to a drop in the amount of atta issued under the ration system following the Government's increase of the price for ration atta and a reduction in bogus ration cards. Details on public sector distribution by Province are in Annex 3, Table 2.

8. In view of GOP's intention to raise atta prices further and thereby reduce the gap between open market flour prices and ration atta prices, it has been assumed that public sector distribution would grow less rapidly in the future than before 1979 and even diminish in some areas. Taking into consideration transportation conditions and transportation costs together with the relative importance of the private sector in wheat marketing in the various Provinces, wheat distribution by the public sector has been projected to grow annually by:

2% in Norithern Areas and for Defense; 1% in NWF]Pand Baluchistan; negative 1% in Sind; and negative 2% in Punjab.

9. On thiebasis of these growth rates and the average quantity of wheat distribution in each district during 1977/78 and 1978/79, public sector distribution has been projected for 1985/86 at 2.841 million MT including 409,000 MT forecasted for Northern Areas and Defense. Details by district are in Tables 1 and 2. - 58 - ANNEX 4 Page 3

D. Public Sector Wheat Storage Needs and Proposed Project Storage

10. Provincial Food Departments and PASSCO presently own 2.203 million MT storage capacitymainly for the storage of wheat. Additional capacity of 502,000 MT is under constructionor planned. Furthermore,GOP plans to construct 300,000 MT capacity for storing food security reserves. Details are in Annex 2, Tables 1 through 4.

11. Wheat storage needs have been projected for 1985/86 on the basis of the forecasts for wheat procurement and distribution in each district. The projected yearly wheat procurement in each district (Tables 1 and 2) has been allocated to the various months in accordancewith the past procurement pattern. The annual amount distributed in each district (Tables 1 and 2) has been assumed to be released during the year in accordancewith historical monthly distributionpatterns which show an increase in ration distribution towards the end of the crop year. Wheat movements into and out of the various districts have been assumed to follow past movement patterns and be directed in a manner that would keep transportationcost at a minimum, while taking into considerationconstraints in transportationcapacity and timing pre- ferences of the Provincial Food Departmentsof NWFP and Baluchistan.

12. Carry over stocks have been estimated for each district considering normal operationalneeds and taking into account transportationdifficulties in the various Provinces. For districts in which projected procurement exceeds distributionneeds, carry over stocks have been estimated at 15% of annual procurement. For the other districts, it has been assumed that carry over stocks would vary with annual distributionrequirements: (i) in Punjab and Sind, carry over stocks are estimated at 20% of annual distributionneeds; (ii) in NWFP and Baluchistan,carry over stocks are projected at three months and four months distributionrequirements, respectively.

13. Under the assumption that 1984/85 would be a normal crop year, projected public sector wheat procurementexceeds forecasteddistribution needs by 90,000 MT; in the case of a bumper crop, by 714,000MT. For the normal crop, it has been assumed that the excess procurementwould be used to increase carry over stocks; for the bumper crop, it has been assumed that export prices would be attractiveand GOP would export 600,000 MT while 114,000MT would be added to inventories. Assuming that Pakistan's total wheat consumptionwould continue to expand at the average annual rate of 4% experiencedin the past decade, Pakistan would be self-sufficientin wheat in 1985/86.

14. Additionalwheat storage needs in each district by 1985/86 have first been calculated under the assumption that multiple grain handling would be kept at a minimum and wheat would be moved in the most economicalmanner. (Examplesof the calculationof district-wisestorage needs are in Tables 3 and 4.) In a second step, by making use of excess storage which is available especially in large distributioncenters, overall storage needs have been reduced. Excess stocage would be utilized by shipping wheat more rapidly to distributionareas using less economical transportationt -eaas avld/ot byj sending wheat temporarilyto locationswith excess storage from where it would be moved later to consumptionpoints. Details on additional storage requirements in each district, together with project storage proposals, are in Tables 5 through 8. - 59 - ANNEX 4 PAKISTAN Table 1

GRAIN STORAGEPROJECT

Projections for Wheat Production (1984/85),and Public Sector Wheat Procurement and Distribution (1985/86) (in '000 MT)

Projected Production Projected Public Projected Public (1984/85) 1/ Sector Procurement Sector Distribution (1985/86) 2/ (1985/86) 3/ District Normal Crop Bumper Crop Normal Crop Bumper Crop PUNJAB Attock 357 377 22 Rawalpindi 153 161 217 Jhelum 200 211 - - 52 Gujarat 459 484 34 42 28 Sargodha 447 472 101 122 30 Faisalabad 1,072 1,131 241 292 80 Jhang 628 663 135 164 18 Mianwali 473 499 26 32 7 Sialkot 445 469 34 42 26 Gujranwala 567 598 157 190 33 Sheikhupura 393 415 88 107 14 Lahore 131 138 27 33 245 Kasur 455 480 94 114 18 Sahiwal 1,148 1,211 465 564 14 Vehari 423 446 148 180 9 Multan 1.069 1,128 373 451 73 Muzaffargarh 536 565 81 99 1 D.G. Rhan 208 219 14 17 4 Bahawalpur 275 290 63 77 26 Bhawalnagar 347 366 97 118 1 Rahinyar Rhan 317 334 61 74 2 Punjab Totals 10,103 10,657 2,239 2,718 920

SIND

Jacobabad 83 88 8 10 8 Thatta 22 23 1 1 8 Karachi - - - - 413 Dadu 183 193 29 35 9 Rhairpur 172 181 51 62 7 Tharparkar 309 326 99 120 14 Sanghar 335 353 157 190 9 Larkana 94 99 8 10 13 Nawabshah 493 521 197 239 22 Sukkur 165 174 23 28 68 Shikarpur 20 21 2 2 5 Hyderabad 256 270 67 81 61 Badin 129 136 20 24 3 Sind Totals 2,261 2,385 662 802 640

1/ See paras 2 and 3. 2/ See para 6. 3/ See paras 7 and 8. - 60- ANNEX 4 PAKISTAN Table 2

GRAIN STORAGEPROJECT

Projections for Wheat Production (1984/85),and Public Sector Wheat Procurement,and Distribution (1985/86) (in '000 MT)

Projected Production Projected Public Projected Public (1984/85) 1/ Sector Procurement Sector Distribution (1985/86) 2/ (1985/86) 3/ District Normal Crop Bumper Crop Normal Crop Bumper Crop

NWFP

D.I. Khan 137 146 10 12 48 Bannu 172 181 2 2 45 Dir 47 50 - - 27 Chitral 9 9 - - 6 Bajour Agency 27 28 - - S.W. Agency 7 7 - - N.W. Agency 10 11 - - - Swat 68 72 - - 22 Malakand 48 51 - - 27 Mansehra 53 56 - - 16 Abbottabad 92 97 - - 85 Orakzai Agency 7 7 - - - Mohmand Agency 20 21 - - - Khyber Agency 15 16 - - - Kurram Agency 9 9 - - - Kohat 78 82 - - 77 Mardan 119 126 1 1 47 Peshawar 96 101 1 1 239 Kohistan - - - - 3

NWFP Totals 1,014 1,070 14 16 642

BALUCHISTAN

Quetta 6 6 - - 75 Pishin 21 22 - - 40 Loralai 26 27 2 2 12 Zhob 9 9 - - 21 Chagai 3 3 - - 7 Sibi 10 11 - - 5 Nasirabad 88 94 11 13 3 Kohlu 3 3 - - 1 Kachhi 17 18 - - 7 Khuzaar 12 13 - - 3 Kalat 18 19 3 4 4 Kharan 2 2 - - 5 Lasbella 1 1 - - 15 Turbat 1 1 - - 15 Gwader - - - - 10 Panjgoor 1 1 - - 7

Baluchist-an ''tuXs 2 16 19 230

1/ See paras 2 and 3. 2/ See para 6. 3/ See paras 7 and 8. - 61 - ANNEX4 Table3 PAKISTAN

GRAIN STORAGEPROJECT

Projected Wheat Storage Requirements 1985/86 - (in '000 MT)

Example: Sahiwal District (PunJab)

Shipments to:2/ Sales in Northern Areas Ending Month Procurement-V District2/ Rawalpindi Lahore NWFP and Defense Inventory

Beginning Inventory .V 70

May 186 1 1 5 36 7 206 June 186 1 1 5 36 7 342 July 65 1 1 5 22 7 371 August 14 1 1 5 13 8 357 September 14 1 1 5 22 7 335 October - 1 1 5 22 7 299 November - 1 1 5 22 7 263 December - 1 ,1 5 23 7 226 January - 2 1 5 22 8 188 February - 2 1 5 23 7 150 March - 1 1 5 22 7 114 April - 1 1 5 22 7 78

Total 465 14 12 60 285 86

Peak Inventory 371

Wheat Storage Requirements 4/ 436 minus: Existing Storage Capacity 5/ 220 minus: Storage Under Construction or Included in Planned Construction Programs 5/ 91 plus : Storage Requirements for Jute Bags, Sugar andlOther Commodities Sharing Wheat Storage Facilities 6/ 22 Additional Wheat Storage Requirements 147

1/ Assuming normal crop year (see paras 2 and 3 ). 2/ See para 11. 3I See para 12. 4/ It has been assumed that for operating reasons, transportation constraints and unsuitable location of some existing storage, storage facilities can be loaded on the average only up to 85% of nominal capacity. 5/ From Annex 2, Table 1. 6/ Estimated at 5% of wheat storage requirements. - 62 - ANNEX4 Table 4 PAKISTAN

GRAIN STORAGE PROJrCTr Projected Wheat Storage Requirements 1985/86 ./ - (in 000u MT)

Example: Karachi (Sind)

Sales in Shipments from: j/ Ending Month District . Dadu Tharparkar Sanghar Navabshah Hyderabad Badin Inventors

Beginning Inventory * 83 -

April 41 1 6 15 18 1 1 84 May 31 1 6 13 14 1 1 89 June 30 1 6 13 .14 - - 93 July 31 1 7 10 12 1 93 August 30 1 7 10 11 - 1 93 September 31 1 7 10 11 1 1 93 October 30 1 7 10 11 - 1 93 November 31 1 6 10 12 - 1 93 December 31 2 7 10 12 1 - 93 January 37 1 7 13 15 - 1 93 Febuary 45 2 7 16 18 1 1 93 March 45 2 7 16 18 1 1 93

Total 413 15 80 146 166 6 10

Peak Inventory 93

Wheat Storage Requirements 4/ 109 minus: Existing Storage Capacity 51 165 minus: Storage Under Construction or Included in Planned Construction Programs 51 9 plus: Storage Requirements for Jute Bags, Sugar and Other Commodities Sharing Wheat Storage Facilities Y 5 Additional Wheat Storage Requirements (60)

1/ Assuming normal crop year (see paras 2 and 3). 2/ See para 11. 3/ See para 12. 1 It has been assumed that for operating reasons, transportation constraints and unsuitable location of some existing storage, storage facilities can be loaded on the average only up to 85% of nominal capacity. 5/ From Annex 2, Table 2. 6/ Estimated at 5% of wheat storage requirements. -63 - ANNEX 4 Table 5

PAKISTAN

GRAIN STORAGE PROJECT

Wheat Storage Gap 1985186 and Proposed Project Storage (in'OOO MT)

Punjab

Normal Crop Year Bumper Crop Year Projected Adjustment Projected Adjustment Storage Gap for Utiliza- Remaining Storage Gap for Utiliza- Remaining Proposed (Excess) tion of Excess Storage (Excess) tion of Excess Storage Project District 1985/86 I/ Storage 2/ Need 1985/86 1/ Storage 2/ Need Storage 13/

Attock (16) 16 3/ (15) 15 9/ - _ Rawalpindi (41) 41 4| - (38) 38 101o - Jhelum (12) 12 5| - (13) 13 11/ - - Gujarat 13 - 13 22 - 22 12.1 Sargodha 15 - 15 33 - 33 14.3 Faisalabad 52 - 52 108 - 108 22.0 Jhang 95 24 3/ 4/ 71 121 (21) 9/ 10/ 100 23.1 Mianwali 7 - 7 13 - 13 - Sialkot 5 - 5 11 - 11 - Gujranwala 79 (45) 4/ 51 34 110 (45)10/ 11/ 65 22.0 Sheikhupura 27 81 - 27 44 8/ - 44 24.2 Lahore - - - 4 - 4 - Kasur 73 - 73 89 - 89 39.6 Sahiwal 147 (12) 6/ 135 272 - 272 52.8 Vehari (12) 12 6/ - 8 - 8 - Multan 104 (55) 7/ 49 244 (47)12/ 197 26.4 Muzaffargarh 43 - 43 56 - 56 19.8 D. G. Khan 1 - 1 1 - I - Bahawalpur (55) 55 7/ - (47) 47 12/ - - Bhawalnagar 31 - 31 56 - 56 20.9 Rahimyar Khan 24 8, - 24 40 8/ - 40 13.2 TOTAL 580 580 1,119 1,119 290.4

Gross Storage Gap 716 1,232 (before deduction of excess storage)

1/ Calculated on the basis of projected grain flows (Examples are in Tables 3 and 4). 2/ Excess Storage would be utilized by accelerating shipments from the procurement area to distribution centers and/or throughi temporary use of the excess until the wheat is moved to the consumption area. 1/ 16,000 MT excess in Attock utilized to reduce needs in Jhang. 4/ 41,000 MT excess in Rawalpindi utilized to reduce needs in Jhang (8,000 MT) and Gujranwala (31,000 MT). 5/ 12,000 MT excess in Jhelum utilized to reduce needs in Gujranwala. 6/ 12,000 MT excess in Vehari utilized to reduce needs in Sahiwal. 7/ 55,000 MT excess in Bahawalpur utilized to reduce needs in Multan. 8/ Adjusted by 15,000 MT to account for disproportionate increase in procurement during last two years. 9/ 15,000 MT excess in Aittock utilized to reduce needs in Jhang. 10/ 38,000 MT excess in Rawalpindi utilized to reduce needs in Jhang (6,000 MT) and Gujranwala (32,000 MT). 11/ 13,000 MT excess in JlJelumutilized to reduce needs in Gujranwala. 12/ 47,000 MT excess in Bahawalpur utilized to reduce needs in Multan. 13/ Details by location are in Table 9. PAKISTAN

GRAIN STORAGE PROJECT

Wheat Storage Gap 1985/86 and Proposed Project Storage (in '000 MT)

Sind

Normal Crop Year Bumper Crop Year Projected Adjustment Projected Adjustment Storage Gap for Utiliza- Remaining Storage Gap for Utiliza- Remaining Proposed (Excess) tion of Excess Storage (Excess) tion of Excess Storage Project DiStrict 1985/86 1/ Storage 2/ Need 1985/86 1/ Storage 2/ Need Storage 9/

Jacobabad (15) - - (15) - Thatta (8) 8 3/ - (7) 7 6/ Karachi (60) 60 4/ - (54) 54 7/ - Dadu (8) 8 5/ - 10 - 10 _ Khaitpur 24 - 24 32 _ 32 9.9 Tharparkar 38 (8) 3/ 30 56 7 6/ 49 14.3 Saighar 127 (40) 4/ 87 158 (40) 7/ 118 22.0 Larksna (25) - - (24) - _ _ NavJabshah 159 (28) 4/ 5/ 131 195 (14) 7/ 181 38.5 Sugkur 12 _ 12 12 _ 12 11.0 Shiksrpur - - - - Hy4eyabad 12 8/ - 12 23 8/ 23 8.8

Badifl 68/ -6 9 8/ -9 __ TOTALS 262 - 302 394 434 104.5

Gross Storage Gap 378 (before deduction of excess storage)

1/ Calculated on the basis of projected grain, flows (Examples are in Tables 3 and 4). Excess Storage would be utilized by accelerating shipments from the procurement area to distribution centers and/or through temporary use of the excess until the wheat is moved to the consumption area. 3/ 8,000 MT excess in Thatta utilized to reduce needs in Tharparkar. 4/ 60,000 MT excess in Karachi utilized to reduce needs in Sanghar (40,000 MT) and Nawabshah (20,000 MT). 5j 8,000 MT excess in Dadu utilized to reduce needs in Nawabshah. 6/ 7,000 excess in Thatta utilized to reduce needs in Tharparkar. 7/ 54,000 MT excess in Karachi utilized to reduce needs in Sanghar (40,000 MT) and Nawabshah (14,000 MT). 8/ Storage requirements in Hyderabad have been increased by 10,000 MT, while those in Badin have been E - decreased by the like amount to take account of the need for milling in Hyderabad a large part of the ' x wheat consumed in Badin. 9/ Details by location are in Table 10. PAKISTAN

GRAIN STORAGEPROJECT

Wheat Storage Gap 1985/86 and Proposed Project Storage (in'000 MT)

NWFP

Normal Crop Year Bumper Crop Year Projected Adjustment , Projected Adjustment Storage Gap for Utiliza- Remaining Storage Gap for Utiliza- Remaining Proposed (Excess) tions of Excess Storage (Excess) tion of Excess Storage Project 1985/86 l/ Storage Need 1985/86 1/ Storage Need Storage 2/

D.I. Khah 10 _ 10 12 _ 12 4.4 Bannu 8 _ 8 8 - 8 3,3 Dir 8 _ 8 8 - 8 3.3 Chitral 2 _ 2 2 - 2 1.7 Swat 6 _ 6 6 - 6 4.4 @ Malakahd 10 _ 10 10 _ 10 9.9 Abbottebad 4 - 4 4 - 4 _ Kohat 18 187 18 - 18 5.5 Mardan 7 1 5. Peshawar 24 _ 24 24 _ 24 12.1 Kohistan 2 _ 2 2 -2 Mansehta 6 _ 6 6 _ 6 2.2

TOTAL 105 105 107 107 50.1

1/ CalCulated on the basis of projected grain flows (Examples are in Tables 3 and 4. 2/ Details by location are in Table 10.

-J P, PAKISTAN

GRAIN STORAGE PROJECT

Wheat Storage Gap 1985/86 and proposed Project Storage (in '000 MT)

Baluchistan

Normal Crop Year Bumper Crop Year projected Adjustment Projected Adjustment Storage Gap for Utiliza- Remaining Storage Gap for Utiliza- Remaining Proposed (gxcess) tion of Excess Storage (Excess) tion of Excess Storage Project District 1985/86 1/ Storage 2/ _ Need 1985/86 1/ Storage 2/ Need Storage 5/

Quetta 17 _ 17 17 _ 17 9.9 Pishin 23 _ 23 23 _ 23 11.0 Loralai3.Loralai ~5 - 5 7 _ 7 3.3 Zhob 13 _ 13 14 _ 14 6.6 3 3 3 3 2.2 Chagai 3 - 3 3 3 2.2 Sibi Nasirabad 2 4/ _ 2 2 _ 2 2.2 Kohlu -- 2 Kachhi 2 2 2 2 1.1 Khuzdar (2) - (2) - 3/ Kalat (2) 4 3/ _ (4) Kharan 2 2 3 3 2.2 Lasbella 11 (4) 3/ 7 11 (4) 3/ 7 4.4 Turbat 7 - 7 7 - 7 6.6 Gwader (1) - (1)- Panjgoor 3_ 3 3 3 3.3

TOTAL 84 87 88 91 55.0

Gross Storage GaP 91 95 (before deductionof excess storage) 1/ CalculatedOn the basis of projected grain flows (Examples are in Tables 3 and 4). 2/ Excess storagewould be utilized by accelerating shipments from the procurement area to distribution centers amd/or through temporary use of the excess until the wheat is moved to the consumption area. 3/ 4,000 MT excess at Lasbella utilized to reduce needs at Kalat. j_ Adjusted to account for transport constraints in moving wheat procured in Nasirabad. 5/ Details by location are in Table 10. - 67- ANNEX4 Table 9 PAKISTAN

GRAIN STORAGEPROJECT

Proposed Project Storage Locations and Capacities

Capacity Capacity District Location (MT) District Location T)

PUNJAB

Gujarat M.B. Din 7,700 Muzaffargarh Rakh Hirpolu 4,400 Lala Musa 4,400 Chak 568/TDA 2,200 Total 12,100 Mandi Leiah Town 3,300 Chak 354/TDA 2,200 Kasur Khudian 2,200 Chak 106/ML 2,200 Theng More 8,800 Chak 99-B/TDA 2,200 Chunnian 5,500 Chak 138/TDA 3,300 Sarai Moghal 5,500 Total 19,800 Pattoke 9,900 Bhai P'heru 7,700 Bahawalnagar Minchinabad 3,300 Total 39,600 Faqirwali 3,300 Madrasa 3,300 Sheikhupura Bucheke 2,200 Khichiwala 3,300 Muridke 3,300 Chabiana 3,300 Kh. Dogran 1,100 Chak Abdullah 4,400 Panwan 3,300 Total 20,900 Shahkot 1,100 Manawala 9,900 R.Y. Khan Liaqatpur 8,800 Dhaban Singh 3,300 Feroza 4.400 Total 24,200 Total 13,200

Guiranwala Gujranwala 22,000 Sargodha Phullarwan 2,200 Bhalwal 1,100 Multan Mian Chunnu 2,200 Shahpur 3,300 Khanewal 4,400 Jauhatabad 3,300 Dunyapur 8,800 Sillanwali 1,100 Dairapur 2,200 Qaidabad 3,300 Lodhran 5,500 Total 14,300 Thatta (Multan) 3,300 Total 26,400 Faisalabad Faisalabad 8,800 Kamalia 4,400 Sahiwal Chak L70/9-L.7 17,600 Pir Mehal 4,400 Renala Khurd 3,300 Jaranwala 3,300 Chak 1/4-L. 4,400 Chak Jumra 1,100 Akhtarabad 4,400 Total 22,000 Shergarh 8,800 Kameer 4,400 Jhang Jhang Sadder 1,100 Harappa 3,300 Bhawana 9,900 Kamand 2,200 Mochiwala 3,300 Qaidarabad 4,400 Shah Jewana 4,400 Total 52,800 Lalian 2,200 Rabwah 1,100 Waryan 1,100 Total 23,100

PUNJAB TOTAL 290,400 MT - 68 - ANNEX4 Table 10 PAKISTAN

GRAIN STORAGEPROJECT

Proposed Prolect Storage Locations and Capacities

Capacity Capacity District Location (MT) District Locatiou (MT)

SIND

Hyderabad Udero Lal 4,400 Sukkur Arain Road 7,700 Chamber 4,400 Dhaharki 3.300 Total 8,800 Total 11,000

Tharparkar Jamesabad 5,500 Rhairpur Gambat 3,300 Samaro Town 4,400 Pacca Chang 3,300 Hirpurkhas 4.400 Pir Wasan 3.300 Total 14,300 Total 9,900

Sanghar Shahpur Chakar 4,400 Nawabahab Daur 5,500 Hingorne 4,400 Sixty Miles 5,500 Tando Adam 4,400 Kazi Ahmed 7,700 Khipro 4,400 Nawab Wali Mohd. 3,300 Barani 4,400 Sarhari 4,400 22,000 Dariya Khan Mari 4,400 Bhiria Town 4,400 Tharu Shah 3.300 Total 38,500

SIND TOTAL 104,500 MT

NWFP

D.I. Khan D.I. Khan 4,400 Swat Saidu Sharif. 4,400

Bannu Bannu 2,200 Malakant Dargai 9,900 Serai Norang 1,100 Total 3,300 Kohat Kohat 4,400 Eangu 1,100 Dir Timergara 3,300 Total 5,500

Chitral Chitral 500 Mardan Hardan 3,300 Broghil 250 Darosh 500 Peshawar Peshawar 9,900 Arundu 250 Nowshera 2,200 Laspur 250 Total 12,100 Total 1,750 Manshera Manshera 2,200

NWFP TOTAL 50,150 Mr

BALUCHISTAN

Quetta Quetta 8,800 Kachhi Belpat 1,100

Pishin Pishin 6,600 Nasirabad Usta-Mohbamad 3,300 Chaman 4.400 Total 11,000 Rharan Rharan 2,200

Loralai Loralai 2,200 Lasbella Bela 2,200 Barkhan 1.100 Uthal 1,100 Total 3,300 Rub Chowki 1,100 Total 4,400 Zhob Zhob 4,400 Muslimbagh 2,200 Turbat Turbat 4,400 Total 6,600 Mand 1,100 Magai Nusbki1,100 Tump 1.100 Chagal TUhiali 1,100 Total 6,600 Dalbandin 1.100 Total 2,200 Panjgur Panjgur 3,300 Sibi Sibi 2,200

BALUCEISTAN TOTAL 55,000 MT

PROJECT TOTAL 550,000 MT - 69 - ANNEX 4 Table 11

PAKISTAN

GRAIN STORAGE PROJECT

Projected Paddy/Rice Storage Requirements for 1985/86 at RECP Mills (in MT)

Month Activity Hafizabad Sheikhupura Siranwali Eminabad Paizabad Mubarikpur Dhaunkal TOTAL

October Procurement 1/ 100 200 100 100 100 100 700 1,400 Milling 2/ ------Carry-Over-Stocks; 100 200 100 100 100 100 700 1.400

November Procurement 3,200 5.600 2.600 3,100 3.600 3.300 19,600 41,000 Milling 200 400 200 200 300 200 1.400 2.900 Carry-Over-Stocks 3.100 5,400 2,500 3.000 3.400 3.200 18.900 39.500

December Procurement 5,000 8,600 4.000 4.900 5.600 5.100 30,400 63,600 Milling 800 1.300 600 800 900 800 6.100 11.300 Carry-Over-Stockst 7,300 12,700 5,900 7,100 8,100 7,500 43,200 91,800

January Procurement 2,300 4,000 1,900 2.300 2,600 2.400 14.200 29.700 Milling 1.200 2.100 1,000 1,200 1.300 1.200 7.500 15.500 Carry-Over-Stocks; 8.400 14.600 6.800 8,200 9,400 8,700 49,900 106.000

February Procurement 500 800 300 400 500 400 2,600 5.500 Milling 1.500 2,500 1.500 1.500 1.500 1.500 7,500 17.500 Carry-Over-Stocks 7,400 12,900 5.600 7.100 8.400 7,600 45.000 94.000

March Mi lling 1.500 2.500 1,500 1.500 1,500 1.500 7.500 17.500 Carry-Over-Stocks 5.900 10,400 4,100 5,600 6,900 6,100 37,500 76,500

April Milling 1,500 2,500 1,500 1,500 1,500 1,500 7,500 17,500 Carry-Over-Stocks; 4,400 7,900 2,600 4,100 5,400 4,600 30,000 59,000

May Milling 1,500 2,500 1,500 1.500 1,500 1,500 7,500 17,500 Carry-Over-Stocks; 2,900 5,400 1,100 2,600 3,900 3,100 22,500 41,500

June Milling 1,500 2,500 1,100 1,500 1,500 1,500 7.500 17,100 Carry-Over-Stocks; 1,400 2,900 - 1,100 2,400 1,600 15,000 24,400

July Milling 1,400 2,500 - 1,100 1,500 1,500 7,500 15,500 Carry-Over-Stocks - 400 - - 900 100 7,500 8.900

August Milling - 400 - - 900 100 7,500 8,900 Carry-Over-Stockis - - _ - - - -

September Carry-Over-Stocks ------

Paddy Storage Requirements 3/ 8,400 14,600 6,800 8,200 9,400 8,700 49,900 106,000 plus: Rice Storage Requirements 4/ 1.000 1.700 1,000 1,000 1,000 1,000 5,000 11,700 plus: Storage Requirement for Jute Bags and Pumigants 5/ 400 700 300 400 500 400 2,500 5.200 minus: Existing Storage Capacity 2,600 2,800 1,500 1,500 1,500 1.500 27,300 38.700

Additional Paddy/Rice Storage RIeq. 7,200 14,200 6,600 8,100 9,400 8,600 30,100 84,200

Proposed Project Storage 4,000 6,000 4.000 4,000 5,000 5.000 12,000 40,000

1/ Procurement for 1985/86 has been estimated on the basis of the average paddy procurement during 1978/79 and 1979/80 and assuming that procurement would increase by 8% annually, provided that total annual procurement does not exceed 75% of the annual milling capacity. Monthwise procurement has been projected in accordance with historical procurement pattern. 2/ Milling during November, December and January has been projected on the basis of annual paddy procurement and past milling pattern. Mills are not used at full capacity during these months mainly because of paddy drying operations. For later months,mills are assumed to run at full capacity until all paddy is milled. 3/ Based on peak carry-over-stock. 4/ Estimated at one month out'put of milled rice when mill operates at full capcity. 5/ Estimated at 5% of paddy storage requirements. - 70 - ANNEX 5 Page 1

PAKISTAN

GRAIN STORAGE PROJECT

Specifications for Wheat Storage Godowns and Pilot Projects

A. Specifications for 1,100 MT Godown

1. Size, Capacity and Stacking. Capacity has been calculated on the basis of the following warehouse dimensions: length 100 ft (30.5 m), width 62 ft (18.9 m), and height from floor to evases 18.75 ft (5.7 m). The floor area would be divided into four equal stacks of 45.5 ft x 23.3 ft each. To facilitate stacking, the floor topping would be laid in panels of 38 in x 42 in demarcating the size of two standard 95 kg bags laid side by side. Bags would be stacked 14 layers high. The number of bags in a stack would be 2,912; four stacks would have a total weight of 1,106 MT.

2. Construction Details

(i) Footing. Footing for the outer foundation wall would be of plain concrete (1:4:8 mix) with a thickness of 9 in and a width of 4 ft. Footing would be placed 3 ft below grade. Soil conditions would be analyzed at each site and special footing prepared where required.

(ii) Floor. The floor designed to support a distributed load of at least 3,000 kg/m2 would consist of 0.75 in thick topping of cement concrete (1:2 mix) over 2.25 in plain concrete (1:2:4 mix) which would be laid on 6 in plain concrete (1:6:12 mix). The latter would cover 3 in of sand laid over a layer of 0.03 gauge polyethelene to prevent moisture migration. Under the moisture barrier 15 in of compacted sand would be placed on stones and well compacted earth without organic material.

(iii) Walls. Walls would be 18 in thick and of brick in cement mortar (1:6 mix);

(iv) Columns. Interior roof sup ort columns would be constructed on concrete footing of 8 ft1 placed 3 ft below grade. The columns would be of heavily reinforced concrete with dimensions 14 in2 and a flared concrete base of 7 ft2 at footing;

(v) Roof and Beams. Roof and beams would be of reinforced concrete (1:2:4 mix) cast in situ or pre-cast. Beams which would be 27 in deep with a 5.5 in roof slab on top would - 71 - ANNEX 5 Page 2

have a pitch of 9 in across 31 ft. Bed plates would be poured on top of walls to support roof beams, and tied together by tie beams in walls. The roof slab would have 18 in overhang to prevent rain from entering through windows. On top of the roof deck, for heat insulation, layers of bitumen, polyethelene, 3 in of puddled earth and 1 in of mud plaster would be placed under a 1.5 in thick cover of burnt tiles set in cement mortar (1:6 mix) and grouted with cement sand mortar (1:3 mix);

(vi) Loading Decks. A continuous concrete loading deck (8 ft wide) would be provided on two sides of each godown. The loading decks would be raised to a minimum height of 3 ft, 3 in above grade. The retaining wall for the deck would be of 18 in wide burnt brick on concrete foundation. The top of the wall would be made of reinforced concrete 9 in thick with a 12 in projection and steel nosing to protect against truck bumpers. For drainage, the deck would be sloped 1.5 in across 9 ft;

(vii) Doors. Six doors (three each on two sides of the godown) would be in two parts, hinged on each side in a steel frame 7.5 ft high and 6 ft wide, and swing flat against the wall with adequate clearance to the loading deck. Doors would be framed with steel angle provided with rubber sealing strips and clad with steel sheet 18 gauge. A 30 in reinforced concrete canopy would be over each door;

(viii) Windows. 42 bottom hung 24 in x 18 in metal frame gasketed plexiglass windows would be installed inside wall panels on both sidJesof the building. The windows would be screened with wire mesh of galvanized iron, and would close and latch f:rom the inside for fumigation;

(ix) Rat Protection. A 9 in reinforced concrete projection would be around that part of the building where no loading deck is provided. The projection with a thickness of 3 in would be at thlesame height as the loading deck;

(x) Multiple Godowns. For larger size storage facilities multiples of the 1,100 MT structure would be built with the end wall as a common wall. The roof slab would be provided with an expansion joint over the center of the wall. A formed PVC expansion joint would be used together with a raised and capped joint. - 72 -

ANNEX 5 Page 3

B. Specifications for Pilot Projects

3. Proposed Equipment for Mechanization of Loading/Unloading of Storage Bins

(a) Semi-Mechanical Alternative

(i) platform at truck deck height built around dump sink;

(ii) bucket elevator with dump sink; elevator capacity: 40 MT/hr; discharge height: 42 ft; power source: 2 HP electric motor;

(iii) surge bin with discharge gate 5 ft above top deck of bin complex; surge bin capacity: 1 MT;

(iv) two portable carts with rubber tires; cart capacity: 500 kg; cart would straddle manhole over top of bin; for emptying, cart would have discharge gate at bottom.

(b) Pneumatic Conveyor Alternative

(i) portable self-contained pneumatic conveyor:combination vacuum/pressure type; power source: 80 HP diesel or gasoline engine; complete with feeding hopper and air separating cyclone; capacity: 25 MT/hr;

(ii) quick coupling type piping, 30 ft each horizontal and vertical.

4. Proposed Equipment for Mechanical Bag Handling

(i) one mobile conveyor; adjustable height to 6 m; length 10 m; width of belt 0.6 m; power source: 4 HP electric reversible motor; hydraulic hand pump;

(ii) five mobile horizontal conveyors; length 10 m; width of belt 0.6 m; power source: 1 HP electrical reversible motor; belt speed 0.5 m/sec; castor wheels for moving the conveyor. IC' 01-0 C- to C- C' C' - C' lb C- -0 Cit to C- C' O - C

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FOODGRAINSTORAGE PROJECT

Civil Works Cost for 1,000 MT Paddy/Rice Storage Capacity

Foreign Unit Cost No. of Total Cost Exchange Cost Item Unit (Rs) Units (Rs) (Rs)

1. Foundation,.sxcavation ms 20 100 3,600

2. Plain Cement Concrete in foundation - Cement kg 1 2,900 2,900 2,610 - Sand ms 45 8.5 383 _ 3 - Aggregate m 70 17 1,190

3. Block masonry work - Blocks Nos. 4 8,500 34,000 - - Cement kg 1 750 750 - 3 - Sand m 45 7 315 -

4. Damp proof course m2 26 35 910 -

5. RCC work in columas, beams, roof, foundation - Cement kg 1 85,250 85,250 76,725 - Sand ms 45 120 5,400 - - Stone crush mS 150 240 36,000 - - Steel (deformedbars) kg 6.5 13,200 85,800 26,400 - Steel (plain bars) kg 6 3,300 19,800 6,600 2 - Form work mi 30 2,000 60,000 -

6. Floor filling - Sand mS 45 730 32,050 - - Stone soling m3 70 100 7,000 - 2 - Compacting mi 4 675 27,000 -

7. Plain cement under floor - Cement kg 1 13,640 13,640 12,276 3 - Sand mS 45 28 1,260 - - Stone crush m3 130 56 7,280 -

8. Floor topping - Cement kg 1 9,720 9,720 8,748 3 - Sand m 45 14 630 - - Stone crush m3 130 28 3,640 -

9. Cement sand rendering - Cement 1 10,270 10,270 9,243 - Sand 45 25 1,125 -

10. Bitumen filled roof cover m2 50 765 38,150 22,950

11. Ventilatorsand windows m 2 262.5 68 17,850 4,463

12. Rolling doors mi2 450 28 12,600 3,150

13. Ramp protection m 2 8 500 4,000 -

14. White wash m2 2 630 1,260 - 2 - Enamel paint m 20 700 14,000 8,400 2 - Cement base paint i 10 650 6,500 _ 15. Total material cost 545,173 182,240 16. Labor comionent (LtS af L5. LU 8.,116 -

17. Total material and labor cost 626,949 182,240

18. Contractors overhead (20X of 17) (including transportation charges) 125,390

19. TOTALCOST 752,339 182,240 1/ 60% of amount is estimatedbeing skilled labor. Aisle3' WVi Ttuck Dor,k 7

gI --- I6- l! I IBag1StackingPttern HofWMun _ _ _ _ _ . _ _ Each_Square: 38" x 42" Roof W/Mud and II Equals 2 Bags, 95 kg Each' Tile Covering

14" 1 's 1HC Cn mn ;Cl Aisle 4'4" Wide 3'6" Above Grade

14'-5 3/7"O10z/ 1 014! 03/7" ,14 5 3/7". _14'5 l3/7"_ -14'-6 3/7"_ IT-10 3/7;"1 N F1818

9, 31 ~~~~~~~~31' 9 l l l l | ~~~~~~~~~~~Door6E:x 7'4"| ;3' | 3 > - 31' a - tl1.62'

I InDock Truck Jlul | CROSS SECTION

_ ~~~~~~~~~~~~100' ,

BUILDING PLAN

Roof 11Linc L ittUsLiL LiLi Liz LiLi JLi LiLi LiL -txt-"PKSA GRAIN STORAGE PROJECT Windows Model Designfor 1,100 MT Godown

World Bak 2_Grade ELEVATION LONGITUDINAL -

ELEVATION, LONGITUDINAL World Bank- 22457 - 76 - ANNEX 6 Table 1 PAKISTAN

GRAIN STORAGEPROJECT

InvestmentCost Sumary for Wheat Storage Complexes and Warehousingand Quality Control Equipment 1/ (in Rs '000) Foreign Cost Item Punjab Sind NWFP Baluchistan Total Exchange

LAND 4,752 1,710 821 900 8,183 -

CIVIL WORKS Storage facilities 168,036 60,468 35,126 38,190 301,820 75,848 Site clearance 1,584 570 274 300 2,728 - Soil survey 810 345 75 75 1,305 Grading,sanitation, drainage 1,980 713 343 375 3,411 - Perimeterwalls 3,583 1,494 377 390 5,844 797 Guardhouse,staff quarters,office 3,210 1,740 560 560 6,070 828 Roads and parking lots 14,502 5,660 2,422 2,608 25,192 3,440 Power and water 1,380 660 180 180 2,400 328 Miscellaneous 3,902 1,433 787 853 6,975 - Subtotal 198,987 73,083 40,144 43,531 355,745 81,241

WAREHOUSINGEQUIPMENT Truck scale 5,580 1,163 697 465 7,905 4,884 Platformscale 2,453 1,321 347 364 4,485 1,352 Grain cleaner 1,030 373 61 43 1,507 1,245 Subtotal 9,063 2,857 1,105 872 13,897 7,481

QUALITYCONTROL EQUIPMENT Sieves 329 153 12 20 514 425 Portable moisture meters 457 229 27 30 743 614 Hand sprayers 333 147 56 59 595 492 Bin samplers 176 26 41 - 243 200 Triple beam scales 537 256 43 57 893 738 Fumigant tablet applicators 372 67 101 - 540 446 Bag sampling spears 120 54 17 15 206 - Grain pans 144 66 21 17 248 - Moisturemeters (capacitancetype) 12 38 12 12 74 61 Laboratoryscales 4 12 4 4 24 20 Sample diviiders 2 6 2 2 12 10 Air ovens 10 29 10 10 59 49 Magnifying glasses 1 2 - - 3 - Sample bottles - 2 1 - 3 Miscellaneous laboratory supplies 1 3 1 1 6 - Subtotal 2,498 1,090 348 227 4,163 3,055

Engineering Charges 2/ 21,055 7,703 4,160 4,462 37,380 -

BASE COST 236,355 86,443 46,578 49,992 419,368 91,777

Physical Contingencies3/ 23,160 8,473 4,577 4,909 41.119 9,178

TOTAL COST 259,515 94,916 51,155 54,901 460,487 100,955

1/ Details are in Tables 2 and 4. 2/ Ten percentof civil works and equipmentcost. 3/ Ten percentof the sum of civil works, equipmentand engineeringcharges. PAKISTAN

GRAIN STORAGE PROJECT

Investm.ent Cost for Wheat Storage Co-pitee with Different Caparitien 1/

New Storage Co=plexes Prujcct__torage at Locations With E.isting Storage In Pun,iab and Siad 2/ I Fgabun and Sind 11 NWFP and Eulcchlvtae Cost Item (1,100 MT) (4,400 MT) (17,600 HT) (1,100 HT) (3,300 NT) (22,000HT) (250 MT) (1,100 MT) (9,900 HT)

LAND (0.3 ha per godowo at Re 60,000/ho) 18.0 72.0 288.0 18.0 54.0 360.0 9.0 18.0 162.0

CIVIL WORKS

- Storage facilities 636.5 2,546.0 10,184.0 S36.5 1,909.U 12,820.0 21.763.8 . 6,874.1. 31 - Site clearante (Rs 20,000/ha) 6.0 24.0 96.0 6.0 18.0 120.0 3.0 6.0 54.0 - Soil survey (RE 15,000/site) 15.0 15.0 15.0 - 15.0 15.0 - - 15.0 - Grading, eanita,ioe aend draieage (Rs 25,000/ha) 7.5 30.0 120.0 7.5 22.5 150.0 3.0 7.5 67.5 - Perimeter walls (Re 70/ft) - 72.8 151.2 29.4 46.2 117.6 - 68.6 - Guardhouse, staff quarters. office - 110.0 6/ 220.0 5/ - - 80.0 7/ - - 80.0 7/ - Roads and parking lots (Rs 4.5/sq.ft) 80.0 260.0 800.0 56.0 150.0 1,000.0 30.0 56.0 450.0 - Power and water 30.0 40.0 60.0 - - 60.0 - - 40.0 -Hiscellaneous (22 of civil wrks) 15.5 61.9 232.9 14.7 43.2 287.3 5.1 16.7 156.4

Subtotal 791.0 3,159.7 11,878.1 750.1 2,204.4 14,649.9 258.1 850.0 7,975.4

WAREHOUSING EQUIPMENT Truck scale (30 NT) - - 232.5 - - 232.5 - - 232.5 Platform scale (500 kg) 6.7 16.9 47.2 6.7 13.5 64.0 3.4 6.7 23.6 Grain cle-enr (40 NT/hr) 8.7 8.7 26.0 8.7 8.7 26.0 - - -

Subtotal 15.4 25.6 305.7 15.4 22.2 322.5 3.4 6.7 256.1,

QUALITY CONTROL EQUIPHENT

Sieves (set of 4 with pan) 0.5 1.0 2.0 0.5 1.0 2.0 0.5 0,5 1.5 Portable wisture meters (battery operated) 3.8 3.8 11.4 3.8 3.8 11.4 - - 3.8 Hand Sprayers (3 gallon capacity, stainless Steel) 1.3 3.2 7.7 1.3 1.9 9.6 0.6 1.3 4.5 Bin sa.plesm (with thermometer and refill) - 1.0 3.1 - 1.0 3.1 - - Triple beam stales 1.2 1.2 2.4 1.2 1.2 2.4 - 1.2 2.4 Fu.igant tabllt applicators - 2.7 5.3 - 2.7 5.3 - - 2.7 Rag saspling spears 0.4 0.7 1.5 0.4 0.6 1.5 0.2 0.4 0.9 Grain pans 0.4 0.8 2.1 0.4 0.7 2.5 0.3 0.4 1.4

Subtotal 7.6 14.4 35.5 7.6 12.9 37.8 1.6 3.8 17.1

Engineering Charges (10% of civil works and equipwent) 81.4 320.0 1,220.0 77.3 224.0 1,501.0 26.3 86.1 937.2

RASE COST 913.4 3,591.7 13.729.3 868.4 2,517.5 16,871.2 298.4 964.6 10,471.4 Physical Contingencies 8/ 89.5 352.0 1,344.1 85.0 246.3 1.651,1 28.9 94.7 1,030.9

TOTAL COST 1,002.9 3,943.7 15,073.4 953.4 2,763.8 18,522.3 327.3 1,059.3 11,502.3

1/ Capacities at project storage complexes range from 250 MT to 22,000 Mt. 8y way of e.asple, only the s,aliest and the largest capacities together with the most frequent capacities are presented here. 2/ NWFP and Raluchistan have not been considered separately, Since -ore than 902 of proJect storagt in these two Provinces would be at locations with existing storage capacity. 3/ Storage facilities in NW?P and Raluchistan have been estimated tn cost 20% ore than thnse in Punjab and Sind, be-anse .' a of higher material and labor cost in the former and heavier construction in Baluchietmn's earthquake prone areas. 4/ Cost of small godown is estimated at 25% higher per NT than for 1100 NT Standard type. 5/ Guardhouse: Rs 30,000; staff quarters: Rs 70,000;and offices: Rs 120,000. 6/ Guardhouse and office Rn 30,000 and Rs 80.000 renpeetloely. 7/ Additional staff quarters and office Re 80,000. d/ 10% of the sum of civil works and equipteent cost and engineering charges. PAKISTAN

GRAIN STORAGE PROJECT

Investment Cost for Paddy/Rice Storage Facilities (in Rs '000)

Hafizabad Sheikhupura Siranwali Eminabad Faizabad Mubarikpur Dhaunkal Total Foreign Exchange

Cost Item (4,000 MT) (6,000 MT) (4,000 MT) (4,000 MT) (5,000 MT) (5,000 MT) (12,000 MT) (40,000 HT)

CIVIL WORKS Storage facilitieP (Rs 753/MT) I/ 3,012 4,518 3,012 3,012 3,765 3,765 9,036 30,120 7,229 Pavement,drain,.ge 2/ 240 360 240 240 320 320 720 2,440 - Soil survey 18 22 18 18 20 20 30 146 -

Electrification ilnternal and external (10%of civil works cost) 327 490 327 327 410.5 410.5 978.6 3,270.6 1,962

Miscellaneous (2% of civil works cost) _6.5 9.8 6.5 6.5 8.2 8.2 19.6 65.3

5 Total Civil Won' Cost 3,603.5 5,399.8 3,603.5 3,603.5 4,523.7 4,523.7 10,784.2 36,041.9 9,191

Engineering charges (6% of civil works cost) 216.2 324 216.2 216.2 271.4 271.4 647.1 2,162.6 -

BASE COST 3,819.7 5,723.8 3,819.7 3,819.7 4,795.1 4,795.1 11,431.3 38,204.4 9,191

Physical cOntingencies (10% of base cost) 382.0 572.4 382.0 382.0 479.5 479.5 1,143.1 3,820.5 919

TOTAL COST 4,201.7 6,296.2 4,201.7 4,201.7 5,274.6 5,274.6 12,574.4 42,024.9 10,110

1/ Detailed civil works cost are in Annex 5, Table 2. 2 2 2/ Roads, pave%ent and drainage estimated on basis of 4,000 ft per 1,000 MT capacity at Rs 15/ft .

F3 PAKISTAN GRAIN STORAGEPROJECT

Warehousing and Quality Control Equipment Cost

Unit Number of Units for: Total Foreign Cost Project Existing Procurement Grain Testing Cost Exchange Cost Item (RL) Stores 2/ Stores Centers Laboratories (Rs '000) (Rs '000)

WAREHOUSING EQUIPMENT

Truck Scale (30 MT) 1/ 232,500 14 20 - - 7,905 4.884 Platform Scale (500 kg) 3,370 531 300 500 - 4.485 1,352 Grain Cleaner (40 MT/hr) 8,660 99 75 - - 1,507 1,245 Subtotal 13,897 7,481

QUALITYCONTROL EQUIPMENT

Sieves (Set of 4 with Pan) 495 227 300 500 12 514 425 Portable Moisture Meter (BatteryOperated) 3,810 95 100 - - 743 614 Hand Sprayer (3 Gallon Capacity, Stainless Steel) 640 479 450 - - 595 492 Bin Sampler (with Thermometer and Refill) 1,040 134 100 - - 243 200 Triple Beam Scale 1,220 132 100 500 - 893 738 Fumigant Tablet Applicator 2,660 103 100 - - 540 446 Bag Sampling Spear 60 1,300 600 1,500 36 206 - Grain Pans 70 1,370 600 1,500 72 248 - Moisture Meters (CapacitanceType) 12,380 - - - 6 74 61 Laboratory Scale (2 kg) 1,995 - - - 12 24 20 Sample Divider 2,060 - - - 6 12 10 Air Oven 9,880 - - - 6 59 49 Magnifying Glass (Desk Type) 250 - - - 12 3 - Sample Bottles 10 - - - 300 3 MiscellaneousLaboratory Supply Set 1,000 - - - 6 6 - Subtotal 4,163 3,055

Engineering Charges(l10of Equipment Cost) 1,806 -

BASE COST 19,865 10,536

PHYSICAL CONTINGENCIES 1.987 1,054 (10% of Base Cost) TOTAL EQUIPMENTCOST 21,852 11,590 1/ Includescivil works for foundation, installationand transportationcost.

2/ Equipment costs for project storage complexes of different capacity are detailed in Table 2. ANNEX 6 -80 Table 5

PAKISTAN

GRAIN STORAGE PROJECT

Pilot Projects - Investment Cost

Unit Total Foreign Cost No. of Cost Exchange Cost Item (Rs) Units (Rs tO0O) (Rs '000)

1. Mechanization of Loading/ Unloading of Storage Bins

(i) Semi-Mechanical System

Platform 15,000 5 75 23 Dump Sink 35,000 5 175 53 Bucket Elevators 25,000 5 125 38 Surge Bins 15,000 5 75 22 Carts (2 per storage complex) 10,000 10 100 30 Subtotal 550 166

(ii) Pneumatic Conveying System 225,000 10 2,250 1,575

2. Mechanical Bag Handling

Conveyor with Adjustable Height 50,800 10 508 356 Horizontal Conveyors (5 per storage complex) 32,900 50 1,645 1,187 Subtotal 2,153 1,543

3. Engineering Charges (10% of equipment cost) 495 -

BASE COST 5,448 3,284

4. Physical Contingencies (10% of base cost) 545 328

TOTAL COST 5,993 3,612 PAKI STAN GRAIN STORAGE PROJECT

Grain Storage Research and Extension - Equipment and Vehicle Cost (in Rs)

University Sind Agric Ayub Sariab Grain Sto. Vertebr. PARC Unit of Agric. University Peshawar A.R.I. A.R.I. Laborat. N.I.A.B. Past Ctr. P.C.S.I.R. Coord. Total Foreign seTe Cost Faisalabad Tando Jam Universit Faisaiabad Qtueta Karachi Faisalabad Lboratory Karachi Unit Cost ______

Labor,tory Moisture Meter 4,190 8,380 8,380 8,380 4,190 4,190 4,190 4,190 4,190 4,190 - 50,280 41,550 Portable Moisture Meter 3,810 3,810 3,810 3.810 - 3,810 3,810 - - 3,810 - 22,860 18,850 Balant5, Triple Beam 1,220 2,440 2,440 2,440 1,220 1,220 2,440 1,220 1,220 1,220 - 15,860 13,100 Seve Set (4 Sieves with Pan) 495 990 990 990 495 495 495 495 495 495 5,940 4,920 Hygro Thermograph1 8,335 25,005 25,005 25,005 16,670 16,670 16,670 16,670 16,670 16,670 - 175.035 144,730 Pocket S ing Psychrometer 1/ 620 1,860 1,860 1,860 1,240 1,240 1,240 1,240 1,240 620 - 12.400 10,250 Sample Divider 2,060 2.060 2,060 2,060 2,060 2,060 2,060 2,060 2,060 2,060 - 18,540 13,350 Microa°OPe (Binocular, Inclined) 13,150 92,050 78,900 78,900 26,300 13,150 26,300 26,300 26,300 26,300 - 394,500 326,200 Microa,uPe(Compound, 4 Objectives) 19,720 ------19,720 - 19,720 16,300 Sample SPear 60 600 600 600 600 600 600 600 600 600 - 5.400 CoPmaetmented Bulk SamPler (63 in.) 1,600 3,200 1,600 1,600 1,600 1,600 1,600 - 1,600 - 12,800 10,600 Extendable Bulk Sampler (Not Corypartmented) 2/ 2,710 2,710 2,710 2,710 2,710 2,710 2.710 - - - - 16,260 13,450 Maborst0 Glassware 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40.000 40,000 40,000 - 360,000 - X Slide llneous Supplies 3/ 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 - 360,000 - d rojector 5,750 17,250 5,750 5,750 5,750 - 5,750 - - - - 40.250 33,280 S5btotal 240,355 214,105 214,105 142,835 127,745 147,865 132,775 132,775 157,285 - 1,509,845 646,580 VEHICLES

Four Wheel Drive 111,000 222,000 111,000 111,000 111,000 111.000 111.000 111,000 111,000 111,000 111,000 1,221,000 507,000 Sedan 125,000 ------125,000 125,000 66,700 Mtrycle (200cc) 9.000 36,000 36,000 36,000 9,000 9,000 9,000 9,000 18,000 9,000 - 171,000 64,900

Subtotal 258,000 147,000 147,000 120,000 120,000 120,000 120,000 129,000 120,000 236,000 1,517,000 638,600

BASE COST 498,355 361,105 361,105 262,835 247,745 267,865 252,775 261,775 277,285 236,000 3,026,845 1,285,180

PHYSICAL CONTINGENCIES (10% of Base Cost) 49,835 36,110 j6,110 26,285 24,775 26,785 25,280 26,180 27,730 23,600 302,690 128,520

TO MUIPMENT AND VEHICLE COST 548,190 397,215 397,215 289,120 272,520 294,650 278,055 287,955 305,015 259,600 3,329,535 1,413,700

2R Wih- Slde eruleand extra thermometer. 2/ With handle and two extensions. 3/ For project period.

a' a - 82 - ANNEX 6 Table 7

PAKISTAN

GRAIN STORAGE PROJECT

Grain Storage Research and Extension Operating Cost of PARC Coordination Unit

Foreign Unit Cost Number Total Cost Exchange Cost Item Unit (Rs) of Units (Rs) (Rs)

Salaries and Wages 1/

Coordinator man-year 66,000 4 264,000 - Technical Field Officer man-year 51,600 4 206,400 - Office Manager man-year 51,600 4 206,400 - Accountant man-year 23,850 4 95,400 - Typist/Clerk man-year 23,850 4 95,400 - Stenographers man-year 18,180 4 72,720 - Drivers man-year 5,200 8 41,600 - Office Helper man-year 4,080 8 32,640 - Subtotal 1,014,560 -

Travel Allowance

Coordinator month 2,500 48 120,000 - Technical Field Officer month 2,500 48 120,000 - Driver month 750 96 72,000 - Subtotal 312,000 -

Vehical Operation and Maintenance

Four-Wheel Drive mile 2.5 60,000 150,000 75,000 Sedan mile 1.6 60,000 96,000 48,000 Subtotal 246,000 123,000

Office Supplies and year 25,000 4 100,000 Miscellaneous

Total Operating Cost 1,672,560 123,000

1/ Includes allowances. - 83 - ANNEX 6 PAKISTAN Table 8

GRAIN STORAGE PROJECT

Cost of Technical Assistance and Training

Cost Per Total Foreign Man-Month No. of Cost Exchange Cost Item (Rs) Man-Months (Rs'000) (Rs'OOO)

TECHNICAL ASSISTANCE 1. Transportation Economics and Logistics

Fee and Expenses 74,250 24 1,782 1,336 Travel 100 100

2. Grain Testing Quality Control and Grading

Fee and Expenses 74,250 18 1,336 1,002 Travel 100 100

3. Mechanical Grain 'Handling

Fee and Expenses 74,250 6 445 334 Travel 25 25

4. Grain Storage Research and Extension

Fee and Expenses 74,250 6 445 334 Travel 25 25 Total Technical Assistance Cost 4,258 3,256

TRAINING

1. Grain Storage Operations and Management

ti) Local Training (16) 11

Travel and Tuition (at Rs 60,000 each) 960 Expenses (Rs 200/day) 6,000 48 288 -

(ii) Overseas Study Tours (7)-

Travel (at Rs 40,000 each) 280 280 Expenses (ItS1,000/day) 30,000 21 630 630

2. Grain Storage Research and Extension

(i) Foreign Tra:ining (9)

Travel and Tuition (at Rs 75,000 each) 675 675 Expenses (Rs 600/day) 18,000 27 486 486

(ii) MSc Fellowships (35) -

Travel and Tuition (at Rs 24,000 each for 2 years) 840 Expenses 500 840 420 - Total Training Cost 4,579 2,071 TOTAL TRAINING AND TECHNICAL ASSISTANCE COST 8,837 5,327

l/ For officers of MFAC (2), Provincial Food Departments (10, including 6 grain technologists), PASSCO (2) and RECP (2). 2/ For one senior officer of each MFAC, Provincial Food Departments, PASSCO and RECP. 3J1 For three grain *scientists of the University of Agriculture, Faisalabad, two of the Ayub A.R.I. at Faisalabad and one of each Agricultural University at Tando Jam, Peshawar University, the Vertebrate Pest Control Institute and the PARC Coordination Unit. 4/ For students at the University of Agriculture at Faisalabad (15), Agricultural University at Tando Jam (10) and Peshawar University (10). - 84 - ANNEX 6 Table 9 PAKISTAN

GRAIN STORAGE PROJECT

Cost Foodgrain Storage and Processing Study

Cost Per Foreign Number of Man-Month Total Cost Exchange Cost Item Man-Months (Rs'000) (Rs'000) (Rs'000)

Salaries and Wages

Co-ordinator 12 120 144.0 - InternationalGrain Storage Specialist 6 69.3 415.8 312.0 InternationalFoodgrain Processing Specialist 6 69.3 415.8 312.0 Marketing Economist 9 8.4 75.6 - AgriculturalEconomist 9 8.4 75.6 - Food Technologist 6 8.4 50.4 - Storage Technologist 6 8.4 50.4 - ProcessingTechnologist 6 8.4 50.4 - Entomologist 6 8.4 50.4 - Transport Specialist 6 8.4 50.4 - Economists (2) 16 8.4 134.4 - Statistician/Programmer(2) 18 8.4 151.2 - Support Staff 120 3.0 360.0 - Subtotal (1) 2,024.4 624.0

Travel

Local Travel (25% of subtotal (1) ) 506.1 76.0 InternationalTravel 1/ 69.3 69.3 Subtotal (2) 575.4 145.3

Office Supplies and Miscellaneous 100.0 10.0

Total Cost Before Overheads 2,699.8 779.3 2/ Overhead Cost - 424.9 -

Total Cost of Study 3,124.7 779.3

1/ For internationallyrecruited consultants. 2/ 20% of sum total of salaries and wages and office supplies and miscellaneous. - 85 - ANNEX 7 Page 1

PAKISTAN

GRAIN STORAGE PROJECT

Proposed Grain Storage Research and Extension Programs

A. Grain Storage Research Programs

1. University of Agriculture, Faisalabad

Agronomy Department and Department of Plant Breeding:

- determine grain characteristics producinR insect resistance.

Entomology Department:

- study on-farm and village level storage losses under Punjab conditions;

- determine grain storage losses under controlled conditions in Punjab during monsoon and dry seasons.

2. University of Peshawar

Entomology Department:

- determine and analyze on-farm and village level storage losses under NWFP conditions with particular reference to hot and cold seasons;

- test simple designs for on-farm storage, including storage within the farm house.

3. Sind Agricultural University

Entomology Department:

- study on-farm and village level storage losses under Sind conditions during monsoon and dry seasons;

- determine and analyze grain handling and transportation losses at various stages of the grain marketing chain.

4. Ayub AgrictulturalResearch Institute, Faisalabad

- investigate traditional on-farm storage practices and structures and develop improved storage designs and effective methods of grain protection; - 86 -

ANNEX 7 Page 2

analyze wheat varieties with storage insect resistance, and hreed varieties with improved resistance to insects.

5. Grain Storage Laboratory, Karachi

- determine characteristics of farm storage structures offering best grain protection in Sind.

6. Agricultural Research Institute, Sariab, Quetta

- trace movement of insecticide in grain environment to determine more effective application of insecticides;

- investigate best timing of insect control action;

- determine and analyze storage losses under Baluchistan rural conditions.

7. Nuclear Institute for Agriculture and Biology, Faisalabad

- investigate repellent fractions in storage insect resistant wheat and in traditional protectants to determine possibility of chemical production.

8. Vertebrate Pest Control Center, Karachi

- determine rat depredation in on-farm and village level stores during different seasons;

- develop suitable means to protect with local materials grain stored on farms and in villages.

9. Pakistan Center for Scientific and Industrial Research, Karachi

- determine conditions giving rise to mite caused losses in wheat and analyze mite population/loss relationship.

B. Grain Storage Extension Training Programs

1. University of Agriculture, Faisalabad

- develop suitable instructional methods to train extension staff in grain storage technology.

2. Three Participating Universities

- ieNeNn\vax cVose ~cordiiatixva with Prrovitc_ial Akricul tural Departments extension training programs in grain storage technology, including: - 87 -

ANNEX 7 Page 3

(i) storage characteristics of different grains;

(ii) grain quality inspection and storage pest recognition;

(iii) storage quality control and grain protection, insect control principles and insecticide/ fumligantuse; and

(iv) grain drying and storage principles and means. - 88 -

ANNEX 8

PAKISTAN

GRAIN STORAGE PROJECT

DisbursementSchedule (US$t 000)

IDA Fiscal Year Disbursement and Quarter In Quarter Cumulative

1982 2nd -/ 150 150 3rd 970 1,120 4th 1,880 3,000

1983 1st 2,240 5,240 2nd 2,450 7,690 3rd 2,530 10,220 4th 2,670 12,890

1984 1st 2,810 15,700 2nd 3,130 18,830 3rd 2,870 21,700 4th 2,560 24,260

1985 1st 2,320 26,580 2nd 2,020 28,600 3rd 1,650 30,250 4th 1,290 31,540

1986 lstV2/ 460 32,000

l/ Estimated date of Credit effectiveness: Septembev l5, I9%I. 2/ Estimated closing date December 30, 1985. - 89 -

ANNEX 9 PAKISTAN Table 1

GRAIN STORAGE PROJECT

Proposed Staffing of Project Implementation Division of PASSCO

Position Nos. Qualifications and Experience

Head Office

Chief Engineer (General Manager) I Graduate or MSc (Civil) Engineer; 15 years experience Executive Engineer, Design 1 BSc Civil Engineer or equivalent; 5 years experience

Assistant Engineer, Design (SDO) 1 BSc Civil Engineer or equivalent; 1 year experience

Executive Engineer, 'Contracts 1 BSc Civil Engineer or equivalent; 5 years experience. Alternatively: Diploma Polytechnic Institute; 15 years experience

Head Draftsman 1 Diploma Polytechnic Institute; 5 years experience

Draftsman 2 Diploma Polytechnic Institute; 2 years experience Tracer 2 Accounts Officer 1 Qualified FAS; 8 years experience Accountant 3 Graduate School of Commerce; 4 years experience Support Staff (incltudingSecretaries, Clerks, Drivers and Office Helpers) 19 Field Staff Deputy General Manager 2 BSc Civil Engineer or equivalent; (Superintending Engineer) 10 years experience. Alternatively Diploma Polytechnic Institute; 15 years experience Executive Engineer 8 BSc Civil Engineer or equivalent; (Project Engineer) 5 years experience Assistant Engineer 16 Diploma Polytechnic Institute; 8 years experience. Alternatively: BSc Civil Engineer or equivalent; 1 year experience Sub-Engineer (Overseer) 32 Diploma Engineering School; 1 year experience

Accouncanc 20 Craduate School of Commerce; 8 years experitnce Support Staff (including Secretaries, 50 Clerks, Drivers anld Office Helpers) PAKISTAN GRAINSTORAGE PROJECT PROPOSEDORGANIZATION CHART OF THE FOODWING IN THE MINISTRYOF FOOD,AGRICULTURE AND COOPERATIVES

SecretarV j

Additional Secretary Livestock and Cooperatives

Joint Secretary (Food)

Fgechnical Officer Technical Officer Director" Officer on Special Deputy Secretary Director I Grain (lualitV Grain Transportation Storagie Duty (Wheat) (Food) of Accounts

Section Officer Section Officer Accounts Section Offcer I Section Officer1 Wheat Officer Planning, Statinkic I Storage Project L___J..1 l_... ____ :SectionOfficer STORAGE CELL Sugar

_ - ,Positions which would be added under the project Section Officer Establishment *Atpresent there Is one Section Officer, Storage Reporting to the Officer on Special Duty (Wheat) .,0irector or Deputy Secretary _ 'o

World Bank - 22541 - 91 - ANNEX 9 Chart II PAKISTAN GRAIN STORAGEPROJECT IMPLEMENTATIONSCHEDULE

19-1 1982 19w 1984 1965

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Staffingof PID 1. ChiefEngineer (General Manr ____ 2. DeputVGeneral Manapr_; 3. ExacuniveEngineer WIN 4. AuaistantEngineers 6. Sub-EnginserstOnrn=enr= 6. SupportStfi _ WhealStorage C;omplene 1. LendAcquisition for consnm.ctionthrugh JuM 1982 for conttction thro,ughDecember 1983

for constructionithrough June1985 W 2. Desigr nd TenderPmparrtion_ 3. Prequalificetionnd TenderAnard _ _ 4. Construction Pilot Proects 1. Desig. 2 TenderPrparationt 3. Pocumtmentend Installation of Equipment Storegeand Quality Contrl Equipmrnent 1. TenderPr.pereionf 2. Procuremente,d nsatlleion of Equipmegnt Paddy/RimcnStorge Fecilities 1. Designrnd TenderPrpwation_ 2. Prequalificationend Tender Awad- 3. Cionstruction Grain StDrageRea. rch endE.ttnrion_ 1. PARC Coordinaton Unit 2. Penparation of Programs W 3. TenderPreparation for Equipmentani Vehicles * 4. Procuremt _E" 5, ProgrrnmlphmenPam ion _ Technicl Assistamtt 1. identification of Conaultants 2. ! Mgasrnnt of Consultantfor En-ginarenn(Pilot Proiwcu) Grain Trnmporation_ Grain Quditty Inepction andContrasl GrabinStorage Refserch rmd Extendlon Training 1. MFAC,Prov. Food Depts.,PASSCO and RECP LocalTraining Courss _ OynaraseStudy Tour, ME Z PARC.Uniar,nities. and Agric.Reserch Int. Fonign Studiaes MSCGreduint StudyProgrr - I Study I. Identificationof Co,nsultants Z Study Preparation _ _ - Strengtheningof M FACs Food Wing 1. Stonre Ceil Director(or Dputy Brtwrry i _ _ _ _ * I - - m SetimonOfficen r nd AccountsOffiker _ _ f _ _ - -_ - - _ i _ _ SupportStaff * _ ' ------2. TechnicalOfficers _ _ _ _ _ * - -- 3. Reponrno ImProre GramTrnponanoiton and Gretn Qualiiy lnuP-e n nd Contro_

__lndefrnitn Durut,or World Bl, - 22540 - 92 -

ANNEX 10 Page 1

PAKISTAN

GRAIN STORAGE PROJECT

Basis of Economic Analysis

1. Base Year. Investment and operating costs of the project and project benefits are expressed in June 1980 constant Rupees (Rs).

2. Exchange Rate. The official exchange rate of US$1.00 = Rs 9.90 is used for converting border prices.

3. Standard Conversion Factor (SCF). Tariff and trade restrictions introduce a distortion in the price relationship between traded goods (valued at border prices) and non-traded goods (valued at local prices). In order to evaluate the non-traded components of project costs and benefits more correctly, SCF is applied to make them compatible with the traded components expressed in Rs. SCF is estimated by the ratio between the value of all trade goods in border prices and their value in local prices and is calculated as follows:

X + M SCF = X + M + Sx + Tm -Tx where X = exports (fob), M = imports (cif), Sx = export subsidies, Tm = import duties, and Tx = export taxes. Trade data from 1976/77, 1977/78 and 1978/79 yield an estimate for SFC of 0.86. In view of recent developments in Pakistan which point to a less stringent tax and import duty regime in the future, SCF has been estimated at 0.9 for the purpose of evaluating non-traded components of project costs and benefits.

4. Shadow Wage Rates. Skilled labor has been costed at 100% of the financial salary rates. Economic costs for unskilled labor used in construction and grain handling have been valued on the basis of a survey carried out under the UNDP financed Indus Basin Planning Project, and are estimated at 85% of the financial costs.

5. Wheat Storage Models. To take properly into account differences in investment costs and operating conditions in the four Provinces and in the "with project" and "without project" situations, project storage complexes have been grouped into four models with the following characteristics:

(i9 Model A would be applicable to all project storage complexes in WMYP anda'Baluchistan. Storage construction cost voald be 20% higher than in Punjab and Sind (Annex 6, Table 2). Proj- ect facilities would be constructed at existing storage locations, where in the "without project" situation, the grain would be stored on raised plinths. Average storage duration would be about three months; annual grain throughput in - 93 -

ANNEX 10 Page 2

project storage would amount to 300% of the storage capacity; and average capacity utilization have been calculated on the basis of grain flow models which have been prepared for each district (examples are in Annex 4, Tables 3 and 4);

(ii) ModeL B has similar characteristics as Model A but would be applicable to storage complexes in Punjab and sind only, where project storage facilities would be located in the wheat procurement areas. Average storage duration would be 4.5 months; annual grain throughput in project storage would amount to 125% of storage capacity; and average capacity utilization would be 46%;

(iii) Model C has the same characteristics as Model B, except that project storage facilities would be constructed at new storage locations where presently only temporary procurement centers exist. In the "without project" situation, the procured wlieatwould be transported to nearby storage locations where it would be stored on raised plinths; and

(iv) Model D has the same characteristics as Model C, except that in the "without project" situation grain would not be stored at nearby storage facilities, but transported immediately after procurement long distance to consumption areas where it would be stored on raised plinths at existing storage locations.

6. Storage Losses. Estimates for quantitative and qualitative storage losses for different storage periods in the "with project" and "without project" situations are detailed in paras 2.26 and 2.28 in the main text. On the basis of these estimates and the Model characteristics average monthly wheat storage losses in the "without project" situation have been calculated at 0.972% for Punjab and Sind, and at 0.861% for NWFP and Baluchistan. For Basmati paddy, average monthly storage losses in the "without project" situation have been calculated at 1.125%.

7. Ecornomic Value of Wheat and Paddy. The economic values of wheat and Basmati paddy have been estimated on the basis of the IBRD projected export prices of wheat and rice in 1985. For calculating the economic value of wheat it has been assumed that Pakistan would become a net exporter of wheat by 1984/85 (Annex 4, para 13). The estimated values of wheat and Basmati paddy are Rs 2,250.86 per MT and Rs 5,772.33 per MT, respectively. Details are in Table 1.

8. Economic Value of Cement and Steel Bars. For calculating the economic values of cement and steel bars, it has been assumed that Pakistan would remain a net importer of cement during the project period and that it would continue to procure scrap steel for domestic processing into finished steel. The estimated economic values of cement and steel bars are detailed Za Tv b 2. 2 . PAKISTAN

GRAIN STORAGEPROJECT

Economic Value of Wheat, Basmati Paddy, Cement and Steel Bars

1. Wheat 85price of Canadian No. 1 Western Red Spring Wheat, 3. Cement Projected 95 (in 1980 Conatant Dollars) 1/ US$ 248.00/MT f.o.b. Thunder Bs, (in 1980-Constant Dollars) II US$ 248.00/HT Import Price c.i.f. Karachi (US$90.00/MTat Rs 9.9

Price of PakistanWheat, f.o.b. Karachi in Rs (US$1.00-Rs 9.9) 2/ Rs 2,455.20/MT per US$1.00) Rs 891.00/MT Minus Average Forwardingand Handling Charges from Punjab Plus Port Charges, Handling Cost, Average Incre- to Karachi and pot Charges at Karachi 3/ Rs 204.34/NT mental TransportationCost and Dealer Margins 7/ Rs 209.75/MT

Price of PakistanWheat at Godown Re 2,250.86/MT Average Price of Cement at Godown ConstructionSite Ra 1,100.75/MT

4. Steel Bars 8/ 2. Easat Pdd Projected 1985 Prices of Thai Rice (5X Broken), f.o.b. Bangladesh Import Price of Scrap Steel c.i.f. Karachi (in 1980 ConstantDol ) 1 US$ 561.00/MT (US$200.00/MTat Rs 9.9 per US$I.OO) Rs 1,980.00/MT Plus 67% AveragePrice Premium for Pakistan Basmati 4/ US$ 375.87/NT Cost of Handling, Dismantling and Average Transport Plus 67% Average ~~~~~~~~~~~~~~~~ofScrap Steel to Smeltery 9/ Rs 942.30/MT Projected 1985 AverogePrice Premium for Pakistan easmati(in 1980 CoAstant Dollars) US$ 936.87/MT Smelting and Rolling of Steel into Bars Rs 1,575.00/HT

Projected 1985 Aver0gePrice of Pakistan Basmati in 9,27501/NT Ex-Factory Price of Steel Bars Rs 4.497.30/MT q. Rs (US$1.00- Rs 9-9) US$9,275.0/TR44930H Minus(US$1.00 - rwading and Ha9dling,Charges from Punjab Handling Cost and Average Transport of Steel Bars I FKaah,adrCand Handling Charges from Punjab and Dealer Margins 10/ Rs 540.00/MT trojKrchi 1and orgtCharges 5/ Es 564.59/NT Average Price of Steel Bars at Godown Construction

Projected 1985 AverigeBasmati Price at Godown Es 8,710.42/NT Site Es 5,037.30/NT

Minus Variable 1i411ng Costs 6/ Rs 95.00/HT Price of 1.493 MTOf Paddy (Which Yield 1 MT of Rice at

Milling RecoverypR5 e of 67%) Rs 8,615.42/NT

Price of 1 NT of Bamati Paddy Rs 5 772.33/HT

1/ IDA Commodity price Forecast, November 1980 / It has been Psuedthat the price of Pakistan Wheat f.o.b. Karachi would be the same as the price of Canadian No. 1 Wheat f.o.b. Thunder Bay. 2/ Calculated on the bWais of financial costs of Rs 227.05/HTmultiplied with the Standard Conversion Factor (0.90). 3/Over the last nioeyears Pakistan Basmati prices on the average have exceeded prices of Thai Rice (5 broken) by 67%. 4/ Calculated on tbe b6sis of financial costs of Rs 627.32 multiplied with the Standard Conversion Factor (0.90). The financial costs include 5 handlingcost of,s 18.05/NT, transportationcost of Rs 232.40/MT port charges of Rs 20.00/NT and cost of gunny bags of sa 356.87/NT. 6/ Calculated on thebnsis of financialcosts of Rs 105.55 multiplied with the Standard Conversion Factor (0.90). 6/ Calculated on theb0sis of financial coats of Rs 233.05 multiplied with the Standard Conversion Factor (0.90). The financial costs include handling cost ofRa18.05/NT,port charges of Rs 20.00/MT,average incrementaltransportation cost of Rs 105.00/NT (for an average distance ^ of 700 km at Re 5s,$T/lOOkm)and dealer margins of Rs 90.00/MT (estimatedat 10% of c.i.f. prices). 1. 8/ Calculated for p1io steel bars. Economic costs for deformed steel bars have been estimated at 109% of the economic costs of plain steel bars. Local cost componen(shave been multiplied with the StandardConversion Factor (0.90). 9/ Scrap steel is 1tPOtedin the form of ships which are dismantled in Pakistan. Financial costs of handling and dismantlinghave been estimated qt rs 900/MT. cost of transport to the smeltery estimated at Rs 147/MT has been calculated on the basis of an average distance of 700 km and a transport cost f R# 21/MT for 100 km. Handling costs are estimated at Rs 45/MT. 10/ Handling cost etioted at Rs 45/NT. Transport Costs of Rs 105/MT have been calculatedon the basis of an average distance of 500 km to storage sites. Dealer mxrgAnshave been estimated at Rs 450/MT (10% of ex-factory price). - 95 -

ANNEX 10 PAXISTAN Table 2

GRATN STORAGE PROJECT

Paddy/Rice Storage Component - Financial Analysis 1/ (in Rs '000)

Year 1 2 3 4 5 6 7 8 9 10 11 SOURCE OF FUNDS RECP Equity Contribution 10,000 4.858 GOP Loan 2/ 12.891 17,841 3.938 Subtotal 22,891 22,699 3,938

Storage Operating Cost (Without: Proiect) 3/ Salaries and Wages Store Manager 66 72 79 86 92 99 106 113 120 127 135 Asst. Accounts Officer 58 64 70 76 82 88 94 100 100 106 119 Watchmen 139 152 165 180 194 209 224 239 253 268 284 Handling Cost 220 241 263 285 308 331 354 377 400 424 449 Electricity 44 48 53 57 62 67 72 77 82 87 92 Ground and Godown Maintenance 1,056 1,157 1,260 1,368 1,477 1,588 1,699 1,809 1,918 2,033 2,155 Pest Control 176 193 210 228 246 264 282 300 318 337 357 Wear & Tear of Gunny Bags 1.690 1,851 2 017 2.189 2.364 2,541 2,719 2,896 3.070 3.254 3.49 Subtotal 3,449 3,778 4,117 4,469 4,825 5,187 5,550 5,911 6,267 6,642 7,040

Grain Losses (Without Proiect) 4/ Handling Losses 1,082 1,260 1,397 1,535 1,674 1,803 1,931 2,059 2,188 2,315 2,443 Storage Losses 14,89 17.347 19.242 21,137 23.056 24,822 26.587 28.355 30.123 31.883 33.635 Subtotal 15.976 18.607 20,639 22,672 24.730 26,625 28.518 30,414 32.311 34.198 36.078 Total Source of Funds 42,316 45.084 28,694 27.141 29.555 31.812 34,068 36.325 38,578 40,840 43.118

USE OF FUNDS Stora e Construction 5/ 18,416 25,487 5,625 Debt Service Interest (11% p.a.) 1,418 3,381 3,814 3,390 2,966 2,543 2,119 1,695 1,271 648 424 Amortization 6/ 3.852 3,852 3.852 3,852 3.853 3.852 3.852 3,852 3.853 Subtotal 1,418 3,381 7,666 7,242 6,818 6,395 5,972 5,547 5,123 4,700 4,277

Storage Operating Cost (With Pro ject) Salaries and Wases Store Manager 66 73 79 86 92 99 106 113 120 127 135 Asst.Accounts Officer 58 64 70 76 82 88 94 100 106 112 119 Watchmen 139 131 116 120 130 140 150 160 170 180 191 Handling Coat 220 222 215 228 246 264 282 300 318 337 357 Electricity 44 53 64 71 77 83 89 95 101 107 113 Ground and Godown Maintenance 1,056 1,060 1,024 1,083 1,170 1,258 1,346 1,433 1,519 1,610 1,707 Pest Control 176 159 127 128 138 148 158 168 178 189 200 Wear & Tear of Gunny Bags 1.690 1.604 1.411 1,459 1.575 1.693 1.812 1.930 2,046 2,169 2.299 Subtotal 3,449 3,366 3,106 3,251 3,510 3,772 4,037 4,299 4,558 4,831 5,121

Grain Losses (With Project) Handling Losses 1,082 1,008 769 768 837 901 965 1,030 1,094 1,158 1,221 Storage Loeser 14.894 11,179 3.848 2.349 2.562 2,758 2,.954 3.151 3,347 3,543 3.737 Subtotal 15.976 12,187 4.717 3.117 3.399 3,659 3.919 4.181 4.441 4.701 4.958 Total Use of Funds 39.259 44,421 21,014 13.610 13.727 13.826 13.928 14.027 14.122 14.232 14.356

Annual Funds Surplus 3,057 663 7.680 13.531 15.828 17,986 20.140 22,298 24,456 26,608 28,762

Cumulative Funds Surxllus 3,057 3,720 11.400 24.931 40,759 58.745 78,885 101.183 125.639 152.247 181,009

Financial Rate of Return 7/ 377

1/ In current Rupees assuming that inflation will decline annually by 0.5% from 10% in 1981 to 67. in 1989 and thereafter. The Rupee/Dollar exchange rate has been assoumed to remain constant at Rs. 9.9 per US$ 1.00. 2/ The RECP equity contributLon and the GOP loan would be 30% and 70% respectively of storage construction cost including physical and price contingencies. It has been assumed that all funds would be made available at the beginning of a given year. 3/ Cost details in constant 1980 Rupees are in Table 3. 4/ Details on handling losseis are in Table 3. Storage losses have been estimated on the basis of different loss percentages corresponding to different storage periods (para 2.28 of main text) and the weighted averages for storage utilization and storage periods. The latter have been calculated in accordance with the projections in Annex 4, Tablell and are estimated at 51% for storage utilization and six months for storage period. Grain losses have been valued in current Rupees in accordanee with the IDA Commodity Price Forecast, Nov. 1980. 5/ tncludes physical and price contingencies. 6/ It has been asumed that the GOP loan would be anortized in even amounts over a nine-year period following two year grace on principal repayments. For interest calculation, it has been further assum d that repayments would be made at the end of a given year. 7/ Calculated on the basis of operating cost in constant 1980 Rupees and storage construction cost including physical contingencies (see Table 3 and Annex 6, Table 3). Grain losses have been valued in financial prices projected for 1985 in accordance with the methodology detailed in Table 1. PAKISTAN

GRAIN STORAGE PROJECT

Economic Rates of Return for Paddy/Rice Storage Component

TOTAL Hafizabad Sheikhupura Siranwali Eminabad Faizabad Mubarikpur Dhaunkal Kr) (12,000 Kr) (40,000 MT) MT) (6,000 MT) (4,000 MT) (4,000 MT) (5.000 MT) (5,000 (4,000 Without With Without With Without With Without With Without With Without With Without Wout With ut With roject ect ect 1roect Cost Item 1/ Project Project Project Project Project Project Project Project Project Project ect

- 10,940 - 36,568 - Investment Cost 2/ 3,656 - 5,478 - 3,656 - 3,656 - 4,591 - 4,591 234 2,104 447 3,932 1,765 16.133 Storage Losses 3/ 166 1,563 312 2,930 156 1,372 190 1,790 260 2,442

Operating Cost Salaries and W,4ges 4/ 8 56 56 Store Manager (Rs 8,500/year) 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 16 16 64 64 Assistant AccodntinR Officer 8 8 8 8 87 82 8 18 13 13 17 13 17 26 34 93 129 (Rs 7500ya! 200e year)8 83 13 Watchmen (Rs 4,200/year) 8 13 17 22 8 13 81 SO 58 213 249 Total Salaries and Wages 24 29 33 38 24 29 24 29 29 33 29 33 60 160 200 Handling Cost 5/ 16 20 24 30 16 20 16 20 20 25 20 25 48 5 14 12 48 40 Electricity 5 4 7 6 5 4 5 4 6 5 6 120 228 288 760 960 Ground and Godown f4aintenance 6/ 76 96 114 144 76 96 76 96 95 120 95 27 48 90 160 Pest Control 7/ 9 16 14 24 9 16 9 16 11 20 11 20 192 307 461 1,022 1,537 Wear and Tear of Gunny Rags 8/ 102 154 153 230 102 154 102 154 128 192 128

346 576 1,152 Handling Losses 8___8 115 86 __17_3 58 115 58 115 72 144 72 144 172 846 1,273 2,869 4,298 Total Operating Cogts 290 434 431 645 290 434 290 434 361 539 361 539 779 1,180 2,640 3,983 Total Economic OpeIrting Costs 10/ 267 402 396 598 267 402 267 402 332 500 332 500 35% 43% Economic Rates of RetOrn 11/ 42% 51% 37% 47% 51% 44%

1/ Costs and benefits are expressed in Rs thousands. construction 2/ Calculated on the basis of financial investment costs detailed in Annex 6, Table 3 after deducting duties and taxes, shadow-pricing unskilled labor (para 4), a,d applying the Standard Conversion Factor (0.90) to local cost components. Steel bars and cement have been valued at their economic prices (Table ;) Land costs have not been considered since land requirements would be the same in the "with project" and "withouit project" situations. of main text) 3/ Storage losses h,e, been estimated on the basis of (i) different loss percentages corresponding to different storage periods (see para 2.28 and (ii) the storage utilizations and average storage periods at each site. The latter have been calculated in accordance with projections in Annex 4, the entire Table 11. CapacitY utilization is estimated to vary between 43% in Dhaunkal and 60% in both Sheikhupura and Faizabad. The weighted average for of paddy/rice storage component is 51%. Average storage duration is ranging from 5 to 7 months with an overall average of 6 months. The economic value Basmati paddy losses is detailed in Table 1. of 4/ Includes allyowances 50% of base salaries. to mills and 5/ Estimated at Rs 30 and Rs 37.5 for handling 100 bags of 75 kg each in godown and open storage respectively. The rate includes transportation stacking. The cost for 6/ Estimated for gOjwn storage at Rs 19/MT storage capacity (2% of godown construction cost) and at Rs 24 per MT of paddy stored in the open. be 2.33' of open storage is bAsed on the assumption that tarpaulins and dunnage would have an average life of 5 years and plinth maintenance costs would plinth conatructi°l cost (Rs 180 per Kr plinth storage capacity). 7/ Estimated at Res2,25 and Rs 4 per MT of grain treated for godown and open storage respectively. bag holding 75 kg of paddy) per month storage for godown and open storage respectively. Storage 8/ Estimted at 2X 05d 3% of cost of gunny bags (Rs 16 per periods would vary between five and seven months. The average storage period would be six months, 91/ Estimated at 0 25% and 0.50% of the economic value of the paddy handled for godown and open storage respectively. for 10/ Calculated by ;uItiplying operating expenditures with Standard Conversion Factor (0.90). Handling losses have been valued at the economic price Badmati paddy (T*tbfe I)- lossea a 25 year economic life of the storage facilities. It has also been assumed that benefits from a reduction in operating cost and grain 11/ Assuming 8 would start accrui" only one year after the investment cost are incurred. PAKI STAN

GRAIN STORAGE PROJECT

Economic Analysis

Annual Operating Cost of Wheat Storage Complexes with Different Capacities (in Rs)

MODEL A -/ MODEL B 250 Mf Capacity 1,100 MT Capacity 9,900 M1 Capacity 1,100 KT Capacity 3,300 MT Capacity 22.000 MT Capacity With Without With Without With Without With Without With Without With Without Project Project Project Project Project Project Proiect Project Project Project Project 1. Salaries and Wages 3/

AssiItsnt Food Controller (Rs 12$000/year) ------12,000 12,000 Food itspector (Rs 8,300/year) - - 8,300 8,300 16,600 16,600 - - 8,300 8,300 24,900 24,900 Supervisor (Ra 7,300/year) - - - - 7,300 7,300 7,300 7,300 - - 7,300 7,300 Watchnn/Sweeper 4 (ES -200/year) 4.200 8,400 8,400 21,000 46,200 67,200 8,400 16,800 12,600 25,200 92,400 117,600 Subtotal 4,200 8,400 16,700 29,300 70,100 91,100 15,700 24,100 20,900 33,500 136,600 161,80

2- TransPortation and Handling 4/ 96,000 96,000 422,000 422,000 3,801,000 3,801,000 10,300 10,300 30,900 30,900 206.250 206,250

3. Electricity 1,500 1,000 3,000 2,500 15,000 12,000 3,000 2,500 4.000 3,000 25,000 17,000

4. Offite and Equipment Maintenance 1,000 1,000 1,500 1,500 5,000 5,000 1,500 1,500 2,000 2,000 8,000 8,000

5. Ground and Godown Maintenance 5/ 4,000 - 17,600 - 158,400 - 17,600 - 52,800 - 352,000 -

6. St.r.g e quality Control 6/ 1,125 2,000 4,950 8,800 44,550 79,200 2,475 4,400 7,425 13,200 49.500 88,400 .

7- Wear end Tear of Gunny Bags 7/ 7,200 10,800 31,680 47,520 285,120 427,68Q 19,800 29,700 59,400 89,100 396,000 594,000

8. Handlin 9 Losses 8/ 4,220 8,441 18,569 37,139 167,126 334,253 7,737 15,475 23,212 46,424 154,745 309,493

9. Repair lid Replacement of Dunnage, plith and Tarpaulins 9/ - 8,750 - 38,500 - 346,500 - 26,400 - 79,200 - 528,800 TOTAL 119,245 136,391 515,999 587,250 4,546,296 5,096,733 78,112 114,375 200,637 297,324 1.328,095 1,913,343

Total Etcnomic Operating Cost 10/ 107,742 123,596 466,225 532,247 4,108,379 4,620,485 71,074 104.485 182,894 272,234 1,210,760 10752,958

Tons Handled 750 750 3,300 3,300 29,700 29,700 1.375 1,375 4,125 4,125 27.500 27,500 EconoRl Cost per MTr 144 176 141 161 138 155 52 76 44 65 44 64

2/ For chatractetistics of Model A storage complex see para 5. 3 1/ For ch5rcteristics of Model B storage complex see para 5. 4i Includes allowances of 50Y of base salaries. -l For Model A transportation and handling costs have been estimated at Rs 128 per MT handled assuming an average teransprtation distance of 800 km. For Model B transportation and handlitng costshave been estimated at Rs 7.5 er Mti handled assuming an average transportation distance of 15 km. 6/ Estimated at Es 16 per MT storage capacity (about 2S of investment costs). -6/ Estiate 5 at Rs 2.25 and Rs 4 per MT of grain treated in open and godown storage respectively. It has been Assumed would be thattetd for Model A 67X of all grain handled needs treatment, while for Model B 80X of the grain handled rEstimate at 32 and 2% / respecti,sel5 of cost of gunny bags (Rs 16 per bag) per month storage for open and godown storage

9/ Estimateq 0.502 and 0.252 of the economic value of the grain handled for open and godown storage respectively. Estiateq at Rs 35 and at Rs 24 per MT storage capacity for Model A and B respectively. For Model A it has been as,hled that tarpaulins and dunnage can be used for 3 years, and plinth repair cost amount annually to 42dof ins,estment costs. (Rs 180 per MT plinth storage capacity). Corresponding figures for Model B are 5 years and 2.33k.

!0/ Calcula td1 by multiplying operating expenditure with Standard Conversion Factor (0.9). Handling losses have been valued at the economic price for wheat (Table 1). PAKISTAN

GRAIN STORAGE PROJECT

Econotic Analysis

Annual Operating Cost of Wheat Storage Complexes with Different Capacities (in Rs)

MODEL 2/ MODEL C -/ 4,400 MT Capacity 9,900 MT Capacity 4,400 MT Capacity 17,600 MT Capacity 1,100 MT Capacity With Without Cost Items 1,100 MT Capacity Without With Without With Without With Without With Without With Project Project Project Project Project Project Project Project Project Project Project Prject

1. Salaries and Wages 3 Assistant Food CUntroller ------(Rs 12,000/year) 16.600 - - 8,300 8,300 16,000 16,600 Food Inspector (s 8,300/year) - - 8,300 8,300 16,600 7,300 - - 7,300 7.300 7,300 - - 7,300 7,300 7,300 Supervlsor (R 7,300 /year) 7,300 16,800 33,600 46,200 67,200 33,600 71,200 96,600 8,400 12,600 Watchmen/Sweeper (Rs 4,200/year) 8,400 12,600 16,800 70,100 91,100 95,100 120,500 15,700 19,900 25,100 41,900 Subtotal 15,700 19,900 25,100 41,900 214,500 638,000 858,000 1,435.500 1,930,500 - 41,200 - 160,000 159,500 2. Transportation and Handling 4/ - 10,300 5,400 4,000 15,000 12,000 5,400 4,000 20,000 13,600 3,000 2,500 3. Electricity 3,000 2,500 1,500 2,600 2,600 5,000 5,000 2,600 2,600 6,000 6,000 1,500 4. Office and Equipment Maintenance 1,500 1,500 - 70,400 - 158,400 - 70,400 - 281,600 - 17,600 5. Ground and Godown Maintenance 5/ 17,600 9,900 17,600 22,275 39,600 9,900 17,600 39,600 70,400 2,475 4,400 5. Storage Quality Ca,tiol 6/ 2,475 4,400 29,700 79,200 118,800 178,200 267,300 79,200 118,800 316,800 475,200 19,800 7. Wear and Tear of Gunny Bags 7/ 19,800 29,700 00 15,475 30,949 61,899 69,635 139,272 30,949 61,899 123,800 247,600 7,737 8. Handling Losses 8/ 7,737 15,475 t 9. Repair and ReplaceeCn of Dunnage, 26,400 - 105,600 - 237,600 - 105,600 - 422,400 - Plinth and Tarpaulins 9/ - 26,400 - 18,600 - 39,000 - 18,600 - 55,800 _ 6,500 10. Temporary Procurement Center 10/ - 6,500 1,954,110 2,761,372 882,900 1,571,500 227,312 320,875 861,549 1,228,999 TOTAL 67,812 116,675 223,549 412,199 1,112,289 1,765,662 2,499,162 377,169 806,990 1,439,110 205,352 290,335 778,489 total Economic Operating Cost 11/ 61,804 106,555 204,289 12,375 22,000 22,000 1,375 1,375 5,500 5,500 12,375 Tons Handled 1,375 1,375 5,500 5,500 142 202 142 202 37 68 37 65 149 211 Economic Cost per NT 45 77

1/ For characteristics of Model C storage complexes see para 5. para 5. 2/ For characteristics 0f Model D storage complexes see allowances of 50% of base salaries. 3I Includes has been estimated at Rs 7.5 per MT handled assuming 4/ Transportation and handling costs for the "without project" situation in Model C and transport cost by truck have an average transpo,tation distance of 15 km. In Model D for the "without project" situationhandling while for the "with project" situation, been estimated at Re 156 per MT handled assuming an average transportation distance of 600 km, estimated at Rs 116 (which includes Rs 8 enabling transport tion by train. handling and transport cost over the same distance have been per MT handled fo.raloc I transport). 0 costs). 5/ Estimated at Re 16 per MT storage capacity (about 2% of investment a It has been assumed that 80% of the grain handled 6/ Estimated at Rs 2.25 snd Rs 4 per MT of grain treated in open and godown respectively. storage for open and godown storage respectively. 7 Eutid bted et 3% and 2% of cost of gunny bags (Rs 16 per bag) per month godown storage respectively. 8/ Estimated at 0.501 nd 0.25% of the economic value of grain handled for open and and dunnage can be used for 5 years and plinth repair cost 9/ Estimated at Rs 24 pet MT storage capacity. It has been assumed that tarpaulins a a t .33% of investment cpst (Re 180 per MT plinth storage capacity). wages be established for about four months. Costs include salaries, / In "witho pj" , ituations,temporary procurement centers would n d a s ojelectionfor Officers, Assistant Purchase Officers and helpers. (0.9). Handling losses have been valued at the economic price I1/ Calculated by multiplying operating expenditures with Standard Conversion Factor for wheat (Table 1). -99 - ANNEX 10 Table 6 PAKISTAN

GRAIN STORAGEPROJECT

Economic Rates of Return for Storage Models with Different Capacities and for the Total Wheat Storage Component

MODELA 1/ 250 MT Capacity 1,100 MT Capacity 9,900 MT Capacity Year 1 Year 2-25 Year 1 Year 2-25 Year 1 Year 2-25

Incremental Investment Cost 2/ 213 - 678 - 6,859 - Savings in Operating Cost 3/ - 16 - 66 - 512 Reductionin Grain Losses 4/ - 40 - 177 - 1,594 Net Benefits (213) 56 (678) 243 (6,589) 2,106 EconomicRates of Return 26% 36% 31%

MODEL B 1/ 1,100 MT Capacity 3,300 MT Capacity 22,000MT Capacity Year 1 Year 2-25 Year 1 Year 2-25 Year 1 Year 2-25 IncrementalInvestmient Cost 2/ 627 - 1,851 - 12,021 - Savings in Operating Cost 3/ - 33 - 89 - 542 Reduction in Grain Losses 4/ - 116 _ 347 - 2,315 Net Benefits (627) 149 (1,851) 436 (12,021) 2,857 Economic Rates of Return 24% 23% 24%

MODEL C I/ 1,100MT Capacity 4,400 MT Capacity 17,600 MT Capacity Year 1 Year 2-25 Year 1 Year 2-25 Year 1 Year 2-25 IncrementalInvestment Cost 2/ 669 - 2,622 - 9,892 - Savings in Operating Cost 3/ - 45 - 173 - 632 Savings in Grain Losses 4/ - 116 _ 463 - 1,852 Net Benefits (669) 161 (2,622) 636 (9,892) 2,484 Economic Rates of Return 24% 24% 25%

MODEL D 1 1,100 MT Capacity 4,400 MT Capacity 9,900 MT Capacity Year 1 Year 2-25 Year 1 Year 2-25 Year 1 Year 2-25 IncrementalInvestiment Cost 2/ 669 - 2,622 - 5,562 - Savings in Operating Cost 3/ - 85 - 334 - 734 Savings in Grain Losses 4/ _ -§_4.u 1.042

Net Benefits (669) 201 (2,622) 797 (5,562) 1,776 EconomicRateis of Return 30% 30% 32% TOTALWHEAT STORAGE COMPONENT5/

Economic Rate of Return 26%

1/ For characteristics ofmodel storage complexes see para 5. Costs and benefits are expressed in Rs thousands. 2/ Incrementalinvestment costs have been calculatedby subtractingthe economic cost for constructing raised plinths from the economic investmentcost of project storage complexes. The latter has been derived from the financialinvestment costs detailed in Annex 6, Table 2 after deductingduties and taxes, shadow-pricingunskilled constructionlabor (para 4), and applying the StandardConversion Factor (0.90) to local cost components. Steel bars and cement have been valued at their economic prices (Table 1). Land costs have not been considered since land requirementswould be the same in the "with project" and "withoutproject" situations. The economiccost of constructingraised plinths has been estimatedas follows:

Plinths Storage Capacity (in MT) 250 1,100 3,300 4,400 9,900 17,600 22,000 Economic Cost (Rs '000): 41.4 182.7 548.1 729.0 1,645.2 2,880.0 3,655.8

3/ Details are in Tables 4 and 5. 4/ Calculatedon the basis of an average warehouse loading factor of 81% in NWFP and Baluchistanand 46% in Punjab and Sind (para 5) and an average storageperiod of 3 months and 4.5 months in NWFP and Baluchistan,and Punjab and Sind respectively. Estimated storage losses for differentperiods are detailed in para 2.26 of the main text. The economic value of wheac is presenced an Zaf,le 1. 5/ Total wheat storage capacity provided under the project would be composedas follovs: Model A - 105,000 MT (21%);Model B - 190,000 MT (38%);Model C - 87,000 MT (17.4%); and Model D - 118,000MT (23.6%). Investmentand operatingcosts, and storage losses for storage capacitiesnot analyzed in detail under the Models and in Annex 6, Table 2 have been calculatedthrough interpolation. - 100 - ANNEX 10 Table 7

PAKISTAN

GRAIN STORAGE PROJECTS

Economic Rates of Return for Pilot Projects

Mechanization of Loading/Unloading of Storage Bins Mechanical Semi-Mechanical System 1/ Pneumatic Conveyer 2/ Bag Handling 3 With Present With Present With Present Cost Item Project Practice Project Practice Project Practice

Investment Cost (in Rs) 4/ 117,964 - 236,363 - 451,950 -

Annual Operating Cost (in Rs) Labor (at Rs 25/man-day) 3,600 5/ 12,000 5/ 4,000 5/ 24,000 5/ 108,000 6/ 156,000 6/ Wear and Tear of Gunny Bags 51,200 7/ 64,000 7/ 102,400 7/ 128,000 7/ 156,800 8/ 224,000 8/ Electricity/Diesel Oil 9/ 2,300 - 15,600 - 6,600 - Equipment Maintenance (at 2.5% of Equipment Cost) 3,277 _ 6,566 - 12,554 - Subtotal 60,377 76,000 128,566 152,000 283,954 380,000

EconomicOperating Cost 10/ 54,015 67,320 115,349 134,640 245,839 327,960

Annual Grain Losses (in Rs) HandlingLosses 11/ 4,502 13,505 9,003 27,016 162,062 202,577 Storage Losses 12/ 37,139 47,268 74,278 94,536 - - Subtotal 41,641 60,773 83,281 121,552 162,062 202,577 EconomicRates of Return: 13/ 23% 19% 23%

1/ For the semi-mechanicalhandling system it has been assumed that it would be installedat a 1,000 MT bin complex which would be filled with wheat twice a year. 2/ For the portablepneumatic conveyor system it has been assumed that it would be used annuallyfor loadingtwice two storagecomplexes of 1,000 MT capacityeach. 3/ For the mechanicalbag handling system it has been assumed that it would be used at 14,000MT godowns. These would be filled twice a year with stacks 18 layers high which would permit storing18,000 MT of wheat. 4/ Includingphysical contingencies; excluding duties and taxes. Financialcost are in Annex 6, Table 5. Local cost have been multipliedvith the StandardConversion Factor (0.90). 5/ Under present practicea crew of about 24 laborersis requiredfor 10 days to load a 1,000MT complex. The crew size and the days requiredfor loading would be reduced to 18 and 4 respectivelywith semi-mechanicalhandling equipmentand to 8 and 5 respectivelywith the pneumaticsystem. 6/ Under present arrangementsthe cost for each loadingand unloadingof the godown is about Rs 15 per 100 bags if stacks are up to 10 layers high. Cost for layers 11 through18 are Rs 30 per 100 bags (arrangementsdiffer by location).In the case of mechanicalhandling it has been assumed that handlihgcost per 100 bags would be Rs 15 for all layers. 7/ Estimatedat 20% and 16% of the cost of gunny bags under the present and the proposedpractice respectively. Ten thousandbags would be handledper 1,000 MT of grain. The cost per bag is Rs 16. 8/ Estimatedat 5% and 3.5% of the cost of gunny bags under the present and the proposedpractice respectively. Ten thousandbags would be handledper 1,000MT of grain. The cost per bag is Rs 16. 9/ Cost of diesel oil has been calculatedon the basis of Rs 12 per liter. 10/ Calculatedon the basis of financialcost after shadow pricing labor (para4) and multiplyingthe total with the StandardConversion Factor (0.90). 11/ For bin storage estimatedat 0.3% and 0.1% of the handledwheat with presentand proposedsystems respectively. Correspondinghandling losseshave been estimatedat 0.25% and 0.2% for the bag storage facilities. The economic value of wheat is presentedin Table 1. 12/ With mechanical equipment it would be anticipated that bin storage capacity would be utilized fully for 11 months while present usage is estimated to average 8 months, with grain being stored longer in godownas. Monthly storage losses are estimated at 0.30% and 0.15% in godown and bin storage respectively (see para 2.26 of the main text). 13/ Assuming a ten year economical life of the proposed equipment. It has also been assumed that benefitsfrom a reductionin operatingcost and in grain losses would start accruingonly one year after the investment cost are incurred. - 101 -

ANNEX 11

PAKISTAN

GRAIN STORAGE PROJECT

Selected Documents and Data Available in Project File

1. Canadian InternationalDevelopment Agency - Economic and Engineering Study, Foodgrain Storage and Handling,West Pakistan,by R. G. Watson Co., Ltd., Consulting Engineers,June 1970.

2. Canadian InternationalDevelopment Agency - Foodgrain Storage and Handling Master Plan, Pakistan,by Carr and Donald and Associates, ConsultingEngineers, January 1980.

3. FAO - Report on Assistance to the Pakistan AgriculturalStorage and Services Corporation,January 1980.

4. FAO - Draft Report of Food Security Policy Formulationand Project IdentificationMission to the IslamicRepublic of Pakistan (Five Volumes), September1980.

5. Government of the Punjab, Food Department- Wheat ProcurementPolicy 1980-81, and Monopoly ProcurementScheme of Rice 1979-80 (Two Volumes).

6. Governmentof Sind, Food Department - Wheat Policy 1980-81, and Voluntary ProcurementScheme for Rice 1979-80 (Two Volumes).

7. Kansas State University- Foodgrain and Oilseed Storage in Pakistan: An Assessment of the Sector's Problems and Plans, by H. B. Pfost, D. Anderson, W. Briggs and C. Hugo, December 1976.

8. MICAS Associates (Pakistan)Ltd., Management Consultants- A Study of Problems Associatedwith Procurement,Storage and Distributionof Wheat, May 1976.

9. Universityof Agriculture,Faisalabad - Research on Stored Grain Pests in Pakistan,by H. A. Qayyum and M. A. Zafar, October 1978.

10. Universityof Agriculture,Faisalabad - Foodgrain Losses in Pakistan (Six Volumes),by M. A. Chaudhry, 1980.

11. Articles and Memoranda and Financial Statementsof Rice Export Corporation of Pakistan and Pakistan AgriculturalStorage and Services Corporation.

12. Site Layouts for Paddy/RiceStorage Constructionat RECP Rice Mills.

13. Storage EngineeringDesigns.

14. Draft Terms of Reference for Project Consultants.

15. Draft Terms of Reference for Grain Storage and Processing Study.

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