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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