RE'TURNTOf RETURN~ro RESTRICTED REPORTS DESK| Report No. PA-99 WITHIN FILECOPY ONE WEEK Public Disclosure Authorized This report is for official use only by the Bank Group and specificallyauthorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibilityfor the accuracy or completenessof the report. INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONALDEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF THE ZOU-BORGOU COTTON PROJECT DAHOMEY Public Disclosure Authorized January 21, 1972 Public Disclosure Authorized Agriculture Projects Department CURRENCYEQUIVALENTS Before January lot 1972 Since January lot 1972 US$1 . CFAF 277.71 CFAF 255.79 CFA! 1 _ US$0.0036 US$0.0039 CFAF 1 million - US$3,600 US$3,9094 WEIGRTSAND MEASURES Metric System CONVERSIONRATES 1 ton of seed cotton - about 380 kg cotton lint 550 kg cotton seed for sale 70 kg losses and seed for sowing 1 ton of paddy - 650 kg rice 1 ton of unshelled groundnuts - 700 kg shelled groundnuts ABBREVIATIONS BCEAO - Banque Centrale des Etats de l'Afrique Occidentale BDD - Banque Dahomeenne de Developpement CARDER - Centre d'Action Regional pour le Developpement Rural CCCE - Caisse Centrale de Cooperation Econonique CFDT - Compagnie Francaise pour le Developpement des Fibres Textiles CIDR - Compagnie Internationale de Developpement Rural FAC - Fonds d'Aide et de Cooperation FAS - Fonds Autonome de Stabilisation et de Soutien des Prix des Produits a l'Exportation FED - European Development Fund IRAT - Institut de Recherches Agronomiques Tropicales et des Cultures Vivrieres IRCT - Institut de Recherches du Coton et des Textiles Exotiques IRRO - Institut de Recherches pour les Huiles et Oleagineux OCAD - Office de Commercialisation Agricole du Dahomey ORSTOM - Office de la Recherche Scientifique et Technique d'Outre- Mer PMWA - IBRD's Permanent Mission to Western Africa PWD - Public Works Department SATEC - Societe d'Aide Technique et de Cooperation SONACO - Societe Nationale Agricole pour le Coton SONADER - Societe Nationale pour le Developpement Rural du Dahomey FISCAL YEAR January 1 - December 31 DARGMEY ZOU-BORGOUCOTTON PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS............................ i-ii 1. INTRODUCTION................ ............. 1 II. BACKGROUND... 1 III. THE PROJECT AREA 3.. .. ...... 3 IV. THE PROJECT ........... o...o.......4 A. Description ............. ...... 4 B. Detailed Features .5........... 5 C. Field Operations ......... 7 D. Credit Arrangementsand Supply of Inputs .... 8 E. Development Schedule... ... .. 9 V. COST ESTDMATES AND FINANCING ............. ........... 9 A. Project Costs........... 9 B. Financial Arrangements ..............................il C. Procurement and Disbursement ..... ...................12 D. Accounts and Audits ... ........ ............ 13 VI. ORGANIZATION AND MANAGEMENT . ............. ....... ........ 14 A. Project Entities ....... .......................... 14 B. Staffing and Training ...............................16 This report is based on the findings of an IDA appraisalmission composed of Messrs. K. Haasjes and K. Ringskog (IDA), M. Palein (PMWA),J. Cantournet and R. Chateau (consultants)which visited Dahomey in January/February1971. In January 1972, the report vas revised to take into accouantthe effects of the dollar devaluation. -2- Page No. VII. YIELDS AND PRODUCTION,MARKETING, FARMERS' BENEFITS AND GOVERNMENTREVENUES ................ 17 A. Yields and Production . .17 B. Markets and Prices . .17 C. Farmners' Benefits . .18 D. Impact of Project on Government Revenues and Expenditures.. 19 VIII. BENEFITS ANDJUSTIFICATION .19 IX. AGREEMENTSREACHED AND RECOMMENDATION .20 ANNEXES 1. General Agricultural Statistics Table 1 Agricultural Exports 1965-1969 Table 2 1970 Production and Average Yields of Annual Crops Table 3 Cotton Areas, Production and Yields (1961-1970) Table 4 Estimated Value of Crops (1966-1970) 2. Societe Nationale Agricole pour le Coton (SONACO) 3. Agricultural Credit Table 1 Terms for Lending to Farners or Village Groupe 4. Fonds Autonome de Stabilisation et de Soutien des Prix des Produits a l'Exportation (FAS) Table 1 Minimum Producer Prices and Total Price Support 5. Project Costs Table 1 Project Cost Estimates Table 2 Housing and Building Construction Table 3 Project Staff Requirements Table 4 Vehicle Requirements Table 5 Revolving Agricultural Credit Fund Table 6 Total Agricultural Extension Costs Table 7 Construction Costs Ginneries and Costa of Rice Hullers Table 8 Road Improvement Costs Table 9 Research Cos ts 6. Cotton Ginneries Table 1 Existing and Proposed Ginneries Table 2 Cotton Production and Ginning Capacity in the Project Area - 3 - 7. CroppiftgPatterns, Inputs, Yields, Production and Prices Table 1 Labor Requirementfor Various Crops Table 2 Areas, Yields and Production Projectionsfor Project Crops Table 3 Areas, Yields and Production Projections for Cotton in the Zou (1971-1974) Table 4 Areas, Yields and Production Projections for Cotton in the Borgou (1971-1974) 8. Feeder Road ImprovementProgram Table 1 Proposed Program Table 2 Equipment to be Hired Table 3 Economic Analysis 9. Research Institutes and Proposed Subjects for Research 10. Farm Models and Budgets Table 1 Areas Cropped on a Typical Farm Table 2 Typical Farm Budgets for the Zou Table 3 Typical Farm Budgets for North Borgou Table 4 Typical Farm Budgets for South Borgou Table 5 Minimum Producer Prices 1970/71 11. Cotton Seed Production 12. Project Financing and Disbursement Table 1 Project Financing Table 2 Disbursement IDA Credit Table 3 Estimated Schedule of Disbursement 13. Compagnie Francaise pour le Developpementdes Fibres Textiles (CFDT) 14. Societe d'Aide Technique et de Cooperation (SATEC) 15. Arrangements between Government and CFDT Table 1 Projected Benefits and Profit Sharing from Cotton Export 16. Cotton Market Prospects Table 1 Recent Trends in the World Cotton Economy Table 2 Recent Trends in World Cotton Prices 17. Economic Rate of Return Calculation Table 1 Economic Rate of Return Table 2 Surplus on Ginning, Marketing and Exporting of Incremental Output Table 3 Ginning and Exporting Costs, Cotton Production and Ginning Outturn Table 4 Actual and Projected Sales Prices of Cotton Lint and Seed Table 5 Foreign Exchange Benefits -4 - 18. Impact on GovernmentBudget Table 1 GovernmentExpenditures and Revenues Table 2 Fiscal Revenues CHART Project Organization MAPS 1. Agriculture and Rainfall 2. AdministrativeUnits and Project Area 3. Feeder Road Program DAHOMEY ZOU-BORGOUCOTTON PROJECT SUMMARYAND CONCLUSIONS i. This report appraises a project for the developmentof cotton and food crop production in the Center and North of Dahomey. The project-would be the Bank Group's second operation for agriculturein Dahomey. 1/ Under the project the cotton area would expand from 29,000 ha on 29,000 farms to 59,Q00 ha on 41,000 faris, and project area production would increase from 25,0 tons in 1910 to 56,000 tons of seed cotton by 1974. Cotton is Dahomey's main export earner after oil palm products -- and recently cocoa smuggled from Nigeria - and accounts for 14% of exports. Production generatedby the project would amount, by 1974, to about 67% of the country's total cotton prQd3Âctàon.Project produced cotton would be exported but this would not have a significant impact on world market prices since Dahomey's exports of the crop would constitute only about 0.3% of world trade. The project repre- sents one of the best means, foreseeableat this time, of substantiallyim- eproving the standard of living of a large segment of the rural population and improving Dahomey's balance of payments. ii. The project would be the final phase of a long term program designed to establish a cotton industry in Dahomey capable of competing efficientlyon world markets. Until now, the program, which started in 1964, has been supported largely with financial aid from France and from the European Common Market. The project would be carried out over a four-year period commencing in 1971. Production would be increased by expanding the cotton area; by împrovîng credit, extension and marketing services, as well as communicationsin the project area in coordinationwith the IDA-financed highway maintenanceprogram; and by providing cotton ginning facilities. The project would also provide rice milling facilities; funds for applied research; and funds for a feasibility study for diversification in the project area. iii. Project costs are estimated at US$12.7 million with a foreign ex- change component of 60%, or US$7.6 million; about US$5,9 million would be for creating, initial staffing and equipping Societe Nationale Agricole pour le COTONQSONACO) to administer extension, credit and marketing services in the project area. Direct investments in ginneries, housing, offices, equip- ment and road improvementaccounts for 27% of project costs. IDA would finance 48% of total project costs; FAC 24.5%; and Government, largely from project generated funds, 27.5%. The½prôposedIDA credit would meet costs of building construction,purchase of equipment and vehicles, feeder road construction,revolving farm credit fund, research, and the feasibility 1/ IDA granted a credit of US$4.6 million for oil palm and food crop development in 1969 (144-DA,Hinvi Project). j i - study, and would be equivalent to 80% of the project's foreign exchange cost. Procurement would be by international competitive bidding where orders and contracts are of a sufficient