Document of FLE COPY The World Bank MLE |oP y

FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 3136-NEP

NEPAL Public Disclosure Authorized

STAFF APPRAISAL REPORT

OF THE

HILL FOOD PRODUCTION PROJECT Public Disclosure Authorized

January 5, 1981 Public Disclosure Authorized South Asia Projects Department Education and Agricultural Institutions Division

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

US$1.00 = Nepalese Rupee (NR) 12.00

WEIGHTS AND MEASURES

Metric System

FISCAL YEAR

Nepal - July 16-July 15 IDA - July 1-June 30

ACRONYMS AND ABBREVIATIONS

AA - Agricultural Assistant(s) AADO - Assistant Agricultural Development Officer(s) ADB - Asian Development Bank ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Inputs Corporation APROSC - Agricultural Projects Service Center ASC - Agricultural Service Center(s) AU - Accounting Unit CDO - Chief District Officer(s) DADO - District Agricultural Development Officer(s) DCU - District Credit Union DDP - District Development Plan(s) DIHM - Department of Irrigation, Hydrology and Meteorology DOA - Department of Agriculture DTO - District Technical Office DU - Disbursement Unit GADP - Gandaki Anchal Agricultural Development Project FIWU - Farm Irrigation and Water Utilization HADP - Hill Agriculture Development Project HMG - His Majesty's Government HYV - High Yielding Variety (ies) JT - Junior Technician JTA - Junior Technical Assistant(s) MFA - Miniscry of Food and Agriculture MLD - Ministry of Local Development MOF - Ministry of Finance MOHP - Ministry of Home Panchayat MOWT - Ministry of Works and Transport MU - Monitoring Unit MWR - Ministry of Water Resources NFC - National Food Corporation PC - Project Coordinator PO - Program Officer(s) PDO - Panchayat Development Officer(s) RCC - Regional Coordinating Committee RDA - Regional Director of Agriculture SFDP - Small Farmers Development Program USAID - United States Agency for International Development FOR OFFICIALUSE ONLY

NEPAL

HILL FOOD PRODUCTION PROJECT

Table of Contents

Page No.

I. INTRODUCTION ...... 1

II. BACKGROUND ...... 1...... A. The Country ...... 1 The Panchayat System ...... 2 District Administration ...... 2 B. The Development Scene ...... 3 C. Agriculture in Nepal ...... 3 Agricultural Performance ...... 4 Agricultural Strategy ...... 4 D. Hill Agriculture ...... 4 Farming Systems ...... 5 Food Balances and Nutrition ...... 5 E. Institutions ...... 6 Research and Extension ...... 6 Agricultural Credit ...... 6 Sajha ...... 7 Input Supply. 8 Marketing and Storage. 9 Irrigation .10 F. Foreign Assistance to Agriculture in the Hills ... 10 World Bank Assisted Projects . .11 The First Rural Development Project (Cr. 617-NEP) . .11 The Second Rural Development Project (Cr. 939-NEP) . .11 Other Hill Agricultural Development Projects .11 Gandaki Anchal Agricultural Develop- ment Project (GADP) .11 Hill Agricultural Development Project (HADP) .12

III. THE PROJECT AREA .. 12 A. General .12 Physical Characteristics .12 Population and Land Use .13 B. Agricultural Production in the Project Area .14 Crop Production .14 Cropping Patterns .15 Cultural Practices .15 Animal Production .16 Animal Health Services .16

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties.Its contents may not otherwise be disclosedwithout World Bank authorization. - ii -

Page No.

IV. THE PROJECT ...... 17 A. General Description ...... 17 B. Detailed Features ...... 18 Agricultural Service Centers (ASC) ...... 18 Agricultural Extension, Research and Training ...... 19 Livestock Development and Animal Health .. 20 Staff Requirements ...... 20 Agricultural Development Bank of Nepal ...... 21 Sajha ...... 21 Marketing ...... 21 Input Procurement and Distribution ...... 22 Minor Irrigation ...... 22 Trails and Bridges ...... 23 Trails ...... 23 Bridges ...... 23 Project Monitoring and Evaluation ...... 23 Technical Assistance ...... 24

V. COST ESTIMATES AND FINANCING ...... 24 A. Cost Estimates ...... 24 B. Proposed Financing ...... 26 C. Procurement and Disbursement ...... 26 D. Accounts and Audit ...... 27

VI. ORGANIZATION AND MANAGEMENT ...... 28 A. Organization ...... 28 B. Management ...... 28 Project District Coordinators ...... 28 Coordinating Committees ...... 29 Project Staffing ...... 30

VII. AGRICULTURAL PRODUCTION AND INCOMES ...... 30 Crops and Cropping Patterns ...... 30 Farmers' Risk and Crop Failure ...... 31 Incremental Production ...... 32 Marketing ...... 32 Farm Incomes ...... 32 Cost Recovery ...... 33

VIII. BENEFITS AND JUSTIFICATION ...... 33 Economic Evaluation ...... 34 Economic Rate of Return ...... 34 Sensitivity Analysis ...... 34

IX. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 35 - Ill -

ANNEX 1 - Crop and Animal Production and Food Balances Table 1 - Population, Adult Consumption Units and Caloric Requirements Table 2 - Food Grain Requirements for Average Family

ANNEX 2 - Adaptive Research

ANNEX 3 - Agricultural Credit, Input Supply, Marketing and Cooperatives Table 1 - Fertilizer Requirement Table 2 - Seed Requirements Table 3 - Pesticide Requirements

ANNEX 4 - Irrigation Appendix 1, Table 1 - Irrigation Cost Estimates

ANNEX 5 - Trails and Bridges

ANNEX 6 - Basis for Economic Analysis Table 1 - Farm Inputs Requirements Table 2 - Summary of Economic & Financial Prices Table 3 - Cropping Area, Yield, Production & Value of Production Table 4 - Farm Input Costs Table 5 - Rate of Return Calculations Appendix 1- Model Farm Budgeting Assumptions Table 1 - Model Farm Budgets (0.2 ha) Table 2 - Model Farm Budgets (0.8 ha)

ANNEX 7 - Estimated IDA Disbursements

ANNEX 8 - Implementation Schedule

ANNEX 9 - Project Costs and Charts Table 1 - Summary of Project Costs Table 2 - Agricultural Extension Service Table 3 - Livestock Development and Animal Health Table 4 - Agricultural Service Centers Table 5 - Agricultural Development Bank Table 6 - Fertilizer Table 7 - Training Table 8 - Trails and Bridges Table 9 - Minor Irrigation Table 10 - Technical Assistance

CHART 1 - Organization of Principal Activities CHART 2 - Flow of Direct Costs and Credit

ANNEX 10 - Refinance Materials Available in South Asia Regional Information Center

MAP - IBRD 15049

NEPAL

HILL FOOD PRODUCTION PROJECT

I. INTRODUCTION

1.01 Ever growing population, mountainous terrain, limited irrigation, increasing cultivation of steep hillsides, overgrazing of pasture lands, and defoliation (for livestock fodder) and destruction of forests all contribute to declining standards of living for the residents of the Hill and Mountain regions of Nepal. In the Hills, food produced annually by the average farm family is now believed to cover only the equivalent of about 225 days of the family's minimum annual subsistence needs. The Agricultural Sector Review undertaken by IDA in 1978 (Report No. 2205-NEP) pointed out that despite decreasing crop yields of maize and wheat, past efforts to raise production in the Hills and Mountains had been few and of little success. Nevertheless, despite the generally moderate agricultural potential of these areas, consider- able opportunities exist for raising production in the short term.

1.02 As a follow-up to the sector review and in recognition of the aims of Nepal's Fifth Development Plan, FAO/World Bank Cooperative Program missions, headed by Mr. D. Muller-Praefcke, visited Nepal in March and October of 1979 to assist HMG in the identification and preparation of a project to increase food production in Hill areas.

1.03 This report is based on the findings of an IDA appraisal mission which visited Nepal in May/June 1980. The mission consisted of Messrs. J. H. Lindt (IDA), D. C. Finfrock (Agricultural Consultant), R. Issar (Agricul- tural Inputs Consultant) and T. B. Rawal (Agricultural Economics Consultant).

II. BACKGROUND

A. The Country

2.01 Nepal is landlocked between China and India. It is divided into three parallel ecological zones running east-west: the Terai Plain, an exten- sion of the Gangetic Plain of India; the Hills, actually the foothills of the Himalayas, ranging from 500 m to 4,000 m in elevation; and the Himalayan Mountains to the north. These three zones account for 17%, 68% and 15% of the total area (140,800 sq km), respectively. Rivers and streams, running north- south, cut the Hills into isolated areas and varying microclimatic conditions provide a range of environments for plant growth, depending on elevation, aspect, cloud cover, slope, etc.

2.02 Nepal's population is currently estimated at 13.6 M and is increas- ing at 2.6% annually. About 65% of the population live in the Mountains and Hills. Population pressure and the lack of employment opportunities in the -2-

Hills forces 10% to 50% of male family members to migrate, either seasonally or permanently, to the Terai, Kathmandu or elsewhere in order to find employment and supplement incomes.

2.03 With current annual per capita income estimated at US$120, Nepal is one of the poorest countries in the world. GDP growth during the last decade has averaged about 2.4% annually which is less than the growth in population.

2.04 Administratively, Nepal is divided into four Development Regions. Each of these comprises a section of the country, running north to south, containing Mountain, Hill and Terai districts. Each Development Region is subdivided into Development Zones, varying from three to five in number, which are further divided into districts.

The Panchayat System

2.05 The panchayat system, which encompasses the political and develop- ment organizations, has three tiers. The lowest political level is the village, followed by the district panchayat and at the highest level is the national panchayat. The village panchayat is generally comprised of nine wards (the smallest socioeconomic unit), each containing about two hamlets. A town panchayat is established for areas with a population of 10,000 and more. The average area of a Hill village panchayat has been estimated at 3,670 ha, with a population of 4,300 (about 700 families).

2.06 The working of the panchayat system and responsibility for law and order rest with the Ministry of Home Panchayat (MOHP).

2.07 District Administration. The Chief District Officer (CDO), appointed by MOHP, is the administrative head of all functionaries of government line ministries operating at the district level. These functionaries comprise a District Secretariat, which also functions as the Secretariat to the District Panchayat.

2.08 Line ministries retain technical supervision of staff at district level while delegating responsibility to CDO for administrative management. Popular participation in development is through a number of coordinating committees, chaired by the district panchayat chairmen and comprising CDO, and representatives of line ministries, and individuals chosen by district panchayats from among their elected body.

2.09 Proposals for village panchayat development are put forward and discussed at village meetings and submitted to the district panchayat for approval, technical clearance and financial assistance. Each year a district development plan is prepared, comprising all the activities in the district other than those of zonal or national scope. Village panchayat plans, which specify priorities, estimated costs and the contribution the panchayat can make (including funds, labor and materials), are consolidated by the district panchayat into the district plan. The district panchayat also assigns prior- ities to projects to be undertaken. Government line officers then examine proposals from the district panchayat, assess their technical feasibility, - 3 - and relate proposals to the implementation capacity of the line department and to funds and other resources available. After further discussions, the final district plan, approved by the district assembly, is submitted to MOHP for its approval and release of funds. A recent innovation requires that district plans be sent to the Zonal Commissioner for his comment and scrutiny before they are submitted to MOHP.

B. The Development Scene

2.10 Nepal embarked on social and economic development only in the early 1950s. Considerable progress has been made since then within the constraints imposed by its landlocked position, its low resource base, inaccessibility of many of its regions, rapidly growing population, and shortage of trained manpower. The lack of communication between administrative zones is impeding economic integration of the country and efficient use of comparative regional advantages.

2.11 Nepal's economic performance during the Fifth Five-Year Plan period (1975-80) has not been encouraging (less than 2.4% GDP growth annually) in spite of real increases in the levels of investment. This performance is mainly due to poor results in agricultural production. The critical stage that agricultural development has reached is highlighted by the fact that Nepal's most important export, rice, has declined from a high level of about 500,000 tons in the mid-1960s to about 100-200,000 in the early 1970s, 30,000 tons in 1977/78, and in 1979/80, a year of low rainfall, Nepal became a net importer. The trade gap has widened steadily, but has so far been covered by increased tourism earnings and foreign aid disbursements. Investment, however, still only amounts to 10% GDP. The Sixth Five-Year Plan (1980-1985), currently under preparation, calls for a 4% growth in GDP and increased investment outlays. Basic principals of the plan focus more sharply on the issues facing Nepal, while recognizing the limited financial and human resources available for development. The main plan objectives are to increase production in agriculture and cottage and small scale industry, to increase opportunities for productive employment, to meet certain basic human needs, and to slow the population growth rate.

C. Agriculture in Nepal

2.12 Agriculture continues to dominate the economy. It provides a livelihood to over 90% of the population, generates about two-thirds of GDP and provides about 75% of all exports, mainly rice, jute, pulses, and oil- seeds. During the past decade, farm family income levels have been maintained by increasing the area under cultivation. While in the Terai, areas of forest that can be converted into productive farm land remain, virtually no such reserve is left in the Hills and Mountains. As a result, more and more marginal land has been brought under cultivation and average crop yields have declined. 2.13 About a sixth of the total land area is suitable for cultivation, of which only about 15% is irrigated. Less than 10% of the cropped area is under cash crops; mainly oilseeds, jute, sugarcane, potato and tobacco. Food crops (mainly paddy, maize, wheat, millet, barley and potatoes) are grown on some 2.0 M ha or about 90% of the total cropped area. Cultivated on 1.3 M ha (more than half of the total area under major food crops), paddy is the dominant crop in Nepal. Maize, second in importance, is grown on some 445,000 ha. Wheat, millet and barley follow with 348,000, 121,000 and 24,000 ha, respec- tively. Some 50,000 ha are under potatoes. Double cropping is important in all areas.

2.14 Agricultural Performance. During the period 1970/71 to 1977/78, the trend in production of major foodgrains and potatoes was disappointing, except for wheat. Production grew at about 1.1% annually, largely due to expansion in acreage, while yields, again with the exception of wheat, fell at a rate of about 0.9% per year. Erratic rainfall, generally decreasing soil fertility and higher cost of fertilizers partly account for the decline but other factors, such as inadequate agricultural extension and other support services, lack of trained manpower, and inappropriate pricing policies have also contri- buted. Cash crops, however, fared much better due to more favorable inter- national prices. The increase in production of these crops was also derived from area increase rather than from increased yields.

2.15 Agricultural Strategy. The Government has had to moderate its earlier approach of regional specialization (foodgrains in the Terai and horticulture, tea, and livestock in the Hills) in view of the need for an adequate foodbase in the Hills. Accordingly, a number of bilateral and multi- lateral supported projects are directed specifically towards the improvement of agriculture in the Hills. The role of the Terai will continue to be the generation of domestic and exportable foodgrain surpluses as a resource for further development. Since area expansion in the Terai is limited, emphasis will be on increasing crop yields under rainfed and irrigated conditions.

D. Hill Agriculture

2.16 Because of the very rugged topography, arable agriculture in the Hills is limited to valley bottom land and to slopes which have been terraced. Overall, some 600,000 ha are estimated to be under cultivation in the Hills. This is less than one-third of the total area cropped in Nepal. The Hill population is currently estimated at 7.8 M, or almost 60% of the total popu- lation and density exceeds 13 persons per ha of cultivated land as against less than six persons per ha in the Terai. Through constant subdivision, the average holding size is now less than 0.5 ha, compared to an average of 1.7 ha in the Terai. Farms are fragmented (five to seven parcels per farm) and mostly owner-operated. The shortage of good land increasingly forces the cultivation of steep or unstable slopes with consequent low yields and increasing erosion. The already massive erosion caused by natural forces is further accelerated by overgrazing of pasture lands, defoliation for livestock fodder and destruction of forests in the search for firewood and timber. 2.17 In Hill districts, some 450,000 ha or 75% of the total cultivated area consists of dry upland terraces where the potential for irrigation is minimal. Maize, wheat, millet and barley and, at higher elevations, potatoes are the principal crops. Irrigated land (some 150,000 ha) is generally con- fined to areas in valley bottoms, mostly along river banks in small patches and on terraces to which small streams are diverted for seasonal irrigation. Since the source of water for these irrigated areas is mostly from small streams which normally dry up during the dry winter season, the possibility of growing winter crops in these areas is limited.

Farming Systems

2.18 The agricultural calendar is similar throughout most of the Hill zone. In the low-lying wet lands, where at least seasonal irrigation is gene- rally available, paddy is planted in June or July and harvested in November or December. Thereafter, wheat is planted and grown on residual moisture and harvested the following April or June depending on elevation. On upland terraces, rainfed maize, millet, pulses and soybeans are grown between July and December and often interplanted. At higher altitudes, potatoes and barley are planted mostly in the winter months of December or January and the growing period lasts until the end of July. In the past, lack of good storage limited retention of seed potatoes to areas above 2,000 m, a factor which posed prob- lems of distribution of seed. Recent research at the Khumaltar Research Center near Kathmandu has developed new methods for seed storage at lower elevations.

2.19 Farming methods are largely traditional and fertility is maintained by the use of animal manures and compost. Except for the Terai and Kathmandu Valley, the application of chemical fertilizer is extremely low as farms are small and owners generally poor and not credit worthy. On these small farms, additional output produced through use of fertilizer is generally consumed by the family and does not enter the market. Livestock, mainly cattle and buffalo, but also goats, pigs and poultry, are kept as sources of milk and meat, draught power and manure. Mainly, because of indifferent genetic stock and poor feeding, productivity of these animals is low.

2.20 For health reasons, most villages are situated on hill tops and hillsides. The valleys have been settled only since malaria became controlled in last 20 years. In general, little cash trade is associated with agricul- tural production and, among farmers in isolated villages located at higher altitudes, barter is common. Some cash income, however, is derived from the sale of animals and animal products, including milk, eggs and ghee. Crops also provide some income to those farmers owning irrigated land. Off-farm income from porterage, army pensions or from seasonal employment in the Terai or North India play an important role in food deficit areas.

Food Balances and Nutrition

2.21 In general, the overall picture in the H{ills is one of growing dependence on foodgrains from other parts of the country, mainly the Terai. In 1976, it was estimated that only eight out of 55 Hill and Mountain districts showed a food surplus. Zonal differences in production of major food crops - 6 - are considerable and when translated into terms of caloric requirements for minimum subsistence, the average family in the Mountains now produces enough food for about 190 days; in the Hills, for 225 days; and in the Terai, for 540 days. The declining ability of the FMountain and Hill zones to provide subsist- ence for their residents is reflected in the high overall Nepalese infant mortality rates (estimated at 152/1,000 live births), a death rate of children between ages 1-4 estimated at 39/1,000 and a general lowered resistance to disease.

E. Institutions

Research and Extension

2.22 Located within Ministry of Food and Agriculture (MFA), the Depart- ment of Agriculture (DOA) is responsible for agricultural research, provision of extension services and the general development of agriculture. The agri- cultural extension and research services are headed by two Deputy Directors General of Agriculture. At the regional level (see para. 2.04) a Regional Director of Agriculture supervises district level extension and development programs each of which is managed by a District Agricultural Development Officer (DADO). In each district, DADO is assisted by Assistant Agricultural Development Officers (AADO), Junior Technicians (JT) and Junior Technical Assistants (JTA) who have varying amounts of formal agricultural training. A recent innovation has been the employment of Agricultural Assistants (AA), who are selected from among progressive farmers, retired servicemen or other respected persons. AA receive minimal training and serve on a part-time basis for which they are given an allowance of NRs 50 to 150 per month. DADO and AADO are gazetted officers, generally with a college education; JT and JTA have ten years of schooling, plus two years or one year, respectively, of generalized agricultural training.

2.23 Agricultural research is centrally controlled by the Deputy General of Research. Since 1972, coordinated crop research programs have been ini- tiated for the production of improved varieties of rice, wheat, maize, citrus and potatoes. These programs are carried out at the large research complex at Khumaltar and seven research stations located throughout the country. Some 30 government farms (located in different parts of the country) support the activities of these main stations. Much useful work has been done in the introduction and testing of improved varieties that have been incorporated into a national crop breeding program. The recently introduced "mini-kit program" whereby progressive farmers are given small amounts of seed of several varieties for testing on their own farms is an excellent concept and appears to be working well. Such a method is particularly well suited to Nepal where enormous variations in growing conditions preclude the possibili- ties of producing varieties suited to all conditions.

Agricultural Credit

2.24 The single major source of institutional credit is the Agricultural Development Bank, Nepal (ADBN), established in 1973. It was created to meet - 7 -

the overall credit requirements of agriculture and agro-based industries, and ensure effective mobilization of rural savings. The Sajha (cooperative) program also provides short term production credit to members from ADBN supplied funds available to Sajha for onlending to its members. More recently, commercial banks have also been involved in rural credit.

2.25 ADBN is authorized to provide loans to individuals, companies, and institutions engaged in agricultural production. More specifically, its functions are: (a) to provide short, medium and long term credit to Sajha and corporate bodies engaged in agriculture development; (b) to provide loans directly to farmers for the purchase of seed, fertilizer, pesticides, farm machinery, and irrigation equipment; (c) to invest in small scale industries engaged in processing farm products and manufacturing inputs required for agriculture; and (d) to provide banking facilities in places where commercial banks are not established. The standard terms and conditions of lending to the final borrower are 18 months duration for short term loans with a 14% annual interest rate, 7 years for medium loans at 11% annual interest rate, and 20 years for long term loans with an 8% interest rate. Rediscount facil- ities are available to ADBN through the Rastra Central Bank. It is expected that the spread to ADBN on future refinance operations would be increased to about 6%, up from the 4% level utilized under previous programs, which is satisfactory to cover all operating and administrative changes. ADBN also has access to development loans; the Asian Development Bank (ADB) is currently completing arrangements with the Government for a fourth line of credit and a Small Farm Development Project for onlending to ADBN. In addition to funds, the ADB projects include technical assistance and training to strengthen ADBN as an institution.

2.26 Most farmers are still reluctant to approach institutional agencies for credit, mainly due to lengthy and complicated procedures for borrowing and difficulties in establishing collateral for loans. Absence of technical know- how in commercial banks is a factor restricting expansion of lending by these organizations.

2.27 A major initiative was taken in 1975, through the Small Farmers Development Program (SFDP), to enable small farmers, who may not meet ADBN's usual lending criteria of annual income of at least NR 950 per person or certificate of land ownership or land revenue receipt, to avail themselves of credit. ADBN was the lead agency in setting up this program with initial capital provided by UNDP/FAO. The basic strategy involves the organization of small farmers into homogenous groups, not exceeding 20 persons. A group organizer is appointed to assist the group in identifying economic invest- ments, and credit is made available using group responsibility as security for the loan. This pilot scheme has met with some success and has subsequently been replicated in various parts of the country. In the project area, such group credit programs, which also include investments in irrigation, are mostly located along the main highway (Map IBRD 15049).

Sajha

2.28 The Sajha development program was introduced by H1-1Gin early 1976 in order to revitalize the cooperative movement, mobilize local savings and to link economic development with political decentralization at the local -8- level. The Sajhas are governed by a committee elected from within its membership. The President of the village panchayat where the Sajha is located automatically becomes chairman (paras 2.05-2.09). The objectives of Sajha are to provide credit (both for production and consumption), agricultural inputs and marketing facilities, as well as to sell essential consumer goods (salt, kerosene, coarse cloth, diesel oil, rice and sugar) to members at controlled prices. At present, one Sajha serves, on average, three to four village panchayats. Sajha also acts as the agent of national trading organizations such as the Agricultural Inputs Corporation (AIC) and the National Food Corporation (NFC) (para 2.36). In some cases Sahjas are incorporated into an apex type cooperative union at district level. Where a union exists, it provides the basis for appropriate planning and supervision especially in the case of poorly performing and recalcitrant societies.

Input Supply

2.29 The Agricultural Inputs Corporation is the sole government agency responsible for supply of inputs to farmers and was established in its present form in 1975-76. Its functions include: (a) importation and distribution of chemical fertilizers and maintenance of a buffer stock sufficient for at least one cropping season; (b) collection, processing, storage and distribution of improved seeds and assistance to DOA in conducting seed multiplication pro- grams; (c) procurement and distribution of agricultural chemicals for plant protection and grain storage; and (d) distribution of locally manufactured agricultural tools and implements as well as importation and distribution of agricultural machinery.

2.30 AIC multiplies improved seed through contract growers. In addition, all seed produced on government farms is distributed through AIC.

2.31 Nepal does not manufacture chemical fertilizer and depends entirely on imports which are either financed by bilateral aid (2/3) or by direct purchase (1/3). International procurement, by nature of Nepal's isolation and landlocked position, is not easy as all purchases have to pass through India. Procurement is so arranged that stocks arrive in Nepal before the advent of the monsoon and again before the winter planting season begins in November. Fertilizer imports are generally delivered through Calcutta Port (India) and transported by road and train to the Indian/Nepalese border. Internal distribution is then either by road or in the hills and mountains by mules and porters. The transportation costs to some of the more remote interior areas amount to more than the actual cost of fertilizer.

2.32 Official figures on imports of fertilizer during the last three years were:

1977-78 1978-79 1979-80 ------tons------

Bilateral aid 37,000 42,000 25,000 HMG purchases 9,000 5,000 13,000

46,000 47,000 38,000 - 9 -

Over the next five years HMG is expecting a substantial increase in demand but is uncertain about the availability of fertilizer provided by bilateral agencies as contributions from these sources declined quite substantially in 1979-80 and levels of future assistance cannot be assured.

2.33 As Nepal depends on the international market for the pv--chaseof fertilizer, inflationary trends in international prices have a marked influence on domestic prices. Hlowever, in keeping with other countries in the region, HMG subsidizes the cost of fertilizers to farmers. The amount of this subsidy is effectively dependent on the prevailing retail price in India as any price differential would ensure flows of fertilizer either one way or other across the border and would be detrimental to both governments. HMG has, as a matter of policy, adopted a uniform price structure for fertilizer throughout the country, regardless of transportation costs. The present sale price of urea to farmers is about Rs 3,000 (US$250) per ton which corresponds to the price prevailing in India. This covers roughly 2/3 of the total cost of fertilizer at the retail sales point. At this price, HMG provides an average subsidy to farmers of Rs 1,543 (US$129) per ton. After the fertilizer is sold, AIC returns the rupee equivalent of the sales price to the government. Due to subsidy in the sales price which has not been offset by H1MG transfers, AIC lost some Rs 46 M on its fertilizer operations between 1972 and 1976. These losses continue (para 4.19).

2.34 AIC is not usually involved in retailing except in some remote hill areas. Fertilizer is sold mostly through Sajha. AIC makes available fertilizer to District Cooperative Unions (DCU) who act as wholesalers both to Sajha and private dealers. Dealers operate on a commission basis and irrespective of the type of fertilizer, AIC allows 6% commission to DCU who retain 1% --nd pass on 5% to individual Sajha. Private dealers are allowed 4-1/2% commission and in this case DCU retain 1-1/2%. Besides, a 3-1/2% additional commission is allowed to Sajha as an incentive to lift fertilizer from district storage well ahead of the planting season.

2.35 The estimated sales of inputs by AIC in 1978 were: 54,000 tons of fertilizer, including carryover stocks and fresh imports, 2,520 tons of improved seeds, pesticides costing Rs 1.9 M, and agricultural implements costing Rs 2.6 M.

Marketing and Storage

2.36 Because the bulk of agricultural production in Hill areas is sub- sistence oriented, only small quantities enter commercial marketing channels. Much of the grain marketed is sold in order to purchase other subsistence requirements, e.g., tea, sugar, salt and spices, and then is bought back later in the year from NFC or private suppliers when home food supplies dwindle. In any event, the pattern of agricultural marketing is largely determined by the topography of the country, the general direction of trade being north-south, i.e., between the Hills and Mountains and the Terai. There is also a consider- able trade of a "regional nature" to meet the demands of vagaries of weather and periodic shortages caused by insect attack, hail, etc. - 10 -

2.37 Throughout Nepal, marketing is hampered by poor transport facili- ties and inadequate storage. The rugged topography makes the construction and maintenance of road systems difficult and expensive. This is particularly true in the Hills and Mountains where foot tracks and trails for mules are the main means of transport. Thus, traditional on-farm storage methods become important and these vary depending upon the type of crop to be stored and the range of locally available building materials. Maize is normally stored on the unhusked cob, tied into bundles and hung on railings of houses or to ver- tical poles placed near the house. Paddy and wheat are stored in containers made of clay and straw. Estimates of storage losses vary considerably and the figure of 10% is quoted frequently. Recently, FAO has initiated the Rural Save Grain Program in Syanja District. The National Food Corporation (NFC), with the aid of UK, UNDP and IDA, is slowly expanding its storage capacity. A US$6.2 M Grain Storage Project (Cr. 1062-NEP) was approved in August 1980 to increase storage capacity by 40,000 tons in the Terai, and to provide technical assistance and training. NFC is responsible, on a national scale, for the internal purchase and distribution of foodgrains to balance demand and supply; NFC often uses Sajha as its local agent. The Food and Agricultural Marketing Services Department collects price data, analyzes trade patterns, and estab- lishes marketing systems, particularly in the Hills. irrigation

2.38 The Department of Irrigation Hydrology and Meteorology (DIHM) of the Ministry of Water Resources (MWR) is primarily responsible for the imple- mentation, operation and maintenance of medium (50 to 100 ha) and large (over 100 ha) irrigation projects throughout Nepal. To make the best use of its limited resources, it has concentrated its main efforts on the larger schemes, and has excluded those below 50 ha. Irrigation in the Hills, however, is dominated by small-scale indigenous systems which normally have command areas well below 50 ha and there is great potential and need for improvement of these primitive systems. Until lately, resources for such efforts were lack- ing although the situation is rapidly changing as MFA, MLD, MOHP and MOWT are becoming increasingly involved in small-scale irrigation rehabilitation works.

2.39 At district level, engineering activities of these ministries are merged under a common District Technical Office (DTO), usually staffed by an engineer, assisted by two overseers and a number of support staff. The engineer and staff may be supplied by any one of the agencies mentioned above. Many DTO lack equipment, office accommodation and adequate staffing. Irrigation development generally has played a subordinate role in activities of DTO which are also responsible for construction of village water supplies, trails, bridges and government buildings.

F. Foreign Assistance to Agriculture in the Hills

2.40 A wide range of bilateral and multilateral assistance supports HMG in its efforts to accelerate agricultural development. A number of projects are directed specifically towards the improvement of agriculture in the Hills. These projects generally follow an integrated area approach, but in some - 11 - cases involve improvement of a single crop or aim primarily at strengthening supporting services.

World Bank Assisted Projects

2.41 The First Rural Development Project (Cr. 617-NEP). This five-year project became effective in July 1976 and is assisting in the development of the two Hill districts of Nuwakot and Rasuwa located in the Central Region. General progress has been satisfactory. With some exceptions, implementation is either ahead of schedule or as forecast at appraisal. Agricultural Ser- vice Centers, located at strategic points throughout both districts, and pro- vide input storage, accommodation and office space for representatives of DOA, ADBN and Sajha. Thus the centers form a focal point for extension, and credit and supply activities. Track and trail improvement has lagged owing to shortages of labor during the construction season. Furthermore, shortages of well-trained staff and lack of seed of improved varieties have contributed to a slower rate of improvement in agricultural production than expected at appraisal. Nevertheless, considerable increases in wheat and potato produc- tion have occurred at higher elevations and the establishment of four small cheese/butter plants has increased cash returns to livestock keeping. As a result of recent management changes, the agricultural program is gaining greater momentum and seed of improved varieties is becoming increasingly planted. About 40,000 farm families have participated in project activities. It is now apparent that overall crop yields will be greater than anticipated at appraisal and, consequently, the rate of return for the project will be better than expected (29%,),as construction costs of tracks, trails and buildings are also lower than estimated.

2.42 The Second Rural Development Project (Cr. 939-NEP). This project aims at the comprehensive development of three Hill districts (Darchula, Dandeldhura and Baitadi) in the Mahakali Zone. It also aims to improve: (a) crop and livestock production; (b) communications, health services, edu- cational facilities, postal services and cottage industries; and (c) agricul- tural credit, cooperatives and input supply. District and panchayat adminis- tration would also be strengthened. The project only became effective in January 1980 and is in the very early stages of implementation. A project coordinator has been appointed and district staff and farmers made aware of project content. First District Development Plans are being prepared by District Panchayats. The area recently suffered from severe earthquakes and the destruction of much of the existing infrastructure will hamper project implementation.

Other Hill Agricultural Development Projects

2.43 Gandaki Anchal Agricultural Development Project (GADP). This proj- ect was established in 1969 as the result of an agreement between HMG and the Federal Republic of Germany. Initially, it covered only three districts in Gandaki Zone (Western Region). Later, it was expanded to cover all six districts of Gandaki and additional districts in Dhaulagiri Zone. Project objectives were to increase agricultural productivity and to improve the economic situation of small farmers mainly through provision of better exten- sion services, training, distribution of high quality breeding animals and - 12 - the setting up of an efficient agricultural marketing system. The project was completed in July 1979 with total expenditures of about US$8 M and made a big impact in the promotion of wheat growing (a relatively new crop in that part of the country). By the end of 1977, some 9,300 ha were under this crop, involving ab-ut 40,000 farmers. Improved paddy and maize varieties were introduced on 4,000 ha. Practical training was provided annually to some 200 extension workers, 800 farmers and 200 participants from different government institutions. Several components of the project, including construction of warehouses and staff quarters are still underway but expected to be completed by July 1981. The Hill Food Production Project described in this report will be carried out in four of the Gandaki districts and will build on and benefit from investments made under the German-funded program.

2.44 Hill Agriculture Development Project (HADP). As a joint undertaking of HMG, UNDP and FAO initiated in 1973, a project to strengthen the activities of the Government in the development of Hill agriculture and the raising of farm incomes and productivity in Hill areas. The project pays special attention to the maintenance and improvement of soil fertility in Hill areas and preservation of a productive ecological balance within the Hill environment. Project coverage was comprehensive, but far beyond the resources available. The major achievements have been the listing of factors limiting agricultural production and the training of personnel.

2.45 Among other programs important to the project area are two forestry projects: Community Forestry Development and Training Project (IDA Credit 1008-NEP) in Lamjung, Syanja and Tanahu Districts and USAID's Resources Con- servation Project in Gorkha District. Crop research and extension projects also include the Integrated Cereals Project (USAID), Potato Development Project (Nepal-Swiss Association for Technical Assistance and International Potato Center), Pumdi Bhundi Pilot Extension Project (HMG) and Lumle Agricul- tural Center (British Government). USAID is supporting a nationwide Seed Production and Input Storage Project and FAO's Rural Save the Grain Program is being carried out in Syanja District.

III. THE PROJECT AREA

A. General

3.01 The project area covers the Hill districts of Gorkha, Lamjung, Syanja and Tanahu (for location, see Map IBRD 15049). The four districts are located within the Gandaki Zone (which contains two additional districts of the Western Development Region). Together, they represent a total area of 7,800 sq km and comprise 194 village panchayats. The districts were covered by the GADP (para. 2.43).

Physical Characteristics

3.02 The project area forms part of the large Sapta Gandaki drainage sys- tem. Five major river tributaries traverse the area in a north-south direction. - 13 -

Most of the terrain is broken, consisting of steep hills and narrow valleys. Altitudes range from about 300 m, mainly in Syanja and Tanahu Districts, to over 7,000 m in northern parts of Gorkha District. The difference in elevation between valley floors and adjacent hill tops often exceeds 1,000 m.

3.03 The climate, strongly influenced by the Himalayan mountain range, varies from subtropical in major valleys below 1,000 m to warn temperate at elevations between 1,000 m and 2,000 m, to cool temperate from altitudes of 2,000 m to 3,000 m and to alpine from 3,000 m and above. Above 4,000 m, the climate is arctic. Recorded rainfall is highest near the Annapurna range (5,300 mm) and lowest in North Gorkha District (1,200 mm). About 80% of precipitation is confined to the monsoon period of June to September. Average minimum temperatures of about 8 0 C and average maximums of 200 C can be considered representative for most of the cropping area. Local variations due to slope and cloud cover lead to many temperature differences within altitude ranges.

3.04 Soils are typically silty loams and clay loams, with silty loams more general in the medium to lower altitudes, and clay loams found at higher altitudes. High rainfall and low soil permeability have led to acid soils in some areas. Potassium and phosphorous levels are generally medium to high, but the nitrogen status is low.

3.05 Natural vegetation consists predominantly of forests and shrubs, with an increasing percentage of denuded forest land that is subject to constant degradation to meet the needs of animal fodder and fuel.

Population and Land Use

3.06 The population of project districts is estimated currently at about 840,000. About 56,000 ha or some 7% of the total area is presently cultivated. The average of 13 inhabitants per ha of cultivated land is exceeded in Gorkha and Lamjung Districts where the cultivated area is comparatively small in proportion to the total area of the district. In Syanja and Tanahu Districts, where topography is less rugged, cultivated land accounts for almost two-thirds of the total areas farmed in the four districts and, in general, pressure on land is less severe.

3.07 The average size of a family is between five and six persons through- out the project area and some 75% of the 147,000 farm holdings are below 0.5 ha in size. These very small farms occupy about half of the total upland (rainfed) and about one-third of the lowland (irrigated) areas. Farm holdings in the size group above one ha (7% of the total) represent almost 40% of all lowland and 20% of upland areas.

3.08 Some 90% of the cultivated area is either under foodgrains or potatoes. The balance is sown to pulses, vegetables and other minor crops. Maize, cultivated on an area of 28,000 ha, occupies the largest area under any single crop. Wheat, a relatively new crop, is grown on some 5,000 ha. Barley and potatoes are important crops in Gorkha and Lamjung Districts. - 14 -

Project Districts - Area under Major Foodgrains and Potatoes 1974/75 to 1976/77 Average (Government Statistics)

District Paddy Maize Wheat Millet Barley Potato Total …______-('000 ha)…------…-______-_

Gorkha 4.8 6.4 0.9 3.0 0.3 1.0 16.4 Lamjung 5.3 6.6 1.0 3.7 0.2 0.9 17.7 Tanahu 5.0 9.0 1.3 6.0 0.1 0.6 22.0 Syanja 9.5 6.2 2.2 8.9 - 0.3 27.1

Total 24.6 28.2 5.4 21.6 0.6 2.8 83.2 /a

/a New land brought into production and the area under "other crops" brings the present (1979/80) crop area to an estimated 85,600 ha.

B. Agricultural Production in the Project Area

Crop Production

3.09 The four project districts together annually produce about 146,000 t of foodgrains or almost 13% of the output from all 39 Hill districts. This production is composed of some 59,000 t of paddy, 54,000 t of maize, 26,000 t of millet and almost 6,000 t of wheat. The production of potatoes amounts to 12,000 t.

3.10 Maize, important for both human consumption and as animal fodder (both green and as crop residues), is grown primarily on rainfed terrace land up to elevations of 2,600 m. Average yields of about 1.9 t/ha are mainly the result of low soil fertility, low plant populations and lack of application of insecticides, particularly against stem borer, army worms and caterpillars. Virtually no fertilizer is applied to this crop. The variety Khumaltar Yellow and several local varieties have been tested and found to be suitable for the project area; seed is available.

3.11 Paddy is mostly grown under seasonal irrigation on valley bottoms or terraced hillside land. The average yields of 2.4 t/ha, with four or five t/ha not uncommon, reflect the generally better standards of husbandry applied to this crop, particularly in the use of fertilizer. There remains, however, potential for yield increases through the use of better varieties such as IR24, Chianung 242, CH45 and T176 as the area under HYV is currently estimated at only about 4% of the total area sown. Limitations in seed supplies have been an important constraint to greater plantings of HYV.

3.12 Occupying an area of about 22,000 ha, finger millet is the third most important foodgrain. It is grown entirely on rainfed terrace land and generally relay planted with maize. The average yields of 1.25 t/ha are moderately high. However, the potential for improvement is limited as there are no improved varieties available. - 15 -

3.13 As a result of an intensive promotional campaign under GADP and the National Wheat Development Program, the area under winter wheat has almost trebled since 1971 and in 1978/79 was estimated at 7,500 ha. Farmers grow the crop on both irrigated and rainfed land. At about 1.1 t/ha, average yields are quite low, mainly as a result of insufficient levels of fertilizer appli- cation, low seed rates and poor irrigation facilities. Reportedly, as much as 90% of the area sown to wheat is under improved varieties, principally RR21.

3.14 Potatoes are cultivated on about 3,000 ha, mainly as a summer crop on land above 2,000 m. At less than 5 t/ha, yields are low. This is largely due to poor seed (which usually consists of small diseased tubers) and lack of fertilizer, low plant density and losses from insect attack. Improved husbandry and planting of improved varieties (Beauteaux, Kufri Jyoti) have trebled yields in other parts of the Hills under similar conditions.

3.15 Pulses, mainly blackgram, are grown on about 4,500 ha of mostly rainfed land and form an important part of the daily diet. Pulses are usually planted towards the end of the monsoon season and interplanted with maize or millet. No fertilizer or plant protection chemicals are applied and yields are low with large annual variations depending on rainfall variations.

3.16 Oilseeds, mostly mustard, are not commonly grown and involve only 400 ha of rainfed land. Mustard is generally grown after maize and millet, but is often intercropped with wheat. At higher elevations, it becomes an increasingly important crop. Fodder legumes are grown to a very small extent, mainly in winter. Vegetables, fruit and nuts are grown in small plots near farm houses.

Cropping Patterns

3.17 Cropping patterns show considerable variation. In addition to alti- tude and soil quality they reflect such factors as slope, aspect, hail suscept- ibility, and the micro-climatic conditions produced by the general topography. The risk of crop failure from the highly variable rainfall is mitigated by staggered planting dates and intercropping. The average cropping intensity is about 150%, but on small farms, with reliable irrigation, it may be close to 200% and may even reach 300% in those areas where perennial irrigation is fully assured.

Cultural Practices

3.18 A pair of bullocks and a simple wooden plough are used for land and seedbed preparation. Where terraces are narrow, a hand hoe may replace ox drawn equipment. When required, weeding and thinning are done by hand, using a light hoe.

3.19 Most crop nutrients are supplied through applications of animal manure rather than through use of fertilizer. Animals are kept close to the dwelling houses, usually located on non-irrigated higher land, and it is mainly for this reason that most manure is applied to the nearby maize/millet crops. Generally, a manure heap is located near the house with all leaves and household waste being added. There is considerable scope for improving - 16 - the quality of the end product through protecting the heaps from excessive sunlight and rain.

3.20 Estimates of average fertilizer use are somewhat misleading. Most recent data suggest that the average amounts of nutrient applied per ha are 2.6 kg of N, 0.9 kg of P 205 and 0.4 kg of K 20. However, many farmers apply no fertilizer to rainfed crops, and use it almost exclusively on the wheat and paddy crops. Few farmers have knowledge of disease and pest control and the small amounts of insecticides that are distributed in the project area are used by farmers growing HYV.

3.21 Crops are generally harvested by hand and paddy is threshed in the field, while most of the other grains are stored in the village before use and threshed during times of low labor demand.

Animal Production

3.22 The most serious constraint to livestock production is the feed supply. Overgrazing by animals and the use of all cultivated land for food crops (fodder is rarely grown) has led to a severe shortage of animal feed. Ruminants subsist on crop stubbles, wasteland pastures and forest grazing.

3.23 The number and type of animals kept per household varies consider- ably according to size of holding, location, and to some extent, altitude. As indicated below, Syanja District accounts for the largest share of all types of animals in the project districts.

Project Districts - Number of Farm Animals 1971/72 ('000 head)

District Buffalo Cows Oxen Sheep Goats Pigs

Gorkha 54 46 41 4 64 3 Lamjung 41 35 29 12 46 3 Tanahu 35 48 39 2 66 9 Syanja 102 136 93 18 114 13

Total 232 265 202 36 290 28

3.24 Animal Health Services. In the project area, a veterinary hospital, employing a veterinarian, is located at Damauli in Tanahu district and a veter- inary dispensary has been built in Syanja district alongside the agricultural office. A recently constructed hospital, staffed by two veterinarians, is located at Pokhara. Plans exist for construction of a further hospital at Gorkha (in line with the national scheme to establish a hospital in each district), but there is clearly a dearth of qualified veterinary staff through- out the project area, at the professional, middle and lower level technical levels. Drugs and medicines are sometimes available at hospitals, dispensaries and at some village stores; farmers frequently comment that treatment is not available for their livestock. - 17 -

3.25 There are five livestock JTA in the project area, one located at each of the district offices of Gorkha, Lamjung and Syanja districts and two working out of Tanahu District. These technicians have training in animal production and health obtained through a one-year course of training. They provide a limited range of specialist services to farmers accessible within a short distance of the district offices; hence, assistance is obtained by only a small minority of livestock owners.

IV. THE PROJECT

A. General Description

4.01 Under the first IDA financed Rural Development Project (Cr. 617-NEP), Agricultural Service Centers (ASC) have been found to be effective as a focal point for promoting development activities in remote rural areas. These centers provide offices and housing for junior staff of the agricultural, animal husbandry, cooperative and credit organizations and storage for agricultural inputs and surplus production. Using the concept of ASC, the project would attempt to rapidly increase food crop production in the Hill districts of Gorkha, Lanjung, Syanja and Tanahu by constructing, equipping and staffing 20 ASC to provide a focal point for:

(a) improving agricultural extension, livestock development and animal health services;

(b) improving the services provided by ADBN, AIC, and Sajhas; and

(c) improving marketing through introduction of regular market days.

In addition, the project would:

(a) provide funds for the purchase of 3,200 tons of fertilizer;

(b) improve about 3,000 ha of land presently farmed under minor (less than 50 ha each) irrigation schemes;

(c) improve about 70 km of trails and construction of about 34 bridges to facilitate movement of agricultural inputs and communications in the project area; and

(d) strengthen project activities by provision of monitoring and evaluation and technical assistance.

4.02 Project management would be vested in the Ministry of Food and Agri- culture (MFA). Overall responsibility for implementation would rest with the Regional Director of Agriculture (RDA), Western Region, assisted by a Project Coordinator (PC) and four DADO, one in each project district. Project commit- tees at district and regional levels would assure cooperation among project - 18 - organizations, such as panchayats, AIC, ADBN, cooperatives, etc. At the national level, the Director General of Agriculture would be responsible for ensuring coordination with other departments. In recognition of a national shortage of trained agricultural staff, the project would be implemented with a minimum of additional staff. Increases in farmer level extension workers would come from recruitment and training of progressive farmers who would be employed on a part-time basis as agricultural assistants (AA) (para. 2.22).

4.03 Responsibility for project monitoring would be with DOA and periodic progress reports would be prepared by the Regional Director of Agriculture. Evaluation studies and the economic baseline survey that would be a prere- quisite for these would be carried out by the Agricultural Projects Service Center (APROSC), a semi-autonomous agency of 1DIG and substantially independent of MFA (para 4.26).

B. Detailed Features

Agricultural Service Centers (ASC)

4.04 Agricultural supportive services would be brought closer to farmers by construction of 20 ASC. ASC would be established at points of high popula- tion density and agricultural activity, and would take account of, as far as possible, the basic district organization (which is normally subdivided into nine areas for the purpose of election of representatives to the District Panchayat). Thus, each ASC would serve four to six village panchayats and cover an area of about 200 sq km and an average population of some 7,000 farm families. Each center, constructed by the Agricultural Engineering Division of DOA with local materials and of simple design would comprise offices and housing for staff of the Agricultural, Livestock Development Departments, ADBN and Sajhas. In addition, a veterinary dispensary, a 20-ton warehouse, and a multipurpose building to be used for support staff training and other group activities would be constructed. ASC would cost about NRs 785,000 each. The total investment cost for the proposed 20 ASC would be NRs 14.8 M. During negotiations, assurances were given by HMG that ASC would be constructed at the locations named and indicated on IBRD Map 15049 and that HMG would provide sufficient land for ASC; construction would be phased over about three years, as scheduled in Annex 9, Table 4 (unless otherwise agreed between HMG and IDA).

4.05 Each ASC would be staffed by a JT (as officer-in-charge), three JTA responsible for agricultural and livestock extension, and a representative of ADBN, and the local Sajha. Ten AA responsible for agriculture and 5 AA for livestock extension activities would work in the area served by each ASC (para. 4.15).

4.06 An ADBN loan assistant would be posted and housed at each ASC (para. 4.17). This would result in a rapid expansion of ADBN coverage in the project area. To improve AIC services for input supply service (which presently does not extend beyond the district capital), the ASC warehouse would provide storage and a sale point for fertilizers, insecticides, pesti- cides, improved seed and simple agricultural implements. In addition, ASC - 19 - warehouse would be used for temporary storage of surplus grain purchased by NFC or Sajhas (para. 4.18 and 4.19).

4.07 Given below is the proposed phasing for construction of Agricul- tural Service Centers:

Cumulative Number of ASC Constructed

Project Year 1 2 3

District

Gorkha 2* 3 5 Lumjung 2* 3 5 Syanja 1* 3 5 Tanahu 1* 3 5 Total 6 12 20

* At least one warehouse or JTA house constructed by GADP available.

4.08 Agricultural Extension, Research and Training. Under the project, agricultural extension services would be strengthened and intensified in each of the four districts. The project would provide hill farmers, on a systematic basis, suitably modified to suit the rugged conditions prevailing in the proj- ect area, with appropriate advice on low cost farming practices capable of having an immediate impact on food crop production, increased availability of livestock feed, and better animal health. Some examples of improved prac- tices would include better seed bed preparation, line planting, application of compost and fertilizer to rows, use of proper spacing, weeding, etc. Initially, the emphasis would be on improved management practices. Farmers often cannot get full benefits from purchased inputs or more costly invest- ments until their farming practices have improved. The strengthening would be brought about by improved supervision, through a regular system of extension staff training and visits to farmers by field staff.

4.09 To ensure satisfactory levels of supervision, training and guidance at the district level, the DADO would coordinate all project activities, inclu- ding extension. Assisted by one AADO, he would provide technical guidance to the JT in charge of ASC and assist in organizing training for JTA and AA. Training would be provided for JT and JTA on a monthly basis at either district headquarters or some other agreed location. Special training courses in crop production and extension methodology would be organized for JT and JTA at the Regional Training Center located near Khairenitar.

4.10 Operating from ASC, each JTA would supervise about five AA. JTA would visit AA on a regular basis and would work with them in encouraging farmers to adopt recommendations, they would also conduct simple field demon- strations. AA would receive extension messages from JT and JTA (joined by Subject Matter Specialists (SMS) and DADO as appropriate) at training sessions held at ASC on a regular day each fortnight. - 20 -

4.11 Each AA would be assigned 20 to 30 contact farmers who would each represent about 10 to 20 farm families in the area in which they live. AA would be responsible for providing practical agricultural advice to these families through contact farmers. The families assigned to each AA would be subdivided into eight small groups, usually of 50 to 80 farmers, from which about 3 or 4 would be selected as contact farmers. Each group would be visited on a given day during a two week cycle. The extension message to be communicated to farmers in the initial stage would be simple, concentrating on the most important aspects of crop cultivation. Initially, the emphasis would be placed on improved cultural practices such as seed selection, plant- ing of improved varieties, better use of compost, weed control and crop care. At a later stage, use of inputs and more sophisticated cropping systems would be recommended. Attention would be given to the safe use and handling of pesticide. Annex I provides more detail on crop production.

4.12 The project would support the training activities described above by ensuring that DADO, AADO and some JT would participate in the Extension Program Planning and Implementation Course held regularly at the Regional Training Center in Khairenitar. All officers, JT and JTA would meet from time to time with SMS, research workers and experiment station staff for training in new techniques and to identify practices to be recommended to farmers during the ensuing months. Study tours to nearby countries and attendance by SMS and others at special courses would be provided.

4.13 Adaptive testing to validate techniques developed at research stations would be conducted by a small team of SMS under the control of the Regional Director of Agriculture. The SMS teams consisting of agronomy, plant protection and communications technicians would initially be trained by specialists provided under the project's technical assistance component (para 4.27). In the third year of the project, when experienced, SMS would be assigned to districts. AADO, JT and JTA would participate in some of these trials and would supervise the "mini kit program" (para 2.23). The present availability of qualified staff able to conduct detailed research is extremely limited and it appears more practical to depend on the research being conducted in the Pumdi Bhumdi Pilot Extension Project near Pokhara and upon visits of research workers from the national coordinated crop devel- opment programs for guidance (see Annex 2).

4.14 Livestock Development and Animal Health. To help improve animal health and husbandry practices, the project would construct, staff and equip a small veterinary dispensary at each ASC. Emphasis would be placed on immunizing buffalo and cattle against rinderpest and hemorrhagic septicemia and anthelmics would be provided for treatment of internal parasites. Over the project period, it is anticipated that 120,000 doses each of vaccines and drenches would be administered. In addition, advice to farmers on improved livestock husbandry practices would be provided by a livestock JTA and five AA attached to each ASC. Supervision and training would be provided by a JT located at each district headquarters and one Project Officer (PO) located at the PC's office.

4.15 Staff Requirements. Staff for the two extension services (Agricul- tural and Livestock Development) would be drawn from existing MFA personnel. Incremental staff requirements are presented below: - 21 -

PC PO DADO AADO SMS JT JTA AA

Project requirements 1 2 4 4 12 20 60 300 MFA staff available for project /a - 3 3 - 14 39 120 Staff to be recruited 1 2 1 1 12 6 21 180

/a Assuming that about 75% of the existing MFA staff in the project dis- tricts would be made available for the project. Staff who remain would be engaged in other DOA programs such as horticulture and home science.

Agricultural Development Bank of Nepal (ADBN)

4.16 The project is expected to generate an increased demand for agri- cultural credit. Incremental production credit would be made available to cover the needs of seed replacement, purchase of fertilizer and other farm chemicals, mainly for use on irrigated land. Medium-term credit would be provided by ADBN for the purchase of improved tools, implements and draught animals and for the improvement of irrigation facilities. At negotiation, HMG agreed to review annually with the Association the credit needs of farmers in the project area and provide adequate funds to ADBN for the purpose of making loans to satisfy these needs. Furthermore, to facilitate the imple- mentation of the credit program, HMG agreed at negotiations that the exist- ing network of ADBN would be expanded under the project by attaching a loan assistant financed by the Project to each of the proposed 20 ASC. Short duration training programs for ADBN staff in basic accounting principles, loan procedures and in general agriculture would be organized. Details are given in Annex 3.

Sajha

4.17 The project would strengthen the Sajha (cooperative) movement by providing training for Sajha managers in warehouse management, accounting principles and general agriculture. A small warehouse at each of the ASC would be available to Sajha to store fertilizers, seed, agricultural chem- icals and consumer goods for distribution to members. Storage would also be provided for surplus foodgrains for later resale to families living in the project area.

Marketing

4.18 To reduce post harvest price depression, a current phenomena and one that could be escalated by project success in increasing grain production, a marketing program would be introduced during the second year of project imple- mentation. This would be undertaken by Sahja or NFC. It is expected that this program would require the Sahja and the NFC to purchase a minimum of 5% of project generated grain production in project year 2 and 10% in year 3 and thereafter. The grain purchased at harvest would generally be stored and be available for resale in the area when needed. To facilitate this, regular weekly market days would be held at each ASC. The JT-in-Charge of ASC and the Sahja manager, would be responsible for the organization and management of these markets. At negotiations assurances were obtained that a marketing plan including financial arrangements acceptable to IDA would be submitted for consideration by June 30, 1982. Details are given in Annex 3. - 22 -

Input Procurement and Distribution

4.19 While for the most part, the extension programs would involve low cost measures, use of fertilizers and other inputs would be increased if the Hill areas are to become more self-sufficient. To ensure a reliable flow of fertilizer to the country, a national fertilizer study will be prepared under the Agricultural Extension and Research Project (being presented simultaneously with this project). As a part of this study, AIC, ADBN, and Sajha would be examined, and recommendations made for improving, procurement, distribution, storage, financing, and credit arrangements. Pending the implementation of such a program, the project would finance two years of total fertilizer needs of the project area. The estimated needs of farmers would be 1,310 t and 1,900 t in project years 1 and 2, respectively. Sajha/AIC would sell fertil- izer at uniform prices throughout the project area. The project would aid farmers in the project area by extending AIC services, including the delivery of fertilizers to ASC warehouses for later distribution through Sajha. Assur- ances were obtained during negotiations from HMG that all fertilizer purchased with project funds would be sold and used exclusively in the project districts. The project would support training of AIC personnel in accounting principles and in use of agricultural inputs at the AIC training center located at Kathmandu and at Khairenitar. Each ASC would be provided with hand operated seed cleaning and treating equipment. Details are given in Annex 3.

Minor Irrigation

4.20 Project activities would be oriented towards the improvement of existing gravity systems and have the objective of converting these from seasonal to perennial irrigation. The project program would:

(a) convert about 2,000 ha of existing seasonally irrigated land to full perennially irrigated status;

(b) convert about 200 ha of land from rainfed to perennially irrigated status;

(c) upgrade about 500 ha of existing seasonally irrigated land by construction of improved irrigation structures; and

(d) upgrade about 300 ha of existing rainfed land to seasonally irrigated status.

4.21 The above would generally require the following remodelling works:

(a) linking the irrigable area to a permanent water source by means of headworks and a main canal; and

(b) constructing headworks involving simple but permanent intakes of the trench type weir, with movable controls and silt extraction arrangements. In smaller schemes, the intake could be of the side weir type with fixed or movable controls.

Canals would be hand-excavated and generally remain unlined. Highly erosive sections would be piped, using concrete pipe for larger capacities and plastic - 23 - pipe for the smaller ones. They would be flumed across gullies and cross- drainage channels provided by open reinforced concrete flumes. Stone masonry culverts would be used across smaller gullies. In design and construction, special attention would be given to slope stability problems.

4.22 Proj-_t irrigation works would be carried out by the Farm Irrigation and Water Utilization Division (FIWU) of DOA. The project would provide staff, equipment, buildings, materials, operating expenses and technical assistance. The average cost of improved or created irrigated land is esti- mated at about NR 10,000/ha. At least 10,000 families are likely to benefit from this component. Further details are given in Annex 4.

Trails and Bridges

4.23 Trails. Much of the project area is dependent on a network of trails. Bridges are insufficient in number to enable all year-round crossing of rivers and torrents, and landslides and gullying often preclude use of trails for varying periods. This has a negative impact on the movement of agricultural inputs and produce, construction material and people. Under the project, approximately 25% (70 km) of the existing 292 km of trails in the project area would be improved.

4.24 Improvement works would include:

(a) rebuilding by cut and fill of sections that have been damaged or destroyed by landslides; construction of stone steps; occasional simple cross drainage, tree and grass planting for erosion protection; and

(b) realignment of sections that presently lead through inten- sively cultivated areas, especially paddy fields.

4.25 Bridges. About 30 medium to small and 4 major suspension bridges would be constructed under the project to allow all-weather passage of the most important trails in project districts. The medium and small bridges would be of an average length of about 50 m. All would be of the common, suspended type, simple in design and consisting largely of components manu- factured within Nepal. Major bridges would be of the suspension type and be 80 m to 90 m in length. Construction of trails and bridges would be supervised by the DTO or, in the case of major bridges, by MLD. Details are given in Annex 5.

Project Monitoring and Evaluation

4.26 Monitoring of project implementation would be conducted on a day- to-day basis by PC and DADO. Semi-annual progress reports would be prepared by DADO, consolidated by PC, and on behalf of the RDA, forwarded to the Director General of Agriculture and IDA. The PC would be aided by a monitor- ing unit (MU) attached to his office. Evaluation of the impact of the project on overall food production would involve an initial baseline survey and subsequent surveys when project implementation is under way or complete. The - 24 -

Agriculture Project Service Center (APROSC), under the direction of the Director General of Agriculture, would be responsible for this work. Tech- nical assistance (para 4.27) provided under the project would be employed to develop appropriate procedures for monitoring and evaluation and interpreta- tion of data.

Technical Assistance

4.27 To assist project implementation, 84 man-months of technical assist- ance would be provided through a U1JNDPfinanced Technical Assistance Project. The assistance would be in the fields of: agronomy and field experimentation (44 man-months), extension training and communications (20 man-months), and identification and design of minor irrigation schemes (20 man-months). Assistance would also be made available to the Project Coordinator in project, monitoring and evaluation (6 man-months). Both national and international experts would be considered for these assignments. Funds would also be included for SMS training at international research centers and short training visits to extension and research programs in South Asia. During negotiations, H1MG assured that not later than April 30, 1981 they would make arrangements satisfactory to the Association for provision of funds for technical assistance.

V. COST ESTIMATES AND FINANCING

A. Cost Estimates

5.01 Project costs are estimated at US$9.7 M, of which the foreign exchange component would be US$3.0 M. Duties and taxes included in total costs are estimated at US$50,000. Details of costs, summarized below, are in Annex 9. - 25 -

Summary Cost Estimate

By Components % of Local Local Total M F.E. Total M F.E. Total Cost ------NR M ------USUS$ X-

Development of ASC 14.1 0.7 14.8 1.18 0.05 1.23 13 Agricultural Extension Service 5.5 3.1 8.6 0.46 0.26 0.72 7 Animal Health and Livestock Development 1.5 0.4 1.9 0.12 0.04 0.16 2 Staff for ADBN 0.6 - 0.6 0.05 - 0.05 1 Purchase of Total Fertilizer 3.8 10.8 14.6 0.32 0.90 1.22 12 Training, ADBN, AIC, Sajha 0.3 - 0.3 0.02 - 0.02 - Construction of Trails and Bridges 4.4 1.8 6.2 0.37 0.15 0.52 5 Development of Minor Irrigation 28.7 3.7 32.4 2.39 0.31 2.70 28 Technical Assistance 0.3 7.8 8.1 0.03 0.64 0.67 7

Base Cost 59.2 28.3 87.5 4.94 2.35 7.29 75 Physical Contingencies 6.7 0.8 7.5 0.56 0.07 0.63 7 Price Contingencies 14.5 7.0 21.5 1.20 0.58 1.78 18

Total 80.4 36.1 116.5 6.70 3.00 9.70 100

By Category X of Local Local Total M F.E. Total M F.E. Total Cost ------NR M ------US$ M --

Civil Works ASC 14.1 0.7 14.8 1.18 0.05 1.23 13 Irrigation 25.9 2.9 28.8 2.16 0.24 2.40 25 Trails & Bridges 4.4 1.8 6.2 0.37 0.15 0.52 5 Subtotal 44.4 5.4 49.8 3.71 0.44 4.15 43 Vehicles 0.2 2.2 2.4 0.02 0.18 0.20 2 Equipment & Furniture 0.8 0.4 1.2 0.07 0.03 0.10 1 Fertilizer 3.8 10.8 14.6 0.32 0.90 1.22 12 Incremental Staff 5.8 - 5.8 0.48 - 0.48 5 Incremental Operating Costs 3.1 1.7 4.8 0.23 0.16 0.39 4 Training All Local 0.8 - 0.8 0.08 - 0.08 1 Technical Assistance 0.3 7.8 8.0 0.03 0.64 0.67 7 Base Cost 59.2 28.3 87.5 4.94 2.35 7.29 75 Contingencies Physical 6.7 0.8 7.5 0.56 0.07 0.63 7 Price 14.5 7.0 21.5 1.20 0.58 1.78 18

Total 80.4 36.1 116.5 6.70 3.00 9.70 100 - 26 -

5.02 Cost estimates are based on findings of the mission during appraisal and updated to August 1980. Physical contingencies, to meet unforeseen expenditures, have been added at rates of 15% for buildings, irrigation works and trails. Price contingencies, totalling 25% of base costs, calculated in accordance with Bank estimates of future price movements in Nepal 1/ are also included.

B. Proposed Financing

5.03 Financing to cover total project costs of NR 118 M (US$9.8 M), including contingencies, would be provided as follows:

Other Technical Development % of Assistance Costs Total Total ------US$ M------______

HMG - 0.85 0.85 9 UNDP 0.85 - 0.85 9 IDA - 8.00 8.00 82

TOTAL 0.85 8.85 9.70 100

The proposed IDA Credit of US$8 M would finance all foreign exchange costs amounting to US$2.2 M (excluding technical assistance) and about 80% of local costs. Prior to negotiations, assurances were obtained that HMG had made budgetary provisions to permit an early start to staff training and recruitment of staff.

5.04 The proposed IDA Credit would be channeled, through the Ministry of Finance (MOF), to implementing agencies.

C. Procurement and Disbursement

5.05 Procurement of equipment, furniture, vehicles and fertilizers involv- ing contracts above US$100,000 and expected to aggregate about US$1.2 M would be on the basis of international competitive bidding (ICB) in accordance with IDA guidelines. Where costs of contracts or equipment packages are below US$100,000, procurement would be through HMG local procedures satisfactory to the Association. Because of inaccessibility of the project area and the small size of individual civil works schemes (U$$65,000 for each ASC and about US$18,000 for irrigation schemes) it would not be practical to group civil works contracts for ICB. Consequently, these would be undertaken either by

1/ Currently estimated on expected international and domestic price escala- tions of 9%, and 8% per annum for 1981, and 1982, respectively, and 7% thereafter. - 27 -

MFA, MLD or MOWT, using local paid labor, or by local contractors in accord- ance with established HMG petty contracting procedures acceptable to IDA. Assurances were obtained at negotiations that the above mentioned procedures would be followed.

5.06 Disbursement of Credit funds would be on the following basis:

(a) 95% of expenditures for civil works carried out by con- tractors or by force account;

(b) 100% of expenditures for directly imported fertilizer, furniture and vehicles, and for locally manufactured goods (ex factory); and 80% for other goods procured locally;

(c) 55% of total expenditures for salaries and allowances of all staff engaged in the project in agriculture and animal health, minor irrigation (FIWU) and ADBN loan assistants (calculated to be equivalent to 95% of incre- mental salaries and allowances);

(d) 95% of incremental operating costs for agricultural exten- sion, animal health and minor irrigation; and

(e) 95% of expenditures for local training.

5.07 Disbursement for civil works carried out by force account and by local contracts involving US$5,000 equivalent or less and against expenditures for staff salaries, incremental operating costs, and training above; would be made against statements of expenditure, certified by the Secretary of the Ministry of Food and Agriculture. Documents supporting statements of expendi- ture would not be submitted to IDA for review, but would be retained by HMG, and would be made available for inspection and review by accredited IDA repre- sentatives during project supervision. Requests for disbursement against other items would be fully documented. Disbursement estimates are given in Annex 7.

5.08 AIC would be responsible for the procurement of fertilizer from the international market through ICB. Funds for technical assistance would be channeled from UNDP under existing procedures.

D. Accounts and Audit

5.09 The project would be subject to normal government financial control and audit procedures which are satisfactory. Assurances were obtained during negotiations that HMG, within the framework of its own accounting and budget system would: (a) record all project expenditures under a separate head of account in accordance with sound accounting procedures; (b) furnish to the Association as soon as available but not later than nine months after the end of each year certified copies of financial statements for the year; and (c) cause these records and accounts to be audited, in accordance with sound auditing principes consistently applied, by independent auditors acceptable to the Association. - 28 -

5.10 Under current practices, financial statements are prepared by the Financial Controller of MFA (who is a first class gazetted officer seconded by the Accountant General's office). Financial Statements are reconciled quarterly and are the basis of an internal audit carried out by the Account- ant General's office, which then forwards these statements to the Auditor General for the purpose of external audit. An audit report is then prepared by the Auditor General and after approval by the National Panchayat will be made available to the Association.

VI. ORGANIZATION AND MANAGEMENT

A. Organization

6.01 Overall responsibility for project implementation would be vested in the Ministry of Food and Agriculture. The Regional Director of Agriculture would be responsible for day-to-day management, assisted by a Project Manager (PC). At the district level, the District Agricultural Development Officers (DADO) would be in charge. Project committees would assure coordination with organizations such as MLD, MOWT, MOHP, AIC, ADBN, cooperatives and line depart- ments, at district and regional levels. At the national level, the Director General of Agriculture would be responsible for coordination with other departments. An implementation schedule is presented in Annex 8.

B. Management

6.02 The project does not envisage any departure from the standard pro- cedural rules of Government in so far as they apply to planning, approval, budgetary procedures or the responsibilities of the Ministries of Agriculture or Finance relating to budgetary submissions, approvals and transfers.

6.03 Each DADO, with assistance from the PC would prepare a project plan of work as part of the overall District Development Plan (DDP) for his district. This would be done in consultation with the local agencies and the district panchayat. Participating ministries/agencies would then provide technical clearance of their components through their designated project officers. DDP would then be submitted to the District Coordinating Committee and Regional Coordinating Committee for approval (see para 6.07). Individual components of the plan would then be implemented under the direct supervision of the technical functionaries of the concerned ministries, under the overall guidance of DADO, and with the support and cooperation of the district panchayat. Assurances were obtained that the agricultural and livestock portions of District Development Plans would be made available to IDA not later than May 15 of each year for comment and that HMG would make budgetary allocations to districts in amounts sufficient for their timely execution.

Project and District Coordinators

6.04 The Project Coordinator, a Class I officer of HMG, would be stationed at Regional Headquarters at Pokhara and report to the Regional Director of - 29 -

Agriculture (RDA). PC would provide administrative support to development programs at district level. In the districts, the DADO would report through the PC to RDA. PC would play an important role in preparation of financial estimates and would assist DADO in the preparation of DDP and detailed imple- mentation schedules. Although PC would primarily assist and supervise in the implementation of the project, he would also have the responsibility of drawing disputes and conflicting priorities, irreconcilable at district level, to the attention of the Regional Coordinating Committee (RCC). Upon request, the PC would also provide assistance and advice to central line departments of Government in the timing, phasing and content of their inputs to district plans. PC would present DDP to RCC in good time for endorsement and would assist the District Coordinating Committee in making any subsequent revisions which may be considered necessary by RCC to ensure timely submission to RCC for approval. Finally, PC would monitor the process whereby each concerned ministry and agency makes identifiable budgetary requests for financial provision to implement the planned project components and would collate such requests for the Ministry of Finance, through MFA. At negotiations, assurances were obtained that, not later than April 30, 1981, a full time Project Coor- dinator would be appointed with qualifications and experience satisfactory to the Association.

6.05 Although withdrawals from the IDA Credit would be by way of indivi- dual applications by line departments, through their ministries to the MOF, accounting responsibilities would remain with the Accountant General. For easier administration, PC would be delegated responsibility for submitting withdrawal requests to IDA.

6.06 PC would be assisted by two Program Officers (PO) and a Disburse- ment Unit (DU) and Monitoring Unit (MU) located at regional headquarters. PO, one for agriculture and the other for livestock development and health would assist the PC in his duties. DU would be responsible for preparing all disbursement requests for submission to IDA, in consultation with the appro- priate ministry. DU would consist of an accounts assistant and supporting staff. MU would be staffed by an economist or sociologist, two enumerator/ tabulators and supporting staff. MU would be responsible, under supervision of PC, for preparing semi-annual progress reports.

Coordinating Committees

6.07 Coordination with programs and policies of other government agencies working at the regional, district and Agricultural Service Center levels would be achieved through the following committees:

(a) Regional Coordinating Committee would be established to conduct the planning and implementation of the project and to identify and resolve problems and to ensure coor- dination of project activities with DDP. The chairman would be the RDA and members would include: regional heads of MOWT, MLD ADBN, AIC, Department of Cooperatives, NFC and District CDO. The secretary would be the Project Coordinator. The committee would meet at least three times per year. The minutes of these meetings would be submitted to the Secretary of MFA. - 30 -

(b) District Coordinating Committee are presently established to coordinate activities of the various agencies at district level. The committee would, in conformity with DDP, review project plans, assign priorities for implementation, assist DADO to obtain and arrange needed goods and services. The chairman would be the Chairman of the District Panchayat and the secretary would be the DADO. Members would be district heads of AIC, ADBN, DTO and include the members of the District Panchayat. The committee would meet monthly. Minutes of meetings would be submitted to the RDA through the PC.

The coordinating committees would report on the effectiveness of current recommendations and project program emphasis, manpower availability, progress of training programs, progress of construction work, agriculture extension, irrigation schemes, and schemes for trail improvement. Ensuring timely availability of credit and agricultural imports aic special responsibilities of these committees (Annex 3). Assurances were obtained at negotiations that the Regional and District Coordinating Committees would meet to discuss project affairs.

6.08 Management of the ADBN and AIC would be strengthened by formalized contact with the project officers in the district and regional coordinating committees, the minutes of which would be available to the Secretary of MFA and the Director General of Agriculture who is responsible for coordination at the national level and to the Managing Directors of AIC and ADBN. The project would provide training in management for ADBN, AIC and Sajha personnel.

Project Staffing

6.09 Existing levels of staff of participating departments would be supplemented by additional project staff (Annex 9). Assurances were obtained at negotiations that all Agriculture (Extension), Livestock Development and Animal Health incremental staff positions specified in Annex 9, Table 2 and 3 would be permanent and that they would be appointed as scheduled.

VII. AGRICULTURAL PRODUCTION AND INCOMES

Crops and Cropping Patterns

7.01 During the project implementation period it is expected that only 50% of the farmers in the area of the ASCs will participate in the program. As discussed in Chapter II and Annex 1, the principal crops grown in the proj- ect area are foodgrains, pulses and potatoes. The prevailing rotations are based on paddy, in the case of irrigated areas, and maize, on nonirrigated lands. Present cropping intensity is about 150% and present cropping patterns are well-suited to existing agro-ecological conditions. Under the project, the only changes expected are to be increases in the area planted to wheat, potatoes and fodder legumes. The project is expected to lead to increases in planting HYV paddy and higher yields from maize as the result of better placement of farm yard manure and use of fertilizers and insecticides. - 31 -

Improvements to irrigation (conversion of 500 ha of rainfed land to irrigated and upgrading of 2,500 ha presently irrigated) (para 4.20) would also lead to increased production because of assured water supplies. Assumed yield increases shown in the table below are phased over four years and are, broadly, 25% for paddy, 30% for maize, 20% for millet, 45% for wheat, 20% for pulses, and nearly 40% for potatoes. These are average figures and take into account the risk of crop failure (para 7.02). These estimates of yield increases are based largely on increases already achieved in areas where improved extension, communications and agricultural credit have been provided in recent years, notably in the Kathmandu Valley and in Rasuwa and Nuwakot districts (para 2.39). Yield assumptions are conservative compared to those achieved on research farms, but reflect the limitations imposed by the lack of government organizations, economic constraints facing small farmers and poor communica- tions. Changes envisaged are set out in the table below:

Crop Area, Yields and Production

Present Future (Estimated 1979/80) Without Project With Project

Area Yield Prod. Area Yield Prod. Area Yield* Prod. Crop '000 ha t/ha '000 t '000 ha t/ha '000 t '000 ha t/ha '000 t

Paddy 24.6 2.4 59.0 26.0 2.4 62.4 28.0 3.0 74.0 Maize 28.2 1.9 53.6 26.0 2.0 52.0 24.0 2.5 61.0 Millet 21.6 1.2 26.0 20.0 1.2 24.0 18.0 1.4 24.3 Wheat 5.4 1.1 6.0 7.0 1.1 7.6 8.5 1.6 9.9 Pulses 3.0 0.5 1.6 5.0 0.5 2.6 5.8 0.6 3.3 Potatoes 2.8 4.4 12.4 3.6 4.4 15.8 4.8 6.0 25.0 Oilseeds & Others - - - 0.7 1.0 0.7 1.2 1.0 1.2

Total 85.6 88.3 90.3

Crop Intensity 150% 156% 160%

* Future yields with project are yields expected from participating farmers (about 50% of those in the project area). Non-participating farmers are expected to obtain yields similar to those indicated under the "Future Without Project" situation.

Farmers' Risk and Crop Failure

7.02 The uncertain rainfall and weather pattern and the occurrence of hail and unseasonal frosts lead to risks of crop failure. Farmers have, however, evolved a farming system which mitigates the risk element (e.g., by owning several fragments of land, each located at different altitudes, and each having differing aspects and by practicing mixed cropping and staggered planting dates). Consequently, the project does not propose to change but rather reinforce present practices. Potatoes and blackgram are high-risk crops and failure occurs approximately two years in ten; maize is a moderately - 32 - risky crop, failure occurring approximately one year in ten; and paddy, wheat, soybean, millet and mustard are very low-risk crops and complete failure almost never occurs. The risk of low yields in these crops is, of course, always present. It is difficult to accurately represent the risk element in farm models, but risk has been taken into account when arriving at the average yield assumptions.

Incremental Production

7.03 Increases in crop production would be largest for paddy, maize and potatoes. At full development, annual paddy production is expected to be 11,600 tons above present levels. Maize would increase by about 9,000 tons, wheat by 2,300 tons, potatoes by 9,200 tons and millet, pulses, and oilseeds by 300, 700 and 1,200 tons, respectively.

7.04 Increases from livestock production, through the provision of more adequate health services, and particularly through better feeding, would eventually lead to higher output of milk and meat, but this has not been quantified.

Marketing

7.05 All project districts are classified as food deficit districts. Most of the increased crop production would be consumed on the farm to meet subsistence needs. Much of the incremental animal production would occur in Syanja district with good road connections to India. Hence, no problems are foreseen in the absorption of incremental production resulting from project actions. NFC/Sajha would participate in marketing (para 4.18) by purchasing up to 5% of the grain produced in the second year and up to 10% in subsequent years at government approved prices.

Farm Incomes

7.06 Two basic farm models have been developed to illustrate farming pat- terns in the project area. To allow for different farming conditions resulting from climatic factors, elevation, accessibility, soil type, hail susceptibility, each basic model has been subdivided into high and low production potential. The high production potential models are assumed to have perennial irrigation. It should be noted that given the very small farm size (.02 ha.) and rainfed conditions of agriculture, farm production can never rise to the level of fulfilling total family subsistence requirements. Small farmers with irriga- tion should, however, be able to raise productivity to this level. Expected increases are shown in the table below.

7.07 Small farmers represent about 72% of all farm holdings and account for about 43% of the cultivated area to be covered under the project. Medium and large farmers represent about 28% of farmers involved and 57% of the cul- tivated area. As a result of the project, farm income would increase by 20% for small farmers and 26% for medium/large farmers. - 33 -

GRAIN PRODUCED AND INCOME BY FARM MODEL

Future Without With Farmers Total Present Project Project Area Poten- Partici- Area Prod Value Prod. Value Prod. Value Model Farmed tial pating Farmed Kg NR Kg NR Kg NR

la 0.2 low 42,000 8,400 549 1,486 560 1,851 720 2,177 lb 0.2 high 14,100 2,810 707 1,730 780 2,155 1,084 2,718 2a 0.8 low 13,300 10,150 2,183 4,711 2,144 5,560 2,670 6,784 2b 0.8 high 5,400 4,350 2,839 5,585 2,801 6,576 3,790 8,931

Total /a 75,000 25,750

/a The total represents about 50% of the farmers and cultivated area in project districts.

Cost Recovery

7.08 There would be no direct recovery of incremental costs for develop- ment of ASC, agricultural extension, livestock and animal health services, training, or constiuction of trails and bridges. Farmers would contribute construction labor and provide maintenance for minor irrigation schemes improved under the project. About two thirds of the cost of fertilizer purchased by AIC would be recovered from farmers (para 4.19).

VIII. BENEFITS AND JUSTIFICATION

8.01 The principal benefit of the project would be increased production of food crops. It is expected that about one half of the 147,000 farm families in the project districts would participate in the project. Of these, 8,000 small farm families, with holdings of up to 0.4 ha, would raise their production to be able to meet minimum subsistence levels (1,300 kg grain/family) and 18,000 medium size farm families, with holdings above 0.4 ha, would generate small foodgrain surpluses. The remaining 50,000 small farm families having rainfed land would also increase food production by about 30%, but due to the small size of farm, this would not be sufficient to attain full subsistence. However, this increased production would bring considerable financial savings to government which now moves grain from the Terai, for sale in deficit areas at highly subsidized prices.

8.02 In addition, increased food supplies generated by improved cultural practices would help reduce pressures to extend cultivation to marginal slopes, and slow and possibly reverse, the present trend of declining crop yields. The promotion of fodder legumes would increase the supply of animal feed and thus, help reduce erosion on overgrazed areas.

8.03 Agricultural Service Centers, established at points of high con- centration of population and agricultural activity, would bring government - 34 -

services to areas which have been devoid of these in the past. The improve- ments of trails leading to ASC and constructing new suspension bridges should bring about major savings in time to farmers and others, although these benefits have not been quantified.

8.04 Through the introduction of more permanent structures and improved functional designs (e.g., piping instead of open canal in landslide-prone zones), the reliability of irrigation in the project area would be improved, thereby reducing the susceptibility of the area to vagaries of weather and landslides due to better engineering and water control. Furthermore, require- ments for repair and maintenance of irrigation systems would be reduced, thus enabling farmers to spend more time on other productive activities.

8.05 The improvement of irrigation schemes, the trail and bridge program, and construction activities in connection with the establishment of ASC would generate a considerable demand for labor. Over the project period, construc- tion would provide about 4 M mandays of employment.

8.06 Economic Evaluation. Assumptions underlying the economic evaluation of the project are:

(a) the standard conversion factor is 0.9 for all non-traded goods;

(b) the opportunity cost for labor is NR 4.4/manday;

(c) traded goods are valued at their market value; and

(d) the opportunity cost for capital is 12%.

Streams of incremental costs and value of production, investment costs and overhead expenses are determined for each project year. Shadow prices have been used to correct price distortions of non-traded goods and services caused by tariffs and trade restrictions and to reflect seasonal characteristics of the labor market.

8.07 Economic Rate of Return. Using the assumptions in Annex 6 on costs and benefits of the entire project to the economy, and discounting these costs and benefits over the project's estimated life of 20 years the economic rate of return (ERR) is in excess of 50% (Annex 6, Table 5). The ERR for the irrigation component is 16%.

8.08 Sensitivity Analysis. Important project risks are: delay in achiev- ing benefits from project investments, failure to achieve projected crop yields, increased farm input costs and increase in investment costs due to higher costs of foreign manufactured goods. A sensitivity analysis was carried out to illustrate which assumptions are most sensitive to variations and, therefore, crucial to the success of the project. Switching 1/ values

1/ Switching value is the value of a variable that reduces the net present value of the project to equal to zero. - 35 -

for a 12% discount rate were calculated for four variables, and the result is as follows:

1. Benefits delay five years 2. Incremental crop production minus 50% 3. irm input costs plus 277% 4. Investment cost plus 477%

The project seems to be insensitive to these variables. Project costs would have to increase by over two and a half times over the project life or yields drop by 50% to reduce the ERR to 12%.

8.09 A further risk is the availability and willingness of government staff to live and work at the ASC and visit farmers in nearby areas. The project is designed to minimize this risk by providing housing and facilitat- ing communications by improving trails and bridges.

IX. AGREEMENTS REACHED AND RECOMMENDATIONS

9.01 During negotiations assurances were obtained from HMG on the following:

(a) ASC would be constructed at the locations named and indi- cated on IBRD Map 15049 and as scheduled in Annex 9 Table 4 unless otherwise agreed between HMG and IDA (para 4.04);

(b) HMG would provide sufficient land for ASC (para 4.04);

(c) IMG would review annually with the Association, the credit needs of farmers in the project area and provide adequate funds to ADBN for the purpose of making loans to satisfy the needs agreed upon (para 4.16);

(d) the existing network of ADBN would be expanded by assign- ing a loan assistant to each ASC (para 4.16);

(e) HMG would provide a marketing plan acceptable to IDA by June 30, 1982 (para 4.18);

(f) HMG would ensure that all fertilizer purchased with project funds would be sold and used in the project districts (para 4.19);

(g) HMG, by not later than April 30, 1981, make satisfactory arrangements for the provision of funds for technical assistance (para 4.27);

(h) International competitive bidding would be followed, in accordance with IDA guidelines, for the purchase of imported equipment, furniture, vehicles and fertilizers. Orders for goods below US$100,000 would be purchased following HMG procedures (para 5.05); - 36 -

(i) Separate accounts would be kept by participating Government Ministries, ADBN, AIC, NFC and Cooperatives and these would be audited annually and a report submitted to the Association within nine months of the close of fiscal year (para 5.09);

(i) Agricultural portions and livestock portions of District Development Plans would be available to IDA for comment no later than May 15 of each year, and that HMG would make budgetary allocations to districts in amounts sufficient for their timely execution (para 6.03);

(k) A full time Project Coordinator would be appointed, by April 30, 1981, with qualifications and experience satisfactory to the Association (para 6.04);

(1) HMG would establish and maintain the Regional Coordinating Committee and this committee would meet at least three times a year to discuss project affairs. Further that, the District Coordinating Committees would be maintained and would meet monthly to discuss project affairs (para 6.07); and

(m) All Agriculture Extension and Department of Livestock Develop- ment and Animal Health incremental staff positions specified in Annex 9 Tables 2 and 3 would be permanent and that they be appointed as scheduled (para 6.09).

9.02 With these conditions and assurances the project would be suitable for a credit of US$8 M to HMG on standard IDA terms. - 37 -

ANNEX 1 Page 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Crop and Animal Production and Food Balances

Crops and Cropping Patterns

1. Principal crops grown in the area are paddy, maize, millet, wheat, oilseeds and potatoes. Various legumes such as soybeans, horse beans and blackgram are grown on field margins or interplanted with maize. Two basic cropping patterns, with several minor variations, are used: the ones for irrigated lands are paddy based, while those for rainfed land are maize based.

2. Paddy is the preferred crop and is grown wherever possible. Population pressure is forcing the cultivation of higher yielding coarse grain rice varieties and higher yielding maize. In the project area, 25,000 ha are devoted to paddy production, with 75% of the crop paddy rice and 25% upland rice.

3. Maize is the principal crop on rainfed land (28,000 ha) but at present only a small percentage is grown on irrigated land. Yields are generally low by world standards and there is great potential for improving maize yields.

4. The third most important crop is millet which occupies 22,000 ha. Most of the millet is relay cropped with maize or pulses. Only at higher elevations where the growing season is short is it grown in pure stands.

5. Wheat now occupies an area of about 5,400 ha during the winter growing season. The area planted to wheat has expanded rapidly in recent years and is expected to cover most of the perenially irrigated land in the near future. The use of fertilizer will need to be increased to maintain present soil fertility levels under the increased cropping pressure. In areas where wheat is included in the cropping systems, yields of rice and other summer crops have declined in the absence of adequate fertilizer applications. Average wheat yields are about 1.1 tons/ha which is low by world standards. Low soil fertility and poor plant stands are primary causes of the low average yields. Following paddy rice, seedbed preparation is difficult when conven- tional plowing and clod breaking methods are employed. Research on different seeding methods is needed.

6. Potatoes are currently grown on about 2,800 ha as a summer crop above 2,000 m and as a winter crop at lower elevations. At about 4.4 tons/ha, yields are very low and potatoes appear to be a crop with excellent potential for yield improvement. If the results of available research in seed production and storage can be extended and utilized, potato yields should easily exceed 8 to 10 tons/ha. - 38 -

ANNEX 1 Page 2

7. Pulses occupy about 4,500 ha in the project area, usually grown in crop mixtures. Black gram (Phaseolus mungo) and horse gram (Dolichos biflous) are the most important pulses, followed closely by soybeans (Glycine max).

8. Mustard is the principal oilseed crop and is grown on about 4,500 ha. Most of it is sowr.after the maize/millet crop or mixed with wheat. Small amounts of niger (Guizotia abyssinica) and groundnuts are also grown as oilseeds.

Crops and Crop Production Under the Project

9. Under the project, it is anticipated that a slight increase in the use of fertilizer and improved crop management will increase maize yields by 0.5 to 0.6 tons/ha. Improved short duration varieties could further help increase yields. A substantial increase in paddy production is expected, due primarily to an accelerated acceptance of HYV Ponlai varieties (CH45, Taichung) as has already occurred in the Kathmandu Valley. Improved avail- ability of fertilizers and pesticides is expected to contribute substantially to acceptance of HYV. Improvement in the supply of irrigation water to part of the project area will also help increase average yields. Improved fertil- ity in relay cropped maize fields is expected to provide a slight increase in millet yields. Wheat production would be expected to increase both in area and in yield under the impact of a revitalized extension service. A modest increase of 0.4 ton/ha is projected which would be achieved through improve- ment of seeding, irrigation and soil fertility. The yield of pulses is expected to remain constant until enough cereal grains are produced to satisfy the demand. It is anticipated that both area and yields for potatoes will double, increasing to 6 tons/ha due to improved seed potato storage.

Animal Production

10. Constraints to livestock production include lack of feed and adequate veterinary health coverage. To help farmers, the project would improve advice given to farmers on the care and feeding of livestock and would initiate programs for inoculation and dosing of livestock. Emphasis would be placed on vaccine for the control of hemorrhagic septicemia and rinderpest. Anthelmics for the control of internal parasites would also be provided in the project area through 20 livestock JTA and 100 AA. One JTA and 5 AA would be-posted at each Agricultural Service Center (ASC). During the first year of the project, staff would be recruited and trained.

11. One of the most serious problems in the hills is the lack of an adequate feed supply for the ever increasing animal population. The project would help to alleviate this problem in two ways: (1) by the increase in crop residues that will come with increased crop production; and (2) through the extension effort to promote the overseeding of forage legumes in paddy fields that would otherwise lie fallow.

12. No increase in income from livestock is projected for two reasons. First, the ever increasing pressure on forest and grazing land will probably reduce the amount of forage available per animal. Secondly, the success of - 39 -

ANNEX 1 Page 3 overseeding legumes in paddy has not yet been adequately tested. It is hoped that the incrc,re in crop residue will offset the reduced amount of forage from forest and grazing lands. Any increase from overseeding legumes in paddy will be an additional benefit. Lentils, field peas and vetch would be most likely to succeed in an overseeding operation. A seeding rate of 20 kgs/ha would be needed; thus 244 tons of forage legume seed would be needed to cover the paddy in the project area. - 40 -

ANNEX 1 Table 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Population, Adult Consumption Units and Caloric Requirement

Population (4 districts) 840,000

Population (in area of influence) 420,000

Adult Consumption Units (x .75) 315,000

Caloric Requirements/Year (millions)

Average Subsistence (2500 cals/day) 290,000

Minimum Subsistence (2000 cals/day) 230,000

Cereal Requirement/day 1/

Average Subsistence 787.5 g

Minimum Subsistence 630.0 g

1/ Caloric value of 100 g; rice = 354 cal.; maize = 349 cal.; wheat and millet - 332 cal.; barley 340 cal.; potato = 82 cal. Source: FAO Food Consumption Tables for use in East Asia: Rome 1972 - 41 - ANNEX1 Table 2

NEPAL

HILL FOOD PRODUCTION PROJECT

FOODGRAIN REQUIREMENTS

FOR AVERAGEFAMILY

Average Family Size: 6

Adult Consumption Units (ACU)/Family: 4.5 1/ (averageof .75 = per person)

Average Subsistence: 2,500 calories/ACU

2,500 x 4.5 = 11,250 calories per family per day

11,250 x 365 = 4,106,250 calories per family per year

85% of calories from cereals 15% of calories from pulses, vegetables (potatoes)and animal products

4,106,250x .85 = 3,490,300 calories per family per year from cereals

35% from paddy - 1,221,600 - 575 kg. 35% from maize - 1,221,600 - 389 kg. 10% from wheat - 349,030 - 124 kg. 20% from millet - 698,060 - 234 kg.

Cereal grain required per family per year - 1,322 kg. (or .8 kg per day /per ACU)

Milling/Conversion ratios - rice - 0.6

maize, wheat - 0.9 millet - 0.85 potatoes - 0.95

Calorie value per kilo - Rice - 3,540 Maize - 3,490 Wheat, millet - 3,320 Potato - 820

Source: FAO - Food ConsumptionTables for Use in East Asia

/1 A.K. Bourini - Population Profile (rounded) - 42 -

ANNEX 2 Page 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Adaptive Research

1. Agro-ecological conditions are extremely variable in the hills of Nepal. Temperatures, rainfall, wind, light duration, and light intensity as well as soils and slope can vary substantially in very short distances. With the almost limitless combinations of variables in hill agriculture it would be impossible for the present research organization to develop adequate technology for sustained high yields.

2. In some parts of the world the efforts of the formal research organizations have been effectively supplemented with a program of adaptive research. Adaptive research consists of basically unreplicated tests of research results. These tests are conducted in farmers' fields and are used primarily to test the validity of research results under differing agro-ecological conditions, and farmers capabilities.

3. At full implementation, each District would be served by team of 2 to 3 Subject Matter Specialists (SMS) that are specifically trained and equipped to implement this type of work through out the areas served by the ASC. The JT and JTA would be responsible for frequent note-taking and inspection of the tests after the SMS had helped to establish them in the field. The SMS would be responsible for identifying problems and reporting results.

4. A Nepalese Senior Agronomist would be responsible for training, coordination, and supervision of the SMS, JT and JTA who conduct the adaptive research program in the project area.

5. A highly experienced expatriate agronomist would consult and advise in all aspects of extension agronomy and adaptive research programs. His services would be essential for the first two to three years of this project when training and implementation will require extra effort and dedication.

6. If three to four tests are conducted near each ASC each crop season there would be 45 to 60 tests conducted in each district each year. Obviously, this will be a major effort and will require careful training, planning and coordination.

Terms of Reference

7. Senior Agronomist. This position will require a well trained and highly motivated individual. He must have extensive knowledge of the principle crops and cropping systems that are commonly grown in the hills of Nepal. - 43 -

ANNEX 2 Page 2

He must have the ability to inspire and motivate the people he is super- vising. Strong legs are essential.

8. Expatriate Agronomist. Basically, this man will have some previous experience in crop production in monsoon Asia. Hopefully, he will also have some experience in irrigated agriculture. Ideally, he will have previously worked with agriculture in the hills of Nepal, India, Thailand, or the Philippines. He must be willing to work in close harmony with the Senior Agronomist in developing and administering a practical training program for the SMS. With the Senior Agronomist, he must be a liaison man between the SMS and the research scientists. This man should be blessed with infinite wisdom and patience and be able to walk hill trails for extended periods of time. - 44 -

ANNEX 3 Page 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Agricultural Credit, Input Supply, Marketing and Cooperatives

A. Agricultural Credit

1. Both institutional and non-institutional sources of credit are important in the project area. The significance of each varies according to the purpose for which it is extended and according to farm size. Institutional credit is provided primarily for production purposes and non-institutional credit is provided primarily for consumption purposes.

2. ADBN is the major source of institutional credit. About 60% of ADBN financing is done through the Sajha (cooperative) movement. Most of these loans are for short-term production credit (crop loans) to farmer members and are secured by the crop. ADBN also loans (about 36% of its financing for agri- culture) directly to farmers at slightly higher rates. It then requires a real estate mortgage which poses difficulties for individual farmers where land titles are not up-to-date. Non-institutional credit is provided through moneylenders (landlords, merchants, traders) at much higher rates. It may also be provided "in kind" by relatives and friends.

3. In the project area, 75% of the farmers own less than 0.4 ha. These farmers have problems in obtaining credit due to difficulties in estab- lishing credit worthiness. Of those who are able to obtain credit, they obtain it from the following sources: moneylenders, about 53%; ADBN, through Sajha, about 18%; ADBN directly, about 4%. There is an obvious need to improve small farmer access to institutional credit.

4. In the project area, ADBN presently has district offices at Tanahu and Syanja and sub-branches at Gorkha and Lamjung. Present staffing of these offices is adequate, except for loan assistants who are needed to accent appli- cations and supervise the use of credit. There is no formal training program for staff at present.

5. To improve farmer access to institutional credit, HMG has agreed to review annually with the Association, the credit needs of farmers in the project area and to provide adequate funds to ADBN for the purpose of making loans to satisfy the needs agreed upon (para 4.16). To provide adequate staffing for ADBN offices, under the project, one loan assistant would be posted for each ASC. A formal training program would be established for staff. - 45 -

ANNEX 3 Page 2

B. Agricultural Inputs

6. The Agricultural Inputs Corporation (AIC) is the government agency responsible for the provision of improved agricultural inputs to farmers in Nepal. It is presently experiencing serious financial difficulties due to fixed prices for its sales in the face of increasing costs for the imported inputs it sells. Private traders also supply agricultural inputs.

Fertilizer

7. AIC is the predominant source of fetilizer supply. Chemical fer- tilizer usage has remained low and confined to certain areas. There are several reasons for this:

(a) Nepal generally lacks sufficient fertilizer supplies. Since the Terai produces greater yields at lower cost, it receives more of the scarce supplies than do the hill areas.

(b) The present system of planning for national fertilizer usage targets is not coordinated with national five-year plans or district annual plans for agricultural development.

(c) In recent years, grant sources have provided a major source of fertilizers or funds for purchase of fertilizer. Unfortu- nately, AIC rarely receives advance commitments and therefore cannot make timely purchases.

(d) AIC also has problems of internal transport and lack of storage facilities. At district level, all fertilizer supplies must be in place and under cover by June because shipment is difficult during the monsoon.

(e) To further complicate the situation, extension agents and farmers frequently lack knowledge about what type of fer- tilizer should be used and when it should be applied. Hence, they use whatever is available regardless of its appropriateness. They also lack access to fertilizer supplies at peak times.

A plan of annual targets, coordinated with a separate stocking plan, would be drawn up for the project area.

8. To improve services to farmers, the following would be done:

(a) At the national level, AIC would draw up an overall plan by November 1 of each year. This plan would take into account the broad strategy of five-year and annual agricultural development plans and be based on district information pro- vided monthly as to on-going and probable demand, present - 46 -

ANNEX 3 Page 3

(b) ADBN and Sajha would coordinate and strengthen their activ- ities to enable farmers to obtain the necessary credit for fertilizer purchase.

(c) At district headquarters, District Coordinatine Committee would review flow of credit, sale of fertilizer stocks, take corrective steps as necessary and report to AIC at national level.

(d) Each month the District AIC would send a representative to each ASC/Sajha to determine sales trends to ensure adequate supplies.

(e) The extension service would be strengthened. (See para. 4.06 for details.).

Seed

9. At present, AIC handles seed for about 1% of the total cultivated area of the country. AIC's sources of seed are government farms and AIC contract farmers. The distribution of improved seed has been uneven and declining over the last few years in the project area. Farmers lack confidence in the quality of AIC seed, AIC has problems with making timely delivery, and its prices are regarded as too high. USAID is assisting AIC with a Seed Production and Input Storage Project which is expected to be active in the project area. Since the area under wheat is likely to remain the same until a better variety is found, demand has been estimated at 10% increase each year over the 1980/81 target of 183 mt (Annex 3, Table 2). Since areas under HYV of paddy are expected to remain constant during the project period, demand has been estimated at a 10% increase. The national potato program expects to expand seed production in nearby Kaski District. AIC would carry out its program at the levels indicated.

Plant Protection

10. Plant protection is a neglected sector in Nepal and does not even have a full fledged division in AIC. Extremely small amounts of pesticides are used in the project area at present, mainly by farmers growing HYV. Dusts are chiefly used as they are relatively easy to transport and apply. Demand forecast is difficult because it depends on intensity of attack, rainfall, speed with which the epidemic spreads, etc. Stocking frequently results in losses as pesticides have a limited shelf life. Few farmers have even a rudimentary knowledge of disease and pest control.

11. Annex 3, Table 3 gives the value of plant protection materials required during the project period. These are based on improvements in the extension service which are expected to lead to an increase in demand. Under the project, each ASC would stock enough pesticides to treat 200 ha of wheat, 500 ha of paddy, 25% of seed used by farmers, and 25% of stored foodgrains. - 47 -

ANNEX 3 Page 4

C. Storage and Marketing

Storage

12. A good network of godowns exists in the project area. Sajha godownswere constructedunder the Gandaki project (for locations,see Map IBRD 15049). While the network exists' present godowns are poorly equipped and maintained. Godown managers lack proper management training. There is inadequateutilization of godowns and their profit-generatingaspects are being mishandled.

13. Under the project, each ASC would have a fully equipped 20 ton warehousewhich would be used as a retail point for fertilizerand a temporary storage point for foodgrains. Some of these warehouses are being constructed under the Gandaki project. Project constructionwould be integratedwith that done under the Gandaki project (see Annex 9, Table 4). Management training to overcome present managementdifficulties would be provided bi-annually. The course would last about ten days and would include the following:

(a) storage, maintenanceand fumigatingof foodgrains;

(b) sorting, storage, timely aeration,desprouting of potatoes;

(c) storing, stacking,preserving of fertilizers,weighing;

(d) maintenanceof storage floor, storage articles,building and beam scales;

(e) maintenanceof accounts,physical balances of different commodities,issue registers,etc.

One day would be devoted to proper on-farm storage of foodgrainswhich would be transmittedto the farmer as an extensionmessage. This training would include:

(a) lecture and demonstrationcovering losses caused by insect, rodents, birds, and moisture;

(b) practicaldemonstration on use of anticoagulantrodenticides and fumigation;

(c) lecture on nature of, damage and control measures to be employed;

(d) demonstrationon improvementof existing storage structure and use of metallic bins;

(e) propertiesof various pest control chemicals,advantages and disadvantages,precautions and antidotes;and

(f) special precautionsregarding seed storage. - 48 -

ANNEX 3 Page 5

Marketing

14. The problems of marketing foodgrains in the project area are:

(a) immediate depression of prices at harvest;

(b) lack of financial capacity of small farmers to withhold foodgrains from the market;

(c) downward flow of foodgrains from hill districts to Terai immediately after harvest, followed by an upward flow three to four months later.

The principal government agency dealing with foodgrain distribution to food deficit areas is Nepal Food Corporation (NFC). NFC has a national network of dealers consisting of sajhas and private traders. At present, the Sajha program is being emphasized as the primary marketing instrument; unfortunately, this objective is beyond the resources of most Sajha. In the project area, Tanahu and Syanja transport goods to market over an all weather highway. Gorkha and Lamjung are presently limited to transport by porter. At the end of the project period, it is expected that there would be an incremental pro- duction of 23,200 t of foodgrains, 9,200 t of potatoes, 2,000 t of pulses and oilseeds.

16. Under the project, a marketing plan would be introduced in the second project year. On an experimental scale, during project years two and three, 5% and 10%, respectively, of total incremental production would be purchased at the government support price by either Sajha or NFC. This should help to stabilize prices. This purchase would be stored in the project area and sold locally to meet needs of the project area later in the year. The selling price would be fixed after including procurement price and costs and overheads. Preliminary procurement would be done at district headquarters and ASC. ASC would be used as relay points for allocating foodgrains to scarcity points within the district. Credit requirements for this market support program would be handled through ADBN from funds generated by the sale of fertilizers.

D. Cooperatives

17. The cooperative movement was given a new dimension with the intro- duction of the Sajha program in 1976, which sought to link economic development with political decentralization at the grass roots level and to mobilize local savings. In 1978, management responsibility for Sajha was transferred from ADBN to a district level Sajha board.

18. In 1980, 22 of the 26 Sajhas in the project area were delinquent-- overdues of members to the Sajha (and consequently of the Sajha to ADBN) were more than 50%. Since delinquencies reduced the ADBN finances available, the - 49 -

ANNEX 3 Page 6

amount of lending to the Sajha for 1979/80 is NRs 1.4 M rather than the targeted NRs 2.15 M. The problems causing the delinquency are complex and and interrelated. The staff of the Registrar Cooperative Societies have not yet initiated legal action; in anticipation that Sajha staff would pursue members to return overdues; or to taken action against the Executive Commit- tees who processed and sanctioned loans to defaulters, or sought recovery from guarantors. Another reason is that there in the past, has been insufficient training to cooperative official members. The Registrar's office in the past, has been incapable of giving advise on financial management, i.e., how best to utilize small financial resources a Sahja may have. Finally, it has not always been possible to ascertain the amount of overdues on the books when Sahja were transferred from ADBN.

19. Lack of confidence in the credit worthiness of Sajha societies has led ADBN to withdraw its funds from some societies and to release funds only on sufficient guarantees that past arrears would be recovered.

20. It is proposed that under improved management and better recovery of overdues, the number of delinquent societies in the project area can be reduced and that these will remain solvent during the project period. To assist Sajhas in providing inputs to members, working capital would be avail- able as credit from ADBN on standard terms. Applications shall be initiated by Sajhas passed to the District and Regional Coordinating Committee for endorsement before presentation to ADBN.

21. A two-tier training program is proposed for Sajha members and staff. The member's program is a regular program run by the registrar. At the national level, it has a target of covering 55 members per district in 45 districts annually. The program is a three-day course which covers topics like cooperative principles, accounting systems, cooperative rules, marketing of foodgrains and inputs. A staff member of the cooperative training college in Kathmandu goes to district headquarters and using district officers as resource personnel organizes camps which are often located in important villages.

22. Staff training courses would include:

(a) basic accounting principles;

(b) loan procedures; and

(c) general agricultural principles, storage and marketing.

These would be organized in consultation with ADBN and Registrar of Coopera- tives either at the Khairenitar Training Institute or at district headquarters. - 50 -

ANNEX 3 Table 1

NEPAL

HILL FOOD PRODUCTION PROJECT Fertilizer Requirement*

Year Project Year Total Needed Incremental Over Base Year

t t

78/79 820 Actual Used 79/80 860 Estimated 80/81 910 Base Year 81/82 1 1,310 400 82/83 2 1,900 990 83/84 3 2,500 1,590 84/85 4 3,200 2,290 85/86 5 4,000 3, nQ; 8,360

* Tons of fertilizer materials with analysis of 45% plant nutrients composed of 85% N and 15% P205 - 51 - ANNEX 3 Table 2

NEPAL

HILL FOOD PRODUCTION PROJECT

Seed Requirements /a (tons)

Year 1 2 3 4 5 Crop Paddy 4.4 4.8 5.2 5.7 6.3 Maize 16.5 18.1 19.9 21.8 23.9 Wheat 20.1 22.1 24.3 26.7 29.3 Potato 36.0 62.0 125.0 185.0 248.0

/a Projected demand for seed of HYV or other improved varieties handled at ASC

Table 3

Pesticide Requirements (NR'000) Year 1 2 3 4 5

Pesticides all crop /a .36 .56 .75 .95 1.14

/a See Annex 3, para. 11 for details - 52 -

ANNEX 4 Page 1

NEPAL

HILL FOOD DEVELOPMENT PROJECT

Irrigation

1. Hill areas of Nepal require irrigation to offset the uncertainties of the monsoons and to extend the growing season. Despite abundant water resources, only 20% to 25% of hill area crop land is irrigated. Nearly all of this area is under supplementary irrigation during the rainy season. The small streams and the torrents which supply most of the irrigation water during the rainy season are dry after the rains cease. As diversion of water from the larger perennial streams and rivers is generally beyond the technical resources of the local people, only a small percentage of the irrigated area is perennially irrigated.

2. Nationally, in the current Five Year Plan, only 7,540 ha of hill irrigation is to be developed--slightly over 5% of the total area to be developed under the plan. This is a realistic expression of the higher costs and manpower requirements for developing irrigation in the hills over those required for the Terai. However, the general decline in productivity in the hills and the related problems have caused a shift in official policy. The objectives of the Sixth Plan are to bring 25% of the cultivated area in the hills under irrigation.

3. The "high farmer participation" concept has been accepted for the 5 to 10 ha schemes as being the most realistic. These could be completed in one working season. Concerned farmers would provide labor and local materials and HMG would provide technical inputs and external construction materials.

Existing Institutions

4. DIHM is primarily responsible for implementation, operation and management of medium to large scale irrigation schemes. Until a short time ago, all DIHM resources were devoted to developing irrigation in the Terai, but recently it has channeled part of its efforts to irrigation schemes in the hills. Since DIHM has stated that systems with 50 ha command areas would be the minimum they would consider, a large percentage of the hill irrigation schemes are excluded from receiving assistance from DIHM. Until recently these small systems were largely ignored by all branches of government, but of late MOHP and MOWT have shown increasing interest and involvement in the rehabilitation of small scale irrigation works.

5. At district level, the ministries operate through a district technical office (DTO), staffed by an engineer, two overseers and some support staff. Although small scale irrigation is designated as one of their responsibilities, their limited manpower and resources are also utilized by village water supply, trail, bridges and building works. - 53 -

ANNEX 4 Page 2

6. MFA retains responsibility for farm level irrigation development and management. These activities are covered by Farm Irrigation and Water Utilization (FIWU) which has shown keen interest in expanding its operations in the hill areas. MFA also has specifically expressed its desire to keep the irrigation development components of this project within the administrative sphere of MFA.

Irrigation in Project Area

7. It is estimated that about 40% or 22,500 ha of the cultivated land in the project area is under some form of irrigation, predominantly supple- mentary irrigation. Only a few irrigation systems provide year around water so that two and three crops a year can be produced.

Water Needs and Resources

8. During the May to September monsoon season there is adequate rain- fall in the project area for most crop production. Paddy usually requires some supplementary water for puddling and transplanting. Additional water may also be needed if there are substantial breaks in the monsoon or to mature the crop. From October to April, rainfall is too limited or uncertain in most of the project area to risk crop production without irrigation. This is the period of the year having the greatest potential for increased crop production. March and April are the critical months for an adequate supply of irrigation water as they are at the end of the dry season when river and stream flows are at their lowest. For March, the mean3discharge of the Narayani River at Station 450 near Narayangarh is 245 M /sec for a catchment area of 3.11 M ha. This equals a discharge of 7.7 1/sec/ha for the HMG planned development of 38,000 ha. The gross irrigation requirement for paddy in March is 2.7 1/sec/ha.

9. Theoretically, there is ample river runoff for the planned irriga- tion development. In practice it is a much more complex problem. In many small tributaries and streams, the dry season flow at higher elevations is sub-surface and without special structures cannot be used where needed. In general, there is a very uneven distribution of available water resources during the dry season. River and stream bottoms have an abundance of water that is not available for use higher on the slopes.

Present Irrigation Facilities

10. The entire existing irrigation facility in the project area can be classified as minor gravity systems. With few exceptions, all are built by indigenous means and maintained by the farm communities. Water is diverted by simple stone and brush weirs into hand dug canals. Canal flows are controlled by crude overflow arrangements near the intake. Gully crossing for the canals consists of dry stone walls with overflow crests. These indigenous systems are easily damaged by floods and runoff from torrential rains. A few HMG-sponsored perennial systems exist in the area. They are equipped with trench type intakes (tyrolian weirs), controlled intakes and various improved canal structures. At least one small lift system exists in the area and two more are in the planning stage. _ 54 -

ANNEX 4 Page 3

Work Proposed Under the Project

11. A feasible target for upgrading and improving the irrigation facilities would be about 3,000 ha. Little of this would involve new systems and the only new land involved would be the expansion area that would be covered by increasing the efficiency of the existing systems. Because the size of the individual projects would be restricted to less than 50 ha, this part of the project would require good organization to achieve the goal in a five-year period. There would be a basic goal of upgrading 2,000 ha from seasonal to fully perennial systems, 200 ha from rainfed to perennial, 500 ha from existing seasonal to improved seasonal and 300 ha from rainfed to seasonal irrigation.

12. Nominations by the village panchayats would serve as a starting point in identifying systems that would qualify for improvement under the project. One of the most important bits of information needed to determine the eligibility of a system for improvement is that of the minimum flow of the water source and maximum irrigation need to coincide. As few records of stream flows, other than those of the larger rivers, are available, it would be advisable for FIWU to set up staging stations on as many project area streams as soon as possible.

13. Carefully conducted preliminary surveys for each potential system are of primary importance. Eight general areas of information should be gathered:

(a) Scheme location and size of irrigated area;

(b) Names of farmers involved and size of irrigated holdings;

(c) Crops grown at present and crops intended to be grown after upgrading;

(d) Hydrology-evaluation of the water source. Village leaders and older people in the area should be valuable sources of information where gauging data is absent;

(e) Estimate of engineering works required for the scheme;

(f) Determination of materials, labor and transportation avail- able for the construction proposed;

(g) Evaluation of village motivation and willingness to cooperate;

(h) Willingness of benefitting farms to sign an agreement that they will maintain the systems at design level and will assign one or more people for training in the operation and management of the system. - 55 -

ANNEX 4 Page 4

Staffing

14. In view of the manpower limitations in the country and the complex- ity of this work, it seems essential to have a highly experienced expatriate engineer to assist in implementing, expediting and coordinating the work. His services would be needed for at least portions of three years and probably for the full five years if the proposed goal is to be reached.

15. A chief engineer, water management specialist, and four junior engineers would also be needed. One junior engineer would be assigned to each district and would be responsible for the detailed engineering needed at each scheme. This would include the surveying, plans, drwwings, material list, labor needs, etc. The chief engineer would be responsible for coordinating the overall work, reviewing plans, procurement of supplies, relationships with villagers and panchayats, etc.

16. Each junior engineer would have one senior overseer and two sub- overseers assigned to him for the first year and two overseers and four sub- overseers the following four years. The sub-overseers would be resident, full-time on-site supervisors of an individual project. The overseer would supervise two projects at a time, spend some time working on preliminary surveys, and where possible, assist junior engineers with the detailed sur- veying. Volunteer village labor would be expected to be available for routine rod and chain work and any minor labor needed in the course of the detailed survey.

17. After project completion when the trained village people take over the operation and management, any technical assistance needed would be provided by FIWU or DTO. If DTO assumes responsibility for minor repairs, at least one more overseer should be assigned to its staff. A sample irrigation scheme is provided in Appendix 1. Component cost and implementation schedules are shown in Annex 9, Table 10. - 56 -

ANNEX 4 Appendix 1 Page 1

NEPAL

HILL FOOD DEVELOPMENT PROJECT

Sample Irrigation Scheme

1. We recommend that about 144 small irrigation systems be upgraded. These systems would have command areas of from 5 ha to 50 ha and they would be upgraded to provide perennial irrigation for about 2,000 ha, bring about 500 ha under irrigation and upgrade systems for the remaining 500 ha for a total target of 3,000 ha. The major cost involved in each scheme would be for a well engineered screen trench intake and flow control gate. Silt traps and overflow weirs would also be included to protect the whole system. The amount of work and materials required will vary widely from one scheme to the next depending on size and location.

2. Following is an example of the problems on an average scheme of 21 ha:

(1) The indigenous weir is incapable of diverting water during the period November to May.

(2) The weir has to be repaired after each major flood (four to five times annually).

(3) The initial 200 M of canal are very porous.

(4) The canal frequently overtops and washes out during heavy storms.

To convert the present indigenous supplementary irrigation scheme into a smoothly functioning supplementary or perennial system, the following remodeling works would be implemented:

(1) Headworks would normally consist of trench type screened weir with movable controls. There would also be provision for silt removal at the headworks.

(2) The canal immediately below the headwork is frequently troublesome and would be replaced with concrete masonry construction or would be piped.

(3) The balance of the canal would be hand dug except where the canal crosses gullies or drainage ways. These normally would be crossed by flumes of RCC or corrugated metal. Stone masonry culverts would serve to cross small gullies. - 57 -

ANNEX 4 Appendix 1 Page 2

The farmers whose fields are served by this system would agree in advance to maintain and operate the system after it is completed. They would also agree to supply labor to bring the canal beyond 200 meters of the headworks up to design standard under the supervision of the engineer add overseer.

3. As an example, a canal designed to handle about 3 liters/sec/ha is needed. This is equal to 63 liters/sec to supply the 21 ha under command. If we assume a 33% loss due to canal seepage for a 3 km canal, then we need a canal designed for 95 1/sec. If the canal slopes 1 meter in 500 meters, then we will need a flow depth of 25 cm and the bed width must be 50 cm.

4. If 144 irrigation systems of an average size of 21 ha can be upgraded over a five year period, approximately 3,000 ha will have an assured water supply during the rainy season and at least 2,200 ha of this area should have perennial irrigation. The improvements planned would be:

2,000 ha present seasonal upgraded to perennial

200 ha present rainfed to perennial

500 ha present indigenous seasonal to improved seasonal

300 ha present rainfed to improved seasonal

3,000 ha. _ 58 - AN>TEY.4 Appendix 1

NEPAL Table I

HILL FOOD PRODUCTION PROJECT

Cost Estimates*

Item Unit Quantity Unit Cost Partial Cost Total F.F. ------NRS------(est.)

1. Intake RCC M3 4 2000 8,000 3,000 Plain Concrete I3 4 800 3,200 -- Stone Masonry M3 50 500 25,000 -- Gabions MI2 80 300 24,000 12,000 Screens M2 15 1300 19,500 15,000 Gates M2 1 7500 7,500 6,000

Excavation: Normal Soil M3A 70 15 1,050 Rocky Soil M3 135 20 2,700 90,950 90,950 2. Canal Lining

Stone Masonry Ml 150 500 75,000 Excavation M3 200 15 3,000 78,000

Total 168,950 Contingencies - 20% 33,050 10,000 GRAND TOTAL 202,000 46,000

Cost per hectare: NRs 9,620

FE Component - 23%

Adaated from FAO/CP Nepal Hill Area Agriculture De-reo:'-e.t "r&e.L, '',<'>:l'--t"X:u' >..,'J 'e" 'A ''-i Cl' AlT,X ;,7 ^ e_ 4 v T-)_ _De - 59 -

ANNEX 5 Page 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Trails and Bridges

General Background

1. Much of the project area is served by the Kathmandu-Pokhara-Bhairawa trunk road which also passes through the district centers of Tanahu and Syanja. The centers of Lamjung and Gorkha will be linked up to the highway by feeder roads. The 26 km road to Gorkha should be completed in 1981 and the 42 km road to Lamjung district center, Besi Sahar, is under construction by HMG. A completion date for the latter has not been given. Apart from these roads, only a few jeepable tracks of little importance for the project exist.

2. A network of trails constitutes the main transport infrastructure in the project area. Major trails in the four districts are estimated to total 800 km, while minor trails may have a total length of approximately 3,200 km.

3. Length of Trails Requiring Improvement:

Average distance Total length of Existing (km) between Trails linking Service Service Center Centers with Nearest Road No. of Service & District Center and/or District Center District Centers or Nearest Road Head (km) a Major lb Minor Total

Gorkha 5 8 /c 65 - 65 Lamjung 5 11 /c 54 32 87 Syanja 5 12 31 30 59 Tanahu 5 16 33 47 72

Grand Total 20 12 183 109 292

/a Some trails are common to two or more service centers. /b Major trails lead through large river valleys and/or connect to major centers. /c When the road to Besi Sahar is completed.

Transport Requirements

4. Movement of agricultural inputs and produce, construction materials and people between the nearest road head and service centers - 60 -

ANNEX 5 Page 2 and between district center and service centers would be via an all-weather trail network as the existing trail network has these major shortcomings:

- insufficient number of trail bridges to enable all-season safe crossing of rivers and torrents;

- lack of maintenance, especially as related to landslides and gullying;

- unduly long detours on some trails due to lack of bridges or rock barriers that cannot be passed by indigenous means;

- alignments of trails through cultivated areas, especially paddy, on narrow and otherwise inadequate paths.

5. Trails are generally constructed and maintained by the DTO, MLD and/or Village Panchayats. At present there are two agencies involved in the construction of trail bridges; the Suspension Bridge Division (SBD) of the Department of Roads under MOWT; and the MLD. SBD handles the construction of large trail bridges with costs borne entirely by the central Government. MLD provides district and village panchayats, with materials and cash to enable them to undertake the construction of a large number of small span bridges. Site selection usually reflects national as well as local prior- ities. Most construction materials for suspended, as well as suspension bridges (pylons, anchors, suspension bars and walkways) are manufactured in Kathmandu. Cable is the main imported item.

Project Components

6. As the Agricultural Service Centers would be established at points strategical to the areas they are to serve, and trails leading to to such points already exist. The project, therefore, would concern itself only with the improvement of existing trails.

7. Improvement works on about 70 km of trail would comprise:

(a) rebuilding of sections that have been damaged or destroyed by landslides, consisting of cut and fill, construction of stone steps, occasional simple cross drainage, planting for erosion protection, etc.; and

(b) realignment of sections that presently lead through in- tensively cultivated areas, especially paddy fields.

8. It is estimated that about 30 medium to small trail bridges and 4 maaor ones are required to establish an all-weather network of trails between service centers and nearest road head as well as between district centers and service centers. The average length of minor bridges is estimated at 50 m. All are assumed to be of the most common-suspended type which is simple in design, consisting largely of components manufactured in the country, with know-how for its construction locally available. Major bridges are of the suspension type and would average 80-90 m. - 61 -

ANNEX 5 Page 3

Implementation

9. Request for trail and bridge improvements are normally initiated by village panchayats for inclusion in the annual District Development Plan (DDP). Technical studies, designs and implementation would be carried out by technical staff of the DTO, with specialist inputs provided by the Suspension Bridge Division (MOWT) or MLD, as and when necessary. After approval of designs and in the cases where the trail or bridge between the ASC and the district headquarters or nearest road-head, the Project Manager shall be authorized to provide the lessor of 95% of construction costs, or a maximum of NR 14,500 per km. of trail, NR 2,400/m for minor bridges or NR 5,000/m for major bridges for projects executed in accordance with regulation published under the District Panchayat Act.

Implementation Schedule

Year 1 2 3 4 5 Total

Total length of trails considered (km) 40 80 80 83 - 283

Total length of trail sections to be improved or realigned (km.) - 20 20 20 10 70

Minor trail bridges - 6 10 8 6 30

Major trail bridges - 1 1 1 1 4

10. A cost estimate is shown in Annex 9, Table 9. - 62 -

ANNEX 6 Page 1

NEPAL

HILL FOOD PRODUCTIONPROJECT

Basis for Economic Analysis

1. Farm Labor. During the peak agriculturalmonths, the opportunity cost of labor is equal to the market wage rate. At minimum employmentlevels, the marginal cost of labor would be the value of additionalconsumption needed to undertake field works (estimatedat NRs 1.5 per man day). 1/ During the slack months, the opportunitycost of labor would be the alternativeearnings in other non-agriculturalactivities such as porterage and constructionlabor, or in gatheringfuelwood, fodder and household works (estimatedat NRs 5.0 per man day). 2/ On the basis of labor requirementsfor various crops and the cropping pattern in the project area, the followingweights are assigned to various levels of opportunitycost of labor:

Market % of Total Annual Cost of Labor Labor Requirement (NRs) man-days

Peak months - 40 7.0 Slack months 35 5.0 Minimum employment 25 1.5

Weighted average 4.9

Economic opportunitycost of labor NRs 4.4 per man day is derived by applying SCF to the opportunitycost of labor.

2. Draft Animals. It is assumed that the opportunitycost of draft animalswould be equal to the rental charges, estimated at NRs 15 per pair per day.

1/ An adult needs an equivalentof 0.5 kg cereals (comprising50% maize and 50% rice) per day for his minimum subsistenceneed of 2,000 calories per day. The economic prices of rice and maize are NRs 3.96 and NRs 2.19 per kg, respectively.

2/ Assuming 50% of the labor force would be involved in porterage and con- structionworks during the slack months, earning on average,NRs 7.5 per man day, and 50% in gathering fuelwood,winter fodder or householdwork (estimatedat NRs 2.5 per day). _ 63 -

ANNEX 6 Page 2

3. Other Inputs. Fertilizers have been valued at the projected world market price. Pesticides and insecticides have been assumed to be traded. Economic prices of seeds are derived by applying the ratio of economic and financial prices of seeds to the prevailing financial prices of seeds.

Construction Conversion Factor (CCF)

4. Construction of project buildings is carried out using simple equipment, local materials and skilled and unskilled labor. For the economic analysis, the construction conversion factor is estimated as follows:

(a) Traded Component. This component includes capital intensive works which require imported materials. Since it is traded, the conversion factor is 1.00. It is estimated that about 10% of the construction costs fall under this category.

(b) Non-traded Component. This component includes works that require skill labor and locally manufactured materials. The SCF of 0.9 is used as the conversion factor for these works. About 35% of construction costs are included in this category.

(c) Unskilled Labor. The analysis of shadow wage rates for unskilled labor is given in para. 7. The conversion factor of 0.90 has been applied to about 55% of construction costs which fall under this category:

Conversion Factor

Traded Items 1.0 x .10 = .100 Non-traded Items 0.9 x .35 = .315 Unskilled Labor 0.9 x .55 = .495 Construction Conversion Factor (CCF) (weighted average) .910 - 64 -

ANNEX 6 Table 1 NEPAL

HILL FOOD PRODUCTIONPROJECT

Fa-rmInputs ReqLuirements

(a) Without Project

Seed Compost Draft Human (kg/ha.) (t/ ha.) Animals Labor p/d/ha. m/d/ha.

Paddy 50 1 40 85 Maize 45 3 30 70 Miillet 30 - - 35 Wheat 100 2 30 70 Pulses 40 - 15 20 Potatoes 450 4 40 80

Plant N-P 0 (b) With Project Protection 2 5 NR/ha. kg./ha. Paddy 40 2 40 90 40 30 Maize 45 4 30 75 30 30 Millet 30 - - 35 10 - Wheat 100 3 35 75 20 30 Pulses 40 - 15 20 - - Potatoes 900 4 40 85 50 30 - 65 _

ANNEX 6 Table 2

NEPAL

HILL FOOD PRODUCTION PROJECT

Summary of Economic & FinancialPrices

AgriculturalOutputs

Item Units Economic Financial

Crops:

Paddy NRs/ton 2500 2000 Maize NRS/ton 2200 1600 Wheat NRs/ton 2300 2000 Millet NRs/ton 1300 1000 Pulses NRs/ton 3900 3000 Potatoes NRs/ton 1500 1200 Oilseeds NRs/ton 3800 3500

AgriculturalInputs:

Fertilizer (Nitroger! Phosphate) NRs/kg 8.00 5.3 Compost NRs/ton 18 20 Human Labor NRs/man day 4.40 7 Draft Animals NRs/pair day 15.0 17

Seeds (EconomicPrices):

Paddy Rice Maize Millet Wheat Pulses Potatoes

W/O Proiect: (NRs/ton) 3130 2750 1630 2880 4880 1880

With Project: 3250 2750 2000 3500 5880 2250 - 66 - ANNEX 6 Table 3

NEPAL

HILL FOOD PRODUCTIONPROJECT

r-ronnino Area, vield, ProAuction& lyalueof Ptoeduction

(a) Without Project:

Area of Yield Expected Econ. Value of Influence t/ha. Production Prices Production (ha'000) (NR'000)

Paddy 12.0 2.4 28,800 2,500 72,000 Maize 13.8 2.0 27,600 2,200 60,720 Millet 10.0 1.2 12.000 1,300 15,600 Wheat 2.3 1.1 2,530 2,300 5,819 Pulses 2.1 0.5 1,050 3,900 4,095 Potatoes .6 4.4 2,640 1,500 3,960

Total 40.8 162,194

(b) With Project:

Paddy 13.4 3.0 40,200 2,500 100,500 Maize 12.3 2.5 30,750 2,200 67,650 Millet 10.3 1.4 14,420 1,300 18,746 Wheat 2.8 1.6 4,480 2,300 10,304 Pulses 2.1 0.5 1,050 3,900 4,095 Potatoes 1.1 6.0 6,600 1,500 9,900 Total - 42.0 211,195

IncrementalProduction 49,001 ANNEX 6 Table 4

NEPAL

HILL FOOD PROFUCTION PROJECT

Farm Input Costs (NR'000)

(a) Without Project

Seeds Compost Draft Labor Plant N - P Total Tons Cost Tons Cost (000) Cost (000) Cost Protection Tons Cost Cost Pair Days Man Days Cost

Paddy 600 1,878 12,000 216 480 7,200 1,020 4,488 - - - 13,782 Maize 621 1,708 40,200 724 402 6,030 938 4,127 - _ 12,589 Millet 300 489 - - - - 350 1,540 - - - 2,029 Wheat 230 662 4,600 83 69 1,035 161 708 - - - 2,488 Pulses 84 410 - - 31 472 42 185 - - - 1,067 Potatoes 270 508 2,400 43 24 360 48 211 - - -1,122

Total 5,655 1,066 15,097 11,259 33,077

(b) With Project

Paddy 536 1,474 26,800 482 536 8,040 1,206 5,306 536 402 3,216 19,054 Maize 554 1,799 49,200 886 369 5,535 923 4,059 369 369 2,952 15,600 Millet 309 618 - - - - 361 1,586 103 - - 2,307 Wheat 280 980 8,400 151 98 1,470 210 924 56 84 672 4,253 Pulses 84 494 - - 32 472 42 185 - - - 1,151 Potatoes 990 2,228 4,400 79 44 660 94 411 55 33 264 3,697 1,598 16,177 12,471 1,119 7,104 46,062 Total 7,593 - 68 -

ANNEX 6 Table 5

NEPAL

HILL FOOD PRODUCTION PROJECT

Rate of Return Calculations

(NR '000)

A. All Components

Year Investments Staff & Incremental Total Incremental Net Overhead Farm Costs Value of Prod.

1 14,605 1,804 1,948 18,357 7,350 (11,007) 2 17,749 2,006 3,246 23,001 12,250 (10,751) 3 14,670 2,231 6,492 23,393 24,500 1,107 4 8,470 2,350 9,738 20,558 36,750 16,192 5 7,983 2,889 12,985 23,807 49,001 25,194 6 0 2,889 12,985 15,874 49,001 33,127

20 0 2,889 12,985 15,874 49,001 33,127 Economic Rate of Return = 57.8% B. Irrigation Component

1 3,575 422 0 3,997 0 (-3,998 2 5,760 625 973 7,358 1,605 (-5,753) 3 5,760 625 2,673 9,058 4,415 (-4,643) 4 5,760 625 4,454 10,839 7,655 (-3,184) 5 5,760 625 6,473 12,858 10,700 (-2,158) 6 0 310 8,091 8,401 13,375 +4,974

20 0 310 8,091 8,401 13,375 4,974

Economic Rate of Raturn = 15.7% - 69

ANNEX 6 Appendix 1

NEPAL

HILL FOOD PRODUCTIONPROJECT

Model Farm BudgetingAssumptions

1. Compost: An average of 12 tons produced per farm but will vary from 8 to 16 tons per farm depending on farm size.

2. Wheat and Potatoes: These crops will be produced mostly on high potential farms that not only have some dry season irrigationwater, but have slopes with a southern aspect. North facing slopes will have low potential for crop productionfrom late October to late February when the sun angles are low. East and West facing slopes also have reduced potential.

3. High Potential Farms are on land where soils are good, rainfall adequate for 6 months, slopes are moderate, aspect is southernly,and irriga- tion is assured on at least 50% of the farm. Cropping intensityof 175 to 200 can be achieved.

4. Low PotentialFarms are on land where soils are light and sandy, rainfall is adequate for only four to five months, slopes are steep, aspect northernly and there is no irrigationwater.

5. Off Farm Income: Figures from the &andaki FertilizerUse Study were averaged to arrive at NRs 1,560 per annum for small farms. Almost all of this was from manual outside labor. The outside income for large farms was sub- stantiallyhigher at NRs 4,250. Part of this incomewas derived from small shops as well as outside labor, and various tradingventures.

6. Income from LivestockProducts: These figureswere derived by averaging figures given in the FAO Report 12/80, so we have the following:

Farm Size Low Potential High Potential

0.2 ha 625 725 0.8 ha 1,200 1,300

-70 -

NEPAL TabIe I

ROLL_1000 IRODOTIOON _PROJECT

WITHOCT PTOddETd PRESENT7 000T010 PROJECT - (1986) Wnj "C J96

A 0,2Caaoam(a nrra A 0.2 --ar Far- (Ion p/P-rIal) A00.2 Hlsarar Pare lo o- na

~~~PC0~~~~~PA00Y MA01ZE 001100 WrEAT PiLoil P01TAT/0S TOTAL JI1 OLT WHEATPI?06 PULSES POTAOES TOTAL ITtEMP~N 000 ILP WCT P10 0009 07. 1 Area Ec/s,pa (H 5 900 1100 40e/ - 00 Ara. Cr-psd (H) 960 1000 840 ISO Areair C-pea (02) ±00 1000 0oa 100 Yield (k,a) 0)0 200 001 -- Yield (boa) 230 220 1/11 9 Yield lkgaj 31 0 75 lEa 0 Parr Ean kA -5 2.2 1.3 - 3.9 Price pea kg 3.0 2.6 1.6 4. 7PrEcaP. ka,L. 3.0 2.0 i.0 4.7

A. iren Ooptaa 059 490 131 35) 12011 A. arsehpm- 690 97? 162 4. t4rt A. trene, EnOot 954 015 189 42 99

too able Cents 9apR06 loinsta ler~~~~~~~~~~~~~~~~~~~~~~~~~~~%iaoieCocos iaed is 14 4 - 4 0Ied33 ' Send 1.e 04 4

Ch-i-I~ ~ ~ ~ -I -Ch-posi 0 11-o-os 6 30f

T-9.o 0 20 5 -- 5 -- T-Ac0 200 -' -50 Pec49 539 5 -113

B. iro..;arGie 0150 B. Stoma Heroin 0416 A. Oroc M-PgOo 10 C.ohanoL OeladCoasL 0e1erI,ed Coa tired Later - P10mb - 7 doss no. S1/day...... 100 lr-A L-as - PRoeReg - / dAyn 3./0.19.ev-105,I /~... biped bOor - pla-toa - 0 days~ NR1 15/ddy . .. .. 0 C. Or. irop Irrema.0004 C. boo Orep enoOlee.1911 o. Net Crop lnoos,e.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1,

.0. ioti soost...oa o e...ra...n ...... 1029 C. oPt- ...... 1311totoNoroao.+32-W, laieraita...... P1,

A. Yet em lke/T,...... 1i62i D. ;eA -toso-arena...... 42 D. N.,C Li-rs Ios... I .... .260 ......

E. stLvFoT..... Lo...bat...n,a...oo...a-... a..o4...5 .. 161F-1 oep.rLeo .. .oaa.AT...... etc 06E I Id-a...... pP.a.m..tb.r.o.o.a... .a. .v. . .o.-.

te WFlnTOncar INotPAOP O0IRe, Part WITHOU PatjJEC 1>1br aIr,Nt aoE Tae PaTi 1966; h29 3

oA 0.2 Or1.. tar -ot 1h/iE p-renrl) A 0.' 0r-1- rFPa (high Fot-or511 A 0...'le era0/A (bhti ooegch

rA- Croppad (0') 9,30 0190 804 020 itO 100 area CoosPod (M') 960 OtOt 80( 301 100 300 Are Creppad (ME) 1leO~ tl09 840 909 100 ott Tiled (ito) 230 2209 000 79 9 79 Yitr a(kg.) 210 P20 101 tO 9 ii., Yold iOg) 2 75 210 11'5 9 22 0 Pola-oEsek 2.9 2.2 1.3 1./3 3.9 0.3 PriroP- kg. ±30 2.6 .t 1.t 4.0 1.0 Po/asPareg. /.0 2.9 1t Z.4 4e-7 1.0

A. eSeeopeL o ItE 509 46. ~ 31 000 t 119 0054 A. Groan daptat 692 572 10' 049 42 ~ 30 0990 A. press tarroc a54 715 109 / 03 42 3(e 3690 tet/neit Coata tOP~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~VIdblSCLoteOrAi costa_ qead ES 14 4 23 12-pd 19 a4 4 20 12 bred 12 10 4 33 4 an resoiltoor / -- -- ~ ~ ~~~ ~~~~~~~~5- F-Prte -ae 7 - - 5 -- - trrlls- IS 'I 1o 12

tempes- 3 i-c-post . . t 9 3 7eae 14o T-1 3~~~7 20 9 e9 5 15 -130 Tera 27 20 5 ' 5 15 -00O 1e-t1e 5 93 4 9 71 21

illo Ie-d C. atcm uvorbad. Case boah-o Coat. 9/rd Labot - PleeiiG - 02 d.oes tO.S.ap.1ttR15,~ ...... farad Lale- - Pl-iheg 13 1laps 9(0MI5/d ...... -199 O/r-d Labr-py-nseteog - 13 J,ypa NR le/doy...... -i93 0.

C, Not ipep T,--- oao...... 1369 C. NanGPI ..--- . .ep.tam...... 1639 C. Oat~ d"P./p ...... erma...... 279

A. Ntao , Il . e..noe.ne... .ece.re..ot.. .. +E25 t. Nac LO--kf-adt..oo.i/ ...... at.m..+2' A. 9/ac L- -Iom..oop..b .. .atnt...... /

0.E -I-I...... 00.are.000/e.__ C. tot Fare - ...... no.me.33t L. NOat -- lame...... Iam 30

PFn-ip JAr, Labor J-aoaa -TO8 mtdoye OEN 4.4 .0.....-55 F-sipy tare labor leccee 02.02e5P,4...... od.e Faeiiy Fer Laber I 6or-04ead/ NR90 I/day.-11...2 ...

P. laoaee.diee-..esc...eee..t Teer11-- ... p. M-cea--otoLd 1Iooes-ae Orroas ...... 3155 Ota--.a..l..o.rotee.ot.e..a..e...h.loae . 2/1

G. fcF,_or,_...... 1560 G. OCf Fore Ioee..0...... - --- . 560 0. 900 tar e- on...... otto ...... _

R. foto1 Paaia Ianom (0+I1)...... 35c5 0. Total PFAily Onae- (Or. i,) ...... 90. TProd M-ilpIat (EmI G) ...... '...300 ...

NLi! AL Table 2

HILI FOODPIODODUCT DN 01(1001

WIT:.DLU P10LOCT PDOONDT .- 0D1UOLDJDOD (DDO6I WITI PROJECT 0 AD6)

A 0.0 H--ar Fire (Ion -- 1eel A 0.0 DH-te be- (I.,, Do-C,,l) A 0.4 H,ercore F0c (Le- Dp,t-m,,j

LE, WaATSA POLlED POT~AYDED ToTi I ji P~ADDY 501,AZ M 1TT0, ~iPEDADPULSES POTOACOE 'OTAL tPADDY MADZD 01 O'L DOhAD FOLDED DOTATDOE TOTAL DIED~ DADDY PIADDW A 3600 3300 - 700- Orro DroopadOl0~~~~O 3(00 ~42103007 20 -Are Cr-P80 (M'l 67D 42iD 2222 -- 2OD cA- OroOppd (0)4240 -- ai,ld toe,) DDO DOD 304 34I y- De0 (toNi DOD SAD ADO 30 o,i Ae 0202 ODD 62o -- .07 ',,i-' Per kg. '.o 0.02 D.3 - 3. Price p-r k,. 0.0 0.0 DO1. 4 .0 PrO PoD no. 3.0 0.0 0.0

Onpere 7OO -- i,9 70o A C ... one co ,e 2c2DOD 1030 ODD 12 -- 7Al A. Op-- 26pn.DO olD9 "DO 1-Dr 3616 A. I re- DADS 2340

30 56 15 -DN- -Dor 40 10 I A~ S- d tO 56 6' 10 --- de I ercO-na 2l1 - - - PF-ili-a A- - - Ferlni-e 72 008 - - -- 4 (rurl- …… …C --- tc L -- Ch-i-nca 22 'n ie,pnn 2 04 4 4.L.--Co-oc-n 10 2 c ninr.4 D -A- 20 44.1 -- 4- ToriD 034~~~~~ot D. 2C DO-2b cODS lOl 000 Ot .D 20 ODD8 ToaLDI 2D2

4539~~~~ANO 0. DGn. 538i8.. tenNr- ...... 060.....0 6 . G",- K-i. 0 4 .

.... -OD Aire-d la.bac- Piocieg - 40, dav'. ' NO I /day...... DI'c ODD-d LoSer - PlnenDa - AD Wip NR IoOdoyt ...... -DID Oir-d beSet- P-L,en - 0 dove 0 ND D5/On' ....

...... S..OLD.. .. 0. l.-lC-rr'i. --...... cot3939 C.-1 ?T O.. .nen.rtco.IOn. ... 47.P .. ri.D),e-..cet...e ... .

.1...3300.. ... 0. Tona F-,i.ey Do-m (Ee1+ G0...... 018 H01. OT-0 PerilDy O-.-Dc (E ,. G)...... D. 30Ii, T-1I Coly E (enI...D.+ ..

Pd It I ~R JU 6,WT

Oa- ar, roe Peilloirr 1-. .c i Wat nt dr miD oo oDr e or ee- aeo ao

P Ii 1 TODDY 10121 0.1~~~~~~~-0116E0T CPLSDED POe 310~A 15001Tlii OOT)D la DZO POoLLED SO A) II S1.0 PDTTDo ~1O...~2-L C AO .01 t . T DTT 'D DAOD

3170 421C ~ ~ ~ ~00 ~~~~~~~~~A-eL.oc67O42DO 1 20 bSOO 120 000 114'12,, 3 3100 Oil0o0 'o 01000 412 100 so 60) Oe-ld (Il') PDR 000 306 3110 30 DAD-1Di (teel DOO 00' 3A 031 35 300 DeNd (toni 1272 003 o.1 1. . Pcc to. 2.5 2.2 1.3 2.3 3.5 1.3 TaInt per kg. 3.' 1r.0 2 .0 0.0 1.0 PrIce O- ltD. 3.0 2.6 1.0 0.0

l4D 0644 DrO, DODD D3 A. Ofcc Gn, inn 20T1 1036 5u2 000 D26 202 10017 A. CAma'. DPtt 2(,41 2100 il8 D,D2 100 t21' 107 A. Croo nipr.m010 2444 "I' iOll" beta. VatOnOc- aiDlCo n I 21 I0 '4 0' Seed 05 r4 'D 10 14 203 "d W~~~I' 56 16 04 DO TO D"a 4 .- 21 onc D -- -- 20 -- -F-ennee- 00 - 40rD - - 60eS 00 -(

G',i-olcl ------Ch--Aeicl n 0 10 -- 2 lI.-i-l 24 40 -16 .s 4 4 Itoepro' 2020 4 DO 4 0 Compoci iA.w8.....K...2A...... ~~~~~~~~~~~~...A> Ooe'enC..?3' 20 1 10 -8( oL hI 0~0 '3 ODO 2( 5(1 404. OTal 153 13 24 D' 00 160 073 I-o l53 02-3 2142 34 200

5/CO~~~~~~~~~.872 licono ror on o353 A. C-0000e i1'.tli.iiM-gi e3DA A. Omen O..cgee 0 0D~~~~~~~~~~im..0ConI. OoNr~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. Ad Cct _.._h-__C__ 5/_ .. - lilld .b, -Pj.j,g I/d ...... -78 Hid ,b-_- ~ 8d-,I O 1/d~ ...... -70 1-dvn.rl.en..o..loan L - -Pl_,, 3 NR 3 C S,r1C:0La--Sn e 'o...nD..n.. .. a.nl.... Oby.110- .. .2 - IlllOo-Pl.o. .eg- . .. I.Dd .. .031.y...... 5TO1 C rd.bn.NLnDD.C-ar/tDOdJ..-

Fani1Y W.-P Labor1 ...... 0.120J e4.4 .... -32 Fanlp Face Labor, In-- - 100 noiay 4.4 ...... 3-20 Fatily Dole LaSer 1orDO.2c nn-o~ i.32...... 58 1

0. T-ec Faniy Der-- (E IC) ...... 003 11. iTel. Fa-ily Deet(E0 4 .. lOPI II.' Tona Fainly Iec... (EI(. ) ...... [D.ODD... ..

- 72 -

ANNEX 7

NEPAL

HILL FOOD PRODUCTION PROJECT

ESTIMATED IDA DISBURSEMENTS (US $ Million)

Disbursements Semester Cumulative (IDA FY)

1982 1st 0.1 -

2nd 0.2 0.3

1983 1st 0.3 0.6

2nd 0.8 1.4

1984 1st 1.0 2.4

2nd 1.0 3.4

1985 1st 1.0 4.4

2nd 1.0 5.4

1986 1st 0.8 6.2

2nd 0.8 7.0

1987 1st 0.6 7.6

2nd 0.4 8.0

/a Estimatedeffectiveness date: April 1, 1981 /b Estimated closing date: January 15, 1988

-73 - ANNEX 8 NEPAL

HILL FOOD PRODUCTIONPROJECT

IMPLEMENTATION SCHEDULE

5 1 2 43 54 | Year | Activity 86 82 83 84 85 IDA Financial Year 1985 1986 1981 1982 1983 1984 Calendar Year

Agricultural Extension 3 - Appoint PC and 2 PO Number Select/Appoint DADO " 3 4 Select/AppointSMS 2 Select/AppointJT " JTA ' _ _ Select/Appoint 10 Select/AppointAA " 2

Animal Health 4 8 8 4 Select/Appoint JT 4 - -12 - - Select/Appoint JTA 1 2 3 Select/AppointAA 1

ASC Site Selection/ 6 6 8 Preparation _ Construction "

Applied Research Trials

ADBN 6 6 8 Appoint Staff Number Loans 16 28 38 16 12 Training Courses Participants

AIC 1310tons 1900 tons 13 5 Purchase Fertilizer Fertilizer ~~~ ~~125 Purchase 1 5 Training Courses

Sajhas 10 20 20 30 30 Training Courses

Marketing Support by NFC/ Sajhas

Transportation 20 km 20 km 20 km 10 km Tra )rtation 9 Construct Trails 7 Construct Bridges Number

Irrigation 32 32 32 Appoint Staff 16 32 Construct Schemes Number 1

Technical Assistance 18 16 10 Consultants Agronomy Man/months 3 3 Consultants Engineer 6 Communi- 5 Consultants 2 2 2 cations 2 Consultants M & E "2

Purchase Vehicles 14 8 1 4-wheel drive Number Motorcycles Bus - 74 - ANNEX 9 Table 1

NEPAL

HILL FOOD PRODUCTIONPROJECT

SUMMARYOF PROJECT COSTS NR 000

Year 1 2 3 4 5 Total Foreign Exchange

Agricultural Extension 2,566.6 1,766.2 1,361.4 1,244.1 1,672.1 8,610.4 3,064.0 Table 2

Animal Fealth 236.6 238.0 368.0 508.0 546.0 1,896.6 422.7 T ble 3

A2ricultural Service Centers 4,584.0 4,584.0 5,602.0 - - 14,770.0 738.0 T ble 4

AU)BN 48.0 96.0 160.0 160.0 160.0 624.0 - Table 5

Fertilizer 5,958.0 8,641.0 - - - 14,599.0 10,824.0 Table 6

Training 59.5 74.5 77.5 57.5 53.5 322.5 - fahIe 7

Trails and Bridges - 1,410.0 1,890.0 1,650.0 1,265.0 6,215.0 1,775.0 Table 8

Minor IrriRation 4,593.9 6,944.6 6,944.6 6,944.6 6,944.6 32,372.3 3,717.0 Table 9

Technical Assistance 3,338NI 2,678.0 1,483.0 560.0 90.0 8,149.0 7,774.0 Tnble 10

Total Base Costs 21,384.6 26,432.3 17,886.5 11,124.2 10,731.2 87,558.8 28,314.7

Physical Contingency 1,167.6 1,859. -,083.8 1,207.5 1,149.8 7,467.8 809.0

Price Contingency 1,984.9 4,909.4 5,064.0 4,392.5 5,174.0 21,524.8 7,025.6

Grand Total 24,537.1 33,200.8 25,034.3 16,724.2 17,055.0 116,551.4 36,149.3 - 75 ~ ANNEX 9 Table 2a NEPAL

HILL FOOD PRODUCTION PROJECT

Agricultural Extension Service

(NR '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Unit Cost a/ No. Cost No. Cost No. Cost No. Cost No. Cost Total Cost Incremental Staff L)istrict Staff DADO 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0 AADo 14.4 ------JT 9.0 3 27.0 6 54.0 6 54.0 6 54.0 6 54.0 243.0 .ITA 6.0 3 18.0 5 30.0 5 30.0 5 30.0 5 30.0 138.0 AA 1.8 15 27.0 40 72.0 50 90.0 50 90.0 50 90.0 369.0 SMS 14.4 5 72.0 8 115.2 8 115.2 12 172.8 12 172.8 648.0

Sub-total 162.0 289.2 307.2 364.8 364.8 1488.0

Project Nanagement Phoject Manager 24.3 1 24.3 1 24.3 1 24.3 1 24.3 1 24.3 121.5 Project Officer 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0 Economist 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0 Accounts Asst. 10.8 1 10.8 1 10.8 1 10.8 1 10.8 1 10.8 54.0 Enumerator 7.2 1 7.2 2 14.4 2 14.4 2 14.4 2 14.4 64.8 Admin. Asst. 5.4 1 5.4 1 5.4 1 5.4 1 5.4 1 5.4 27.0 Admin. Clerk/Typist 5.4 2 10.8 2 10.8 2 10.8 2 10.8 2 10.8 54.0 Other 3.6 1 3.6 1 3.6 1 3.6 1 3.6 1 3.6 18.0

Sub-total 98.1 105.3 105.3 105.3 105.3 519.3

Total Incremental Staff 260.1 394.5 412.5 470.1 470.1 2007.3

-/Salaries include basic pay plus regular allowances. 76 -

NEPAL ANNEX9 Table 2b HILL FOOD PRODUCTIONPROJECE

Agricultural ExtensIon Service

Operating Expenses NR '000

Unit Year I Year 2 Year 3 YeaT 4 Year 5 Total FPorign lo-honge Coat N.. Coat No. Coat No. Cost No. Cost No. Coot Cost /. Coot 1. Operating Expenses

ASC

Office Supplies 1.0 6 6.C 12 12.0 20 20.0 20 20.0 20 20., 7S.0 10 a

Training Materials 4.2 6 25.2 12 50.4 20 94.0 20 84.0 20 R4.0 327.6 50 164

Building Maintenance 5.0 - - - - 6 30.0 12 60.0 20 100.0 910.0 - -

Applied Research .5 - - 36 18.0 50 25.0 720 35.0 70 35.0 113.C

District

Office Supplies 2.0 4 P.1 4 8.0 4 8.0 4 8.0 4 8.0 40.0 10 4

Training Materials 2.0 1 3.- 1 3.0 1 3.0 1 3.0 1 3.0 15.0 50 9

Travel Allowances 4.0 1 4.0 1 4. 1 4.0 1 4.0 1 4.0 2C. 0 -

Applied Research .5 - - 8 4,0 16 8,0 16 8.0 - - 20.0 -

Vehicle Operation 10.0 8 80.0 8 90.0 8 80.0 12 120.0 1; I00.0 480.0 80 384

Proieat ManageRent

0ffice Rent 6.0 I 6.0 1 6.0 1 6.0 1 6.0 1 6.0 30.0 - -

Office Supplies - 20.0 20.0 * 10.0 - 10.0 10.0 70.0 10 7

Training Material. - 10.0 - 10.0 - 8.0 - 8.0 - 10.0 46.0 50 23

Travel Allowance. 6.0 1 6.0 1 6.0 1 6,0 1 6.0 1 6.0 30.rf - -

Travel Allowance for SMS 4.0 3 20.0 8 32.0 8 32.0 12 40.0 12 48.^ IP0.0 - -

Vehicle Operating

4 Wheel Drive 33.0 2 66.0 3 99. 3 99.0 3 99.0 3 99.0 462.0 80 370

Motorcycl. 10.0 5 50. 0 00.C 00.0 - - - - 210.0 00 160

MonitorirM4 & Evalastion

Contract Studies - 500.C - - - 500.0 1000. - -

Applied Research Trials 1.0 8 8.0 12 12.0 16 16.0 36.0 - -

Regional Training Centers

Vehicle Operation

Bus - 36.0 2 72.0 2 72.0 2 72.0 2 72.0 2 72.5 360.0 80 2P8

Total Gperating Expenses 884.2 516.4 591.0 591.0 1125.0 3707.6 1424 J77 ANNEX 9 Table 2c

NEPAL

HILL FOOD PRODUCTION PROJECT

Agricultural Extension Service NR '000

Unit Year I Year 2 Year 3 Year 4 Year 5 Total Foreign hoch.nge Cost No. -at No. Cost No. Cost No. Cost No. Cost Cost M Cost Equip-et & Furniture

Agricultural Service Centers

Lqoip..ent & Furniture 13.3 6 79.8 6 79.8 8 106.4 - - - - 266.0

Training Aids 20.0 6 120.0 6 120.0 8 160.0 - - - - 400.0

Districts

Equipment & Furniture 10.0 4 40.0 - - _ - - - 40.0

Training Aids 15.0 4 60.0 ------60.0

Project Managenent

Office Equip-ent - - 20.0 - 20.0 - 10.0 - 10.0 - - 60.0

Training Aids - - 25.0 - 25.0 ------50.0

TYst plot Equipoent - - 15.0 - 20.0 ------35.0

Total Eq.ipnest & Furniture 359.8 264.8 276.4 10.0 _ 911.0 20 182

Vehicles

Districts

Motorcycle b/ 30.0 R 240.0 - - - - 4- 120.0 - - 360.0

Pro ject Mna-gessent

4 ,u, 180.0 1 180.0 1 180.0 ------360.0

Motorcycle' 30.0 5 150.0 3 90.0 ------240,0

4 WD for Applied Research 180.0 1 180.0 - - - - _ _ _ _ 180.0

Regional Training Center

Bus 240.0 1 240.0 1 240.0 - _ - - - - 480.0

Total Vehicles 990.0 510.0 - - - 120.0 - - 1620.0 90 1458

b/ Motorcycles for use of DADO and AADO.

S/ Motorcycles for use of SMS while seconded to PM later to be transferred to districts. - 78 _ ANNEX 9 T?ble 2d NEPAL

HILL FOOD PRODUCTIONPROJECT

Agricultural Extension Service (NR'000) Unite Year 1 Year 2 Year 3 Training Year 4 Year S Total Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost Foreign Exchange %I Cost

Special Short Courses

DADOIAADO/SMSa/ 2.0 6 12.0 6 12.0 6 12.0 - - 10 20.0 56.0 SM b/' 1.0 2 2.0 5 5.0 3 3.0 4 4.0 8 8.0 22.0 JT Management j/ 2 weeks .5 - - 10 5.0 10 5.0 - - - - 10.0 JTIJTA Crops 2 weeks .5 25 12.5 25 12.5 25 12.5 - - - - 37.5

AA .5 80 40.0 80 40.0 80 40.0 80 40.0 80 40.0 200.0

Training Visits (Nepal) for DADO/AADO/SMS 3.0 2 6.0 2 6.0 3 9.0 3 9.0 3 9.0 39.0

Tota; Training 72.5 80.5 81.5 53.0 77.0 364.5

Total Agricultural £atention Service 2,566,6 1,766.2 1,361.4 1,244.1 1,672.1 8,610.4 3,064

a Extension management and planning course

SMS Special training in country, 1 month

JT course in management - 79 ANNEX 9

NEPAL Table 3

HILL FOOD PRODUCYXON PROJECT

Lives took Developmentand Animal Health (NH '000)

Dolt Year 1 Year 2 Year 3 Year 4 Year 5 Total Foreigo Oochatge Too Ho. Cost Ho. Coat No. Cost. No. Coat Ho. Coat Coat 2. Coot 1. lncrr,oertal Staff

District

iT 9.0 4 36.0 4 36.0 4 36.0 4 36.0 4 36.0 190.0

iTS 6.0 4 24.0 8 49.0 16 96.0 20 120.0 20 120.0 409J

ci 1.0 12 21.6 30 54.0 50 90.0 HO 144.0 100 190.0 449.5

Sob-total 91.6 138.0 222.0 300.0 336.0 1377.6

Project Monageneot

1-rogran cfficer 10.0 1 16.0 1 16.0 1 18.0 1 18.0 1 18.0 90.0

7 Total Staff 99.6 106.0 240.0 319.0 304.0 14 .c

01. loclgnoot & Foroitoro

ASC

Sqclpooot 4 Furoitore 1.0 4 4.0 4 4.0 9 1.0 4 4.0 - - 20.0 20 5

Tratotog Aids 1.0 5 4.0 4 4.0 8 0.0 4 4.0 - - 20.0 10 10

District

tqclpsoeot 5.0 4 20.0 ------00.0 20 4

Tralsiog aids 5.0 4 20.0 ------20.0 50 10

Pro joct Honageneot

OqaipoeOt 5.0 1 5.0 ------5.0 20 1.2

Trofsissg Aids 5.0 1 5.0 - - - - 5.0 50 0.5

Total iqolpoont & Farnitoor 58.0 6.0 16.0 8.0 90.0 31.7

III. Vehicles

frojoot Maoaoeoeot

Motorcycle 30 1 30.0 ------30.0 90 22 80ANNEXNO 9

no 0-4 Table 3b 8.LL FOOD PRODUCTION PROJECT

Livestock Develogornt and Antnal ieelth

Urrt Ye-r Year 2 Year 3 Year 4 Year 5 Total Foreign Exchan-e Cost No. Coet No. Cest No. Cost NoSoa o. Cost Cost 7 .Cost IV. r.e_ratong st:oseo .. sc ~~ ~~~~~~~~.

U.e,r l 1.0 4 4.0 P 8.0 16 16,0 20 20.0 20 20.0 68.0

tacc c 'OCC00Ises 5.0 5 5,0 10 10.0 20 20.0 40 40.0 45 45.0 120.0 90 0OP reon ea'("O coos 2.0 5 ICOC 10 20.0 20 40.0 40 80.0 45 90.0 240.0 90 216

aistrlct

Ceccorol l.C 4 4.C 4 4.0 4 4.0 4 4.0 4 4.0 20.2

Crave>; 1.D 4 4.C 4 4.0 4 4.0 4 4.0 4 4.0 20.C

cr0 oit Mlaragernent

General 1.0 2.4 4.0 4.0 5.0 5.0 20.0

.Yoto-;ycle 0I., I 10.0 1 1C.0 1 10.0 1 10.0 1 10.0 50.0 80 40 rota: lozerating occcensns 39.0 60.0 98.0 163.0 178.0 538.0 364

V. Tr-in,ic

h-cortGorsos

JT/JOA ot .t060001 trainir center- .5 S 4.0 4 2.0 8 4.0 8 4.0 8 4.0 18.0

AA at egional t-sileig center .S 12 6.0 18 9.0 20 10.0 30 15.0 20 10.0 50.0

OraLnino Viaitn Nlepal 3.0 - - 1 3.0 ------3.0

T Total ral-isg 10.0 14.0 14.0 19.0 14.0 71.0

Total Ani-Il Health 236.6 238.0 368.0 508.0 546.0 1896.6 422.7 NEPAL HILL FOOD PRODUCTION PROJECT Annex 9 Agricultural Service Centers Table 4 (NR '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Foreign Unit Cost No. Cost No. Cost No Cost No. Cost No. Cost Cost Exchange

Agricultural Complex a/ 113 6 678 6 678 8 904 - _ _ _ 2260 %

Houses JT d/ 80 6 480 6 480 3 240 - - - - 1200

JTA 60 12 720 12 720. 16 960 - - - - 2400

Livestock Development and Animal Health b/ 20 6 120 6 120 8 160 - 400

House JTA 60 6 720 6 720 8 960 - 2400

ADBN c 27 6 162 6 162 8 216 - - - 540

House Staff 60 6 720 6 720 8 960 - - - - 2400

Cooperatives/Sajha

Office 22 6 132 6 132 8 176 - - - - 440

Warehouse 20 22 6 132 6 132 3 66 - - - - 330

House Staff 60 6 720 6 720 8 960 - _ - - 2400

4584 4584 5602 - - 14,770 5 738

a/ Agricultural Complex consists of Agricultural office 24m2 Storage Room 6m , multipurpose building 30m

b/ Animal Health Dispensary 10M2

c/ ADBN office and storage 15m2

4/ Five JT houses and warehouses for Sajha are provided at ASC by GADP. ANNEX 9 Table 5

NEPAL

HILL FOOD PRODUCTION PROJECT

Agricultural Development Bank

(NR '000)

Year 1 Year 2 Year 3 Year 4 Year 5 - Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost Incremental Staff Loan Asst. 8.0 6 48.0 12 96.0 20 160.0 20 160.0 20 160.0 624.0

Annex 9 Table 6 NEPAL

HILL FOOD PRODUCTION PROJECT 0 Fertilizer (NR '000)

Unit Year 1 Year 2 Year 3 Year 4 Year 5 Total Cost No. Cost No. Cost No. Cost No. Cost No. Cost No. Cost Foreign Exchange Agriculture Input Corporation Cost for Fertilizer

Tons 1,310 1,900 Cost 5,958 8,641 14,599 10,824 NEPAL ANNEX 9 Table 7 HILL FOOD PRODUCTION PROJECT Training (NR '000)

Unit Year 1 Year 2 Year 3 Year 4 Year 5 Cost No. NR No. NR No. NR No. NR No. NR Total

Training ADBN Management 1.0 6 6.0 6 6.0 6 6.0 6 6.0 - - 24.0 Accounting 1.0 - - 10 10.0 10 10.0 10 10.0 - - 30.0 General .5 - - 12 6.0 12 6.0 - - 12 6.0 18.0 Loan Procedure .8 10 8.0 - - 10 8.0 - - - - 16.0

Sub-total 14.0 22.0 30.0 16.0 6.0 88.0

Training AIC

Management 1.0 4 4.0 - - - - 5 5.0 - - 9.0 Accounting 1.0 - - 5 5.0 - - - - 5 5.0 10.0 General .5 8 4.0 - - 8 4.0 - - 8.0

Sub-total 8.0 5.0 - 9.0 5.0 27.0

Training Sajhas

A. Staff Training

Management 1.0 10 10.0 10 10.0 10 10.0 - - 10 10.0 40.0 Accounting 1.0 - - 10 10.0 10 10.0 10 10.0 10 10.0 40.0 General .5 10 5.0 10 5.0 10 5.0 - - - - 15.0

B. Member Training 22.5 22.5 22.5 22.5 22.5 112.5

37.5 47.5 47.5 32.5 42.5 207.5

Total Training 59.5 74.5 77.5 57.5 53.5 322.5 Annex 9 Table 8 NEPAL

HILL FOOD PRODUCTIONPROJECT

Trails and Bridges Foreign Unit Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total, Exchange No. Cost Cost No. Cost No. Cost No. Cost No. Cost Cost % Civil Works

Trail Improvement km 14.5 - - 20 290 20 290 20 290 10 145 70 1,015 55 5 Minor Bridges a ea 120 - - 6 720 10 1,200 8 960 6 720 30 3,600 1,080 30 Major Bridges b/ ea 400 - 1 400 1 400 1 400 1 400 4 1,600 640 40

1,410 1,890 1,65f 1,265 6,215 1,775

average 50 m in length at NR 2,400/mr

b average 80 m in length at Nr 5,000/m - 85 -

NEPAL Table 9a HILL FOOD PRODUCTION PROJECT Mindr Irrigation

(NRs '000) Year 1 Year 2 Year 3 Year 4 Year 5 Total Forilign Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost Exc,ange Incremental Staff % NR Cost Chief Engineer 19.5 1 19.5 11 19.5 1 19.5 1 19.5 1 19.5 97.5 Water Management Specialist 19.5 - - 1 19.5 1 19.5 1 19.5 1 19,5 78.0 Junior Engineer 15.6 4 62.4 4 62.4 4 62.4 4 62.4 4 62.4 312.0 Overseers 9.8 4 39.2 8 78.4 8 78.4 8 78.4 8 78.4 352.8 Sub-Overseers 8.0 8 64.0 16 128.0 16 128.0 16 128.0 16 128.0 576.0 Draftsmen 12.0 5 60.0 5 60.0 5 60.0 5 60.0 5 60.0 300.0 Clerk/Typist/Acct. 7.2 4 28.8 4 28,8 4 28.8 4 28.8 4 28.8 144.0 Drivers 4.0 4 16.0 4 16.0 4 16.0 4 16.0 4 16.0 80.0 Peons 4.0 3 12.0 3 12.0 3 12.0 3 12.0 3 12.0 60.0

Sub Total 301.9 424.6 424.6 424.6 424.6 2,000.3

Operating Expenses

O & M for Vehicles 27.0 4 108.0 4 108.0 4 108.0 4 108.0 4 108.0 540.0 80 432 Office Expenses 12.0 12.0 12.0 12.0 12.0 60.0 10 6

Sub Total 120.0 120.0 120.0 120.0 120.0 600.0 438 - 6- Annex 9 Table 9b NEPAL HILL FOOD DEVELOPMENT PROJECT Minor Irrigation

(NRs '000)

Item Unit Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total Capital Cost No. Cost No. Cost No. Cost No. Cost No. Cost Costs

Irrigation Schemes 1 200.0 16 3,200.0 32 6,400.0 32 6,400.0 32 6,400.0 32 6,400.0 28,800.0 10 2,880

Equipment: 144.0 90 130

Surveying Set 36.0 4 144.0 ------144.0 90 130

Camping Set 12.0 2 24.0 ------24.0 70 17

Drawing Office Set 24.0 1 24.0 ------24.0 90 22

Miscellaneous Lump Equipment Sum 60.0 1 60.0 ------60.0 35 20

Vehicles: 1 180.0 4 720.0 ------720.0 9( 648

Sub Total Equipment & Vehicles 972.0 972.0 - 837

GRAND TOTAL IRRIGATION 4,593.9 6,944.6 6,944.6 6,944.6 6,944.6 32,372.3 - 3,717 - 87 - NEPAL HILL FOOD PRODUCTIONPROJECT Technical Assistance

(NR '000) TableANNEX 109

Year 1 Year 2 Year 3 Year 4 Year 5 Total Foreign E-change Unit Cost No. Coat No. Cost No. Cost No. Cost No. Cost Cost 7. ^ost

Consultants Local

Agronomist man/month 6.0 6 36 8 48 6 36 - - - - 120 Communications/Training Officer man/month 6.0 3 18 6 36 4 24 1 6 - - 84 Monitoring & Evaluation man/month 6.0 2 12 2 12 2 12 36 66 96 72 6 - - 240

International (US$ '000)

Agronomist man/month 11.0 12 132 8 q6 4 44 - -272 Engineer man/month 11.0 7 77 7 77 3 33 3 33 220 Communications/Training man/month 11.0 2 22 2 22 2 22 - - = = 66

Sub - Total International US$ 231. 195 99 33 558 NR 2.772 2.340 1,188 396 6,696 100 t,t9t

Subtotal Consultants 2,838 2,436 1,260 402 6,936 b,6Yt

Vehicles and Equipment (NR ' 000) 4 WD vehicle 180 2 360 ------360 90 324 Equipment - - 20 - 20 - 10 - - - - 50 76 38 Sub total 380 20 10 362 Operating Expenses Vehicles 35 - 70 70 - 70 - 35 - 246 Miscellaneous - - 50 - 50 - 35 - 15 - 150 Sub total 120 120 105 50 395 80 316

Total Consultants 7,741 7.374

International Training

Agricultural Extension & Service at international center 1 90 1 90 1 90 1 90 360 Regional Short Visits 2 6 3 9 3 9 24 Animal Health and Husbandry 2 6 3 9 3 9 24 Total Training 102 lOS IPA 91 403 400

Total Tech. Assistance 3,338 2,678 1,483 560 90 8,149 7,774 - 88 _

ANNEX 9 Chart 1

NEPAL

HILL FOOD PRODUCTIONPROJECT

Organization of Principal Activities

H1MG

nistry ofMinistry of Mnistry ofMinistry o Food & Local Non Works n Auriculture Development Panch yats Transpor

Dept. of Dept. oLie- Agricultr stock,Develop- FIU - AlC Board meot andAni- mal Health

Region 7 1 RgoRegi egioal Regional RDA Office Ofc

Progera Officerfi cer

Coand C sBranch A~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Dstrict Dist:rict Chie ----- __ F __ -- t _ Office Office Sajha - _____ District Disrict DTO|

|IASCIl _ Field _ ____ -_ AC r

I _ nt an lI- s

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ rI

-Cormand Channels …---Advisory ANNEX 9 Chart 2

NEPAL

HILL FOOD PRODUCTION PROJECT

Flow of Direct Costs and Credit

IDA

HMG

_ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

0,

tMinistry| Ministry l of Food of and Finance

AIC

Project Activities l Il

_ i ' . .' ~ ~ ~~~~~~~~~~~~~~I' -_- . Direct Costs …------Credit r - 90 -

ANNEX 10 Page 1

NEPAL

HILL FOOD PRODUCTION PROJECT

Reference Material Available in South Asia Regional Information Center

A. Documents Relating to the Project

1. Nepal Hill Agricultural Reconnaisance/Identification Mission- FAO/World Bank Cooperative Programme, Rome; Report 28/79 NEP 13; 18 June 1979.

2. Nepal Hill Area Agriculture Development Project; Preparation Mission (Vols. I & II) FAO/World Bank Cooperative Programme, Rome; Report 12/80 NEP 14; 29 February 1980.

3. Nepal Agricultural Sector Review; World Bank, Washington, D.C.; Report 2205-NEP; 27 April 1979.

4. A Study of Hill Agriculture in Nepal - Rockefeller Foundation Team; April 1976.

5. National Sample Census of Agriculture 1971/72, Nepal - HMG National Planning Commission Secretariat, Kathmandu, 1976.

6. Gandaki Agriculture Development Project - HMG, Nepal and Federal Republic of Germany; February 1978.

7. A Study of Fertilizer Use in Gandaki Zone of Nepal; German Agency for Technical Cooperation, Berlin, 1978.

8. Small Farmers Development Project Manual; April 7-11, 1980, Kathmandu, Nepal.

9. Integrated Cereals Project Semi-annual Report; October 1979-March 1980, DOA, Kathmandu.

10. Lumle Agricultural Centre Quarterly Report; October 31-December 31, 1979; Nepal, Gandaki Zone.

11. A Manual for the Design of Small Hill Irrigation Schemes in Nepal; Rural Development Project (Rasuwa/Nuwakot) Kathmandu (March 1980).

12. Proposal for a Pilot Extension Project-Integrated Cereals Project; HMG, February 1980; DOA, Kathmandu.

13. Nepal Staff Appraisal Report; Second Rural Development Project; Mahakali Hills; May 31, 1979; Report 2401-NEP. - 91 -

ANNEX 10 Page 2

14. Report on Fertilizer Marketing System of Nepal; Contract No. NP 68 005; FAO by Agro Management Consultants Ltd. Solihull, UK.

15. Nepal - The Fifth Plan (1975-80) in Brief; HMG, 1975.

16. District Administration Plan, HMG, Kathmandu, 1975.

~~~~~~~~~~\~~~~~~~~~~~~~~~~ NEEPAL HILLFOOD PRODUCTION PROJECTCHN PROJECTAREA AND FACILITIESAN G

PROJECTHEADQUARTERS ®i DISTRICTTOWNS/CFNTERS l A N A N G '

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C) CENTER-SINZONAL>OALBOUNDARIESTRAINING

AIC STORAGE DEPOTS RTRERS /ALBIMAR1 M.RNACIHOLL

O PROJECT RELATES VILLAGES ~ MUTISADEEAIN

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DISTRICTS LOCATION AS.C

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