Malaysia Appraisal of the Northwest Selangor Integrated Agricultural

ReportNo. 1757b-MA Mft 0 t Malaysia Appraisalof the NorthwestSelangor IntegratedAgricultural Development Project Public Disclosure Authorized

lanuary30, 1978 ProjectsDepartment EastAsia and Pacific Regional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the World Bank

This document hasa restricteddistribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. CURRENCY EQUIVALENTS

US$1.00 = M$2.48 M$1.00 = US$0.40 M$1 million US$403,000

WEIGHTS AND MEASURES - METRIC SYSTEM

1 millimeter (mm) = 0.039 inches 1 meter (m) = 39.37 inches 1 kilometer (km) = 0.62 miles 1 square kilometer (sq km) = 0.386 square miles 1 hectare (ha) = 2.47 acres 1 cubic meter (cu m) = 35.31 cubic feet I liter (1) = 0.264 gallons (USA) 1 liter/second (l/s) = 0.035 cubic feet per second 1 kilogram (kg) = 2.2 pounds 1 metric ton (ton) = 2,205 pounds

ABBREVIATIONS

AA = Agriculture Assistant AO = Agriculture Officer AT = Agriculture Technician BPM = Bank Pertanian Malaysia DID = Drainage and Irrigation Department DOA = Department of Agriculture FOA = Farmers' Organization Authority GOM = Government of Malaysia GRP = Glass-Reinforced Polyester MOA = Ministry of Agriculture MARDI = Malaysian Agriclture Research and Development Institute LPN = Lembaga Padi dan Beras Negara = National Padi Board SG = Sungei = River

MALAYSIAN FISCAL YEAR

January 1 to December 31 FOR OFFICIAL USE ONLY MALAYSIA

APPRAISAL OF THE NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS i-ii

1. INTRODUCTION ......

2. BACKGROUND ...... 1

The Agricultural Sector ...... 2 Irrigation and Drainage Development in Malaysia . . . .. 2 The State of Selangor...... 3

3. THE PROJECT AREA ...... 4

Climate ...... 4 Soils, Topography, and Drainage ...... 5 Drainage and Irrigation Infrastructure ...... 6 Farm Size and Tenure ...... 7 Estate Agriculture ...... 8 Agricultural Supporting Services ...... 8 Project Formulation ...... 11

4. THE PROJECT ...... 12

Project Components ...... 12 Status of Design ...... 15 Implementation Schedule ...... 16 Cost Estimates ...... 16 Financing . . . . - . . . . . * ...... 17 Procurement ...... 18 Disbursements ...... 19 Accounts and-Audits ...... 19 Environmental Effects ...... 19

5. ORGANIZATION AND MANAGEMENT ...... 20

Project Coordination ...... 20 Agency Responsibilities ...... 21 Smallholder Rent and Cost Recovery ...... 23 Estate Taxation ...... 24

This report is based on the findings of an appraisal mission composed of Messrs J. Goldberg and G. Temple (Bank), and G. Thorsky, R. Shepherd, and P. Judd (consultants). This docunenthas re tricteddistribution andmay be usd by recipients only in the performance of their omcial duties. Its content mAy not otherwise be diclosed without Worid Bankauthorization. Page No.

6. PRODUCTION, MARKETING, PRICES AND FARM INCOME ...... 24

Padi Production, Marketing, and Prices ...... 25 Tree Crop Production, Marketing, and Prices ...... 25 Farm Incomes ...... 27

7. BENEFITS, JUSTIFICATION AND RISK ...... 28

8. RECOMMENDATIONS ...... 29

ANNEXES

1. Water Demand, Supply, and Quality 2 Present and Projected Developments in Padi Production 3. Present and Projected Developments in Tree Crop Agriculture 4. Drainage and Irrigation Works, Equipment and Staff - Cost Estimates 5. Agricultural Supporting Services 6. Summary Cost Estimates 7. Expenditure and Disbursement Schedules 8. Proposed Allocation of the Proceeds of the Loan 9. Production, Marketing and Prices 10. Farm Budgets and Incomes 11. Economic Analysis

CHARTS

17908 - Proposed Timing of Farm Activities in Tanjong Karang Padi Area (attached to Annex 2) 17696 - Schedule of Implementation of Civil Works (attached to Annex 4) 17618 - Tanjong Karang Irrigation Area - Typical Layout (attached to Annex 4)

MAPS

13026R - Northwest Selangor Rural Development Project 13027R - Typical Drainage Layout (Sabak Bernam)

REFERENCES

1. FAO/IBRD Cooperative Program; "Draft Report of the Northwest Selangor Drainage and Irrigation Improvement Project Preparation Mission;" March 8, 1977

2. S. Selvadurai, "Coconut Smallholdings in Lower Perak, Kuala Selangor, and Sabak Bernam," Ministry of Agriculture, 1974

3. S. Selvadurai, "Padi Survey in Kuala Selangor and Sabak Bernam," Ministry of Agriculture, 1976 MALAYSIA

APPRAISAL OF THE NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

SUMMARY AND CONCLUSIONS

1. The Government of Malaysia has requested Bank assistance in financing the Northwest Selangor Rural Development Project. The major objective of the project is to raise the productivityand incomes of about 32,000 smallholder farm families dependent on the cultivation of padi and a wide variety of tree crops in a region bordering the northwest coast of the State of Selangor. Project formulationoriginated in the efforts of the Selangor Drainage and IrrigationDepartment (DID) to upgrade existing drainage and irrigation infrastructure and to promote agriculturaldevelopment (increasedcropping intensity in padi areas, intensified intercroppingin tree crop areas) in the major agriculturalsubregion of the state. Over time it became apparent that only piecemeal engineeringsolutions to the region's drainage and irrigation problems were possible as long as developmentwas dependent on routine annual budget allocations. It was also necessary to involve the agencies providing agricultural supporting services together with DID in an integrated extension effort to upgrade smallholder farm practices in conjunctionwith full-scale improvement in agriculturalinfrastructure. The formulationof this project thus involved the long-term planning of irrigationworks and regional drainage systems on the engineeringside, and the working out of a complete operationalmethodology of field extension activitieswith the Department of Agriculture, the Bank Pertanian Malaysia, the Farmers' OrganizationAuthority, and DID at both the State and Federal levels.

2. The proposed project is composed of three major infrastructure elements, including the upgrading and intensificationof the existing Tanjong Karang irrigation system serving 12,000 families cultivating 20,000 ha of padi; provision of an integrated and improved drainage and flood protection system for about 10,000 families cultivating28,000 ha of coconuts and intercrops in the Sabak Bernam area; and provision of major drainage works in the Kuala Selangor area, to serve 10,000 smallholder families cultivating25,000 ha of tree crops and to link the private drainage systems of 35 estates with over 26,000 planted ha. In addition to the irrigationand drainage infrastructureelements, the project would provide required access roads throughout the region and agricultural installations,quarters, and equipment to support an expanded program of agriculturaland irrigation extension, production credit, crop marketing, input supply, and operation and maintenance services for the region's smallholders.

3. The project would advance the Government'stwo major goals for the rural sector - increasing incomes of smallholderfarmers and increasingproduc- tion of imported staples and diversifiedexport crops. About 65% of the North- west Selangor region's padi and tree crop smallholderscurrently earn incomes below the absolute poverty line, and the incomes of the majority of these families would be raised above the absolute poverty line by full project development. A combinationof factors, includingthe rapid spread of intercropping of cocoa and coffee by coconut farmers, the recent developmentof very high yielding hybrid dwarf coconuts, and relativelyhigh prices for a range of coconut products, provides the first opportunityin recent years for large numbers of coconut farmers to escape poverty, given adequate drainage of the coconut areas. - ii -

Similarly, padi farmers in the region are progressive enough and possess large enough farms (1.7 ha on average) to rise out of the poverty group, given an adequate irrigation and drainage system. The project would produce an incremental 30,000 tons of milled rice at full development, reducing imports by about US$10 million per annum at present prices. Total incremental production of coconut products, cocoa, coffee, rubber and oil palm products would amount to approximately US$9.3 million per annum by the year 2000. The overall economic rate of return is estimated at 21%, comprising a 19% rate of return for the irrigation component and a 22% rate of return for the drainage component.

4. Total project cost is estimated at US$60 million (M$148.7 million), of which the foreign exchange component would be US$26 million, or 43% of the total cost. The proposed Bank loan of US$26 million would finance the foreign exchange component. The average capital costs of the irrigation works proposed are US$1,390/ha (US$2,100/family), while costs of the tree crop drainage works in smallholder areas are US$225/ha (US$540/family). Average capital costs of drainage directly allocable to estate areas are US$33/ha, or US$52/ha if costs of regional drainage works are allocated pro rata. Incremental annual costs of agricultural services at project completion (1983) would amount to about US$12 per smallholder family.

5. The drainage and irrigation works and access roads would be constructed through a total of 12 contracts, of which five pertaining to the Tanjong Karang irrigation component (US$28.3 million) would be subject to international competitive bidding in accordance with Bank Group guidelines. The three largest ICB contracts; (totalling US$18.3 million) would cover the supply and installation of the structural tertiary canal system, and would be open to any structural system meeting specified characteristics of speed of installation, minimal disruption of existing crops, total command of the area, durability, and other factors. Two additional ICB contracts (totalling US$10 million) would cover construction of secondary and lateral canals, drains, and roads. Rehabilitat:ionand upgrading of headworks, main canals, and coastal bunds, and fabricat:ionof tidal gates, totalling US$2.2 million in value, would be executed by DID on force account. Drainage of the tree crop areas would be implementedl through seven contracts worth a total of US$17.5 million, which would be awarded after competitive bidding advertised locally in accordance with Government procedures satisfactory to the Bank. Buildings and facilities costiniga total of US$2.7 million would also be tendered locally. Agricultura:L and operation and maintenance equipment and vehicles (US$2.0 million) would be tendered internationally, and a 15% preference margin, or the prevailing customs duty if lower, would be extended to local manufacturers of these items. Small off-the-shelf items, costing less than US$20,000 each and limited to a total of US$500,000, would be procured through normal Government procedures.

6. The project would be implemented over a period of five years. All Federal agencies involved in the project are under the jurisdiction of the Ministry of Agriculture (IIOA). Federal DID would be responsible for final design, tendering, and supervision of construction of all project civil works. The agency has successEully completed the Muda (434-MA) and Kemubu (500-MA) Irrigation Projects, and is currently implementing the major drainage component of the West,ern Johore Agricultural Development Project (973-MA) and the major irrigation component of the North Kelantan Rural - iii -

Development Project (1294-MA),and is supervisingthe implementationof the National Small-ScaleIrrigation Project (1444-MA)by the various State Departments of Drainage and Irrigation. Implementationof the present project works without consultant assistance is considered feasible, particularlysince the rectangularlot layout of the Tanjong Karang padi area presents a much less difficult problem of on-farm irrigation and drainage system design than that faced by DID planners in North Kelantan, and the areas to be drained are much smaller and less complex hydrologicallythan those of Western Johore. The agriculturalservices program would be implementedby local field staff of the Department of Agriculture, the Farmers' OrganizationAuthority, and the Bank PertanianMalaysia, working in cooperationwith each other and DID field staff. The project would be administeredby a Project Coordinator appointed by the 1O0A,under a Steering Committee co-chaired by the Secretary-Generalof the MOA and the State Secretary of Selangor.

7. Subject to appropriate assurances,the proposed project is suitable for a Bank loan of US$26 million, with a 17-year maturity and a grace period of 4 years. The borrower would be Malaysia.

MALAYSIA

APPRAISAL OF THE NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

1. INTRODUCTION

1.01 The Government of Malaysia (GOM) has requested Bank assistance in financing the Northwest Selangor Integrated Agricultural Development Project. The major objective of the project is to raise the productivity and incomes of about 32,000 smallholder farm families dependent on the cultivation of padi and a wide variety of tree crops in a region bordering the northwest coast of the State of Selangor. Major infrastructure components would include the upgrading and intensification of the existing Tanjong Karang irrigation scheme, reconstruction and improvement of drainage and flood control networks in the Sabak Bernam and Kuala Selangor tree crop areas, and construction of Farmers' Development Centers and access roads distributed throughout the region. Agricultural service components would promote the introduction of an intensive training and visit system of agricultural extension throughout the smallholder padi and tree crop areas, as well as a marked expansion in volume and coverage of agricultural production credit and input supply and marketing services for smallholders. In addition to substantial increases in smallholder padi and tree crop production, the project would permit increased production of various tree crops by private estates (plantations) which would be able to connect their own internal drainage systems to the new main drainage system.

1.02 The project was identified and formulated by the Drainage and Irri- gation Department (DID) with the assistance of Bank missions in May and August 1976. Detailed project preparation was assisted by FAO/CP missions consisting of Messrs. C. W. Brookson and M. Sugimura (FAO/CP), and J. Weather- hogg and T. Bright (Consultants), working in close cooperation with Federal and Selangor DID, the Ministry of Agriculture (MOA), the Bank Pertanian Malaysia (BPM), Federal and Selangor Departments of Agriculture (DOA) and the Farmers' Organization Authority (FOA). This report is based on the findings of an appraisal mission which visited Malaysia in April 1977 composed of Messrs. J. Goldberg and G. Temple (Bank) and G. Thorsky, R. Shepherd and P. Judd (Consultants).

2. BACKGROUND

2.01 Malaysia covers an area of 333,000 sq km, of which 132,000 sq km are in the 11 States of Peninsular Malaysia and the remaining 60% in the Borneo States of Sarawak and Sabah. Of the total population of 12.3 million in 1975, 10.2 million lived in Peninsular Malaysia, 1.3 million in Sarawak, and 0.8 million in Sabah. The ethnic composition of the population is approximately 47% Malay, 34% Chinese, and 9% Indian, with the remainder chiefly consisting of groups indigenous to Sabah and Sarawak and a small Eurasian community. In Peninsular Malaysia, the great majority of farm families are Malay, while the population of most urban areas is predominantly Chinese.

2.02 With a per capita income of US$860 in 1976, Malaysia is one of the most prosperous developing countries in Asia. This high average income masks considerable poverty among rural smallholders, however, among whom padi farmers and coconut and rubber smallholders have been identified by GOM /1 as target poverty groups to be assisted by rural development programs. The Government's commitment to financing large drainage and irrigation, agricultural production, rural infrastructure and social service programs has been facilitated by fairly high rates of economic growth, averaging 6% p.a. during the last decade. The growth rate of the economy slowed down to 1% in 1975 due to softening of international commodity prices, following the boom years of 1973 and 1974 when commodity prices and GNP growth peaked. The estimated GNP growth in 1976 again rose above trend to about ]L0%,and Malaysia's external reserves (US$2.6 billion in February 1977) rose to a level equal to about eight months of net imports at current levels.

The Agricultural Sector

2.03 Malaysia's agricultural sector is largely oriented to world export markets, and occupies a predominant position in international trade in natural rubber, palm oil, hardwoods, and pepper. Except for oil palm, acreages of all principal crops mainly consist of smallholdings, although the large private and public estate sector continues to play a vital role in the production of rubber and coconuts. In this regard, coconut smallholders on the west coast of Johore, Selangor, and Perak have in recent years followed estate breakthroughs in the intercropping of cocoa and other crops with mature coconuts. Other recent trends in tree crop agriculture include the gradual replacement of rubber by oil palm by estates situated in coastal regions more suited to the latter, and the initiation of oil palm cultivation by independent smallholders. Planting and production decisions by both estates and smallholders are closely attuned to existing and projected world market conditions.

Irrigation and Drainage Development in Malaysia

2.04 Irrigation and drainage works in Malaysia constitute a basic infrastructure network on which the settlement, continued habitation, and pros- perity of large coastal regions, including hundreds of thousands of farmers and town dwellers, depend. In this sense the water control network is at least as important as the road, railway, and electrical networks to the life of the country. The most productive padi and tree crop areas of the country were developed from coastal swamp jungles and marshland which required drainage to permit agric:ulturaldevelopment, settlement, construction of transport links, and alleviation of the once endemic malaria. Channelization of rivers and bunding of river banks and sea coast were required to prevent annual heavy flooding of both crops and towns in monsoon seasons, salt water intrusion, and severe erosion of the coast in storm

/1 See Problems of Rural Poverty in Malaysia, IBRD Report No. 838-MA. seasons. Irrigation was required to expand the production of the population's basic food, rice. All of these activities fall within the purview of DID, which began the survey and design of its first major project (the Krian Irrigation Scheme) in 1880.

2.05 Bank financing of DID activities began with the Muda Irrigation Project (Loan 434-NIA) in 1965, which provided the facilities required to initiate padi double-cropping in Malaysia's largest coastal plain, in the states of Kedah and Perlis. The Kemubu Irrigation Project (Loan 500-MIA) enabled a substantial increase in padi double-cropping in the southern portion of the Kelantan coastal plain, while the North Kelantan Rural Devel- opment Project (Loan 1294-MA) provides for intensification of padi irrigation and drainage facilities originally constructed by DID between 1958 and 1962 on the north bank of the Kelantan River, as well as construction of a system of river flood control bunds. The recently initiated National Small- Scale Irrigation Project (Loan 1444-MA) will finance a program of nearly 200 small irrigation schemes throughout the country, several of which were originally developed by DID from coastal swampland. The Western Johore Agricultural Development Project (Loan 973-MA) is based on the construction of an intensive drainage and coastal bunding system which will enable that tree-crop region to achieve higher levels of agricultural productivity. The present project would be the first to combine the two major elements of DID's program, drainage and protection of tree crops and irrigation of padi, in a single area development project.

The State of Selangor

2.06 The State of Selangor is situated in the central portion of the west coast of Peninsular Malaysia, bounded by Negeri Sembilan to the south, the Central Mountain Range and Pahang to the east, the Bernam River and Perak to the north, and the Strait of Malacca to the west. It surrounds the Federal Territory of Kuala Lumpur, recently detached administratively from the jurisdiction of the Selangor State Government. The State is now divided into six administrative districts, of which two (Kuala Selangor and Sabak Bernam) form the present project area. Selangor had a population of 1.63 million in 1970, of which .87 million were in Kuala Lumpur. Selangor is Malaysia's most prosperous State, due mainly to the large tin mining and manufacturing industries in the Klang Valley and the concentration of civil service and commercial employment in the Kuala Lumpur area, but the economy of the two relatively isolated districts in the northwest corner of the State is almost entirely dependent on agriculture. -4-

3. THE PROJECT AREA

3.01 The project area lies in the districts of Sabak Bernam and Kuala Selangor (Map 13026R). It includes most of the inhabited area of the two districts, the remainder largely consisting of a large peat swamp (nearly 500 sq km in extent) inland from the project area and smaller coastal mangrove swamps, which would not be affected by the proposed project. The project area extends about 90 km along the coast and 20 km inland at its widest point. The total agricultural area of the project is about 97,000 ha, including nearly 20,000 ha of padi in the Tanjong Karang irrigation area; a drained coastal strip between this area and the sea of 7,500 ha largely planted with smallholder coconuts; a drained area in Sabak Bernam to the north of 21,000 ha largely planted with smallholder coconuts; and a drained area in Kuala Selangor to the south of 48,500 ha of tree crops (oil palm, rubber, coffee, coconuts, and cocoa), evenly divided between smallholdings and estates.

3.02 The population of thes two districts in 1970 was 213,000, of which 64% were Malay, 21% Chinese, and 15% were Indian. The Chinese population was largely concentrated in the area's major towns, including Kuala Selangor, Sekinchan, Tanjong Karang, Sungei Besar, and Sabak Bernam, and was largely involved in trade, fishing, and small-scale industry in addition to agricultural pursuits. The Indian polpulation was chiefly engaged as laborers in estate agriculture, while the Malays were largely concentrated in smallholder agriculture. About 73% of the households in the region were engaged in smallholder agriculture. The present smallholder agricultural population of the project area is estimated at 192,000 (32,000 households), the overwhelming majority of which is Malay.

Climate

3.03 The project area has a humid tropical climate characterized by relatively high rainfall, high humidity, consistently high temperatures, and only minor variations in day length. Annual rainfall averages 1,800 mm with distribution largely determined by the northeast monsoon (October-March) and intermonsoonal disturbances during the March-April and September-November periods. The influence of the southwest monsoon (May-September) is weakened by the sheltering effect of North Sumatra. The wettest months are October- November and April-May. The driest months are February-March and June-July.

3.04 Mean annual temperature is about 26 degrees centigrade and average relative humidity is about 83%. There are no major climatic constraints to perennial tree crop and upland field crop production, but the unreliability of rainfall in the January-August period precludes off-season rice production without supplementary irrigation. In the absence of an intensive drainage system, heavy rains in the September-November period also frequently hinder harvest and drying of late-planted off-season rice crops, and increase the incidence of pest and disease aLttack. Occasional extended flooding, due to heavy localized rainfall and overtopping of rivers, is also capable of inflicting permanent damage on tree crops. -5-

Soils, Topography, and Drainage

3.05 The bulk of the project area comprises a flat coastal plain, with rising land and undulations in the southern section between the Buloh River and the Klang district boundary. Four rivers drain the area. The Bernam River meanders along the northwest boundary of the area, while the smaller Tinggi, Selangor, and Buloh rivers dissect the southern half of the area and flow in a southwesterly direction to the sea. Due to the low elevation, slight grade and lack of natural drainage lines, the coastal plain is poorly drained and was historically subject to sea water intrusion along the coastal fringe. Since 1910, the Drainage and Irrigation Department has progressively improved the area with the construction of a coastal bund, tidal gates and a basic network of internal drains at about 2-km intervals. These works have allowed most of the more suitable soils to be developed for agricultural purposes. Nevertheless, problems with the silting of drainage outlets, and the inadequacy of the existing drainage network still impose a yield constraint on crops in the lower lying areas.

3.06 The bulk of the soils on the plain are fairly heavy alluvial soils developed under marine or brackish water conditions or organic muck and peat soils developed under impeded surface drainage conditions in the lower lying areas. Fresh water alluvial soils occur along the lower reaches of the larger rivers. The most common soil series in the project area, the Selangor series, is one of the most fertile series in Peninsular Malaysia, and most of the local soils are well suited to rice production and have been successfully developed for the entire range of Malaysian tree crops. However, the heavier phases of these soils are not well suited for rubber production, and are currently being converted to oil palm. The yields of all tree crops in the region are closely correlated with the adequacy of surface drainage. Small isolated areas of potentially acid sulphate soils have been identified, and will require careful water table management to insure good tree crop yields.

3.07 A sample survey of the region's coconut smallholders /1 in 1974 revealed the extent of drainage problems as follows. Fifty percent of the respondents in Sabak Bernam, and 44% in Kuala Selangor, reported waterlogging of coconut holdings, and 21% and 15% of the respondents in the respective areas reported waterlogging of duration between 11 and 30 days. Seventeen percent of the Sabak Bernam respondents reported waterlogging of over 30 days duration, which is an indication of serious damage for coconuts and intercrops. Ninety-one percent of Sabak Bernam farmers and 65% of those in Kuala Selangor had excavated drains on their holdings, but only 19% in the former area and 22% in the latter reported that collector drains existed to which their farm drains could be connected. According to the survey, the largely similar coconut areas of Lower Perak, immediately north of the Bernam River, are much better served by major drainage infrastructure, and perhaps as a result, report substantially reduced waterlogging and more intensive maintenance and cleaning of farm drains by smallholders.

/1 Coconut Smallholdings in Lower Perak, Kuala Selangor, and Sabak Bernam, S. Selvadurai, Ministry of Agriculture, 1974. - 6-

Drainage and Irrigation Infrastructure

3.08 The first settlers of the project area, many of whom migrated from various regions of present-day I]ndonesia,constructed open drains through the coastal areas to permit coconut cultivation. These systems were not particularly effective in draining localized flooding, and the area became increasingly vulnerable to sea water intrusion, and to river flooding with the clearing of inland jungles. Government drainage and flood control works were initiated in Kuala Selangor in 1910 and in Sabak Bernam in 1932, and by 1937 included 90 km of coastal bunds with tidal gates and associated main drains. Between 1937 and the 15950sDID provided a simple internal drainage network for 6,000 ha of smallholder tree crops in Sabak Bernam, while the private estates in Kuala Selangor constructed their own piecemeal drainage systems. The existing drains in the tree crop areas were designed to evacuate a two-year frequency storm in 72 hours, but several large areas are frequently flooded for two weeks or more (para. 3.07). Drain capacities are too small and drain structures dlonot adequately control water levels. Tidal gates are in many cases much too small and are incorrectly sited in locations that silt up. Much of the coastal and river bund system is inadequate or needs repair. Hundreds of ha of potential coconut land near the sea, and thousands of ha of potential coffee land near the Buloh River, are still subject to frequent sea and river flooding, and require improved bunds and drainage to permit cultivation by smallholders.

3.09 The Tanjong Karang padi irrigation scheme was developed from virgin jungle by DID through a series of programs beginning in 1936. Water was first provided for a single wet-season padi crop by a weir on the Tinggi River via a 40-km main canal along the inland border of the project area. To augment the water supply for double-cropping, diversion barrages were constructed in 1957 and 1964 on the Bernam River, and a 15-km feeder canal was excavated through the peat swamp to transport water to the Tinggi River. A pumphouse was constructed in 1962 on the lower reaches of the Bernam River at Bagan Terap, to provide a more assured water supply for the northern portion of the scheme. These water sources are augmented by substantial seepage from the swamp into the feeder canals, the Tinggi River, and along the entire length of the main canal which borders the swamp. A water balance study of the project area (Annex 1) indicates that the irrigation area would have an assured water supply, with no foreseeable restriction on cropped area due to water shortage. This conforms with historical experience, as the cropping intensity has never been constrained by lack of water (rather by lack of command and a poor distributary system), despite the fact that the present system of irrigation by back-flooding is extremely wasteful (para. 3.10). No problem related to water quality has been encountered in Tanjong Karang, despite the fact that from 1938 to 1958 the padi area was virtually entirely supplied from the peat swamp. Since that time the diversion from the Bernam River has replaced the swamp as the major supplementary water source, and the irrigation supply has become markedly less acidic. The scheme area is divided into seven large blocks, of which one (Sawah Sempadan) has been developed to proposed project standards as a pilot scheme. The padi area is divided into 16,411 three-acre (1.2 ha) rectangular lots, which significantly facilitates the layout and construction of on-farm irrigation and drainage works.

3.10 The existing irrigation system has fulfilled its original purpose of permitting wet-season padi production and dry-season cropping of an average of 70% of the scheme area, but still suffers from several deficiencies. The capacity of some reaches of the main canal is inadequate, and the gates of the old Tinggi headworks now leak badly and waste water. Command head of the existing distributary canals is inadequate, causing slow inundation of fields and late transplanting, a problem exacerbated by the fact that water must travel one-half mile (.8 km) across farm lots with the present density of distributaries. Since the micro-topography is undulating, the water must often fill depressions to undesirable depths (30 cm and above) before its flow continues. Much of the area can only be inundated by back- flooding from drains which are kept full for this purpose, thereby wasting substantial amounts of both water and fertilizers. These inadequacies have led to a situation where large areas of padi are continually out of phase, and drainage for drying and harvesting earlier planted fields is impossible if the water needs of the less mature crops are to be met.

Farm Size and Tenure

3.11 The average size of land holding of the 12,000 padi farmers in the Tanjong Karang irrigation area is 2 ha (5.1 acre), consisting of 1.6 ha of irrigated padi land and 0.5 ha of house lot and village land on which some dry land crops are grown under coconut trees./l Only 5% of the holdings surveyed were larger than 3 ha, and no holding contained over 5 ha of padi land. An earlier (1967) survey of the area estimated the average padi holding at 1.8 ha, the reduction in average size probably stemming from increased population pressure. As the padi area has been developed relatively recently, a relatively high proportion (84%) of the land is owner-operated, and the remainder is rented through payment of fixed money rents averaging US$230/ha per annum. The bulk of family labor is utilized on the family padi holding.

3.12 By contrast, in the coconut areas less than half of the available farm work force has been utilized on the smallholding, and there has been a high dependence on outside work to augment the traditionally meager income from coconuts. Hired labor has been extensively utilized, however, for the physically difficult and-specialized tasks of plucking ripe coconuts from the palms and husking them. This situation is rapidly improving, however, with the expansion of intercropping in the coconut areas and the replacement of bananas with cocoa as the predominant intercrop, which provides substantially improved incomes and useful employment for the farm families on their own holdings. In 1974 the average coconut holding was 2.8 ha in

/1 Current socioeconomic information is derived from Padi Survey in Kuala Selangor and Sabak Bernam, S. Selvadurai, Ministry of Agriculture, 1976. -8-

Sabak Bernam and 2.6 ha in Kua:La Selangor, 94% owner-operated./l Holdings of ot.er tree crops average about 2 ha and are almost entirely owner-occupied. Whi,e r- holdings are entireLy devoted to rubber or coffee, there is a cooidsirible amount of mixed tree farming, particularly in Kuala Selangor. A typical 2.xed farm would inc:Ludeabout 1.2 ha of rubber, 0.3 ha of coffee, 0.4 ha of oil palm, and the balance under fruit trees and vegetables. While the padi holdings in the project area are slightly larger than the average for Peninsular Malaysia (1.3 ha), the tree crop holdings are smaller and less productive than the Malaysian average. This is particularly true for the rubber smallholders.

Estate Agriculture

3.13 There are 40 private estates /2 in the project area, of which 35 are in Kuala Selangor (27,600 ha) and 5 are in Sabak Bernam (5,200 ha). The estates are typically interspersed among the smallholder areas, making it physically impossible to drain the latter without also improving the drainage of the former. Mlost of the estate coconut acreage is concentrated in Sabak Bernam. Most of the 17,600 ha of estate oil palms, and all of the 10,300 ha of estate rubber, are found in Kuala Selangor. Cocoa is planted as an estate intercrop in Sabak Bernam (1,500 ha) and as a minor sole crop in two Kuala Selangor estates (620 ha). In Kuala Selangor, as in many parts of Peninsular Malaysia, estates are a basic feature of the rural economy, employing thousands of people,/3 introducing new cr'ops and processing methods later adopted by smallholders, and providing large and assured tax revenues to the Federal and State Governments (para. 5.11). During their establishment and expansion, the project area estates evolved their own internal drainage systems and main outlets as was expedient. These private systems are now constrained by the main drainage system, consisting of canalized and natural rivers and streams, river and tidal bunds, and major drains, which are the responsibility of DID. Improvement of the regional system, which is a necessary prerequisite for intensive drainage of the smallholder and town areas, would thus also provide subsidiary benefits to the region's estate sector.

Agricultural Supporting Services

3.14 Most of the agencies responsible for providing agricultural supporting services to project area farmers are under the jurisdiction of the Ministry of Agriculture (MOA). These include the Department of Agriculture (DOA) and the Drainage and Irrigation Department (DID), which are line departments within the Ministry, as well as the Farmers' Organization Authority (FOA), the Bank Pertanian Malaysia (BPM), the MIalaysianAgricultural Research and Development Institute (MARDI), and the Federal Agricultural Marketing Authority (FAMA).

/1 30% of project area coconut farmers owned some padi land, with the average subsidiary padi holding equalling 1.3 ha.

/2 An estate is defined as a holding of over 40 ha (100 ac).

/3 Project area estates are estimated to employ about 8,000 laborers, representing about 4,000 households. -9-

In addition,the Rubber Industry Smallholders'Development Authority (RISDA)/l supervisesrubber replanting,rehabilitation, and cooperativeprocessing programs, and provides extensionservices to smallholderswho are dependenton rubber or who have replantedrubber with other crops, typicallyoil palm. The National Padi Authority (LPN)/2 in the Ministry of Trade, is responsiblefor regulatingthe marketing,milling, and importingof rice, maintainingthe national rice stockpile,and operatinga network of rice mills in the larger padi producing areas./3

3.15 The DOA is responsiblefor agriculturalextension to rice and coconut smallholders,and is thus the key agriculturalsupport agency in the project area. In addition,the Coconut Smallholders'Development Scheme (CSDS),a branch of the DOA, supervisesthe Federal coconut replanting program, which provides grants to smallholdersreplanting or rehabilitating (thinningand intercropping)their coconut stands over a five-yearperiod. Extensionservices within the project area are supervisedby an Agricultural Officer stationed in Kuala Selangor town, assisted by two Agricultural Assistants,in Sungei Besar and Tanjong Karang. The AgriculturalAssistants supervise the work of 20 AgriculturalTechnicians, who are expected to serve the region's smallholdersat a ratio of over 1,600 families per extension agent. As the ATs are also responsiblefor regulatoryduties, statistical work, and administrationof subsidies,the ratio is much wider in practice, and the ATs contact few farmers in their area of operation. The CSDS is operated through a similar, though smallerhierarchy, which processesapplica- tions for replantinggrants, inspects the property of participantsto ensure that planting and cultivation(including excavation of farm drains) is done to CSDS guidelines,and arranges for the supply of cash, inputs, and seedlings provided under the replantingprogram. Extensionfor coconut smallholdersis generally left to the DOA staff, however, as CSDS agents typicallyvisit participantsonly twice a year, and lose contact with participantsonce the five-yeargrant period is completed. While the recentlyinitiated National ExtensionProject (Loan 1493-MA)would increase the overall level of staffing, quarters, and training of the SelangorDOA extensionservice, an additional concertedextension effort will be requiredin the project area to allow farmers to realize the full agriculturalpotential of their smallholdings.

3.16 The Selangor DID is responsiblefor operatingand maintainingthe drainage and irrigationsystems in the project area. DID field staff also advise the District AgricultureCommittees (comprisedof representatives from the District Office, DOA, DID, and farmer groups) on the availability of water for timing of agriculturaloperations which are closely related to DID water management responsibilities,including land preparation,nursery

/1 In the Ministry of Primary Industries.

/2 The official name of this agency is Lembaga Padi dan Beras Negara.

/3 Details of the organizationand operationsof the major agricultural agencies in the project area are presented in Annex 5. - 10 - planting, transplanting, and harvesting. With the implementation of the project the intensity of drains and canals in the area would be increased to about four times that of the existing system. To ensure that DID could continue to perform its important advisory role, as well as for proper operation and maintenance of the intensified infrastructure system, a substantial increase in the number of field staff (particularly technical assistants, inspectors, and overseers) would be necessary.

3.17 The Selangor FOA operates three Farmers' Development Centers (FDCs) in the project area, in Kuala Selangor, Tanjong Karang, and Sungei Besar, with a total paid-up membership of 7,000. In addition there are 66 private farmers' cooperatives, organized for rice-milling, revolving credit, and rubber processing activities. Both FDCs and private cooperatives supply inputs and planting materials (e.g., cocoa and coffee seedlings), and in recent years have become involved in the marketing and processing of cocoa beans. Neither the official Farmers' Organizations based in the FDCs, nor the private cooperatives, have yet attained the level of technical skill in their agro-business activities or the volume of blusinessrequired for commercial viability. Input supply for smallholders, processing of tree crops, and provision of credit are still largely in tlhehands of private enterprise, and are likely to remain so in the foreseeable future. Private enterprise, in this regard, covers a wide spectrum of agents ranging from large rubber and coconut oil factories in Klang District to the south; through medium-sized coconut oil factories and copra kilns in the project area; to large middlemen who purchase processed tree crops for transshipment to factories in Klang, Perak, and Penang; to the basic unit, the general store which grants farmers credit to be repaid with cocoa and coffee beans, coconuts and rubber sheets which the storekeeper and his family thtenprocess and sell to middlemen or factory agents. The marketing of rice in the project area is, however, dominated by a Government agency, the National Padi Authority (LPN).

3.18 The LPN has been granted an official monopoly on the purchase of padi and rice-milling in the Tanjong Karang irrigation area, which it exercizes only in regard to the surplus production intended for cash sale and export from the irrigation area. LPN permits padi farmers to mill rice for domestic consumption at 46 licensed cooperative mills and 120 small unlicensed mills scattered throughout the area. LPN itself operates 5 large milling complexes in the project area, which handle a combined total of 65% of the padi crop. Total rated milling capacity of these mills is 26 tons/hour, rated drying capacity is 80 tons/hour, and storage capacity is 44,000 tons. Currently LPN buys most of its padi during two three-month seasons, dries the padi as quickly as possible, and mills continuously throughout the year. Padi is purchased through 30 cooperatiLves,two Farmers' Organizations, and private agents. The major problem faced by LPN is the high moisture and trash content of the padi, which should be reflected in standard price discounts by the LPN mills. As the discounts have not been applied, there has been no incentive for farmers to winnow and sun-dry the padi crop. LPN plans to correct this situation through formal testing of moisture content by its buying agents. The recent addition of two LPN complexes will ease processing bottlenecks and provide sufficient surplus capacity for the proposed project. - 11 -

3.19 BPM provides short-term padi production credit in the Tanjong Karang irrigation area, as part of a national program for irrigated padi. The credit is supplied in kind in the form of approved quantities of fertilizers, insecticides and pesticides, and contract tractoring, and in cash for hired labor for cultivation and transplanting, with a six-month term at 4.25% per term. The credit has been provided through the FDCs, which have functioned as local credit centers for BPM, screening applications, issuing inputs or credit vouchers for inputs and services, and recovering loans, in exchange for a commission of 1.25% per season. This program reached a peak of 2,400 padi farmers (20% of the total) in 1973, but has since largely retrenched following scandals involving the management of two Farmers' Organizations, to a point where only 280 farmers took credit in 1976. This credit program can be revived, and extended to a majority of the area's padi farmers, provided FOA improves and increases the staffing of the FDCs, BPM staff are brought in to field operations to control financial transactions and promote the program, and the credit program is publicized and implemented as part of a combined extension effort including DOA agricultural advice and recommendations, DID water management extension, and purchasing and preliminary drying of rice by FOA as an agent for LPN.

Project Formulation

3.20 Project formulation originated in the efforts of Selangor DID to upgrade existing drainage and irrigation infrastructure and to promote agricultural improvement (increased cropping intensity in padi areas, intensified intercropping in tree crop areas) in the major agricultural subregion of the State. Over time it became apparent that only piecemeal engineering solutions to the region's drainage and irrigation problems were possible as long as development was dependent on routine annual budget allocations, and that the other agricultural agencies would have to be involved with local DID staff in an integrated extension effort to upgrade smallholder farm practices in conjunction with full-scale improvement in agricultural infrastructure. The preparation of this project thus involved the long-term planning of irrigation works and regional drainage systems on the engineering side, and the working out of a complete operational methodology of field extension activities (Annex 5) with DOA, BPM, FOA, and DID at both the State and Federal levels. The average capital costs of the proposed irrigation works are US$1,390/ha (US$2,100/family), while costs of tree crop drainage works in smallholder areas are US$225/ha (US$540/family). Average capital costs of drainage directly allocable to estate areas are US$33/ha, or US$52/ha if costs of regional drainage works are allocated pro rata. Incremental annual costs of agricultural services at project completion (1983) would amount to about US$12 per smallholder family. - 12 -

4. THE PROJECT

4.01 The project would improve the productivity and incomes of smallholder farmers throughout the Northwest Selangor region through provision of improved drainage and irrigation facilities, access roads, and intensified agricultural supporting services, and would improve regional drainage systems with subsequent subsidiary benefits for the region's towns and estates. The main components of the project are as follows:

(a) rehabilitation of the existing headworks and feeder and main canals and structures serving the 20,000 ha of padi in the Tanjong Karang irrigation area; construction of required access roads in the padi area; construction of tertiary irrigation and drainage networks which would serve each individual padi lot; and provision of required maintenance equipment;

(b) rehabilitation and improvement of existing main drainage and flood control systems serving 77,000 ha of tree crops, including upgrading and reconstruction of coastal and river bunds; provision of tidal gates, bridges, and gated culverts; construction of an intensive drainage system serving individual smallholder lots and farm access roads; and upgrading of the main drainage system in estate areas;

(c) construction of offices, quarters, storehouses, and drying floors, and provision of vehicles, agricultural equipment, anid training to support an intensified program of agricultural extension, agricultural credit, input supply, and marketing services for the region's smallholders.

The components of the project are summarized below, and further details are given in Annexes 4 through 6.

Project Components

4.02 Tanjong Karang Irrigation Improvement: The main canal delivery system would be improved by enlarging the canal in some locations and by rehabilitating the primary structures. The sluiceway and inlet to the Bernam River headworks would be modified to reduce sluicing water needs and improve the removal of bed load material. The Tinggi River headworks structure and spillway would be modified ancd its gates replaced. The wasteway structure to the Haji Dorani flood relief channel would be rehabilitated and the drop and the lower end of main canal improved to provide better command and capacity. - 13 -

4.03 The existing distributary irrigation and drainage system in the padi area consists of a main canal along the upper boundary of the area, and straight tertiary canals and drains at half mile (800 m) intervals perpendicular to the main canal./l Under the project existing tertiary canals would be transformed into drains, and additional small drains would be excavated parallel to and midway between each existing canal and drain. This would provide a drain spacing of one-quarter mile (400 m), which would permit evacuation of a five-year frequency storm in 72 hours. Irrigation distribution would be intensified by constructing structural canals (para 4.04) midway between each drain, which would thus also lie one-quarter mile apart. The distance between tertiary canals and drains would thus be reduced from the present half mile (800 m) to one-eighth mile (200 m), the length of a typical three-acre (1.2 ha) lot, giving each farmer direct access to both canals and drains. In three blocks (Sungei Burong, Sungei Leman, and Sekinchan) the width of the padi area increases from 2 miles (3.2 km) to 4 miles (6.4 km), making it uneconomic to serve the entire block directly by means of structural tertiary canals. In these areas, two concrete-lined earth link canals would be constructed from the existing main canal to smaller transverse secondary canals within the blocks, which would in turn supply structural tertiaries in the lower part of each block.

4.04 The structural tertiary canal system would total 305 miles (492 km) in length, and the discharge capacity of various segments would range between 1.6 cusecs (45 1/sec) and 19 cusecs (538 1/sec). Discharge capacity for outlets to individual lots would be 0.1 cusecs (4.5 I/sec) under 16 in (41 cm) of head. The proposed structural tertiary canal system has been completed by DID in the Sawah Sempadan block of Tanjong Karang as a pilot scheme. The structural system used there consisted of glass-reinforced polyester (GRP) flumes, placed above ground on concrete pads founded at 20 ft (6 m) centers on bakau wood friction piling. Installation and initiation of the system in the pilot area has proceeded with a minimum of engineering or social problems. The GRP system has been approved by the Bank for installation in the Lemal Irrigation area under the North Kelantan Rural Development Project (Loan 1294-MA), after completion in July 1977 of a one-year accelerated testing program undertaken by DID to confirm the long-term structural and chemical properties of the system. The GRP system would also be installed under the present project in the Sungei Nipah block of Tanjong Karang, under the same central contract utilized for the Sawah Sempadan and Lemal works./2 For the remaining five blocks in Tanjong Karang, tendering for the tertiary distributary system would again be opened to all structural water conveyance systems which could meet the performance specifications already achieved by the GRP system, in terms of speed of installation, lack of disruption of cropping activities, minimization of land acquisition, discharge and command, ease of maintenance and durability.

/1 Tertiary canals are now one mile apart, as are the alternating tertiary drains. See Annex 4, Figure 1 for a layout of typical existing and proposed distributary blocks.

/2 This contract, valid through December 1978, was approved by the Bank during negotiations for the North Kelantan Rural Development Project, and is described in Report No. 1137-NA, para. 4.15. - 14 -

4.05 Existing roads run through the padi area parallel to the main canal at one mile intervals, and will in future cross all tertiary canals and drains. Checks and culverts would be located at these crossings to control the water surface upstream. Existing tertiary canals and drains have banks that would be upgraded and surfaced to a 10 ft wide (3 m) roadway. New drains would be provided with a 4 ft wide (1.2 m) laterite surfaced bank on one side. Timber bridges would be provided where necessary.

4.06 Tree Crop Drainage Improvement. Improved drainage in the tree crop areas would be based on evacuating a five-year frequency storm in 48 hours, equivalent in the project area to a drainage capacity of 80 cusecs/ sq mile (0.9 cumecs/sq km). In smallholder areas existing main drains would be improved by clearing and deepening, and new main drains constructed where necessary. Secondary drains would be constructed at half mile (800 m) intervals, and would discharge into main drains through gated culverts or other suitable water control devices. The water control devices would hold up the water during low flow periods to prevent over-drainage, while allowing large storm flows to evacuate quickly. Feeder drains, one-eighth mile (200 m) apart, would be constructed to collect water from farm drains and convey it to the secondary drains. Construction of farm drains is the responsibility of individual farmers; in many cases the smallholders have already excavated them (para. 3.07), while the remaining tree crop areas in the region are expected to be covered by the CSDS (para. 3.15) between 1978 and 1983.1l

4.07 Secondary drains would be 5 to 6 ft (1.5 to 1.8 m) deep with a bottom width of 6 to 10 ft (1.8 ito 3m), and side slopes of 1-1/2:1 or flatter. Feeder drains would be 3 ft (0.9 m) deep with a bottom width of 4 ft (1.2 n). MIain and secondary drains would have a 10 ft wide (3 m) laterite surfaced roadway constructed on one bank. Timber bridges would be constructed over main drains and culverts wouild be installed under roadways on secondary drains. A typical drainage layout for smallholder tree crop areas is provided in Map 13027R, which portrays a block on the Bernam Peninsula at the northern extremity of the project area.

4.08 In the tree crop estate areas project works would consist of the construction and rehabilitation of main drains and the construction of bridges across main drains to provide access for smallholders and estate laborers. These main drainage improvements would serve blocks of about 3,000 ac (1,215 ha) of estate land. A low-lying area of 10 sq miles (26 sq km) of State land, located between thLemajor estate area of Kuala Selangor and the Buloh River, would be drained and poldered for eventual parcelization and transfer to smallholders. A pumping plant would also be constructed to evacuate flood waters from this area.

/1 A coconut rehabilitation project, which would support CSDS programs in Northwest Selangor and throughout the country, has been prepared for Bank financing. - 15 -

4.09 A total of 167 miles (269 km) of bunds protecting the entire coast- line of the project area and low-lying areas along the lower reaches of the major rivers would be upgraded or reconstructed under the project (Map 13026R). Bunds would be designed to protect against floods of 25-year frequencies. The bunds would consist of earth embankments, with material obtained from borrow pits on the inland side, and would be finished to 3:1 side slopes with a 10 ft (3 m) top width. All main drains discharging through the bunds to the rivers or the sea would be served by reinforced concrete tidal control gate structures founded on piling. In many installations the existing gates are too small, and would be replaced by larger gates up to 12 ft (3.7 m) in width. Some old structures would be abandoned because of constant silting due to poor siting, and new tidal gates would be added at more suitable locations. All new gates would be fabricated of marine aluminum alloy.

4.10 Operation and Maintenance Equipment. Vehicles and excavation and earth-moving equipment would be purchased under the project to improve the capability of Selangor DID to operate and maintain completed project works (Annex 4, Table 4). The equipment would be allocated to the Sabak Bernam and Kuala Selangor District DID offices, which are capable of performing routine maintenance. Major repairs of heavy equipment and fabrication of parts would be undertaken by DID's central maintenance shop in Ipoh.

4.11 Agricultural Supporting Services. This component is designed to institute an integrated agricultural service system which would eventually provide a wide range of required services to all project area smallholders on a reliable, timely basis (Annex 5). Two steps are required to achieve this goal - the upgrading and expansion of the field operations of the four key agencies responsible for promoting smallholder agricultural development in the project area (DOA, FOA, BPM, and DID); and the integration of operations of those key agencies to the extent required to synchronize services to farmers. Each agency would require a buildup of staff at various levels in the project area, with an emphasis on adequate numbers of field level staff to form and regularly service small farmer groups, supported by smaller numbers of additional supervisory and specialist staff. New staff would require offices, quarters, vehicles, equipment, and training, which would be financed by the project, to effectively fulfill their duties. Operations of the various agricultural agencies would be most closely integrated at the planning and management level, on the one hand, and at the level where the field workers contact small farmer groups and individual smallholders on the other. To facilitate these joint operations, a single project headquarters to be shared by supervisory staff of the agencies would be constructed under the project. Seven new secondary-level Farmers' Development Centers (FDCs) would also be constructed, and the three existing FDCs expanded, to provide office space, storehouses, meeting rooms, and living quarters for field staff of the various agencies.

Status of Design

4.12 Federal and Selangor State DID have completed detailed layouts of representative sample areas for both the padi irrigation and tree crop drainage components. For the irrigation distribution system the sample areas utilized were the Sungei Nipah and Sungei Burong blocks, comprising a total of 27% of the entire irrigable area. In addition, the proposed tertiary - 16 -

irrigation and drainage system has already been constructed in the Sawah Sempadan block of Tanjang Karang, representing an additional 12% of the padi area. Federal DID would be responsible for the final design of all works, including access roads and FDCs. Designs for the FDCs would be based on the standard designs developed by DID for the seven centers constructed under the Western Johore Agricultural Development Project (Loan 973-MA).

Implementation Schedule

4.13 The project would be implemented over a period of five years. The agricultural support components provide for a buildup of staff and facilities phased over the implementation period. Much of the survey work in the padi area has already been done, and except for two drainage blocks in Kuala Selangor all surveying should be completed in 1978. Construction of irrigation works in the Sungei Nipah block, to be financed retroactively under the project (para. 4.16) began in July 1977 and is expected to be completed in July 1978. Construction of irrigation works in the five remaining blocks would commence immediately thereafter. Building of offices, quarters, and FDCs would begin in February 1978. Construction of drainage works would begin in Sabak Bernam in May 1978. Land acquisition is not expected to seriously delay the implementation of construction as right-of-way for most of the proposed drainage works has long been reserved by DID, and the use of structural tertiary canals in the padi area would require the acquisition of only 72 ha of padi land. All project works would be completed by January 1983. Further details are presented in Annex 4.

Cost Estimates

4.14 Total project costs are estimated at US$60 million, of which US$26.0 million (43%) would be foreign exchange. Cost estimates for irrigation and drainage works (including roads) are based on detailed layout and design of 10% of the drainage area and 27% of the irrigation area (para 4.12) and recent contract unit costs for earthwork and concrete structures in the project area. Costs of structural tertiary canals, which represent 38% of the total construction costs of project civil works, are based on an existing central contract for manufacture and installation of GRP flumes valid through December 1978 (para 4.04). Project cost estimates exclude the costs of the tertiary canal system already installed in the Sawah Sempadan block, at a cost of US$2.1 million. Costs of FDCs are based on similar recently completed buildings in Johore. All incremental operating costs for the project period, including salaries, have been included for the agricultural services component. Cost estimates for equipment and vehicles are based on recent suppliers' quotations, net of taxes and duties. Physical contingencies of 15% on construction costs and 10% on equipment have been included. All cost estimates have been adjusted to February 1978 levels based on recent Malaysian and international inflationary trends. Expected price increases due to inflation of 9% in 1978-79 and 8% thereafter have been included for civil works and related physical contingencies, land, and operating and personnel costs. For equipment, price increases of 7.5% in 1978-79 and 7% thereafter have been allowed. Expected price increases amount to 27% of base costs plus physical contingencies. - 17 -

4.15 Detailed project costs are given in Annexes 4-6 and are summarized below:

Foreign Exchange Local Foreign Total Local Foreign Total Component ---- M$ Million ------US$ Million ---

Civil Works:

Tanjong Karang Irrigation 29.6 25.1 54.7 11.9 10.1 22.0 46 Tree Crop Drainage 16.6 13.7 30.3 6.7 5.5 12.2 45 Buildings and Facilities 2.9 1.3 4.2 1.2 0.5 1.7 30 Engineering and Supervision 6.4 0.7 7.1 2.6 0.3 2.9 10

Equipment:

Agricultural 0.1 0.9 1.0 - 0.4 0.4 90 Operation and Maintenance 0.1 2.3 2.4 0.1 0.9 1.0 95

Incremental Agricultural Services: 3.3 0.4 3.7 1.3 0.2 1.5 10

Base Cost Estimate 59.0 44.4 103.4 23.8 17.9 41.7 43

Physical Contingencies 7.4 6.3 13.7 3.0 2.5 5.5 46 Expected Price Increases 17.8 13.8 31.6 7.2 5.6 12.8 43

Total Project Cost 84.2 64.5 148.7 34.0 26.0 60.0 43

Financing

4.16 The proposed Bank loan of US$26 million would finance the foreign exchange requirement of the project. The loan would finance retroactively the installation of a GRP flume tertiary canal system in approximately 50% of the Sungei Nipah block (2,500 ac) of Tanjong Karang. Total costs of this work, which commenced after completion of appraisal in May 1977, are estimated at US$1.1 million. As this is a Federal project, all local costs would be borne by GOtM throughout the implementation period of the project. Activities falling under constitutional State jurisdiction, such as operation and maintenance of the completed irrigation and drainage works and agricultural extension, would thereafter be financed through normal GOM procedures as necessary. An assurance to this effect has been obtained from GOM. - 18 -

Procurement

4.17 The drainage and irrigation works and access roads would be constructed through a total of 12 contracts, of which 5 would be subject to international competitive bidding in accordance with Bank Group Guidelines. The three largest contracts (totalliLngUS$18.3 million) 11 would cover the supply and installation of the structural tertiary canal system in five complete blocks of Tanjong Karang and in one-half of the Sungei Nipah block. These contracts would be subject to international tender open to any structural system meeting specified characteristics of speed of installation, minimal disruption of existing crops, total command of the area, durability, and other factors. The tertiary system in the remaining half- of the Sungei Nipah block (US$1.1 million) would be installed under the existing GRP flume contract (paras. 4.04 and 4.16). Most of the remaining civil works pertaining to the Tanjong Karang irrigation component, including construction of secondary and lateral canals, drains, and roads, would be divided into two contracts worth approximately US$5 million each. These contracts would also be subject to international competitive bidding.

4.18 Drainage of the tree crop areas would be implemented through seven contracts worth a total of US$17.5 million. Three contracts would cover Sabak Bernam, phased with the coconut replanting program planned for that area. Three contracts would cover Kuala Selangor, divided by the Tinggi, Selangor, and Buloh rivers, and a single contract would cover the coastal strip between the padi area and the sea. As these contracts would be too small in value to attract international interest (averaging US$2.5 million each), they would be awarded after competitive bidding advertised locally in accordance with Government procedures satisfactory to the Bank. The local contracting industry is extremely competitive and strong, and local tendering is well managed and publicized. Bids would be accepted from foreign contractors who wish to participate, and no preference margins, whether domestic or international, would be utilized in the evaluation and award of civil works contracts. Buildings and facilities costing a total of about US$2.7 million would also be tendered locally.

4.19 Force account work would include the rehabilitation of the Bernam River and Sungei Tinggi Headworks as well as the feeder canal between them; improvements to portions of the Tanjong Karang main canal and coastal bunds; resurfacing of access farm roads; and the fabrication and supply of aluminum roller gates and gears for tidal control structures. The total cost of force account work is esitimated at US$2.2 million.

4.20 Agricultural and operation and maintenance equipment and vehicles (US$2.0 million) would be procured under international competitive bidding in accordance with Bank Group Guidelines. A 15% preference margin, or the prevailing customs duty if lower:,would be extended to local manufacturers of these items. Small off-the-shelf items, costing less than US$20,000 each and limited to a total of US$500,000, would be procured through normal Government procedures.

/1 All estimates of contract values in this section refer to the total of base costs, physical contingencies, and expected price increases. - 19 -

Disbursements

4.21 Disbursementswould be made at the rate of 100% against foreign exchange expenditureson all directly imported equipment and vehicles and training, 100% of the ex-factory cost of items manufacturedlocally, and 80% of the total cost of locally procured items. Disbursementsfor all civil works executed by contract would equal 48% of total costs. Disbursementsfor force account work (para. 4.19) would equal 48% of total costs, and would be made against a certificateof expenditures,the documentationfor which would be retainedby the borrower and be available for inspectionby the Bank during the course of project supervision. Estimated expenditureand disbursement schedulesfor the project, and a proposed allocationof the proceeds of the loan, are given in Annexes 7-8. It is expected that disbursementswould be completedby August 31, 1983.

Accounts and Audits

4.22 The agencies involved in the project are all subject to normal Government control and audit procedures. Assuranceshave been obtained that:

(a) all agencies involved in project implementationwould maintain separate accounts for the project;

(b) all project accounts would be collated by the Project Manager (para. 5.01);

(d) the Project Manager would send the audited project accounts, together with the auditor's comments,to the Bank within nine months of the close of each financialyear.

EnvironmentalEffects

4.23 The project would not greatly affect the regional environment, as most of the project works would merely intensifywater control systems which have been establishedfor decades. About 1,000 ac (400 ha) of coastal land subject to frequent sea flooding and salt water intrusion,and 2,500 ac (1,000 ha) of land subject to flooding near the Buloh River, would be reclaimedand protected for agriculturaluse. Drainage works would reduce local mosquito habitats and facilitateongoing malaria and dengue fever control programs. The volume of drainage into the sea would remain essentially unchanged and should have no effect on marine fish or shellfish. Project works would not disturb the coastalmangrove fringe or the Tanjong Karang swamp.

4.24 The Tanjong Karang peat swamp plays an importantrole as a water storage reservoir for the padi area (Annex 1). Assurances have been obtained that the swamp would be protected as a forest area, and that the portion of the swamp which serves as a catchmentfor the irrigationarea would not be drained, logged, or developed in a manner which would jeopardize the supply of water for irrigationpurposes. - 20 -

5. ORGANIZATION AND MANAGEMENT

Project Coordination

5.01 All the Federal agencies which would be involved in the implementation of the project - the Drainage and Irrigation Department (DID), the Department of Agriculture (DOA), the Farmers' Organization Authority (FOA), and the Bank Pertanian Malaysia (BPM) - are under the jurisdiction of the Ministry of Agriculture (MOA). While each agency would be responsible for implementing specific activitiieswithin its jurisdiction, responsibility for coordinating all project activities would rest with a Project Manager in MOA. The Project Manager's main administrative responsibilities would include assisting the project agencies in the planning of joint field extension programs (para. 4.11) and in preparing requests for the staff and operating budgets required to implement ithose programs; assisting in planning construction of facilities and equipment procurement programs which would fulfill the various agency requirements; representing the project in periodic meetings with the Public Services Deparitment, the Treasury, and Selangor State Government agencies; monitoring and evaluating the progress of implementation actions and project effects and benefits; and reporting on the progress of the project (particularly on behalf of DOA, FOA and BPM) to the Steering Committee (para 5.02) and the Bank. Experience in Malaysia indicates that technical officers (i.e., agriculture officers or engineers) are able to perform this managerial function most effectively. The appointment of a suitably qualified and experienced Project Manager would be a condition of effectiveness of the proposed 'Loan. The Project Manager, who would reside in the project area, would have a small staff to assist in budgeting, procurement and disbursement matters.

5.02 The Project Manager would be guided on policy matters by a Steering Committee composed of the Secretary General of the Ministry of Agriculture, the State Secretary of Selangor, and other officials they may nominate. Involvement of the State Secretary would ensure the participation of both State-level agencies and officers and the District Officers, who are in charge of local governmental ftnctions, and should facilitate coordination of project activities at the grourLd level. Establishment of the Steering Committee would be a condition of effectiveness of the proposed loan.

5.03 At the substantive level the Project Manager would have to provide close and continuous liaison between the implementing agencies in order to maximize the impact of the project on the target population. The first and most difficult task would be the organization of common Small Agricultural Units, small groups of farmers which would be contacted by the various agencies for agricultural extension, marketing, input supply, credit, water management, and operation and maintenance purposes. The organization of these groups would have to instill a cooperative spirit necessary for the successful operation of relatively complex irrigation and drainage systems and for the efficient provision of agricultural services to 32,000 smallholder families. Such groups have operated successfully (on a small scale) - 21 -

in the project area in the past, particularly when formed voluntarily on the basis of natural residential and kinship patterns. The first step in this effort would be to ensure that the local field staff of the various agencies are themselves organized and aware of each other's activities and programs, and that they meet the farmers jointly and with a unified program.

5.04 The Project Manager would have to ensure that agricultural recommendations developed by the Malaysian Agricultural Research and Development Institute (MARDI) for the project area are translated into simple field recommendations delivered and demonstrated by the DOA extension staff, and that recommended inputs are available in appropriate quantities through the FOA. For this purpose, the Project Manager would function as a member of the State Agricultural Research Development and Extension Committee, composed of senior State-level officers in all agriculture-related agencies, including MARDI. Finally, the Project Manager would have to ensure that adequate credit is available through BPM to enable farmers to purchase recommended inputs. On the last point assurances have been obtained that:

(a) the Project Manager would prepare, in consultation with FOA, DOA, and BPM staff, a statement of annual agricultural credit requirements, to be submitted to BPM and the Bank not later than three months prior to the beginning of each fiscal year; and

(b) GOM would thereafter ensure that an adequate amount of credit would be made available to project area farmers through BPM.

Agency Responsibilities

5.05 Drainage and Irrigation Department. DID would be responsible for implementing all project civil works. Design work would require the full-time services of a team of 7 engineers (including a senior engineer) based in DID headquarters, as well as approximately 50 supporting technical staff, for a period of 4 years. To ensure that design concepts, features, assumptions, and data are effectively transmitted from the Federal design staff to the State staff who will eventually operate and maintain the systems, assurances have been obtained that design staff would produce a designer's operation manual covering major project works. Supervision of construction would require 6 senior engineers, 15 irrigation engineers, and about 170 technical and clerical staff during the peak years of construction activity (1979-82). This staff would be posted by Federal DID to the project area during project implementation. Selangor State DID would assume responsibility for operation and maintenance of works upon completion and acceptance by Federal DID. To adequately fulfill this responsibility, state staff in the project area would have to be augmented by an additional senior engineer and irrigation engineer, 47 technicians, inspectors, overseers, and clerical staff of various grades, and 140 laborers./l An assurance has been obtained that all drainage and irrigation staff required to operate and maintain the project would be appointed.

/1 Detailed estimates of DID staff requirements are presented in Annex 4. - 22 -

5.06 Department of Agriculture. DOA would assume primary responsibility for the organization and operation of the agricultural services component of the project, with the assistance of the Project Manager (para. 5.01). As agricultural extension is a State responsibility, the Selangor Director of Agriculture would be administratively responsible for allocation of extension staff to the project and for the general direction of the extension effort in the project area. A Chief Extension Officer for the State of Selangor, as well as a number of administrative and field extension staff, would be provided under the National Extension Project. Additional staff would be provided under the present project to complement the proposed drainage and irrigation infrastructure with an intensified agricultural services program aimed at raising smallholder agricultural incomes to the maximum extent possible (para. 4.11). The operational methodology of the proposed program is based largely on the training-visit system of agricultural extension, modified to suit Malaysian institutions and the requirements of the smallholders in the project area. The proposed operation and structure of the agricultural services program is described in detail in Annex 5. In order to implement that program, the Selangor DOA would require an additional 10 agricultural technicians (to bring the field agent:farmer ratio to 1:800), 5 Agricultural Assistants, 1 District Agriculture Officer, and 1 senior project (regional) Agriculture Officer. Effective technical support of the field extension staff would require the addition of five subject matter specialists to the staff of the Selangor DOA, and strengthening of the Federal technical support units serving the State. An assurance has been obtained that all DOA staff required to serve the project area would be appointed. The operational guidelines for the agricultural extension system presented in Annex 5 should be updated and refined on the basis of field experience in implementing the system over the entire project area. Accordingly, assurances have been obtained that the DOA, in consultation with DID, FOA, and BPM, would prepare an agricultural services operations manual as a guide for field extension staff by December 31, 1978.

5.07 Farmers' Organization Authority. FOA facilities in the project area, which currently include three FDCs, would be augmented by seven new secondary-level FDCs (para. 4.11). The subcenters would be operated to the extent possible by farmer group leaders (Annex 5), supervised on a regular basis by FOA staff based in the FDCs. To improve the FOA management system in the project area, and to achieve an overall staffing level which would permit FOA to play its role in the integrated agricultural services program, Selangor FOA would require three graduate FDC managers assisted by two additional Agriculture Assistants to strengthen and upgrade FDC activities in the project area, and one agro-business specialist to provide technical support and training for field staff. The State Director of FOA would bear overall responsibility for agency activities in the project area. Assurances have been obtained that all FOAIstaff required to operate FDC facilities and to participate in padi credit operations in the project area would be appointed.

5.08 Bank Pertanian Malaysia. BPM staff would work closely with FOA staff in reviving and expanding institutional smallholder credit in the - 23 -

project area; the two agencies would adopt the same methods of credit assessment and would share the responsibilityof making the assessment. With the assistance of the DOA extensionworkers creditworthinessassessment would be converted from a seasonal activity undertakenby a few individualFOA credit workers to a year-round activity handled as part of the overall extension effort. Another innovationwould introduce the concept of group responsibility for credit, in terms of countersignatureof ordinary loans by farm group leaders, and through loans to small groups of farmers, cross-guaranteedby each, in cases where farmers own no land or are already in debt. BPM would appoint 14 credit assistants to serve the project area from the 10 FDCs and the BPM branch office in Tanjong Karang, and 5 area supervisors (AA level) also to be stationed at the 5 larger FDCs. One thrust of the BPM effort would be to provide credit directly to farmers unable or unwilling to become members of Farmers' Organizations,who at present frequentlyfind it difficult to gain access to institutionalcredit programs. The regional BPM program would continue to be supervised by the branch manager in Tanjong Karang. An assurancehas been obtained that all BPM staff required to serve the project area would be appointed.

SmallholderRent and Cost Recovery

5.09 At present operation and maintenance (O&M) costs of the Tanjong Karang irrigationsystem average US$15/ha, while irrigation charges levied by the State Government average US$10/ha. The O&M costs in the drainage areas are lower, ranging between US$3 and US$8 per ha in various drainage districts. Drainage rates paid by both estates and smallholdersgenerally are set to cover these O&M costs. IncrementalDID O&M costs due to project implementationare calculated (Annex 4, Table 5) to average US$15/ha in the irrigationarea by 1984, US$7.30/ha in the Sabak Bernam drainage area and in smallholderareas generally, and US$3.60/ha in the Kuala Selangor drainage area and in estate areas generally. The State Legislature of Selangor has approved an increase in irrigation rates to a maximum of US$15/ha (in addition to a land tax of US$3/ha), and it is expected that these rates would be charged by full project development. In addition to these charges all Malay padi farmers pay the Islamic padi production tithe (zakat) to the Selangor Department of Religious Affairs, which uses the receipts to finance the religious school system, teachers' salaries, welfare expenses,and maintenance of mosques. Estimated zakat payments (for all irrigation blocks except Sekinchan)average US$69/ha, and are projected to rise an increment of US$40/ha proportionallywith project-inducedyield increases. Thus the total cost recovery index for the non-Sekinchan irrigationblocks is 37% /1 and the total rent recovery index for those blocks is 30%. For the non- Moslem Sekinchan farmers, who are not liable for zakat, the cost recovery index is 9% and the rent recovery index is 34%./2

/1 Equivalent to 300% of incrementalO&M costs and therefore covering a substantialproportion of capital costs.

/2 The rent recovery index is high because of the more limited potential benefits in Sekinchan (Annex 2). - 24 -

5.10 It should be noted that O&M of irrigation facilities in Malaysia is totally divorced from irrigation charge collections,/l that irrigation O&M is financed out of general revenues supported by a highly efficient and generally progressive tax system, and that the level of O&M is not constrained by a shortage of funds. In view of these factors and the level of farm incomes (para. 6.07) the present structure and level of charges are considered acceptable. Assurances have been obtained that the Selangor State Government would continue to collect irrigation and drainage charges whose level would be determined taking into account O&M and capital costs, incentives to farmers, farmers' capacity to pay, and other taxes and charges imposed upon them; and that the Government would exchange views with the Bank from time to time on the level of these charges.

Estate Taxation

5.11 The estates in the project area pay drainage rates typically set to cover O&M costs as calculated by Selangor DID. They also pay export duties averaging 10% of the value of rubber and oil palm production, and quit rents (property taxes) to the Selangor State Government. In addition, all estates in the project area belong to registered private companies liable to pay the standard Malaysian company tax equivalent to 45% of net profits. A financial projection of the incremental tax payments of the 40 estates in the project area which would be associated with incremental production due to the project indicates that the net present value of such incremental taxes (US$10 million) far exceeds the investment costs of drainage works in estate areas (US$2.3 million). The cost recovery index in these terms is over 430%./2 Finally, dividend income received by resident owners or shareholders of the estate companies is again subject to personal income tax at rates of up to 55%. In sum, the drainage works benefit:ting estates would not constitute a burden on Malaysian public finances.

6. PRODUCTION, MARKETING, PRICES, AND FARM INCOME

6.01 The Tanjong Karang irrigation component would provide each individual padi farmer access to imprcovedirrigation and drainage systems, permitting a very high degree of water control over each three-acre (1.2 ha) lot. The tree crop drainage component would provide an intensive drainage system serving most of the tree crop smallholdings directly, which, with associated gates, checks, and other structures, would provide for the first time a reliable degree of control over the depth of the water table in the tree crop areas. The main drainage systems, river canalization works, and coastal bunds would also provide flood protection to smallholder and estate tree crop areas, as well as providing outlets for numerous internal drainage systems constructed by the estates (see Map 13026R). Most of the smallholders have enough experience with the crops they are growing to be able to take advantage of the improved infrastructure systems through changes in cultivation

/1 Irrigation and drainage rates, together with quit rents and land taxes, are paid by landowners to the State Land offices, and not to DID.

/2 The financial rent recovery index is approximately 65%. - 25 -

practices and input usage. However, changes in the smallholders' agricultural practices can be directed and accelerated by an integrated agricultural extension effort, to make quicker and fuller use of improved facilities to increase their production and incomes. This is the function of the project's agricultural services component. Penetration of the agricultural areas by extension and credit workers, and marketing and input supply activities, would be facilitated by the access road and bridge construction elements of the project.

Padi Production, Marketing, and Prices

6.02 Average padi yields in Tanjong Karang would increase substantially with improved water control facilities alone due to five major factors: conversion from double-transplanting (floating nursery) techniques adapted to a situation of uncontrolled water depths to standard wet seedbed techniques; increased use of fertilizer and insecticide in lower risk conditions; better land preparation with improved drainage; better timing of planting and hence harvesting seasons; and maintenance of more appropriate water levels during various growth stages (Annex 2). With infrastructure investment alone, main season padi yields are projected to rise from 3.0 to 3.7 ton/ha, and off-season yields from 3.5 to 4.0 ton/ha, over a period of ten years./l This would result in an incremental output of 25,000 tons of padi per annum. Assuming effective implementation of the project's agricultural services component, final yields are expected to reach 4.4 ton/ha in the main season and 4.7 ton/ha in the off-season, with a total incremental output of 46,000 tons of padi, equivalent to 30,000 tons of milled rice.

6.03 The incremental padi production would be entirely marketed in Malaysia, which is projected to be a net importer of rice at least through 1990 (Annex 9, Table 2). Tanjong Karang, the only large padi area in Selangor, is also the closest point of supply to Kuala Lumpur, the major consuming market in the country. Most of the incremental production would be milled and marketed by LPN (para. 3.18) which purchases padi from farmers at farm-gate prices roughly equivalent to current world market prices. Although the project output would substitute for the highest grades of Chinese and Thai rice (which are the grades commonly imported) for purposes of economic analysis it is assumed that the mixture of grades to be produced under the project would equal in value the standard 15% broken Thai grade. This grade is typically traded internationally at prices 10% below those of the Thai 5% broken grade for which the Bank's Economic Analysis and Projec- tions Department makes long-term projections.

Tree Crop Production, Marketing, and Prices

6.04 All of the major tree crops in the project area are susceptible to serious damage and yield reduction due to prolonged inundation, drought, or frequent fluctuations in the depth of the water table. Due to widespread

/1 Preliminary crop cutting results for the first full season following completion of works in the Sawah Sempadan block indicate a rise in average yield of over 0.6 ton/ha, an extremely rapid reaction. - 26 -

recognition of this fact, both estates and smallholdings throughout the region are characterized by regular systems of on-farm drains, though the standard of excavation and maintenance on the estates naturally exceeds that of most smallholdings. By providing collector and main drains and regulating structures, the project would be essentially completing a network begun by smallholders and firms. The benefits of this investment would be reflected in increased areas planted with certain tree crops and in increased yields on existing stands or on stands which would have been planted or replanted in the absence of the project (Annex 3). As project works would for the first time prevent river flooding and provide drainage on a total of 3,200 ha (7,800 ac) of unused fertile land in Kuala Selangor, it has been assumed that the net benefits of planting this land with 800 ha of smallholder oil palm, 1,200 ha of smallholder coffee, and 1,200 ha of estate oil palm would be due to the project. Similarly, an area of 600 ha of smallholder land in Sabak Bernam to be reclaimed behind reconstructed sea bunds and planted with coconuts would be a direct result of the project. In each case the nature of the crop to be planted on reclaimed land was projected on the basis of soil type, future drainage conditions, and trends in the immediate vicinity. Implementation of this project would also permit the Selangor State Government to initiate the Bukit Cheraka Settlement Scheme, which would involve the planting of 3,000 ha of oil palm along the Buloh River and the settling of 1,800 landless families. The latter scheme has not been accounted a direct benefit of the present project.

6.05 Estimates of yield increases (Annex 3) are based largely on the long experience of private estates in the northwest Selangor and lower Perak areas, supplemented by the recent experience of drainage schemes in smallholder areas of those two states. The largest proportional yield increases (about 25%) are projected for the diminishing areas of smallholder and estate rubber, as existing stands of rubber are capable of substantial yield increases with lowering and control of the water table. Oil palm is capable of such yield recovery to a lesser extent, being less susceptible to poor drainage conclitions in the first place, and average yield increases of about 10% due to the project have been postulated. For coconuts, cocoa, and coffee, yield increases (of about 10%) would primarily be observed on new plantings rather than existing stands. None of the large projected increases in the area of cocoa intercropped on coconut smallholdings is assumed to be due to the project (Annex 3, Table 6) despite the fact that adequate drainage and a water table maintained at 1 m (3 ft) below the surface are considered to be agronomic prerequisites of the crop. None of the highly profitable projected conversion of coconut land from Malayan Tall varieties to MAWA hybrids is assumed to be due to the project, although yield increases of 10% for both varieties have been included as project benefits.

6.06 Marketing and processinLg of the projected incremental output of tree crops would present no problems whatsoever. Malaysia is the largest producer and exporter of natural rubber and oil palm, and extremely efficient private bulking and milling, facilities developed to serve both estates and smallholders are available thLroughout the region. Incremental project area production of rubber and oil palm would amount to only 0.03% and 0.4% - 27 -

respectively of projecued Malaysian exports in 1990. The country has also long exported coconut oil, and several private coconut oil mills operate in the region. The initiation of cocoa production by estates along the Perak and Selangor coasts opened up international marketing channels, which have now been extended to reacn the smallholders by a network of small middlemen, who process the beans and sell the dried and fermented product to international agency houses. The p'roject's incremental output of Liberica coffee would be largely destined for the domestic market, but domestic demand is strong for this variety and a strong private marketing and processing network already e'xist:s for .Uis commodity also. The Federal Agricul- tural Marketing Authority is also active in the processing and marketing of smallholder copra and cocoa in the project area, serving to ensure fair treatment of smallholders by private wholesalers and processors. Price projections of rubber, oil palm and coconut products, and cocoa are based directly on Bank projections of world prices, with a slight (5%) discount for Malaysian cocoa due to its higher acidity relative to West African output. The price of local Liberica coffee has been forecasted to vary proportionally with Bank projections of the world price of Arabica varieties, in line with recent experience.

Farm Incomes

6.07 The farm budgets presented in Annex 10 represent single-family farms typical of the irrigation and drainage areas of Northwest Selangor. Surveyed farm families in the region average 6.0 members in size. The present annual per capita income in the non-Sekinchan padi areas is about M$583 (US$235), compared with the estimated national relative poverty line of about M$840 (US$340), the estimated absolute poverty line of M$533 (US$215), and national per capita income of about M$2,130 (US$860). Per capita incomes in the tree crop areas are lower (averaging M$370 or US$150) and tree crop farmers are heavily depe -ei' on off-farm incomes. About 85% of smallholder families in the project area subsist on total incomes below the relative poverty line, while 65% live in absolute poverty. In general, the project area is not among the poorest padi or rainfed areas in the country, but in no sense can it be considered wealthy or prosperous. The level of incomes, farm sizes, and agricultural practice of the area is such that the project is anticipated to lift the bulk of the poor in the project area (17,000 families) out of absolute poverty, and to place those currently living on incomes above the absolute poverty line more securely and permanently outside the poverty group. In the non-Sekinchan padi areas per capita income would rise with the project to M$735 (US$296) in constant terms by 1987, while tree crop farmers would by 1990 earn the equivalent of between M$938 (US$378) and M$1,528 (US$616), depending on choice of primary crops and intercrops. The most advanced and prosperous single identifiable group of farmers, the Sekinchan padi farmers, are expected to benefit least from the project, with per capita incomes rising from M$1,100 (US$444) now to M$1,150 (US$464) with the project. - 28 -

7. BENEFITS, JUSTIFICATION, AND RISK

7.01 The expected value of the economic rate of return of the overall project, assuming effective implementation of the agricultural services component, is 21%. This estimate is a composite of the estimated return of the Tanjong Karang irrigation component (19%) and the tree crop drainage component (22%). The effects of the tree crop drainage component were further segregated into costs and benefits primarily related to either smallholder or estate areas. This analysis indicates that the return on drainage investments in the smallholder areas would be 15% and in the estate areas, 30%. The difference would be due to the higher sunk cost of existing works (largely on-farm drains and roads) constructed by the estates themselves, the higher sunk cost of existing stands of estate tree crops, and the higher standards of upkeep and labor management. Almost all project works would be justified on the basis of effects on smallholder production alone, however. The above rates of return do not include possible project effects on increases in areas planted of various tree crops, on rates of conversion between varieties of coconuts planted, nor on the feasibility of the Bukit Cheraka Settlement Scheme (paras. 6.04-6.05).

7.02 Commodity prices were derived with suitable adjustments from the Bank's world market price projections (Annex 9). All farm labor was valued at the surveyed regional market rate of M$8/day (US$3.20/day) during the peak periods of land preparation and harvesting and M$4.80/day (US$1.90/day) during the remainder of the year. During the appraisal period (March-May 1977) the freely fluctuating market rate of exchange for the Malaysian currency averaged M$2.48 to US$1.00. Recent calculations, based on data for the three-year period 1974-76, indicate that the standard conversion factor is 1.00, which permits the use of the official market exchange rate.

7.03 The major risk associated with achievement of project benefits involves the uncertainties associated with the implementation of the integrated agricultural supporting services system. If the padi yield increases projected with the proposed intensive agricultural service system are reduced by 50%, the expected value of the economic rate of return of the Tanjong Karang irrigation component would decline from 19% to approximately 16%, on the basis of the assumptions made in Annex 2. Similar rLsks would be assoc_ated with the drainage component, although to a lesser extent as the starting base of tree crop yields in the region is quite low, the projecteciincremenial yield increases are quite small, and the required changes in productioL techniques are quite simple. However, the implementing agencies have already begun to organize the proposed field extension system in the Sawah Se'tPqdqn pilot irrigation block (para. 4.04) in anticipation of expanding the ,stc'. throughout the region in step with infrastructure improvements. Fu l er;nole the proposed system has now been initiated with considerable success under the North Kelantan Rural Development Project (1294-MA) providing a training - 29 -

ground for Selangor staff and more importantlya demonstrationthat with sufficientwill, enthusiasm,and organizationalleadership, the training and visit extensionsystem is feasible in Malaysia. Finally, the National Extension Project (Loan 1493-MA) would provide the Federal and Selangor Departmentsof Agriculturewith the general organizationalsupport and strengtheningthey would require to effectivelydirect and manage the proposed extensionprogram in Northwest Selangor.

8. RECOMMENDATIONS

8.01 During negotiations,assurances were obtainedfrom the Government on the following major points:

(a) all local costs would be borne by GOM throughout the implementation period of the project, and activities falling under constitutionalstate jurisdiction,such as operation and maintenance of the completed irrigation and drainageworks and agriculturalextension, would thereafterbe financed through normal GOM procedures as necessary (para. 4.16);

(b) the implementingagencies would maintain separate project accounts for the project; and such accounts would be audited by auditors satisfactoryto the Bank and forwarded to the Bank within nine months of the close of each financialyear (para. 4.22);

(c) the Tanjong Karang swamp would remain a protectedforest area, and the portion of it which serves as a catchmentfor the irrigation area would not be drained, logged, or developed in a manner which would jeopardize the supply of water for irrigation purposes (para. 4.24);

(d) the Project Manager would prepare annual statementsof agricultural credit requirementsto be submittedto BPM and the Bank not later than three months prior to the beginning of each fiscal year, and GOM would thereafterensure that an adequate amount of credit would be made available to project area farmers through BPM (para. 5.04);

(e) DID design staff would prepare a designer's operation manual to guide the operation and maintenance of project works upon completion of final design, and DOA would prepare an agricultural services operations manual as a guide for field extension staff by December 31, 1978 (paras. 5.05 and 5.06);

(f) all DID, DOA, FOA, and BPM staff required to implement and operate the project would be appointed (paras.5.05, 5.06, 5.07, and 5.08); and - 30 -

(g) the Selangor State Government would continue to collect irrigation and drainage charges wFhose level would be determined taking into account O&M and capital costs, incentives to farmers, the farmers' capacity to pay, and other charges and taxes imposed upon them; and that the Government would exchange views with the Bank from time to time on the level of these charges (para. 5.10).

8.02 The appointment of a suitably qualified and experienced Project Manager (para. 5.01), and the establishment of a project Steering Committee (para. 5.02) would be conditions of effectiveness of the proposed loan.

8.03 With the above assurances the project is suitable for a Bank loan of US$26 million, with a 17-year maturity and a grace period of 4 years. The borrower would be Malaysia. ANNEX I Page 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Water Supply, Demand and Quality

Climate

1. The project area has a tropical climate, characterized by high humidity, abundant rainfall and little variation in temperature. Average annual rainfall is about 70 inches, of which approximately 60% occurs during the Northeast monsoon season from October to March. The rainfall pattern generally includes two maxima and two minima per year. One maximum occurs in April-May, and a higher one in October-November. One minimum occurs in February, and a low-er one in June-July. The monthly rainfall in the project area is shown in Table 1 for 1962-73. Monthly mean temperature is almost uniform throughout the year at about 8OoF. Relative humidity is persistently high, varying between 80% and 86%.

Water Supply

2. The water supply for the Tanjong Karang irrigation area 11 is derived from the following three sources:

(a) Rainfall on the padi fields. This is an important but highly variable source (Table 1). Only a portion of the monthly mean rainfall can be relied upon and effectively utilized.

(b) Bernam River. Flow from the Bernam River is diverted into the existing 1,000 cusec capacity feeder canal at the Bernam River headworks and barrage (Map 13026). The feeder canal discharges into the Tinggi River which conveys the water for about 15 miles before it is diverted to the main canal, and project use, by the Tinggi headworks. The Bernam River headworks and barrage can essentially divert the full flow of the river, to the limit of the capacity of the feeder ranal: About 220 cusecs of river flow are continuously sluiced through the barrage to prevent the entrance of bed load sediment into the feeder canal. Table 2 shows the mean monthly discharge for the period 1962-73 of the Bernam River at the SKG Bridge, about ten miles upstream from the headworks. No flow is diverted from the river between the bridge and the headworks.

/1 The water supply and demand analysis is based on the entire net padi area in the Tanjong Karang irrigation scheme, including the Sawah Sempadan block (5,990 ac) which has already been upgraded. ANNEX1 Page 2

(c) TanJong Karang Swamp. The Tanjong Karang peat swamp acts as a storage reservoir for the project area. The feeder canal and Tinggi River pass through it and the main canal borders it on the east. Water in the swamp is derived from rainfall and also from Bernam River flow diverted to the feeder canal and into the swamp in excess of project requirements. The main canal has no bank on the swamp side and receives water from the swamp along its whole length. The swamp is composed of peat to a depth of some 15 to 20 feet and covers an effective storage area of 274 square miles. The extractable water is stored in the upper layer which is computed to hold 120,000 acre feet of live storage. Refer to Table 3 for assumptions and computations which derive the live storage, and Table 4 for the computed monthly water yield of the swamp. The water balance yield equation reduces to the difference between rainfall and evaporation, as deep percolation is not a factor. Table 5 shows mean monthly evaporation at five forest sites in the area.

3. Water demand is primarily supplied by rain falling on the irrigated area and by flow diverted from the Bernam River. When this is insufficient the deficit is made up by withdrawal of water from the Tanjong Karang swamp. Conversely, when rainfall and diversion are in excess of demand, the excess water is stored in the swamp, to an estimated capacity of 120,000 acre feet.

Water Demand

4. To compute water demand, the Taniong Karang irrigation area is divided into three cropping patterns (three water delivery schedules) of approximately equal size and 20 days apart. Refer to Figure 1 of Annex 2 for proposed timing of farm activities. The main canal would be upgraded and operated so that any area or sub-area could be included in any one of the cropping patterns. Staggering farm activities has the advantage of better utilizing water conveyance capaLities and aLtenuatiing peak demands on farm labor and machinery. For purposes of computation, areas were grouped as follows:

(a) Cropping Pattern No. 1 (19,434 acres) comprising Sawah Sempadan, Sungei Burong and Sekinchan blocks;

(b) Cropping Pattern No. 2 (14,245 acres) comprising Sungei Leman, Pasir Panjang, and Sungei Nipah;

5. The above areas add up to 49,045 acres which is used to compute water requirements. This is a conservativefigure since the net projected irrigated area, after subtracting land which will be taken out of production by the constructionof flumes and additional drains, is about 48,300 acres.

6. Table 6 shows the monthly irrigation requirement for each cropping pattern and Table 7 shows the total flow requirement in cusecs for each month, based on results shown in Table 6. To develop these tables, the following assumptionswere made:

(a) the effective rainfall is 30% of the mean monthly rainfall;

(b) the water delivery/application/operatingefficiency is 60%.

Values for presaturation requirementsand consumptiveuse can be obtained by referring to Table 6. A field loss of .07 in per day was assumed./l

Water Demand and AvailabilityAnalysis

7. A computerizedanalysis of water demand and availabilitywas performed on the basis of 12 years of data, and the detailed results in the form of printouts are available as working papers. Computationswere based on half-monthlyintervals of time. Rainfall data and monthly discharge values for the Bernam River for the years 1962-73 were superimposedon computed demands. A silt (bed load) flushing requirement of 220 cusecs was assumed at the Bernam River headworks and the maximum capacity of the feeder canal was assumed as 1,000 cusecs. The swamp capacity was assumed as 120,000 acre feet. The analysis revealed that in 288 two-week periods there is withdrawal from the swamp 86 times. The lowest storage level reached is 18,182 acre feet.

8. The study showed that the project would have an assured water supply with diversion from the Bernam River and storage in the Tanjong Karang swamp. This result conforms with historical experience in tl-heproject area, which has depended on the three available sources of water (para. 3) for double- cropping of up to 70% of the land area since 1964. The cropping intensity has never been constrainedby lack of water (ratherby lack of command and a poor distributarysystem), despite the fact that the present system of inundationby backfloodingis extremely wasteful.

Water Quality

9. There is little analytical data available on water quality. The water from the peat swamp is quite acidic and the water from the Bernam River turbid. No problem related to water quality has been encounteredin the

/1 Water requirementsestimates are based on DID Water Resources Publica- tion No. 5 and DID InformationPaper No. 2. ANNEX I Page 4 irrigationarea, despite the fact that from 1938 to 1958 the padi area was virtually entirely supplied from the peat swamp. Since that time the diversion from the Bernam River has replaced the swamp as the major supplementary water source, and the irrigationsupply has become markedly less acidic. Throughout the entire period the Tanjong Karang padi area has been one of the highest yielding padi areas in Malaysia. ANNEX I Table I

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Monthly Rainfall in Taiong Karang Irrigation Area (Inches)

Month 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973

January 4.87 4.95 5.54 1.01 6.36 6.07 2.78 3.03 9.08 9.05 1.90 11.19

February 3.67 2.69 9.99 5.43 7.01 4.04 1.47 2.14 0.55 3.09 4.28 4.01

March 4.67 3.74 4.64 2.94 5.78 1.95 5.89 4.58 5.20 1.80 1.17 10.01

April 6.11 0.56 3.72 6.24 5.47 5.84 7.38 3.07 5.46 1.97 3.49 9.32

May 6.66 5.96 1.79 4.02 4.74 2.76 4.93 9.98 4.43 1.78 2.02 11.19

June 2.46 2.89 2.45 0.57 6.88 3.54 4.06 2.96 3.58 5.62 7.52 3.55

July 1.62 2.07 6.23 3.07 2.20 1.70 5.14 1.76 5.24 2.80 3.32 3.09

August 6.42 4.34 1.40 4.97 7.17 4.45 3.27 5.82 2.10 5.77 2.23 4.27

September 2.06 7.60 6.36 4.68 6.95 3.83 6.58 2.89 3.12 5.56 6.25 6.91

October 10.80 12.63 9.64 9.36 8.95 7.25 12.84 10.40 9.76 5.98 6.98 11.40

November 11.63 16.17 7.09 9.58 11.74 17.13 7.81 17.29 16.58 6.40 9.19 7.13

December 3.52 5.66 6.70 10.07 6.88 3.65 11.73 11.24 6.24 10.76 4.67 4.62

Source: DID ANNEX 1 Table 2

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Monthly Discharge of Bernam River at SKG Bridge la (Cusecs)

Month 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973

January 2.653 1,630 2,055 1,313 2,195 3,545 1,030 2,276 2,585 4,251 2,208 1,523 rebruary 1,160 841 1,177 1,060 1,708 2,310 770 1,596 1,112 1,576 1,643 1,120

March 2,176 911 1,397 1,131 2,074 1,683 508 1,169 1,070 1,770 1,315 1,435

April 2,604 607 1,403 2,353 2,727 2,213 916 1,593 2,178 1,343 2,042 4,279

May 3,142 1,579 1,612 3,443 1,558 2,794 3,135 3,201 2,777 1,357 2,784 3,512

June 1,538 1,511 1,242 1,483 1,726 1,189 2,394 1,706 1,347 1,074 2,279 3,180

July 997 1,007 2 250 1,000/1b 1,631 775 1,537 935 1,297 1,004 1,212 1,696

August 1,258 1,777 1,484 1,000/b- 1,556 687 1,236 1,404 1,399 1,869 1,095 2,283

September 1,656 1,678 2,802 1,000/b 1,842 1,125 1,797 1,443 2,088 2,272 1,901 2,463

October 3,436 3,433 2,273 2,463 3,186 2,033 2,364 3,996 3,102 1,491 3,777 3,852

November 4,693 5,735 3,506 3,316 3,935 4,446 2,459 2,928 2,880 3,452 4.693 4,604

December 2,237 3,428 2,858 3,545 3,802 2,311 2,686 2,779 2,947 4,219 2,873 4,223

/a From DID streamflow records.

/b Estimated values: records not available. ANNEX 1 Table 3

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Computation of the Live Storage in Tanjong Karang Swamp

The water stored in the Tanjong Karang Swamp contributes a portion of the irrigation supply to the Tanjong Karang Irrigation Scheme. In the computation of the possible storage, the following assumptions were made:

(1) The top of the storage layer is defined by the existing ground level.

(2) The base of the layer is defined for a specified contour level as the top half of the depth of that contour above the R.L. + 16.00 level.

(3) The peat possesses an average void ratio of 70% and a minimum yield coefficient of 0.2.

Area in Base level Storage volume Contour level square miles of water layer in acre feet

16 to 18 12.75 16 to 17 4,080 18 to 20 15.15 17 to 18 14,544 20 to 22 16.50 18 to 19 26,400 22 to 24 16 95 19 to 20 37,968 24 to 26 18.90 20 to 21 54,432 26 to 28 24.75 21 to 22 87,120 28 to 30 46.20 22 to 23 192,192 30 to 31 16.80 23 to 23.5 77,952 31 to 32 15.10 23.5 to 24 75,144 32 to 33 15.45 24 to 24.5 81,576 33 and above 75.05 24.5 to 25 420,000

Total 274.00 1,071,408

Therefore, live storage = 0.7 x 0.2 x 1,071,408 = 149,997 acre feet

However, for the purpose of computation, 80% of this value was assumed as the live storage of the swamp available to the project.

Hence, maximum live storage = 0.8 x 149,997 = 120,000 acre feet MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Monthly Water Yield from the Tanjong Karang Swamp /a (Acre feet)

Month 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973

January 58,464 16,384 31,396 -42,068 77,796 46,244 17,012 14,228 10,610 56,596 -16,548 53,466

February 29,385 -17,322 56,298 6,804 23,354 29,232 15,466 25,520 -33,408 3,712 14,692 5,316

March 41,760 46,090 32,480 21,808 585928 15,218 3,556 59,050 59,856 17,940 -47,328 75,434

April 87,540 -38,202 49,648 53,978 64,650 31,458 80,426 2,628 62,330 22,890 74,240 195,976

May 63,412 85,914 -9,434 36,964 -17,322 53,204 60,938 97,904 83,210 -28,304 14,848 120,528

June -464 -16,394 15 930 -36,346 46,682 -18,126 28,768 -4,330 -33,716 -772 25,674 -772

July 22,116 -28,458 47,328 11,136 -21 652 -54,132 -19,178 -37,738 -20,880 -36,964 -45,628 18,404

August 38,048 34,336 -17,322 20,828 17,476 -2,040 -13,920 35,108 -9,280 19,488 -1,042 31,552

September 5,568 71,456 57,844 12,064 37,892 32,480 15,466 -7,732 24,282 22,426 85,674 36,656

October 107,338 95.892 51,348 109,348 78,416 86,304 88,004 99,296 22,580 24,436 82,282 140,436

November 115,226 200,292 46,090 139,972 93,108 220,372 38,048 152,768 143,220 52,074 178,640 106,564

December 11,600 29,554 32,016 97.284 103,472 6,650 121,412 48,768 51,960 143,684 51,504 69,908

/a Based on DID's "Water Balance Study of Tanjong Karang Swamp." Pt t

a,.-. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Mean Monthly Forest Evaporation (Inches)

June July Aug. Sept. Oct. Nov. Dec. SI. no. Site no. Site name Jan. Feb. Mar. Apr. May

4.85 5.04 4.96 5.00 4.53 4.33 1 3710306 Bagan Terap 5.04 5.16 5.79 5.24 5.08 4.65 5.59 5.63 5.67 5.52 5.12 4.89 2 340 Tg. Malim 5.04 5.00 5.99 5.56 5.56 5.40 5.28 5.36 5.52 4.96 5.12 4.73 4.57 3 3609313 Sg. Besar 5.08 5.16 5.83 5.48 5.36 5.32 5.52 5.75 5.59 5.59 5.08 5.16 4 322 K.K. Baru 5.36 5.00 5.91 5.67 5.56 4.73 5.08 4.93 4.89 4.41 4.26 5 325 Tg. Karang 4.57 4.57 5.24 5.89 4.85 4.65

Publication No. 5, 1976. Source: "Evaporation in Peninsular Malaysia, DID Water Resources

Um MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Monthly Irrigation Water Requirements (inches)

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Mean rainfall (in/month) 5.48 4.03 4.36 4.88 5.02 3.84 3.19 4.35 5.23 9.66 11.48 7.15

Cropping pattern I Presaturation, q - 15.94 - - - - - 16.16 - - - Consumptive use + field loss - 2.55 8.28 8.66 5.83 - - 2.94 7.90 8.31 8.06 3.81 Effective rain, RE - 1.21 1.31 1.46 1.51 1.15 - 1.31 1.57 2.90 3.44 2.15 Farm requirement, QF - 17.28 6.97 6.82 7.15 4.68 - 17.79 6.33 5.41 4.62 1.66 Diversion requirement - 28.80 11.61 11.36 11.91 7.80 - 29.65 10.55 9.01 7.70 2.76

Cropping pattern II Presaturation, q - 8.03 8.02 - - - - 4.09 12.07 - - - Consumptive use + field loss 1.34 - 5.49 7.82 8.66 8.40 2.75 - 1.34 7.59 8.06 7.62 Effective rain, RE 1.64 1.21 1.31 1.46 1.51 1.15 0.96 1.31 1.57 2.90 3.44 2.15 Farm requirement, QF - 6.82 12.20 6.36 7.15 7.25 1.79 2.78 11.84 4.69 4.62 5.47 Diversion requirement - 11.36 20.33 10.60 11.91 12.00 2.98 4.63 19.73 7.81 7.70 9.11

Cropping pattern III Presaturation, q - - 16.26 - - - - - 12.16 - - - Consumptive use + field loss 6.83 - - 7.84 7.83 8.40 8.52 - - 7.59 7.41 7.62 Effective rain, RE 1.64 - 1.31 1.46 1.51 1.15 0.96 - 1.57 2.90 3.44 2.15 Farm requirement, QF 5.19 - 14.95 6.38 6.32 7.25 7.56 - 10.59 4.69 3.97 5.47 Diversion requirement 8.65 - 24.91 10.63 10.53 12.08 12.26 - 17.65 7.81 6.61 9.11

Source: DID.

0 Z M rm (DN t- MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Gross Water Requirements in Main Canal

Item Unit Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Cropping Pattern I (19,434 ac)

Volume requirement ac ft/day - 1,529 616 603 632 414 - 1,574 560 478 409 146 Flow requirement cusecs - 764 308 301 316 207 - 787 280 239 204 73

Cropping Pattern II (14,245 ac)

Volume requirement ac ft/day - 442 791 412 463 470 116 180 767 304 299 354 Flow requirement cusecs - 221 395 206 231 235 58 90 383 152 149 177

Cropping Pattern III (15,366 ac)

Volume requirement ac ft/day 363 - 1,046 446 442 507 515 - 741 328 277 383 Flow requirement cusecs 181 - 523 223 221 253 257 - 370 164 138 191

Total flow requirement cusecs 181 985 1,226 730 768 695 315 877 1,033 555 491 441

Source: DID.

3- ANNEX 2 Page 1

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Present and Projected Developments in Padi Production

Physical Aspects

1. Presently about 19,800 ha in the Tanjong Karang Irrigation area are utilized for padi production. The soils are predominantly fertile marine alluvia, with low permeability, and are well suited to padi. However, the Soils Branch of the Department of Agriculture estimates that about 30% of the irrigated area adjacent to the main supply canal on the fringe of the peat swamp may be under organic clay, muck and peat soils. Small isolated areas of acid sulphate soils may also occur. Local field staff estimate that peat may account for aboul: 1,500 ha of the area. Due to acidity, hydrogen sulphide production and associated nutrient in-balance, yield potential on the organic soils is considerably lower than on the mineral soils.

2. The irrigation area iLsdivided into blocks of 80-120 ha, with each block having its own supply channel and drain. The blocks in turn are divided into 1.2 ha lots. The average family grows padi on 1 to 2 lots. There are a total of 16,411 lots in the area and the number of farm families involved is of the order of 12,000. While the land is fairly flat, there are local variations of 30 cm in land level. On-farm water control is crude; much of the area is now irrigated by back-flooding from drains rather than from canals, and hence few batases (field bunds) have been constructed by farmers.

3. As the capacity of tbhepresent delivery system is limited, irrigation schedules and planting are staggered over a 12-week period. Farmers in the Kuala Selangor section, e.g. the Sawah Sempadan, Sungei Burong and Sekinchan blocks, can obtain water earlier. Also, since they are closer to the headworks and on higher ground, the reliability of water supply and water control is better. These factors, coupled with timely planting and a high level of management skill, lead to very high yields on about 1,860 ha operated by Chinese farmers in the Sekinchan block./l By contrast, farmers in the Sabak Bernam area receive water later, have difficulties in disposing of excess water, can often not obtain enough water to adequately flood the higher ground, and report difficulties with regard to the reliability and timing of supplies. The problems with regard to timing of supply are compounded by the fact that with the present system, a block cannot be irrigated until all farmers have completed harvest. Except in the Sekinchan block, there are always large numbers of farmers who plant late, either through ignorance,

/1 Sekinchan farmers have also invested a considerable amount of capital and effort in digging field channels and contract land-levelling. ANNEX 2 Page 2

tardiness, or the need to work on other farms to raise sufficient cash to plant. Hence, with the exception of the Sekinchan block, late delivery of water, poor water control and lack of organization of the farmers to plant on schedule are major constraints to production. This is reflected in cultural practices and in average yields and production.

Present Cropping Pattern. Yields and Production

4. Currently most farmers attempt to grow two crops per year. Those in the Kuala Selangor section plant from April to June and from September to November, and harvest in the February-March and August-October period. In the Sabak Bernam areas, July-September and December-February are the main planting months, and harvesting is carried out from December to February and May to July. Crops planted in May-June run into periods of low radiation during grain maturation and periods of high rainfall at harvest, which reduces yield and increases the risks of losses. Also, November-January plantings are sometimes affected by periods of cooler weather. In essence, only the early planters in Sekinchan are planting at close to optimum time. While most farmers in the Sekinchan area are consistently planting two crops a year and achieving 200% cropping intensity, local field staff confirmed that many farmers in other areas are only achieving about five crops in three years since they progressively plant later and later, and finally get out of phase with the water supply schedule and have to miss a crop. It is estimated that overall cropping intensity is of the order of 170%.

5. Estimates of current planted area, yield and production of padi /1 are summarized as follows:

Total Area Average Yield ton/ha Production ton/padi ha Main season Off season Main season Off season

Sekinchan 1,860 5.0 5.2 9,300 9,672 Other Areas 15,555 3.0 3.5 45,354 38,185

Project Area /2 17,415 3.2 3.7 54,654 47,857

The higher yields achieved in the off season are a reflection of lower levels of pest attack, lower incidence of excess water and flooding, and a lower level of risk which provides incentive for the use of cash inputs.

Production Methods

6. The majority of farmers use locally selected improved varieties, e.g. Mat Chandu, Sri Sekinchan Merah and Sri Sekinchan Putih. These are thought to be farmer selections of improved varieties released during the 1960s. They are long-strawed varieties, adapted to conditions of poor water control, which mature in about 135-145 days from seeding. They are

/1 See Tables 1-4. /2 This padi area excludes the 5,990 ac (2,425 ha) in the Sawah Sempadan pilot block. ANNEX 2 Page 3 susceptible to lodging under high fertility conditions and have only moderate resistance to pest and diseases. Nevertheless, under good management conditions, they have a yield potential of 5-6 ton/ha. This feature, coupled with good quality and high market value, accounts for their popularity. Officially recommended varieties, Mahsuri and Jaya, have lost popularity. In a double-cropping system, a shorter term variety such as Jaya (C4-63, bred in the Philippines) which normally matures in 125 days, would be an advantage, and has proved quite popular in the Muda Irrigation Area. However, it proved susceptible to Pyricularia oryzae (Rice blast). "Improved Jaya," a Jaya line with improved blast resistance, recently released by MARDI, has yet to convince the farmers of its superiority over local varieties. While the new line has acceptable cooking quality and good yield potential, it matures in about 135 days, which is only 10-15 days earlier than some of the local improved varieties.

7. Farmers use several types of seeding methods, depending on the reliability and timing of water supply. In areas with good water control e.g. Sekinchan, most farmers adopt the standard wet seedbed technique. However, they use relatively light seeding rates, e.g. 20 kg/ha and often do not pull and transplant the seedlings until they are 30-35 days old. In areas with unreliable water supply, or where there is risk of late delivery, they adopt a dry seedbed technique or practice direct seeding by dibbling the seeds directly in the field. In the dry seedbed technique, a piece of land is levelled and covered with banana leaves or dried grass. Wet mud from a drainage ditch is spread to a depth of 5-6 cm and germinated seed broadcast on the mud. The seed is covered with soil and banana or palm leaves. After 7-10 days, when the seedlings are well established, they are transferred in clumps to an area of the field which is wet or flooded, and transplanted. They are left for a further 30-40 days until water is available in the padi field or the seedlings are large enough to withstand the depth of water in the field. This technique allows farmers to start the seedbed before water arrives, and allows flexibility with regard to the time the seedlings are left in the seedbed, and the height of seedling used at transplanting in cases where deep water is a problem. However, the late planting of seedlings in both the wet seedbeds and banana leaf seedbeds provides a severe setback to the seedling, and the physical damage leaves the seedling very vulnerable to attack from bacterial blight (Xanthomonas oryzae). Several newly transplanted seedlings observed in the field in Sabak Bernam exhibited symptoms of systemic bacterial blight (Kresek).

8. Before land preparation, the straw is normally cut and burnt, which provides a cheap and effective control for the buildup of insects and disease, as well as making land cultivation easier. However, this is only possible in areas with good drainage. In areas with poor drainage, a good burn is impossible and cultivation is more difficult. Most of the land is cultivated with 8-10 hp diesel-powered 2-wheeled rotovators which are owned or hired. It is estimated that over a thousand units are available in the area, and most farmers reported reasonable access to the machines. Cultiva- tion practice depends on the condition of the land and the availability of cash. Where land has been cleared and burnt and drainage is adequate, farmers normally plough once under dry conditions and allow weeds to germinate, and then plough again and puddLe when the water arrives and the field can be flooded. Where the land is poorly drained and the straw cannot be burnt properlvy ANNEX 2 Page 4

or there is a shortage of cash, farmers often only plough once, after the field is flooded. However, some spray weeds with Paraquat or Dowpon, prior to cultivation,or supplement tractor ploughing with hand cultivation.

9. Transplanting is carried out one or two days after puddling. Seedlings are pulled and topped and transplantedat 2-5 seedlings per hill, on about 30 x 30 cm spacing, using the "kuku kambing," a forked stick. The majority of farmers use urea and mixed fertilizer at transplanting, and topdress with urea. However, rates of application and types of mixed fertilizer used vary widely, from excessive use of expensivemixed fertilizer in Sekinchan to suboptimal rates of fertilizer use in other blocks. Weed killers are also popular in Sekinchan, and many farmers reported using Amine 2.4.D. and MCPA preparations,but were often not sure of the most economic rate or the best herbicide to use. Farmers outside Sekinchanwho used herbicide usually used it at suboptimal rates. Some hand weeding is common throughout the area, but in many cases is inadequate.

10. The most common pests causing damage to the rice crop are stem- borer (Chilo polychrysa and Tryporyza incertulas),rice bugs (Leptocoriza), cut worm and army worm (Spodopterasp) and leafhoppers (Nephotettix). Rats and mice were also reported to cause considerabledamage in some locations, and birds are also a problem in areas where a small area of crop is out of phase with the rest of the area. With the exception of Sekinchan, few farmers used adequate pest control measures. The Department of Agriculture operates a subsidy scheme in which farmers can purchase sprayers at half price and obtain free chemicals to control severe outbreaks of pests. How- ever, the farmers reported that the supply of chemicals and control measures were usually too late to prevent damage. Either through ignorance or lack of cash, most did not make a concerted effort to protect their crops. It is suspected that the majority of farmers do not recognize the early signs of damage and are not fully conversantwith the correct control measures. A further problem is the wide range of chemicals and fertilizersavailable through the Farmers' Organizationsand private dealers, which confuses the farmers, especially when some items recommendedby the Department of Agri- culture are not available.

11. Harvesting and threshing are carried out by hand. The crop is cut with a serrated sickle (sabit padi) and threshing is usually carried out in the field, using a locally made threshing box. It is traditional for hired labor to assist with harvest and threshing. Very little of the crop is winnowed and dried before sale. Although the LPN operates a grading system which has provisions for downgradingprice on the basis of moisture content and contamination,most farmers reported putting the threshed grain straight in the bag and selling to the dealers at about M$27 per picul (US$185 per ton) which is equivalent to the price for dried second grade padi. Most farmers appear to retain the equivalentof 110-140 kg milled rice per year per capita for domestic consumption. ANNEX 2 Page 5

12. The harvesting and dryjing problem is most acute with late planted off-season crops that cannot be harvested until September/October. The LPN reports receiving large volumes of padi in excess of 20% moisture content. While farmers must be encouraged to have their crops planted by early April, the current problem is a reflection of the lack of enforcement of grading and pricing policies and the lack of adequate drying floors at village level.

13. Most of the padi field work is carried out by family labor. The exceptions are land preparation, transplanting and harvest, when there is pressure to complete the operaticin in reasonable time. Available data indicates that most of the hired labor is used for transplanting and harvest, and that hired labor used per crcp is of the order of 20 to 30% of total labor requirements.

Demonstration Projects

14. The State Drainage and Irrigation Department, in collaboration with the State Department of Agriculture, has established a 32 ha demonstration area at Sekinchan, to check the yields and cropping intensities possible, given adequate water supply and control, and effective extension. The target is five crops in two years. To date, three crops have been harvested, and yields of 5.0-6.0 ton/ha have been recorded, with Improved Jaya. However, the planting schedule is now reported to be slipping behind, because Improved Jaya required 135 days to mature, as opposed to the 125 day maturation period expected. Progressive farmers participating in the project are not enthus- iastic regarding the prospect of five crops in two years, due to the tight working schedule and high demand for labor throughout the year. In practice, five crops in two years is not likely to prove practical on a large scale, due to limitations of water supply and the need to keep the majority of farmers in the project area on a standard schedule which maximizes water use and reduces harvesting and drying problems.

Projected Yield and Production Increases under the Project

15. Under the project, the irrigation and drainage system would be rehabilitated and intensified and the delivery capacity increased. Each 1.2 ha lot would have its own water supply channel and drain, and the maximum irrigation run would be of the orcder of 200 meters. Plans for operating the system include dividing the irrigation area into three divisions and providing presaturation water to the first section of each division simultaneously, in the first weeks of February and August. Presaturation of each division would be completed within eight weeks. Altough the system has the capacity to presaturate the whole area in a shorter time, a 6-8 week spread of operations in each division is likely to be more practical when the availability of tractors and labor for land pre!paration,seedbeds and transplanting is considered. Further, a 6-8 week spread at harvest would put less strain on drying, transport, processing and storage facilities. ANNEX 2 Page 6

16. The improvement in the irrigation and drainage system per se would result in substantialbenefits in terms of yield and production. To achieve full benefits, there will have to be a dramatic improvement with regard to the organization of farmers, management of the irrigation and drainage system, the efficiency of the extension service, the supply of credit and inputs, and the handling of produce. A concerted effort will also be necessary to change farmers' attitudes to water management,credit and group activity. To this end, an intensive agriculturalservice componenthas been included in the project (Annex 5). As the latter has a high "human" content and is harder to implement than physical works, estimated yield and production increases are examined in two parts, first by projecting the likely benefits attainablewith imp- -8ment in irrigation and drainage works onl.v,and then the benefits resultiiigfrom improvement in both physical works and supporting services.

17. With improvement in physical works, and a better timed irrigation schedule, average cropping intensity should rise to at least 190%, and yield should rise by at least 0.5 ton per ha per crop, on the following grounds:

(a) With individual plot watering, the majority of farmers would convert to a standard wet seedbed, and planting of younger seedlings would be practical. There would be less physical damage to seedlings and less setback in growth, and the incidence of infection, e.g. Xanthomonasoryzae, would decrease.

(b) More farmers would be able to drain their fields properly and burn straw effectively prior to land preparation. This would improve the standard of land preparation,reduce hand labor input, and reduce the buildup of insect pests and disease.

(c) With earlier planting, grain maturation and harvest of the off- season crop would occur during periods of high radiation. This would increase yield potential, reduce labor input for harvest and drying, and result in a higher quality padi. As a result of earlier planting of the main season crop, seedlingswould be better developed before heavy rains occur and insect populationsbuild up, which would reduce potential damage.

(d) With better facilities for water control, the majority of farmers would have an opportunityto maintain water levels closer to the optimum for weed control and maximum tillering.

(e) Under lower risk conditions, the use of fertilizer and insecticide can be expected to increase, especially in the main season.

18. Without organizationof farmers, integratedsupporting services, and an effective credit service, rates of adoption of improved production practices and yield buildup would be comparativelyslow. Water management at farm level would likely be chaotic during the first season, and water would be wasted unless farmer groups were formed to plan water distributionwithin a block and build batases to prevent water from flowing directly to the drains. ANNEX 2 Page 7

It would take several seasons for the farmers to adjust to the new system, and staggered cropping would probably continue on a large percentage of the area. Overall efficiency of production would remain at a fairly low level without a service to provide sound technical and economic advice.

19. With an effective integrated agricultural service to supplement the improved physical works, a yield increment of at least one ton per ha per crop can be anticipated, and cropping intensity should rise to at least 195%, even allowing for farmers who consistently get out of phase with the system, and crop losses due to epidemics and flood. All the advantages outlined (para. 17) would apply, but the rate of adoption and yield buildup would be more rapid, and a higher percentage of farmers could be expected to plant on time. With less spread of planting, and a period of the year with very little rice in the field, the carry-over of pests and disease should decrease and result in reduced crop loss. The productivity of cash inputs would increase, resulting in higher yield at lower incremental cost. Farmers could be expected to better utilize family labor in the off-peak periods for han,lweeding, pest control and water management if incremental yield offered a favorable return to labor, which becomes possible with an improved physical environment and the use of modern high input techniques.

20. Even allowing for favorable conditions at full development, average project area yields are not likely to reach 5.0 ton per ha per crop. On the physical side, the presence of organic soils would depress average yield. On the human side, the project demands a dramatic change in farmers' attitudes and the competence and efficiency of agricultural and irrigation service personnel, many of whom have received minimal training. At the technical level, the rice varieties are a major constraint. The long growing period calls for fairly rigid adherence to the planting schedule. The varieties are prone to lodging under high fertility conditions, and susceptibility to disease and insect attack is likely to become more apparent as average fertilizer applications increase. There is an urgent need in Malaysia to develop a medium height, shorter duration, disease and insect resistant, high-yielding variety that can respond to high fertility conditions, and at the same time produce an acceptable grain. The development of a new variety will be the next major breakthrough in raising yields in areas such as Tanjong Karang, once water control and agricultural services have been developed to a reasonable standard of efficiency.

21. With a shorter duration variety, growing two rice crops and one short-term vegetable or field crop per year would become a distinct possibility, one which is likely to be more practical and profitable than attempting three rice crops a year or five rice crops in two years. It is suggested that this topic, along with the possibility of profitably growing one main season rice crop and off-season vegetables and field crops on the organic soils, should form part of the research program for the project area. Another topic requiring urgent investigation is the best long-term method of ANNEX 2 Page 8 insect control. As broad spectrum insecticideshave not been widely used in Malaysia, there appears to be an adequate population of predators and para- sites to control the population of major economic rice pests at acceptable levels. However, with an increase in cropping intensity and higher usage of fertilizers,insect population and damage can be expected to increase, and there will be an increasing tendency for farmers to use larger quantitites of broad spectrum insecticides. Apart from running the risk of changing the balance of pests to predators and starting a cycle of excessive chemical use and more costly control, there is the added risk of reducing natural fish populations and the building up residues, if some of the potent granular insecticidesavailable are used indiscriminately.

22. Projected yields and production that can be attributed to irrigation works with and without intensifiedagricultural services are presented in the accompanyingtables. In Sekinchan, potentialyield and production increases are relatively small. Farmers are already operating on a 200% cropping intensity and practicing a relativelyhigh level of water control and management. The yield potential of the existing varieties will be their main constraint at full development. Nevertheless, financial benefits would accrue from more intelligent use of cash inputs and lowered cost of production, if an effective extension service is established. Most project benefits would come from the rest of the project area. With irrigation improvement only, it is anticipated that main season yields would rise from 3.0 to 3.7 ton/ha, and off-seasonyields would rise from 3.5 to 4.0 ton/ha. With effectiveagricultural services, potential average yields at full developmentare estimated at 4.4 ton/ha for the main season and 4.7 ton/ha for the off-season. Total padi productionwould increase by 25,000 tons per year with irrigation improvement only, and a further 21,000 tons if the agriculturalservice program is implemented effectively. Gross annual production could thus rise from the present 103,000 tons to 156,000 tons at full development,an overall increase of 51%, of which 46,000 tons would be due to the project. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Padi Production - Sekinchan

Assumed Effects of Irrigation Improvement with Effective Agricultural Services

Area Yields Yields Production Year WithU WithD Without With Without With Without With Without Incremental

Main season 1 15,555 0 15,586 15,088 15,118 3.00 3.00 45,264 45,354 -90 2 13,466 2,038 15,586 15,100 15,118 3.03 3.01 45,753 45,505 248 3 10,068 5,378 15,586 15,144 15,118 3.10 3.04 46,946 46,147 799 4 6,170 9,213 15,586 15,198 15i118 3.30 3.07 50,153 46,412 3,741 5 1,975 13,350 15,586 15,266 15,118 3.60 3.10 54,958 46,866 8,092 6 0 15,325 15,586 15,325 15,118 3.97 3.13 60,840 47,319 13,521 7 0 15,325 15,586 15,325 15,118 4.19 3.16 64,212 47,773 16,439 8 0 15,325 15,586 15,325 15,118 4.30 3.19 65,898 48,226 17,672 9 0 15,325 15,586 15,325 15,118 4.35 3.22 66,664 48,680 17,984 10-25 0 15,325 15,586 15,325 15,118 4.40 3.25 67,430 49,133 18,297

Off-season 1 15,555 0 15,586 10,889 10,910 3.50 3.50 38,112 38,185 -73 2 13,466 2,038 15,586 11,362 10,910 3.54 3.51 40,222 38,294 1,928 3 10,068 5,378 15,586 12,157 10,910 3.70 3.53 44,981 38,512 6,469 4 6,170 9,213 15,586 13,071 10,910 3.90 3.56 50,977 38,840 12,137 5 1,975 13,350 15,586 14,065 10,910 4.10 3.59 57,667 39,167 18,500 6 0 15,325 15,586 14,559 10,910 4.33 3.62 63,041 39,492 23,219 7 0 15,325 15,586 14,559 10,910 4.46 3.65 64,933 39,822 25,111 8 0 15,325 15,586 14,559 10,910 4.56 3.65 66,389 39,822 26,567 9 0 15,325 15,586 14,559 10,910 4.63 3.71 67,408 40,476 26,932 10-25 0 15,325 15,586 14,559 10,910 4.70 3.74 68,427 40,803 27,624

U = Undeveloped under project. D = Developed under project, with effective agricultural services. ANNEX 2 Table 2

MALAYSIA

NORTHWEST SELANGOR INTEGRATEDAGRICULTURAL DEVELOPMENT PROJECT

Padi Production - Sekinchan

With an EffectiveAgricultural Supporting System

Cropped area Yields Production Year With Without With Without With Without Incremental

Main season 1 1,860 1,860 5.00 5.00 9,300 9,300 0 2 1,860 1,860 5.02 5.01 9,337 9,319 18 3 1,860 1,860 5.05 5.02 9,393 9,337 56 4 1,860 1,860 5.13 5.03 9,542 9,356 186 5 1,832 1,860 5.22 5.04 9,563 9,374 189 6 1,832 1,860 5.28 5.05 9,673 9,393 280 7 1,832 1,860 5.34 5.06 9,783 9,412 371 8 1,832 1,860 5.37 5.07 9,838 9,430 408 9 1,832 1,860 5.39 5.08 9,875 9,449 426 10-25 1,832 1,860 5.40 5.10 9,893 9,486 407

Off-season 1 1,860 1,860 5.20 5.20 9,672 9,672 0 2 1,860 1,860 5.25 5.21 9,765 9,691 74 3 1,860 1,860 5.32 5.22 9,895 9,709 186 4 1,860 1,860 5.40 5.23 10,044 9,728 316 5 1,832 1,860 5.48 5.25 10,039 9,765 274 6 1,832 1,860 5.55 5.26 10,168 9,784 384 7 1,832 1,860 5.63 5.27 10,314 9,802 512 8 1,832 1,860 5.67 5.28 10,387 9,821 566 9 1,832 1,860 5.69 5.29 10,424 9,839 585 10-25 1,832 1,860 5.70 5.30 10,442 9,858 584 MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Padi Production - Non-Sekinchan Areas

Assumed Effects of Irrigation Improvement without Effective Agricultural Services

Area Cropped area Yields Production Year WithU WithD Without With Without With Without With Without Incremental …______----(ha) ------(ton/ha) ------(tons) ------

Main season 1 15,555 0 15,586 15,088 15,118 3.00 3.00 45,264 45,354 -90 2 13,466 2,038 15,586 15,100 15,118 3.01 3.01 45,451 45,505 -54 3 10,068 5,378 15,586 15,144 15,118 3.04 3.04 46,038 45,959 79 4 6,170 9,213 15,586 15,198 15,118 3.11 3.07 47,266 46,412 854 5 1,975 13,350 15,586 15,266 15,118 3.24 3.10 49,462 46,866 2,596 6 0 15,325 15,586 15,325 15,118 3.39 3.13 51,952 47,319 4,633 7 0 15,325 15,586 15,325 15,118 3.52 3.16 53,944 47,773 6,171 8 0 15,325 15,586 15,325 15,118 3.60 3.19 55,170 48,226 6,944 9 0 15,325 15,586 15,325 15,118 3.65 3.22 55,936 48,680 7,256 10-25 0 15,325 15,586 15,325 15,118 3.70 3.25 56,703 49,134 7,569

Off-season 1 15,555 0 15,586 10,889 10,910 3.50 3.50 38,112 38,185 -73 2 13,466 2,038 15,586 11,372 10,910 3.51 3.51 39,881 38,294 1,587 3 10,068 5,378 15,586 12,158 10,910 3.53 3.53 42,914 38,512 4,402 4 6,170 9,213 15,586 13,071 10,910 3.58 3.56 46,794 38,840 7,954 5 1,975 13,350 15,586 14,065 10,910 3.67 3.59 51,619 39,167 12,452 6 0 15,325 15,586 14,559 10,910 3.78 3.62 55,033 39,492 15,539 7 0 15,325 15,586 14,559 10,910 3.87 3.65 56,343 39,822 16,521 8 0 15,325 15,586 14,559 10,910 3.93 3.65 57,217 39,822 17,395 9 0 15,325 15,586 14,559 10,910 3.97 3.71 57,799 40,476 17,323 10-25 0 15,325 15,586 14,559 10,910 4.00 3.74 58,236 40,803 17,433

U = Undeveloped under project. *D = Developed under project, irrigation improvement only. a M ANNEX 2 Table 4

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURALDEVELOPMENT PROJECT

Padi Production - Sekinchan

Assumed Effects of Irrigation Improvement without Effective Agricultural Services

Cropped area Yields Production Year With Without With Without With Without Incremental

Main season 1 1,860 1,860 500 500 9,300 9,300 0 2 1,860 1,860 501 501 9,319 9,319 0 3 1,860 1,860 503 502 9,356 9,337 19 4 1,860 1,860 506 503 9,412 9,356 56 5 1,832 1,860 502 504 9,343 9,374 -31 6 1,832 1,860 514 505 9,417 9,393 24 7 1,832 1,860 519 506 9,508 9,412 96 8 1,832 1,860 521 507 9,545 9,430 115 9 1,832 1,860 523 508 9,581 9,449 132 10-25 1,832 1,860 525 510 9,618 9,486 132

Off-season 1 1,860 1,860 520 520 9,672 9,672 0 2 1,860 1,860 521 521 9,691 9,691 0 3 1,860 1,860 523 522 9,728 9,709 19 4 1,860 1,860 526 523 9,784 9,728 56 5 1,832 1,860 530 525 9,710 9,765 -55 6 1,832 1,860 534 526 9,783 9,784 -1 7 1,832 1,860 539 527 9,875 9,802 73 8 1,832 1,860 542 528 9,929 9,821 109 9 1,832 1,860 543 529 9,948 9,839 109 10-25 1,832 1,860 545 530 9,984 9,858 126 MALAYSIA NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT ProposedTiming of FarmActivities in TanjongKarang Padi Area

Jan. Feb. Mar. Apr. [ May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Cropping Pattern No. OFF - SEASON MAIN-SEASON

20 49 72 20 20 20 49 72 20 I F p E L H F P E | L jHJ

20 20 49 72 20 20 49 72

3H F P E L |H F D E L

20 20 49 72 20 20 20 49 72

1III H F P E L H F I P I E I L

Abbreviation P - Presaturation - 20 Days E - Early Growth Stage - 49 Days L - Late Growth Stage - 72 Days H - Ripening & Harvest - 20 Days F - Fallow Period World Baik - 17908 ANNEX 3 Page 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATEDAGRICULTURAL DEVELOPMENT PROJECT

Present and Projected Developments in Tree Crop Agriculture

General

1. There are approximately190,000 ac (77,000ha) of tree crops in the Northwest Selangor region, of which 108,000 ac (44,000ha) or 57% of the total consists of smallholdings,defined as holdings less than 100 ac (40 ha) in size. Coconuts are by far the major smallholder tree crop in the region, followed by rubber, coffee and oil palm. The major estate crop is oil palm, followed by rubber, coconut, and a small amount of sole crop cocoa. The northern part of the region (Sabak Bernam) is dominated by coconut smallholdings while oil palm and rubber estates are concentratedin the southern portion (Kuala Selangor). The major current trend in the smallholdersector is the intercroppingof existing coconut stands with cocoa, a development which offers many desperatelypoor coconut farmers their first opportunity for decent incomes. The major current trend in the estate sector is the continuing replacementof rubber by oil palm, due to the now general realizationthat the coastal areas are better suited to oil palm production.]L Smallholdersare also replacing rubber with oil palm to some extent, following the example of neighboring estates and extension advice by local RISDA /2 staff.

2. The major foreseeable future development in the tree crop sector involves the introductionof a new variety of coconut, the MAWA Hybrid, which will largely replace the existing Malayan Tall variety in the project area over the next three decades. The MAWA is a cross between Malayan Dwarf and West African Tall varieties, originally bred in the Ivory Coast and now being produced by private estates in Malaysia. At full development the MAWA produces on the order of three times as much copra per unit area as selected Malayan Talls, and production begins two years sooner than with the tall varieties. It is also suitable for intercroppingwith cocoa, as its dis- tinctly uniform growth provides a homogeneous shade regime. Estates in Northwest Selangor have already planted about 600 ac of MAWA, of which 200 ac will come into production in 1980. MAWA planting materials will not be available in sufficient quantities for distributionto smallholdersuntil 1980. Conversion of smallholdingsto MAWA is expected to lag behind conversion of estates for many reasons, one of which is the lower average age of the existing heterogeneoussmallholder stands as compared to the very old existing estate coconut plantings.

/1 The Rubber Research Institute discourages rubber planting on coastal alluvial soils and peats as yields are significantlylower (15-40%) than those obtained on inland mineral soils.

/2 Rubber Industry SmallholdersDevelopment Authority. ANNEX 3 Page 2

3. The project would not greatly affect the direction or pace of the developments outlined above in acreage terms, as they represent responses to strong long-term price trends or to technical innovations of obvious merit. All the various tree crops suffer from waterlogging and poor drainage, however, and all will experience some increase in yields due to improved drainage (see Tables 1-10). This will provide the major benefit of the tree crop drainage component. In addition some new areas would be brought into production by project drainage works, including 4,000 ac of estate oil palm, 2,000 ac of smallholder oil palm, and 2,800 ac of smallholder coffee near the various rivers dissecting Kuala Selangor District; and 1,500 ac of smallholder coconuts in Sabak Bernam District. Finally, the canalization of the Buloh River and other associated drainage works would permit the initiation of the Bukit Cheraka land settlement scheme, a Selangor State Government project to develop 7,500 ac of oil palm on frequently inundated scrubland along the inland reaches of the Buloh, with eventual settlement by landless applicants./l

Coconut Smallholdings

4. The average size of coconut smallholdings in the project area is 7 ac (2.8 ha), and around 12,500 project area families are primarily dependent on the crop. Families with smialler than average coconut stands are more likely to possess padi or additional tree crop land. Aside from waterlogging of the palms and excessive weed growth due in part to poor drainage, the major problems of coconut smallholdings are excessive numbers of palms per acre and frequent attack bty the rhinoceros beetle (Orcytes rhinoceros). Effects of poor drainage (as well as other contributing factors) are frequently visible in terms of tapering of growing points, yellowing of fronds, and reductions in size and number of nuts. In Sabak Bernam, where 91% of the farmers have excavated on-farm drains, only 19% of coconut holdings have access to connecting drains, and 50% of farmers report waterlogging as a serious problem.

5. The present level of husbandry on coconut smallholdings is quite low. The following practices are only incompletely followed and should be improved:

(a) correct excavation and adequate upkeep of on-farm drains and connections to the main drainage network as it is extended;

(b) correct stand of palms per acre to permit maximum yield of coconuts and adequate light for intercropping. This normally requires thinning of excess palms;

(c) removal of all competitive weeds, especially lallang (Imperata cylindrica) and bamboo grass (Ischaemum muticum). This should be accomplished by chemical means as slashing merely aggravates the nutrient uptake of these weeds;

(d) growing of suitable intercrops with adequate inputs.

/1 Benefits attributable to the Bukit Cheraka Scheme have not been included in the economic analysis of this project. ANNEX 3 Page 3

6. Over half of all labor expended on the coconut holdings is devoted to harvesting rather than cultivation, and half of the cultivation labor is spent slashing weeds. Harvesting is done every two months, often by groups of specialized laborers hired by the farmer or by contractors who buy the crop on the palm. An estimated 35% of production is both harvested and processed into copra by the farmers themselves.

7. The estimated present average annual yield of coconut smallholdings in the project area is .27 tons of copra per acre. This estimate is based on an estimated average of 48 bearing palms per acre, an average yield of 28 nuts per bearing palm per year, and a production of .447 lb (203 g) of copra per nut. Kuala Selangor smallholdings generally exhibit fewer than average palms per acre which is more than compensated for by a greater than average number of nuts per palm, with Sabak Bernam exhibiting the reverse characteristics. The average smallholder yield in the project area is slightly below the estimated average for Peninsular Malaysia, possibly due to the relatively poor drainage conditions and to the poor standard of husbandry, especially in the Sabak Bernam area.

8. The density of coconut plantings (75 palms/ac in Sabak Bernam) is clearly excessive, as the optimum density for tall coconuts alone is 55/ac, and 50/ac is recommended for situations where cocoa will be intercropped. Intended replacements for old palms contribute to the high densities, but in some holdings the original stand approximates 75/ac. Replacement palms frequently compete with the original palms and thinning would cause only a temporary (2-3 year) decline in yield. Three years after thinning the yield per acre would recover to its original level and subsequently a marginal yield increase might be registered. The cocoa intercrop would benefit most from thinning as yields are strongly correlated with the amount of incident sunlight up to 75% of full sunlight. It is estimated that cocoa yields could be 25% higher if stands were reduced to within the 50-55/ac range. This factor, and the fact that replanting now with Malayan Tall coconuts would be unjustifiable when much higher yielding MAWAseedlings will be available in 1980 (para. 2), leads to the recommendation that both the CSDS /1 and the DOA extension staff in the region should concentrate on the thinning and rehabilitation of existing smallholder coconut stands until MAWAmaterial is available, and should discourage replanting in the interim. A program of interplanting cocoa, improvement of on-farm drains, thinning of coconut stands, removal of weeds by use of herbicides rather than slashing, and both manual and chemical measures against the rhinoceros beetle would show quick and large results in increased production and incomes among the region's coconut farmers.

9. The Coconut Smallholders' Development Scheme (formerly the Coconut Rehabilitation/Replanting Scheme) is an ongoing program initiated by the Federal DOA in 1963 in an attempt to improve the smallholder coconut sector. The objectives are:

/1 Coconut Smallholders Development Scheme (see para. 9). ANNEX 3 Page 4

(a) to increase the productivity of coconut smallholdings by provision of monetary and material assistance to smallholders to replant and rehabilitate their holdings;

(b) to provide extension services to smallholders who participate in the Scheme;

(c) to assist smallholders to utilize their land for optimum production through cashi-cropping, intercropping or mixed farming; and

(d) to manage coconut nurseries to introduce high-yielding coconut varieties and suitable intercrops to smallholders.

10. The Scheme is financed from development funds, provisionally amount- ing to M$62.3 million under the Third Malaysian Plan. The Scheme makes phased grants to smallholders completely replanting their coconuts (for holdings with under 10 economically bearing palms per acre) or rehabilitating their holdings, which involves thinning to 55 palms per acre and mandatory intercropping. The terms and conditions and detailed breakdown of grants for rehabilitation and replanting are available as working papers. Government is currently consid- ering increasing the grant rates from M$600 per ac for replanting to M$900 and from M$300 per ac for rehabilitation to M$600 in view of the increase in costs of production since the inception of the Scheme.

11. Intercropping is a compulsory condition of the Scheme for the following reasons:

(a) Tall coconuts as a sole crop afford only a low income. To attain reasonable productivity of land intercropping is considered necessary.

(b) Replanted tall palms take about seven years to come into bearing and it is essential that during the immature period, participants should have other sources of income.

12. In deciding what intercrops should be compulsory for a given area, the following points are considered:

(a) soil suitability and climatic conditions of the area;

(b) experience and knowledge of the participants in growing the crop; and

The intercrops which satisfy the above conditions in Northwest Selangor are bananas, coffee and cocoa. In view of the success of cocoa intercropping, emphasis is given to this under the Scheme. ANNEX 3 Page 5

13. The Scheme is implemented in compact areas of between 2,000 and 5,000 acres. The most important criterion is drainage, others being soil suitability, accessibility,conditions of the holdings and pest (especiallyrhinoceros beetle) control considerations. The Scheme has operated in Northwest Selangor since 1974, following the initiation of drainage improvementsby DID. In 1974-76, about 100 ac were replantedunder the project, and 2,300 ac were rehabilitated, representingabout 3% of the smallholdercoconut area in Northwest Selangor. A proposed coconut replanting project, which would accelerate the replanting and rehabilitationprograms of CSDS in Northwest Selangor as well as in other coconut areas, is being prepared for Bank financing. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Chanpes in Main Tree Crop Distribution by Area ('000 acres)

Change 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1991 1996 2001 1978-2001

1. Smallholdings Rubber 9.5 9.4 9.3 9.2 9.1 9.0 8.9 8.7 8.5 8.3 8.1 7.9 7.7 6.6 5.1 3.6 -5.5 Oil palm 3.5 3.7 3.9 4.1 4.3 4.5 4.7 5.0 6.0 6.0 6.5 7.0 7.5 9.0 10.5 12.0 +7.7 Coconut 87.0 87.0 87.0 87.0 87.0 87.0 87.5 87.5 87.5 87.5 87.5 88.0 88.0 88.0 88.0 88.0 +1.0 Coffee (sole crop) 5.9 6.5 7.1 7.7 8.3 8.9 9.5 10.1 10.7 11.3 11.9 12.5 13.1 14.0 14.0 14.0 +5.7 Main tree crops 105.9 106.6 107.3 108.0 108.7 109.4 110.6 111.3 112.7 113.1 114.0 115.4 116.3 117.6 117.6 117.6 +8.9 2. Private estates Rubber 25.0 24.0 23.0 22.0 21.0 20.0 19.0 18.0 17.0 16.0 15.0 14.0 13.0 8.0 5.0 5.0 -16.0 Oil palm 43.0 44.0 45.0 46.0 47.0 50.0 53.0 54.0 55.0 56.0 57.0 58.0 59.0 64.0 67.0 67.0 +20.0 Coconut 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8 nil Cocoa (sole crop) 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 +0.4 Main tree crops 80.0 80.1 80.2 80.3 80.4 82.5 84.6 84.7 84.8 84.8 84.B 84.8 84.8 84.8 84.8 84.8 +4.4 3. Bukit Cheraka Settlement Scheme Oil palm - - - - 2.0 4.0 6.0 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 +5.5 Total main tree crops 185.9 186.7 187.5 188.3 191.1 195.9 201.2 203.5 205.0 205.4 206.3 207.7 208.6 209.9 209.9 209.9 +18.8

m. ¢ X

- t, ANNEX 3 Table 2

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Smallholder Rubber Production

Mature area Average yield (lb/ac) Production (tons) Year (acres) With Without With Without Incremental

1974 8,500 700 700 2,700 2,700 1975 8,500 700 700 2,700 2,700 1976 8,500 700 700 2,700 2,700 1977 8,500 700 700 2,700 2,700 1978 8,400 700 700 2,670 2,670 1979 8,300 700 700 2,630 2,630 1980 8,200 730 695 2,710 2,580 130 1981 8,100 770 685 2,830 2,520 310 1982 7,900 810 680 2,900 2,440 460 1983 7,700 850 675 2,970 2,360 610 1984 7,500 850 670 2,890 2,280 610 1985 7,300 845 665 2,800 2,200 600 1986 7,100 840 660 2,700 2,130 570 1987 6,900 830 655 2,600 2,050 550 1988 6,700 825 650 2,510 1,980 530 1989 6,500 815 645 2,400 1,900 500 1990 6,300 805 640 2,300 1,830 470 1991 6,000 795 635 2,160 1,730 430 1992 5,700 785 630 2,030 1,630 400 1993 5,400 775 625 1,900 1,530 370 1994 5,100 770 620 1,780 1,430 350 1995 4,800 765 615 1,670 1,340 330 1996 4,500 760 610 1,550 1,240 310 1997 4,200 760 610 1,450 1,160 290 1998 3,900 750 600 1,330 1,060 270 1999 3,600 740 590 1,210 960 250 2000 3,300 730 580 1,090 870 220 2001- 2008 3,000 725 575 990 780 210 ANNEX 3 Table 3

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Smallholder Oil Palm Production

Average yield Mature area (ac) (ton ffb/ac) Production (ton ffb) Year With Without With Without With Without Incremental

1974 2,400 2,400 5.0 5.0 12,000 12,000 1975 2,800 2,800 5.0 5.0 14,000 14,000 1976 3,200 3,200 5.0 5.0 16,000 16,000 1977 3,500 3,500 5.0 5.0 17,500 17,500 1978 3,700 3,700 5.0 5.0 18,500 18,500 1979 3,900 3,900 5.0 5.0 19,500 19,500 1980 4,100 4,100 5.2 5.0 21,320 20,500 820 1981 4,300 4,300 5.4 5.1 23,220 21,930 1,290 1982 4,500 4,400 5.7 5.3 25,650 23,320 2,330 1983 4,700 4,500 6.0 5.5 28,200 24,750 3,450 1984 5,000 4,650 6.0 5.5 30,000 25,575 4,425 1985 5,500 4,800 6.0 5.4 33,000 25,920 7,080 1986 6,000 5,000 5.9 5.4 35,400 27,000 8,400 1987 6,300 5,200 5.9 5.3 37,170 27,560 9,610 1988 6,600 5,400 5.8 5.2 38,280 28,080 10,200 1989 6,900 5,600 5.8 5.2 40,020 29,120 10,900 1990 7,200 5,800 5.7 5.2 41,040 30,160 10,880 1991 7,500 6,000 5.7 5.1 42,750 30,600 12,150 1992 7,800 6,200 5.6 5.1 43,680 31,620 12,060 1993 8,100 6,400 5.5 5.0 44,550 32,000 12,550 1994 8,400 6,600 5.4 4.9 45,360 32,340 13,020 1995 8,700 6,800 5.3 4.9 46,110 33,320 12,790 1996 9,000 7,000 5.3 4.8 47,700 33,600 14,100 1997 9,300 7,300 5.2 4.8 48,360 35,040 13,320 1998 9,600 7,600 5.2 4.8 49,920 36,480 13,440 1999 9,900 7,900 5.1 4.7 50,490 37,130 13,360 2000 10,200 8,200 5.1 4.7 52,020 38,540 13,480 2001- 2008 10,500 8,500 5.0 4.6 52,500 39,100 13,400 ANNEX 3 Table 4

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Smallholder Coconut Production

Mature area (acres) Average Yields (tons copra/acre) With prolect Without project Malavan talls MAWA hybrids Production (tons copra) Year Malayan tall MAWA hybrid Malayan tall MAWA hybrid With Without With Without With Without Incremental

1974 77,000 - 77,000 - .27 .27 - - 20,790 20,790 - 1975 78,500 - 78,500 - .27 .27 - - 21,195 21,195 - 1976 80,000 - 80,000 - .27 .27 - - 21,600 21,600 - 1977 81,500 - 81,500 - .27 .27 - - 22,005 22,005 - 1978 83,000 - 83,000 - .27 .27 - - 22,410 22,410 - 1979 84,500 - 84,500 - .28 .27 - - 23,660 22,815 845 1980 85,500 - 85,300 - .30 .28 - - 25,650 23,884 1,766 1981 86,000 - 85,500 - .32 .28 - - 27,520 23,940 3,580 1982 85,500 - 85,000 - .34 .29 - - 29,070 24,650 4,420 1983 85,000 - 84,500 - .35 .30 - - 29,750 25,350 4,400 1984 84,500 - 84,000 - .35 .30 - - 29,575 25,200 4,375 1985 84,500 500 83,500 500 .35 .30 ,05 .05 29,600 25,075 4,525 1986 83,500 1,000 82,500 1,000 .34 .29 .33 .30 28,720 24,225 4,495 1987 82,300 1,500 81,300 1,500 .34 .29 .48 .43 28,702 24,222 4,480 1988 81,100 2,500 80,100 2,000 .33 .29 .49 .45 27,988 24,129 3,859 1989 79,900 3,000 78,900 2,500 .33 .29 .68 .62 28,407 24,431 3,976 1990 78,700 3,500 77,700 3,000 .33 .29 .79 .72 28,736 24,693 4,043 1991 77,500 4,500 76,500 4,000 .33 .29 .80 .72 29,175 25,065 4,110 1992 74,900 5,700 73,900 5,200 .32 .29 .83 .75 28,699 25,331 3,368 1993 72,300 6,900 71,300 6,400 .32 .29 .88 .79 29,208 25,733 3,475 1994 69,700 8,100 68,700 7,600 .32 .29 .93 .84 29,837 26,307 3,530 1995 67,100 9,300 66,100 8,800 .32 .29 .98 .88 30,586 26,913 3,673 1996 64,500 10,500 63,500 10,000 .31 .28 1.02 .92 30,705 26,980 3,725 1997 59,500 12,500 58,500 12,000 .31 .28 1.00 .90 30,945 27,180 3,765 1998 54,500 14,500 53,500 14,000 .31 .28 1.01 .91 31,540 27,720 3,820 1999 49,500 16,500 48,500 16,000 .31 .28 1.03 .93 32,340 28,460 3,880 2000 44,500 18,500 43,500 18,000 .31 .27 1.07 .96 33,570 29,460 4,130 2001 39,500 20,500 38,500 20,000 .30 .27 1.04 .94 33,170 29,195 3,975 2002 39,500 23,500 38,500 23,000 .30 .27 1.07 .96 36,995 32,475 4,520 2003 39,500 28,000 38,500 27,500 .30 .27 1.03 .93 40,690 35,970 4,720 2004 39,500 34,000 38,500 33,500 .30 .27 .99 .89 45,510 40,210 5,300 2005 39,500 41,000 38,500 40,500 .30 .27 .97 .87 51,620 45,630 5,990 2006 39,500 48,500 38,500 48,000 .30 .27 .97 .87 58,895 52,155 6,740 2007 39,500 48,500 38,500 48,000 .30 .27 1.14 1.03 67,140 59,835 7,305 2008 39,500 48,500 38,500 48,000 .30 .27 1.24 1.12 71,990 64,155 7,835 ANNEX 3 Table 5

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Smallholder Coffee Production

Average yield Mature area (ac) (lb parchment/ac) Production (tons parchment) ar With Without With Without With Without Incremental

1974 5,000 5,000 400 400 907 907 - 1975 5,200 5,200 400 400 943 943- 1976 5,400 5,400 400 400 980 980 - L977 5,600 5,600 400 400 1,016 1,016 - ±978 5,900 5,900 400 400 1,070 1,070 - 1979 6,500 6,500 400 400 1,179 1,179 1980 7,100 7,100 450 440 1,449 1,417 32 1981 7,700 7,700 500 480 1,746 1,676 70 1982 8,300 8,300 550 520 2,070 1,957 113 1983 8,900 8,700 600 550 2,422 2,170 252 1984 9,500 9,100 600 550 2,585 2,270 315 1985 10,100 9,500 600 550 2,748 2,370 378 1986 10,700 9,800 600 550 2,912 2,444 468 1987 11,200 9,900 600 550 3,048 2,469 579 1988 11,600 10,000 600 550 3,156 2,494 662 1.989 12,400 10,000 590 540 3,318 2,449 869 1990 12,400 10,000 590 540 3,318 2,449 869 1991 12,800 10,000 580 530 3,367 2,404 963 1992 12,800 10,000 580 530 3,367 2,404 963 1993 12,800 10,000 575 525 3,338 2,381 957 1994 12,700 9,900 575 525 3,312 2,357 955 1995 12,700 9,900 565 515 3,254 2,312 942 1996 12,600 9,900 560 510 3,200 2,290 910 1997 12,600 9,900 555 505 3,171 2,267 904 1998 12,500 9,800 550 500 3,118 2,222 896 1999 12,500 9,800 540 490 3,061 2,178 883 2000 12,500 9,800 530 480 3,005 2,133 872 2G01- 2008 12,400 9,800 500 450 2,812 2,000 812 ANNEX 3 Table 6

MALAYSIA

NORTHIWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Smallholder Cocoa Production

Average yield Mature area (lb dry beans/ac) Production (tons) Year (ac) With Without With Without Incremental

1974 8,000 50 50 181 181 - 1975 11,000 50 50 249 249 - 1976 14,000 50 50 317 317 - 1977 17,000 100 100 771 771 - 1978 20,000 200 200 1,814 1,814 - 1979 23,000 300 300 3,129 3,129 - 1980 26,000 350 340 4,127 4,009 118 1981 29,000 400 375 5,261 4,932 329 1982 33,000 450 410 6,735 6,136 599 1983 38,000 500 450 8,617 7,755 862 1984 43,000 500 450 9,751 8,776 975 1985 48,000 500 450 10,884 9,796 1,088 1986 53,000 500 450 12,018 10,816 1,202 1987 57,000 500 450 12,925 11,633 1,292 1988 60,000 510 460 13,878 12,517 1,361 1989 63,000 510 460 14,571 13,143 1,428 1990 65,000 515 465 15,181 13,707 1,474 1991 67,000 520 470 15,800 14,281 1,519 1992 67,000 520 470 15,800 14,281 1,519 1993 67,000 525 475 15,952 14,433 1,519 1994 67,000 525 475 15,952 14,433 1,519 1995 67,000 520 470 15,800 14,281 1,519 1996 67,000 515 465 15,649 14,129 1,520 1997 67,000 510 460 15,497 13,977 1,520 1998 67,000 500 450 15,193 13,673 1,520 1999 67,000 490 440 14,889 13,370 1,519 2000 67,000 480 430 14,585 13,066 1,519 2001- 2008 67,000 475 425 14,433 12,914 1,519 ANNEX 3 Table 7

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Estate Rubber Production

Mature area Average yield (lb/ac) Production (tons) Year (acres) With Without With Without Incremental

1974 24,000 900 900 9,820 9,820 - 1975 23,000 900 900 9,410 9,410 - 1976 22,000 900 900 9,000 9,000 - 1977 21,000 900 900 8,590 8,590 - 1978 20,200 900 900 8,260 8,260 - 1979 19,200 900 900 7,850 7,850 - 1980 18,200 920 895 7,610 7,400 210 1981 17,200 960 885 7,510 6,920 590 1982 16,200 1,000 880 7,360 6,480 880 1983 15,200 1,050 875 7,250 6,050 1,200 1984 14,200 1,045 870 6,745 5,620 1,125 1985 13,200 1,040 865 6,240 5,190 1,050 1986 12,200 1,035 860 5,740 4,770 970 1987 11,200 1,030 855 5,240 4,350 890 1988 10,200 1,025 850 4,750 3,940 810 1989 9,200 1,015 835 4,240 3,490 750 1990 8,200 1,005 820 3,750 3,060 690 1991 7,200 995 805 3,260 2,630 630 1992 6,600 985 790 2,960 2,370 590 1993 6,000 975 775 2,660 2,110 550 1994 5,400 970 770 2,380 1,890 490 1995 4,800 965 765 2,110 1,670 440 1996 4,200 960 760 1,830 1,450 380 1997 4,200 955 755 1,820 1,440 380 1998 4,200 950 750 1,810 1,430 380 1999 4,200 940 740 1,790 1,410 380 2000 4,200 930 730 1,780 1,390 390 2001-2008 4,200 925 725 1,770 1,380 390 ANNEX 3 Table 8

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Estate Oil Palm Production

Average Yield Mature area (ac) (ton ffb/ac) Production (ton ffb) Year With Without With Without With Without Incremental

1974 37,000 37,000 6.5 6.5 240,500 240,500 - 1975 38,000 38,000 6.5 6.5 247,000 247,000 - 1976 39,000 39,000 6.5 6.5 253,500 253,500 - 1977 40,000 40,000 6.5 6.5 260,000 260,000 - 1978 41,000 41,000 6.5 6.5 266,500 266,500 - 1979 42,000 42,000 6.5 6.5 273,000 273,000 - 1980 43,000 43,000 6.7 6.6 288,100 283,800 4,300 1981 44,000 44,000 6.9 6.6 303,600 290,400 13,200 1982 47,000 45,000 7.2 6.7 338,400 301,500 36,900 1983 50,000 46,000 7.5 6.8 375,000 312,800 62,200 1984 51,000 47,000 7.6 6.9 387,600 324,300 63,300 1985 52,000 48,000 7.7 7.0 400,400 336,000 64,400 1986 53,000 49,000 7.7 7.0 408,100 343,000 65,100 1987 54,000 50,000 7.8 7.0 421,200 350,000 71,200 1988 55,000 51,000 7.8 7.0 429,000 357,000 72,000 1989 56,000 52,000 7.7 7.0 431,200 364,000 67,200 1990 57,000 53,000 7.7 7.0 438,900 371,000 67,900 1991 58,000 54,000 7.6 7.0 440,800 378,000 62,800 1992 58,600 54,600 7.6 7.0 445,400 382,200 63,200 1993 59,200 55,200 7.5 7.0 444,000 386,400 57,600 1994 59,800 55,800 7.3 6.8 436,500 379,400 57,100 1995 60,400 56,400 7.1 6.6 428,800 372,200 56,600 1996 61,000 57,000 6.9 6.4 420,900 364,800 56,100 1997 61,000 57,000 6.7 6.3 408,700 359,100 49,600 1998 61,000 57,000 6.5 6.2 396,500 353,400 43,100 1999 61,000 57,000 6.4 6.1 390,400 347,700 42,700 2000 61,000 57,000 6.3 6.0 384,300 342,000 42,300 2001- 2008 61,000 57,000 6.2 6.0 378,200 342,000 36,200 ANNEX 3 Table 9

MALAYSIA

NORTHWESTSELANGOR INT]EGRATEDAGRICULTURAL DEVELOPMENTPROJECT

Estate Coconut Production

Average yield (tons copra/ac) Mature area (ac) Malayan tall MAWA hybrid Production (tons copra) Year Malayan tall MAWA hybrid With Without With Without With Without Incremental

1974 10,800 - .54 .54 - - 5,832 5,832 - 1975 10,600 - .54 .54 - - 5,724 5,724 - 1976 10,400 - .54 .54 - - 5,616 5,616 - 1977 10,200 - .54 .54 - - 5,508 5,508 - 1978 10,000 - .54 .54 - - 5,400 5,400 - 1979 9,800 - .55 .54 - - 5,390 5,292 98 1980 9,400 200 .56 .54 .10 .10 5,284 5,096 188 1981 9,000 400 .:57 .54 .50 .47 5,330 5,048 282 1982 8,600 600 .158 .53 .73 .69 5,426 4,972 454 1983 8,200 800 .60 .53 .90 .86 5,640 5,034 606 1984 7,800 1,000 .60 .53 1.04 .99 5,720 5,124 596 1985 7,400 1,400 .60 .53 1.01 .96 5,854 5,266 588 1986 7,000 1,800 .'59 .52 1.12 1.06 6,146 5,548 598 1987 6,400 2,400 .59 .52 1.13 1.07 6,488 5,896 592 1988 5,800 3,000 .58 .52 1.21 1.15 6,994 6,466 528 1989 5,200 3,600 .58 .52 1.28 1.22 7,624 7,096 528 1990 4,600 4,200 .57 .52 1.36 1.29 8,334 7,810 524 1991 4,000 4,800 .57 .52 1.43 1.36 9,144 8,608 536 1992 3,600 5,200 .56 .51 1.56 1.48 10,128 9,532 596 1993 3,200 5,600 .56 .51 1.65 1.57 11,032 10,424 608 1994 2,800 6,000 .55 .51 1.72 1.63 11,860 11,208 652 1995 2,400 6,400 .55 .51 1.77 1.68 12,648 11,976 672 1996 2,000 6,800 .55 .51 1.81 1.72 13,408 12,716 692 1997 1,600 7,200 .54 .50 1.85 1.76 14,184 13,472 712 1998 1,200 7,600 .54 .50 1.87 1.78 14,860 14,128 732 1999 800 8,000 .54 .50 1.89 1.80 15,552 14,800 752 2C00 400 8,400 .53 .49 1.90 1.81 16,172 15,400 772 2001 - 8,800 - - 1.91 1.81 16,808 15,928 880 2002 - 8,800 - - 2.01 1.91 17,688 16,808 880 2003 - 8,800 - - 2.07 1.97 18,216 17,336 880 2004 - 8,800 - - 2.11 2.00 18,568 17,600 968 2005 - 8,800 - 2.15 2.04 18,920 17,952 968 2006 - 8,600 - - 2.18 2.07 18,748 17,802 946 2007 - 8,400 - - 2.20 2.09 18,480 17,556 924 2008 - 8,200 - 2.20 2.09 18,040 17,138 902 MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Estate Cocoa Production

Average yield (lb dry beans/acre) Mature area (acres) With project Without project Production (tons) Year Sole crop Intercrop Sole crop Intercrop Sole crop Intercrop With Without Incremental

1974 1,200 2,900 350 650 350 650 1,050 1,050 - 1975 1,300 3,200 400 700 400 700 1,250 1,250 - 1976 1,400 3,500 400 750 400 750 1,450 1,450 - 1977 1,500 3,800 500 775 500 775 1,680 1,680 - 1978 1,600 5,000 625 825 625 825 2,330 2,330 - 1979 1,700 6,000 750 875 750 875 2,970 2,970 - 1980 1,800 7,000 950 950 900 900 3,800 3,600 200 1981 1,900 8,000 1,000 960 940 900 4,350 4,080 270 1982 2,000 9,000 1,050 970 980 900 4,920 4,570 350 1983 2,000 9,000 1,100 980 1,020 900 5,010 4,610 400 1984 2,000 9,000 1,150 990 1,060 900 5,100 4,650 450 1985 2,000 9,000 1,200 1,000 1,100 900 5,180 4,680 500 1986 2,000 9,000 1,190 990 1,090 890 5,130 4,630 500 1987 2,000 9,000 1,180 980 1,080 880 5,080 4,580 500 1988 2,000 9,000 1,170 970 1,070 870 5,030 4,530 500 1989 2,000 9,000 1,160 960 1,060 860 4,980 4,480 500 1990 2,000 9,000 1,150 950 1,050 850 4,930 4,430 500 1991 2,000 8,000 1,140 940 1,040 840 4,450 4,000 450 1992 2,000 8,000 1,130 930 1,030 830 4,410 3,950 460 1993 2,000 8,000 1,120 920 1,020 820 4,360 3,910 450 1994 2,000 8,000 1,110 910 1,010 810 4,320 3,860 460 1995 2,000 8,000 1,100 900 1,000 800 4,270 3,810 460 1996 2,000 8,000 1,090 890 990 790 4,230 3,770 460 1997 2,000 8,000 1,080 880 980 780 4,180 3,720 460 1998 2,000 8,000 1,070 870 970 770 4,140 3,680 460 1999 2,000 8,000 1,060 860 960 760 4,090 3,630 460 2000 2,000 8,000 1,050 850 950 750 4,050 3,590 460 2001- 2008 2,000 8,000 1,050 850 950 750 4,050 3,590 460

m X

0- ANNEX 4 Table 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Tanjong Karang Irrigation Works

Item Quantity Unit Rate Costs (M$) (M$'000)

1. Sg. Bernam headwork improvement - L.S. - 500

2. Main canal (a) Earthwork 25 Mile 10,000 250 (b) Structures (spillway modification, structure additions) - L.S. - 1,000

Subtotal 1,250

3. Distributary canals (a) Earthwork /a 18,786 Acre 4.24 80 (b) Canal lining /a 18,786 Acre 196.50 3,691 (c) Turnouts to secondary canals /a 2 No. 30,000 60 (d) Turnouts to tertiary canals /a 4 No. 20,000 80 (e) Canal end controls /a 4 No. 19,000 76 (f) Structural tertiary canals 42,902 Acre 784.84 33,671 (g) Turnouts to structural tertiaries 160 No. 15,000 2,400 (h) Checks on structural tertiaries 270 No. 6,000 1,620 (i) 1-1/2" dia. syphons to fields 14,180 No. 20 284

Subtotal 41,962

4. Drainage (a) Earthwork 48,892 Acre 20.68 1,011 (b) Field drain inlets 16,300 No. 50 815 (c) Checks and road culverts 237 No. 17,000 4,029 (d) Drain end controls 4 No. 19,000 76 (e) Modification or removal of existing structures - L.S. - 250 (f) Syphon structures 10 No. 25,000 250

Subtotal 6,431

5. Roads and bridges (a) New laterite surfacing 126 Mile 15,000 1,890 (b) Upgrading and rehabilitating 163 Mile 5,000 815 (c) Laterite on 4' drain paths 169 Mile 6,000 1,014 (d) Bridges 20 No. 3,000 60 (e) Light wooden bridges 17 No. 1,700 29

Subtotal 3.808

Total, Tanjong Karang irrigation works 53,951

6. Engineering and supervision, at 8% of cost of civil works 4,314

7. Land acquisition 177 Acre 4,000 708

Total cost of Taniong Karang irrigation component 58,973

/a Sg. Burong, Sekinchan and Sg. Leman area. ANNEX 4 Table 2

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Tree Crop Drainage Works

Item Quantity Unit Rate Costs (M$) (X$ 000)

1. Sabak Bernam & coastal strip (a) Coastal/river bund upgrading 90 Mile 8,000 720 (b) Coastal/river bund reconstruction 8 Mile 20,000 160 (c) Tidal control gate structures 20 No. 160,000 3,200

Subtotal 4,080

2. Sabak Bernam & coastal strip (smallholders area) (a) Main drains 95 Mile 16,000 1,520 (b) Secondary drains 290 Mile 11,700 3,393 (c) Feeder drains 450 Mile 1,450 653 (d) Farm roads 390 Mile 8,750 3,413 (e) Bridges 160 No. 5,000 800 (f) Culverts with controls 350 No. 5,000 1,800 (g) Culverts without controls 325 No. 3,000 975

Subtotal 12.554

3. Sabak Bernam (estates area) (a) Main drains 12 Mile 16,000 192 (b) Bridges 8 No. 5,000 40

Subtotal 232

4. Kuala Selangor (a) Coastal bund upgrading 57.5 Mile 8,000 460 (b) Costal bund reconstruction 12 Mile 20,000 240 (c) Tidal control gate structures 10 No. 160,000 1,600

Subtotal 2,300

5. Kuala Selangor (smallholders area) (a) Main drains 70 Mile 16,000 1,120 (b) Secondary drains 220 Mile 11,700 2,574 (c) Feeder drains 340 Mile 1,450 493 (d) Farm roads 290 Mile 8,750 2,537 (e) Bridges 120 No. 5,000 600 (f) Culverts with controls 270 No. 5,000 1,350 (g) Culverts without controls 240 No. 3,000 720

Subtotal 9*394

6. Kuala Selangor (estates area) (a) Main drains 55 Mile 16,000 880 (b) Bridges 37 No. 5,000 185 (c) Pump house, structure - L.S. - 200 (d) Pump house, mechanical - L.S. - 470

Subtotal 1.735

Total, tree crop drainage works 30.295

7. Engineering and supervision, at 8% of civil works 2,430

Total cost of tree crop drainage component 32,725 ANNEX 4 Table 3

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Drainage and Irrigation Personnel Requirements

Project Existing Additional Monthly Annual Total annual Function requirement staff requirement salary salary salary costs (M$) (M$'000) (M$'000)

Planning, Design & Drawing Senior resident engineer (S.S.G.) 1 - 1 2,400 28.8 Resident engineer (timescale) 6 - 6 1,600 115.2 Technicians (S.G.) 7 - 7 1,000 84.0 Technicians (timescale) 28 - 28 700 235.2 Junior technicians (draftsmen) 10 - 10 400 48.0 Tracers 4 - 4 300 14.4 Quantity surveyors I - 1 1,500 18.0 543.6

Construction Staff Chief resident engineer (S.S.F.) 1 - 1 2,600 31.2 Deputy chief resident engineer (S.S.G.) I - 1 2,400 28.8 Senior resident engineer (S.S.G.) 4 - 4 2,400 115.2 Resident engineer (timescale) 15 - 15 1,600 288.0 Technicians (special grade) 21 - 21 1,000 252.0 Technicians (timescale) 84 - 84 700 705.6 Junior technicians (special grade) 11 - 11 800 105.6 Junior technicians (timescale) 44 - 44 400 211.2 Quantity surveyor I - 1 1,500 18.0 Executive officer I - 1 1,500 18.0 Chief clerk 1 - 1 1,000 12.0 Financial clerk 3 - 3 600 21.6 General service clerks 3 - 3 600 21.6 Contract clerks 4 - 4 600 28.8 Stenographer 1 - 1 800 9.6 Typists 3 - 3 400 14.4 Telephone operator 1 - 1 300 3.6 Office boys 3 - 3 200 7.2 I.M.G. 30 - 30 250 90.0 1,982.4

Operation and Maintenance Senior district engineer ("F") I - 1 2,600 31.2 Deputy engineer ("G") 1 1 - 2,400 28.8 D & I engineer (timescale) 3 2 1 1,600 57.6 Technical assistant (superscale) 2 2 - 1,800 43.2 Technical assistant (timescale) 8 8 - 1,000 96.0 Plant superintendent 2 1 1 1,000 24.0 Chief irrigation inspector 1 1 - 1,500 18.0 Senior irrigation inspector 2 1 1 1,000 24.0 Irrigation inspectors 10 4 6 700 84.0 Irrigation overseer 20 16 4 400 96.0 Drainage technician (superscale) 2 - 2 1,500 36.0 Drainage technician (special grade) 4 1 3 1,000 48.0 Drainage technician (timescale) 12 6 6 700 100.8 Drainage overseer 36 15 21 400 172.8 Chief storekeeper 1 1 - 1,000 12.0 Storekeepers 2 1 1 700 16.8 Chief clerk 1 1 - 1,000 12.0 Clerks 8 6 2 800 76.8 Typists 4 4 - 500 24.0 Technicians (special grade) 1 1 - 1,000 12.0 Technician (timescale) 6 6 - 800 57.6 Draftsmen 2 2 - 500 12.0 Tracer I I - 400 4.8 Office boys 3 3 - 200 7.2 I.M.G. 420 280 140 250 1,260.0 2,324.4 (of which 814.8 is incremental) MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Equipment and Vehicle List and Capital and Operating Costs

Existing equipment Additional plant Kuala Tanjong Sabak Additional Unit Total Operating costs Selangor Karang Bernam requirement /a Total cost costs /a Unit /b Annual /c Total annual increment /d -- (M$'000) (M/r)(M$000) ------

Equipment (O&M)

1. Excavators, 3/4 cu yd 5 17 12 6 40 100.0 600.0 20.00 36.0 216.0 2. Tractors and trailers 1 11 5 10 27 65.0 650.0 3.50 6.3 63.0 3. Graders, 120 hp - 3 2 3 8 80.0 240.0 14.00 25.2 75.6 4. Front-end loaders - 1 1 3 5 75.0 225.0 10.50 18.9 56.7 5. Vibrating roller, 5 tons - 1 1 2 4 40.0 80.0 4.50 8.1 16.2 6. Flat trucks, 6 tons with hydraulic cranes - 3 - 3 6 40.0 120.0 10.00 18.0 54.0 7. Tippers, 4 cu yd - 3 - 6 9 36.0 216.0 7.40 13.3 79.8 8. Bulldozers, 115 hp - I - - 1 - - 16.50 29.7 -

Subtotal 2,131.0 561.3

Vehicles M$/mile

For O&M staff:

9. 4 wd long wheel base station wagons 1 4 3 8 16 16.2 129.6 0.338 5.1 40.8

Total O&M equipment and vehicles 2,260.6 602.1

For construction staff:

10. Saloon station wagons - - - 2 2 12.5 25.0 0.275 4.1 8.2 11. 4 wd long wheel base station wagons - - - 3 3 16.2 48.6 0.338 5.1 15.3 12. 4 wd long wheel base pick-ups - - _ 5 5 14.0 70.0 0.338 5.1 25.5

Total construction staff vehicles 143.6 49.0

Total equipment and vehicles 2.404.2 la To be procured under the project. Proposed list is subject to revision during project implementation.

/b Unit operating costs include fuel and lubricants, repairs, tires but no depreciation. Operators' and drivers' wages are included in personnel costs (Table 3).

/c Annual operating costs based on 1,800 hours for equipment and 15,000 miles for vehicles. Equipment life - 10,000 hours; vehicle life - 100,000 miles.

/d Incremental operating costs refer to additional equipment and vehicles financed by project only. a. ANNEX 4 Table 5

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Incremental Operation and Maintenance Costs

Costs (M$'000)

Incremental equipment and vehicle operations /a 602.1

Incremental staff salaries /b 814.8

Materials /c 251.2

Kuala Selangor drainage pump:ingcosts 18.0

Total drainage and irrisgationO&M annual costs 1,686.1

Estimated laterite supply costs for road maintenance /d 484.5

Total incremental O&M annual costs 2,170.6

Allocation of incremental O&M costs:/e

Drainage and irrigation works Roads …----- M$/acre ------

Tanjong Karang irrigation area 15.10 2.95 Sabak Bernam and coastal belt drainage areas 7.34 2.77 Kuala Selangor drainage area /f 3.60 1.21

/a Table 4. tb Table 3.

/c Estimated at 2% of capital costs of structures annually.

/d Estimated at M$500/mile for 969 miles of various classes of road (see Tables 1 and 2). Assumes improved maintenance of currently existing roads.

/e 50% of equipment, vehicle, and staff costs allocated to Tanjong Karang; balance of such costs allocated between drainage areas on basis of value of works. Materials and laterite costs allocated on basis of value of structures and road mileage.

/f Includes drainage pumping costs. ANNEX 4 MALAYSIA Figure 1 NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT TANJONG KARANG IRRIGATION AREA TYPICAL LAYOUT

Main Canal and Roadway

ConstantHead Orifice Turnouts

660' 660 ' 660- ' 660- ' 660- '

New flumes b

6" Pipe Drains

------. _i"______1/2" Siphon New Drain With 4' Path

1%"Siphon Typical 3 Acre Farm Lots

Existing Drain, Cleaned; 10' Roadway

*Existing CanaIConverted to Drain; 10' Roadway New flume

Existing Gated/OverflowChecks, Rehab tated as Required

Check

Existing 10' road Gated Checks

V/2Mile

WorldB..k-17618 AN4NEX4 Figure 2

MALAYSIA NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT Scheduleof Implementationof Civil Works

YEAR 1977 19781991819192 PARTICULARS ACTIVITY

SABAK EERNAM DRAINAGE WVORKS PLANNING SURIVEYS LAND ACQUISITION BLOCK I DESIGN CONTRACT TENDER, EVALUATION CONSTFRUCTION ------~- ~~~~~~~~~~~~~~PLANNING- -- 1 II--

COSTRUCTIO

BLOCK It LAND ACQUISITION

BLOCK III ~~~~DESIGN CONTRACT TNE.EAUTO CONSTRUCTION

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WOrldB.nk- 17696 ANNEX 5 Page 1

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

AgriculturalServices Component

A. EXISTING SERVICES

Background

1. Several agriculturalagencies are active in the project area. They may be divided into two broad categories- those controlledalmost exclusively at Federal level and those in which the State plays a major role. Agencies in the first category include the following:

(a) LPN, Lembaga Padi dan Beras Negara, or the National Padi Authority, which is responsible for controllingthe marketing and processing of rice, and maintaining a national stockpile.

(b) FOA, the Farmers' OrganizationAuthority, which is responsible for amalgamatingrural cooperativesinto viable area Farmers' Organizations,which could effectivelyorganize input supply, credit, processing, storage and marketing operations for large numbers of smallholders,and eventually be self-financing.

(c) BPM, the Bank PertanianMalaysia, which is the key governmentsource of agriculturalcredit for production,inputs, equipment,and land purchase.

(d) MARDI, the Malaysian AgriculturalResearch and Development Institute, which is responsibleat the national level for all agricultural research,with the exception of rubber.

2. The Department of Agriculture (DOA) operates under a two-tier system. The State DOA is responsiblefor agriculturalextension and state development programs. The Federal Department of Agricultureprovides technicalassistance and supplementaryfinance and staff, mainly through specializedtechnical support units located in various States which assist the extensionworker in such fields as plant protection, crop production,and soil analysis,and through Federal developmentand subsidy programs, e.g., for coconut replanting and rehabilitation,plant protection,and other crop subsidy programs. ANNEX 5 Page 2

3. The Drainage and IrrigationDepartment (DID) is more centralized than the DOA under the provisions of the Malaysian constitution. Nearly all development expenditureby DID is financed by the Federal Government, and Federal DID exercizes technical control over State DIDs. Operation and maintenance of DID works is a State responsibility,however. DID, like most of the key agencies serving the farmer, comes under the jurisdictionof the Ministry of Agriculture. Both DID and DOA are line departmentswithin the Ministry, while BPM, FOA, FAMA and MARDI also report to the Ministry. The current status of agricultural services relevant to irrigation areas is discussed in some detail in IBRD Report No. 1523-MA. The descriptionprovided here is thus restricted to a summary of the status within the project area.

The Department of Agriculture

4. Agriculturalextension within the states is traditionallya state responsibilityunder the direction of the State Director of Agriculture. The State employs a basic number of staff and provides infrastructurefacilities and operating costs. The Federal Department provides staff and facilities to run technicalsupport units for crop production, crop protection,soils, and farm mechanization. In addition, the Education and Training Branch provides training for agriculturaltechnicians, and the Extension and Advisory Branch provides technicalinformation on a national basis. In Selangor, there is currently no State Extension Officer, and only one AgriculturalOfficer (AO), three AgriculturalAssistants (AAs) and a small number of AgriculturalTechni- cians (ATs) in the Federal Support Units to service the whole state. In practice, there is currently no subject matter specialist in padi or tree crops, the main crops in the project area, who can provide technicalsupport on a full-time basis to field extension personnel.

5. Extension services within the project area are supervised by an AO stationed at Kuala Selangor. He is assisted by one AA at Sungei Besar, who superviseswork in Sabak Bernami,and a second stationed at Tanjong Karang, who is responsiblefor Kuala Selangor District. The AAs are assisted by 20 ATs who are expected to service 32,000 farm families at a ratio of 1 AT to 1,600 farm families. As the ATs are also responsiblefor regulatory duties, the ratio is much wider in practice, and the ATs contact very few farmers in their area of operation. In addition, there are two AAs and five ATs involved in seed production and technical support work and 1 AA and three ATs running a Farm MechanizationTraining course for young farmers on tractor operation and maintenance. The Department operates three field stations in the area for seed and planting material production,at Sungei Burong, Jaya Setia and Parit Umpat.

6. The Federally-managedCoconut SmallholdersDevelopment Scheme (CSDS) program in the project area is supervised by one AO at Klang who supervises ten ATs servicing the Klang and Kuala Selangor Districts. One AA and six ATs located at the Sungei Besar District Office service the Sabak Bernam area. ANNEX 5 Page 3

These officers process coconut reprocessingapplications and inspect properties for the CSDS, and arrange for the supply of cash, inputs and seedlings provided under the program. Extension is left to the local ATs, as CSDS workers may only see a farmer twice a year, and move on once the program is completed on his property. Under the coconut rehabilitationproject now being prepared, an additional five ATs would be provided to service the Sabak Bernam area.

7. In summary, most DOA units in Selangor, both Federal and State, are understaffed. Many of the staff in the project area are relatively young and inexperienced,and under present circumstances,have little impact on the farming community. There is an urgent need to increase numbers, improve competence through regular training and technical support, and introduce a more effective method of operation, which will ensure that the majority of farmers receive regular contact with the service. The recently initiatedNational Extension Project (Loan 1493-MA) will provide some additional ATs and some training. However, there would still be insufficientATs to service the project area adequately,and a need to strengthen the technical support units.

The Drainage and Irrigation Department

8. The State Director of Drainage and Irrigation is responsible for operation and maintenance of the irrigation and drainage systems in the project area. A senior drainage and irrigation engineer supervises local activities. The area is currently divided into four operational zones - Sungei Besar, which covers irrigation and drainage works in Sabak Bernam; Tanjong Karang, which covers the balance of the irrigation area and drainage works on the coast; and two zones which cover the balance of drainage works in Kuala Selangor. Cur- rently, the field staff available to supervise O&M in the irrigated padi area comprise 1 chief inspector, 1 senior inspector, 4 inspectors, 14 overseers and 22 gatekeepers. The O&M staff in the drainage areas comprise: 2 technical assistants, 4 technicians,30 overseers, and 21 gatekeepers. The service is currently understaffed,and available staff do not receive adequate supervision and technical support or regular in-service training. It is very difficult to retain good personnel at the inspector and technical assistant level, due to the low pay and status in relation to the responsibilityof the position. An added problem is the fact that this level of field staff bears the brunt of farmers' complaintswhen water supply or drainage problems arise.

9. There are District Drainage Boards and Irrigation Committees to make recommendationson water and drainage charges, to discuss priorities for improvements in works and operations, and to set irrigation schedules. There is also an Ordinance setting out rules governing the use and abuse of irrigation and drainage facilities. According to local reports, the District Drainage Boards rarely meet, and the Irrigation Committee does little more than set the dates for water supply. In essence, there is no effective system to bring the DID field staff into regular contact with the end-users, and lack of communicationand understandingis clearly a problem. With the existing physical inadequaciesof the system and political pressures, it is extremely difficult for irrigation staff to enforce water supply and drainage regulations. The ANNEX 5 Page 4

above are serious matters, and potential benefits from improving the physical status of the systems will be limited unless steps are taken to increase the number and standard of O&M field staff, improve the operationalsystem, raise the status of field staff, and organize the farmers into effectivewater-user and drainage groups, with effective representationon active and effective Drainage Boards and Irrigation Committees. Above all, DID must have the full backing of District and State Government in the enforcementof basic system operation rules.

The Farmers' OrganizationAuthority

10. - The Selangor FOA office is currently located in Kuala Lumpur, some 90 km from the project area. Headquartersstaff comprise a State Director, a Deputy, an administrativeofficer, two officers for developmentand organization, a State Auditor, two admninistrationassistants, eight audit assistants, and six clerical staff. The Project area is currently served by three Farmers' Development Centers (FDCs) located at Kuala Selangor,Tanjong Karang and Sungei Besar. These are staffed by 3 General Managers (AA level), 15 field officers (AT level), 3 clerks, I typist:and a driver, employed by FOA; and a total of 19 laborers, storekeepers, drivers and cashiers, employed by the Farmers' Organizations (FOs) based in the FDCs. There are currentlyabout 76 Small AgriculturalUnits (SAUs) - small groups of farmers which are subdivisionsof, and are served by, the FDCs, and paid-up FO members total about 7,000 or 22% of farmers in the area. In addition there are 66 farmers' cooperatives in the area. These comprise 28 multipurpose, 15 rice milling, 2 rubber and pineapple, and 21 credit cooperatives, with a total membership of about 8,500. As many farmers are members of both the cooperativesand FOA, it is difficult to assess the total farmer membership in cooperativeactivity. The process of amalgamating the cooperativeswith the FDCs to form unified FOs is still under way. The FDCs and cooperativesare active in supplying inputs, credit and planting materials, (e.g., cocoa and coffee seedlings),rice milling, rice marketing, and in recent years have become involved in the marketing and processing of cocoa beans.

11. Key problems facing the FOA and individual FOs are: difficulties in successfully amalgamating many cooperatives into one viable organization; the relatively low management skills of the cooperative member staff; the general lack of business skills among the farmers, and their lack of responsibility in handling credit. Local FOA staff are relatively young and inexperienced, and their efforts are spread too thinly over too many activities. They receive very little training before beLng placed in the field, and do not receive sufficient day-to-day guidance from senior experienced staff. As a result, the management and supervision of cooperative activities leaves much to be desired and does not instill confidence among the farming community. Quite recently, there have been serious problems with the misuse of cooperative funds by cooperative committee members, and many farmers, while still members, have not recently participated in credit:programs, through fear of becoming involved in legal action. Under these circumstances, the prospects of expanding and strengthening FO membership and activities are poor, unless systematic changes are instituted. Some of the more obvious measures are as follows: ANNEX 5 Page 5

(a) Restriction of activities to a few well-defined revenue earning lines of operation that can be handled by the level of farmer and FOA personnel available, e.g., input supply.

(b) Promotion of these activities to serve all farmers, i.e., members and nonmembers, on an equitable and efficient basis.

(d) Adoption of an improved organization and management system that provides for better use of FOA manpower and continuous supervision and in-service training for field staff.

Currently, there is no financial provision for training of farmer leaders and field staff within the State. This is a serious omission, as regular local on-job training to improve the skills of grass roots staff in performing their day-to-day tasks is a prerequisite to improving management.

Bank Pertanian Malaysia

12. The Bank Pertanian Malaysia (BPM) maintains one Branch Office at Tanjong Karang to service Kuala Selangor and Sabak Bernam. The staff comprise a branch manager, one credit supervisior (AS level) and two credit assistants (AT level) to supervise credit; a finance supervisor (AA) and a bookkeeper (AT), plus four clerical staff and a driver. The key activity has been short- term production loans for padi. Loans for tractors and equipment, land purchase and other crops constitute only a small part of the business. For the padi production credit scheme, the BPM operates through Local Credit Centers (LCCs), such as FOs and cooperatives, and through groups of padi farmers (Bank Pertanian Credit Groups). Each LCC usually has its own credit officer responsible for the disbursement and recovery of loans. Normally, no security is required of the farmer, and the LCC recommends the farmer for BPM loans on the basis of character, credit standing in the community, and his ability to repay the loan from padi sales. However, in principle, the LCC is required to provide security before being registered with the Bank, and has overall responsibility for repayment. Farmers pay 4.25% for a six-month loan, plus a penalty charge of an additional 1% per month for overdue payments. The LCC receives 1.25% interest as a service fee, and BPM receives 3% interest per half year. In 1976, farmers could borrow up to M$462 (US$188) per ha to cover cultivation, transplanting, fertilizers, and insecticides. Credit coupons are issued for inputs which can be obtained from the FOs or registered stockists. Cash is provided for cultivation and transplanting.

13. The padi credit scheme reached a peak in 1973 when about 2,400 farmers (20% of padi farmers) took credit each season. In the first season of 1976, only 286 farmers, or about 2% of farmers, took loans. On the average, farmers used only 43% of the total value of each loan approved. ANNEX 5 Page 6

Most of the loan funds used were taken as cash for cultivationand transplanting, with much smaller amiountsutilized for urea and insecticides. The dramatic recent decline in the BPM padi credit program was due largely to personal scandals, but there also had bieenrepayment problems, which largely reflected the poor performance of the LCCs in disbursing and recouping credit. Recovery of loans was made difficult by the turnover of LCC credit officers and difficulties in identifying loanees. BPM is now restrictingcredit services to two FOs, four cooperativesand two private retailing businesses,who appear competent to handle credit.

14. In summary, there is very little institutionalcredit reaching the farmers at the present time. The basic problems may be summarized as follows. The average farmer has little commercial orientation,and under the present system there is no group or social pressure to encourage a responsible attitude towards credit. In general terms, the farmers have become accustomed to governmenthandouts and feel that political pressure will work in their favor in case of default on a commitment. To many, the BPM or FO is a remote governmentorganization to which they feel little responsibility.There is currently no close supervisionat field level, with the result that credit is often used for nonproductivepurposes, and profits from the sales of produce are often used to buy consumer goods in preference to repaying a loan. A concerted effort is required by BPM, the DOA extension service and the FOA, to organize the farmers better and to provide intensive education on credit, business and technicalmatters, in order that a credit program can be successfully developed. A key feature of any program should be the formation of small farmers' groups, with responsibilityfor disbursement,use and repayment of credit, vested in the farmers' group and its elected leader. Penalties for default and improper use of credit should affect the whole group, so that members feel a responsibilityto the group and its elected leader.

MARDI

15. MARDI operates a 16 ha field station at Tanjong Karang. About 7 ha is devoted to irrigated padi, and the remainder is under coconut and buildings. A resident manager and fLeld staff maintain the station and field trials, under the direction of senior research personnel located at the MARDI headquarters in Serdang. In addition, there is a Project Development Officer stationed at Klang, who is responsible to the Cropping Systems Unit at Serdang for the study and developmentof cropping systems in the area. He is assisted by one research assistant and one junior technician. The field staff have programs on padi, vegetables, cocoa and coffee. In the project area, the field program covers padi, vegetables and cocoa. This adaptive field research commenced in 1974, and is based on selecting progressive farmers and checking improved varieties and management techniquesunder farm conditions. The MARDI personnel supply inputs, supervise management and measure yield and profitability,at the end of the season. The unit currently runs about 46 field plots and has achieved some outstandingyields with padi in the Tanjong Karang irrigation area. In addition, a MARDI economist from Serdang is studying costs, yields and returns on a sample of padi farms located on alluvial, organic muck and peat soils in Sawah Sempadan. These ANNEX 5 Page 7

programs are highly relevant to the needs of the extension service and the project area. Currently, the main contact between the MARDI field personnel and the extension service is via the State AgriculturalResearch Develop- ment and Extension Committee (SARDEC),chaired by the State Director of Agriculture. At these meetings, the MARDI personnel report on their projects' results, and discuss field research requirementsand recommendationswith the DOA. Unfortunately,there is not sufficient staff at project area level. Nevertheless,the present program provides an excellent basis for expanding cooperativeadaptive field trials jointly run by local MARDI and DOA staff.

The National Padi Authority, LPN

16. The LPN is formally empowered to purchase all padi in the project area. It currently operates five storage and milling facilities, four of which are equipped with mechanical driers in addition to drying floors. Total storage capacity is 44,000 tons and rated milling capacity is 26 tons per hour. The rated drying capacity of the drying facilities is about 80 tons per hour, but since much of the padi received is above 20% moisture content, actual capacity is about 50 tons per hour. In addition, LPN permits the operation of about 46 small licensed cooperativemills and about 120 small unlicensed mills in the area. Currently, the LPN buys most of its padi during two three-monthseasons and mills continuouslythroughout the year. Padi is purchasedvia 30 cooperativesand 2 FOs. LPN provides advance funds, gunny bags and padi graders to the agents, collects the padi, and pays M$.40 per pikul 11 commission to the agents. Currently, the LPN handles about 65% of the crop. Key problems are the high moisture content and trash in the padi. Although the LPN has a grading system, with deductions for moisture content and impurities,most farmers appear to receive about M$27.00 per pikul for wet padi marketed straight from the field, and hence, there is no incentive for them to winnow and dry the crop. Naturally, most of the wetter and lower grade padi is directed to LPN, which creates problems with drying in the August-Octoberperiod. Substantial improvementsin padi drying could be made with simple concrete drying floors located at FDCs.

Coordinationof Activities

17. There is very little coordinationof activities among the agencies servicing the project area. The only viable coordinatingmechanism at present is the SARDEC at State level, which is largely restricted to senior staff. In practice, each agency plans and implements its own program inde- pendently, although DID, DOA and MARDI have combined efforts successfullyto run the 32 ha pilot padi project at Sekinchan. However, this type of coordination is required on a broad scale if individual agencies are to have any major impact in solving current social, economic, technical and management problems prevalent in the area, and are to provide the farming community with an effective agriculturalsupport service.

/1 Equivalent to US$2.71/metricton. ANNEX 5 Page 8

Agricultural Service Project Formulation

18. By national standards, levels of yield and production are quite high in the project area, especially in the irrigated padi areas. There is little scope for increasing production and incomes by expanding area, as most of the better agricultural land has been utilized. Improvements must come from raising production and incomes on existing land still further. This calls for intensification, and, in physical terms, implies investment to improve water control, flood control and water table control in the rainfed areas, and more reliable water supply and drainage in the irrigated area. However, improvement of the plhysical environment is only the first step in the process. The farmers cannot fully benefit from the investment unless a concerted effort is made to improve the organization and management of the total system. This will require a dramatic improvement in the organization of farmers, water management, extension services, research services, credit supply, input supply and the processing, storage and marketing of farm produce. All aspects are interdependent and complementary in determining the level of success, which calls for integration of planning, implementation and progressive evaluation by all agencies concerned. On the other hand, even the best integrated organization and management system cannot function effectively unless the agencies concerned fully commit themselves to the task, and each officer in the system receives regular training and technical support to carry out his duties competently and effectively.

19. The above points were discussed at some length with the agencies concerned and a general organization and management framework for the project area was agreed to. The proposed system is designed to coordinate planning, implementation, progress evaluation and continuous training of all levels of personnel on a routine basis. This system, along with provisions of additional personnel, equipment, vehicles, facilities and training programs, forms the basis of the agricultural services component. If the agencies involved fulfill their commitment to the system by positive action in the field, and the additional staff and facilities required to operate the system are provided on schedule, the project can be highly successful.

The Concept

20. The basic concept of the system is to effectively coordinate the field activities of the DOA extension service, DID, FOA and BPM, to provide an effective integrated agricultural service to the 32,000 farm families in the project area. Main points may be summarized as follows:

(a) One set of small farmer groups would be organized in the field by DOA, based Dn adjoining cultivated lots. The same set of groups would be serviced by the field staff of all agencies with aggregation into larger units or breakdown into subunits on a systematic basis to serve the special needs of water management, credit, etc.

(b) Group leaders would be nominated by the farmers and appointed by the agencies to be the key contact point between the agencies ANNEX 5 Page 9

and the groups, and to ensure that all farmers in each group consult with field staff, join in group programs, and take advantage of services available.

(c) Service field staff would visit each farmer group on a set day at a set time and at a set meeting place in the field on a strict schedule throughout the year. This would ensure that farmers know exactly when and where they can meet a field officer, enable service visits by the four agencies to be synchronizedto facilitategroup discussionwith farmers, and provide each field officer with a clear-cut program, which could be readily monitored by his supervising officers.

(d) Area supervisorswould call their staff in on a set day, bi-weekly, for program review and planning, discussion of management and technical problems, and training sessions relevant to the immediatework program of the field staff given by specialists from headquarters. Portions of these sessions would be conducted on an interagencybasis, with rotation of chairmanship,to facilitate joint program review and planning by all agencies. A longer joint interagency session would be provided every six months for seasonal program review, and for planning and training purposes.

(e) Senior project or regional staff would meet once a month at the Project Headquarters,with district and area supervisors, to review progress and plan the next month's program, on an interagencybasis, with rotating chairmanship. Each agency would then split off for its own monthly meeting. A joint interagency session would be planned every six months, to evaluate the past season's program and prepare a joint master program for the following season.

(f) Following the regional six-month meeting, a special sitting of SARDEC would be convened, to discuss the regional or project report from each agency, to ratify the proposals for the coming season, and to resolve policy issues.

(g) Five-day short training courses would be arranged by the regional supervisorsof each agency for all field staff every six months, following the program evaluation and planning sessions.

The above system provides for close working relationshipsat field areas, district and regional levels. It would ensure the establishmentof an effective integrated service system, if all levels of staff adopt a positive attitude to the system, realize that they are only offering one part of the package of services required by the farmer, and that they are members of a team. The continuouson-the-job training and technical support provided through the bi-weekly meetings would rapidly build the confidenceand expertise of the field workers if the training is practical and relevant to their immediate ANNEX 5 Page 10

requirements. The longer training courses held in conjunction with the semi- annual program review would provide an opportunity for all staff to meet and exchange views and experiences with common problems, and would provide more in-depth training on priority topics relevant to the needs of the service program.

B. The Agricultural Services Component

21. Implementation of the component would require the following additional operational staff, facilities, and equipment:

Department of Agriculture

(a) Recruitment and training of an additional 10 agricultural technicians (ATs) to 'bringthe average AT:farmer ratio to 1:800, allowing for tlhe additional ATs to be provided under the proposed national extension project.

(b) Recruitment and training of an additional five agricultural assistants (AAs), one district Agriculture Officer (AO), and one senior project (regional) Agriculture Officer, to bring the AA:AT ratio up to 1:8, and to strengthen District agricultural programs by lthe appointment of experienced graduate staff.

(c) Recruitment and trainiLngof five experienced graduate specialists in rice production, tree crops, plant protection, soils and farm mechanization, to provide the bi-weekly training programs and technical support required by the extension field staff, and also to service the rest of Selangor State.

(d) Recruitment and training of an additional four AAs and ten ATs, to bring the Federal technical support units up to satisfactory strength, to service the project in terms of seed production, plant protection, soils assessment, tractor operation training for farmers, and assistance with demonstration plots.

(e) Basic equipment and vehicles required by the additional staff, not provided for under the proposed national extension project.

(f) Office storage and meeting room faciliites at ten multipurpose Farmers' Development Centers (FDCs) to be provided under the project, and housing for field staff, chiefly on FDC premises.

22. The Farmers' Organization Authority

(a) Recruitment and training of one agribusiness specialist (AO) to provide bi-weekly training and regular backup for field staff; ANNEX 5 Page 11

three graduate FDC managers to strengthenand upgrade activitiesin the three existing FDCs; and two agriculturalassistants (AAs) to provide a total of five area supervisorsfor the FDCs throughout the area.

(b) Office space, storage and drying floors at the ten FDCs under the project, plus housing for additionalstaff.

23. DID's operationand maintenancestaff, including the additionalstaff to be recruitedunder the project (Annex4, Table 3), would also function as that agency's field extensionstaff. Because of their long field experience and close relationswith farmers, they are currentlyamong the most effective contact points with farmers on agriculturalmatters. Additionalhousing for DID and BPM field staff, again largely on FDC premises,would be constructed under the project.

Overall Organization

24. The organizationof the componenthas been designed to fit into the normal State administrativesystem after the completionof the project. Each agency, i.e., DID, DOA, FOA and BPM, would be responsiblefor implementing its own part of the service program. However, during the implementation phase, a ProjectManager would be appointedwithin the Ministry of Agriculture, to devote full time to monitoringprogress on all phases of the project. He would be guided on policy matters by a Steering Committee chaired by the SecretaryGeneral of the Ministry of Agricultureand the State Secretaryof Selangor,and composed of State and Federal officials to be nominatedby them. The ProjectManager would receive full support from the Steering Committeeto resolve any implementationproblems. The Steering Committee would meet regularlyevery six months, and as required.

25. Each agency would appoint project supervisorsto ensure that its part of the program is efficientlyimplemented. At project completion,these staff would revert to being regional supervisorswithin their own departmentalstructure. During the implementationof the project they would meet monthly under the chairmanshipof the ProjectManager to review progress,solve problems, and plan the next month's work. A special meeting would be held every six months to carry out a joint seasonal review of progress, and to prepare program proposals for the Steering Committee. At the completionof the project, chairmanship of the monthly and special six-monthlymeetings would be rotated among the agencies at the direction of the SARDEC (para. 17). ANNEX 5 Page 12

26. Each agency would, in turn, appoint an experienced officer working within each District as its District representative. The District representatives, along with their area supervisors, would meet monthly under the chairmanship of the District Officer or his nominee, to jointly review progress, resolve problems arising within the District, and plan the program for the following month. At six-month intervals, the group would hold a seasonal review and planning session, as a preparatory step to meeting with the regional supervisors, to conduct a review of the regional program.

27. In addition to a regional center and two District centers of operation, the project would have ten field subcenters, located at FDCs, as operational headquarters for DOA, DID, FOA and BPM staff at field levels. Six of these centers would be located in or adjacent to the padi area. One would be located in the southern drainage area, to serve the Kuala Selangor District, and three would be located in the northern part of the project area (Map 13026). Office, storage and meeting room facilities would be provided for the FOA. Five of these centers would be sited so as to serve as Grade 1 area centers, as sub- divisions within a District. Each of these centers would be staffed by an AA or equivalent from each service, who would act as area supervisor and be responsible for the activities of field officers operating in his area, and also coordinate field program activities with his counterparts. The five other subcenters would be manned by AT-level field staff, operating under the supervision of the area AA./1

28. Each field officer or AT would be allocated 16 farmer groups, of about 50 farmers, i.e., 800 farmers, to service on a regular bi-weekly visiting schedule. Staff from the DOA extension service, DID, FOA and BPM will work as teams servicing the same groups to facilitate joint visits and discussions and jointly to determine with eaclh farmer group, program priorities at the beginning of each cropping season.

Farmer Groups

29. The DOA would be responsible for the formation of farmer groups, with assistance from the DID and FOA. In the Tanjong Karang irrigation area, farmer groups would be formed on the basis of tertiary canals and drains to facilitate farmer group action on water distribution, maintenance of the system and scheduling planting to correslpondwith the planned water delivery date to the tertiary block. A typical tertiary canal would supply an area of 320 ac (130 ha) and 80-112 farmers. The tertiaries would have a control structure at 1.6 km intervals, dividing the service area into two sections of 160 ac (65 ha) each with 40-56 farmers. The 65 ha unit and group of 40-56 farmers would form the basis of farmer group fonnation. DID would prepare a map of the whole irrigation area, marking the logical boundaries of each farmer group area. In consultation with DOA and FOA, the groups would be packaged into units of 16, totaling about 800 farmers, as a service area for one field officer from DOA, DID, FOA and BPM.

/1 FOA would provide three graduate (AO level) FDC managers and two additional AAs to manage all regional FOA activities from the three large existing FDCs. ANNEX 5 Page 13

30. Each farmer group would have one Group Leader for overall supervision of the group's activities for extension, irrigation,agribusiness and credit. He would be assisted by two assistant leaders, one primarily responsiblefor extension and irrigation activities, and the second for credit and agribusinessactivities. Four subgroup leaders would be responsible for a group of 10-14 farmers on a 16 ha section. Candidates for group and subgroup leaders would be nominated by the farmers, and selected by the DOA extension AT, with the assistance of the FOA and DID field staff and kampong leaders, who may have background information concerning the suitabilityof candidates. Selected candidates should own and operate land within the group area and be prepared to assist the field staff of servicing agencies. The group leaders would be the key points of contact for the team of ATs servicing the group, and would encourage all members to consult with field staff, to ensure that every member receives informationand advice given by the visiting ATs.

31. In tree crop areas, cultivated land would be divided into logical service areas of about 800 farmers, and subdivided into groups of about 50 farmers, on the basis of access roads, drains and natural boundaries. Similar procedures would be followed in appointing group leaders. However, in the appointment of subgroup leaders, care would be taken to have them located more or less in each quarter of the group area, so that they have ready access to the 10-12 neighbors they are leading. As there would be no irrigation,one group leader with overall responsibilityfor extension and credit would be appointed; one assistant would be appointed for extension, and another for credit. In drainage areas the assistant for extension would also be responsible for liaison with DID field drainage staff, on behalf of the farmer group.

Extension Service Operation

32. The field extension worker (AT) would visit his assigned groups on fixed days, at fixed times and set locations in the fields throughoutthe year. He would visit two groups a day, and take eight days to complete the round, meeting the group leaders and subgroup leaders and as many farmers in each group as they can encourage to attend. He would start the meeting with a training session appropriate to the farmers' current field activities, followed by a practical field demonstrationwhere possible, and a general discussion on the topic. He would then lead a farm walk through the group area, to advise on the management of demonstrationplots, inspect crops, and give on-the-spot advice. His bi-weekly visiting schedule would be made available to all groups, so they would know exactly where to contact him should problems arise between visits. He would spend eight days per fortnighton farm visits, two days on general administrativeduties, committeework, and special visits to problem areas. One day per fortnight would be set aside to attend a meeting with his supervisingAA and a subject matter specialist to discuss progress and problems, receive training appropriate to his work program, and plan the next two weeks' work. ANNEX 5 Page 14

33. An area supervisor (AA) would supervise the work of about eight ATs. He would visit each AT at least once or twice per fortnight on a random basis to ensure he is maintaininghis visiting schedule, observe problems in farmer groups firsthand,and provide support to the AT as required.He would arrange the bi-weeklymeeting for his ATs and maintain close contact at all times with the IrrigationInspector, FOA Area Supervisor and BPM Credit Officer assigned to his area. The bi-weeklymeeting with field staff would be held on the same day each fortnight,and would be fixed in consultationwith the FOA, DID and BPM, to ensure that their field staff can combine in a joint session at the beginning of the meeting to review general progress in the service area, discuss mutual problems,and plan remedial action for the next two weeks. Once a month, the area supervisor (AA) would attend a meeting with his District Agri- culture Officer on a fixed day, along with other AAs to review progress within the District.

34. The District AgricultureOfficer would be primarily responsible for the extensionprogram, but would also oversee regulatory and development work, and ensure that regulatoryand subsidy programs within the District are compatiblewith and complementaryto the extension program. He would supervise the extensionactivities of about two or three AAs and about 20 ATs. He would make frequent random visits to the field every month, to visit each AA and AT, to observe field work and field problems firsthand. He would ensure that the bi-weekly programareview, planning and training sessions for the AAs and ATs are run according to schedule,and that the type of subject matter, and subject matter specialist,appropriate to the needs of his groups, are supplied as requested. He will also arrange for the regular monthly meeting with his staff on a fixeclday suitable to FOA, DID and BPM representatives, so that a preliminaryjoint session of all agencies can be held to review progress and problems at District level.

35. The project or regional AgriculturalOfficer would be located in the project headquarters. He would have overall responsibilityfor extension, technical and regulatoryprograms in the project area. He would maintain continuous contact with the District AgriculturalOfficers, their area supervisors, AAs and ATs, through regular field checks at each District and service area each month. He would have overall responsibilityfor combiningwork programs prepared by ATs, area supervisors,and District AOs into one project or regional agriculturalprogram each season. He would ensure that the final program is integratedwith the programs of DID, FOA and BPM, and would maintain close contact with their regional officers at all times regarding program planning, implementationand evaluation. He would meet with District and area supervisorson a fixed day each month agreed with his DID, FOA and BPM regional counterpartsto review progress and problems. He would be responsible for preparing six-monthlyprogram proposals, for presentationto the Project Manager and the Steering Committee. He would also maintain close liaison with MARDI personnel and assist wherever possible to integrate their field evaluation programs with the extensionprogram and demonstrationplot program. ANNEX 5 Page 15

36. An AA for extension programs and training would be attached to the State Extension Office. His prime responsibility would be to work with the regional and district Agricultural Officers to determine bi-weekly training requirements at District and/or area level, and to determine the types of short course training required at the six-month program review and training sessions held at the end of each cropping season. In addition, he will maintain a training record for all extension personnel. He will work through the State Extension Officer and State Director of Agriculture, to ensure that Subject Matter Specialists attached to the technical units at State Headquarters service the bi-weekly meetings, provide technical backup services as required, and assist with six-month training at project level. He would liaise with the Federal Extension Service to arrange special training courses and to obtain outside expertise as required by the project.

37. Subject Matter Specialists in padi and tree crops would be appointed to the Federally-operated Crop Production Unit at State Headquarters. Plant protection, soils and farm mechanization subject specialists would also be appointed to the appropriate technical units. These specialists would be seconded to the State extension service and would be administratively responsible to the State Director, while maintaining professional links with their Federal branches. Their prime responsibility would be to provide the bi-weekly training sessions and technical support to ATs and AAs in the project area and in other parts of the State as required. Their secondary responsibility would be to provide technical guidance to the units to which they are attached. They would maintain close contact with MARDI units and personnel working in the project area and ensure that MARDI field crop trials in farmers' fields and demonstration plots conducted by the ATs in farmer group areas are integrated. They would work with MARDI and extension personnel to evaluate the results of demonstration and field trial plots, and continuously upgrade recommendations for use by the extension workers.

38. A State Extension Officer would be appointed under the National Extension Project. This officer would have overall responsibility for extension in the State and in the project area. He would jointly plan demonstration plot, seed production and farmer training programs with the Subject Matter Specialists, the Federal technical units and the regional Agricultural Officer. Demonstration plots would be established in each AT's service area of 16 farmer groups by the AT, with assistance from the technical support units. Farm group leaders' fields would be selected for this purpose, and would become a focal point of attention during the AT's regular bi-weekly visits. An AA and two ATs would be appointed for padi, tree crops, soils and crop protection to assist in this program. The Crop Production unit would continue to be responsible for seed production. Pure seed would be obtained from MARDI and multiplied on the padi field stations in the project area. The initial aim of the program would be to supply sufficient new seed to plant one acre in each farmer group area, on an exchange basis. This would produce sufficient seed to supply the rest of the group in the following season. A simple program planned along these lines would only require the production of four tons of good seed ANNEX 5 Page 16

per season, and could be init:iated immediately. Until an outstanding improved variety is available that competes in terms of yield, price and quality with the local varieties, consideration must be given to working with MARDI to select and multiply superior lines of the local material, for distribution to the farmers.

39. The Farm Mechanization unit would be provided with additional staff and equipment to expand the training of farmers in the operation and maintenance of two-wheeled tractors. An additional two ATs are provided along with a service/demonstration unit, to run training sessions on correct maintenance procedures and simple repairs at village level throughout the project area. These special training sessions would be organized through the area supervisors and ATs servicing the farmer groups. MARDI would continue its program of adaptive research in farmers' fields, and has agreed in principle to coordinate its program with the demonstration plot programs conducted by the extension service. It has also agreed in principle that the agro-economic program now being conducted in Sawah Sempadan could be linked to the trial and demonstration plot program, to provide a proper economic evaluation of trial and demonstration plot results and proposed technical recommendations. This would be followed up during project implementation when the Subject Matter Specialists are appointed.

Irrigation Service Operation

40. DID O&M staff would operate along lines similar to those described for extension. In establishing staff numbers, DID uses staff:area ratios instead of staff:farmer ratios. Overall, this gives a higher number of overseers and irrigation inspectors than extension ATs and AAs. This means that the DID can match the staff numbers recommended for extension, and can place 1 overseer to work with I AT, to service 16 farmer groups throughout the irrigation and drainage areas. DID has accepted the proposed integrated operational system in principle, and would work with the DOA to develop a practical system of joint operation that takes into account the needs of O&M.

41. In general terms, the system would operate as follows. One irrigation overseer would be assigned to cover the same irrigation or drainage area as an extension AA, i.e., 16 farmer groups. While his general duties are dif- ferent from those of an AT, and he does not need to spend so much time with the farmers, he would be presient for the final session of each AT's visit to each farmer group, to discuss water supply, drainage and operational problems with the farmers and the AT. He would attend a full field visit session at the end of each cropping season to discuss the past season's performance and work out a desirable irrigation schedule and cropping pattern for the next season with the farmer group and the AT. He would maintain close contact with the farm group leader and assistant group leader for irrigation, regarding water supply and drainage matters throughout the cropping season, and advise on the best methods of water distribution within the group, and construction and maintenance of field bunds and on-farm water control structures. He would ANNEX 5 Page 17 report to his inspector once every two weeks, and participate in the bi- weekly joint program review and planning sessions, with the DOA, FOA and BPM.

42. Irrigation inspectorswould be assigned to work with specific extension AAs, and where practical would be stationed at the same subcenters. They would supervise the activities of four overseers, and would maintain close contact with the extension AAs regarding cropping and irrigation schedules within their service area. They would call their irrigation overseers in once a fortnight, on the day agreed with the Extension AA, to hold a joint program review and planning session. A senior O&M engineer would attend each bi-weekly session, and provide a training session for the inspector and overseers. He would inspect a portion of their area at each visit, and help to resolve operation and maintenance problems in their service area. The irrigation inspectorswould attend a monthly meeting at the appropriateDistrict Office, for a joint program review and planning session with the DOA, FOA and BPM, and then break off to discuss their own program in greater depth with the Senior Inspector and Chief Inspector. All inspectors, senior inspectors,and district engineers would attend the monthly regional meeting at project headquarters,where there would be a joint discussion with DOA, FOA and BPM personnel, as well as an in-depth review and planning session on O&M matters. Staff at area, district and project or regional level would carry out a post-seasonalprogram review and planning session, as a joint exercise with DOA, FOA and BPM, and ensure that program proposals developed at all levels are compatiblewith the programs of the other agencies. The Project Engineer would be responsible for ensuring that staff at all levels follow the operating system agreed with the other agencies. He would also be responsiblefor preparing and submitting the DID plan of operation to the Project Manager and State Committee every six months.

43. To ensure that the interests of all farmer groups within an irrigation or drainage division are protected, the DID would take the initiative in establishingirrigation and drainage committees. The basic committees would comprise the 16 farmer group leaders in a service area, the irrigation overseer, the agriculturalextension AT and appropriate representatives from the villages concerned. The main function of the committeewould be to meet regularly, to discuss problems of water distributionand drainage and breaches of the Irrigation Ordinance, and to obtain local government support for enforcementof agreed rules and operational schedules. At the commencementof each season, the committee would reach a consensusregarding the desirable irrigation and cropping schedule for the area. Two farmer group leaders, one local governinentrepresentative, the extension AT and the Irrigation Overseer, would be members of an IrrigationDivision Committee, comprising about six service areas. The IrrigationDivision Committee, representing farmers on about 15,000 ac (6,000ha) would meet at the end of each season, to reconcile irrigation and cropping schedules requested by each service area, and determine the irrigation and cropping schedules to be adopted for the whole irrigationdivision for the next season. These committees would be chaired by the District Officer. In addition to setting up ANNEX 5 Page 18

the irrigation schedules for each division, the Division Committees would take action regarding breaches of the irrigation ordinance and operational rules that the service area committees cannot handle. Representatives of the three Irrigation Division Committees would form an Irrigation Area Committee to determine the irrigation schedule for the whole irrigation area, and to deal with problems beyond the scope of the Division Committee. The existing Drainage Board structure would also be reviewed with a view to ensuring that under the new management system, farm group leaders, and drainage and agricultural field staff get adequate representation, and can influence management decisions regarding the operation of the drainage system, including maintenance of water tables on the basis of local needs. Establishment of effective committees, with grass-root representation, would provide support for the enforcement of the Irrigation Ordinance and operation schedules.

FOA and BPM Operations

44. FOA would work closely with DOA and BPM, and adopt a similar operating system. In the Tanjong Karang area, FOA would appoint 1 field officer to work with every 2 field extension workers and 32 farmer groups. BPM proposes to appoint 10 cre,dit assistants to Tanjong Karang, so the basic system would be 1 FO field officer working with 1 BPM officer, and 2 Extension ATs, to service 32 farmer groups. The BPM and FO field officers would make a joint visit to each of the 32 Earmer groups once per month on the same visiting schedule as the 2 extension field officers, and work with the farm group leader and the assistant group leader for credit and agribusiness. They would make other follow-up visits, as required. At each regular visit, they would train the credit-agribusiness leader in some aspect of credit and agribusiness operations, and remind farmers that they have a choice of taking credit either via the FO or directly from the BPM on the same interest and repayment terms. The agribusiness leader would be shown how to compile a list of all cultivators in the group, along with pertinent details on the area cultivated. He would arrange to bring two farmers forward for credit assessment each time the BPM and FOA officer visit the group. The FOA and BPM would adopt the same methods of credit assessment and would share the responsibility of making the assessment. Copies of assessments would be filed with the BPM credit supervisor and the FO.

45. Those farmers who, in the opinion of the FOA and BPM field staff, and the farm group credit/agribusiness leader, have a good credit rating, would be issued a credit book. This would show their name, group number, area cultivated, with columns showing the amount of credit requested for cultivation, fertilizer, chemicals, and transplanting and harvest labor. A farmer wishing to take credit would discuss his request with the credit/agribusiness leader at least six weeks before the planting season. He would fill out his requirements in the book, which would be handed to the extension AT during his next group visit. The technical merits of the request would be discussed with the farm group leaders. It would be adjusted as required, and ANNEX 5 Page 19 initialedby the extension AT. The book would also be initialed by the farm group leader, as confirmationof the area to be planted. The completed applicationwould be submitted to the FOA and BPM representativeat their next visit. Depending on whether the farmer is seeking credit from the FO, or direct from BPM, the FO or BPM officer would make follow-up enquiries, and submit the book with his recommendationto his area supervisor,who would fix the final amount of credit to be granted, and issue vouchers for the supply of cash or inputs. These would be supplied to the farmer via his farm group credit leader. When they are issued, the farmer taking credit would be required to sign a standard letter of contract, which would be countersigned by the farm group leader and credit leader. The standard contract would set out the terms of the loan and commit the farmer, and the group leaders, to repay the loan to either BPM or the FO, whichever the case may be. It would also specify the stockists and FO depots from which inputs can be supplied, and the points at which produce must be delivered as repayment. The credit/ agribusinessgroup leader would receive a commission on loan repayments. The commissionwould increase with the percentage repayment to set a worthwhile incentive for better than 90% repayment. The FO and BPM field workers would issue a list of farmers taking credit approved, to the extensionAT. As part of his routine group visits and field inspections,he would check that the farmers concerned are using the inputs effectively.

46. Farmers with poor credit assessments,due to indebtednessor lack of assets, but who are commended as sound citizens and good farmers, e.g., tenants, would be encouraged to form groups with their neighbors, where, in the opinion of the farm group leader and credit leader, they have the ability to make good use of credit, and would repay the loan from the extra yield produced. Under a group credit system, a minimum of three farmers would cross-guaranteethe repayment of their loans as a group. As the system developed, and the agribusinessleaders gained experience through regular supervisionand job-trainingvisits from FO and BPM field staff, they would be given more responsibilityin the processing of credit applications,and credit issue to reliable farmers who consistentlyrepaid would be brought down to a routine basis. The FO and BPM field staff would then concentratemost of their efforts on assessing and following up farmers with low credit ratings, to check the cause of the problems.

47. In the tree crop areas, a similar system would be adopted. In these areas, 1 FO field officer would be assigned to serve 16 farmer groups with I extension AT. They would carry the main responsibilityfor agribusiness and credit operations. They would be supported initially in credit by four BPM credit assistants,i.e., one BPM credit assistant to backstop five FO field staff. If credit operations are successful under the new system, a ratio of 1 credit officer to 800 farmers would be too large. In this event, additional staff can be appointed to those service areas where credit demand accelerates.

48. In the irrigatedareas, the FOA and BPM would appoint one area supervisor at AA level, to work alongside the extensionAAs and irrigation ANNEX 5 Page 20 inspectors, at the larger FDCs. In tree crop areas, the FOA would provide an area supervisor to work with the extension AAs. Nevertheless, the BPM would maintain an office at each of the ten FDCs. The FOA and BPM area supervisor AAs would adopt the same practice as the extension AAs and irrigation inspectors, and call their field officers in on a fixed day agreed with the DID and DOA, to jointly review progress and problems in the area, plan the work program for the coming two weeks, and provide a training session for their field officers, on a topic relevant to their immediate work program. The area supervisors would also make regular checks on their field personnel, and every six months work together with the area supervisors of DID and DOA, to review the progress in the area, and formulate the work program for the next season. The area supervisors would also attend the regular monthly meetings at District level.

49. The FOA will have one District Officer in Sabak Bernam and two in Kuala Selangor. The most senior and experienced officer in Kuala Selangor would be nominated as the District FOA Officer, and as the chief FOA spokesman at the monthly District meetings. BPM only has one branch manager. He would oversee operations in both Districts, and attend the monthly District and regional meetings. The BPM branch manager and the FOA State Director (who will function as the FOA regional supervisor) would be responsible for working with the regional representatives of DID and DOA to prepare an integrated regional program for the project area every six months, and for presenting their portion of the program to the Project Manager and the Steering Committee. The BPM would appoint one officer from its Kuala Lumpur Headquarters as a representative on the Steering Committee, to work with the State Directors of FOA, DID and DOA on the overall supervision of project implementation.

50. With regard to input supply and marketing of produce, each of the ten FDCs would be equipped with a store and drying floor, and staffed withi a storekeeper and laborers. The FOA would supervise these facilities for the FOs and establish them as centers for input supply, collection of produce and provision of services. The LPN would register the centers established in the padi areas as official collection agents. All centers would be officially recognized as collection centers for farmers repaying credit extended by BPM or the 'FOs and would also be registered as official suppliers of inputs for the credit scheme. BPM, in consultation with FOA, would also register private input suppliers in areas where it is not practical for the farmers to obtain inputs through the FO system. The Regional FOA, BPM and DOA supervisors would ensure that all stockists throughout the project area have a list of the key recommended chemicals and fertilizers, along with the official recommendation for each product. The State DOA, BPM and FOA representatives would ensure that all FOs and officially registered stockists carry the recommended chemicals and fertilizers, and limit their range to a reasonable size so as to avoid confusion among the farmers.

51. In areas where there are strong active Small Agricultural Units (SAUs) already functioning at village level it would be necessary to integrate ANNEX 5 Page 21 the field agribusinessgroups with the SAU. In these situations, the field group leader for agribusinesswould automaticallybecome a field representative of the SAU chiefs operating in the area. He would be the primary contact for the farmers with the FO and all farmers would work through him to obtain FO services. Unit chiefs would only act on the recommendationof the field group leader with regard to approving requests for services. The farmer receivingservices would be primarily responsibleto the field group leader and the field group for proper use of services and repayment of credit extended via the FO. However, he would also have to answer to the Unit Chief in his own village when problems arise. This arrangementwould extend the potential coverage of existing SAUs and provide the Unit Chief with a field supervisionservice to ensure effective use of services. Where SAUs are weak or not active the opportunitywould be taken to reorganize the system using one or more field groups to form the basis of SAUs with appointmentof the most capable field agribusinessgroup leaders as SAU chiefs. The FO field officers would visit the SAU chiefs or take them along on the regular visits to field group leaders to ensure closer supervisionand better coordination of SAU activities.

Training

52. Training for farm group leaders and all levels of field staff is an essential component if the improved management system is to work well and the staff are to perform their tasks satisfactorily. Several types of training would be provided for farm group leaders. Following their appointment,all group leaderswithin a service area of 16 farmer groups would be brought together at a central point for project orientation training.At the first session, the DOA, DID, FOA and BPM staff would explain the project concept and management system to the group and outline the respon sibilities of the field staff serving them. DID, FOA and DOA would then arrange a two-day, follow-up training session within the service area, designed specificallyfor the irrigation, extension and agribusinessgroup leaders to provide more detailed informationon their specific task in the system, and to answer queries. In the case of agribusiness/creditgroup leaders, who would be required to keep records and assist with credit applicationsand disbursement,the FOA with the assistance of BPM would run a series of 12 1-day training sessions over a 3-month period, i.e., I day per week. Once the system is established,the DOA, DID and FOA would bring the group leaders together in each service area for two days at the end of each cropping season, to review progress and problems and outline the key points of the following season's program.

53. The AAs and ATs of all services would receive regular bi-weekly training sessions relevant to their immediatework programs,from Subject Matter Specialistsfrom State Headquarters,at the meetings to be convened by the AAs. This continuous on-job training related to field problems the junior ANNEX 5 Page 22

staff are facing is essential to raising the confidence and competence of junior staff, and giving them an opportunity to obtain regular backstopping from senior personnel. In addition, all AAs and ATs would be brought in to regional headquarters at the end of each cropping season, for a general program review and planning session, followed by short course training of four to five days on key topics required for the new season's program. These courses would utilize State Specialists, plus lecturers supplied with the assistance of Federal DOA. As well as providing training in specialist subjects at regular intervals, these training sessions would provide an opportunity for all field staff in the project area to meet and exchange views and experiences on common problems.

54. For regular basic training of field staff, DID would utilize its Water Management Training Center to be established in Kelantan, and DOA would arrange training courses for key personnel with the Federal Extension and Training units. However, in tlhecases of FOA and DOA, special arrangements would be made for the training of Subject Matter Specialists, to be recruited under the project, along the lines indicated in the cost estimates. Early recruitment and effective training of these personnel is basic to the success of the component, as they are the main technical contact for the field staff and would have a large influence on the effectiveness of field programs. Two-week overseas training and study tours are recommended, and included in cost estimates, for farm group leaders and field workers working on extension, irrigation and agribusiness. A committee comprising regional and district supervisors of all participating agencies would select a few outstanding farm group leaders and field workers in each discipline who have achieved success in furthering the aims of the project and the work program. Combined groups would be selected and sent to Taiwan or Indonesia for a study tour in irrigation and drainage areas. The program would be arranged so that participants may observe farming practices and operational systems at the grass-root level, and discuss mutual problems with farmers and field workers.

55. Project Implementation. The outline of the organization and management system proposed for the project is based on a preliminary analysis of the project area. While the system is currently being started in the Sawah Sempadan pilot area, an iin-depth study based on a season's field experience in implementing the system over the entire project area is required to determine deployment of staff and detailed operating procedures for each agency. A clear definition of all aspects of the system and the preparation of a draft operations manual, setting out job descriptions and operating procedures for all levels of staff, is a prerequisite to success. Assurances have been obtained that the agencies concerned would appoint a working group chaired by DOA to review the proposed system in greater depth, and would prepare an Agricultural Services Operations Manual to guide field operations by December 31, 1978. ANNEX 5 Table 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Agricultural Supporting Services

Summary Cost Estimates

1. Buildings & facilities M$

(a) Joint facilities Farmers' Development Centers (10) /a 1,418,450 Project office 400,000 Project Manager's quarters 46,500

(b) Staff housing DOA (59 units, various classes) 1,194,450 FOA (6 units) 117,400 DID (40 units) 970,600 MARDI (1 unit) 46,400

Total construction cost 4,203,800 Engineering & supervision /b 336,200

Total base cost 4,540,000

2. Agricultural equipment DOA equipment /c 617,700 FOA equipment /d 442,250

Total base cost 1,059,950

3. Incremental operating costs DOA operations /e 2,443,000 FOA operations /f 1,283,000

Total base cost 3.726.000

/a Including 5 Grade 1 FDCs and 5 Grade 2 FDCs (see Table 2), plus M$100,000 for site development. /b At 8% of cost of facilities. /c Table 3. /d Table 4. /e Tables 5, 6, and 7. /f Tables 9, 10, and 11. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Space & Facility Requirements at Farmers Development Centers

Drainage & Farmers' Bank Department of Irrigation Organization Pertanian Agriculture Department Authority Malaysia Total Area Cost Area Cost Area Cost Area Cost Area Cost 2 2 2 (ft ) (M$) (ft ) (M$) (ft ) (M$) (ft2) (M$) (ft2 ) (M$)

Grade 1 centers (5) Office space 600 15,000 603 15,000 600 15,000 200 5,000 2,000 50,000 Meeting area 750 18,750 - - - - - 750 18,750 Toilet block 150 4,500 - - - - - 150 4,500 General storge 200 4,000 200 4,000 750 15,000 - - 1,150 23,000 Garage space 200 3,000 200 3,000 200 3,000 200 3,000 800 12,000 Drying floor - - - - 3,000 10,000 - - 3,000 10,000

Subtotal 45,250 22,000 43,000 8,000 118,250

Land acquisition 2 ac 20,000 - - - 20,000 Misc. expenses 3,620 1,760 3,440 640 9,460

Total 68,870 23,760 46,440 8,640 147,710

Grade 2 centers (5) Office space 400 10,000 400 10,000 500 12,500 200 5,000 1,500 37,500 Meeting area 400 10,000 ------400 10,000 Toilet block 100 3,000 - - - - 100 3,000 General storge 150 3,000 150 3,000 750 15,000 - - 1,050 21,000 Garage space 200 3,000 200 3,000 200 3,000 200 3,000 800 12,000 Drying floor - - - - 3,000 10,000 - - 3,000 10,000 >

Subtotal 29,000 16,000 40,500 8,000 93,500X

Land acquisition 1.5 ac 15,000 - - - 15,000 Misc. expenses 2,320 1,280 3,240 640 7,480

Total 46,320 17,280 43,740 8,640 115,980 ANNEX S Table 3

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

DEPARTMENTOF AGRICULTURE

Cost Estimates - Equipment and Vehicles

Cost (M$) Cost (M$) Total Item No. Unit Total Item No. Unit

40 Field Extension Workers (ATs) Project Agriculture Officer (AO) 1 30,000 30,000 Basic estension tools 40 200 8,000 1 mobile extension unit 1 27,000 27,000 Visual aid materials 40 200 8,000 4-wheel drive vehicle 1,500 1,500 Basic office furniture 40 400 16,000 Slide projector & accessories 1 2,500 Subtotal 32,000 Overhead projector 1 2,500 Camera 1 400 400 1 3,000 3,000 5 Extension Supervisors (AAs) Duplicating machine 3,000 3,000 4-wheel drive vehicles & trailers 5 28,000 140,000 Photostat machine 1 1 1,000 1,000 Typewriters 5 1,000 5,000 Typewriter 1 300 300 Electronic calculators 5 300 1,500 Electronic calculator 2 200 400 Ceiling fans 5 250 1,250 Whiteboards 250 500 Filing cabinets 5 250 1,250 Filing cabinets 2 1,200 1,200 Blackboards 5 200 1,000 Office furniture 70_800 Office furniture 5 700 3,500 Subtotal Subtotal 153.500 Crop Production Unit 28,000 28,000 District Extension Officers (AOs) 4-wheel drive vehicle & trailer 1 3,000 4-wheel drive vehicles 2 27,000 54,000 Grain moisture meter 2 1,500 2 1,500 3,000 Slide projectors & accessories 2 1,500 3,000 Scales 250 1,500 Cameras 4 400 1,600 Knapsack sprayers 6 4 1,200 4,800 Typewriters 2 1,000 2,000 MIotorized sprayers 2 300 600 Electronic calculators 2 300 600 Cyanogas pumps 1 300 300 Filing cabinets 4 250 1,000 Electronic calculator - 1,500 1,500 Blackboards 2 200 400 Office furnishing & equipment - 1,000 furniture 2 1,000 2,000 Miscellaneous demplet equipment - Office 43,700 Subtotal 64,600 Subtotal

Plant Protection Unit Soils Unit 27,000 4-wheel drive vehicles & trailers 2 28,000 56,000 4-wheel drive vehicle 1 27,000 - 5,000 5,000 Motorized sprayers 10 1,200 12,000 Soil field equipment 300 Knapsack sprayers 10 250 2,500 Electronic calculator 1 300 1,500 Motorblowers 10 1,200 12,000 Office furnishing 6 equipment - - 33,800 Fogging machines 10 1,500 15,000 Subtotal Hi tree sprayers 20 1,000 20,000 Cyanogas pumps 10 300 3,000 Mechanization Training Unit 28,000 Electronic calculator 1 300 300 4-wheel drive vehicle & trailer 1 28,000 28,000 Office furnishing & equipment - 1,500 1,500 Service/demonstration vehicle 1 28,000 Subtotal 122.300 2-wheeled training tractors 3 6,000 24,000 Complete tool sets 1 2,500 2,500 Basic student tool sets 10 700 7 000 GRANDTOTAL 617,700 Cut-out Model 10 hp diesel engine 1 2,000 2,000 Slide projector & accessories 1 1,500 1,500 Miscellaneous teaching aids - 2,000 2,000 Additional office furnishing & equipment - 2,000 2,000 Subtotal 97,000 ANNEX 5 Table 4

MALAYSIA

NORTHWEST SELANGORt INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

FARMERS ORGANIZATION AUTHORITY

Cost Estimates - Equipment and Vehicles

Cost (M$) Item No. Unit Total

Regional Supervisor (AO) 4-wheel drive vehicles 1 27,000 27,000 Overhead Projector 1 2,500 2,500 Slide projector & accessories 1 1,500 1,500 Duplicating machine 1 3,000 3,000 Photostat machine 1. 3,000 3,000 Typewriter 1 1,000 1,000 Electronic calculators 1 300 300 Whiteboards 1 200 400 Filing cabinets 2 250 500 Office furnishing 2 1,200 1,200 Subtotal 40,400

District Supervisors (AOs) Slide projectors & accessories 2 1,500 3,000 Cameras 2 400 800 Electronic calculators 3 300 900 Grain moisture testers 3 1,500 4,500 Hi tree sprayers /a 6 1,000 6,000 Motorized sprayers /a 6 1,200 7,200 Cyanogas pumps /a 6 300 1,800 4-wheel drive vehicles & trailers 3 28,000 84,000 Subtotal 108,200

Subcenters Pick-up trucks /a 5 15,000 75,000 2-wheeled tractors /a 6 6,000 36,000 4-wheeled tractor & implements /a 4 30,000 120,000 Grain moisture testers 6 1,500 9,000 Sets of scales 9 1,500 13,500 Typewriters 9 1,000 9,000 Filing cabinets 9 250 2,250 Office safes 9 600 5,400 Blackboards 9 200 1,800 Electronic calculators 23 300 6,900 Grade I center office furniture 5 2,000 10,000 Grade 2 " " " 4 1,200 4,800 Subtotal 293,650

Total 442,250

/a Revenue earning items. ANNEX 5 Table 5

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Cost Estimates - DOA Incremental Operating Costs

------Cost (M$ '000)…------Item Total 1978 1979 1980 1981 1982

Salaries and travel /a 1,514 148 298 356 356 356 O&M, Buildings 158 - 21 39 49 49 O&M, Vehicles 70 2 14 18 18 18 O&M, Equipment 72 2 10 20 20 20 General supplies/Administration 213 9 24 60 60 60 Farm group leader training 176 33 35 36 36 36 Local extension staff training 76 4 18 18 18 18 Technical specialist training /b 74 32 28 14 - Overseas study tours /b 90 - - 30 30 30

Total 2.443 230 448 591 587 587

/a See Table 6

/b Disbursements would be made against these items (Annex 8). See Table 7 for details on DOA training activities under project. Total overseas and specialist training would amount to M$ 248,000 (US$100,000), of which M$ 164,000 would be for DOA activities and M$ 84,000 for FOA (Table 9). ANNEX 5 Table 6

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

DEPARTMENTOF AGRICULTURE

Salary and Travel Costs of Incremental Staff

Year 1 2 3 4 5

Field Extension Workers (ATs) 6 4 - - - Cumulative total 6 10 10 10 10 Annual cost (M$4,800) 28,800 48,000 48,000 48,000 48,000

Extension Supervisors (AAs) 2 3 - - - Cumulative total 2 2 5 5 5 Annual cost (M$9,960) 19,920 49,800 49,800 49,800 49,800

District Supervisors (AOs) I - - - - Cumulative total 1 1 1 1 1 Annual cost (M$13,200) 13,200 13,200 13,200 13,200 13,200

Subject Matter Specialists (AOs) 2 2 1 - - Cumulative total 2 4 5 5 5 Annual cost (M$15,600) 31,200 62,400 78,000 78,000 78,000

Project Agricultural Officer (AO) 1 - - - - Cumulative total 1 1 1 1 1 Annual cost (M$17,500) 17,500 17,500 17,500 17,500 17,500

Technical Support (AAs) 1 2 1 - - Cumulative total 1 3 4 4 4 Annual cost (M$9,960) 9,960 29,880 39,840 39,840 39,840

Technical Support (ATs) 2 4 4 - - Cumulative total 2 6 10 10 10 Annual cost (M$4,800) 9,600 28,800 48,000 48,000 48,000

Clerk/Typists 3 5 - - - Cumulative total 3 8 8 8 8 Annual cost (M$3,600) 10,800 28,800 28,800 28,800 28,800

Drivers 3 5 6 - - Cumulative total 3 8 14 14 14 Annual cost (M$2,400) 7,200 19,200 33,600 33,600 33,600

Total (M$) 148,180 297,220 356,380 356,380 356,380

GRAND TOTAL (M$) 1,513,74C1 ANNEX 5 Table 7

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

DEPARTMENT OF AGRICULTURE

Cost Estimates for Training

mandays Cost (M$)

Farm Group Leader Training

Project Orientation Training (Year 1 only) 640 group leaders 1,920 7,680 3,200 subgroup leaders 6,400 25,600 Subtotal 33,280

Preseason Program Orientation Training (every year) 640 group leaders 2,560 10,240 3,200 subgroup leaders 6,400 25,600 Subtotal 35,840

Project Extension Staff Project Orientation Training (Year 1 only) 60 agricultural field staff 120 3,600

Local preseason Program Planning/Training (every year) 60 agricultural field staff 600 18,000

Subject Matter Specialists Rice specialist: 6 months IRRI Philippines 14,000 Tree crop specialist: 12 months Local Estates 18,000 Farm mechanization: 6 months overseas with manufacturers 14,000 Plant protection: 6 months overseas training 14,000 Soils specialist: 6 months overseas training 14,000 Subtotal 74,000

Training and Study Tours (Years 3-5) Two-week group tours to Taiwan for 3 groups 1 Agricultural Officer 2,500 2 Agricultural Assistants 5,000 9 Agricultural Technicians 22,500 24 Farm Group leaders 60,000 Subtotal 90,000

Note: Regular in-service technical training for field staff will be provided by the National Extension Project. ANNEX 5 Table 8

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Department of Agriculture Staff Requirements

No. Staff Supplied by Positions Grade req'd available NEP /c Project

State Extension Unit Project Agricultural Officer AO/a I1 - 1 District AO, K. Selangor AO 1 1 - District AO, S. Bernam AO 1 1 Extension Assistant (training) AA 1 - _ 1 Extension Supervisors AA 6 2 - 4 Field extension workers AT 40 10 20 10 Regulatory workers AA 2 2 - - Regulatory workers AT 10 10 -

Crop Production Unit Rice Specialist AO/b 1 - - 1 Tree Crop Specialist AO/b 1 - - 1 Assistant Rice AA 1 - - 1 Assistant Tree Crops AA I - - 1 Technician Rice AT 2 - - 2 Technician Tree Crops AT 2 - - 2

Plant Protection Unit Crop Protection Specialist AO/b 1 - - 1 Assistant Rice AA 1 1 - - Assistant Tree Crops AA 1 - - 1 Technician Rice AT 2 2 - - Technician Tree Crops AT 2 - - 2

Soils Unit Soils Specialist AO/b 1 - - 1 Assistant Soils AA 1 - - I Technician AT 2 - - 2

Farm Mechanization Unit Farm Mechanization Specialist AO/b 1 - - 1 Assistant AA 1 1 - - School Technicians ATs 3 3 - - Field Technicians AT 2 - - 2 Secretary/typists (for AOs) 3 - - 3 Clerk/typists (for AAs) 5 - - 5 Drivers (for AOs) 4 - - 4 Drivers: (for extension) 5 - - 5 Drivers: (for technical specialists) 5 - - 5

/a Superscale G. /b Senior time scale: To serve the whole state. /c National Extension Project. ANNEX 5 Table 9

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Cost Estimates - FOA Incremental Operating Costs

------Cost (M$ '000)…------…---- Item Total 1978 1979 1980 1981 1982

Salaries and travel /a 702 52 145 168 168 169 O&M, Buildings 86 - 11 25 25 25 O&M, Vehicles /b 22 2 5 5 5 5 O&M, Equipment /b 33 2 6 8 9 9 General supplies/Administration 74 5 15 18 18 18 Agribusiness leader training 123 23 54 15 15 15 Local field staff training 69 9 15 15 15 15 Senior staff training 90 90 - Overseas study tours A 84 - - 28 28 28

Total 1,283 183 251 282 283 284

/a See Table 10

/b Excludes revenue earning items.

Ic Disbursements would be made against this item. See Table 11 for details on FOA training activities under the project. ANNEX 5 Table 10

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

FARMERS ORGANIZATION AUTHORITY

Staff Requirements

Number Number Provided Position Grade Required Available Under Project

Agribusiness Specialist AO I - I Area Managers AD 3 - 3 Area Supervisors AA 5 3 2 Field Officers AT 15 15 - Typists/Clerks - 5 - 5 Storekeepers - 9 - 9 Laborers - 9 - 9 Drivers - 10 - 10 Guards - 9 - 9

Salary and Travel Costs of Incremental Staff

…------…Year------1 2 3 4 5

Agribusiness Specialist 1 - - - - Annual Cost (M$15,600) 15,600 15,600 15,600 15,600 15,600

Area Managers 2 1 - - - Cumulative Total 2 3 3 3 3 Annual Cost (M$13,200) 26,400 39,600 39,600 39,600 39,600

Area Supervisor - 2 - - - Cumulative Total - 2 2 2 2 Annual Cost (M$9,960 - 19,920 19,920 19,920 19,920

Typist Clerks - 5 - - - Cumulative Total - 5 5 5 5 Annual Cost (M$3,600) - 18,000 18,000 18,000 18,000

Storekeepers - 5 4 - - Cumulative Total - 5 9 9 9 Annual Cost (M$2,400) - 12,000 21,600 21,600 21,600

Drivers 4 5 - - - Cumulative Total 4 9 9 9 9 Annual Cost (MS2,400) 9,600 21,600 21,600 21,600 21,600

Labor/Guards - 10 8 - - Cumulative Total - 10 18 18 18 Annual Cost (M$1,800) - 18,000 32,400 32,400 32,400

Total 51,600 144,720 168,720 168,720 168,720

Grand Total 702,480 ANNEX 5 Table 11

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farmers Organization Authority

Cost Estimates for Training

Cost M$

1. Training for Agribusiness Farm Leaders Project Orientation Training (Year 1 only) 640 Agribusiness Leaders 1,920 man days 7,680

Local Business Management Training Year 1, Padi Area 320 Leaders 3,840 man days 15,360 Year 2, Tree Crop Area 320 Leaders 3,840 man days 15,360 Subtotal 30,720

Local Specialized Pre-season Refresher Courses Main Season 640 Leaders 1,920 man days 7,680 Off-Season 640 Leaders 1,920 man days 7,680 Subtotal 15,360

2. Project Field Staff Project Orientation Training (Year 1 only) 30 Field Staff 60 man days 1,800

Local Pre-season Program Planning/Training (Every year) 50 Field staff 500 man days 15,000

3. Senior Staff Training 1 Agribusiness Specialist: 6 months Business Management) 2 months Bank Pertanian ) 18,000 4 months Estate Companies )

3 District Supervisors) 5 Area Supervisors ) 6 months Business Management 72.000 Subtotal 90,000

4. Overseas Training and Study Tours /a (Years 3-5) 1 District Supervisor 4,000 2 Area Supervisors 5,000 6 Field Officers 15,000 24 Agribusiness Leaders 60,000 Subtotal 84,000

/a Disbursements would be made against this item. ANNEX 6

tALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Cost Summary

Foreign Local Foreign Total Local Foreign Total/a Exchange ---- M$ Million ----- US$ Million ---- (%)

Tanjong Karang Irrigatibn

Headworks improvement 0.25 0.25 0.50 0.10 0.10 0.20 50 Main canal improvement 0.64 0.61 1.25 0.26 0.25 0.50 49 Distributary canal construction 22.66 19.30 41.96 9.14 7.78 16.92 46 Drain construction 3.23 3.20 6.43 1.30 1.29 2.59 50 Roads and bridges 2.11 1.70 3.81 0.85 0.69 1.54 45 Land acquisition 0.71 - 0.71 0.29 - 0.29 0 Engineering and supervision 3.87 0.44 4.31 1.56 0.18 1.74 10

Subtotal 33.47 25.50 58.97 13.50 10.28 23.78 43

Tree Crop Drainage

Coastal/river bunds 0.87 0.71 1.58 0.35 0.29 0.64 45 Tidal control gates 2.16 2.64 4.80 0.87 1.06 1.94 55 Drain construction 8.92 6.75 15.67 3.60 2.72 6.32 43 Roads and bridges 4.41 3.17 7.58 1.78 1.28 3.06 42 Pump station 0.19 0.48 0.67 0.08 0.19 0.27 72 Engineering and supervision 2.19 0.24 2.43 0.88 0.10 0.98 10

Subtotal 18.74 13.99 32.73 7.56 5.64 13.20 43

Buildings and Facilities

Farmers development centers 1.00 0.43 1.43 0.40 0.17 0.58 30 Project offices 0.28 0.12 0.40 0.11 0.05 0.16 30 Staff quarters 1.66 0.71 2.37 0.67 0.29 0.96 30 Engineering and supervision 0.31 0.03 0.34 0.13 0.01 0.14 10

Subtotal 3.25 1.29 4.54 1.31 0.52 1.83 28

Equipment

Agricultural 0.11 0.95 1.06 0.04 0.38 0.43 90 Operation and maintenance 0.12 2.28 2.40 0.05 0.92 0.97 95

Subtotal 0.23 3.23 3.46 0.09 1.30 1.40 93

Incremental Agricultural Services 3.36 0.37 3.73 1.35 0.15 1.50 10

Base cost estimate 59.05 44.38 103.43 23.81 17.89 41.71 43

Physical contingencies 7.38 6.29 13.67 2.96 2.54 5.51 46 Expected price increases 17.82 13.81 31.63 7.17 5.57 12.74 43

Total proiect cost 84.25 64.48 148.73 33.94 26.00 59.96 43

/a Subtotals may not sum due to rounding. ANNEX 7 Table 1

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Estimated Schedule of Expenditures

Total Calendar years cost /a 1978 1979 1980 lJ81 1982 1983 ------(US$ million) ------

Tanjong Karang irrigation 27.03 2.54/c 5.56 6.10 6.54 5.99 0.30 Tree crop drainage 15.02 0.84 3.22 5.70 3.87 1.14 0.25 Buildings and facilities 2.13 0.20 0.37 0.80 0.40 0.36 - Equipment procurement 1.54 0.07 0.14 0.15 0.40 0.78 - Incremental agricultural services 1.50 0.13 0.22 0.32 0.38 0.45 -

Subtotal 47.22 3.78 9.51 13.07 11.59 8.72 0.55

Expected price increases lb 12.74 0.19 1.36 3.10 3.90 3.91 0.28

Total project cost 59.96

/a Includes physical contingencies.

/b Annual rates of price escalation used were (para. 4.14):

1978 1979 1980 1981 1982 1983

Civil works and services Annual percentage increase 9 9 8 8 8 8 Compounded escalation factor .045 .139 .236 .334 .441 .519

Equipment

Annual percentage increase 7.5 7.5 7 7 7 Compounded escalation factor .038 .115 .196 .280 .369

/c Includes expenditure of US$0.7 million in 1977. ANNEX 7 Table 2

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DIEVELOPMENTPROJECT

Estimated Schedule of Disbursements

IBRD fiscal year Accumulated disbursements and semester US$ million equivalent

1979 1st 0.7 2nd 1.7

1980 1st 3.8 2nd 6.4

1981 1st 9.2 2nd 13.3

1982 1st 17.0 2nd 20.6

1983 1st 24.0 2nd 26.0 ANNEX 8

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Proposed Allocation of the Proceeds of the Loan

Estimated Estimated foreign total exchange Proposed Category cost component allocation Disbursement ------(US$ million) ------(%)

1. Civil Works Tanjong Karang Irrigation 22.0 10.1 Tree crop drainage 12.2 5.5 Buildings & facilities 1.8 0.6 36.0 16.2

Price contingencies (part) 10.7 4.7

Subtotal 46.7 20.9 22.4 48

2. Equipment & Vehicles 100% of foreign ex- Agricultural equipment 0.4 0.4 penditures, 100% of O&M equipment 1.0 0.9 local expenditures 1.4 1.3 ex-factory, or 80% of items procured Price contingencies (part) 0.4 0.4 locally

Subtotal 1.8 1.7 1.7

3. Training 0.1 0.1 0.1 100% of foreign expenditures 4. Unallocated Engineering & supervision /a 2.9 0.3 Incremental operating costs /a 1.5 0.2 Remaining price contingencies 1.5 0.3 Physical contingencies 5.5 2.5

Subtotal 11.4 3.3 1.8

Total 60.0 26.0 26.0 (43)

/a No disbursements would be made against these items. ANNEX 9 Page 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Production, Marketing, and Prices

A. Rice

Production, Import and Consumption of Rice

1. Data on production, imports and consumption of rice for Malaysia /1 are given in Table 1. Over the ten-year period 1964 to 1974 (three-year moving average) production increased by over 70% to 1.28 million tons of milled rice; during the same period there was a corresponding decline in imports of 38% and an increase in the degree of self-sufficiency to 83% in 1973.

2. The most recent projection of production, consumption and imports of rice for Peninsular Malaysia (Table 2) indicates that Malaysia will continue to import rice despite planned efforts to increase production in the present project area and in the Krian-Sungei Manik and Muda areas. Thus, incremental project production, estimated at 46,000 tons of padi (30,000 tons of milled rice) per annum at full development, will replace imports and is not expected to result in any marketing problems.

Marketing

3. Prior to 1967 padi marketing in northwest Selangor was an official monopoly of cooperative milling societies. However, owing to dissatisfaction with the performance of that system, the Government established the Federal Agricultural Marketing Authorilty (FAMA) in 1967, which in turn set up a Padi and Rice Marketing Board to manage and control the padi marketing activities of the cooperatives. In September 1971 this Board was merged with part of the Ministry of Trade and Industry to form the National Padi and Rice Authority - LPN (see Annex 5, para. 16). LPN controls the supply and price of rice directly through purchase of padi by its own mills, by the licensing and regulation of private sector milling and marketing concerns, and since 1973 through control of rice imaports.

4. Within the project area LPN controls the marketing of all rice through farmers cooperatives. Two new LPN milling complexes were recently commissioned in the Tanjong Karang area, which will substantially augment milling and storage capacity and increase drying capacity fourfold. Thus,

/1 For a more complete review of rice production and consumption in Malaysia see Appraisal of the National Small-Scale Irrigation Project: Malaysia, IBRD Report No. 1523-MA, Annex 12. ANNEX 9 Page 2

it is not anticipated that there will be serious problems in handling additional production. It would be possible, however, to reduce the high moisture content of the grain purchased by LPN agents in the field by enfor- cing the standard LPN deduction system for moisture content. Most farmers at present receive the standard price of M$27.00 per pikul /1 of padi with no deductions for moisture; thus, there has been no incentive for the farmers to dry their grain prior to its sale to LPN. This results in farmers making no effort to sun dry grain prior to delivery to LPN, while they do make such efforts for private millers. LPN is thus forced to redry large volumes of padi during the peak August-Septemberperiod, with attendant high costs and losses. LPN will supply moisture meters to its buying agents to enable them to enforce the official system of discounts for lower grades of rice. These actions will provide sufficient incentive for improvement in padi drying through the use of concrete drying floors to be provided at the FDCs by the project.

Prices

5. Financial farm-gate prices are based on an annually determined guaranteed minimum price from which deductions are made for the presence of impurities,moisture and shortness of grain. The current price is M$30.00 per pikul /2 for long grain padi, M$28.00 for medium length and M$27.00 for short grain padi, all of 14% moisture content. The implementationof the official price system depends on padi selectors appointed by LPN. Of the various categories received at the buying centers, local LPN staff estimate a distribution of 75% Grade B, 20% Grade C, and 5% Grade Cl; purchases in the other categories are insignificant. This distributionand a reported average 20% moisture content imply an average farm-gate price of M$25.61 per pikul. However, the average price recorded in a recent survey is M$26.90. This higher price probably reflects both the failure to apply standards of moisture control and higher standards of production than those estimated by LPN. For farm budgeting purposes the farm-gateprice has therefore used a price of M$27 per pikul based on the LPN schedules and the padi survey results.

6. Economic farm-gate prices are based on Bank price projections for Thai rice, 5% broken f.o.b. Bangkok with a 10% discount for the generally lower quality rice produced in Tanjong Karang (Table 4).

/1 One pikul is equivalent to 133.33 lbs or .06 metric tons.

/2 US$203/ton. ANNEX 9 Page 3

B. COCONUTS

Production, Consumption and Trade

7. Acreage of coconuts and estimated copra production in Peninsular Malaysia are set out in Table 5. Estimated acreage has remained fairly constant at around 520,000 acres over the past decade./l Copra production has similarly stagnated at around 160,000 tons. Statistics on trade in coconuts and copra (Table 6) indicate that Peninsular Malaysia has been a net exporter of oil and an importer of copra. The 1970 Bank Sector Survey estimated that domestic consumaption, which accounts for about half of the country's production, would inicrease at 5% per annum and reduce exports to zero by 1985. Regardless of when Malaysia ceases to be a significant exporter of coconut oil, the incremental production from the project, estimated to be around 4,500 tons copra equivalent in 1990 (Annex 3, Tables 4 and 9), would not present any marketing problems.

Marketing

8. The marketing of coconuts and copra is almost totally done by the private sector. FAMA's involvement in the marketing of coconuts is limited to a copra drying unit in Sabak Bernam; the unit has three copra drying houses with potential throughpiutof about 20,000 nuts per day and a sun drying yard with a possible throughput of about 3 tons per day. During the last two years the unit has operated at less than 50% capacity because many smallholders are tied by credit to private traders. Despite this disappointing performance, the FAMA facility at Sabak Bernam has performed the useful function of improving the quality of smallholders copra and reducing private marketing margins to more competitive levels. Increases in BPM credit to be supported by the project would allow more farmers to sell their copra to the highest bidder. Consequently, it is thought that the productive efficiency of the FAMA processing unit would increase in the future.

Prices

9. Financial farm-gate prices have followed closely the sharp fluctua- tion in world prices, declining from high levels in 1974 to much lower ones in 1976 (Table 7). Economic farm-gate prices are based on Bank price projection for Philippine copra c.i.f. Europe (Table 8). Copra drying costs used in the calculation are based oin the FAIA operation at Sabak Bernam and are higher than the rates quoted by farmers by approximately M$5 per 1,000 nuts. However, the lower private drying costs are offset by the lower quality of privately produced copra. Thus basing the estimates of economic prices on FAMA production costs does niot bias the results downward.

/1 Main crop coconut acreage is concentrated in three large drainage areas - the Western Johore (973-IA) project area, the present project area in Selangor, and the Bagan Datoh area of Perak. ANNEX 9 Page 4

C. COCOA

Production and Exports

10. Because domestic usage of home produced cocoa is very small, production increaseswould be directly reflected in increased exports. Malaysia's exports of cocoa beans have risen from 2,700 tons in 1973 to 6,200 tons in 1975; in addition exports of cocoa butter in 1973 and 1974 averaged 600 tons (Table 9). With the current rapid increase in cocoa planting accompanying the spectacular recent rise in cocoa prices, exports are expected to rise sharply. Incremental production from this project is estimated at 2,000 tons of dry beans in 1990 (Annex 3, Tables 6 and 10), which is not expected to have any deleterious effect on Malaysia's trading position in cocoa at that time. With the expansion of processing facilities (para. 11), this incremental production is unlikely to cause any serious marketing problems in the project area.

Marketing

11. With the exception of one small fermentary and drying unit run by the Sabak Bernam Farmers Cooperative /1, all processing and marketing of cocoa in the area is done by the private sector. Cocoa is a relativelynew crop to the area, but large numbers of private entrepreneurshave already developed simple processing units for fermenting beans and then sun drying them on bamboo screens. In addition FAMA plans to establish a smallholder cocoa processing center in Sabak Bernam by 1978. In order to maintain the quality of Malaysian exports as the percentage of smallholderproduction increases, FAMA will establish a statutory grading scheme for cocoa bean exports by mid-1978.

Prices

12. In line with the recent sharp increases in world prices, farm-gate prices have risen from M$.41 per lb. in 1974 to over M$3.00 at the end of 1976 (Table 10). Economic farm-gate prices are based on Bank projectionsfor cocoa beans c.i.f. New York; but because Malaysian beans have a poorer quality and a higher shell content than other sources, the forecast has been discounted by 5% (Table 11).

D. OIL PALM AND RUBBER

Production

13. Improved drainage is expected to result in increasedyields of oil palm and rubber in the area. Incrementalproduction in 1990 is estimatedat 79,000 tons of fresh fruit bunches (equivalentto 14,000 tons of pericarp oil

/1 The unit, based on the Samoan drier design, was built for the cooperative by Selangor DID. ANNEX 9 Page 5

and 2,700 tons of unsplit kernels) and 1,200 tons of dry rubber. This repre- sents in the case of palm oil less than 0.4% of Malaysian exports, and less than .03% of projected rubber exports. Total production of rubber within the project area will decline greatly during the project because old rubber trees are being replaced by oil palm, coffee, and cocoa, crops which are better suited to the local soil conditions.

Marketing

14. Malaysia is the largest exporter of natural rubber and oil palm products in the world, and the necessary infrastructure and institutions for marketing and processing incremientalproject production are already well developed in the project area.

Prices

15. Financial prices are based on current ex-mill prices in Kuala Lumpur. Economic prices are based on Bank projections for Malaysian palm oil and rubber c.i.f. Europe and New York (Tables 12 and 13).

F. COFFEE

Production and Imports

16. Coffee is of minor importance as a crop both in Malaysia and in the project area. Domestic procluction is confined to Liberica which is preferred locally but not internationally. Coffee imports are of Robusta, Arabica and instant coffee.

Marketing

17. Farmers sell their berries to private processors who wash and dry them and then sell the beans to wholesalers. For the small incremental project production estimated at 850 tons of parchment, processing facilities in the area are adequate and marketing is not expected to present any problem.

Prices

18. Since the Liberica variety grown in Malaysia is not traded internationally, an analysis has been made of the relation of domestic and international prices over the period September 1974 to June 1976; the results show highly correlated proportionate movements. Therefore, the future trends of the economic and financial farm-gate prices have been projected to follow the Bank's long-term projection of Arabica coffee. ANNEX 9 Table 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Rice Production - Net Imports and consumption 1964-74 (Three-Year Moving Average)

Production Imports Consumption (3 year (3 year (3 year Estimated Consumption moving moving moving population of rice Year average) average) average) million per head - …------(tons '000) ------(lb) --

Peninsular 1964 639 349 988 7.621 290 Malaysia 1965 645 289 934 7.815 268 1966 668 250 918 8.032 256 1967 702 244 946 8.228 258 1968 767 248 1,015 8.439 269 1969 852 240 1,092 8.534 287 1970 922 208 1,131 8.775 289 1971 969 168 1,137 9.018 282 1972 1,032 133 1,165 9.261 282 1973 1,091 153 1,244 9.512 293 1974 1,123 141 1,264 9.769 290

Sabah 1964 47 31 78 0.520 336 1965 48 31 79 0.539 328 1966 50 31 81 0.560 324 1967 52 29 81 0.582 312 1968 57 29 86 0.601 320 1969 60 31 91 0.624 327 1970 64 36 100 0.649 345 1971 70 39 109 0.668 365 1972 72 44 116 0.686 379 1973 74 45 119 0.704 379 1974 73 - - 0.724 -

Sarawak 1964 63 54 117 0.826 317 1965 65 58 123 0.852 323 1966 63 59 122 0.878 311 1967 64 55 119 0.905 295 1968 72 53 125 0.927 302 1969 83 53 136 0.948 321 1970 90 58 147 0.972 339 1971 92 60 151 0.999 339 1972 88 63 152 1.026 332 1973 87 73 160 1.055 340 1974 86 - - 1.085 -

Malaysia 1964 749 435 1,184 8.967 296 1965 759 378 1,137 9.206 277 1966 781 340 1,121 9.470 265 1967 818 328 1,145 9.715 264 1968 896 330 1,223 9.967 275 1969 995 324 1,316 10,106 292 1970 1,076 302 1,374 10.396 297 1971 1,131 267 1,393 10.686 293 1972 1,192 241 1,427 10.973 292 1973 1,252 271 1,515 11.271 303 1974 1,282 - - 11.578 -

Source: Padi Statistics, Peninsular Malaysia. Agricultural Statistics, Sabah. Agricultural Statistics, Sarawak. Statistics Department, Malaysia. ANNEX 9 Table 2

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Projected Rice Production, Consumption and Imports

Per capita Local rice Total rice production Net imports Year Population consumption /a requirements of rice of rice (millions) (lb) ------('000 tons) ------

1973 11.641 292 1,529 1,250 279 1974 11.962 287 1,663 1,329 334 1975 12.300 278 1,405 1,269 136 1976 12.629 267 1,505 1,314 191 1977 12.973 267 1,546 1,365 181 1978 13.332 267 1,590 1,409 181 1979 13.707 267 1,634 1,457 177 1980 14.097 267 1,681 1,525 156 1981 14.475 267 1,726 1,580 146 1982 14.872 267 1,773 1,633 140 1983 15.279 267 1,821 1,687 134 1984 15.708 267 1,873 1,742 131 1985 16.155 267 1,925 1,802 123 1986 16.535 267 1,971 1,858 113 1987 16.992 267 2,025 1,917 108 1988 17.436 267 2,078 1,976 102 1989 17.896 267 2,132 2,038 94 1990 18.375 267 2,190 2,099 91

/a 1973-75 per capita consumption is a moving three-year average of local rice production and net imports.

Source: "Projection of Padi Acreage, Production, Consumption and Imports," Ministry of Agriculture, Kuala Lumpur, Malaysia. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Price of Padi per Pikul /a Paid to Farmers at Buying Centers in Northwest Selangor

1 9 7 4 1 9 7 5 1 9 7 6 1st season 2nd season 1st season 2nd season 1st season 2nd season Category Description /b Long Medium Short Long Medium Short Long Medium Short Long Medium Short Long Medium Short Long Medium Short

Grade A Good, clean dry paddy (maximum moisture content 14%) 23.00 21.00 19.00 29.25 27.25 25.25 29.25 27.25 25.25 27.25 25.25 23.25 29.25 27.25 26.25 29.25 27.25 26.25

Grade B Good, clean dry paddy (maximum 2% impurities & with moisture content 14-16%) 21.85 20.0 18.05 27.75 25.85 23.95 27.75 25.85 23.95 25.85 23.95 22.05 27.75 25.85 24.90 27.25 25.85 24.90

Grade C Good, clean dry paddy (maximum 3% impurities & with moisture content from 17-20%) 21.15 19.50 17.50 26.85 25.00 23.15 26.85 25.00 23.15 25.00 23.15 21.35 26.85 25.00 24.10 26.25 25.00 24.10

Grade Cl Good, clean paddy (maximum 5% impurities & moisture content 17-20%) 20.70 19.00 17.10 26.25 24.45 22.65 26.25 24.45 22.65 24.45 22.65 20.85 26.25 24.45 23.55 26.25 24.45 23.55

Grade D Good, clean lb paddy (maximum 6% impurities & moisture content from 20.1-25%) ------23.05/b 21.35/b 19.65/b 25.75/b 23.05/b 22.20/b 24.75 23.05 22.20

/a One pikul is 133.33 lbs.

/b There have been slight alterations in the categories over the 6 seasons. The descriptions listed refer to the 2nd season of 1976.

a z

(DX ANNEX 9 Table 4

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Derivation of Economic Farm-Gate Price of Rice (1978 currency values per ton)

1978 1979 1980 and thereafter

In US$

Thai 5% broken 330.00 372.10 421.40 10% discount for quality 297.00 334.89 379.26 Freight, Bangkok to Port Klang 19.32 19.32 19.32 Insurance 1.11 1.24 1.40 c.i.f. Port Klang 317.43 355.45 399.98

In M$ c.i.f. Port Klang 787.23 881.52 991.95 Port Klang handling charges 11.81 11.81 11.81 Transport to Ampang Godown 8.86 8.86 8.86 Value at Ampang Godown 807.90 860.85 971.28

Haulage, Tanjong Karang to Ampang 12.51 Loading 1.10 Gunny sack cost 8.78 Milling cost 70.33 Millers' profits 27.43

Subtotal cost Tanjong Karang to Ampang 120.15 Less value of by-products 53.44

Net cost Tanjong Karang to Ampang 66.71

Rice price Tanjong Karang (ready to mill) 741.19 794.14 904.57 Paddy price Tanjong Karang (ready to mill) (assuming 63.3% recovery) 469.17 502.69 572.59

Drying cost 12.50 10% weight loss 55.70 Handling (into driers and off-trucks) 10.71 Transport from purchasing center to mill 7.14 Commission for buying agents 7.14

Subtotal delivery buying centers to mill 93.19

Price delivered at buying center 375.98 409.50 479.40 Transport farm to buying center 1.00 1.00 1.00

Economic farm-gate price of padi per ton 374.98 408.50 478.40 ANNEX 9 Table 5

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURALDEVELOPMENT PROJECT

Acreage of Coconuts and Estimated Production of Copra in Peninsular Malaysia-/a

Coconut acreage Estimated copra production Year '000 acres '000 tons

1967 504 166

1968 517 170

1969 523 160

1970 527 160

1971 524 157

1972 522 157

1973 538 161

1974 526 158

/a Sources: For 1967-70, Appraisal of the Western Johore Agricul- tural Development Project (IBRD Report No. 314a-MA).

For 1971-74, Ministry of Agriculture acreage figures and mission estimate of copra production based on an average yield of 0.3 tons of copra per acre per year. ANNEX 9 Table 6

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

International Trade in Coconuts and Coconut Products - Peninsular Malaysia

Exports Imports Net trade Commodity Volume Value Volume Value Volume Value M$ M$ M$

1973

Coconut fresh (nuts) 5,986,000 725,300 23,000 4,500 +5,963,000 +720,800 Copra (tons) 294 162,200 2,960 1,318,300 -2,666 -1,156,100 Crude coconut oil (tons) 25,245 26,900,500 613 297,800 +24,632 +26,602,700 Refined coconut oil (tons) 2,182 2,593,300 2,263 1,938,900 -81 +654,400 Copra cake (tons) 911 175,900 4,102 679,000 -3,191 -503,100

Total 30,557,200 4,238,500 26,318,700

1974

Coconut fresh (nuts) 4,448,700 1,298,377 74,500 13,529 +4,374,200 +1,284,848 Copra (tons) 1,043 942,586 535 498,040 +508 +444,546 Crude coconut oil (tons) 40,152 94,995,436 82 29,392 +40,070 +94,966,044 Refined coconut oil (tons) 2,817 6,193,600 535 873,000 +2,282 +5,320,600 Copra cake (tons) 14 4,204 7,263 1,596,061 -7,249 -1,591.857

Total 103,434,203 3,010,022 100,424,181

1975

Coconut fresh (nuts) 5,718,289 1,466,144 44,100 5,418 +5,674,189 +1,460,726 Copra (tons) 139.53 118.038 3,398.20 1,857,611 -3,258.67 -1,739,573 Crude coconut oil (tons) 29,917.88 30,838,723 248.32 171,782 +29,669.56 +30,660,941 Refined coconut oil (tons) 3,520.68 5,739,899 423.19 804,618 + 3,096.49 +4,935,281

Total 38,162,804 2,845,429 35,317,375

Source: Import and Export Trades in Food and Agricultural Products, Ministry of Agriculture and Rural Development. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Average Monthly Ex-farm Copra Prices at Sabak Bernam and Kuala Selangor (M$ per pikul)

Years and Grades

------19 75- - _ _------1976…- … Grade 1 Grade 2 Grade 3 Grade I Grade 2 Grade 3 Grade I Grade 2 Grade 3 Months S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S. S.B. K.S.

January 44.19 45.00 39.56 39.00 37.50 34.40 36.00 34.13 33.30 30.13 31.00 27.63 February 41.84 38.88 37.51 34.81 35.56 30.94 36.50 34.63 33.50 30.63 31.00 28.13

March 35.88 35.63 32.65 32.13 30.66 28.69 36.95 35.88 33.78 31.88 31.33 29.38 April 32.62 32.40 29.60 29.15 28.09 26.20 35.70 34.20 32.40 30.60 30.20 28.00 May 33.10 31.60 30.52 27.65 28.54 25.20 35.60 33.50 32.70 30.00 30.80 27.50 June 29.69 27.88 27.38 24.88 24.44 22.38 39.30 37.00 35.80 34.50 33.90 31.50

July 79.88 - 73.53 - 70.79 - 30.70 29.10 28.60 26.00 26.20 23.40 46.60 45.50 42.60 43.00 39.20 40.00

August 79.50 - 74.00 - 70.00 - 37.38 34.08 34.98 30.63 30.75 27.38 44.50 45.00 41.00 '42.00 38.50 39.00

September 67.25 - 61.63 - 58.03 - 34.50 31.50 32.38 28.00 28.88 25.53 47.50 47.50 45.50 44.00 42.00 41.00

October 64.68 55.00 59.00 53.00 56.00 51.00 33.75 31.75 30.63 27.75 27.75 25.25 46.10 47.00 43.50 44.00 40.90 41.00

November 62.50 56.88 58.00 52.50 54.00 48.25 31.75 31.50 29.88 27.50 26.88 25.00 51.20 52.00 47.40 49.00 44.70 46.30

December 50.25 48.00 45.25 41.00 42.75 38.00 34.13 32.63 32.00 28.63 29.38 26.00 52.50 56.50 49.50 53.50 47.50 51.00

S.B. - Sabak Bernam K.S. = Kuala Selangor

Grade I - 97%-100 dry by visual inspection. Grade 2 - 94%- 96% dry by visual inspection. Grade 3 - 90%- 94% dry by visual inspection.

Prices reported by FAMA field staff.

2 _ IS ANNEX 9 Table 8

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Derivation of Economic Farm-Gate Price of Copra (1978 currency values per ton)

1978 1979 1980 1985

In US$ Copra c.i.f. Europe 425.00 378.50 391.20 464.60 Ocean freight differential 32.40 32.40 32.40 32.40

c.i.f. Port Klang 392.60 346.10 358.80 432.20

In M$ c.i.f. Port Klang 973.65 858.33 889.82 1,071.86 Handling charges Port Klang 12.40 12.40 12.40 12.40 Transport Port Klang to Sabak Bernam 10.33 10.33 10.33 10.33 Drying & sacking cost at Sabak Bernam 39.93 39.93 39.93 39.93 Transport farm to drying unit 5.20 5.20 5.20 5.20 Commission to buying agent 10.42 10.42 10.42 10.42

Economic farm-gate price per ton 895.37 780.05 811.54 993.58

Economic farm-gate price per nut /a 0.24 0.21 0.22 0.27

/a Based on a conversion factor of 225 nuts from Malaysian talls per pikul of copra. ANNEX 9 Table 9

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

International Trade in Cocoa - Peninsular Malaysia

Exports Imports Net trade Commodity Volume Value Volume Value Volume Value M$'000 M$'000 M$'000

1973

Cocoa bean raw or roasted ('00) 60,302 6,456.9 42,094 4,187.0 +18,208 +2,269.9 Cocoa powder unsweetened ('00 lb) 3,151 254.2 17,424 2,299.0 14,273 -2,044.8 Cocoa paste defatted or not (lb) 426,155 134.9 11,011 7.0 +415,144 +127.9 Cocoa butter (lb) 1,397,736 3,214.3 93,216 133.2 +1,304,520 +3,081.1

Total 10,060.3 6,626.2 + 3,434.1

1974

Cocoa bean raw or roasted ('00) 113,726 16,776.2 19,335 3,501.3 +94,371 +13,274.9 Cocoa powder unsweetened ('00 lb) 794 126.1 30,522 4,156.4 -29,728 -4,030.3 Cocoa paste defatted or not (lb) - - 56,793 35.3 -56,739 -85.3 Cocoa butter (lb) 1,300,148 2,371.8 45,985 85.3 +1,254,163 +2,286.5

Total 19,274.1 7,828.3 +11.445.8

1975

Cocoa bean raw or roasted ('00) 139,778 18,174 4,030 204 +135,748 +17,970 Cocoa powder unsweetened ('00 lb) 2,323 263 1,725 2,162 -14,928 -1,899 Cocoa paste defatted or not (lb) - - 165,445 264 -165,445 -264 Cocoa butter (lb) /a 414,874 1,196 111,438 1,171 +303,436 +25

Total 19.633 3.801 +15,832

/a Part year only.

Source: FAMA Commodity Bulletin. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Average Monthly Ex-farm Cocoa Prices, 1974-1976 /a (M i/lb)

-- …------1974 …-1975 …-1976… Wet beans Dry beans Wet beans Dry beans Wet beans Dry beans Kuala Sabak Kuala Sabak Kuala Sabak Kuala Sabak Kuala Sabak Kuala Sabak Months Selangor Bernam Selangor Bernam Selangor Bernam Selangor Bernam Selangor Bernam Selangor Bernam

January - - - - 40 50 95 - 45 50 155 165

February = - - - 35 50 80 - 55 55 180 170

March - - - - 40 52 80 - 60 55 185 170

April - - 43 45 90 - 55 55 180 170

May - - 45 40 85 - 57 69 175 177

June - - 40 35 - - 73 80 225 200

July - - 35 30 120 110 77 89 270 250

August - - - - 30 35 100 120 66 76 260 241

September - - - - 30 35 100 130 70 90 270 268

October - - - - 35 40 110 150 90 104 285 294

November 55 55 125 - 40 45 125 160 110 130 325 370

December 40 55 100 - 40 45 135 160 120 130 385 390

/a Prices reported by FAMA field staff. F-X I.. , ANNEX 9 Table 11

MALAYSIA

NORTHWEST SELANGOR INTEGRATEDAGRICULTURAL DEVELOPMENT PROJECT

Derivation of Economic Farm-Gate Price of Cocoa (1978 currency values per ton)

1978 1979 1980 1985

In US$ Cocoa beans c.i.f. New York 1.130 1.024 0.939 0.614 5% discount for lower quality 1.074 0.973 0.892 0.583 Ocean freight & insurance 0.065 0.065 0.065 0.065

c.i.f. Port Klang 1.009 0.908 0.827 0.518

In M$ c.i.f. Port Klang 2.502 2.251 2.051 1.285 Handling charges Port Klang & transport to Sabak Bernam 0.010 0.010 0.010 0.010 Fermenting,drying & transport cost to farm 0.058 0.058 0.058 0.058

Economic farm-gate price per lb 2.434 2.183 1.983 1.217

Economic farm-gate price /a for wet beans per lb 0.811 0.728 0.661 0.406

/a Conversion wet to dry beans at 3:1. ANNEX 9 Table 12

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Derivation of Economic Price of Palm Oil, Palm Kernel and Fruit Bunches (1978 currency values per ton)

1978 1979 1980 1985

PALM OIL

In US$ Malaysian palm oil c.i.f. Europe 495.00 437.20 443.30 455.60 Ocean freight 32.00 32.00 32.00 32.00

f.o.b. Port Klang 463.00 405.20 411.30 423.60

In M$ f.o.b. Port Klang 1,148.24 1,004.90 1,020.02 1,050.53 Handling charges Port Klang 12.80 12.80 12.80 12.80 Transport from Kuala Selangor 9.84 9.84 9.84 9.84

Economic price ex-mill Kuala Selangor per ton 1,125.60 982.26 997.38 1,027.89

PALM KERNEL

In US$ Nigerian palm kernels c.i.f. Europe 332.00 288.40 282.50 328.60 Ocean freight and insurance 50.00 50.00 50.00 50.00

f.o.b. Port Klang 282.00 238.40 232.50 278.60

In M$ f.o.b. Port Klang 699.36 591.23 576.60 690.93 Handling charges Port Klang 15.75 15.75 15.75 15.75 Transport from Kuala Selangor 9.84 9.84 9.84 9.84

Economic price ex-mill Kuala Selangor per ton 673.77 565.64 551.01 696.84

FRESH FRUIT BUNCH

In M$ 18.5% of oil plus 3.5% of kernel 231.82 201.52 203.80 214.55 Processing costs & margins 35.00 35.00 35.00 35.00

Economic price ex-mill Kuala Selangor per ton 196.82 166.52 168.80 179.55 ANNEX 9 Table 13

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Derivation of the Economic Price of Rubber (1978 currency values per lb)

1978 1979 1980 1985

In US$ RSSI rubber spot, New York 0.44 0.46 0.47 0.46

Ocean freight and insurance 0.03 0.03 0.03 0.03

c.i.f. Port Klang 0.47 0.49 0.50 0.49

In M$ f.o.b. Port Klang 1.17 1.21 1.25 1.22

Handling charges, Port Klang 0.01 0.01 0.01 0.01

Transport from Kuala Selangor 0.01 0.01 0.01 0.01

Processing cost 0.12 0.12 0.12 0.12

Processing losses 0.09 0.09 0.09 0.09

Economic dry rubber price at Kuala Selangor per lb 0.94 0.98 1.02 0.99 ANNEX 10 Page 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farm Budgets and Incomes

1. Annexes 2 and 3 contain discussions of the existing and projected cropping patterns. This annex shows representative farm models for the project.

2. The irrigation area is divided into two distinct production areas. In Sekinchan a relatively high degree of social organization, other social factors and a comparatively dependable water supply have resulted in the use of relatively productive techniques; in the other areas - referred to collect- ively as non-Sekinchan - highly variable timing of the arrival and quantity of water has resulted in the use of low-risk, low-yield techniques of production. Separate farm models have been constructed for padi farms in the two areas (Tables 1-4). Estimates of available family labor were subtracted from estimates of projected labor inputs (Table 1) to arrive at the estimates of hired labor (Table 2). Estimates of present input use are based on government surveys of the area and interviews with farmers during appraisal. Without the project, yields are projected to increase in Sekinchan owing to better planting techniques and in the other areas, to better general use of chemicals. Future input levels for the "with project" conditions are based on current best practices and M4ARDI-supervised farmer-managed field trials (Table 2).

3. Farm budgets for the two padi areas are calculated according to cash flows and incremental net farm benefits. Financial labor costs include only hired labor which is costed at M$8.00/day. Changes in off-farm income are reflected in the changes in net farm cash flow. As the padi area was developed and distributed to smrallholdersrelatively recently (1930s-1950s) commercial renting of land is not a significant feature. About 84% of the land is owner-operated and most: of the remainder is "rented" from blood relatives, where the distribution of returns is based more on family than on economic considerations.

4. In Sekinchan (Table 3) cropping intensity does not change with the project. Irrigation charges increase by M$12 per hectare with the project. Incremental net benefits are relatively low because farmers in this area are by any standard already at very high yields.

5. Cropping intensities in the other areas (Table 4) increase from 97% to 100% in the main season and from 70% to 95% in the off-season. A major change during the project would be the financing of purchased inputs through credit. These inputs are to some extent financed at present by working first as wage-laborers in Sekinchan or other areas and then using the ANNEX 10 Page 2

cash so obtained to purchase seeds and fertilizers. This pattern disrupts cropping schedules throughout Tanjong Karang. With the extension of intens- ively supervised BPM credit as part of the proposed agriculturalservices program, institutionalcredit would rise to about M$550 per ha per annum. In addition to the M$12 per ha increase in irrigation charges, zakat payments would rise by approximatelyM$110 per ha per annum with the project /1.

6. Data for the coconut area are based on a detailed socioeconomic survey of the area./2 Since 94% of coconut farms are owner occupied, the models assume complete owner occupation of the farms. Yields, investment and production costs are based on estimates made by the staff of the Coconut SmallholdersDevelopment Scheme (CSDS). It is assumed that hired labor is used for initial felling, on-farm drain improvementand weed eradication,and for harvesting coconuts; estimated labor requirementsare detailed in Table 5. The drainage area is representedby models of a 7 acre (2.8 ha) farm of existing Malaysian talls replanting 4 of the 7 acres with MAWA hybrids (Table 6), rehabilitatingthe 7 acres with intercroppedcoffee (Table 7), and rehabilitatingthe 7 acres with intercroppedcocoa (Table 8).

Incomes

7. The farm budgets presented in the accompanyingtables represent single-familyfarms typical of the irrigation and drainage areas of Northwest Selangor. Surveyed farm families in the region average 6.0 members in size. The present annual per capita income in the non-Sekinchanpadi areas is about M$583 (US$235),compared with the estimated national relative poverty line of about M$840 (US$340),/3the estimated national absolute poverty line of M$533 (US$215),and national per capita income of about M$2,130 (US$860). Per capita incomes in the tree crop areas are lower (averagingM$370 or US$150) and tree crop farmers are heavily dependent on off-farm incomes. About 85% of smallholder families in the project area subsist on total incomes below the relative poverty line, while 65% live in absolute poverty. In general, the project area is not among the poorest padi or rainfed areas in the country, but in no sense can it be considered wealthy or prosperous. The level of smallholder incomes, farm sizes, and agriculturalpractice of the area is such that the project is anticipatedto lift the bulk of the

/1 Zakat, the official Moslem religious tax, is obligatory for all Malay farmers. Virtually 100% of the farmers in the non-Sekinchanareas are Malays.

/2 "Coconut Smallholdingsin Lower Perak, Kuala Selangor and Sabak Bernam," S.Selvadurai,Ministry of Agriculture,August 1974. Additional informationderived from surveys of the smallholderrubber areas in 1976/77.

/3 Equivalent to the total of personal income tax deductions for a family of six, divided by six. ANNEX 10 Page 3

poor in the project area out of absolute poverty, and to place those currently living on incomes above the absolute poverty line more securely and permanentlyoutside the absolute poverty group. With the project per capita income in the non-Sekinchanpadi areas would rise to M$735 (US$296) in constant terms by 1987, while tree crop farmers would by 1990 earn the equivalent of between M$938 (US$378)and M$1,528 (US$616),depending on choice of primary crops and intercrops. A total of about 17,000 farm families would be lifted out of the absolute poverty group. The most advanced and prosperous single identifiablegroup of farmers, the Sekinchanpadi farmers, are expected to benefit least from the project, with per capita incomes rising from M$1,100 (US$444)now to M$1,150 (US$464)with the project.

Rent and Cost Recovery

8. Rent and cost recovery are discussed in detail in paras. 5.09-5.11 of the main text. Table 9 presents a summary of the data used to calculate the rent and cost recovery indices. ANNEX 10 Table 1

MALAYSIA

NORTHWEST SELANGOR INTEGRATEDAGRICULTURAL DEVELOPMENT PROJECT

ProjectedLabor Inputs for Padi (Man-daysper hectare)

Sekinchan Non-Sekinchan Future Future Future Future without with without with Present project project Present project project

Land Preparation/a Clearing straw 7.4 7.4 7.4 2.5 2.5 7.4 Repairingbunds, etc. 2.5 2.5 4.9 7.4 7.4 4.9 Plowing 0.6 0.6 0.6 1.7 1.7 0.6

Seed Beds /b 3.9 3.9 4.4 7.4 7.4 3.9

Transplanting/c 18.5 18.5 22.2 16.1 16.9 19.8 Applying fertilizer /d 2.2 2.4 3.0 0.9 1.2 2.5 Applying chemicals /d Handweeding/e 12.4 12.4 19.8 4.9 6.2 14.8 Water management and supervision/f 19.8 19.8 24.7 14.8 14.8 19.8 Harvest /& 24.7 24.7 29.7 26.7 24.7 29.7

Total 92.0 92.2 116.7 82.4 82.8 91.4

/a Extra time will be spend on maintainingbunds, etc., with improved system.

/b There will be better preparationand closer supervisionof seed beds.

/c Closer spacing and row planting will increase transplantingtime.

/d More time spent on spraying - more intensive technique.

/e More handweeding (chemicaltreatment and handweedingin future). Handweed- ing can be handled by family labor in off-peak periods.

/f More attention to cover managementwhen control available to every farmer.

/g More time spent on winnowing and drying if proper grading introduced. More labor required off season crop due to less favorableharvest conditions. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Technical Coefficients and Production Costs Per Hectare

Farm Model A Farm Model B Sekinchan Non-Sekinchan Present Future w/o project /d Future w/ proiect /d Present Future w/o project Future w/ project /d Item Main Off-season Main Off-season Main Off-season Main Off-season Main Off-season Main Off-season

Technical Coefficients Yields (tons/ha) 5.00 5.20 5.10 5.30 5.40 5.70 3.00 3.50 3.25 3.75 4.40 4.70 Cropping intensity (%) 100 100 100 100 100 100 97 70 97 70 100 95 Production Costs (M$/ha) Land preparation: Plowings (M$56/ha) 112.00 112.00 112.00 112.00 112.00 112.00 92.70 92.70 92.70 92.70 112.00 112.00 Seeds /a 11.60 11.60 11.60 11.60 15.40 15.40 11.60 11.60 11.60 11-60 15.40 15.40 Urea 46% N (M$0f50/kg) 24.70 24.70 26.00 26.00 43.00 32.50 25.00 25.00 26.00 26.00 38.00 32.50 Mixed fertilizer /b 148.20 148.20 140.00 140.00 100.00 6 100.00 44.50 44.50 50.00 50.00 81.50 81.50 Insecticides (13. /ltr) 61.80 42.00 60.00 40.00 52.50 36.80 14.83 8.90 13.60 13.60 44.62 29.02 Herbicide (9.7/ltr) 24.70 24.70 24.70 24.70 20.60 20.60 9.70 9.70 12.38 12.38 Rat control /c 0 0 0 0 7.20 7.20 0 0 0 0 7.20 7.20 Total cost of physical inputs 383.00 363.20 374.30 354.30 350.70 324.50 188.60 182.70 203.60 203.60 311.10 290.00 Labor Input (man-days/ha) Land preparation 10.5 10.5 10.5 10.5 12.9 12.9 11.7 11.7 11.7 11.7 12.9 12.9 Seed beds 3.9 3.9 3.9 3.9 4.4 4.4 7.4 7.4 7.4 7.4 3.9 3.9 Transplanting 2.2 2.0 2.4 2.2 3.0 2.8 16.1 16.1 16.1 16.1 19.8 19.8 Fertilizing/spraying 18.5 18.5 19.0 19.0 22.2 22.2 0.9 0.9 1.1 1.1 2.5 2.5 Handweeding 12.4 12.4 12.4 12.4 19.8 19.8 4.9 4.9 5.2 5.2 14.8 14.8 Water management 19.8 19.8 19.8 19.8 24.7 24.7 14.8 14.8 14.8 14.8 19.8 19.8 Harvest 24.7 25.7 24.7 25.7 28.7 31.0 22.7 23.7 22.7 23.7 26.7 28.7 Total labor requirements 92.0 92.8 92.7 93.5 115.7 117.8 78.5 79.5 79.0 80.0 100.4 102.4

Hired labor, man-days/ha 24.7 25.9 25.2 26.4 37.5 40.3 25.1 26.3 25.1 26.3 31.5 33.9

/a Traditional seeds, M$0.46/kg; improved varieties, M$0.55/kg.

/b 15:15:7.5, M$0.85/kg.

/c 20 kg of broken rice @ M$7.00; 988 gm Warfarin @ M$3.61 and 198 gm zinc phosphate @ M$12.80/kg; assumption is 70% control.

/d At full development in 10 years.

0& ANNEX 10 Table 3

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farm Model A - Sekinchan Area

Cultivated Padi Area 1.5 ha

Future /a Future /a Without With Present Project Project

Cropping Intensity (Z) Main season 100 100 100 Off season 100 100 100

Total 200 200 200

Yield (tons/ha) Main season 5.00 5.10 5.40 Off season 5.20 5.30 5.70

Production (tons) Main season 7.50 7.65 8.10 Off season 7.80 7.95 8.55

Total 15.30 15.60 16.65

…___-M$ …----

Cash Inflow Rice sales 6,414.14 6,550.64 7,028.38 Credit 1,364.85 1,365.90 1,728.72

Total cash inflow 7.778.99 7.916.54 8.757.11

Cash Outflow Operation costs Land preparation 336.00 336.00 336.00 Seeds 34.80 40.50 46.20 Fertilizer and chemicals 748.50 722.10 630.60 Hired labor 607.20 619.20 933.60

Subtotal 1.726.50 1.717.80 1.946.40

Credit repayment 1,501.34 1,492.59 1,802.19

Taxes and water charges Irrigation rate 37.05 37.05 55.58 Quit rent 7.35 7.35 7.35

Subtotal 44.40 44.40 62.93

Total cash outflow 3.272.24 3.254.79 3.811.52

Cash flow frompadi production 4.506.75 4.661.75 4.945.58

Off-farm income 1,350.00 1,300.00 1,180.00

Income from nonpadi production 230.00 230.00 230.00

Net farm cash flow 6.086.75 6.191.75 6,355.58

- Off-farm income 1,350.00 1,300.00 1,180.00 + On-farm consumption 547.37 547.37 547.37

Net farm benefit 5.284.12 5.439.12 5,722.95

Incrementalnet benefit - - 283.83 ANNEX 10 Table 4

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farm Model B - Non-Sekinchan Area

Cultivated Padi Area 1.2 ha

Future Future without with Present project project

Cropping Intensity (Z) Main season 97 97 100 Off season 70 70 95

Total 167 167 195

Yield (tons/ha) Main season 3.00 3.25 4.40 Off season 3.50 3.75 4.70

Production (tons) Main season 3.52 3.81 5.32 Off season 2.96 3.18 5.40

Total 6.48 6.99 10.72

-- - (M$) ------_

Cash Inflow Rice sales 2,524.40 2,730.80 4,330.23 Credit 0.00 0.00 664.00

Total cash inflow 2,524.40 2,730.80 4,993.46

Cash Outflow Operation costs Land preparation 187.32 187.32 264.26 Seeds 23.44 23.44 36.34 Fertilizer and chemicals 165.38 200.66 409.19 Hired labor 413.89 413.89 616.66

Subtotal 790.03 825.31 1,326.45

Credit repayment 0.00 0.00 692.22

Taxes and water charges Irrigationrate 29.89 29.89 44.83 Quit rent 5.98 5.98 5.98 Zakat 206.39 222.63 341.43

Subtotal 242.26 258.50 392.24

Total cash outflow 1,032.29 1,083.81 2,410.91

Cash flow from nadi Production 1,492.11 1,646.99 2,682.55

Off-farm income 1,350.00 1,340.00 950.00 Income from nonpadi production 230.00 230.00 230.00

Net farm cash flow 3,072.11 3,216.99 3,862.55

- Off-farm income 1,350.00 1,340.00 950.00 + On-farm consumption 424.00 450.00 547.37

Net farm benefit 2,146.11 2.326.99 3,459.92

Incremental net benefit - - 1,132.93 ANNEX10 Table 5

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Additional Family Labor Ploquiremnt. for Tree Crovs

Present -With Project---- Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9-25

…d------tays per farm ------…

MODELC

3 acres nonreplanted 28 28 28 28 28 28 28 28 28 28

4 acres replanted with HAWA Fertilizer application ) 5 5 5 5 5 5 5 5 5 Weeding ) 40 - 70 35 35 35 18 18 18 18 Clearing drains ) - - 70 18 18 18 18 18 18 Planting ) 40 25 25 25 25 20 10 10 10 1.0 acre other crops 40 40 40 40 40 40 40 40 40 40

Total family labor requirements 108 113 168 203 151 151 129 119 119 119

Reduction in days of off-farm employment ------

MODELD

Fertilizer application ) 9 9 9 9 9 9 9 9 9 Weeding ) 68 - 120 60 60 30 30 30 30 30 Clearing drains ) - - 120 30 30 30 30 30 30 Coffee ) 48 5 5 5 5 5 5 5 5 Coffee harvesting - - - 82 164 246 328 369 410 410 1.0 acre other crops 40 40 40 40 40 40 40 40 40 40

Total family labor requirements 108 97 174 316 308 360 442 483 524. 524

Reduction in days of off-farm employment - - - - - 40 122 163 204 204

MODELE

Fertilizer application ) 9 9 9 9 9 9 9 9 9 Weeding ) 68 - 120 90 90 60 60 30 30 30 Clearing drains ) - - 120 30 30 30 30 30 30 Cocoa 30 5 5 5 5 5 5 5 5 Cocoa harvesting - - - 48 84 108 132 144 156 168 1.0 acre other crops 40 40 40 40 40 40 40 40 40 40

Total family labor requirements 108 79 174 312 258 252 276 258 270 282

Reduction in days of off-farm employment ------

/a Assuming 600 man-days of farmer and family labor available per year antd present off-farm employment of 280 days. ANNEX10 Table 6

NALAYSIA

NORTWEISTSSLAIGOR IYEGRtATED AGRICULTURAL DKVKLOPMZIN P80JSCY

Fare Model C

Coconut Are& 7 Acres with 4 Acres Replanted tava Hybrids at 65 Palms/Acre

Present - With Project Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Years 13-25

Production La

Coconuts ('000 nuts) - talls 9.7 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 - Maw------1.6 18.3 23.8 27.5 31.2 36.9 41.9 45.0 45.0

Cash Inflow

Inco from sale. Cocon-ts /b 1,583 614 614 614 614 838 3,176 3,946 4,464 4,982 5,780 6,480 6,914 6,914

Replanting subsidy Le - 2,100 600 600 600 600 ------

Total cash inflow 1.583 2.714 1.214 1.214 1.214 1.452 3.176 3.946 4.464 4.982 5,780 6 480 6.914 6.914

Cash Outflow

Investment costs d Felling and drains - 1,401 ------Weederadication - 492 ------_ Planting materials - 878 ------

Total inveatment costs - 2.771 ------

Operating costs le Fertilizer - 300 300 300 225 225 225 225 225 225 225 225 225 225 Plant protection 21 109 234 109 109 109 59 59 59 59 59 59 59 95 Harvesting .L 388 160 160 160 160 224 892 1,112 1,260 1,408 1,636 1,836 1,960 1,960

Subtotal 409 569 694 569 494 598 1,176 1.296 1.566 1.714 1.942 2.142 2.266 2.266

Land tax and drainage chargea /it 51 51 94 94 94 94 94 94 94 94 94 94 94 94

Total operating costs 460 620 788 663 588 692 1.270 1.490 1.660 1 805 2.036 2.236 2.360 2.360

Total cash outflow 460 3.391 788 663 588 692 1.270 1.490 1.660 1,08 2.036 2.236 2.360 2.360 Cash balance from the coconut area 1,127 -677 426 551 626 760 1.906 2,456 2,804 3,174 3,744 4,244 4,554 4,554

Off-fare net incomo /h 1.120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120

Net farm cash flow 2.243 443 1.546 lu671 1,746 1.880 3,026 3.576 3.924 4.294 4.864 5,364 5,674 5.674

Nonproduction Inflow Replanting subsidy 0 2,100 600 N00 600 600 0 0 0 0 0 0 0 0 Off-farm income 1,120 1,120 1,120 1,120 1,120 1.120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120

Net Farm Benefit 1.123 -2,777 -174 -49 26 160 1,906 2.456 2,804 3.174 3,744 4,244 4,554 4,554

Incremental Net Farm Benefit - -3,900 -1,297 -1,172 -1,097 -963 783 1,333 1,681 2,051 2,621 3,121 3,431 3,431

/a Assuming yield build up shown in Annex 3, Table 4. /b At M$0.17 per nout for talls and MS0.14 per nut for Mewa hybrids. Annual totals exclude subsistence consumption valued at M$66, equivalent to 4Z of without production. 1c At M$900 per acre, of which MS420 in Year I and M$120 in Years 2 to 5 as proposed for the Coconut Replinting Scheme to be carried out during the Third Malaysian Plan. Id Costs estimated by CSOS staff. At present the amount of subsidy paid for felling and drains is only MS160 per acre compared with a cost of MS280 per acre. /e Weeding, clearing drains snd fertiliser applic-tion are assumed to be crrried out by the farmer and his family. /f For coconuts M$20 per 1,000 nuts for picking and MS20 per 1,0010 for husking, splitting and carrying to roadside. TX Land tax at M91 per acre. Drainage charges increase fros MS5 per acre for the without situation end Year I to MS10 per acre from Year 2 onwards. /h Assuming no reduction in off-farm income as a risult of the additional farmer and family labor requirements detailed in Table 5. ANNEX10 Table 7

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farm Model D

Coconut Area 7 Acres Rehabilitated Malaysian Talls. Underplanted Coffee

Present ---- With Project------Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Years 10-25

Production /a

Coconuts ('000 nuts) 9.7 9.7 9.7 10.8 11.9 13.0 13.0 13.0 13.0 13.0 13.0 Coffee berries (piculs) /a - - - 57.4 114.8 172.2 229.6 258.2 287.0 287.0 287.0 ______… ______-__ ------NM$------

Cash Inflow

Income from sales Coconuts at M$0.17/nut lb 1,583 1,583 1,583 1,770 1,957 2,144 2,144 2,144 2,144 2,144 2,144 Coffee berries at M$15.5/picul - - - 890 1,779 2.669 3.559 4.004 4.448 4.448 4.448

Rehabilitationsubsidy /c - 3,060 1,020 1,020 ------

4 Total cash inflow 1.583 4.643 2.603 3.680 3.736 .813 5.703 6,148 6.592 6,592 6.592

Cash Outflow

Investment costs /d Felling and drains - 1,524 ------Weed eradication - 571 ------Planting materials Coconut - 91 ------Coffee - 383 ------

Totalinvestment costs - 2.569 ------

Operating costs ke Fertilizer - 961 825 850 850 850 850 850 850 850 850 Plant protection 21 272 196 170 106 106 106 106 106 106 106 Harvesting /f 388 380 388 432 476 520 520 520 520 520 520

Subtotal 409 1,621 1.409 1.452 1,432 1.476 1.476 1,476 1 .476 1,476 1.476

Land tax and drainage charges /g 51 51 94 94 94 94 94 94 94 94 94

Total operating costs 460 1.672 1.503 1,546 1.526 1.570 1,570 1.570 1,570 1,570 1.570

Total cash outflow 460 4,241 1,503 1.546 1.526 1.570 1.570 1.570 1.570 1.570 1.570

Cash balance from the coconut area 1,123 402 1,100 2,134 2,210 3,243 4,133 4,578 5,022 5,022 5,022

Off-farm net income th 1,120 1,120 1,120 1,120 1,120 960 632 468 304 304 304

Net farm cash flow 2.243 1,522 2.220 3.254 3.330 4.203 4.765 5.046 5.326 5,326 5.326

NonproductionInflow Rehabilitationsubsidy 0 3,060 1,020 1,020 0 0 0 0 0 0 0 Off-farm income 1,120 1,120 1,120 1,120 1,120 960 632 468 304 304 304

Net Farm Benefit 1,123 -2,658 80 1,114 2,210 3,243 4,133 4,578 5,022 5,022 5,022

IncrementalNet Farm Benefit - -3,781 -1,043 -9 -1,087 2,120 3,010 3,455 3,899 3,899 3,899

/a 1 picul - 133.3 lb. lb After deduction of subsistence consumption equivalent to 42 of present production value at K$66. /c At M$600 per acre of which M$360 in Year I and M$120 in Years 2 and 3 as proposed for the Coconut Rehabilitation Scheme to be carried out during the Third Malaysian Plan. /d Costs estimated by CSDS staff. /e Weeding, clearing drains, fertilizer applicationand picking of coffee are assumed to be carried out by the farmer and his family. /f At M$20 per 1,000 nuts for picking and M$20 per 1,000 nuts for husking, splitting and carrying to roadside. 14 Land tax at M$1 per acre. Drainage charges increase from M$5 per acre for the preproject situation and Year I to N$10 per acre from Year 2 onwards. th Assuming a reduction in off-farm net income due to additional farmer and family labor requirementsdetailed in Table 5. ANNEX 10 Table 8

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Farm Model E

Coconut Area 7 Acres Rehabilitated Malaysian Talls. Underplanted Cocoa

Present ---- With Project ------…- Year L Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Years 10-25

Production

Coconuts ('000 nuts) 9.7 9.7 9.7 10.8 11.9 13.0 13.0 13.0 13.0 13.0 13.0 Cocoa (wet beans - '000 lb) - - - 5.1 9.0 11.6 12.9 14.2 15.0 15.5 15.5

Cash Inflow

Income from sales Coconuts at MS0.17/nut /a 1,583 1,583 1,583 1,770 1,957 2,144 2,144 2,144 2,144 2,144 2,144 Cocoa at M$0.41/lb wet beans - - - 2,091 3,690 4,756 5,289 5,822 6,150 6,355 6,355 Rehabilitation subsidy /b - 3,060 1,020 1,020 ------

Total cash inflow 1.583 4.643 2.603 4.881 5.647 6,900 7.433 7.966 8.294 8.499 8.499 Cash Outflow

Investment costs /c Felling and drains - 1,524 ------Weed eradication - 571 ------Planting materials Coconut - 91 ------Cocoa - 383 ------Total investment costs - 2.569 ------Operating costs /d Fertilizer - 961 825 850 850 850 850 850 850 850 850 Plant protection 21 272 196 170 106 106 106 106 106 106 106 Harvesting coconut /e 388 380 388 432 476 520 520 520 520 520 520

Subtotal 409 1.621 1,409 1.452 1.432 1,476 1.476 1.476 1.476 1.476 1.476 Land tax and drainage charges /f 51 51 94 94 94 94 94 94 94 94 94

Total operatina costs 460 1.672 1.503 1.546 1.526 1.570 1.570 1.570 1.570 1,570 1,570

Total cash outflow 460 4.241 1.503 1.546 1.526 1,570 1.570 1.570 1.570 1.570 1.570 Cash balance from the coconut area 1,123 402 1,100 3,335 4,121 5,330 5,863 6,396 6,724 6,929 6,929

Off-farm net income LA 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120

Net farm cash flow 2.243 1.522 2.220 4.455 5.241 6.450 6.983 7.516 7,844 8.049 8.049 Nonproduction Inflow Rehabilitation subsidy 0 3,060 1,020 1,020 0 0 0 0 0 0 0 Off-farm income 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120

Net Farm Benefit 1,123 -2,658 80 2,315 4,121 5,330 5,863 6,396 6,724 6,929 6,929 Incremental Net Farm Benefit - -3,781 -1,043 1,192 2,998 4,207 4,740 5,273 5,601 5,806 5,806

/a After deduction of subsistence consumption equivalent to 4% of preproject production valued at K$66. /b At M$600 per acre, of which M$360 in Year I and M$120 in Years 2 and 3 as proposed for the Coconut Rehabilitation Scheme to be carried out during the Thrid Malaysian Plan. /c Costs estimated by CSDS staff. /d Weeding, pruning, clearing drains, fertilizer application and picking and splitting of cocoa are assumed to be carried out by the farmer and his family. /e At M$20 per 1,000 nuts for picking and M$20 per 1,000 nuts for husking, splitting and carrying to roadside. /f Land tax at M$1 per acre. Drainage charges increase from M$5 per acre for the preproject situation and Year 1 to M$10 per acre from Year 2 onwards. /y Assuming no reduction in off-farm income due to addiitional farmer and family labor requirements detailed in Table 5. MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Rent and Cost Recovery Analysis /a (X$)

Gross Value of Farm Manage- Indirect Direct value of purchased cash Pamily ment and Project Zakat Irrigation rent recov- rent recov- Cost recov- production input income labor lb risk /c rent payments charges ery /d (X) ery /d (X) ery /e (X) (1) (2) (3) (4) (5) (6) (7) (8) (7 + 8) * 6 (9) (10)

Sekinchan 1.5 ha farm 477 228 249 120 74 54 0 18 34 34 9

Non-Sekinchan1.2 ha farm 1,697 501 1,196 390 358 477 118 14 30 5 37

/a All figures are incremental.

/b From Tables 3 and 4.

/c Calculated at 30X of incremental income.

/d It is assumed that farm incomes, project rent and water charges build up to full development levels with proportional time streams. Consequently, discountingthe flows will not affect the rent recovery ratios.

/e The cost recovery index was derived by discounting base costs (Annex 4, Table 1) distributed in time according to the implementation schedule (Annex 7, Table 1), and OEM charges, by 13.81 over a period of 25 years. Payments were phased as per the tables in Annex 2 and also discounted m x by 13.81. %OJ ANNEX 11 Page I

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Economic Analysis

Numeraire

1. The common unit of account used in the economic analysis is consumption measured at domesstic economic prices.

Foreign Exchange

2. Recent calculations indicate that the standard conversion factor for Malaysia is about 1.00, so that the market rate of exchange (M$2.48 to US$1.00) is the appropriate rate to use to convert border values into the common unit of account.

Labor

3. Labor availability would exceed labor utilization throughout the area except during the periods of land preparation and harvest of padi./l Accord- ingly, the recorded daily wage of M$8.00 actually paid to hired laborers during the peak periods has been used to value all labor during those periods. During the remainder of the year labor has been valued at M$4.80 per day, equal to standard casual labor wage rates in the region.

Benefits

4. Expected cropping patterns and incremental production are discussed in Annex 2 for padi and in Annex 3 for tree crops. Economic farm-gate prices are calculated in Annex 9 while crop production costs are derived in Annex 10. Tables 1 and 2 calculate the net incremental benefits of the irrigation component with an effective integrated agricultural services system.

Investment Costs

5. Investment costs are expressed in 1978 constant prices and have been adjusted to exclude taxes and price contingencies. The foreign exchange component of each investment item has been converted into Malaysian dollars at the economic rate of exchange (para. 2). Annual O&M costs and the costs of the agricultural supporting services system have been treated similarly.

/1 L.J. Fredericks, "Some Socio-Economic Characteristics of Rural Labor with Special Reference to a Rice Double-Cropping Area in Selangor, West Malaysia," Mimeo, University of Malaya, October 1976. ANNEX 11 Page 2

Development Period

6. Constructionof the irrigation component would be phased over a five- year period beginning in 1978 and effectivelyending in 1982. The impact of the phasing of constructionon cropped area is shown in Annex 2. Full benefits for the irrigation componentwould be achieved in 1987. Construction of the drainage component would also be phased over a similar five-year period, but owing to the dependence of tree crop yields on age, the effects of this project on production would be felt until the year 2008 (see Annex 3, Table 4).

Economic Rate of Return

7. Using the foregoing assumptions and a 31-year period of analysis, the best estimate of the economic rate of return for the overall tree crop drainage component is 22%. A detailed analysis allocating investments primarily either to smallholderor estate areas indicates that the economic rate of return of the drainage works in the former would be about 15% and in the latter about 30%. The difference is due to the higher sunk cost of existing works constructed by the estates themselves, and management factors. The best estimate of the economic rate of return for the Tanjong Karang irrigation component is 19%, and the composite rate of return for the entire project is 21%.

Risk Analysis

8. The major risk in this project derives from the uncertainties associated with the implementationof the integrated agriculturalsupporting services system. If the proposed training and visit system of extension is implementedin the manner proposed by the Malaysian Government, the internal rate of return of the irrigation component would be 19%. In the event that only 50% of the projected padi yield increases with the agriculturalservice system are attained,/l the rate of return of the Tanjong Karang component would fall to 16%. The project would remain viable, but would have a reduced impact on economic development. However, the Malaysian Government is taking the measures necessary to avoid this potential economic loss. A pilot program to test the implementationof the supporting services system has already begun in the Sawah Sempadan block, which has a completed distributary system identical to that proposed under the project. Furthermore,a similar version of the training and visit system of extension is being implemented with considerablesuccess in the North Kelantan project area (Loan 1294-MA), providing both a model and a training ground for the present project. Smaller risks are associated with the drainage component, since the required changes in production techniquesare much simpler.

/1 Equivalent to 85% of projected final yields. ANNEX 11 Table I

MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Tanlong Karant Irrigation Component

Padi Production Values and Costs /a (M$'000)

Gross value of production Production cost (M$ '000) Incrementa]

Ws Wns W5 Wns Ws Wns WS Wns Benefits

Main season 1 4,301 20,974 4,301 20,932 1,857 10,886 1,857 10,865 -21 2 4,951 24,175 4,960 24,307 1,856 10,898 1,864 10,954 77 3 5,717 28,138 5,751 28,743 1,855 10,934 1,875 11,176 377 4 5,728 28,416 5,842 30,706 1,854 10,970 1,903 11,760 1,565 5 5,751 28,694 5,855 33,648 1,853 11,006 1,905 12,632 3,930 6 5,762 28,971 5,922 37,249 1,852 11,042 1,926 13,696 5,710 7 5,774 29,249 5,990 39,314 1,851 11,078 1,947 14,299 6,964 8 5,784 29,519 6,022 40,336 1,850 11,113 1,957 14,601 7,460 9 5,795 29,797 6,044 40,804 1,848 11,149 1,964 14,738 7,551 10-25 5,808 30,074 6,055 41,273 1,846 11,185 1,967 14,876 7,634

Off season 1 4,473 17,658 4,473 17,625 1,829 7,867 1,829 7,852 -18 2 5,138 20,344 5,188 21,368 1,827 7,879 1,847 8,284 649 3 5,944 23,579 6,058 27,540 1,826 7,904 1,874 9,255 2,676 4 5,956 23,780 6,149 31,211 1,825 7,940 1,904 10,475 5,010 5 5,979 23,980 6,146 35,307 1,822 7,977 1,905 11,836 7,552 6 5,990 2,180 6,225 38,596 1,821 8,013 1,931 12,924 9,630 7 6,001 24,381 6,3:15 39,755 1,820 8,050 1,961 13,304 10,293 8 6,011 24,375 6,358 40,636 1,818 8,050 1,976 13,596 10,904 9 6,022 24,715 6,380 41,260 1,817 8,123 1,984 13,801 10,998 10-25 6,034 24,975 6,391 41,883 1,816 8,159 1,987 14,005 11,248

/a These values assume successful implementation of the agricultural extension system described in Annex 5, and are based on yield and cropping intensity assumptions presented in Annex 2, Tables I and 2.

/b W = without project; W - with project; s = Sekinchan; ns = non-Sekinchan. MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Tanjong Karang Irrigation Component

Incremental Costs and Benefits /a

Incremental costs Total Agricultural Total Incremental incremental Irrigation service system incremental net benefits Construction O&M Construction Operation costs benefits

Main season 1 -39 5,879 0 272 280 6,431 -6,470

2 736 12,889 91 583 473 14,036 -13,310

3 3,053 14,145 271 1,158 583 16,157 -13,104

4 6,575 15,155 450 545 586 16,736 -10,161

5 11,482 13,771 631 545 586 15,533 -4,051

6 15,340 813 714 0 586 2,658 12,137

7 17,257 0 714 0 586 1,845 14,867

8 18,364 0 714 0 586 1,845 15,974

9 18,549 0 714 0 586 1,845 16,159

10-25 18,882 0 714 0 586 1,845 16,492 --3

/a Incremental benefits from Table 1. ( X MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Tree Crop Drainage Component

Incremental Production Benefits (M$'000)

Incremental production benefito Smallholder Smallholder Smallholder Smallholder Smallholder Estate Estate Estate Estate Total incremental benefits Rubber Oil Palm Copra Coffee Cocoa Rubber Palm Oil Copra Cocoa Smallholder Estate Total

Year (78) 1 0 0 0 0 0 0 0 0 0 0 0 0 (79) 2 0 0 785 0 0 0 0 91 0 785 91 876 (80) 3 355 168 1,706 77 609 573 882 182 1,031 2,915 2,668 5,583 (81) 4 845 264 3,458 168 1,697 1,609 2,706 272 1,392 6,432 5,979 12,411 (82) 5 1,255 478 4,269 271 3,089 2,400 7,565 438 1,805 9,362 12,208 21,570 (83) 6 1,664 707 4,250 605 4,445 3,273 12,752 585 2,063 11,671 18,673 30,344 (84) 7 1,664 907 4,226 756 5,028 3,068 12,978 576 2,321 12,58; 18,943 31,524 (85) 8 1,590 1,532 5,337 597 3,452 2,783 13,932 693 1,586 12,508 18,994 31,502 (86) 9 1,511 1,817 5,301 739 3,813 2,571 14,084 705 1,586 13,181 18,946 32,127 (87) 10 1,458 2,079 5,284 914 4,099 2,359 15,403 698 1,586 13,834 20,046 33,880 (88) 11 1,405 2,207 4,551 1,045 4,318 2,147 15,576 623 1,586 13,526 19,932 33,458 (89) 12 1,325 2,358 4,689 1,372 4,530 1,988 14,538 623 1,586 14,274 18,735 33,009 (90) 13 1,246 2,354 4,768 1,372 4,676 1,829 14,689 618 1,586 14,416 18,722 33,638 (91) 14 1,140 2,629 4,847 1,520 4,819 1,670 13,586 632 1,428 14,955 17,316 32,271 (92) 15 1,060 2,609 3,972 1,520 4,819 1,564 13,673 703 1,459 13,980 17,399 31,379 (93) 16 981 2,715 4,098 1,511 4,819 1,458 12,461 717 1,428 14,124 16,064 30,188 (94) 17 928 2,817 4,163 1,507 4,819 1,299 12,353 769 1,459 14,234 15,880 30,114 (95) 18 875 2,767 4,332 1,487 4,819 1,166 12,245 793 1,459 14,280 15,663 29,943 (96) 19 822 3,050 4,393 1,436 4,819 1,007 12,137 816 1,459 14,523 15,419 29,942 (97) 20 769 2,882 4,441 1,427 4,819 1,007 10,730 840 1,459 14,341 14,036 28,377 (98) 21 716 2,908 4,505 1,414 4,819 1,007 9,324 863 1,459 14,365 12,653 27,018 (99) 22 663 2,890 4,576 1,394 4,819 1,007 9,238 887 1,459 14,342 12,591 26,933 (00) 23 583 2,916 4,871 1,376 4,819 1,034 9,151 911 1,459 14,565 12,555 27,120 (01) 24 557 2,899 4,688 1,282 4,819 1,034 7,832 1,038 1,459 14,245 11,363 25,608 (02) 25 557 2,899 5,331 1,282 4,819 1,034 7,832 1,038 1,459 14,888 11,363 26,251 (03) 26 557 2,899 5,567 1,282 4,819 1,034 7,832 1,038 1,459 15,124 11,363 26,487 (04) 27 557 2,899 6,251 1,282 4,819 1,034 7,832 1,142 1,459 15,808 11,467 27,275 (05) 28 557 2,899 7,065 1,282 4,819 1,034 7,832 1,142 1,459 16,622 11,467 28,089 (06) 29 557 2,899 7,949 1,282 4,819 1,034 7,832 1,116 1,459 17,506 11,441 28,947 (07) 30 557 2,899 8,616 1,282 4,819 1,034 7,832 1,090 1,459 18,173 11,415 29,588 (08) 31 557 2,899 9,229 1,282 4,819 1,034 7,832 1,064 1,459 18,786 11,389 30,175

I l ANNEX 11 Table 4

MALAYSIA

NORTHWESTSELANGOR INTEGRATEDAGRICULTURAL DEVELOPMENT PROJECT

Tree Crop Drainage Component

Incremental Production Costs (M$'000)

Incremental production costs Total incremental Smallholder Estate production costs Rubber Oil Palm Copra Coffee Cocoa Rubber Palm Oil Copra Cocoa Smallholder Estate Total

Year 1978 0 116 79 0 0 0 3,996 0 0 195 3,996 4,191 1979 0 188 427 0 0 0 5,232 50 0 615 5,282 5,897 1980 97 415 1,261 25 44 229 6,479 95 95 1,842 6,898 8,740 1981 231 488 1,680 56 123 644 4,421 143 128 2,578 5,207 7,799 1982 342 419 1,967 90 224 960 4,758 230 166 3,042 6,114 9,156 1983 454 429 2,258 200 323 1,310 4,692 307 190 3,664 6,499 10,163 1984 454 438 2,098 250 365 1,228 3,680 302 213 3,605 5,423 9,028 1985 446 469 2,136 300 407 1,146 2,668 298 237 3,758 4,349 8,107 1986 424 434 1,999 371 450 1,059 1,888 303 237 3,678 3,487 7,165 1987 409 420 1,992 460 484 971 2,065 300 237 3,765 3,373 7,338 1988 394 432 1,730 525 509 884 2,088 268 237 3,590 3,477 7,067 1989 372 447 1,679 690 534 819 1,949 268 237 3,722 3,273 6,995 1990 350 446 1,708 690 552 753 1,969 266 237 3,746 3,225 6,971 1991 320 473 1,736 764 568 644 1,833 302 218 3,440 2,997 6,437 1992 298 387 1,423 764 568 644 1,833 302 218 3,440 2,997 6,437 1993 275 366 1,468 760 568 600 1,670 308 213 3,437 2,791 6,228 1994 260 346 1,491 758 568 535 1,656 330 218 3,423 2,739 6,162 1995 246 315 1,551 748 568 480 1,641 341 218 3,428 2,680 6,108 1996 231 316 1,573 722 569 415 1,627 351 218 3,411 2,611 6,022 1997 216 280 1,590 718 569 415 1,438 361 218 3,373 2,432 5,805 1998 201 282 1,613 711 569 415 1,250 371 218 3,376 2,254 5,630 1999 186 281 1,639 701 568 415 1,238 381 218 3,375 2,252 5,627 2000 164 283 1,744 692 568 426 1,227 391 218 3,451 2,262 5,713 2001 156 281 1,679 644 568 426 1,050 446 218 3,328 2,140 5,468 2002 156 281 1,909 644 568 426 1,050 446 218 3,558 2,140 5,698 2003 156 281 1,994 644 568 426 1,050 446 218 3,643 2,140 5,783 2004 156 281 2,239 644 568 426 1,050 491 218 3,888 2,185 6,073 2005 156 281 2,530 644 568 426 1,050 491 218 4,179 2,185 6,364 2006 156 281 2,847 644 568 426 1,050 473 218 4,496 2,167 6,663 2007 156 281 3,085 644 568 426 1,050 468 218 4,734 2,162 6,896 2008 156 281 3,309 644 568 426 1,050 457 218 4,958 2,151 7,109 MALAYSIA

NORTHWESTSELANGOR INTEGRATED AGRICULTURAL DEVELOPMENTPROJECT

Tree Crop Drainage Component

Net Incremental Benefits (M$ 000)

Incremental investment and support costs Smallholder area Estate area Net incremental Drainage Service Drainage production benefits Construc- Construc- Opera- Construc- Subtotals Net incremental benefits Smallholder Estates Total tion O&M tion tions tion O&M Smallholder Estates Total Smallholder Estates Total

Year 1978 -195 -3,996 -4,191 1,939 0 109 29 1,133 0 2,077 1,133 3,210 -2,272 -5,129 -7,401 1979 170 -5,191 -5,021 6,789 60 350 123 2,550 56 7,322 2,606 9,928 -7,152 -7,797 -14,949 1980 1,073 -4,230 -3,157 12,284 377 695 309 1,077 187 13,665 1,264 14,929 -12,592 -5,494 -18,086 1981 3,854 772 4,626 8,406 907 327 397 567 241 10,037 808 10,845 -6,183 -36 -6,219 1982 6,320 6,094 12,414 2,909 1,269 327 423 340 270 4,928 610 5,538 1,392 5,484 6,876 1983 8,007 12,174 20,181 0 1,395 0 484 0 288 1,879 288 2,167 6,128 11,886 18,014 1984 8,976 13,520 22,496 0 1,395 0 484 0 288 1.879 28R 2,167 7,097 13,232 20,329 1985 8,750 14,645 23,395 0 1,395 0 484 0 288 1,879 288 2,167 6,871 14,357 21,228 1986 9,503 15,459 24,962 0 1,395 0 484 0 288 1,879 288 2,167 7,624 15,171 22,795 1987 10,069 16,673 26,742 0 1,395 0 484 0 288 1,879 288 2,167 8,190 16,385 24,575 1988 9,936 16,455 26,391 0 1,395 0 484 0 288 1,879 288 2,167 8,057 16,167 24,224 1989 10,552 15,462 26,014 0 1,395 0 484 0 288 1,879 288 2,167 8,673 15,174 23,847 1990 10,670 15,497 26,167 0 1,395 0 484 0 288 1,879 288 2,167 8,791 15,209 24,000 1991 11,094 14,322 25,416 0 1,395 0 484 0 288 1,879 288 2,167 9,215 14,034 23,249 1992 10,540 14,402 24,942 0 1,395 0 484 0 288 1,879 288 2,167 8,661 14,114 22,775 1993 10,687 13,273 23,960 0 1,395 0 484 0 288 1,879 288 2,167 8,808 12,985 21,793 1994 10,811 13,141 23,952 0 1,395 0 484 0 288 1,879 288 2,167 8,932 12,853 21,785 1995 10,852 12,983 23,835 0 1,395 0 484 0 288 1,879 288 2,167 8,973 12,695 21,668 1996 11,112 12,808 23,920 0 1,395 0 484 0 288 1,879 288 2,167 9,233 12,520 21,753 1997 10,968 11,604 22,572 0 1,395 0 484 0 288 1,879 288 2,167 9,089 11,316 20,405 1998 10,989 10,399 21,388 0 1,395 0 484 0 288 1,879 288 2,167 9,110 10,111 19,221 1999 10,967 10,339 21,306 0 1,395 0 484 0 288 1,879 288 2,167 9,088 10,051 19,139 2000 11,114 10,293 21,407 0 1,395 0 484 0 288 1,879 288 2,167 9,235 10,005 19,240 2001 10,917 9,223 20,140 0 1,395 0 484 0 288 1,879 288 2,167 9,038 8,935 17,973 2002 11,330 9,223 20,553 0 1,395 0 484 0 288 1,879 288 2,167 9,451 8,935 18,385 2003 11,481 9,223 20,704 0 1,395 0 484 0 288 1,879 288 2,167 9,602 8,935 1A,537 2004 11,920 9,282 21,202 0 1,395 0 484 0 288 1,879 288 2,167 10,041 8,994 19,035 2005 12,443 9,282 21,725 0 1,395 0 484 0 288 1,879 288 2,167 10,564 8,994 19,558 2006 13,010 9,274 22,284 0 1,395 0 484 0 288 1,879 288 2,167 11,131 8,986 20,117 2007 13,439 9,253 22,692 0 1,395 0 484 0 288 1,879 288 2,167 11,560 8,965 20,525 2008 13,828 9,238 23,066 0 1,395 0 484 0 288 1,879 288 2,167 11,949 8,950 20,899 2008 13,828 9,238 23,066 w~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ANNEX 11 Table 6

MALAYSIA

NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

Economic Analysis of the Prolect

Net incremental benefits Year Drainage Irrigation Project

1978 - 7,401 - 6,470 -13,871 1979 -14,949 -13,300 -28,249 1980 -18,086 -13,104 -31,190 1981 - 6,219 -10,161 -16,380 1982 6,876 - 4,051 2,825 1983 18,014 13,227 31,241 1984 20,329 15,957 36,286 1985 21,228 17,064 38,292 1986 22,795 17,249 40,044 1987 24,575 17,582 42,157 1988 24,224 17,582 41,806 1989 23,847 17,582 41,429 1990 24,000 17,582 41,582 1991 23,249 17,582 40,831 1992 22,775 17,582 40,357 1993 21,793 17,582 39,375 1994 21,785 17,582 39,367 1995 21,688 17,582 39,270 1996 21,753 17,582 39,335 1997 20,405 17,582 37,987 1998 19,221 17,582 36,803 1999 19,139 17,582 36,721 2000 19,240 17,582 36,822 2001 17,973 17,582 35,555 2002 18,386 17,582 35,968 2003 18,537 0 18,537 2004 19,035 0 19,035 2005 19,558 0 19,558 2006 20,117 0 20,117 2007 20,525 0 20,525 2008 20,899 0 20,899

MALAYSIA -, 'go ;9s, 6er&9sNorthwest SelangorIntegrated Agricultural t LIV DevelopmentProject / - ~~~~~~~~~~~~~~~~~~~~~~~~~~~MainCanals Roads

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IBRD 13027R SANtVARY19ig MALAYSIA A M Northwest Selangor Integrated Agricultural Development Project

Typical Drainage Layout (Sabak Bernam) Main Drain Secondary Drain -- -Feeder~ Drain * Culvert Gate - Culvert Flow ------Farm Roads * Tidal Control Gates

~~~~~~~~~~~~~~~~ ~ /~~ ~~ ~ ~ ~~ ~~~~~~~~~~~~~~~

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