CIRCULATINGCOPY ('-1 m BERETURNED TOREPORTS DESK ReportNo. 1137-MA Appraisalof the North Kelantan FILECOPY RuralDevelopment Project Malaysia
Public Disclosure Authorized June10, 1976 EastAsia and Pacific ProjectsDepartment RETURN TO Irrigation and Area Development Division REPORTS DiS WITHIN ONE WEI}K FOR OFFICIALUSE ONLY J Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank
This document hasa restricteddistribution and may be used by recipients only in the performanceof their offi(ial duties. Its contents may not otherwise be disclosed witlhout World Bankauthorization. CURRENCYEQUIVALENTS
US$1.00 = M$2.57 M$1.00 = US$0.39 M$1 million = US$389,000
WEIGHTS AND MEASURES - METRIC SYSTEM
1 millimeter (mm) = 0.039 inches 1 meter (m) = 39.37 inches 1 kilometer (km) = 0.62 miles
1 square kilometer (km ) = 0.386 square miles 1 hectare (ha) = 2.47 acres
1 cubic meter (m ) = 35.31 cubic feet 1 liter (1) = 0.264 gallons (USA) 1 liter/second (1/sec) = 0.035 cubic feet per second 1 kilogram (kg) = 2.2 pounds 1 metric ton (ton) = 2,205 pounds
ABBREVIATIONS
AA = Agricultural Assistant BPM = Bank Pertanian Malaysia CCL = Critical Consumption Level DID = Drainage and Irrigation Department DOA = Department of Agriculture FDC = Farmers Development Center FO = Farmers Organization FOA = Farmers Organization Authority GRP = Glass-Reinforced Polyester JAA = Junior Agricultural Assistant KADA = Kemubu Agricultural Development Authority MOA = Ministry of Agriculture MARDI = Malaysian Agriculture Research and Development Institute PWD = Public Works Department RISDA = Rubber Industry Smallholders' Development Authority SAU = Small Agricultural Units
MALAYSIA FISCAL YEAR
January 1 to December 31 FOR OFFICIAL USE ONLY
MALAYSIA
APPRAISAL OF THE NORTHKELANTAN RURAL DEVELOPMENT PROJECT
Table of Contents
Page No.
SUMMARY AND CONCLUSIONS ...... i-iii
I. INTRODUCTION ..... 1
II. BACKGROUND 1. . General 1.. The Agricultural Sector . . 2 The State of Kelantan. .... 2
III. TTHE NORTH KELANTAN REGION. 3 Climate ... . 3 Soils ...... 4 Farm Population, Farm Size, and Land Tenure. 4 Agricultural Production. 5 Agricultural Support Services. 6 Irrigation Facilities. 8 Transport Facilities. 9 State Land Development Schemes .10 Project Formulation .10
IV. THE PROJECT . . . 11 Project Components ...... 12 Status of Design ...... 15 Implementation Schedule ... 16 Cost Estimates ...... 16 Financing ... 17 Procurement ..... 18 Disbursements ...... 18 Accounts and Audits ... 19 Environmental Effects ... 19
V. ORGANIZATION AND MANAGEMENT . . .19 Project Coordination ...... 19 Agency Responsibilities . . 21 Agricultural Manpower Availability ... 23 Cost Recovery ... 23
VI. PRODUCTION, MARKETING, PRICES, AND FARM INCOME ... 24 Production ... 25 Marketing and Prices . .. 25 Farm Incomes. . . . 26
This documenthas a restricteddistribution and may be used by focipihntsonly in the performance of theif offcial duties.Its contentbmay rot otherwisebe disclosedwithout World bank authorization.^ -2-
Page No.
VII. BENEFITS AND JUSTIFICATION ...... 27
VIII. RECOMMENDATIONS ...... 29
ANNEXES
1. Agricultural Production in Kelantan 2. Lemal Irrigation Component - Water Supply, Demand, and Quality 3. Lemal Irrigation Component - Project Works 4. Small-Scale Irrigation Component 5. Rural Road Component 6. Agricultural Extension Component 7. Farmers Development Center Component 8. Cost Summary 9. Expenditure, Disbursement and Implementation Schedules 10. Allocation of the Proceeds of the Loan 11. Lemal Irrigation Component - Economic Analysis 12. Economic Analysis of Alternative Tertiary Canal Systems 13. Lemal Irrigation Component - Incomes, Taxes, and Cost Recovery 14. Rural Road Component - Economic Analysis 15. Small-Scale Irrigation Component - Economic Analysis 16. Studies
MAPS
Project Components Map 12003 Lemal Irrigation Area Map 12004 MALAYSIA
APPRAISAL OF THE NORTH KELANTANRURAL DEVELOPMENTPROJECT
SUMMARYAND CONCLUSIONS i. The Government of Malaysia has requested Bank assistance in financ- ing the North Kelantan Rural Development Project. Several studies have shown that while large investments in basic infrastructure, particularly highways and large-scale land settlement, are necessary to open up and begin develop- ment in South Kelantan, the North Kelantan Region would require agricultural intensification aimed at achieving higher yields, to enable incomes to rise while long-run land settlement and industrialization programs could be for- mulated. Major constraints on agricultural productivity in North Kelantan are: inadequate extension services; supply of agriculture inputs and credit; storage facilities; basic road access to agriculture areas; and inadequate irrigation facilities. The proposed project is designed to overcome these constraints in an integrated manner. ii. The largest project component involves the construction of flood control dikes, major drainage works, and access roads to serve 30,000 gross ha in and around the existing Lemal irrigation area, and tertiary and quaternary distribution and drainage systems to serve 12,000 net' ha of padi within the Lemal area. Other infrastructure components involve the construction of a number of small irrigation systems to serve about 1,300 ha of padi outside the large irrigation areas, and construction of about 190 km of rural roads of various standards throughout the North Kelantan region. In addition to infrastructure, the project has two agricultural components: provision of facilities, equipment, agricultural credit and staff for a network of 13 existing Farmers Development Centers, and construction of 12 new Centers, to serve the farm input, crop marketing, and credit needs of the region's farmers; and an agricultural extension component, which would include the staff and equipment necessary to provide frequent, regular, and effective extension service to the majority of the region's farmers. Two studies are included in the project, one of the feasibility of rehabilitating a number of State land development schemes, and a second study to confirm the long-term properties of glassreinforced polyester (GRP) flumes, which would involve an accelerated testing program. Subject to review by the Bank of the results of the testing program, GRP flumes would be installed in Lemal as the tertiary distribution system. iii. The project is in line with several basic Government objectives, including improving the productivity and incomes of small farmers; reducing urban-rural, racial (Malay-non-Malay), and regional (East Coast - West Coast) income disparities; and reducing the national dependence on imported food grains. The East Coast State of Kelantan is the poorest in Malaysia, with a - ii - per capita income 46% of the national average. The Malay padi farmers of the heavily populated flood plain in the North Kelantan region are the most impoverished group in the State, despite the benefits of several major irrigation systems, including the Bank-financed Kemubu Project (Loan 500-MA). The Lemal irrigation component of the proposed project would provide 16,000 farm families with the degree of water control necessary to expand cropped areas, particularly in the dry season, and to raise padi yields in both seasons. The small-scale irrigation systems would ensure good wet season crops to small padi areas now dependent on rainfall, and provide for some double-cropping in addition. Several types of rural roads would be constructed under the project, including an asphalt paved link serving a high volume of existing international and domestic through-traffic, high-standard laterite roads providing improved access to established intensively-cropped agricultural areas, and lower standard roads which would open up sparsely settled areas. The agricultural extension and Farmers Development Center components would complement each other in an integrated effort to teach simple but effective cultural practices necessary to increase yields of padi, groundnuts, and other crops to 100,000 farm fami- lies; to supply the inputs, services, and credit required to improve yields; and to collect, store, and market the produce efficiently. iv. Total project cost is estimated at US$48 million (M$123 million), of which the foreign exchange component would be US$21 million, or 44% of the total cost. The proposed Bank loan of US$21 million would finance the foreign exchange component. The Lemal irrigation component would be divided into three packages, one each for flood protection dikes (US$1.6 million), major drainage works (US$0.8 million), and access roads (US$1.6 million), which would be carried out under contracts awarded after competitive bidding advertised locally in accordance with government procedures satisfactory to the Bank. Subject to review of the results of the accelerated testing pro- gram, the GRP flume tertiary system (US$4.0 million) would be installed under a central national contract awarded in August 1975 after the same locally advertised competitive bidding procedures. The Farmers Development Centers and facilities, as well as the offices, facilities, and quarters included in the agricultural extension component (US$3.0 million) would also be sub- ject to local competitive bidding. Local tender is justified in all these cases, as the works are dispersed and labor-intensive, and the contracts relatively small. The rural road component would be divided into two con- tract packages (of between US$2 and US$4 million) for international competi- tive bidding in accordance with Bank Group Guidelines. Construction of quaternary canals and on-farm drains (US$0.8 million) and small-scale irrigation systems (US$1.7 million) would require close adjustment to crop- ping seasons and prior negotiation with farmers, and would be constructed on force account. All vehicles and equipment (US$2.8 million) would be tendered internationally, with the exception of small off-the-shelf items costing less than US$10,000 each and limited to a total of US$400,000. - iii - v. The project would be implemented over a period of five years. With the exception of the Public Works Department, which would implement the rural roads component, all Federal agencies involved in the project are under the jurisdiction of the Ministry of Agricultural and Rural Development (MOA). The Drainage and Irrigation Department would be responsible for the Lemal and small-scale irrigation components, the Department of Agriculture for agricultural extension, and the Farmers Organization Authority for the Far- mers Development Centers component. A Project Manager would be appointed in MOA to coordinate the activities of all Federal agencies, and their State- level counterparts, involved in project implementation. The Project Manager would be guided on policy matters, and assisted in coordinating Federal and State level agencies, by a Steering Committee chaired by the Secretary General of MOA and the State Secretary of Kelantan. vi. The Lemal irrigation component would permit 16,000 farm families to produce an increment of 37,000 tons of padi by 1985, increasing farm family incomes by about 40%. The small-scale schemes would result in in- cremental padi output of about 2,500 tons and increases in income for 1,500 farm families. The rural road component would provide improved access to about 50,000 farm families, while the agricultural extension and Farmers Development Center components would bring modern agricultural techniques, inputs, credit, storage facilities, and marketing services to over 100,000 smallholder families throughout the North Kelantan region. The project would provide substantial proportional increases in income to a large number of extremely poor people throughout the region, giving Kelantan a sufficient period of time to plan and initiate long-term land settlement and industrialization strategies to alleviate poverty. vii. The Lemal irrigation component would provide an economic rate of return of 42% on an investment of about US$800 per padi farming family. Individual small-scale irrigation schemes would provide returns of between 12% and 22%, depending on local natural features. The rate of return for the asphalt paved road link would be 41%, while the weighted average of the rates of return for the various lower standard access roads is expected to be 30%. While the benefits of the agricultural components are more difficult to quantify, they are expected to result in an independent increase in production of at least 18,000 tons of padi per annum on a State-wide basis, as well as ensuring the economic viability of the infrastructure components. The composite rate of return of all project components is 27%. viii. Subject to appropriate assurances, the proposed project is suitable for a Bank loan of US$21 million, with a 23-year maturity and a grace period of five years. The borrower would be the Federation of Malaysia.
MALAYSIA
APPRAISAL OF THE NORTH KELANTAN RURAL DEVELOPMENT PROJECT
I. INTRODUCTION
1.01 The Government of MSalaysiahas requested Bank assistance in financ- ing the North Kelantan Rural Development Project. The objective of the proj- ect is to raise agricultural productivity and farm incomes in the poorest region of Peninsular Malaysia, a goal which is in close agreement with the income distribution and the regional and rural development objectives of the Government. The project involves the construction of major irrigation, flood control, and drainage facilities as well as a number of separate small-scale irrigation systems and rural roads. In addition to infrastructure, the project has two agricultural components: provision of facilities, equipment, working capital, and staff for a network of Farmers Development Centers to serve the farm input, crop marketing, and credit needs of the region's far- mers; and an agricultural extension component which would include the staff and equipment necessary to provide frequent, regular, and effective extension service to the majority of the region's farmers. Two studies are also included in the project, one of the feasibility of rehabilitating a number of State land development schemes, and a second study of the long-term properties of glass-reinforced polyester flumes, which would involve an accelerated testing program.
1.02 The project was identified by the Kelantan State Planning Unit with the assistance of Messrs. D.G. Reese and A.S. Cheema of the Bangkok Regional Mission. The project was prepared by several Federal agencies with the assistance of a Bank preparation mission which visited Malaysia in June 1975. This report is based on the findings of an appraisal mission which visited Malaysia in November 1975 composed of Mr. J. Goldberg and Miss I. Girardot (Bank), and Messrs. P. Judd, G. Thorsky, W.H. Cooke, and J. Dublin (consultants).
II. BACKGROUND
General
2 2.01 Malaysia covers an area of 333,000 km , of which 60% is in Sabah and Sarawak. Nearly 85% of the population, estimated at 12 million in 1974, lives in the 11 States of Peninsular Malaysia. The ethnic composition of the population is approximately 47% Malay, 34% Chinese, and 9% Indian, with the remainder chiefly consisting of groups indigenous to Sabah and Sarawak and a small Eurasian community.
2.02 With a per capita income of US$660 in 1974, Malaysia is one of the most prosperous developing countries in Asia. The economy has maintained fairly high rates of growth, averaging 6% per annum during the last decade. This trend reached a peak of 17% growth in 1973, largely as a result of in- ternationalcommodity price movements,but by 1975 real GNP growth had de- clined to less than 1%, again as a result of internationalprice developments. The balance of payments were still in surplus, however, and Malaysia'sex- ternal reserves (US$1.5billion in September,1975) were equal to about 5 months of net imports at present levels.
2.03 In addition to Malaysia's traditionalstrategy of export-ledgrowth, policies and programs to reduce the income differentialsbetween ethnic groups, collectivelyknown as the New Economic Policy, have recently assumed import- ance. This topic was covered in detail by a recent FAO/IBRD mission to Malaysia (Problems of Rural Poverty in Malaysia). Recent economic develop- ments are covered in the accompanyingPresident's Report on this project.
The AgriculturalSector
2.04 Malaysia'sagricultural sector is largely oriented to world ex- port markets, and occupies a predominantposition in internationaltrade in natural rubber,palm oil, hardwoods and pepper. With most of the culti- vated land under rubber (61%) and oil palm (10%), rice production is largely confined to irrigatedareas situated in coastal plains, among which are the Muda (Loan 434-MA) and Kemubu (Loan 500-MA) Project areas, accountingfor about 37% and 4% respectively of national rice production. Despite the fact that 58% of Peninsular Malaysia's padi land is now double-cropped, over 10% of the Peninsula's rice requirements, and over 15% of national require- ments, must be imported. Further intensificationof irrigation facilities is thus seen by the Governmentof Malaysia (GOM) as a vital step toward achieving two important goals -- reducing dependenceon rice importsand alleviatingthe poverty of padi farmers, the majority of whom subsist on incomes below the national poverty line.
The State of Kelantan
2.05 The State of Kelantan is situated in the north-eastsector of PeninsularMalaysia, bounded by Thailand to the north-west,the South China Sea to the north-east,and the States of Perak, Pahang, and Trengganu to the west, south, and e2st, respectively(Map 12003). Kelantan covers an area of about 15,000 km , of which about 80% is still under forest. The topogra- phy is dominated by mountain ranges along the western and eastern boundaries of the State, which roughly delineate the catchmentarea of the Kelantan River, the major river of the State. The only large, relativelyflat areas well-suited for field crops occur in the northern part of the State, and comprise the riverine plains of the Kelantan and Golok Rivers, the latter stream serving as the internationalborder with Thailand between the foot- hills and the sea.
2.06 The populationof Kelantan is about 770,000, and is largely rural and overwhelminglyMalay, unlike the West Coast States. The Chinese minority is concentratedin towns, particularlyin Kota Bharu, the State capital. The populationis very unevenly distributed,with 91% of the people living in the seven northern districts of the State which comprise but 21% (2,940 km2) of the total area. The heavily forested and mountainouseighth district, Ulu Kelantan, is largely unpopulated,aside from a number of State land developmentschemes based on rubber production,small towns along the major rivers, and isolated subsistencecommunities.
2.07 Kelantan is the least developed Malaysian State in terms of per capita income 1/, in part because of its history of political and geographic isolationfrom the rest of PeninsularMalaysia. The State has recently been politicallyintegrated in the Federal system with the formation of the Na- tional Front Government,while its geographic integrationwill be accelerated with the completion of the East-West Highway now under construction. Geo- graphic integrationalone can stimulateonly a limited amount of development, particularlyin the northern districts o° the State, which are characterized by a populationdensity exceeding 200/km , average landholdingsof 2 ha or less, 70% of the population living below the critical consumptionlevel of income, and perennialnet emigration. Despite these problems, considerable scope exists for improvingproductivity and incomes in North Kelantan through intensifiedagricultural services and investment in irrigation and other public infrastructure.
III. THE NORTH KELANTAN REGION
3.01 The North Kelantan region, which consists of the Districtsof Kota Bharu, Bachok, Pasir Puteh, Tumpat, Pasir Mas, Machang, and Tanah Merah, is a densely populated region largely dependent on smallholderfarming. Although the region is served by public services and infrastructureon a much more intensive level than Ulu Kelantan, average incomes are lower in North Kelan- tan than in the sparsely populated Ulu Kelantan region, largely due to popu- lation pressure on available land. Within the North Kelantan region lies the Kemubu AgriculturalDevelopment Authority (KADA),whose boundaries in- clude portions of Kota Bharu, Bachok, and Pasir Puteh Districts on the right bank of the Kelantan River, known collectivelyas the Kemubu Irrigation Scheme 2/, and portions of Pasir Mas and Tumpat Districts on the left bank, constituting the Lemal irrigation component area in the present project.
Climate
3.02 The climate of North Kelantan is tropical and is dominated by the northeastmonsoon, which brings about 50% of the total annual rainfall of
1/ The State GDP per capita was estimatedat US$137 in 1970, which was 46% of the national average, and 78% of the figure for Trengganu, the next poorest State.
2/ Constructedunder the Kemubu Irrigation Project (Loan 500-MA). - 4 -
3,000 mm in the November-January period. There is no true dry season, with an average rainfall of 80 mm in April, the driest month. Considerable flood- ing occurs throughout the region during the northeast monsoon, due to intense localized precipitation 1/ and to overtopping of the banks of the Kelantan and Golok Rivers. The northeast monsoon may start late or finish prema- turely. In the former case, planting of the main season rice crop is delayed and is vulnerable to damage from wet season floods. An early finish to the season exposes the rice crop to moisture stess during grain development. Rain- fall in the period February-October is too variable to sustain an off-season rice crop without supplementary irrigation. Upland crops, such as tobacco and groundnuts, are grown in the drier months without irrigation, but yield reductions occur quite frequently due to drought.
3.03 There are only slight variations in daylength and temperature regime throughout the year. Daily temperatures range from about 210 C to 310C and relative humidity is high throughout the year. Given adequate water con- trol and crop scheduling most of the agricultural area is well suited to year round crop production.
Soils
3.04 The soils of Kelantan fall generally into four main categories. Lithosols cover 76% of the State's area, mainly in the mountainous forested areas of Ulu Kelantan, and offer little scope for agricultural development. Sedentary soils constitute about 12% of the total area, including substan- tial areas of North Kelantan, and are sometimes suitable for perennial tree crops such as rubber and oil palm where slopes are moderate. The remaining land area of North Kelantan can be divided into river alluvia, covering ter- race levees and flood plains, and marine deposits occurring along the coast. The levee soils are occupied chiefly by villages, fruit trees and annual crops in house compounds, and tobacco and groundnuts. The basin soils form the main rice growing areas of Kelantan. The marine deposits along the coast include saline nipah palm swamps and sandy ridges which, aside from coconut cultivation and some livestock raising, have limited agricultural potential.
Farm Population, Farm Size, and Land Tenure
3.05 Of approximately 120,000 farm families in Kelantan, about 108,000 are located in North Kelantan, 38,000 living within the bounaries of KADA. Average farm size on the river plains varies from 0.8 to 1.2 ha with about 60% of the farm under rice, 20% under rubber, and 20% for houselots, fruit trees, and other field crops. In upland areas average farm size is about 1.8 ha with greater emphasis on rubber, tobacco, and groundnuts, rice being grown on a subsistence basis in small basins and stream valleys.
1/ Rainfall of 162 mm in one hour has been recorded in Kota Bharu. -5-
3.06 The Lemal irrigation area is similar in many respects to the larger Kemubu area, except that with 16,000 farm families on a gross area of 20,000 ha population density is greater and average farm size smaller. Average farm size in Lemal is 1.1 ha, with about 0.7 ha of rice dispersed over 3 parcels of land. Padi land is rather evenly distributed in the area, with only 3% of the farmers cultivating over 2 ha of padi. About 32% of farmers own all the land they operate, and a further 50% own some land but rent additional area. Thus about 60% of the total padi area is owner-operated and 40% is rented, with owner-operators generally cultivating slightly larger holdings than ten- ants. The predominant padi land rental arrangement is a share-cropping sys- tem in which the tenant provides all labor and inputs and shares the crop on a 50:50 basis with the landlord.
Agricultural Production
3.07 The major crops of Kelantan are rubber (102,000 ha), padi (63,000 ha), coconuts (17,000 ha), tobacco (7,000 ha), and groundnut (3,500 ha). 1/ Except for rubber, cropping activity is heavily concentrated in the North Kelantan region. Rubber and padi are the basic sources of income and employ- ment, with tobacco and groundnut providing vital supplementary cash incomes during the dry season. Livestock, particularly cattle, are raised for con- sumption and sale throughout North Kelantan, and coastal fishing is another important source of protein and cash in Tumpat, Kota Bharu, and Bachok Dis- tricts. Despite considerable diversification of agricultural activities, the small size of holdings and comparatively low agricultural yields and incomes force a sizeable proportion of North Kelantan farmers to seek seasonal off- farm employment as manual laborers or trishaw operators in the towns, or as migratory agricultural laborers in other States.
3.08 In the 1974-75 wet season, about 147,000 tons of padi were pro- duced on 70,000 harvested ha in North Kelantan, representing a substantial increase over 1973-74 because of less severe flood conditions, but below totals achieved in earlier years. The dry season harvest, mainly confined to the KADA area, reached 67,000 tons on 27,000 ha in 1975, a record crop largely due to the continuing adoption of double-cropping in Kemubu and im- proved pumping operation in Lemal. About 25% of the region's padi output is now exported, mainly to the rice-deficit areas of Trengganu. The key sources of variation in annual production are the yield and harvested area of main season padi, which are strongly affected by annual flooding in the lowlands.
3.09 Tobacco and groundnuts are planted on the lighter, well-drained soils in the region, and are particularly important as sources of cash in- come for farmers outside irrigation areas whose main season padi crop pro- vides little more than their bare subsistence requirements. The production of both crops is geared to local and Singapore markets, and growth of demand by local cigarette manufacturers and confection groundnut processors is ex- pected to be modest. Nevertheless, improvements in quality of output could
1/ Estimates for 1973-74. - 6 - produce immediate benefits to growers in terms of farmgate prices received, as well as longer term benefits through access to new local and overseas markets.
3.10 While rubber is the primary source of farm income in Kelantan, it is secondary to padi in the North Kelantan region. Smallholder yields are low, due to the high proportion of overaged trees, inefficient tapping and cultivation practices, and adverse climatic conditions, particularly the frequent occurrence of heavy rainfall and flooding.
Agricultural Support Services
3.11 Agricultural research is the responsibility of the Malaysian Agri- cultural Research and Development Institute (MARDI), which has operated in Kelantan since 1971. Although a small research station was opened in late 1975, MARDI operations are still constrained by lack of land for experimental purposes. Nevertheless, local staff have performed valuable work on leased land and in farmers' fields, including padi variety trials and a small breed- ing program, padi fertilizer response and agronomic studies, and some develop- ment work on alternative intercrops with coconut on the sandy Bris soils characteristic of the coastal areas. Unfortunately, until recently the re- lationship between applied research and field extension work has been weak in Kelantan, with adverse effect on both farmers' productivity and the rele- vance of the applied research undertaken. The recent Agricultural Research and Extension Project (Loan 1115-MA) will improve liaison between these vital activities at the policy making level, while the State Government has recently instituted a State Agricultural Research Development and Extension Committee to coordinate the research and extension efforts of MARDI, KADA, and the State and Federal Departments of Agriculture in Kelantan.
3.12 Several agencies are involved in extension, with responsibilities generally allocated on a crop basis. The Rubber Industry Smallholders' De- velopment Authority (RISDA) supervises rubber replanting and rehabilitation programs and associated extension services. Responsibility for tobacco has recently shifted from the private Malaysian Tobacco Company, which ran a highly successful extension program through sub-contractors' curing barn centers, to the National Tobacco Board. The State Department of Agriculture (SDOA) is responsible for providing extension for padi and other field crops, horticultural crops, and coconuts. This service is organized on a district basis, with eight district Agricultural Assistants (AA's) supervising a total of 60 Junior Agricultural Assistants (JAA's) who serve as the points of contact with the nearly 120,000 farm families in the State. The effective- ness of this service is severely constrained by lack of manpower, as the inadequate 1:2,000 ratio of field agents to farm families is further eroded by the practice of using the JAA's to administer Federal and State crop and input subsidy schemes and licensing and regulation programs. In addition to an increase in manpower, the State extension service requires an experi- enced senior officer to direct extension activities on a full-time basis, in-service training facilities, closer liaison with research staff, and transport and other equipment to extend the range and effectiveness of the field staff. - 7 -
3.13 The SDOA extension effort is supported by Federal Agricultural De- partment technical units in the fields of seed production, demonstration plots, plant protection, soil fertility, mechanization, and farmer training, all located at the Lundang Agricultural Station. These units require addi- tional equipment and facilities to support an expanded extension program.
3.14 Farmers in Kelantan belong to a wide variety of organizations which deal with input and credit supply and processing and marketing of produce. These organizations fall into two broad categories, private cooperatives and Government-sponsored Farmers' Organizations 1/ (FO's). The cooperatives are typically small and single-purpose, concentrating on credit supply or the operation of small rice mills. The FO's come under the formal jurisdiction of the Farmers' Organization Authority (FOA), a Federal body established in 1973 to refurbish the Farmers Associations which had been managed by the Federal Department of Agriculture, to amalgamate existing overlapping coopera- tives and Farmers Associations into unified organizations serving identifi- able areas, and to expand the physical network of Farmers' Development Cen- ters (FDC's) to serve these new organizations. FDC's generally have office, storage, and meeting room facilities, managerial staff, and some equipment. Through the FDC's, FO's supply their members with equipment rental, input supply, produce marketing, and credit services, although performance to date has been limited by manpower, working capital, and general budgetary con- straints. The FO organizational structure in Kelantan is slightly compli- cated by the regional authority powers of KADA, which has been granted operational control of the nine FDC's within the KADA area in order to ensure close integration of agricultural support services and irrigation development. The KADA FDC's are thus staffed and managed by KADA personnel. FOA is res- ponsible for supervising the activities of these FDC's, as well as for direct management of all FO activity outside KADA. In this regard, FOA has con- structed four new FDC's in North Kelantan in the past two years, and has organized twelve additional FO's in the region which are currently served from leased facilities. About 9,000 farmers in KADA, or 25% of those eligible, are members of FO's, while outside KADA 8,000 farmers representing 12% of those eligible are on FO rolls.
3.15 Smallholders obtain credit from non-institutional, commercial, and Governmental sources, depending on the purpose of the credit, the urgency of the requirement, the credit-worthiness and location of the individual borrow- er, and his awareness of alternative sources. Non-institutional sources, chiefly moneylenders, storekeepers, landlords, and rubber and tobacco pro- cessors and dealers, provide most of the consumption credit available, as well as a considerable amount of agricultural production credit, at annual interest rates of between 30% and 80%. Some additional consumption credit is provided at low interest rates by rural credit cooperatives and FO's. Commercial credit is available to the more affluent farmers through banks, finance companies, and suppliers for the purchase of tractors, trucks, and other equipment. The major source of short-term padi production credit is
1/ Formerly called Farmers' Associations (FA's). - 8 -
the Bank Pertanian Malaysia (BPM), which runs a supervised input supply credit scheme through the KADA FDC's. The credit is supplied in kind, in the form of approved quantitiesof fertilizers,insecticides and pesticides, and contract tractoring,with a six-month term at 4.25% per term. The FDC's screen applications,issue inputs or credit vouchers for inputs and services, and are responsible to BPM for loan recovery, in exchange for a commission of 1.25% per season. Although well designed,the program has never reached more than 15% of the farmers in the KADA area, and has not assisted farmers living outside the area. FO's outside KADA have provided on a limited scale both short-termproduction credit and longer term credit for such items as bicycles and pumps both from their own funds and through a special Federal revolving-fund.
IrrigationFacilities
3.16 Substantialinvestments in irrigationfacilities have been made over the past two decades in the North Kelantan region, with the primary objective of promoting the double-croppingof padi to reduce national de- pendence on imported rice. The major single investmenthas been the Kemubu IrrigationProject (Loan 500-MA), which serves 19,000 ha of padi on the right bank of the Kelantan River in the Districts of Kota Bharu, Pasir Puteh, and Bachok. The project works included a pumping station on the Kelantan River; small diversion headworks;a complete network of primary, secondary,and tertiary canals and a partial network of quaternaries;a drainage system; a flood protectionlevee along the Kelantan River; and ancillary works. Implementationof this project began in 1967, and all works financed under the Bank Loan were completed in 1973. Cropping intensityin the area has now reached 185%, which appears to be the limit without additionalon- farm developmentworks. In 1973, KADA was created as a semi-autonomousre- gional irrigationauthority to manage the Kemubu IrrigationProject, along with the small contiguousSalor area and three contiguousareas on the op- posite bank of the Kelantan River. These three areas, known as the Pasir Mas, Sungei Lemal, and Alor Pasir Schemes, collectivelyform the project area for the Lemal irrigationcomponent of the present project.
3.17 Double-croppingof padi in Kelantan commenced in 1962 with the completionof the Pasir Mas Scheme (2,100 ha), which includes a pumping station on the Kelantan River downstream from the town of Pasir Mas and about 43 km of main and distributarycanals. The Sungei Lemal Scheme (9,300 ha), which was completed in 1968, is supplied from a headworkson the Lemal River, supplementedby a pumping station on the Kelantan River upstream of Pasir Mas, and includes 113 km of main canals and distributaries. In 1970, the Alor Pasir Scheme (600 ha) was completed as an extension to the Sungei Lemal Scheme, with a 10 km distributarysystem drawing water from the Sungei Lemal main canal. Operation of the SungeL Lemal and Alor Pasir Schemes has been hampered by frequent breakdownsof the electric pumps at Lemal, but major overhaulshave been completed and full pumping capacity should be achieved in 1976. All three schemes will still provide only rudimentary - 9 - water control, however, because of lack of flood control, adequate drain- age, and an articulated distribution system. Since these problems affect all three systems and are closely interrelated, the three schemes have been treated as a unified area in designing the Lemal irrigation component.
3.18 The Lemal irrigation area (Map 12004) covers 20,000 ha within the boundaries of KADA, of which about 12,000 ha are suitable for padi, 5,500 ha are under horticulture and mixed field crops, 2,000 ha are under pure stands of rubber and other tree crops, and the remainder is devoted to non-agricul- tural uses or is swampland. At present, padi production in the wet season is limited to 10,800 ha by poor drainage conditions, and dry season production to 5,800 ha by the lack of an adequate water distribution system below the secondary canals. Padi yields average 1.75 and 2.6 ton/ha for the wet and dry seasons respectively, the yield difference largely due to flooding and the consequent higher use of native varieties and lower use of cash inputs in the wet season. Total annual padi production in the Lemal area is cur- rently about 34,000 tons, about 16% of aggregate State production.
3.19 In addition to the large-scale irrigation facilities in the KADA areas, numerous small irrigation schemes have been built throughout the North Kelantan region, by farmers groups or by the Drainage and Irrigation Department (DID). These schemes, most of which are located in Tanah Merah and Machang Districts, usually involve pumping or diversion of water from the numerous small streams flowing out of the interior foothills, and s[m- ple canal systems. The major purpose of this type of investment is to assure a reasonably good main season crop, although well-designed schemes on streams with adequate dry-season flows also provide considerable scope for double-cropping. During the Second Malaysia Plan period (1971-75), DID constructed or improved 187 of these schemes in Kelantan, covering a total of 9,700 ha.
Transport Facilities
3.20 Lack of adequate transport facilities, including both inter-State links and the intra-State network, has limited the opportunities for rapid agricultural development in North Kelantan. Access to both the West Coast and Thailand has historically been provided by railroad lines, but as the railroad does not provide rapid direct access to Kuala Lumpur, Penang, or other large towns, its development impact has been limited. The only road link to the West Coast is south via the East Coast road to Kuantan, and thence across the Central Mountain Range to Kuala Lumpur, a distance of about 600 km. Under construction, with completion expected by 1978-79, is a new East-West Highway which will complete a 180 km link to Penang, a ma- jor port city and market center, as well as providing more direct access to all the large cities of the West Coast, including Kuala Lumpur.
3.21 The intra-State road network is rudimentary by Peninsular Malay- sian standards (Map 12003). The total length of Federal and State roads meeting minimum Federal Public Works Department (PWD) geometr cal standards is 795 km, giving Kelantan a density of .05 km of road per km of area, the - 10 -
lowest in Peninsular Malaysia and 42% of the national average. The state ratio of 1.03 km of roadway per 1,000 population is also lower than that of the other States with the exception of Selangor, whose population is concentrated in the municipality of Kuala Lumpur. The density of the net- work is greater in the densely populated areas of North Kelantan, but still fails to provide adequate access to the agricultural areas. In addition to the high-standard network, the State PWD maintains 345 km of lower standard road, 90% of which are located in North Kelantan. Access to the improved road network is provided by over 2,000 km of village roads and tracks, which are typically passable only by 4-wheel drive vehicles, light vans, and motor- cycles in the drier months. The condition of these roads, only occasionally upgraded or maintained out of the limited budgets of the District Officers, restricts contact between the majority of Kelantan's rural population and the markets and Government services available in the towns.
State Land Development Schemes
3.22 Over the past two decades the State Government has implemented a program to settle impoverished laborers and farmers from North Kelantan in sparsely populated areas in Ulu Kelantan and southern Tanah Merah Districts. Twenty-seven such schemes have been initiated since 1957, covering a gross area of 31,000 ha, of which 12,000 have been planted to rubber and 4,000 ha are currently being tapped. The 5,000 families settled so far have typ- ically been provided 2.4 ha on which to plant rubber, 0.8 ha for orchard, 0.8 ha for padi where feasible, and a 0.1 ha house lot. In contrast to the "turnkey" approach of the Federal Land Development Authority to land settle- ment, the Kelantan Land Development Board has relied heavily on the settlers' own efforts to plant rubber, construct houses, and provide subsistence through production of food crops. The Board has provided land, housing and planting materials, some schools and rubber processing facilities, as well as supervi- sory staff and basic access. The schemes vary widely in the degree of success achieved, with lack of sufficient competent supervisory staff, inadequate access, poor land, and lack of social amenities jointly responsible for fail- ure in several cases. Nevertheless, families have been settled and have at- tained increased incomes at a cost of about US$1,500 per family, which is substantially below the settlement cost under Federal Land Development proj- ects. Although difficulties in acquiring new land, budgetary and staff con- straints, and the expectation of Federal projects in Kelantan have led the State Government to suspend new land development by the Board, high priority has been placed on rehabilitation and improvement of the existing schemes.
Project Formulation
3.23 The basic project concept originated in the Kelantan Regional Plan- ning Study, executed for the GOM by consultants in 1973. The Study divided Kelantan into northern and southern regions for analytical purposes, and pro- posed that markedly different development strategies be followed in each region. IWhile large investments in basic infrastructure, particularly high- ways and large-scale land settlement areas, were necessary to open up and - 11 - begin development in South Kelantan, the North Kelantan Region would require agricultural intensification aimed at achieving higher yields, to enable in- comes to rise while long-run land settlement and industrialization programs could be formulated. This emphasis on raising agricultural productivity in North Kelantan was reinforced by the findings of the FAO/CP rural poverty sector mission which visited Malaysia in 1974 (para 2.03). The principal policy recommendation of this mission was for a shift in emphasis in agri- cultural development from land settlement to rapidly improving the produc- tivity of the masses of smallholders in situ. At the same time, analysis by the Economic Planning Unit of recent census data emphasized the prevalence and severity of poverty in Kelantan, particularly in relation to other Malaysian States.
3.24 Analysis of the major constraints on agricultural productivity in North Kelantan has indicated that a substantially improved extension effort is required to encourage farmers to adopt better cultivation practices and to increase their application of agricultural inputs. To complement this effort, expanding the supply of inputs, credit, and storage facilities would also be necessary, and basic access to agricultural areas would have to be improved. Finally, provision of improved water control facilities to assure reasonable wet-season padi yields and to extend dry-season cropping is the single most effective means of raising the productivity of Kelantan's experi- enced padi farmers. The proposed project is designed to meet these various needs in an integrated manner.
IV. THE PROJECT
4.01 The project would improve the productivity and incomes of small- holder farmers throughout the North Kelantan region through provision of im- proved irrigation and road facilities and intensified agricultural support- ing services. The main components of the project are as follows:
(a) construction of major flood control and drainage works to serve 30,000 ha in and around the Lemal irrigation areas; construction of tertiary and quaternary irrigation and drainage networks and access roads to serve 12,000 net ha of padi within Lemal; and provision of required maintenance equipment;
(b) construction of about 15 small irrigation schemes to serve approximately 1,300 ha of padi;
(c) construction of about 190 km of roads of various standards outside the Lemal area, and provision of equipment and facilities for maintenance of State and village roads; - 12 -
(d) provision of facilities, equipment, and technical services to complement a phased build-up of agricultural extension field staff;
(e) construction of 12 new Farmers Development Centers (FDC's), expansion of 13 existing FDC's, and provision of required agricultural credit, equipment, and additional storage facilities; and
(f) studies of the feasibility of rehabilitating and expanding existing State land development schemes, and of the long- term properties of glass-reinforced polyester (GRP) flume irrigation conduits.
The components of the project are summarized below, and further details are given in Annexes 3 through 7.
Project Components
4.02 Lemal Irrigation Improvement: This component would consist of two parts. The first part would provide protection from river flooding and drain- age of localized monsoon flooding for an area of 30,000 ha including the Lemal irrigation area, the town of Pasir Mas (population 13,000) and its environs, and Kubang Gadong, an agricultural area (including 1,600 ha of padi land) situated between the Golok River and the boundaries of KADA. Works under this component include three river dikes totalling 28 km in length designed to protect the area from Kelantan and Golok River floods of 50-year frequency, and 39 km of major drains designed to evacuate local flood water due to storms of 5-year frequency within a period of 72 hours. These works would permit rapid increases in wet-season yields for about 13,600 net ha of padi, as well as materially reducing annual flood damage to tree crops, herds, personal property, and structures. Under the second part of the component, tertiary and quaternary irrigation and drainage systems designed to provide indepen- dent water control to 10-ha units would be constructed in the Lemal irriga- tion area (para 3.18). These works would include a tertiary distribution system of 187 km of glass-reinforced polyster (GRP) flumes, 500 km of quater- nary earth field channels, improvement of main canal structures to permit operation of the tertiaries, and 600 km of on-farm drains. These works, in conjunction with the major drainage works, would increase the net irrigable area by about 1,000 ha (to nearly 12,000 ha), increase the maximum potential cropping intensity of this land from about 160% to 195%, and increase yields by allowing timely cultivation-practices and good water control. Equipment required to maintain the Lemal system, including draglines and excavators, would also be provided. In addition, a total of about 90 km of access roads and 10 km of maintenance roads on canal banks would be constructed within the area.
4.03 As the proposed GRP flume system incorporates innovative design elements, an accelerated testing program is included in the project to con- firm the long-term structural and chemical properties of the system. The - 13 - terms of reference of the program have been agreed upon with DID, and are briefly summarized in Annex 16. The program is expected to require the services of at least one consultant chemical engineer expert in the manu- facture of reinforced plastics, and assurance has been obtained that the qualifications, experience, and terms and conditions of employment of consultants employed for this purpose would be satisfactory to the Bank. The testing program would commence in July 1976, with final results ex- pected by June 15, 1977. Assurances have been obtained that installation of GRP flumes would be conditional on approval by the Bank, following re- view of the results of the testing program, and that should the results of the program be negative, an alternative tertiary system acceptable to the Bank would be installed.
4.04 Small-Scale Irrigation: This component would include the con- struction or rehabilitation of about 15 small irrigation systems located outside the major irrigation areas, each system serving between 20 and 200 ha of padi. Reinforced concrete gated headworks would be constructed on small streams, while pumphouses would be used to supply water from larger streams. As detailed design work and economic analysis of the individual schemes must await the synthesis of hydrological data, final selection of individual schemes for inclusion in the project would depend on meeting certain criteria including the presence of a reliable source of water supply to permit the irrigation of at least one crop of padi annually and a minimum economic rate of return of 10%. Assurances have been obtained at negotia- tions that DID would prepare a feasibility report analyzing water demand and supply and the economic rate of return for each proposed scheme in the course of executing final engineering and design. The feasibility reports for the first three schemes would be forwarded to the Bank for review prior to implementation under the project. Reports for subsequent schemes would be kept by DID for review by supervision missions.
4.05 Rural Roads: The roads included in this component are fairly evenly distributed over the North Kelantan region, and considered in conjunc- tion with the roads to be built in Lemal, they will complete a basic access grid for the agricultural areas of the region as well as directly connecting several important towns. This component includes a new high-standard (6.7 m surface width) asphalt paved link, 21 km in length, between Pasir Mas and Rantau Panjang on the Thailand border, replacing an existing State road 24 km in length which is subject to severe annual flood damage. The new align- ment, which is above flood levels, would serve a high volume of international and local traffic at reduced transport and maintenance cost, as well as pro- viding access to a large area of intensively cultivated agricultural land. Eight links, totalling 55 km in length, would be built to minimum Federal PWD standards (4.3 m width compacted laterite pavement). Nineteen addition- al links, with a total length of 112 km, would be built with a 4.9 m forma- tion width and a 3 m wide laterite pavement of 20 cm thickness, embanked at least I m above high-water level. Although below Federal PWD standards, these roads would provide all-weather access. As is typical in flood plain and deltaic regions, a considerable amount of bridging (30% of total con- struction cost) is required to link the coastal areas with market towns. - 14 -
Road maintenance equipment and workshop facilitieswould be provided to the State PWD to improve the level of maintenance of State and village roads throughoutNorth Kelantan.
4.06 AgriculturalExtension: This component is designed to provide well- informed and well-equippedextension service, concentratedon the achievement of higher padi, groundnut,coconut, and horticulturalcrop yields and grades, to the 100,000families in Kelantan who substantiallydepend on those crops to meet their cash and subsistenceneeds. The number of SDOA extension field agents (JAA's) would be increased from 45 to 160, which would permit contact between agents and farmer groups on a fortnightlybasis. Quarters would be constructedfor agents posted to the more remote areas, and all agents would be supplied with pest control and fertilizerapplication equipment. The num- ber of district extension officers (AA's) would be increased from eight to 16, and these officers would be provided field offices in the agricultural areas and vehicles to permit more intensive supervisionof field staff. Eight subjectmatter specialistswould be recruitedand equipped to develop simple packages of technical recommendations,geared to the cropping seasons, which would be transmittedthrough the field agents to the farmers. A State Extension Officer would be appointed to provide full-timeadministration for the extension service. In addition, facilitiesand equipment would be pro- vided to upgrade the State extension headquarters,Federal technical support units, and a farmer training center, all located in Lundang.
4.07 Farmers DevelopmentCenters: Twelve new FDC's would be constructed throughoutthe non-irrigatedareas of North Kelantan to serve FO's which have already been formed. Each new FDC, as well as each of the 13 existing FDC's in North Kelantan, would be provided with storage facilitiesand vehicles adequate to handle estimated seasonal crop marketing and fertilizer distributionrequirements, as well as padi drying floors and staff housing where required..Tractors of various sizes, motorized sprayers, and irriga- tion pumps would be supplied to the FDC's to enable them to provide rental or contract services to their expandingmembership. Small storage facili- ties would be provided at the village level to permit marketing, input supply, and productioncredit services to reach the smallholdersmore effi- ciently. A buildup of FDC staff to levels sufficientto provide these services to a majority of the region's target population is also included in the component.
4.08 The expansion of the network of FDC's serving North Kelantan and improvements in the staffing and facilities of existing FDC's would present an opportunity to provide more comprehensive institutional agricultural credit to larger numbers of farmers in the region (para 3.15). In con- junction with the rehabilitationprogram for the KADA FDC's, the Bank Pertanian Malaysia (BPM) has agreed to expand its existing short-termcredit programs for padi and tobacco production in the irrigationareas, and to initiate similar programs in the rainfed areas through the new FDC's to be constructedunder the project. In addition, BPM has agreed to initiate a new short-termcredit program to finance the productionof groundnuts, vegetables and other annual crops through both the KADA and non-KADA FDC's. - 15 -
Under this program, BPM would advance seasonal block loans to the FO's on the basis of their individual requirements. Prior to each cropping season, the FO's would submit their estimated requirements to KADA or the Kelantan State FOA, which would screen the requests and assess the loan-processing capabilities of the FO's. The requests and recommendations would then be forwarded to BPM, which would decide on the maximum amount of credit to be made available to each FO for the season. Disbursement and repayments would be made through BPM's branch office in Kota Bharu, with copies of loan records sent to KADA and the Kelantan State FOA. Processing of indi- vidual loans to farmers would be the responsibility of the local FO's. Loans to farmers would finance input purchases and the contracting of trac- tor services, and would normally be extended for a six-month period. Inte- rest rates to farmers would range from an 8.5% annual rate for padi produc- tion loans, to 10% for tobacco and 12% proposed for the new annual crop program. The incremental volume of agricultural credit oustanding associated with the buildup of the FDC network is projected to reach US$1.9 million by completion of the project in 1981, and this amount has been included in the costing of the Farmers' Development Center component (Annex 7, Table 2), although no disbursements would be made against credit operations. Assurances have been obtained that:
(a) the Project Manager would prepare, in consultation with KADA and Kelantan State FOA, a statement of annual agricultural credit requirements, to be submitted to BPM and the Bank not later than three months prior to the beginning of each fiscal year; and
(b) GOM would thereafter, following consultation with the Bank, ensure that an adequate amount of credit would be made available to project area farmers through BPM.
4.09 Study of State Land Development Schemes: This component would finance a study by consultants of existing State land development schemes (para 3.22), with a view to identifying a low-cost package of investments which would enable those schemes to approach their potential in terms of numbers of families settled and levels of agricultural productivity and farm incomes attained. The study would require three experts, for a total of about 21 man-months, with completion scheduled for mid-1977. The Kelantan State Planning Unit would be responsible for directing the study, which is described in Annex 16. Assurances have been obtained that the qualifications, experience, and terms and conditions of employment of consultants employed for this study would be satisfactory to the Bank.
Status of Design
4.10 The Federal DID has completed detailed designs for 10% of the on- farm irrigation and drainage system included in the Lemal component, and final engineering of the remainder of the works is included in the project. The design and alignment of the flood control works are in line with the pre- liminary recommendations of the Kelantan River Basin Study, which in addition - 16 -
include substantialupstream diking and a multi-purposedam as a long-term solution to the basin's flood problems. Final design of the flood control works would be rechecked with the mathematicalmodel being developed for the Basin Study, currently in an advanced stage of preparation. Final engineer- ing of the small-scaleirrigation, rural roads, and Farmers Development Center works is also included in project costs. All proposed project roads have been surveyed for quantity estimationpurposes by Kelantan PWD, and final engineeringof the roads would also be under the control of the State Director of PWD, whose staff would be suitably augmented to cover the additionalwork- load. If in the opinion of the Bank there is unreasonabledelay in carrying out the final engineeringof the roads, PWD would engage engineeringconsul- tants to assist with the design and constructionsupervision of the roads. In addition, a firm of local surveyorswould be employed to carry out basic engineeringsurveys. Assurances to that effect have been obtained from Government. Bridge structureswould be designed by the Federal Design and Research Division of PWD using standard designs as far as possible; this division would also be responsiblefor soil investigationsand foundation engineering. Farmers DevelopmentCenter buildings would be designed by the Buildings Section of the State PWD, following standard designs.
ImplementationSchedule
4.11 The project would be implementedover a period of five years. The agriculturalsupport componentsprovide for a buildup of staff and facilities phased over the implementationperiod. Constructionof the small irrigation schemes would begin in mid-1977 and proceed through 1980, while survey and design work for the schemes would begin in 1976. For the rural road compo- nent, engineeringand land acquisitionwould proceed through mid-1978, with constructionspread over the remaining three years. Engineeringand tender- ing of the major civil works in Lemal, and the execution of the GRP flume acceleratedtesting program (para 4.03) would proceed through mid-1977. Con- structionwould begin in the latter half of 1977 and continue through 1980, except for the access road element, for which constructionwould begin in 1978. Further details are presented in Annexes 3-7 and summarizedin Annex 9. Cost Estimates
4.12 Total project costs are estimated at US$48 million, of which US$21 million (44%) would be foreign exchange. Costs for the rural road component are based on survey estimatesof earthwork,surfacing, and land acquisition quantitiesand numbers of structuresneeded for each road, and unit prices based on recent local constructioncontracts. Cost estimates for Lemal are based on detailed layout and design of 10% of the area, recent contract unit costs for earthwork,and recent tenders for the supply of flumes valid through mid-1977. Estimates for small-scaleirrigation are based on con- struction experiencegained from a number of similar schemes in Kelantan, and updated unit costs. For the agriculturalsupport components, all incre- mental operating costs for the project period, including salaries,have been included. Recent suppliers'quotations are the basis for estimated costs of vehicles, equipment,and materials included in the various com- ponents. Physical contingenciesof between 15% and 20% have been allowed - 17 - on all civil works items. All cost estimates have been adjusted to mid- 1976 levels based on recent Malaysian and international inflationary trends. Expected price increases due to inflation of 9% in 1976, 8% in 1977-79, and 7% thereafter have been included for all equipment items and personal serv- ices. For civil works and related physical contingencies, price increases of 13% in 1976, 12% in 1977-79, and 10% thereafter have been allowed. Ex- pected price increases amount to 26% of total project costs.
4.13 Detailed project costs are given in Annexes 3-8 and are sum- marized below:
Foreign Exchange % of Local Foreign Total Local Foreign Total Component Total -----(M$ Million)------(US$ Million)…------
Lemal Irrigation Improvement 18.9 13.7 32.6 7.4 5.3 12.7 42 40 Small-Scale Irrigation 3.0 2.0 5.0 1.1 0.8 1.9 40 6 Rural Roads 8.1 9.6 17.7 3.2 3.8 7.0 54 22 Agricultural Extension 6.1 3.5 9.6 2.4 1.4 3.8 35 12 Farmers Develop- ment Centers 9.8 5.8 15.6 3.8 2.3 6.1 37 19 Studies - 0.4 0.4 - 0.2 0.2 90 1
Base Cost Estimate 45.9 35.0 80.9 17.9 13.8 31.7 43 100
Physical Con- tingencies 5.4 4.6 10.0 2.1 1.8 3.9 46 Expected Price Increases 18.0 13.9 31.9 7.0 5.4 12.4 44
Total Project Cost 69.3 53.5 122.8 27.0 21.0 48.0 44
Financing
4.14 The proposed Bank Loan of US$21 million would finance the foreign exchange requirement of the project. As this is a Federal project, all local costs would be borne by GOM throughout the implementation period of the pro- ject. Activities falling under constitutional State jurisdiction, such as agricultural extension, would be financed through normal GOM grant procedures. An assurance to this effect has been obtained. - 18 -
Procurement
4.15 The Lemal component would be divided into three packages, one each for flood protection dikes (US$1.6million), major drainage works (US$0.8mil- lion), and access roads (US$1.6million), which would be carried out under contractsawarded after competitivebidding advertised locally in accordance with Governmentprocedures satisfactoryto the Bank. In August 1975 DID invitedbids to constructand install 600 km of irrigationconduits through- out Malaysia during a three-yearperiod (1976-78). Six bids were received from local and foreign contractorsin September 1975. The systems offered includedpre-cast concrete,corrugated steel, ferro-cementand GRP. The lowest bid was for GRP, which had the added advantage of requiringa sub- stantiallyshorter period of time than the other offers to manufactureand install the conduits. In view of the advantagesof the GRP system (Annex 12), the fact that the manufacturerhas a patent applicationpending, and his will- ingness to install the 187 km of GRP in Lemal for the same unit rate quoted in his bid, the Bank agreed to finance the installationof GRP conduits in the Lemal project (US$4.0million) under the terms of DID's existing contract. The installationwould, however, be subject to review of the results of the acceleratedtesting program (para. 4.03).
4.16 The Farmers DevelopmentCenters and facilities,as well as the offices, facilities,and quarters included in the agriculturalextension component (US$3.0million) would also be subject to local competitivebid- ding. Local tender is justified in all these cases, as the works are dis- persed and labor-intensive,and the contractsrelatively small. The rural road componentwould be divided into two contract packages (of between US$2 and US$4 million) for internationalcompetitive bidding in accordance with Bank Group Guidelines. Constructionof quaternarycanals and on-farm drains (US$0.8million) and small-scaleirrigation systems (US$1.7 million) would requireclose adjustment to cropping seasons and prior negotiation with farmers, and would be constructedon force account.
4.17 Vehicles and equipment (US$2.8million) would be procured under internationalcompetitive bidding in accordancewith Bank Group Guidelines. A 15% preferencemargin, or the prevailing customs duty if lower, would be extended to local manufacturersof these items. Small off-the-shelfitems, costing less than US$10,000 each and limited to a total of US$400,000,re- quired to implement agricultural extension, Farmers Development Center, and road and irrigation maintenance programs, would be procured through normal Government procedures.
Disbursements
4.18 Disbursements would be made at the rate of 100% against the foreign exchange expenditures on all directly imported equipment and vehicles, 95% of the ex-factorycost of such items manufacturedlocally, and 65% of the actual cost of locally procured imported items. Disbursementsfor all civil works executed by contract would equal 50% of actual costs. Disbursements for works executed on force account, including the small-scale irrigation schemes and - 19 -
on-farm canals and drains to be executed by DID and workshops to be construct- ed by PWD, would equal 50% of total costs, and would be made against a cer- tificate of expenditures,the documentationfor which would be retained by the borrower and be available for inspectionby the Bank during the course of project supervision. For the two studies, disbursementswould equal 100% of total expenditures. Estimated expenditureand disbursementschedules for the project, and a proposed allocationof the proceeds of the loan, are given in Annexes 9-10. It is expected that disbursementswould be completed by December 31, 1981.
Accounts and Audits
4.19 The agencies involved in the project are all subject to normal Governmentcontrol and audit procedures. Assuranceshave been obtained that:
(a) all agencies involved in project implementationwould maintain separate accounts for the project;
(b) all project accounts would be collated by the Project Manager (para 5.02);
(c) the Government'sAuditor General or other auditors satisfactoryto the Bank would audit these accounts;and
(d) the Project Manager would send the audited project accounts, together with the auditors comments, to the Bank within nine months of the close of each financial year.
EnvironmentalEffects
4.20 The major environmentalimpact of the project would derive from the dikes to be constructed on the Kelantan River. In addition to increas- ing crop yields in Lemal, the proposed dike and drainage system would prevent the extensiveannual flood damage to homes, shops, vehicles, and herds, and occasionalloss of life suffered in that area and in the town of Pasir Mas. These works would also reduce the local mosquito habitat, and tend to alle- viate malaria and dengue fever outbreaks in the area.
V. ORGANIZATIONAND MANAGEMENT
Project Coordination
5.01 Aside from the Public Works Department (PWD), all the Federal agencies which would be involved with the implementationof the project --the Drainage and IrrigationDepartment (DID), the Departmentof Agricul- ture (DOA), the Farmers OrganizationAuthority (FOA), and the Kemubu Agri- cultural DevelopmentAuthority (KADA)--areunder the jurisdictionof the - 20 -
Ministry of Agriculture (MOA). While each agency would be responsiblefor implementingspecific activitieswithin its jurisdiction,responsibility for coordinatingall project activitieswould rest with a Project Manager in MOA. The Project Manager would have a small staff to assist in budgeting,procure- ment and disbursementmatters. Experiencein Malaysia indicatesthat techni- cal officers,with agriculturalor engineeringbackground and experience,are able to perform this managerial functionmost effectively. The appointmentof a suitably qualifiedand experiencedProject Manager, in consultationwith the Bank, would be a condition of effectivenessof the proposed Loan.
5.02 The major responsibilityof the Project Manager would be to ensure the integrationof agriculturalextension and FDC activitiesat the field or farmers' group level, and to ensure that both agencies provide proper agricul- tural support to encourage maximum benefit by farmers from the irrigation facilities to be constructed. For this purpose, the Project Manager would function as a member of the State AgriculturalResearch Developmentand Extension Committee (Annex 6), composed of senior State-levelofficers in all agriculture-relatedagencies. He would concentratein the project start- up period on ensuring the organizationof common Small AgriculturalUnits for FDC, extension,water managementand irrigationmaintenance purposes (Annex 7). In addition, the Project Manager would be responsiblefor coor- dinating detailed annual budgets, work programs, and staffing plans for project activitiesprepared by the participatingagencies. Assurances have been obtained that each agency would prepare annual budgets and work programs for its part of the project and submit them to the Project Manager for review at least three months in advance of each fiscal year. The Project Manager would forward a copy of the annual budgets and work programs to the Bank for information.
5.03 The Project Manager would be guided on policy matters by a Steering Committeecomposed of the SecretaryGeneral of the Ministry of Agriculture,the State Secretaryof Kelantan,and other officials they may nominate. Involvementof the State Secretarywould ensure the participation of both State-levelagencies and officers and the District Officers, who are in charge of local governmentalfunctions, and should facilitatecoordination of project activitiesat the ground level. Establishmentof the Steering Committeewould be a conditionof effectivenessof the proposed Loan.
5.04 Several mechanisms exist at the Federal and Kelantan State levels to facilitatethe coordinationof ongoing agriculturalsupport programs. With- in the past two years both FOA and BPM, originallyestablished as semi-autono- mous bodies, have been brought under the direct administrationof MOA to en- sure greater integrationof agriculturalsupport services and credit programs at the Federal level. At the State level, the coordinationof research and extension efforts on a State-widebasis has been institutionalizedin the State AgriculturalResearch Developmentand Extension Committee while engineeringand agriculturalactivities in the irrigationscheme areas are coordinatedby KADA (paras 3.16-3.18). In addition, developmentprojects at - 21 -
the State level are identified,screened, and monitored by the State Planning Unit. Thus a reasonable structure exists for the coordinationof project- initiatedprograms after the implementationphase is completed.
Agency Responsibilities
5.05 Drainage and IrrigationDepartment: DID would be responsiblefor implementingthe Lemal irrigation improvementand the small-scaleirrigation components of the proposed project. Design work and supervisionof the force account elements of the works would require the full-time services of two senior and five junior level engineers, as well as a number of tech- nicians, of which one senior and two junior engineerswould be required at the commencementof the project. The latter positions have been approved by the Public Services Department conditionalon loan signing. Supervision of this staff would be provided by the DID Kelantan State Engineer, who cur- rently has a staff of nine engineers in Kota Bharu, while engineering,design, and hydrologicalstudies would be supportedby Federal DID units in Kuala Lumpur.
5.06 KADA would assume responsibilityfor operation and maintenanceof the Lemal works upon their completion. As the engineeringcapability of KADA is provided by the Kelantan DID staff, however, continuityof O&M opera- tions is assured. DID field staff would operate and maintain the conveyance systems down to the quaternary canals, the drainage system down to the on- farm tertiary drains, dikes, roads, and the existing pumping plants. About 21 km of village roads to be opened to heavy public through-trafficwould be transferredto the State PWD for maintenance. Farmers would be organized into small cooperativegroups, based on the Small AgriculturalUnits (SAU's) organized for extension and FDC activities (para 5.02), to maintain quaternary canals and tertiary drains, under KADA supervision,as soon as the rehabi- litated delivery and drainage system becomes operational. DID would operate and maintain the small-scaleirrigation schemes to be constructedoutside KADA boundaries down to the level of on-farm canals and drains, which would also be maintained by SAU's under Departmentalsupervision. In order to facilitatemaintenance of project works, additional O&M equipment would be purchased under the project. DID would provide O&M training to its field staff and selected farmers at a Water Management Training Center to be built in the Kemubu Project area with Japanese assistance.
5.07 Public Works Department: The rural roads componentwould be im- plemented by the PWD. A senior project engineer would be seconded to the staff of the State Director of PWD to administer the component, assisted by two engineers to handle planning and design, three engineers for construction supervision,and a number of techniciansand subprofessionalstaff. The positions of project engineer and an additional engineer, required for commencementof the project, have been approved conditionalon loan signing. Bridge structures would be designed by the Federal Design and Research Division in Kuala Lumpur.
5.08 The Kelantan State PWD would assume responsibilityfor the main- tenance of all roads constructedunder this component, as well as about 21 km - 22 -
of roads to be built by DID in the Lemal area (para. 5.06). GOM would finance the maintenance of all project roads meeting minimum Federal design standards at the rate of M$3,100/km per annum while maintenance of lower standard roads would be financed by a special grant fund as required. Four sets of road maintenance equipment have already been provided by the Federal Government to Kelantan PWD for the maintenance and general improve- ment of existing unclassified roads. In order to ensure adequate maintenance of the roads constructed under the project, as well as to improve the general level of maintenance and up-grading of rural roads throughout the region, the project would provide two sets of normal maintenance equipment and one set of heavier equipment for repairs of embankments and culverts, as well as ancil- lary equipment and vehicles. Extensions to existing PWD workshops in Machang and Tanah Merah, equipment and tools for those workshops, and a mobile servic- ing unit would also be included to facilitate maintenance of the road equipment. Assurances would be obtained that GOM would take the necessary steps to ensure that all roads constructed or improved under the project would be properly maintained.
5.09 Department of Agriculture: The agricultural extension component would be implemented by the Federal and Kelantan State DOA. Although the SDOA is formally responsible for extension activities, the necessity for sub- stantial Federal funding of the staff buildup and improved technical support units required to create an effective extension service in Kelantan would directly involve FDOA in supervising the implementation of this component. Active Federal involvement is also expected because this component is re- garded as a model for a proposed national extension project, currently being prepared by FAO/CP for possible Bank funding, which would provide for a simi- lar intensification of extension activities in the other Malaysian States. The pivotal figure in the implementation of the component would be the State Director of Agriculture, who is also the General Manager of KADA. Under the project a Chief Extension Officer, who would devote full time to administering the extension service, would be appointed to the Director's staff. Additional staff, including district extension workers, field agents, and subject matter specialists, would be appointed to provide sufficient qualified manpower at various levels to reach the majority of the State's smallholders on a regular and sustained basis (para 4.06). Details of the organization and methodology of the extension program are presented in Annex 6. Positions for the Chief Extension Officer and two subject matter specialists, whose services would be required at the commencement of the project, have been approved conditional on loan signing. Assurances have been obtained that all extension staff required to implement the project would be appointed, that GOM would make arrangements to finance the required staff build-up on an ongoing basis, and that two sub- ject matter specialists would be appointed within three months of loan signing. Appointment of a qualified Chief Extension Officer for the State of Kelantan in consultation with the Bank would be a condition of effectiveness of the proposed Loan.
5.10 Farmers Organization Authority: FOA would be responsible for supervising the execution of the Farmers Development Center component, in keeping with its general supervisory jurisdiction over the FO's (para 3.14). FOA is administered by a Director General, assisted by well-staffed credit, - 23 -
agro-business,and administrativedivisions at headquarterslevel, and no additional staff would be required at headquartersto administer this com- ponent. The major tasks involved in implementingthe component, including organizingthe farmers, estimatingdetailed storage and padi drying require- ments for individualFO's, estimating the farmers' credit requirements, assisting farmers in applying for credit, screening the applications,arrang- ing the procurementand delivery of inputs to the farmers, collecting repay- ments, storing and marketing produce and record keeping, would te executed by the Kelantan State FOA and KADA in their respectivegeographical areas (para 3.14). Both State-levelagencies would be guided and assisted by the Director General of FOA and his staff in the implementationof these func- tions. To perform these functionsadequately some increase in staff would be required,although proportionallymuch smaller than that required for the extensioncomponent. The State FOA in particular has already received approval and is now appointing sufficient field staff to man the proposed network of new FDC's. To manage the Farmers DevelopmentCenter component on a full-timebasis, the following staff would be required at the commence- ment of the project: two new managerial officers;a Senior Development Officer in FOA who would serve under the present Deputy State Director; and a Deputy Head of the AgricultureSection in KADA, who would serve under the KADA General Manager. In addition, senior Credit Officers would be added to the staffs of FOA and KADA during the initial implementationperiod. These four positionshave been approved conditionalon loan signing.
AgriculturalManpower Availability
5.11 Implementationof the agriculturalsupport services componentswould require the appointmentof approximately180 new staff to the DOA, FOA, and KADA establishmentsin Kelantan over the five-year project period. Of this total, 10 would require a University degree in agriculture-relatedfields, 20 a Diploma of Agricultureor equivalent,and 150 a Certificateof Agriculture or equivalent. Currently, about 200 degrees are awarded annually in agricul- tural subjectsby the University of Malaya and the AgriculturalUniversity at Serdang, 325 Diplomas in Agricultureare awarded at Serdang, and 280 Cer- tificatesof Agricultureare awarded at six Agriculture Institutesincluding one in Besut, Trengganu recently establishedto facilitate access by students from Kelantan and Trengganu. All of these programs are expected to expand rapidly, with the output of Certificateholders to reach 480 within the next few years. In addition,many Malaysians are trained overseas or in local institutionssuch as the MARA Instituteof Technology,which specializes in commercial subjects applicable to project activities. Many students from Kelantan attend these institutions,in part because of a Government policy to give preference to students from rural areas. Thus recruitmentof suf- ficient numbers of officers to effectivelyimplement the project should pre- sent no major problems.
Cost Recovery
5.12 At present, O&M costs of the irrigation systems in the Lemal area average US$27/ha, while irrigationand land charges levied by the State - 24 -
Governmentaverage US$10/ha. The State Legislatureof Kelantan has approved an increase in rates to a maximum of US$18/ha (M$47/ha)for irri- gation and land charges combined, and it is expected that these rates would be charged by full project development. In addition to these charges, pro- ject area farmers pay an Islamic padi productiontithe (zakat) to the Kelantan Departmentof Religious Affairs, which uses the receipts to finance the reli- gious school system, teachers salaries, welfare expenses,and maintenance of mosques. This tithe is compulsoryfor Moslem farmers 1/ under State law, and non-payment is punishableby imprisonmentor fine. Zakat payments in Kelantan equal 7% of gross padi production,with actual 1975 payments in Lemal averaging 210 kg/ha of padi, equivalentto US$33/ha in domestic market prices and US$42/ha in world prices. Payments by project area farmers are thus equivalentto the full costs of operating the existing systems plus a substantialpayment towards recovery of original capital costs.
5.13 The capital costs of the Lemal componentamount to US$670/ha,ex- cluding those elements (flood control and access roads) which benefit large populations not dependent on padi production. The incremental O&M costs would amount to US$12/ha per annum at full development. Assuming a 10% discount rate and a repayment period of 25 years, full cost recovery from project beneficarieswould require incrementalannual payments of US$86/ha for the period. Actual incrementalirrigation charges would range between US$5.2/ha and US$10.4/ha for various sizes of model farms. This representsa cost recovery index of 6% for a 0.3 ha farm and 12% for a 1.5 ha farm. The correspondingrent recovery index is 8% and 53%. However, if the zakat tax is consideredas a project charge, the cost recovery index would increase to 52%. Consideringthe fact that even after completionof the project nearly 90% of project beneficiarieswould still only receive a net income at or below the Critical ConsumptionLevel (para 6.08), and the absolute tax level on the farmers, the present level of water charges are consideredacceptable. No increases in the level of water charges beyond those recently introducedby the State Governmentare proposed under the project although assuranceshave been obtained that the State Governmentwould continue to collect O&M charges whose level would be determinedtaking into account incentives to the farmers, the farmers' capacity to pay, and other taxes and charges imposed upon them. Annex 13 presents a detailed analysis of income, taxes, and cost recovery in the Lemal area.
VI. PRODUCTION,MARKETING, PRICES AND FARM INCOME
6.01 The project would increase agriculturalproduction in two ways. Constructionof the proposed works in Lemal and in the small irrigationscheme areas would provide farmers with the water control they require to increase padi yields on presently cropped land, with the techniquesand varieties pres- ently known to them and with small proportionalincreases in input usage which
1/ Virtually all project area farmers are Malay and hence legally liable Moslems. - 25 - would not be economical unless present risks of flooding and late and insuf- ficient delivery and drainage of water are reduced. These works would also extend the effective cultivable land within the irrigated areas by supplying water to fields which have never received dry season irrigation, and by drain- ing permanently ponded areas. Besides these effects directly attributable to irrigation, the package of agricultural support services included in the agricultural extension and Farmers Development Center components would raise yields of padi, groundnuts, and other crops by providing farmers instruction in new techniques, many of which require higher cash input levels than are now applied, and by providing the storage and distribution system (including rural roads where necessary) to supply inputs and credit to the farmers and to market the incremental output. While the latter effect would apply to padi yields in Lemal and Kemubu, its maximum impact would be felt in the rain- fed areas of North Kelantan, which until now have received a minimum of agricultural supporting services.
Production
6.02 Average padi yields in Lemal due to improved water control facili- ties are expected to rise from 1.75 ton/ha at present to 3.0 ton/ha for the wet season crop, and from 2.6 ton/ha to 3.65 ton/ha in the dry season, by 1985 (Annex 11). Yields in the small scheme areas are expected to reach 2.4 ton/ha and 2.9 ton/ha in the wet and dry seasons, respectively, in 1985 (An- nex 15). Infrastructure improvements would thus result in incremental padi output of 37,000 tons in Lemal and 2,500 tons in the small schemes by 1985. The effect of the agricultural support components on padi production is more difficult to gauge, but it should be possible to raise average padi yields by a net increment of 0.2 ton/ha in the Kemubu area and in the large rainfed padi areas by 1985 through the agricultural extension and FDC project com- ponents. Achieving this 9% increase in average yields would result in an incremental output of about 18,000 tons of padi.
6.03 The agricultural support components would make positive contribu- tions to yield improvements and increases in cropping area for several crops besides padi, since the mixed agriculture characteristics of the region en- sures that agents specializing in padi and groundnuts would also be regularly meeting growers of the other crops, and few rubber, tobacco, and coconut growers now follow the accepted cultivation practices known to even junior level extension staff. Furthermore, the input supply and credit services provided by FDC's would be available to support a wide range of crops. As rubber and tobacco are primarily served by other agencies and programs, how- ever, the major thrust of the project aside from padi would be the improve- ment of groundnut yields and grades. Incremental production of groundnuts due to the project is expected to amount to 2,000 tons in 1985.
Marketing and Prices
6.04 Most of the incremental padi production due to the project would be marketed in Malaysia, particularly in the neighboring State of Trengganu, with the remainder kept for subsistence. In either case, the project output - 26 -
would substitute for imported high grades of Chinese and Thai rice. For pur- poses of economic analysis, it is assumed that the mixture of grades to be produced under the project would equal in value the standard 15% broken Thai grade, typically traded internationally at prices 10% below those of the Thai 5% broken grade for which the Bank's Economic Analysis and Projections Department makes long-term projections. Except for the period 1971-72, farm- gate padi prices in Malaysia have in recent years been below equivalent world market prices, and there is no indication that this situation will reverse. Padi is now generally marketed at published rates, currently US$183 per ton for long-grained varieties and US$157 per ton for short-grained. Expansion of the network of FDC's helps to maintain these rates through increased com- petition for the marketed surplus, and it is increasingly common for private dealers to offer a premium on the official rates in order to assure them- selves sufficient turnover. In addition, provision of even small amounts of institutional credit through FDC's and cooperatives reduces the obliga- tion of smallholders to market their crop through private dealers.
6.05 Most of the incremental output marketed through FDC's would be milled and distributed by the National Padi and Rice Authority, which op- erates a large milling and drying complex located in the Kemubu project area (15,000 ton annual capacity) and is completing a similar complex (10,000 ton annual capacity) in the Lemal area. The remainder would be milled by the hundreds of smaller private and cooperative mills distributed throughout the area. Milling rates for the Government and private mills are 65% and 63% respectively . The Government mills discount the prices paid for padi with high germination or moisture content, but these factors should be reduced by the improved storage facilities, drying floors, and transport equipment to be provided through FDC's under the project.
6.06 The groundnuts grown in Kelantan are generally sold to factories in Perak for the production of Menglembu peanuts, which are sold in Malaysia and Singapore as a confection. Prices for these nuts have fluctuated widely in the past, both seasonally and from year to year. 1/ A processing plant of 3,500 ton annual capacity is currently under construction in Pasir Mas, with financial participation of the Kelantan State FOA, and a second plant of 2,200 ton annual capacity is being planned by the local Farmers' Organization in Tiga Daerah. The establishment of these facilities should stabilize local demand for the raw products to some extent. In addition, FDC's in the pro- ject area have recently begun to assist in the distribution, marketing and storage of this product, though capacity has been limited by insufficient storage facilities.
Farm Incomes
6.07 The Lemal area is statistically the most impoverished irrigation project area in Peninsular Malaysia. Average total family income is cur- rently about US$480 (US$90 per capita), while the median income level is US$350 (US$65 per capita) (Annex 13). Per capita income is less than 15%
1/ Farmgate prices in 1975 ranged from a low of US$125/ton in June to a high of US$295/ton in November. - 27 - of the national level, and only about half the estimated Critical Consumption Level (CCL) for Malaysia. 1/ The distribution of income within the area is fairly even, with 90% of the farm families earning less than the CCL. While padi farming is the single largest source of family income, providing 48% of the total, income from other sources, including off-farm work (30%), crops other than padi (18%), and remittances (4%), are required to maintain bare subsistence living standards.
6.08 The project would increase real net padi farm incomes by an average of 82% by 1985, raising average total family income 39% to about US$667 (US$124 per capita), using present farmgate prices. Expected increases in farmgate padi prices by the Government to levels 2/ more closely approaching world rice price levels and stricter enforcement of existing rent control laws would raise average family incomes to about US$785 (US$145 per capita) in 1985. At full project development, no more than 20% of the beneficiaries would receive incomes above the critical consumption level, as the more affluent residents of the area are generally primarily dependent on non-farm occupations and would receive proportionally smaller incremental incomes due to the project. Given the overpopulation and natural conditions of the area, this represents the most cost-effective means of dealing with the hard-core poverty problem in Kelantan as well as the maximum impact attainable through agricultural intensification consonant with the achievement of reasonable economic rates of return. The project would raise few Lemal area farmers above poverty income levels, but it would provide large proportional increases in income to one of the poorest groups in MIalaysian society, and provide a sufficient period of time for the planning and initiation of land settlement, industrialization, and other development programs in Kelantan.
VII. BENEFITS AND JUSTIFICATION
7.01 The project would provide the infrastructure facilities and sup- porting services required to raise smallholder agricultural yields, produc- tion, and farm incomes throughout the North Kelantan region. It is thus closely in line with the following major objectives of Malaysian Government policy:
(a) to improve the productivity of and incomes of small farmers;
(b) to reduce urban-rural, racial (Malay-non-Malay), and regional (East Coast-West Coast) income disparities; and
(c) to reduce the national dependence on imported food grains.
1/ The CCL for Malaysia is estimated at M$465 (US$180) per capita in 1975, while the country's average per capita income is M$1,700 (US$660).
2/ US$196/ton for long-grained and US$176/ton for short-grained varieties. - 28 -
7.02 Aside from furtheringbasic national policies,the project would yield high economic returns. Individualrates of return have been calculated for the Lemal irrigation,small-scale irrigation, and rural road components. While these calculationshave not been performed for the agriculturalexten- sion and Farmers DevelopmentCenter components,those componentsare antici- pated to make important independentcontributions to the agriculturaldevelop- ment of North Kelantan, as well as to ensure the economic viability of the infrastructurecomponents. The capital cost of the FDC's and agricultural extensionservices amount to about US$55 per benefitingfamily (US$35/ha), while incrementalannual operating costs would amount to US$10 per family (US$7/ha). In the calculationof a composite rate of return for the entire project (para 7.07), an incrementin annual padi productionof 18,000 tons (para 6.02), phased over the period 1977-85,has been included along with the above costs as an estimate of the minimum independentproduction effect of the two agriculturalcomponents.
7.03 In carrying out the analysis, all agriculturalprices were derived from the Bank's world market price projections. Input prices used reflect the eliminationof all known tariffs and subsidies. All farm labor was valued at a shadow wage rate of M$1.50/day. An exchange rate of M$2.57 to US$1.00, equivalentto the freely fluctuatingmarket value of the Malaysian currency from June 1975 to April 1976, was used to equate domestic and international values. This value is consideredto representa relativelyundistorted rate and was adopted for the purposes of economic analysis.
7.04 Lemal IrrigationComponent: The rate of return of this component, calculatedsolely on the basis of projected increass in padi production, would be 42% (Annex 11). The component would also materially reduce annual flood damages to homes, shops, vehicles, tree crops, and herds over an area of 30,000 ha, including the town of Pasir Mas. However, as only rough estimatesof flood damages are available,these benefits were excluded from the present analysis even though the full costs of the flood protectionworks were included. The rate of return is high for several reasons, including in particularthe anticipated speed of developmentof the component,the low opportunitycost of farmers' labor in the region, and the large sunk cost of existing facilities. The rate of developmentwould be relativelyrapid for several reasons, including the large existing investmentin pumping plant and main and secondarycanals, the long experienceof Lemal area farmers with padi double-cropping,and the relative ease of installationof GRP flume tertiaries,as opposed to excavatingchannels under extremelydifficult weather and cropping constraints. A separate incrementalanalysis indicates that the equalizingdiscount rate of the GRP flume tertiary system, as opposed to the earth canal alternative,would be 45% (Annex 12).
7.05 Small-ScaleIrrigation: Indicativerates of return have been cal- culated for this component (Annex 15) under two extreme assumptionsregarding the potential for padi double cropping in the scheme areas:
(a) that no double-croppingwould ever be possible given the hydrology and topographyof the area, and that benefits would consist solely of ensuring a good wet-seasoncrop; and - 29 -
(b) that 50% of the net padi area of the schemes would be double-cropped at full development.
The rate of return for case (a) would be 12%, and for case (b) 22%. All in- dividual schemes to be constructed are expected to fall within this range. Areas where double cropping is feasible would be given preference in deter- mining the construction program.
7.06 Rural Roads: The Pasir Mas - Rantau Panjang road (21 km) would serve a high volume of existing international and local through-traffic, amounting to about 1,400 vehicles per day at present and growing at 6% per annum. Benefits would derive from reduced average vehicle operating costs on the new road, shortened route length, and reduced maintenance costs on the new alignment, which is outside the path of the annual floods. The eco- nomic rate of return of constructing this high-standard road is 41% (Annex 14). To evaluate the 190 km of lower-standard access roads to be constructed under the component, model road influence areas have been developed for the coastal, floodplain, and foothill sub-regions of North Kelantan. The models were based on field economic surveys of eight links totalling 52 km in length and analysis of land use maps. From these models, estimates were derived of normal and generated passenger and goods traffic which would utilize an im- proved access road. Benefits were calculated on the basis of reduced trans- port costs, largely in terms of the marginal opportunity cost of farmers' and laborers' productive time. The estimated rates of return for the various model roads are as follows:
Sub-Region Rate of Return
Coastal 27%
Floodplain 32%
Foothill 29%
Composite Rate of Return
7.07 The composite rate of return of the project, estimated by amal- gamating the cost and benefit streams of the infrastructure components, the cost streams of the FDC and extension components, and the net value of pro- duction due to the agricultural components (para 7.02), is 27%.
VIII. RECOMMENDATIONS
8.01 During negotiations, assurances were obtained from the Government on the following major points: - 30 -
(a) installationof GRP flume tertiarieswould be conditional on approval by the Bank, followingreview of the results of a testing program, and that should the result of the program be negative, an alternativetertiary system acceptable to the Bank would be installed (para 4.03);
(b) the Governmentwould employ consultantsto assist in the implementationof the GRP flume testing program (para 4.03) and the study of State Land DevelopmentSchemes (para 4.09) whose qualifications,experience, and terms and con- ditions of employment shall be satisfactoryto the Bank;
(c) DID would prepare feasibilityreports analyzing water demand and supply and economic returns for each small- scale irrigationscheme to be constructedunder the project, and would forward the first three reports to the Bank for review prior to implementation(para 4.04);
(d) a statementof annual agriculturalcredit requirements would be prepared and submitted to BPM and the Bank not later than three months prior to the beginning of each fiscal year, and the Government would thereafter,follow- ing consultationwith the Bank, ensure that an adequate amount of credit would be made available to project area farmers through BPM (para 4.08);
(e) PWD would engage a firm of local surveyorsand, should delays be experiencedin final engineeringof the pro- ject roads, a firm of engineeringconsultants to assist in the design and constructionsupervision of the roads (para 4.10);
(f) all local project costs would be borne by GOM through- out the implementationperiod of the project (para 4.14);
(g) separate project accounts would be kept by the various implementingagencies; and such accounts would be collated by the Project Manager, audited by auditors satisfactoryto the Bank, and forwarded to the Bank within nine months of the close of each fiscal year (para 4.19);
(h) the various implementingagencies would prepare annual budgets and work programs for their parts of the project, and submit them to the Project Manager for his review at least three months in advance of each fiscal year, copies to be forwarded to the Bank (para 5.02);
(i) GOM would properly maintain the roads constructedor improved under the project (para 5.08); - 31 -
(j) all extension staff required to implementthe project would be appointed, that arrangementswould be made to finance the required staff build-up on an ongoing basis, and that two subject matter specialistswould be appointed within four momths of loan signing (para 5.09); and
(k) the Kelantan State Government would continue to collect O&M charges whose level would be determined taking into account incentives to farmers, the farmers' capacity to pay, and other charges and taxes paid by them (para 5.13).
8.02 Conditionsof effectivenessof the Loan would be:
(a) the appointmentof a suitably qualifiedand experienced Project Manager in consultationwith the Bank (para 5.01);
(b) establishmentof a project Steering Committee (para 5.03); and
(c) the appointmentof a qualified Chief Extension Officer for the State of Kelantan in consultationwith the Bank (para 5.09).
8.03 With the above assurances, the project would be suitable for a Bank loan of US$21 million, with a 23-yearmaturity and a grace period of five years. The borrower would be the Federation of Malaysia.
ANNEX 1 Page 1 MALAYSIA
NORTH KELANTAN RURAL DEVELOPMENT PROJECT
Agricultural Production in Kelantan
General
1. Estimates of present land use by district in Kelantan are presented in Table 1. Except for rubber, agricultural activity is concentrated in the seven northern districts. Rubber and rice are the key crops, but groundnut and tobacco grown on relatively small plots in the off-season provide an important source of farm income to many farm families. About 65% of the rub- ber is grown by smallholders, 22% on estates, and the balance is under State Land Development Schemes. The sale of rubber and rubber tapping have long been the major sources of cash income in Kelantan.
Padi Production
2. According to official statistics, about 80,000 ha of padi were harvested in 1973-74. About 23,000 ha were irrigated and double-cropped (46,000 ha harvested) and 34,000 ha were rainfed, wet padi or dry padi grown during the main season. Preliminary reports for 1974-75 indicate that the padi area harvested increased 25% to 100,000 ha in that year, of which 27,000 ha were irrigated and double-cropped and 46,000 ha rainfed. Table 2 details production trends over the past seven years.
3. Total production increased by 23% in the period 1969-73, largely due to an expansion in the irrigated and dry-season rice area. The area of main-season wet padi land has remained fairly constant, indicating that the bulk of land suitable for padi is already utilized. The area of dry padi has decreased appreciably, due to low yields and areas brought under irri- gation schemes. The key source of variation in annual padi production is the yield and harvested area of main-season wet padi. Regular flooding of the lowlands leads to crop loss and yield reduction, which was particularly severe in 1973-74, when only 80% of the padi land was harvested in the wet season. Current estimated State-wide yields for harvested land, assuming normal weather conditions, are 1.9 and 2.3 ton/ha for wet padi in the wet and dry seasons, respectively, and 1.3 ton/ha for dry padi. Even allowing for the rather low fertility of East Coast soils, these yields are poor and reflect low standards of management and lack of cash inputs.
4. Padi is the main smallholder crop in the North Kelantan region and the key source of rural employment and farm income. In rainfed areas the main season crop is planted in the August - October period and harvested in February - March. In irrigated areas the water supply schedule is set to allow the main season crop to be planted in October and harvested in ANNEX 1 Page 2
February-March,and the off-seasoncrop to be planted in April and harvested in September. However, under both rainfed and irrigated conditionsmany farmers do not plant at the optimum times. About 60 percent of the land is prepared by four-wheeledand two-wheeledtractors, with the remainderpre- pared by buffalo plough and hand. Lack of tractors or availabilityat the right time is a constraint in some areas. About 60 percent of farmers plant long-strawedlong-duration (160 - 210 days) native varieties in the wet sea- son as a precautionagainst flood damage. The majority plant the improved varieties Mahsuri and Bahagia (135 - 140 days) in the dry season, but it appears that many farmers retain their own seed rather than take new seed from the Departmentof Agriculture.
5. Most farmers use some fertilizer,and crude estimates suggest an average applicationrate equivalentto about 20 kg N/ha which is less than half of the optimal applicationfor improved varieties. Limited nitrogen response data indicates relativelylow ratios of grain produced per unit of nitrogen applied, which would discouragefertilizer use. This is pro- bably related to the use of non-responsivevarieties, incorrectmethods and timing of application,poor water management and lack of adequate weed and pest control. Currently,few farmers weed their crops adequately,since without reasonableinputs of fertiliser,weed growth is not vigorous and readily apparent. Stemborer,leafhoppers, rice bugs and rats probably re- gularly reduce yields by 15 - 20 percent, but only about 20 percent of far- mers practise pest control. Pest control is largely restrictedto serious outbreaks when levels of damage are much higher and the Departmentof Agri- culture Pest ControlUnit is called in.
6. Since all operationswith the exception of ploughing are carried out by hand, the rice crop absorbs a lot of labor. At current yield levels, returns to labor and investmentin irrigationare rather low. Introductionof measures to improve cultural technique is the lowest cost and most rapid method of improving the income of the majority of farm fami- lies. It is clear that timely planting, use of good seed, intelligentuse of fertilizer,and effective weed and pest control could increase yields appreciably. Key constraintsto implementingsuch a program at present are: lack of an effective extension service in regular contact with the farmer; recommendations which may not always have a sound technical and economic basis; lack of operating capital on the smaller farms; and the failure of institutionalcredit systems to reach the masses of poor farmers. Groundnut
7. Groundnut is a relativelynew crop which has developed rapidly over the past five years to an area of about 3,500 ha. Production is cen- tered on the lighter well drained soils of the Kelantan valley, the Pergau valley and Machang and Tanah Merah districts. However, it is often grown on padi land in rotation with main season rice. Yields are highly variable, depending on soil type and cultural technique,and range from 1,500 kg to ANNEX I Page 3
3,700 kg of fresh wet nut in shell per ha. The Department of Agriculture estimates current average yield at 2.4 ton per ha and total State production at about 8,000 tons per year.
8. Almost all growers plant 0.2 - 0.4 ha of groundnut as a supple- mentary crop to some other major enterprise, e.g. rubber or rice. Maturing in about 100 days, it can be successfully planted from January to July. Most growers plant in June and harvest in September - October, to avoid clashes with rice operations. The land is ploughed by tractor and the seeds are planted by hand at about 20 x 20 or 30 x 30 cm spacing. Varieties in use are not clearly identified and are classed locally as "Two seeded Indonesian" or "Three seeded Siamese" cultivars. Although the Department of Agriculture recommends the application of compound fertiliser and lime and careful hand- weeding, few farmers follow recommendations or attempt to control pests. The crop is harvested by hand and sold in gunny bags to a kampong dealer or the Farmers' Organization who act as agents for a local factory or groundnut pro- cessors located in Ipoh. The bulk of nuts are processed and sold in the shell, using the local Menglembu process. This involves washing and then sun drying, roasting and packaging. The Malaysian market is seasonal, but exports have been effected through Singapore traders. As with rice, substan- tial gains in yields are possible given an effective extension service and regular supply of good seed of improved varieties.
Tobacco Production
9. Kelantan produces the bulk of Malaysia's Virginia Tobacco which constitutes about 50 percent of local consumption. Initiated as a commercial crop in 1959 by the Malaysian Tobacco Company, the area has expanded to more than 7,000 ha by virtue of its high potential returns relative to other crops. As the average family can only adequately manage 1 - 3,000 plants (0.06 - 0.18 ha), the crop is an important source of cash income to a large number of families. The crop is currently organized around Independent Tobacco Producers (TP's) who are registered with the National Tobacco Board to operate curing barns and supply a quota of flue-cured leaf. The TP's distribute their quota to registered growers within reasonable proximity to their curing barns and are responsible for providing credit and advisory services. To provide con- tinuity of supply, growers are organized to stagger planting over the period January to June. The average crop spends 4 weeks in the seedbed, 3 weeks in pots, 6 weeks as a developing field crop, and 6 - 8 weeks for harvest. Total crop duration is thus about 4 1/2 - 5 months, of which only 3 months is spent in the field. Since the crop requires only small areas of land and seedbeds can be started on kampong land before another field crop is harvested, it can readily be fitted in with other farm operations. Most tobacco land is ploughed and ridged by tractor, but all other operations are done by hand.
10. The agronomy of the rainfed crop is fairly well known, and specific cultural recommendations are available to ensure the production of a good quality crop. Further, there is an assured reasonably well organized market for good quality leaf. Unfortunately, the crop has spread on to marginal ANNEX 1 Page 4 soils, too many curing barns have been established, and the standard of credit and extension services operated through some of the TP's leaves a lot to be desired. As a result, average yields and quality have dropped below the levels achieved in the late 60's when the lIalaysian Tobacco Company largely controlled production. The National Tobacco Board is now working on these problems. If this industry, which is so important to many small- holders, is to be maintained and expanded, measures must be taken to pro- vide adequate extension and credit services to all growers, restrict the production of tobacco on marginal soils, and organize the grading, pricing and marketing of the crop to encourage production of high quality leaf. AN4EX 1 Table 1
MALAYSIA
NORTH KELANTANRURAL DEVELOPMENT PROJECT
Estimates of Present Land Use in Kelantan (Planted Areas)
Main Season Off-Season District Padi Padi Tobacco Groundnut Rubber Coconuts (ha '000) (ha '000) (ha 'OOO) (ha '000) (ha '000) (ha '000)
Khota Bharu 14>.2 11.2 0.8 0.4 8.7 3.7
Bachok 7.8 2.9 1.8 0.3 1.1 4.6
Pasir Puteh 12.1 2.3 1.3 0.1 5.7 4.3
Thmpat 6.7 1.4 0.6 0.1 0.5 2.6
PasirMas 15.7 4.3 1.7 0.4 10.9 1.1
Machang 4.9 0.1 0.6 0.5 11.2 0.1
Tanah Merah 1.9 0.4 0.1 0.6 18.7 0.3
Ulu Kelantan - - 0.1 1.1 455
Total 63.3 22.6 7.0 3.5 102.3 16.7
3ource: Kelantan State Department of Agriculture, 1974. ANNEX1 Table 2
MALAYSIA
NORTHKELANTAN RURAL DEVELOPMENT PROJECT
Trends in Padi Production - Kelantan
Wet Season Dry Season
Wet Padil Dry PadilY Wet Padi Total Season AreaV. Production Area Production Area Production Production ('000 ha) ('000 ton) ('000 ha) ('000 ton) ('000 ha) ('000 ton) ('000 ton)
1068-69 69.4 132.5 6.6 9.1 7.8 22.1 163.8
1Q69-70 66.5 142.4 6.7 9.7 10.4 27.2 179.5
1970-71 67.1 157.8 6.7 10.4 7.1 20.0 188.2 iQ71-72 66.6 ijo.6 5.9 8.0 17.1 48.7 187.5
1972-73 68.0 151.6 2.1 2.6 19.9 47.9 202.3
1973-7h 54.)4 118.6 2.6 3.6 22.6 56.3 178.6
1974-75 70.3 146.9 2.7 3.3 27.3 67.0 217.2
1/ Wet padi refers to padi grown in bunded fields which retain water. Dry padi refers to padi which is seeded on upland areas with no provision for water control.
2/ Estimated harvested area.
Source: Padi and Ricg Statistics, Peninsular Malaysia Ministry of Agriculture, various years. ANNEX 2 Page 1
MALAYSIA
NORTH KELANTAN RURAL DEVELOPMENT PROJECT
LEMAL IRRIGATION COMPONENT
Water Supply, Demand and Quality
Climate
1. The Kelantan climate is tropical and is dominated by the Northeast monsoon in the October-February period and to a lesser extent by the South- west monsoon in the May-September period. Average monthly rainfall at five stations encompassing the Lemal irrigation component area is shown in Table 1 for the period 1960 - 1974. As can be seen, the rainfall is quite uniform over the project area but varies considerably throughout the year. Also, the rainfall intensity is highly variable. During the November-January period an intensity of 162 mm per hour and a monthly rainfall of the order of 1,000 mm have been recorded. The very high rainfall in the project area and in the surrounding hills coupled with topographic features causes flooding (in the November-January period) almost every year, while rainfall in the period February-October is too variable to sustain an off-season rice crop without supplementary irrigation.
Water Supply
2. The sources of supply for the irrigation project are the Lemal and Kelantan rivers. A diversion structure at Tok Uban on the Lemal River di- verts flow into the main canal serving the Lemal and Alor Pasir sub-areas. The gravity water supply is augmented by pumping from the Kelantan River, at Lemal, about 6 km downstream from the diversion works. The pumping plant, built in 1968, has 4 electric driven pumps, each having a capacity of 6.09 m /sec. The Pasir Mas sub-area is serviced by a pumping plant, built in 1958, located on the Kelantan River 3at Kampong Kasar. It has 3 electric driven pumps with a capacity of 1.42 m /sec each. Gravity diversion is used to the extent of water available in the Lemal River. However, the dependable flow of the Lemal River is limited. Thi 10-year average, two- week low flow is estimated to be approximately 1 m /sec. Water supply for the project therefore depends largely on the Kelantan River.
3. About 20 years of reliable streamflow records of the Kelantan River are available from the station at Guillemard Bridge. The station is situated about 30 km upstream of the pumps serving the KImubu Project. At the gauging point the river has a catchment of 11,900 km . A 10-year ANNEX 2 Page 2 low 1/ flow is estimated to be 102 m /sec (see Figure 1). An examination of the annual low flow characteristicsof the river shows that the low flow occurs during the months of March through August (see Figure 2). These are also the months of highest irrigation demands.
4. There are two projects, in addition to Lemal, which have as their source of water the Kelantan Ri3er. These are the Salor and Kemubu Projects. Their maximum dsmands are 2.3 m /sec and 28.3 m /sec respectively,for a total of 30.6 m /sec. This total subtractedfrom the 10 year flow leaves over 70 m /sec for the Lemal Project.
Demand
5. For purposes of computing demand, it is assumed that two crops of padi will be grown annually throughout the Lemal area. To take advantage of the relativelydry months of March and September for harvest, fields should be prepared for planting (presaturated)during the months of April and October. The irrigationschedule is as follows:
Dry Wet Activity Days Season Season
Presaturation & Nursery 30 April 1 - 30 Oct 1 - 30
Normal irrigation 120 May 1 - Aug 30 Nov 1 - Jan 30
Draining 15 Sept 1 - 15 Feb 1 - 15
Harvesting 15 Sept 15 - 30 March 15 - 30
6. In practice, the irrigation efficiencyis much higher during the presaturationperiod than during the normal irrigationperiod. The seepage losses would be nearly constant throughout the year but generally very low (less than 10%) in the clayey soils. The primary contributorsto ineffi- ciency are operationalwaste and farm waste. Both of these are signif- icantly lower during the presaturationperiod than during the normal seasons. The followingsystems/irrigations efficiencies were thereforeassumed:
45% during normal 120-day season; and
65% during 30-day presaturationseason.
1/ The low flow that has a recurrence interval of 10 years. In 9 out of 10 years, this flow would be exceeded. ANNEX 2 Page 3
7. The following table develops the water demand:
Dry Season Wet Season 30 days 120 days 30 days 120 days Total ------(mm)------(mm)------(mm)
Saturation 110 - 100 - 210
Evaporation 125 - 115 - 240
Percolation 25 100 25 100 250
Flooding 75 50 75 50 250
Evapotranspiration - 650 - 600 1,250
Sub-Total 335 800 315 750 2,200
Effective Rainfall 25 400 80 500 1,005
Total Water Needed 310 400 235 250 1,195
Diversion Required 477 889 362 556 2,284
System/Irrigation Efficiency (%) 65 45 65 45 52
The evaporation, evapotranspiration and percolation rates are based on field tests. Total flooding of 125 mm per crop is based on agricultural practice. Effective rainfall was derived from observed daily rainfall, allow- ing the pondage in the padi field to fluctuate with the growth of crops to a maximum depth of 50 mm in the first month and 150 mm in succeeding months. On this basis, effective rainfall was calculated to be 425 mm in the dry sea- son and 580 mm in the wet season. Some 2,284 mm of water have to be diverted by gravity and pumping to meet the annual crop water requirement of 1,195 mm, resulting in an overall annual irrigation efficiency of 52%.
8. The largest demand is during the 30-day presaturation period start- ing April 1 when 477 mm of water must be supplied. This is equivalent to 4,770 m /ha or about 47 Mm for the 9,990 ha Sungei Lemal - Alor Pasir serv- ice area. A 30-day diversion of 18.2 m /sec would 3be needed to meet Shis re- quirement. Subtracting a gravity diversion of I m /sec leaves 17.2 m /sec that must be supplied by pumping. This is considerably below the designed capacity of the Lemal pumping plant. Three pumps could meet the demand, permitting one pump to3 be on reserve. Similarly, the pumps at the Pasir Mas area must supply 3.9 m /sec, which is fithin the capacity of the pumping plant. The total demand of about 22 m /seS during the month of April is easily met by the available supply of 70 m /sec in the Kelantan River (para 4). ANNEX 2 Page 4
9. Although the Kelantan River is quite turbid, its suitabilityfor irrigationis excellent. Water from the Kelantan River has been used for irrigation in this area for many years with no ill effects. From three samples taken in October 1974, the mean value for pH was found to be 7.1 and dissolved solids 82 ppm. ANNEX2 Table 1
KALAYSIA
NORTHKELANTAN RURAL DEVELOPMENT PROJECT
LEMALIRRIGATION COMPONEMT
Average MonthlY Rainfall (1960-1974) (mm)
Kg. Machang Pengkalan Tumpat Bachok Kembang Police Kubor Salor Railway Railway Month Bahru Station Pumphouse Station Station (001)V (0057)Y (0060)V (0067)j/ (0074)V
January 223 244 177 195 175
February 104 100 125 52 70
March 76 82 77 82 96
April 76 79 77 70 121
May 147 169 143 119 117
June 141 146 214 139 119
July 155 140 204 189 157
August 199 212 202 148 200
September 238 203 280 245 195
October 252 309 264 290 295
November 388 384 417 562 613
December 495 646 547 584 605
Total 2,494 2,714 2,727 2,675 2,763
j/ See Map 12003 for location of the stations identifiedby number.
Source: Rainfall records based on DID rain gauge stations. ANNEX2 Table 2
MALAYSIA
NORTHKELANTAN RURAL DEVELOPMENT PROJECT
LEMhL IRRIGATION CCHPONENT
Effective Rainfall Analysis(Pasir IbasPump~house) (Daily rainfall between 5 and 50 mu considered effective)
Year April October (n m) ~~~(mm)
1960 51.05 212.09
1961 134.11 309.37
1962 11.94 176.78
1963 35-56 185.17
1964 24.38 218.44
1965 64.77 329.69
1966 42.67 471.68
1967 26.92 189.74
1968 49.78 263.91
1969 33.53 223.01
1970 145.80 2o6.25
1971 0.00 284.99
1972 156.46 219.46
1973 26.42 334.26
1974 76.20 203.96
Mean 58.67 255.27
Ptandard 149.02 79.140 Deviation - -
Coefficient of Variation 84% 31% MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT Lemal Irrigation Component
Analysis of low flows (lowest averagefor 14 consecutivedays) of Kelantan River
566 - - _ _ _ _ _
227 ___ _ 198 ______B
~?170 ______
z 142 _ _ Z (D 113 ______
Co 85
1.01 1.1 1.2 1.3 1.5 2 3 4 5 6 7 8 9 10 20 30 40 50 100 RECURRENCEINTERVAL IN YEARS World Bank-15798
MALAYSIA NORTH KELANTAN RURAL DEVELOPMENTPROJECT Lemal Irrigation Component
Kelantan River - fortnightly averageof low flow dischargesat Guillemard Bridge
700
600 H
CD2IJ I I I I I I
400
LU uJ
m~~ 200 |0 26 1year 9 frqunc1 1 of 1 3 20 141 6 1 8 19 2 1 2 3 24 2 6L ]a
100
0
0 24 25 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26[jj
PERIODOF THE YEAR (fortnight) r>
World Bank -15799
ANNEX 3 Page 1
MALAYSIA
NORTH KELANTAN RURAL DEVELOPMENT PROJECT
LEMAL IRRIGATION COMPONENT
Project Works
The Lemal Irrigation Area
1. The Lemal Irrigation Area is bounded by the Kelantan River on the east and extends in some places to the Golok River (the Thai border) on the west. The northern boundary is the lowland along the South China Sea. The gross area of 20,000 ha is divided into three sub-areas--Pasir Mas, Sungei Lemal, and Alor Pasir--all of which are included within the boundaries of the Kemubu Agricultural Development Authority (KADA), a regional authority which also manages the Kemubu Irrigation Project (Loan 500-MA) on the eastern side of the Kelantan River. In addition to the Lemal area, the town of Pasir Mas and an area known as Kubang Gadong 1/, outside the boundaries of KADA, would benefit from flood control works included in the component. The Lemal area is farmed by approximately 16,000 families.
2. The higher ground in the Lemal project area is occupied by kampongs (settlements), roads, rubber and coconut trees, orchards, and tobacco fields, leaving 12,000 ha of padi fields in the total gross area of 20,000 ha. The sub-areas are as follows:
(a) The Sungei Lemal irrigation sub-area (9,300 ha of potential padi land) receives its water supply from the Lemal and Kelantan Rivers. A diversion structure at Tok Uban on the Lemal River diverts flow into the main canal serving the irrigated area. The gravity water supply is augmented by pumping from the Kelantan River, at Lemal, about 6 km down- stream of the headworks. The pumping plant hai 4 electric driven pumps, each having a capacity of 6.09 m per second. The system includes 113 km of main canal and laterals, water level control structures (checks), offtakes (turnouts) and drainage crossings. The scheme was completed in 1968 but the area has not been fully irrigated. In 1969 4,000 ha were double-cropped for the first time. The double-cropped area increased to about 5,700 ha in 1974. Frequent break- downs of the electric pump motors caused by faulty design has restricted irrigation, but rectification work is in progress and should be completed in 1976;
1/ The area includes 4,100 ha of agricultural land, of which 1,600 are suitable for padi. ANNEX 3 Page 2
(b) The Alor Pasir irrigation scheme (600 ha of potential padi land) was completed in 1970 as an extension to the Sungei Lemal scheme. Since its completion in 1970, about 280 ha have been double-cropped; and
(c) The Pasir Mas irrigation scheme (2,100 ha of padi land) is the oldest scheme in the area, having been completed in 1958. It is served by a pumping plant on the Kelantan River at Kampong Kasar. The plint has three electric pumps with a capacity of 1.42 m per second each. They have performed satisfactorily,and 65% of the project area has been doubled-croppedsince 1962.
Existing Irrigation Facilities
3. There are 156 km of main and secondarycanals in the Lemal area, and only about 10 km of tertiary canals. Farmers were encouraged to con- struct field channels from turnout structures in the past, but without much success. The existing field channels, totalling80 km, are poorly made, in- efficient, and costly to maintain.
4. Very few turnouts are equipped with water measuring devices. Irri- gation water is discharged directly from canal to field or from field channel to field, flowing from field to field until it reaches the lowest and far- thest fields from the point of initial diversion. This system causes many difficulties:
(a) There is an unduly long lag in time between service of the first irrigatedplot to service of the plot farthest from the canal. Often the most distant plots are 3 km from the turnout, and the time lapse for servicemay exceed 30 days. In a double-cropping system, lag time of 30 days places affected farms out-of-phasewith the cropping seasons;
(b) In its movement from plot to plot, the water must often cross and fill depressionsbefore its flow continues. As these depressions may range from 10 cm to more than 30 cm below the next lowest field, the water either continues to inundate the higher field until sufficienthead is built up for its advance, or it flows into a drainage channel connected to the depression and fails to advance further. Thus, the area beyond is deprived of its service. Deep water conditions in depression areas hamper planting activities;
(c) Because water released from the turnouts is unmeasured,there is wastage through over-supply or deprivation through under- supply. This condition aggravates the situations described in (a) and (b) above. ANNEX 3 Page 3
Existing Drainage Facilities
5. The present drainage is composed of natural streams, improved in some places, and a few gulleys (alors). On-farm and collectordrains complementaryto the irrigationsystem are almost nonexistent. The north- western and southwesternparts of the Lemal sub-area are drained by several small streams while the Selehong River drains the northeasternpart. The streams have flat to moderately flat gradients and most have been improved to some extent by DID. There are two "alors" in the Pasir Mas subarea; otherwise,natural drainage channels in that area are conspicuouslyabsent.
6. Because of inadequatedrainage facilities,low-lying areas are perpetuallyinundated and about 10% of the project area, much of which was used for padi before the schemes were constructed,cannot be cultivated. Poor drainage also hampers machine movement and mechanized farming, while proper drainage of fields prior to harvesting is seldom possible.
Flooding
7. During the monsoonal months (October-February)the project area is usually at least partially flooded by both the Kelantan and Golok Rivers. A 20 year frequency flood subjects over half the area to inundation. Floods occuring in the monsoon season are preceded by severe rainstormsand rivers often reach bankful stage within 48 to 72 hours. The Kelantan River overtops its banks in the vicinity of Pasir Mas. From there the flood waters spread in a northwesterlydirection, following the general direction of slope of the area. Further downstream the Kelantan also overflows its bank at Pasir Pekan and spreads its flow northwesterlyover project lands. The Golok River overtops at Kampong Guntong spreadingoverland into the western part of the area. Further downstream (north of Meranti) the entry of flood waters into the project area is prevented by a levee (the Golok River bund).
8. The duration of flooding, following the overtopping of river banks, varies from a few days in some parts to as long as one month in other parts, and the inundation depth varies from 1 to 3 m. Flood water entering the area from the upstream side is typically trapped behind the existing Golok River bund, and evacuation in this area is particularlyslow. In addition to flooding from river overflows, the project also suffers from flooding by local rain storms. This occurs where there is insufficientdrainage, par- ticularly in the Pasir Mas sub-area.
Roads and Access
9. The area is served by several classes of roads including unsurfaced roads on the banks of main canals. The area is served by about 90 km of asphalt surfaced roads built to PWD standards and maintained by that agency. It also has about 120 km of laterite roads under the jurisdictionof District Officers. The operation and maintenance roads on the main canal banks have no surfacingand are only usable in dry weather. Many parts of the area are still more than 2 km from a usable access road. ANNEX 3 Page 4
The Project Works
10. The works included in the Lemal irrigationcomponent would improve a gross area of about 30,000 ha. They would include:
(a) Rehabilitationof existing canal systems and constructionof tertiary and quaternarydistribution and drainage systems to serve 12,000 net irrigable ha of padi in Lemal;
(b) Flood protectionand major drainage works to serve the 20,000 gross ha in Lemal, 4,000 gross ha in Kubang Gadong, and about 6,000 ha in and around the town of Pasir Mas; and
(c) Constructionand improvementof about 100 km of access roads in Lemal.
11. Irrigation and On-Farm Drainage: The major element in the compo- nent would be the installationof a tertiary distributionsystem, consisting of 187 km of glass-reinforcedpolyester (GRP) flumes, 768 control and pro- tective structureson the tertiary system, and 200 flume crossings. In addi- tion, existing main and secondarysystems would be improved by constructing measuring devices at secondarycanal offtakes,modifying existing check structures,and constructingnew ones to permit water delivery to the ter- tiary system at discharges greater than the present rate. Below the tertiary level, 500 km of unlined quaternarycanals would be constructedto deliver water to 10 ha units, while an average of about 100 ha would be served by each tertiary. A total of 600 km of tertiary and quaternarydrains is also included in the component,with quaternarydrains evacuatingexcess water from 10 ha units. Tertiary drains would convey water to new (para 16) or existing collectordrains. Table 1 summarizes the works, while Table 2 pre- sents the estimated cost of the works on a per/ha basis.
12. The design of the GRP flumes 1/ is an innovativeconcept integrally utilizing two materials, GRP and hardwood. GRP is a light, impact-resistant, non-brittleconstruction material widely used in piping, boat hull and build- ing construction,and many other applications. It is composed of resilient durable polyester resin reinforced with fibreglass. Used alone, GRP would be too expensivea material for flume construction,while wood alone would not be sufficientlydurable. Structurallycombined, the GRP furnishes water- tightness,durability 2/, and high-tensilestrength. The wood also furnishes tensile strength,but its main function is to provide compressive strength,
1/ See Figure 1.
2/ The resin is pigmented with carbon black to resist the weathering effects of sunlight. ANNEX 3 Page 5 stiffness, and lateral support. The wood is a very dense, straight,knot- free local product. It is completely encased by the GRP in the flume structureand fully protected from the elements. While the polyesterresin and fibreglassmaterials are imported, the manufacture of the product in Malaysia is highly labor-intensive. The materials are applied by hand in successivelayers on a steel mold and cured at ambient outdoor temperatures. On-site constructionis also labor-intensive,with pile-drivingdone manually by four men, and field-weldingof the 6 m (20 ft) sections by hand placement of resin and fibreglass to provide a continuouswater-tight section.
13. ENEX, a consortiumof New Zealand engineeringfirms currently engaged in the Kelantan River Basin Study, would prepare topographicmaps for the Lemal project area on a scale of 1:5,000. To make the maps suitable for laying out on-farm works, ENEX would obtain sufficienttopographic details to permit drawing of 0.25 m-interval contours.
14. The Drainage and IrrigationDepartment (DID) would lay out the on-farm works to suit the topography,existing irrigation,road and drainage networks and village and ownershipboundaries. They would also design and construct the various works to the followingstandards:
(a) GRP Flumes
Material--Resilientpolyester reinforced with fibrous glass (Manning's n = 0.013).
Thickness--2.0 - 3.0 mm.
Gross-Section--Trapezoidalwith 1:3 side slopes.
Stiffeners--Hardwoodribs, struts and beams (Figure 1).
Supports--Hardwoodpiles spaced 6.0 m apart and driven 0.60 - 0.90 m into the ground.
Joints--10 cm end laps welded with resin or butted ends welded with resin to 15 cm backing strips.
Capacity--1301/sec (average)
LongitudinalSlope--0.0006 which correspondsroughly to average slope of irrigatedland.
Invert Elevation--Tobe set such that water surface in flume would be about 30 cm above field level.
Crossings--Spaced0.8 - 1.0 km apart to facilitatecrossing of equipment and farm animals. ANNEX 3 Page 6
(b) QuarternaryCanals
Material--Partlyexcavated and partly compactedearthfill.
Cross-Section--Trapezoidalwith 1.5:1 side slopes.
Capacity--Tobe based on peak delivery of 1.35 1/sec/ha.
LongitudinalSlope--0.0006 to correspondroughly with slope of irrigatedland.
Invert Elevation--Tobe set such that water surface in canal would be about 15 cm above field level.
Maximum Length--0.5km.
(c) Tertiary and QuarternaryDrains
Material--Partlyexcavated and partly compactedearthfill.
Cross-Section--Trapezoidalwith 1.5:1 side slopes.
Capacity--Tobe based on draining within 72 hours excess iater resultingfrom a five-yearstorm (1.2 m /sec/km ).
Invert Elevation--Tobe set to enable collection of excess water from lowest portion of field and emptying of collected water into the secondaryor main drains.
15. Flood Control and Major Drainage Works: The flood control works would include two dikes along the Kelantan River at Pasir Mas (7.3 km) and Pasir Pekan (4.5 km) and a dike along the Golok River upstream of Kuala Lamba (16.6 km). The locationsof these works (Map 12004) have been selected on the basis of flood maps prepared by ENEX for the Kelantan River Basin Study. DID, with assistance from ENEX, would design the dikes for the 50-year flood which would also preclude overbank flow at the above reaches during passage of a flood equivalent to the 1967 flood, the maximum flood of record. DID would design the dikes to the followingstandards:
ConstructionMaterial--Earth, except 4.9 km of the Pasir Mas dike, which would be a reinforcedconcrete retainingwall to minimize right-of-wayacquisition in the town area.
Top Width--4.5 m.
Side Slopes--2:1.
Freeboard--0.6m above the 1967 flood level and more than one meter for the 50-year design flood. ANNEX 3 Page 7
16. In addition to the above flood control works, DID would improve 72 km of existing primary and secondarydrains and construct 39 km of new drains to speed up the evacuation of local flood waters to the sea (Table 3). DID would design the drains for a capacity of 1.2 m3/sec/km2 to ensure that excess water resulting from a storm of five-year frequencywould be dis- charged to the sea within 72 hours. About 75% of the gross area to be served is above the 1.5 m contour, and is feasible for free gravity drain- age. The remainder of the area would require bunding, and gravity drainage would take place during low tide. Supplementarypumped drainage would be provided, where necessary, to prevent damage to crops.
Access Roads
17. The componentwould include the widening and surfacing of about 10 km of canal bank to facilitateoperation and maintenance of the irrigation system, as well as serving light local farm traffic. Heavier traffic would be served by 90 km of access roads to be newly constructedor upgraded from existing tracks. The layout of these roads is based on the criterionof providing good access within no more than 1.2 km distance from any padi field. The sub-base of these roads would be compactedhauled fill, 5 m wide, raised 0.6 m above the highest level of irrigation water in neighboringpadi fields. The surfacing would be compacted laterite, 3 m wide and 0.2 m thick. Both the layout and the standards of the access roads are integrated with the rural roads to be constructedunder the project outside of Lemal, by PWD.
Implementation
18. The proposed implementationschedule is shown in Figure 2. Contour mapping and planning began in December 1975, and would proceed into 1977. The component would be divided into three packages, one each for flood pro- tection dikes (US$1.6million), major drainage works (US$0.8 million),and access roads (US$1.6 million), which would be carried out under contracts awarded after competitivebidding advertised locally in accordance with Government procedures satisfactoryto the Bank. Subject to review of the results of an accelerated testing program, the GRP flume tertiary system (US$4.0million) would be installedunder a central national contract awarded in August 1975 after the same locally advertised competitivebidding procedures. The dispersed, labor-intensiveconstruction of quaternarycanals and on-farm drains would be constructedby DID on force account. Constructionof the tertiary canal system would begin in mid-1977.
Organizationand Management
19. DID would be responsiblefor maintaining the works during construc- tion. Upon completion of the works, KADA would assume responsibilityfor operating and maintaining the systems and all DID-constructedroads, except some 21 km of access roads which would be extensivelyused by through-traffic and which would be maintained by PWD. Since DID provides the engineering ANNEX 3 Page 8 capabilityfor KADA, continuity in the 0 & M function is assured. The Ministry of Agriculturewould provide KADA with an annual allocationof M$2,170/km for maintenanceof roads under its jurisdiction. Quarternary canals and on-farm drainage works would be maintained by farmers under the direction of DID staff. For this purpose, DID would organize farmers into water-usergroups based on the Small AgriculturalUnits to be establishedunder the agriculturalextension and FDC components. Table 6 presents the staffing needs of the system for 0 & M, while Table 5 details estimated recurrent0 & M costs.
20. To ensure adequate maintenance of project works, a complete set of maintenanceequipment would be provided to DID under the project. This equipment, listed in Table 4, would formally become the property of KADA when that Authority assumes responsibilityfor maintaining the completed project works. AKM EX 3 Table 1
MALAYSIA
NCRTHKELAI TmAN RURALDEVELOPWENT PROJECT
LEMAL IRBIGATION COMONENT
On-Farm Wvlorks
For 1.0 ha For 12,000 ha ,.uantity Length Quantity Length
6 GRP Flumes (Tertiaries) - 15. m - 187 km
Q^uaternar7 Canals - 1 .7 rm - 500 km
Canal Structures 0.06 - 768
Tertiary & "uaternarv Drains40.0 - m - 600 km
Right-of-}ay 150 m2 - 180 ha -
Access Roeds - 7.5 m - 90 km ANNEX 3 Table 2
MIALAYSIA
NORTHKEIANITAN RURAL DEVELOPMENT PROJECT
LEKALIRK'-TATION CONIPOYENT
Estimated Cost of On-Farm Wsorks
US$/ha
GRP Flumes (Tertiaries) 340)
Quaternary Canals 46
Canal Structures 40
Tertiary & Quaternary Dra-ins 80
Access Roads 50
Totall/ 556t
1/ Not including contingencies (1i55) and engineering, supervision and administration (10%). ANTTEX 3 T bi cc
MIALAYSIA
NORTHKELANTAN RURAL DEVELOPMENT PROJECT
LEMALIRRIGATION COMPONENT
Flood Control and Primary Drainage Works
Quantity Length Reha.bilitation
Existing Drains - 72.0 km
Earthwork 0.5 Mn
Existing Drainege Structures 2 -
New Works
Flood Control Dikes - 23.5 kr.
Earthwork 0.7 Mm3 _
Reinforced Concrete Flood Wall - 4.9 km
Primary Drains - 39.0 km
Earthwork 1.4 Mm -
Drainage Structures 6
Right-of-Jav 230 ha ANNEX 3 Table
MALAYSIA
NORTHKEIANTAN RURAL DEVELOPMENT PROJECT
'-i. I'--r' Iul r'ru'Kljuji l Eoquipmen4j List
Item Number Unit Cost Total Cost -- (-)-
Dragline, 3/4 c.y. 2 100,000 200,000
Hydraulic Excavator 4 120,000 480,000
Danp Truck 1 25,000 25,000
Tractor, 60 Hp with blade 1 20,000 20,000
Grader, 120 Hp, 6-wheel 1 70,000 70,000
Road Roller,5 tons 1 40,000 40,000
Field Vehicle, 4-wheel drive 3 17,000 51,000
Mobile PLmps, 5 cusec. 5 15,000 75.000 Sub-Total 961,000
Spares 219,000
Total 1,180,000
1/ For estimating purposesonly. The implementation agencies may make adjustments as necessary duringproject implementation. AX8NEX 3 Ta-b'e5
MALLYSIA
NORTHKELANT'AN RURAL 3DEVrOPM3EN r PRCJECT
Estimated Annual Operation and Maintenance ,osts
M~~~N,3t/ku ir^}:^e MWha
Main & Secondary Canals 1,142 - 16
Main & Secondary Canal Structures - 25
GR'LPFlurmes (Tertiaries) 267
Lertiary Structures - 20 ',
I%uaternary Canals 120 -
Main and Secondary Drains - 1,081 10
Drainage Strue'ures 1,250 1
Tertiary & Quaternary Drains 120 -
Pumping Stations - 360,000'
Farm Roads 928
Flood Protection 'Dykes& TW4alls 1,576
no'.a1 118 ANNEX 3 Table 6
MALAYSIA
NORTHKELANTAN RURAL DEVELOPMENT PPOJECT
LEMALIRRIGATION SCHEME
Operationand MaintenanceStaff a/ Engineer - Time Scale 1
TechnicalAssistant - Special Grade 1
Technical Assistant - Time Scale 1
Technician- Time Scale 3
Irrigation Inspector - Special Grade 1
Irrigation Inspector - Time Scale h
Irrigation Overseer - Special Grade 2
Irrigation Overseer - Time Scale 14
Chargeman 3
Industrial & Mannual Groups Workers 140
Clerk - Special Grade 1
Clerks 2
Typist 1
Storekeeper 1
Office Boy 1
Total 176
1,2 Responsibleto Senior Engineerin charge of operr:;i n arid maintenanceof KermubuIrrigation Project. AlCEK 3 Table 7
NOPRTHKTJkINT.;d iiI.AI. )ET+L 0X2 P PThOJECT
LS1LALIRIGATION COci,T'f::
-- .:,s r -.k Ites
- ~e
Cost Ite-m Unit Quantity Rate Local Foegm To+al -TiT- -(MI$ Mtillion)-
1. Canals & On-Fasr Drains
(a.) Land Accuisition ha T?J 12,500 2.38 - 2.38 (b) Tertiary Canals " 1a7,000 53.4 5.00 5.00 10.00 (c) Quaternary Can; s m 59O,000 1.2 .60 - .60 (d) Structures LIS. - - .65 .75 1.4O (e) Drains m 600,000 2.7 .60 1.02 1.62
Sub-Total 9.23 6.77 16.00
2. Flood Protection
(a) Land Acquisition ha 95 10,000 .95 - .95 (b) Clearing ha 94 1,300 .05 .07 .12 (c) Earthwork - Dikes in3 650,000 1.1 .25 .47 .72 (d) Concrete Flood 'dall L.S. - - .99 1.26 2.25 (e) Strctures L.S. - _3- .42 .76
Sub-Totil 2.58 2.22 4.80
3. MIajor Drainage
(a) Land Ac-uisition ha 136 12,500 1.70 - 1.70 (b) Clearin- ha 136 1,250 .07 .10 .17 (c) Earthwork i 3 1,800,000 .85 .54 .99 1.53 (d) Structures L.S. - - .18 .22 .40
Su;-t~~- 2.49 1.31 3.80
Fl. i,eess ±-o5 L.S. - - 2.30 1.88 4.18
5.d.-inten-nce ,a *.B.r..neern~2. -30.S. - - 2.30 .30 2.60 lb.p0 13.66 32.56 S-i-.re MALAYSIA NORTH KELANTAN RURAL DEVELOPMENzT PROJECT Typical Tertiary Flume Cross-Section GRP Encased Hardwood Struts at approx. 5 ft. centers located midway between ribs *-D13- - r -BD/3 - GRP Encased| Hardwood Beams D/ \GRP \ i < >/ / GRP Encased Hardwood Ribs @ approx. 5 ft. centers Tertiary Flume Data Discharge-/ EB2 Di Cusecs i /sec 12" 10" 1.6 45 18" 15" 4.7 133 24" 20" 1 2 340 30" 26" 19 538 36" 32" 37 1,048 1 Manning's n = .013 and S .0006 -/WB= D World Bank-16129 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT LEMAL IRRIGATION COMPONENT Implementation Schedule 197' 1976 1977 1978 1979 1980 DESCRIPTION OF WORK N IIM AjE 3[ 0 ND ]I A] i ]AE [ i 0 ND iAJ[ AS 09i ii i 1, IRRIGATION WORKS Contour mapping Planning Survey & verification of alignment Detailed design,working drawings & specification Land acquisition Tender Construction 2. FLOOD PROTECTION DIKES Contour mapping & supplementary survey Planning Soil investigation & verification of alignment Detailed design, working drawings & specification Land acquisition Tender Construction U 3.ACCESS ROADS Survey Detailed design, working drawings & specification Land acquisition- Tender Construction _ 4. MAJOR DRAINAGE WORKS Contour mapping Planning * Survey & verification of alignment Detailed design,working drawings & specification Land acquisition - - - Tender Construction World Bank 15999 ANNEX 4 Page 1 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT SMALL-SCALE IRRIGATION COMPONENT Small-Scale Irrigation in Malaysia 1. Malaysia's policy of reducing the national dependence on imported rice has emphasized the construction of major irrigation facilities in "rice-bowl areas", flood plain regions where large blocks of good padi land could be brought under command of reliable water sources economically and quickly. Under this program, double-cropping in Peninsular Malaysia has expanded from 6% of total padi area in 1963 to 58% in 1974. Further pro- gress in increasing rice production in this manner will be more difficult to achieve, however, as most of the large areas with potential for irri- gated double-cropping have already been brought under command. Improvements in yields in the rice-bowl areas can be achieved through intensification of irrigation facilities and strong extension efforts, but additional potential exists in terms of providing small-scale irrigation systems in the smaller isolated padi areas distributed throughout Peninsular Malaysia. Aside from increasing padi production, these small systems provide increased incomes to very poor farmers who have generally received little benefit from infra- structure development programs. 2. DID units in the various States undertake continuing programs of construction of new small systems and rehabilitation of existing works con- structed by farmers as well as by the agency. During the Second Malaysia Plan period (1971-75) a total of 1,210 such operations were implemented in Peninsular Malaysia, affecting about 59,000 ha (Table 1). As many of these operations involved only minor improvements or repairs to existing structures, the average cost of these operations (M$295/ha) understates the costs of con- structing new systems. 3. Over half of the padi land in Kelantan lies outside the boundaries of KADA, and thus would not benefit from the intensification of major irri- gation facilities. Of this area, about 38,000 ha are purely rainfed, and un- less groundwater sources can be developed inexpensively these areas will never be irrigated due to distance from surface sources, small size of areas, and topographic factors. Wet season rainfall is quite variable in Kelantan in terms of timing and amount, and rainfed padi yields are depressed directly through flooding and moisture stress, and indirectly through reduced cash input usage in a situation where returns are uncertain. ANNEX 4 Page 2 4. The remainingarea, about 33,000 ha, is served by some form of irri- gation facilities,including several small schemes built by DID, but more typicallyworks built and maintained by groups of farmers attemptingto assure themselvesan adequate supply of water during the wet season and if possible some dry season cropping as well. Existing DID facilitiesare quite similar to those to be constructedunder the project, which are described below. The facilitiesbuilt by farmers generally consist of diversiondams made of earth or brush and simple earth canal systems. Damage i8 frequent,and the dams usually must be rebuilt after each flood season. The canal systems usually irrigate only a small proportionof the potentialcommand area. Be- cause of the unreliabilityof flow and system failures,partial or total crop failure often occurs. The Small-ScaleIrrigation Component 5. The componentwould include constructionof about 15 small-scale irrigationsystems covering about 1,300 ha of padi land, each system serving between 20 and 200 ha of padi. A list of proposed schemes is presented in Table 2. As detailed design work and economic analysis of the individual schemesmust await the synthesisof more complete hydrologicaldata (para 6), final selection of individual schemes for inclusion in the project would depend on meeting certain criteria, including the presence of a reliable source of water supply to permit the irrigationof at least one crop of padi annually and a minimum economic rate of return of 10. 6. Fairly good stream flow records exist for the larger streams in the State, and they have been kept up to date as part of Kelantan's flood warning system. In cases where records are not available,DID's computer modelling procedureswould be used to simulate flood and low flow patterns which would be used as the basis for estimatingdesigned flows. 7. Most of the proposed schemes identifiedthus far are located in the foothill regionsof Machang and Tanah Merah Districts, end4 are s±ted near major highways. DID is continuing to identify additionalpotential areas to replace those schemes listed in Table 1 which may prove technicallyor econo- mically unfeasible. Descriptionof Works 8. For areas to be served by small streams,a headworkswould be con- structed to divert the flow for irrigationpurposes. In the case of large streams,where the cost of headworksbecomes prohibitive,a pumping station would be provided. A comparativecost study would be carried out where the choice between gravity diversionand pumping is not readily apparent. Head- works would be gated, reinforcedconcrete structuresdesigned to pass a dis- charge at bank-full stage of approximately1.5 times the discharge capacity of the stream channel. Flood flows exceedingthis would be allowed to by- pass the structure. The effects of 50-year floods would be checked. ANNEX 4 Page 3 9. The substructureof pumping plants would be reinforced concrete and the building would be of concrete or wood. Buildings would be set to elevations above the 25-year flood level, or otherwise protected from damage from this frequencyflood. 10. The irrigationsystems would be small and of simple design. The alignment of irrigationcanals would be determined from contour maps and checked by field survey. The canals would be unlined, lined, or of other appropriateconstruction dependent on local conditionsand economics. Canal structures such as checks, turnouts, road crossings, etc., would be p5ovided as needed. The diversion design capacity would be based on about 1 m /sec per 500 ha. This water demand is slightly higher than for the Lemal irriga- tion component (Annex 3) because the overall systems/irrigationefficiency is expected to be somewhat lower on small projects. II. Earth drains would be constructedto remove stagnant water from depressionsand to prevent water logging. Ancillary structureswould be of concrete construction. Organizationand Management 12. DID would plan, design, and constructthe works included in the component. DID would operate and maintain the works down to the level of on-farm canals and drains. To maintain the latter, farmers would be organized into small cooperativegroups, based on the Small Agricultural Units to be organized for extension and FDC activities (Annex 7). The groups would provide free labor under DID staff supervisionat agreed times when agriculturallabor requirementsare low. 0 & M costs for existing DID small schemes currently average about US$50/ha with pumping and about US$30/ha for gravity diversion, and similar costs are anticipated on the new systems. As all project farmers would be liable to pay the zakat tax, cost recovery experience on the small schemes is anticipated to closely parallel that on the Lemal irrigation component,which is analyzed in Annex 13. MAIAYSIA NORTHKEIANTAN RUIRA L DWVELOFNT PROJKET SMA,LL-SCALE IRPIGATIN CO1MONENT 9aull Drainage & Irrigation Works Implemented During the Second Malaysia Plan 1971-1975 Total Nmber of Works Total Area Benef$tted (ha) Total Ependiture (ME) State Fed State Total Fed State Total Fed State Total Johore 49 3 52 7,227 45 7,692 734,196 188,000 922,196 Kedah 111 48 159 3,932 2,223 6,155 1,153,458 389,424 1,542,882 Kelantan 127 60 187 7,836 1,902 9,738 879,795 261,925 1,141,720 NS/Melaka 138 29 167 1,764 303 2,067 2,879,381 557,446 3,436,827 Pahang 66 21 87 1,937 886 2,823 1,301,177 707,349 2,008,526 P. Pinang 15 - 15 520 520 212,715 - 212,715 Perak 232 24 256 4,582 3,676 8,258 1,403,888 1,580,777 2,984,665 Perlis 12 - 12 1,062 - 1,062 265,119 - 265,119 Selangor 68 37 105 11,688 2,956 14,644 1,456,000 892,000 2,348,000 Trengganu 73 7 80 2,269 443 2,712 710,600 353,900 1,o64,500 Melaka 90 - 90 3,330 - 3,330 1,461,886 - 1,461,886 Total 981 229 1,210 46,147 12,854 59,001 12,458,215 4,930,821 17,389,036 ANNEX4 Table 2 MALAYSIA NORTHKELANTAN RURALDEVELOPM4ET PROJECT SMALL-SCALEIRRuATION COMPONENT Proposed Scheme Areas Identification No. NIameof Padi Areas District Aproximate Area (ha) 1 Bendang Cherang Hangus and Machang 80 Bendang Sega 2 Bendang Becah Pauh 120 3 Bendang Tualang Kelikir 4o 4 Bendang 9g. Suda 80 Benclang Gaung 4L 6 Sg. Che Wa 100 7 Bandang Kg. Batu " 100 8 Bendang Batu Dara Pergau Valley 120 9 Belok Ulu Kusial Tanah Merah 120 10 Sg. Glugor it 40 11 Bendang Anak Muring it"40 12 Bendang Buyong, Gertak Serong " 70 13 Bendang Kg. Panjang " 70 14 Bendang Kg. Rambai " it 80 15 Bendang Senor Meranti Pasir Mas 200 Total 1,300 ANNEX 5 Page 1 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENTPROJECT RURAL ROAD COMPONENT Background 1. The West Malaysian highway network consistsof about 10,000 km of Federal and State roads of which about 1,000 km are situated in Kelantan. In addition there are about 2,100 km of unclassified(penggawa) roads or tracks in Kelantan. There is no functionalclassification of roads but the Federal roads are generallythe interstateand internationalroutes. While the State roads connect administrativedistrict headquartersand the capital at Kota Bharu, the unclassifiedroads serve the more populatedand cultivatedagri- culturalareas connecting them with motor roads and market centers. Few of these local and village roads have been engineeredor built to any recognizedstandard. Many of them are mere tracks which have established themselvesthrough long usage along individualproperty boundaries, at best constructedby District Officeswith communal assistance. These roads re- ceive little or no maintenanceand are passable only by four wheel drive vehicles and light trucks in the dryest season of the year; during the monsoon most of them are impassable. The Departmentof Irrigationand Drainage (DID) has constructeda basic grid of low class road in connection with the Kemubu IrrigationProject. These roads are surfaced with laterite, and are often located on the tops of dykes or canal banks. 2. The rural roads proposed for constructionand improvementunder the project, totallingabout 190 km, are distributedover the seven most northerlyadministrative districts of Kelantan (Map 12003) and in con- junctionwith the access roads to be constructedunder the Lemal irrigation componentof the project (100 km in the Lemal area) would provide a basic grid of low-standardfarm to market roads. Description 3. The rural roads under the project fall into three categories,sub- PWD, PWD-01 and PWD-04 standards,and this componentcomprises: (a) constructionand improvementof the following; (i) Sub-PWD 110 km (ii) PWD-01 57 " (iii) PWD-04 21 " Total 188 km ANNEX 5 Page 2 (b) detailed engineering and construction supervision of roads in (a); (c) procurement of road maintenance equipment; and (d) improvement of two existing workshops. 4. The length of sub-PWD and PWD-01 roads generally vary from 5 to 10 km as shown in Table 1. The one PWD-04 road would be about 21 km in length. The sub-PWD standard roads would connect individual villages to motorable roads of higher standard where traffic is not expected to exceed 20 vehicles per day (vpd). PWD-01 standard roads, the lowest standard qualifying for national maintenance grants, would serve as feeder roads for several lower standard roads, and traffic on these roads is expected to be up to 100 vpd. With few exceptions these roads would follow the routes of existing tracks or roads. Except in Machang and Tanah Merah districts, where some of the terrain is hilly, all of the above roads traverse flat areas of paddy fields where groundwater level is permanently high and flooding is a regular occurrence. During the monsoon season existing roads are generally impassable. 5. The proposed PWD-04 standard road between Pasir Mas and Rantau Panjang would replace an existing State road, which for half of its length closely follows the bank of the Golok River and in consequence suffers severe flood damages yearly. It is also the only road on the east coast of Malaysia which connects with Thailand, via a road bridge on the Golok River completed in 1972; it therefore has international significance. 60% of the traffic on the existing road would be diverted to the new road, which would be on an entirely new alignment above the flood levels. It would follow existing roads for half its length, while the remaining half would open up for devel- opment a new area which is at present largely inaccessible. In addition the route mileage would be reduced from 24 to 21 km. It is expected that diverted traffic, together with generated traffic would amount to about 2,000 vpd in 1980. In all cases where additional land is required to widen an existing right-of-way or construct a new alignment, appropriate legal steps would be taken to acquire right-of-way. 6. The proposed design standards for PWD-01 and PWD-04 roads are pre- sented in Table 2. Sub-PWD standard roads would have a formation width of 4.86m, a laterite surfaced width of 3.05m and would be designed for a wheel loading of 3.6 tons. Road surfaces would be about one meter above groundwater level. Roadway surfacing would be 20 cm of laterite except for the PWD-04 standard road which would be asphalt pavement over a crushed stone base. 7. Because of the shortage of maintenance equipment available in the State, particularly in view of the expansion of the road network, the road maintenance equipment shown in Table 3 would be provided under the project. For the same reason two existing mechanical workshops (at Machang and Pasir Mas) would be improved and additLonal workshop equipment and tools would be provided under the project (Table 4). ANNEX 5 Page 3 Implementationand Maintenance 8. The PWD would be responsiblefor the executionof the works and for their maintenancethereafter. These functionscan be properly carried out under the existing organizationalstructure but the existing staff would have to be augmentedby hiring of additionalengineers and technicians. 9. Detailed engineeringand land acquisitionwould be carried out by the PWD throughmid-1978 and constructionover the followingthree-year period. The rural roads would be grouped into two contractsfor tender and internationalcompetitive bidding in accordancewith Bank Group guide- lines. 10. Maintenanceof the roads to be constructedor improved under the component,as well as 21 km of roads to be built by DID in the Lemal area, would be the responsibilityof Kelantan State PWD. Existing equipmentand workshops togetherwith those to be supplied under the project (para 7) would be adequate for this purpose. Federal grants of M$3,100/kmper annum for roads constructedto federal standardsand special grants of M$2,170/kmfor lower standard roads are expected to be adequate to ensure proper maintenance and general improvementof the rural road system. Costs 11. The total cost of the rural road componentincluding physical con- tingenciesand right-of-wayis estimatedto be US$7.0 million of which US$3.8 million would be foreign exchange. Details of the cost estimates are presentedin Table 5. MALAYSIA ANNU 5 Table 1 NORTHKELANTAN RURAL DEVELOPMENT PROJECT RURALROAD COMPONENT List of Project Roads No. -' Route t District Sub-PWD Standard 1 Banggol Setol-Banggol Kong 4.8 Pasir Mas 2 Kubang Kual-Baroh Kala 3.6 Pasir Mas 3 Batu Hampar-Bukit Tuku 9.7 Pasir Mas 4 Paloh-Bujok 6.4 Pasir Mas 5 Lati-Chicha Tinggi 3.7 Pasir Mas 6 Kubang Batu-Kangkong 4.5 Pasir Mas 7 Chetok-Sungei Keladi 3.7 Pasir Mas 8 Kampong Paloh-Bukit Mas 5.6 Tanah Merah 9 Chabang Tiga-Bukit Mas 14.2 Tanah Merah 10 Kelewek-Kampong Tirok 8.1 Tanah Merah 11 Kampong Pauh-Baumg 5.2 Kota Bharu 12 Beris Kubor Besar-Pintu Gerbang 5.2 Bachok 13 Smigei Mati-Kerawang 3.6 Machang 14 Simpul Belubang-Kubang Simpul 9.7 Machang 15 Pangkal Maleret-Liman Hantu 3.6 Machang 16 Sungei Kelong-Pak Amat 4.8 Pasir Puteh 17 Cherang Tuli-Jeram 3.2 Pasir Pateh 18 Telipot-Jeram Linang 5.2 Pasir Puteh 19 Chabang Tiga-Gual 5.2 Pasir Puteh Sub-Total 110.0 PWD 01 Standard 20 Kampong Terbok-Belukar 7.3 Tumpat 21 Bakat-Kubang Kual 5.6 Pasir Mas 22 Gual Ipoh-Kuala Tiga 4.5 Tanah Merah 23 Bukit Pauh-Kampong Baru 2.5 Tanah Merah 24 Tawang-Pulau Belanga 4.8 Bachok 25 Kg. Tok Bali-Pasir Puteh 11.3 Pasir Puteh 26 Labok-Benggol Judah 11.3 Machang 27 Selesing-Kok Lanas 9.7 Machang Sub-Total 57.0 PWD04 Standard 28 Pasir Mas-Rantau Panjang 21.0 Pasir Mas Total 188.0 1/ Serial nunbers refer to 11ap No. 12003 ANNEX 5 Table 2 MALAYSIA NORTHKELANTAN RURAL DEVELOPMENT PROJECT RURkL Rau.fl C010NENT Selected Highway Design Standards (for Roads in Raral AreRs) (IN FIAT TERRADN) Traffic Light Medium Group 01 04 Design Speed km/hr 30 5° Surface Width m 4.27 6.71 Shoulder Width m 1.22 2.44 Formation Width m 7.93 12.81 Maxirnwu Gradient % 7% 4% Minimum Curve Radius m 70.00 213.50 Bridges: Width m between Parapets 5.18 8.23 Bridge Loading: BS 153 HA loading (checked for 45 units HB loading) Source: "Minimum Geometric Design Criteria for New Roads in Rural Areas -PWD Malaysia May 1971 MALAYSIA WORTHKELANTAN RURAL DEVELOPMENT PRWECT RURALROAD CCKP0NENT Road Maintenance Equirment Item Description No. Rate Total 1 Self-Propelled Motor Grader, 135 hp 3 100,000 300,000 2 Three-WheeledRoller, 5-7 tons 3 40,000 120,000 3 Tipping Trucks,6 Yd3 6 36,ooo 216,000 4 FWD Wheeled Front-End Loader, < 2 Yd3 1 75,000 75,000 5 Back Hoe/ExchangeHp 1 60,000 60,000 6 FWD Utility Vehicles (Land Rover Type) 4 25,0o0 100,000 7 Grass-CattingMachines - L.S. 8,000 8 Miscellaneous lbols - L.S. 21,000 Total 900,000 ANNEiX 5 Table II Ms.ALLSTA NOC.THKELANTA2' RURAL DEVELOPMENT PROJECT RURALROAD COMPONENT Estimated Cost of IlechanicalWdorkshops, Tools and Equipment Item Details Estimated Cost _~~~~~~~~~~~~~~~~M ------ Workshop "A" 1 Survey expenses 500 2 Clearing site 500 3 Plant and vehicle shop 401x50 50,000 4 Servicingbay and tyre shop (includingpits) 35'x30' 25,000 5 Vehicles washing ramp 7,000 6 Toilets 2,200 7 Fencing 4,600 8 Paving 3,700 9 Water supply 1,000 10 Drainage 2,000 96,500 Workehop B 11 Survey expenses 500 12 Clearing site 500 13 Plant and vehicles shop 40'x40' 40,000 14 Servicingbay and tyre shop (including pits) 35?x3ot 25,000 15 Vehicle washing ramp 7,000 16 Toilets 2,200 17 Fencing 4,600 18 Paving 3,700 19 Water supply 1,000 20 Drainage 2,000 86,500 21 Workshopequipment & tools Two shops @ 58,500 117,000 Total 300,000 ANNEX5 Table 5 MALAYSIA NORTHKEIANTAN RURAL DEVELOPMENT PROJECT RURALROAD COMPINENT Cost Summary PROJECT ELEMENT (M$ Million) FEC Local Foreign Total % 1. Construction & Improvement of Roads 1/ (a) Sub-PWD Standard 2.4 2.8 5.2 (b) 01 - PWD Standard 2.2 2.6 4.8 (c) 04 - PWD Standard 2.4 2.9 5.3 v--o T-7 17.7 54% 2. Detailed engineering& supervision 1.0 0.2 1.2 20% 3. Maintenance Equipment 0.0 0.9 0.9 100% 4. Mechanical workshops & Tools 0.1 0.2 0.3 60% Sub-total1-4 (Base 5bsts) 8.1 9.6 17.7 5. Physical Contingencies2/ (a) 20% of items 1 + 2 1.5 1.8 3.3 52% (b) 10% of items 3 + 4 0.0 0.1 0.1 88% Total 9.6 11.5 21.1 54% 1/ Includes rights-of-waycosts. 2/ Price contingenciesare dealt with in Annex 9. ANNEX 5 Table 6 MALAYSIA NORTHKELANTAN RURAL DEVELOPMENT PROJECT RURALROAD CCKPONENT Breakdown of Road Construction Costs Cost per km-(M$ '000) Standard Compensation Earthwork Structures Surfacing Total Sub-FWD Cost: 9.9 15.0 16.6 5.7 47.2 % of Total Cost: 21% 32% 35% 12% 100% NWD- 01 cost: 14.6 25.0 38.6 6.8 85.0 % of Total Cost: 17% 30% 45% 8% 100% PWD - 04 Cost: 28.6 85.7 65.9 71.4 251.6 %of Total Cost: 11% 34% 26% 29% 100% ANNEX 6 Page 1 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT AGRICULTURAL EXTENSION COMPONENT Background 1. Agricultural incomes in Kelantan are limited in part by the very low yields attained, averaging between 50% and 60% of field potential for a wide range of crops. Incomes are further depressed below potential levels by a lack of intercropping of field crops with the rubber, coconut, bananas, and other tree crops common in the region. Low yields and income can be attributed to widespread ignorance of improved varieties and techniques, low standards of management, failure to weed crops and control pests, and lack of cash to purchase inputs. 2. The opportunities for increasing yields, production, and income from existing crops are substantial. Adequate pest control on padi could increase annual State production of padi by at least 30,000 tons, which is almost equivalent to the anticipated incremental production due to the Lemal component. The use of improved varieties, good seed, timely planting, and intelligent use of fertilizer would increase yields similarly. The major requirements for achieving these goals are a sound practical approach, good organization and management, and additional personnel and facilities. 3. Emphasis must be placed initially on the extension service to gain the confidence of farmers and establish a reliable communications pipeline which reaches every farmer, on a regular basis. Once well established, the pipeline can be used for several key purposes. Information on technical matters, input supply, credit supply, water management, prices, marketing situation, etc. can be readily transmitted to the grower. Conversely, the pipeline can be used to convey farmers' field problems back to Government and research agencies, and to assess input requirements. It can thus be an effective monitoring system and assist planning. Once extension is function- ing well, it becomes easier to solve problems associated with credit, input supply, marketing and research which are the other basic components neces- sary to initiate and sustain a dynamic agricultural system. The Agricultural Extension Service 4. Agricultural extension within the State is traditionally a State responsibility and comes under the direction of the State Director of Agri- culture and the State Department of Agriculture. The State employs the staff and provides basic infrastructure facilities and operating costs. The Federal Government provides a Federal Agricultural Unit at the Lundang Experiment Station comprising Soils, Farm Mechanisation, Farmer Training, ANNEX 6 Page 2 Plant Protection and Crop Production Divisions. These have professional and administrative links with their Federal units but are responsible to the State Director of Agriculture. In Kelantan, the Kemubu Agricultural Development Authority (KADA) coordinates agricultural activities over some 31,000 ha of padi land in the Kemubu and Lemal irrigation areas. 5. The State Director of Agriculture directs extension activities with the assistance of an Agricultural Officer. Presently there is no senior officer who can devote full time to this task, which is a major weakness. Extension activities are organized on a District basis. An Agricultural Assistant (AA) is assigned to each district of the State (8) and supervises the work of 5-8 Junior Agricultural Assistants (JAA's). In addition to extension work, the JAA's are responsible for crop cutting and other time- consuming data collection and regulating work. In the KADA area most avail- able JAA's are involved in running the Farmers' Organizations and have little time available to go to the field to assist farmers. There are cur- rently only 45 JAA's in the field who can spend a reasonable amount of time on extension. Since KADA will retain responsibility for operating the FO's in the KADA area, staff employed there will not be released for extension work. Currently, the JA : Farmer Ratio is about 1:2,000. This rather high ratio, coupled with regulatory duties and lack of close supervision, makes effective extension difficult. Most of the staff have reasonable basic training and a general appreciation of agricultural problems in their district, but require regular in-service training to upgrade them. Currently these facilities are not available. 6. The support units at Lundang have several functions. The Crop Production Division is responsible for seed production, demonstration plots and also adaptive testing. The unit has about 45 ha available for seed pro- duction but is unable to cope with the potential demand for rice and ground- nut seed. Key constraints are lack of adequate drying, cleaning and storage facilities. Cold storage is required to carry groundnut and soybean seed through the monsoon season. Transport and field staff constraints limit the demonstration plot program. 7. The Plant Protection unit is concerned with weed and pest control. It is responsible for controlling major pest and disease outbreaks in addi- tion to providing general support to extension in terms of pest identification and demonstration plots. The main constraints to operation at present are lack of staff, basic field equipment and State finance for chemicals. The main functions of the Farm Mechanization unit are running short-duration tractor-operator schools, selecting the better students for training in minor repair work and providing advisory support to FO's on tractor operation and repair. The unit has buildings but is understaffed and lacks tools and work- shop equipment. The Farmer Training unit runs short courses for farmers. Its main constraint is shortage of dormitory and teaching facilities. ANNEX 6 Page 3 8. The Development Division of the State Department of Agriculture administers a number of crop subsidy schemes. These cover the rehabilitation and replanting of fruit, citrus and coconut, and first year planting subsidies for crops such as groundnut, corn, vegetables and new crops such as ginger, to encourage farmers to try new crops and diversify. About 3,700 ha came under the subsidy schemes in 1975. If well planned and managed, the subsidy schemes are a useful aid to extension. The Project 9. The extension component would develop a State "grass roots" extension service to service all farmers in the State, whether they be in areas currently served by KADA, the FOA, or outside. Initially, emphasis would be placed on the Kota Bharu, Bachok, Pasir Puteh, Tumpat, Pasir Mas, Mlachang and Tanah Merah Districts, but ultimately the system would extend to Ulu Kelantan. In the first phase, effort would be largely concentrated on padi and groundnut. Once good results are being achieved, the scope would be widened to include other crops, e.g. coconut, fruit crops, vegetables, soybean, corn and rubber. The component would be developed over a 5-year period. 10. The main components are as follows: (a) Recruitment and training of an additional 115 field extension workers (JAA's) to bring the average JAA:Farmer ratio to about 1:600; (b) Recruitment and training of an additional eight Agricultural Assistants (AA's) to bring the AA:JAA ratio to about 1:10; (c) Recruitment and training of eight subject-matter specialists to provide regular in-service training to the AA's and JAA's one day every two weeks, to assist them to review progress and plan the next two weeks' work and to provide specialist support in the field as required; (d) The recruitment of an experienced Chief State Extension Officer to devote full time to running the Extension Service; (e) The formation of farmer groups of 25-40 based on Small Agri- cultural Units (SAU's) or irrigation outlets, with one farmer leader per ten farmers. Each group would receive visits from the JAA once every two weeks on a systematic basis; (f) Seed Production, Plant Protection and Demonstration Plot Units would be strengthened to meet the requirements of the improved extension service. Supplementary facilities would be provided to the Farm Mechanization and Farmer Training Centers at Lundang, to boost tractor-operator training and to provide basic facilities for training farmer leaders; ANNEX 6 Page 4 (g) Five district extension offices and eight sub-district offices would be constructed to provide basic facilities for the AA's. Where practical, sub-district offices would be constructed adjacent to Farmer Development Centers; and (h) Basic extension and field equipment would be provided for all additional staff. Organization and Staff Functions 11. One field extension worker (JAA) would service about 600 farmers and would live and work full time in his area. The farmers would be formed into groups of 25-40 on the basis of Small Agricultural Units (SAU's) or irrigation outlets, as appropriate. Three or four progressive farmers would be selected per group on the basis of one progressive farmer taking responsibility to ensure that new information and ideas reach 9-10 neighbors. The progressive farmers would be the main contact with the JAA but would encourage members of their group to make personal contact with the JAA during his visits. The JAA would handle 18 farmers' groups. He would visit each group on a fixed day at a fixed time at a fixed location, which would remain constant throughout the year. Whenever practical, he would meet the group in their fields, to visit crops and inspect field problems first hand. He would handle two groups per day, one in the morning and one in the afternoon, and take nine days per fortnight to visit the 18 groups. The tenth working day would be set aside to attend a meeting with his supervising MA and subject matter specialists, to discuss progress and problems and plan the next two weeks' work. 12. The District Extension Officer (AA) would supervise the work of 10 JAA's. There would be 1-5 AA's per district, depending on farmer density. The AA's would be responsible for arranging the fortnightly meetings for their 10 JAA's, and inviting other agencies, e.g. FOA staff and irrigation personnel working in the area, to attend. Meetings would be rotated between the Farmers Development Centers and Extension offices, as appropriate, and would be held at fixed times on fixed days at fixed locations, throughout the year. Between the regular fortnightly meetings the AA would visit every JAA under his control at least once on a random basis, to meet farmers, check progress and see field problems on the ground. 13. Subject matter specialists (SMS) would be assigned to the project from the Federal Department of Agriculture service units. A total of eight are required over the life of the project, as follows: two in rice produc- tion, two in upland crops, one in plant protection, one in horticultural crops, one in soil and water management, and one in farm mechanization. The specialists in rice and upland crops would service 8 AA's and 80 JAA's each. The other specialists would service the whole State in areas where their services were required. An SMS would spend four days per fortnight attending the one-day training and program planning meetings, with A-A'sand 20 JAA's attending a session. The other six days would be spent back-stopping the AA's ANNEX 6 Page 5 and JAAIs on specific field problems and keeping up-to-date on research, the availability and price of inputs, market prospects and all topics of interest to the JAA's and farmers. The SMS has an important task, since once the ex- tension system is fully developed, 8 M's, 80 JAA's and 48,000 farmers will know the key points raised by the SMS within two weeks of his attending the fortnightly meetings. 14. A Chief Extension Officer reporting to the State Director of Agri- culture, but with professional links with the Federal Extension Department, would devote full time to running the extension service with the assistance of the subject matter specialists. Demonstration plot, seed production, and farmer training programs would be jointly planned by the Chief State Extension Officer, the SMS, and the heads of the Federal Service Units. The units would implement the agreed program. 15. The demonstration plots would be designed to clearly demonstrate cultural practices currently emphasized by the field extension workers. The initial target would be at least one set of demonstration plots for each JAA. The JAA's would select progressive farmers from their farmers' groups to provide land and manage the plots under the direction of the demonstration plot personnel. Two AA's and 10 JAA's working under the Crop Production Unit would execute this program. In addition, two AA's and 9 JMA's working with the Plant Protection Unit would carry out plant protecttion demonstrations and assist field extension workers to initiate regular effective rat control campaigns in their areas. 16. The Federal Crop Production Division would continue to be responsible for seed production. Breeders' seed would be supplied from the Bumbong Lima Rice Experiment Station operated by MARDI. Pure lines would be maintained and multiplication carried out on about 45 ha of land under control of the Department of Agriculture. The seed would be dried and cleaned at Lundang and packaged for distribution to selected seed growers strategically grouped in major rice growing areas. Crops would be regularly inspected and checked for freedom from weeds and off-types and sub-standard crops rejected. Growers producing good clean crops of seed would be recommended as approved seed sup- pliers through the extension service. Growers not conforming to standards would be dropped from the program. The initial aim is to improve the avail- ability and purity of seed of the improved varieties and not to attempt seed certification until the growers have gained experience and the farmers are variety and quality seed-conscious. The possibility of selecting and mul- tiplying one or two of the better local long-strawed varieties would be in- vestigated, as many farmers prefer these for the monsoon season. Currently, no good quality seed of these varieties is available. 17. A similar approach would be taken to groundnut production. Seed of superior varieties would be obtained for early planting in January, to produce seed for one main planting in May-June. Sufficient seed would be carried through the monsoon season in airtight bins and cool storage for the early Janaury planting. The Crop Production Division expects to have cool storage facilities soon. ANNEX 6 Page 6 Workshop Facilities 18. The Farm Mechanization Training Center at Lundang would be respon- sible for training tractor operators and farm mechanics to service the FDC farm mechanization program. The Center currently lacks adequate staff, class- room and dormitory accommodation, basic tools, and teaching equipment. Pro- vision is made under the project for extensions to existing buildings and procurement of equipment required to improve the effectiveness of this unit. 19. The Central Workshop at Lundang also requires additional facilities, equipment and staff to effectively service the vehicles and equipment of the State and Federal Agriculture Units and KADA. Under the project, the work- shop would be expanded and equipped, and an additional five mechanics ap- pointed. 20. The Central Workshop and Farm Mechanization Training Center would be brought under the control of one graduate mechanical engineer. He would have three deputies in charge of the Training Center, the Central Workshop and Field Service Units. The Central Workshop and Field Service Units would service all vehicles and tractors belonging to Federal and State DOA, KADA, and State FOA. The Field Service Units would concentrate efforts on regularly visiting FDC's throughout the region to ensure proper maintenance of vehicles and tractors. They would also provide services to private tractor operators through the FDC's in areas where no local workshop facilities are available. The agency or client would pay for spare parts, but workshop facilities and skilled labor would be provided free of charge. Coordination, Planning and Evaluation 21. The State Government has established a permanent State Agricultural Research Development and Extension Committee (STARDEC), composed of the senior officers of Federal and State agricultural agencies in Kelantan, to coordinate the planning and implementation of research, extension, and agricultural support programs throughout the State. Most of the work of this body would be devoted to the coordination of field level agricultural activities included in the project. For purposes of coordinating project activities, the committee would include the following permanent members: State Director of Agriculture State Director of Drainage and Irrigation Deputy State Director, Farmers Organization Authority State Manager, Bank Pertanian Malaysia Director, State Research Station, MARDI Representatives, Federal Department of Agriculture Farmer Representatives (from each District) Chief Extension Officer Project Director, Ministry of Agriculture (Committee Secretary) ANNEX 6 Page 7 22. The committee would receive brief progress reports on the past sea- son's activities and performance with regard to extension, applied research, credit, Farmers' Organizations, input supplies and marketing. Key problems in each area of activity would be clearly identified. Proposals for the next season's program would be presented, along with priority requirements for implementation. The committee would review progress, finalize and approve extension program proposals, resolve policy issues and initiate action to remove bottlenecks holding back progress. 23. The committee would appoint several technical working groups, each chaired by a subject matter specialist, to regularly review technical recommen- dations for each major crop in the light of new information and changing eco- nomic conditions. Working groups would be established for rice, groundnut, smallholder rubber, corn and soybean, horticultural crops and livestock. The working groups would comprise research workers, extension workers and progres- sive farmers, and would call on the services of specialists throughout the country. They would concentrate on developing recommendations that could be used with confidence by extension workers and which would result in higher returns to the farmer. Recommendations would be ratified by STARDEC for the coming season, prior to publication and distribution to extension workers and farmers. 24. Extension workers at all levels would participate in program plan- ning and evaluation. The JAA would meet with his progressive farmers a few weeks before the end of the season. With their help he would evaluate pro- gress and problems and draw up a plan for the coming season. His end-of- season evaluation report and plan of operations would be prepared on simple standardized report forms. It would show acreage of major crops, varieties used, fertilizer used, agrochemicals used, estimated yields and production. It would list the problems encountered and targets for the coming season, along with estimates for seed, fertilizer, agro-chemical and farmer training requirements. Extension topics would be identified and a plan of extension activities prepared. The subject matter specialists and AA would review the JAA's reports and recommendations and the AA would use their data to prepare an evaluation report, set targets and outline the work program and require- ments for his area for the coming season. This report would also be standardized on prepared forms and forwarded to the Chief Extension Officer. 25. The Chief Extension Officer, with the assistance of his subject matter specialists, would prepare an evaluation report and program plan for the State, showing targets and requirements. He would consult with the plant protection, demonstration plot, seed production and farmer training units to prepare appropriate programs. The plan would be presented to the State Direc- tor of Agriculture and the semi-annual meeting of STARDEC for ratification and for resolution of policy issues and problems. The Chief Extension Officer and SMS would then prepare targets and a detailed work schedule for each of the JAA's. ANNEX 6 Page 8 26. The two weekly meetings between the SMS, AA and JA's would allow continuousmonitoring of the program and allow program changes to be made as required, to meet local circumstances. Provided appropriateFOA, DID and other agency staff working at the district level attend these meetings, good coordinationat the district level should be possible. The AA's with the assistanceof visiting SMS should prepare a brief monthly report for the Chief ExtensionOfficer, summarizingactivities, progress and problems in each extension area. ConsultingServices 27. Provision is made for a series of brief visits (totalling4 man- months)by specialistconsultants to assist with resolution of technical and managementproblems as they arise, and to make a positive contributionto program planning. Visits would preferablybe timed to coincide with the half-yearlyprogram reviews. Training 28. Several types of training would be required to meet the require- ments of progressive farmers, JAA's, M's, SM1Sand the technical support units. For the AA's, JAA's and progressive farmers, emphasis would be placed on continuoustraining built into the system via the SMS and the two weekly meetings.This offers the advantage of training personnel in topics which they will encounter in the field almost immediately. This would boost con- fidence and the learning process would be reinforcedby practical use of the principlestaught under field conditions. The same principleswould apply to longer training. Efforts would be concentratedon a few key topics which are expected to arise in the coming year or season and would focus on problems and their practical solution. Facilitieswould be made available for participantsto immediatelypractice what they were taught in the lecture room. The proposeA National Extensionand Seeds Project would provide dormi- tory, classroom and field facilitiesfor regular longer term in-service training programs for all grades of personnel. 29. ProgressiveFarmers - Ultimatelyeach JAA would be responsiblefor 18 farmer groups each including3 progressive farmers, or about 54 pro- gressive farmers. In turn, each AA would have 540 progressive farmers in his area. With 16 AA's in the State, the target is about 8,600 progressive farmers. As it would be impossible to bring all these farmers to a central point for formalizedtraining, emphasis would be placed on field training. Once progressivefarmers have been selected on the basis of farming success, local leadership,and ability to communicate,the JAA would divide them into groups of 8-10. With the assistanceof the AA each group would be given a clear descriptionof how the improved extension system will operate and what is expected of them. The principles to be emphasizedin the coming season would be carefullyexplained and demonstrated. Each progressivefarmer would be asked to adopt these principles in the productionof his crops and ANNEX 6 Page 9 to convey the information to his 10-12 neighbors or followers, so that in effect his crop becomes a farmer demonstration. The JAA would assist the progressive farmers with management advice throughout the season during his two-weekly visit to their group, which would constitute regular field train- ing. Official department demonstration plots would be rotated among the progressive farmers. The in-field group training would be conducted at the beginning of each cropping season, i.e., twice a year, and would be supple- mented by slide evenings and film shows arranged by the JAA and AA during the season. Leading farmers would progressively be selected to attend a one-week intensive course on the major crop in their area at the Lundang training center. 30. Field Extension Workers - The AA's and JAA's would receive one day training and program evaluation sessions run by the SMS every two weeks. The sessions would deal with two main topics: (a) discussion and resolution of extension problems which emerged during the past two weeks; and (b) planning activities for the next two weeks with thorough training in the theory and practice of those activities. A training group would comprise 2 AA's and the 20 JAA's under their control. The meeting would be held on a fixed day at an AA extension office or an FDC office, as appropriate. 31. The 16 AA's and 160 JAA's (i.e. 176 personnel) would be brought to Kota Bharu for a 10 day training session, just prior to each cropping season. The session will comprise: review of extension activities during the previous season, summary of STARDEC's deliberations, discussions of objectives of the next season's program, workshops to deal with specific problems, and a series of specialized training courses accommodating 20-30 extension personnel per course, in such subjects as rice production, ground- nut production, horticultural crops, smallholder rubber production, extension methods, plant protection, water management, and fertilizers. The course would be field-problem oriented and would include practical field work. Under the proposed National Extension and Seeds Project, experts from the Federal Department of Agriculture, MARDI, the University of Malaya and the Agricultural University, the Rubber Research Institute, and the Federal Drainage and Irrigation Department would be recruited to give lectures and assist in planning the semi-annual courses. ANNEX6 Table 1 MALAYSIA NORTHKELANTAN RURAL DEVELOPMENTPROJECT AGRICULTURALEXTENSICN COMPFDENT Summary Cost Estimates 1976 Mt % Foreign '000 Exchange I. Construction (see Table 2) District Extension Offices 375 Sub-District Extension Offices 360 Fencing, Utilities, etc. 169 Land Acquisition 72 Seed Storage/Drying Facilities 90 Plant Protection/Storage 20 Farmer Training Center (extensions) 105 Central Workshop (extensions) 35 Field Agent Housing (30 units) 480 1,706 20% Engineering & Supervision (d5%) 7L 1,760 II. Equipment and Vehicles (see Table 3) Field Extension Officers (JAA's) 622 District Extension Officers (Ak's) 595 Subject Matter Specialists 216 Chief Extension Officer 28 State Extension Headquarters 98 Seed Production Unit 40 Demonstration Plot Unit 93 Plant Protection Unit 139 Central Workshop 113 Farm Mechanization Training Center 211 Farmer Training Center L0 2,197 90% III. Incremental Operating Costs (Five Years) Salaries (see Table 4) 3s,140 Buildings, O&M Costs 308 20% Equipment and Vehicles, O&M Costs 798 75% General Supplies and Administration 1,252 30% Travel and Subsistence 56 Consultant Services 62 516 19% Total Base Costs 9,593 35% ANNEX6 Table2 MALAYSIA Page 1 NORTHKELATAN ThIRAL DEVEOPvEHT PROJECT AGRICULTURAILEETINSICI COMPONENT ConstructionCost Estimates Item No. Unit Cost TotalCost StateExtension Service Grade1 DistrictExtension Office 5 75,000 375,000 and basicstorage and garage facilities Grade2 Sub-DistrictExtension 8 455,000 360,000 Officeand basic storageand garagefacilities Site Development,Fencing & 13 13,000 169,000 Services Land Acquisitionfor 3 Grade1 officesand 7 Grade2 offices 8 acs 9,000 72,000 Sub-total 976,000 Seed ProductionUnit Lundang Seed DryingFloors 10,000ft 2 3 30,000 Seed Storage 3,000ft 2 20 60,000 PlantProtection Unit Lundang Chemical& EquipmentStorage 1,000ft 2 20 20,000 Sub-total 110,000 FarmerTraining Center Lundang Hostelblock for 30 trainees 3,000ft 2 25 75,000 Rehabilitation& atension kitchens 20,000 and dininghall, etc. Extensionsto classroomsto accommodate30 trainees 10,000 Sub-total 105,000 ANNEX 6 Table 2 Page 2 Item No. Unit Cost Total Cost Central sorkshop Facilities Extensions to existing Wbrkshop 25,000 ~)ie1 and "il Storage 10,000 Sub-total 35,000 Housing Field Extension Officer houses 30 16,000 48o,ooo Total 1.706,000 ANNEX6 MALAYSIA Page 1 NORTHKELANTAN RURAL DEVELOPMENT PROJECT AGRICULTURALEXTENSICN COMPONENT Cost Estimates- Equipment and Vehicles Item No. Unit Cost Total Cost 160 Field Extension Officers (JAA's) Motorised Sprayer 160 1,000 160,000 Knapsack Sprayers 320 250 80,000 Gas pumps (rat control) 320 200 64,ooo Extension Materials 160 2,000 320,000 Sub-total 624,000 16 District Extension Officers (AA's) Vehicles and trailer 16 26,500 424,000 Overhead Projectors 8 3,000 24,000 Slide ProJectors 8 775 6,200 Cameras 8 600 4,80p Teaching Aids 8 5,000 40,000 office Equipment 16 6,000 96,000 Sub-total 595,000 8 Subject Matter Specialists Vehicles 8 22,000 176,000 Office/TeachingEquipment 8 5,000 40,000 Sub-total 216000 1 Chief State Extension Officer Vehicles 1 22,000 22,000 Office Equipment 1 6,000 6,000 Sub-total 28,00 State Extension Headquarters DuplicatingEquipment 1 4,500 4,500 Electronic Stencil Cutter 1 2,500 2,500 Xerox Photocopier 1 4,500 4,500 Composer 1 12,000 12,000 Miscellaneous:e.g. Stapling, Punching machines, etc. 4,500 Mobile Public Address/FilmUnits 2 35,000 70,000 Sub-total 97,00- AN-'-EX6 Table 3 Page 2 Item No. Unit Cost Total Cost ---M ~~ -- M$-- Basic Equipment: Seed Production Unit Seed Cleaning, Processing Equipment _ _ 10,000 Scales, Moisture Testers, etc. 3,000 Vehicles and trailer 1 26,500 26,500 Sub-total 39700 Supplementary Equipment Demonstration Plot Unit Office Furniture, Equipment for Additional 5,000 Staff 7ehicles and trailer 2 26,500 53,000 Tractor plus equipment 1 32,000 32,000 Miscellaneous,tapes, labelling equipment, - - 3,000 scales, etc. Sub-total 93,000 SupplementaryEquipment Plant ProtectionUni_ &-Staff Basic LaboratoryEquipment 16,150 Knapsack pover mist dusters, HQ 2 1,000 2,000 Districts 7 1,000 7,000 Thermal Fogging Machines, HQ 2 1,500 3,000 Districts 7 1,500 10,500 Knapsack sprayers 16 250 4,000 Cyanogas pumps 16 200 3,200 Hi Pressure Tree Sprayers 10 1,000 10,000 Soil Fumigant Injectors 10 3,000 30,000 Vehicles and trailer 2 26,500 53,000 Sub-total 13b,650 Supplementary Equipment - Central Workshop Complete tool sets 4 2,500 10,000 Pressure Lubricating Eauipment 1 15,000 15,000 Electrical Systems testing eouipment 1 5,200 5,200 Hydrauli.cLifting equipment 1 30,000 30,000 Diesel Injector Tester 1 600 600 Plug Cleaner and Tester 1 1,500 1nCon Gauging Instruments 1 set 1,000 1,000 wheel drive Mobile Service 'Jnitwith 1 35,000 3X,000 winch and eauipment Field Service Van 1 15,000 11,000 _IlC-- wa'113,3007 A NTk'6 Ta.ble 3 Page 3 Item No. Unit. Cost Total Cost ---M$_--_ ----Ml;-- Supplementary Equipment, Farm Mechanization Training Center, Lundang Basic tool sets 20 700 14,000 Arc Welding sets 2 500 1,000 Oa s '.'ding sets 2 250 500 Fuel pump/injection test lnit 1 30,000 30,000 Hydraulictesting equipment 1 1,200 1,230 BatteryCharging/Test equipment 1 1,500 1,500 Dynamom"eter 1 3,000 3,000 Wheel Alignment Unit 1 600 600 Tyre Changing Unit 1 3,000 3,000 Wheel 3alancing Unit 1 2,000 2,000 -wscellaneous items - - 15,000 Sub-total 71,500 Teaching Aids Cutout model L strok;e petrol engine 1 1,000 1 ,000 Cutout model 4 stroke diesel engine 1 2,000 2,000 2 inch water pump 1 2,000 2,000 2 stroke petrol engine 1 1,200 1,200 2 stroke, hand-operated model 1 400 400 Hydraulic svstems model 1 2,000 2,000 OverheadProjector 1 3,000 3,000 oub-total Training Tractors & Implements Four-Wheeled Tractors 4 25,000 100,000 Disc Plough 1 3,000 MouldboardPlough 1 4,000 Disc Harrow 1 4,000 Scraper 1 5',000 Ditcher 1 12,000 Sub-Total 128,000 AMFLTZ6 Table 3 Item No. Unrit Cost Total Cost Farmer Training Center Lundag Basic Furnishing of classrooms and hostel 20,000 Field Spraring Equipment 8,000 Field Custodian Equipment and tools 2,000 Sub-total 30,000 Overhead Projector 1 3,000 3,000 Slide Projector 1 800 800 Other Teaching Aids 1,000 Sub-total 4,800 Food Handling and Nutrition Equipment 2,000 H-omecraft Equipment 500 Sewing Machines 2 500 1,000 Sewing Machines 2 1,000 2,000 Sub-total 5,500 Total 2,197,350 ANNEX6 Table b MALAYSIA Page 1 NORTHKELANTAN RURAL DEVELOPMENT PROJECT AGRICULTURALEXTENSlION COKPCNENT Salary Expenses for Incremental Staff Year 1 - 2 3 5 Field Extension Officers (JAAtB) 23 23 23 23 23 Cumulative Total 23 46 69 92 115 Annual Cost (M$3,600) 82,800 165,600 24W,400 331,200 414,0o0 District ExtensionOfficers (AA's) 4 4 - - - Cumulative Total 4 8 8 8 8 Annual Cost (M,$9,000) 36,000 72,000 72,000 72,000 72,000 Subject Matter Specialists 4 4 - - - Cumulative Total 4 8 8 8 8 Annual Cost A,,JX%)) 43,200 86,400 86,400 86,400 86,400 Chief Extension Officer 1 - - - _ Cumulative Total 1 1 1 1 1 Annual Cost (M$124,000) 24,000 24,000 24,000 21,000 24,000 DemonstrationPlots Supervisors 1 1 - - - (AAA's7v CtiulatEveTotal. 1 2 2 2 2 Annual Cost (M$9,00() 9,000 18,000 18,000 18,000 18,000 Junior DemonstrationPlot 3 3 4 - - Workers (JAA's) Cumrlative Total 3 6 10 10 10 Annual Cost (MP3,600) 10,800 21,600 36,000 36,000 36,000 Plant Protection (.AAA's) 1 1 - - - CumulativeTotal 1 2 2 2 2 Cost (M$9,0oo) 9,000 18,000 18,000 18,000 18,000 Plant Protection (JAA's) 2 2 2 2 1 Cumulative Total 2 L 6 8 9 Cost (M$3,600) 7,200 14,400 21,600 28,800 32,400 Senior Mechanics 1 1 - _ _ Cumulatlve Total 1 2 2 2 2 Cost (M$6,OO0) 6,000 12,000 12,000 12,000 12,000 Junior Mechanics 1 1 1 - - Cumulative Total 1 2 3 3 3 Cost ($3,600) 3 ,600 7,20O 10,800 10,800 10,800 ANNEX6 Table 4 Page 2 Year 1 2 3 4 5 Clerical Staff 12 4 4 - bmulLative Total 12 16 20 20 20 o'St.. 43, 200 57,600 72,000 72,000 72,000 D-ivvers 7 7 7 7 1 !Oumulative Total 7 l 21 28 32 Cost ( ?, 4 2. 16,800 33,600 50,4oo 67,200 76,800 Total (X$) 291,600 530,400 669,600 776,4oo 872,400 Grand Total ($) 3,140,400 ANNEX 7 Page 1 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENTPROJECT FARMERS DEVELOPMENTCENTER COMIPONENT 1. The administrationand organizationof Government-assistedrural agriculturalinstitutions in Malaysia has evolved rapidly over the past decade, in response to major poltcy reorientationswithin the GOM and to dissatisfactionwith the overall rate of progress in improving the pro- ductivityof small farmers. At present, Farmers Organizations(FO's) are under the jurisdictionof the Farmer's OrganizationAuthority (FOA), a statutorybody established in 1973 to amalgamateFarmers Associations,which had been managed by the Departmentof Agriculture,and local cooperatives, into units which could effectivelyorganize marketing, input supply, storage and processingactivities for large numbers of smallholders. While organi- zational changes have had importanteffects in terms of motivating field staff and farmer-membersalike, it should be emphasizedthat the physical infrastructurefacilities provided under the Farmers Organizationprogram are justifiable long-term investmentswhich would be well-utilizedfor pro- ductive purposes independentlyof any particularorganizational structure. 2. The basic facility or Farmers Development Center (FDC), includes: (a) an office block to house staff and provide space for agriculturalextension and other meetings, and com- mercial transactions; (b) a warehouse or storage block to provide dry storage for crops and fertilizerand other inputs; (c) a garage or shed to house FDC equipment used on own account, such as trucks and other vehicles, and for equipment hired or contractedby the FO to area farmers, such as tractors, power sprayers,pumps, winnowers,etc.; and (d) simple processing facilities, including padi drying floors, cassava drying yards and chipping machines, groundnut shelling machines, and chicken houses. 3. At present there are 169 FDC's throughoutPeninsular Malaysia. FOA plans to increase the size of this network to 210 by the end of the Third Malaysia Plan (1981). In Kelantan, the KADA area is well served by 9 FDC's establishedin the late 1960's and early 1970's as part of the Government's ANNEX 7 Page 2 policy of concentratingagricultural support efforts on the double-cropping of padi in irrigatedareas. No FDC's were built outside KADA until 1974, when the newly established FOA constructed the first in Machang District, and three more were completed in 1975. The neglect of the more remote aeas has been unfortunate,in the sense that while smallholdersin the KADA area are generally within a 30-km radius of Kota Bharu, and have at least minimal access to Government and commercial credit sources, input suppliers,market- ing agents and transport and storage facilities,farmers outside the KADA area are often totally isolated from the modern economy except for occasional long trips to the few large towns to sell rubber and purchase consumer goods. 4. The standard FDC is expected to eventually serve the needs of about 3,000 farm families,operating about 5,000 ha of agricultural land within the delineatedarea of the FDC. At present in Kelantan the average FDC is serving about 1,000 members and 1,200 ha of agricultural land. The major constraintson the operations of existing FDC's are: (a) lack of operating funds; (b) lack of adequate office, storage and drying facilities; (c) lack of vehicles and equipment; (d) lack of sufficient field staff, particularlyin the credit operations; and (e) lack of an effective extension service to ensure efficient use of cash inputs. Sufficientfunds, facilities,equipment and staff for the 13 existing FDC's in Kelantan, as well as for the 12 new FDC's to be constructedunder the component,would be provided under the project. The agriculturalextension effort in the State would be substantiallyintensified under the agricultural extension component. These improvementswould permit Kelantan FDC's to effectivelyservice an average of 1,800 members by 1981 and a minimum of 2,700 members by 1986. 5. Even when the FDC network is completed, individualFDC's will be more than 5 km distant from the majority of small farmers, too great a dis- tance for the effective administrationof credit, marketing and input supply programs directly from the FDC building. FO's have thus been sub-divided into between 8 and 12 Small AgriculturalUnits (SAU's), consistingof be- tween 60 and 300 FO members. At least one farmer in each SAU, typically the SAU "unit chief" (para 7), is registered as a sub-stockist,and is provided assistance in constructinga small wooden barn to store fertilizerand other inputs to be sold on commission from the FDC. The sub-stockistis also expected to collect produce and store it for pickup by FDC vans, as well as to assist FDC staff in agriculturalcredit operations. Although the concept ANNEX 7 Page 3 of a sub-stationat the SAU level is sound, the facilities provided to exer- cise this function have been extremely inadequate, both in terms of size and standard of construction,which offer little more protection from rain than do the farmer's ricks or cribs beside or beneath the typical kampong house. Watertight stores, with concrete floors and zinc roofs would be provided at the SAU level under the project. Management of the FDC's 6. FOA regulations prescribe basic management staff for each FDC, including a General Manager with qualifications1/ and seniority equiva- lent to an Agriculture Assistant, and five subordinate staff at levels equivalent to Junior Agriculture Assistants 2/. The five assistants are assigned responsibilityfor credit, organization, agribusiness,accounting, and agriculturalproduction, although in practice this degree of specializa- tion have rarely been achieved. Few FDC's have yet received a full com- plement of staff, and in many FDC's Managers have found that assigning Assistants to specific geographicalareas and SAU's permits a closer relationshipbetween the staff members and the farmers than do functional assignments. 7. The tManagerand Assistants are assigned and paid by FOA, with the exception of FDC's in the Muda and Kemubu areas, where the staff are provided by the regional authorities (MADA and KADA). Additional staff, such as clerks, drivers, laborers, mechanics, and tractor operators are hired by the indivi- dual FO as needed if its finances permit. Additional assistance to the FO's in such matters as procurement,logistics, and project planning is provided by the State FOA staff. While commercial self-sufficiencyof the FO's is a long-term Government objective, GOM also views the FO as the single most important public service institution in the rural areas and is accordingly committed to providing basic support to the FO's until they may achieve financial self-reliance. 8. Each SAU elects a unit chief and one or two deputy chiefs to take responsibilityfor input distribution and storage, liaison with FDC staff, and other matters. The SAU also elects 2 or 3 representativesto the Farmers Assembly which ideally functions as the policy-makingbody of the FO. The typical FO also has a Board of Directors of 11 members, of which 7 are select- ed by the Farmers Assembly from among themselves, and 4 are nominated by FOA, which usually requests local District Officers, Members of Parliament, and civil servants to fill these roles. While the formal procedure quite naturally exaggerates the actual importance of the farmer's representatives in the management of the FO, these representativesdo fulfill several import- ant functions, including: 1/ Holding a Diploma from the Agricultural University or MARA Institute of Technology. 2/ Holding a Certificate from one of the Agricultural Institutes. ANNEX 7 Page 4 (a) recruitingnew FO members and recontactinginactive members; (b) distributingthe bulk of the fertilizerhandled by the FDC's at the village level; (c) collectingand screening credit applicationsat the village level; and (d) providing informationto farmers regarding the range of services available from the FDC, as well as informing FDC staff of the input, credit, storage and marketing needs of the farmers. The Project 9. The basic objectives of the component are to provide the facilities and logistical system necessary to supply efficient marketing, credit, farm mechanization, and input supply servics to the majority of farmers in Kelantan. Efforts in the first few years would be concentrated on providing support services for padi and groundnut production, although inputs would be supplied for other crops where justified. 1J. The component would include: (a) constructionof 12 new Farmers Development Centers (FDC's), including basic office and storage facilities; (b) constructionof padi drying floors and supplementalstorage facilitiesrequired to handle seasonal needs, for the 12 new FDC's, the 13 existing FDC's, and about 100 Small AgriculturalUnits; (c) provision of required office and field equipment to new and existing FDC's; (d) provision of agricultural credit funds through FDC's to permit expansion of existing credit programs; (e) incrementaloperation and maintenance costs associated with increases in the physical and staff establishmentover the next five years; (f) consultant services to assist FOA in resolving technical and logisticalproblems in marketing, input supply, and storage; and (g) modifications to the FDC method of operation to ensure closer contact between the FDC and the village, and closer integra- tion of FDC operations with agricultural extension activities. ANNEX 7 Page 5 11. FDC Construction Program: The locations of the FDC's to be constructed are presented in Table 1. As all new FDC's would be con- structed outside the KADA area, this element of the component would be implemented by FOA. Before any FDC is constructed, FOA would form an FO in the area, often through the amalgamation of existing Farmers Associations and cooperatives, to ensure that facilities would be fully utilized imme- diately upon completion. Several of these FO's have already been formed, and are currently being served from FDC's occupying rented shophouses in the towns. The FDC's would be built on standard designs similar to those used previously, and construction would be tendered locally. 12. Storage and Drying Capacity: The volume of storage capacity re- quired in each FDC area would depend on the production of padi and ground- nut in the area in excess of home consumption, the proportion of area farmers utilizing FDC and SAU facilities rather than their own or commercial facilities, the volume of inputs used (primarily fertilizer), the seasonal distribution of input usage and production, and the efficiency of the sche- duling of the overall logistics operation, including procurement, transport, distribution, and marketing activities. For the five-year project period, KADA FDC's were assumed to require markedly greater storage capacity (about 650 tons per FDC area) than non-KADA FDC's (about 100 tons per FDC area), for the following reasons: (a) KADA FDC's would serve a higher proportion of area farmers, due to their comparatively longer estab- lishment and large initial memberships; (b) while KADA farmers produce two or three times as much padi on a per capita basis than do non-KADA farmers, their production in excess of home requirements is a much larger multiple; (c) the availability of irrigation, drainage and flood control facilities in KADA would encourage a much greater usage of inputs requiring storage than is anticipated outside of KADA; and (d) the prevalence of double-cropping of padi in KADA means that peak seasonal storage requirements for the harvested crop largely coincide with the peak requirements for storage of inputs for the next crop. 13. Lack of adequate drying facilites at present results in economic losses due to the necessity of redrying and remilling moist padi to avoid production of inferior grades of rice. These losses are reflected in dis- counts in prices paid by Goverment mills due to excessively high moisture content. Concrete padi drying floors are at present the only technically and economically feasible method for reducing the moisture content and ANNEX7 Page 6 germinationrate of padi reaching the mill. The capacity of the drying floors to be provided under the project is roughly equal to the storage capacity provided. In each FDC area, storage space and drying floors would be allocated between the central FDC and the outlying SAU's on the basis of the geographicaldistribution of agriculturalactivity in the locality. 14. Equipment Rental Operations: KADAFDC's now own 25 4-wheeled tractors (between62 and 77 BHP) which perform contractploughing on a hire basis. Trained operatorsare employed by the FDC's, and are paid a small salary and a commissionon work done. Agents are also paid com- missions for finding customersand collectingpayments. Detailed records of the operationsof individualtractors indicate that the financialrate of return on investmentsin tractors is about 25% per annum, varying from 20% to 30%, after all commissionsand depreciationare deducted. Consider- able scope exists for further profitableexpansion in tractoring operations by Kelantan FDC's, as well as for the hiring out of smaller equipmentitems under the project. The new FDC's outside KADA would each be provided with 2 4-wheeled tractors,2 2-wheeledpedestrian tractors,sprayers, and other equipmentto be hired out. In the KADA area, incrementalneeds are less, but some heavy tractors,including halftrack tractors for deep soil areas, would be required. Small trucks and 4-wheel drive vehicles would be supplied to each FDC primarily to facilitatethe Centers' own distributionand market- ing operations,but in slack seasons the vehicles would be hired out to private parties also. 15. AgriculturalCredit: The expansionof the network of FDC's serving North Kelantan and improvementsin the staffing and facilitiesof existing FDC's would present an opportunityto provide more comprehensiveinstitutional agriculturalcredit to larger numbers of farmers in the region. In conjunc- tion with the rehabilitation program for the KADAFDC's, the Bank Pertanian Malaysia (BPM) has agreed to expand its existing short-termcredit programs for padi and tobacco production in the irrigationareas, and to initiate similar programs in the rainfed areas through the new FDC's to be con- structed under the project. In addition, BPM has agreed to initiatea new short-term credit program to finance the production of groundnuts,vegetables and other annual crops throughboth the KADA and non-KADA FDC's. Under this program, BPM would advance seasonal block loans to the FO's on the basis of their individualrequirements. Prior to each cropping season, the FO's would submit their estimated requirementsto KADA or the Kelantan State FOA, which would screen the requests and assess the loan-processingcapabilities of the FO's. The requests and recommendationswould then be forwardedto BPM, which would decide on the maximum amount of credit to the made availableto each FO for the season. Disbursementsand repaymentswould be made through BPM's branch office in Kota Bharu, with copies of loan records sent to KADA and the Kelantan State FOA. Processing of individualloans to farmers would be the responsibilityof the local FO's. Loans to farmerswould finance input pur- chases and the contractingof tractor services,and would normally be extended for a six-monthperiod. Interest rates to farmers would range from an 8.5% annual rate for padi productionloans, to 10% for tobacco and 12% proposed ANNEX 7 Page 7 for the new annual crop program. The incremental volume of agricultural credit outstanding associated with the buildup of the FDC network is projected to reach M$5.0 million by completion of the project in 1981, and this amount has been included in the costing of the Farmers' Development Center component (Table 2), although no disbursements would be made against credit operations. Assurances have been obtained that: (a) the Project Manager would prepare, in consultation with KADA and Kelantan State FOA, a statement of annual agricultural credit requirements, to be submitted to BPM and the Bank not later than three months prior to the beginning of each fiscal year; and (b) GOM would thereafter, following consultation with the Bank, ensure that an adequate amount of credit would be made available to project area farmers through BPM. Coordination of Extension and FDC Activities 16. Both KADAand Kelantan State FOA would modify their organization and management of field personnel to ensure a direct link between agribusi- ness and extension services at the grass roots. They would also provide regular backstop visits to field staff by experienced credit and agribusi- ness personnel from the head offices. In consultation with the Project Man- ager and the Chief Extension Officer to be apppointed under the agricultural extension component, KADA, FOA and DOA would determine a mutually agreed basis for forming small farmer groups of 30-40 members for extension and agribusi- ness activities. The groups would be formed as sub-divisions of SAU's outside the KADA area but would be based on irrigation outlets in the KADA area. DOA would select its progressive farmers for extension purposes and FOA and KADA would select one progressive farmer in each group as the key credit and agri- business contact. Within the KADA area one progressive farmer would be selec- ted as the water users representative. The same farmer groups would thus be used for extension, agribusiness and water management purposes. 17. The role of the agribusiness contact would be to ensure that all farmers in his group were aware of the services offered by the FDC, to put interested farmers in contact with FO personnel, advise on creditworthiness and act in a supervisory capacity with regard to the use of services within his area and repayment of credit. Compensation for these activities is pro- vided by small commissions on the volume of credit and distribution handled. The most capable man in each SAU on the basis of the first few weeks perfor- mance would be recruited and trained as agribusiness supervisor for the area and be the key direct contact with FDC personnel and farmers. 18. Each FDC officer would become a multi-purpose field officer and assume responsibility for 3-4 SAU's in the FDC operating area. He would visit the SAU agribusiness supervisor on a set day at a set time each week, follow-up enquiries, check credit applications and records of business ANNEX 7 Page 8 transactions. Emphasis would be placed on delegating as much responsibility and authority as practical to the FDC officer and his SAU supervisors to avoid bringing farmers to the FDC, to identify the service with the local community, reduce paper work and shorten lines of communications. 19. Each FDC officer and agricultural extension agent operating in the same area would make an effort to maintain regular informal contact, exchange information and coordinate efforts wherever possible. Formal contact would be effected through bi-weekly meetings arranged by the District Extension officer for all field extension workers to review and plan working programs. Local FOA staff would attend these meetings to participate in program review and planning sessions. The extension officers would provide information on input and service requirements as reported from their farmer groups. FOA would provide the extension workers with lists of farmers taking production credit, so that they may visit these farmers to ensure proper use of inputs at their next field visit. ANNEX7 'lable1 M LAY SI4 NORrTH3 KELANTANRURAL DEVELOPMENT PiiOJECT FARMERS DEVELOPMENTCENTER COrTTMENT List of Proposed flew FDC's Estimated No. of Present Members of Farm Families Cooperatives and Location in FDC Area Farmers Organizations 1. Pengkalan Chepa 9,000 1,450 2. Chetok 1,900 200 3. Bachok Utara 3,700 1,050 4. Bukit Panau 4,100 700 5. Machang Seletan 6,500 1,200 6. Bukit Awang 3,400 700 7. Tumpat Pantai 6,200 1,050 8. Semerak 1,800 150 9. Repek/Telong 3,000 300 10. Ayer Lanas 2,000 200 11. Jeli 2,300 12. Ulu Kusial 1,900 300 45,800 7,300 MALAYSIA NORTHKELANTAN RUliAL DEVELOPMENT PXOJECT FARMERS DEVELOPMET CENTER CCMPONENT Cost Estimates KADAFDC's Non-Kada FDC's Total d Foreign ------(M$ '000) ------Exchange I. Construction 1i:lve BW .ldings 1,680 1,68o FDC Storage Facdlities 8bo 360 1,200 SAIUStorage Facilities 588 300 888 Padi Drying Floors 870 500 1,370 Staff Housing 270 270 71-17M 2; 640 TIT50 25 Engineering and Supervision 180 199 379 SLb-total T,740,77 II. Eauimnt Basic Eouipment Package 70 166 236 70 Tractors an.dVehicles 78b 1,h82 2,266 90 Sub-total -77 1,67 2,502 III. Agricultural Credit 1,800 3,200 5,000 35 IV. Operating Expenses IncrementalSalaries 81 1,090 1,171 3uilding Operationand Maintenance 252 364 616 15 Vehicle Operationand Maintenance 215 210 h25 25 Sub-total g -T-,F 2,212 V. Consulting Services 62 62 90 Total Base Cost 5,950 9,613 15,563 36 rQ-- MALAYSIA ANNEX8 Table 1 NORTHKELANTAN RURAL DEVELOMENT PROJECT Cost Summary Foreign Local Foreign Total Local Forei£n Total Exchange := (IMmillion)------(US$ Million)--- Lemal Irrigation Improvement Canals & On-Farm Drains 9.2 6.8 16.0 3.6 2.6 6.2 43 Flood Protection 2.6 2.2 4.8 1.0 0.9 1.9 !;5 Major Drainage 2,5 1.3 3.8 1.0 0.5 1.5 34 Access Roads 2.3 1.9 4.2 0.9 0.7 1.6 45 Maintenance Equipment - 1.2 1.2 - 0.5 0.5 100 Engineering & Supervision 2.3 0.3 2.6 0.9 0.1 1.0 10 Sub-Total 18.9 13.7 32.6 7.4 5.3 12.7 42 Small-Scale Irrigation Physical Works 2.4 2.0 4.4 0.9 0.8 1.7 h5 Engineering & Supervision o.6 - o.6 0.2 - 0.2 __ Sub-Total 3.0 2.0 5.0 1.1 0.8 1.9 4° Rural Roads Construction 7.0 8.3 15.3 2.8 3.2 6.0 54 Mechanical liWorkshops 0.1 0.2 0.3 - 0.1 0.1 60 Maintenance Equipment - 0.9 0.9 - 0.4 0.4 100 Engineering & Supervision 1.0 0.2 1.2 0.4 0.1 0.4 20 Sub-Total 8.1 9.6 17.7 3.2 3.8 7.0 54 Agricultural Extension Buildings & Facilities 1.4 0.4 1.8 0.5 0.2 0.7 25 Equipment & Vehicles 0.2 2.0 2.2 0.1 0.8 0.9 90 Incremental Operating Costs 4.5 1.1 5.6 1.8 0.4 2.2 19 Sub-Total 6.1 3.5 9.6 2.4. 1.4 3.3 35 Farmers Development Centers Buildings & Facilities 4.3 1.5 5.8 1.7 0.6 2.3 25 Equipment & Vehicles 0.3 2.2 2.5 0.1 0.9 1.0 88 Agricultural Credit 3.2 1.8 5.0 1.2 0.7 1.9 35 Incremental Operating Costs 2.0 0.3 2.3 0.8 0.1 0.9 11 Sub-Total 9.8 5.8 15.6 3.8 2.3 6.1. 37 Studies GRP Flume Testing Progratm - 0.2 0.2 - 0.1 0.1 90 State Land Development Scbemes - 0.2 0.2 0.1 0.1 90 Sub-Total - 0.4 0.4 - 0.2 0.2 90 Base Cost Estimate 45.9 35.0 80.9 17.9 13.8 31.7 43 Physical Contingencies 5.4 4.6 10.0 2.1 1.8 3.9 46 Expected Price Increases 18.0 13.9 31.9 7.0 5 12.4 4 PU.Al, PlRCfJECTCOST 69.3 53.5 122.8 27.0 21.0 4,8.0 44 ANNEX 9 Table 1 IIALAYSIA 1ORTHKELAITAN RURL DEVELOWFT PROJECT Estimated Schedule of Expenditures Total Cplendar Years Item Cost 1/ 19o76 1°77 197u 1979 190 19 ------eUSMiion) - Lenal Irrigation 14.4 0.3 3.7 h.8 3.7 1.3 0.6 Snall-ScaleIrrigation 2.2 0.1 0.4 0.7 0.7 0.3 - Rural Roads 8.3 0.3 2.1 2.7 2.3 0.5 0.4 AgriculturalExtension 3.9 0.2 0.9 0.9 0.8 0.7 0.4 Farmers DevelopmentCenters 6.6 0.3 1.7 1.7 1.3 1.3 0.3 Studies 0.2 0.1 0.1 - _ Sub-Total 35.6 1.3 8.9 10.8 8.8 4.1 1.7 Expected Price Increases 12.4 0.1 1.6 3.3 3.8 2.3 1.3 TOTALPROjECT COST 48.o 1/ Includes physical contingencies. 2/ Annual rates of price escalationused were (para 4,12): Civil WrLorks: 1976 1977 1978 1979 1980 1981 rf4,If 13 12 12 12 10 10 Price EscalationFactor Used .o65 .20 .34 .50 .67 .83 Equipment& Services: ?FqgII 9 8 8 C 7 7 PrircEscqlation Factor Used .045 .13 .22 .32 .42 .52 Af4]EX 9 Table 2 MAL! SIA NORTHKEIANTA-J RURAL DEVELOPMENT PROJECT TBRDFiscal Year Accumulated Disbursements and Semester US$ Million Equivalent 1977 1st t 2nd 0.2 1978 1st 0.7 2nd 2.7 1979 1st 7.2 2nd 12.4 1980 1st 15.4 2nd 17.9 1981 1st 19.4 2nd 20.5 1982 1st 21.0 ANNEX9 Table 3 MALAYSIA NORTHKELANTAN RURAL DEVEI0PMENT PROJECT Schldule of Implementation Early Events Responsible Target Activity Agency Date A. Lomal Irrigation (local competitive bidding) DID 1. Irrigation Works (a) Start detailed engineering design May 1976 (b) Start MP evaluation program for tertiariea July 1976 (c) Interim report on GRP evaluation Nov 1976 (d) Complete tender documents & advertise Jan 1977 (e) Complete GRP evaluation June 1977 (f) Award contract & start construction July 1977 2. Flood protection dikes and major drainage works (separate cmt ots) (a) Start detailed engineering design May 1976 (b) Complete tender documents & advertise May 1977 (c) Award contracts & start construction Sept 1977 3. Access Roads (a) Start detailed engin ering design Sept 1977 (b) Conplete tender documents & advertise May 1978 (c) Award contract & start construction Nov 1978 B. Rural Roads (ICB) Kelantan PWD 1 Start detailed engineering design July 1976 2. Complete tender dcoq"mnts & advertise first contract March 1977 3. Award contract & start construction under first oontract July 1977 C. Sall-Scale Irrigation (force account) DID 1. Start feadibilil xWdg first three schemes Dec 1976 2. Complete feasibilityg studtr (3 schemes) June 1977 3. Conplete detailed engineering & specifications July 1977 4. Start construction first schees July 1977 D. FDC Buildings & Fealities (local competitive bidding Kelantan P.fD 1. Complete tnder documents & advertise first contract May 1977 2. Award contract and start oonstruction JulJy 1977 E. EkjulLnt and Vehicles (ICB) Kelantan PWD & DID 1. Approval tender documents & advertise Mar 1977 2. Award first contract July 1977 F. StuEr of State Iand Develoment Schemes 1. Selection of consultants June 1976 2. Complete stuy June 1977 ANNEX10 Table 1 MALAYSIA NORIH XELANTAN RURAL DEVELOPNENT PROJECT Proposed Allocation of the Proceeds of the Loan Estimated Proposed Category Total Cost Allocation Disbursement 7FussMul1ion---- _ (1) Civil Works Lemal Irrigation 12.2 Small-ScaleIrrigation 1.9 Rural Roads 6.6 AgriculturalExtension 0.7 Farmers DevelopmentCenters 2.3 23.7 Price Contingencies 9.2 Sub-Total 32.9 16.5 5° (2) Equipment& Vehicles Lemal Irrigation 0.5 100 of Rural Roads 0.4 foreign expenditures, Agricultural Extension 0.9 95 of local Farmers Development Centers 1.0 expenditures 2.8 ex-factory, or Price Contingencies 0.9 65 of imported items procured Sub-Total 3.7 3.2 locally (3) Studies 0.2 0.2 100 (4) Unallocated Incremental Operating Costs 1/ 3.1 Working Capital 2/ 1.9 Remaining Price Contingencies 2.3 Physical Contingencies 3.9 Sub-Total 11.2 1.1 Total 48.o 21.0 (U4) 1/ Includes US$2.2 million for agriculturalextension and US$0.9 million for Farmers Development Centers. No disbursementswould be made against these items. 2/ Included in Farmers DevelopmentCenters component. No disbursementwould be made against this item. ANNEX 11 Page 1 MALAYSIA NORTH KELANTANRURAL DEVELOPMENTPROJECT LEMAL IRRIGATION COMPONENT Economic Analysis General 1. The major benefit to be derived from the implementation of the Lemal irrigation component would be an increase in padi production over the without project situation of about 37,000 tons by 1985. The projected rates of irrigation development and yields used to estimate incremental production are given in Table 1, along with projected padi prices and farm production costs. Table 2 aggregates production, value of production, and production cost data over the component area. The net value of produc- tion due to the component is derived in Table 3, while Table 4 presents the calculation of the rate of return. 2. The benefits calculated in Tables 1-4 include increases in padi production in the Lemal area proper (about 12,000 ha of potential padi land) and in Kubang Gadong, an area 1/ which would not be irrigated under the project but which would be protected from annual river floods which severely damage the padi crop. In addition to increases in padi production, the com- ponent would provide significant additional economic benfits which are more difficult to quantify. The most important of these benefits derive from flood protection for the town of Pasir Mas (pop. 13,000), the homes of 20,000 rural families living between the Colok and Kelantan Rivers, and the non- padi crops (chiefly rubber), herds, and property of those people. A con- servative estimate of the annual value of damages to buildings 2/, ve- hicles 3/, rubber trees, and livestock which would be eliminated by the proposed component would be on the order of M$1.2 million. These benefits have not been included in the rate-of-return calculations. 1/ Kubang Gadong includes a gross area of 4,100 ha, of which 1,600 ha are suitable for rainfed padi. 2/ Shophouses, homes, and Government facilities in Pasir Mas; farm houses elsewhere. 3/ Including bicycles. ANNEX 11 Page 2 Production Estimates 3. Yields in Lemal have been projected to increase to 3.0 ton/ha in the main (wet) sason, and to nearly 3.7 ton/ha in the off (dry) season, by 1985. Although these yields imply increases of over 1 ton/ha in each season, several factors are present in Lemal which make these yield increases feasible: (a) Project area farmers are already experienced in padi double-cropping, and no learning period is required; (b) Project area farmers would benefit from an intensive agricultural extension effort, complemented by expanded storage, marketing, and credit facilities in the Farmers Development Centers, all of which would be supported by the proposed project; (e) The elimination of major flooding and drainage problems should provide a quick boost to main season yields early in the project; (d) Rapid installation of the GRP flume tertiary system pro- vides improved water control earlier in the project than would conventional excavated distribution systems (Annex 12); (e) The Lemal system would be the most articulated system in Malaysia when completed. Yields are thus expected to exceed those in the nearby Kemubu area, recently projected to reach 2.6 and 3.2 ton/ha by 1980 in the wet and dry season. 1/ 4. The area cropped during the wet season is expected to increase by about 1,000 ha, due primarily to major drainage works. The area cropped during the dry season is expected to increase by about 5,400 ha during the project period, but approximately 1,500 ha of this increase would be due to repairs to pumps in the Lemal pumphouse, and not allocable to the project. The remaining increase would be due primarily to extension of command through installation of tertiaries and improvements in the main and secondary canals. Prices 2/ 5. Padi Prices: Malaysia still imports substantial amounts of high- grade Thai and Chinese rice, amounting to between 150,000 and 250,000 tons 1/ IBRD Report No. 796-MA (Completion Report - Kemubu Irrigation Project), Annex 5, Table 2. 2/ All prices used are in constant 1976 M$. ANNEX 11 Page 3 per annum, or about 15% of national requirements, in recent years. The incremental production due to the project would thus substitute for imports, and has accordingly been valued in terms of Bank projections of the price of Thai rice (5% broken, fob Bangkok). As the grades produced in Lemal are closer in quality to 15% broken Thai rice than to the 5% export grade for which long-term projections are made, the fob Bangkok prices have been reduced 10%, maintaining the price ratio between these two grades which has prevailed in recent years. The output of the Kubong Gadong area is almost entirely highly prized long-grain native varieties, and has been valued at levels equivalent to the Thai 5% grade. 6. It is assumed that all incremental output would be consumed in the rice deficit areas of Trengganu, the neighboring State to the south. The development of a large port in Kuantan, Pahang, by 1980 is expected to reduce the local (Trengganu) costs of imported rice, eliminating the long roundabout haul via the port of Klang and Kuala Lumpur, and this has been reflected in the determination of the economic value of padi produced in Lemal. To re- present the average milling costs of large, medium, and small mills in Lemal, a padi/rice conversionrate of 64% has been used, with an additionalM$10/ton in milling costs in excess of the value of by-products. The price structure used in the economic analysis for Lemal is given below for two illustrative years: Constant 1976 M$/ton 1976 1980 Export price, fob Bangkok 879 815 Ocean Freight: Klang 24 Kuantan 13 Port Handling and transportto Kuala Trengganu 66 30 Wholesale price of rice, Kuala Trengganu 969 858 Transport, Lemal-Kuala Trengganu 15 15 Price of rice, Lemal 954 843 Padi equivalent price, Lemal 601 530 7. Input Prices: Input prices used reflect the eliminationof all known tariffs and subsidies. In particular, the full unsubsidized price of urea 1/ (currentlyabout M$600/ton farmgate)has been used. A description of projected input usage is contained in Annex 13). 1/ There is currently a 17% subsidy on urea in Malaysia. ANNEX 11 Page 4 8. Wages and Labor Costs: For purposes of economic analysis, all farm labor used in producing padi in Lemal was valued at M$1.50/day. This figure is based on a detailed analysis of economic labor costs in Kemubu, which indicated that labor costs throughout the year after full development of the Kemubu project would average M$.15/hr in 1974 currency values, or about M$1.50/day in 1976 values. Little seasonal variation in average labor costs was noted in Kemubu 1/ and there is no major difference in seasonal patterns of labor supply and demand between Kemubu and Lemal. Despite the good evidence for using M$1.50/day as a representative shadow wage rate for economic analysis, a range of values may be placed on farmers' labor for other purposes. On the one hand, the average money wage earned by Lemal area farmers for off-farm work was M$.46/hr in 1975, or between M$3 and M$4 per day. On the other hand, surveys of the area indicate that farmers are unemployed for 50% (and other family workers for 70%) of their potential working time, indicating a shadow wage approaching zero in certain seasons. Project Life 9. A project evaluation period of 25 years, without terminal salvage value, was used for the economic analysis. With proper operation and maintenance which has been accounted for in the calculation of the rate of return, project works should easily remain in use for this period. Economic Rate of Return 10. The calculated economic rate of return is 42%. The rate of return is high for several reasons, including in particular the anticipated speed of development of the component and the low opportunity cost of farmers' labor in Kelantan. The speed of development is due in part to the rehabilitative nature of the component, and in part to the choice of conveyance system to be used at the tertiary distribution level (Annex 12). 1/ While the marginal opportunity cost of labor in Kemubu was estimated to range from a high of M$.35/hr in November to M$.15/hr in slack months, the average opportunity cost of labor used only varied from M$.17/hr to M$.14/hr in those months. Variation in total labor demand is dampened to some extent by the off-season demands of rubber tapping, tobacco planting, etc. MALAYSIA NORTH KELANTAN RURAL DEVELOPMENF PROJECT LEMAL IRRIGATION COMPONENT Economic Analysis - Basic Data Farm-Gate Padi Yields Cropped Area Paddy Price Production Costs Lemal Kubang Gadong Lemal Kubang Gadong Lemal KG Lemal Kubang Gadong ______---- (ton/Fa) ------(ha) ------(M$/ton) ------(M$/ha) ------W W W W W W W W W w w w Year Main Season 1976 1.75 1.75 0.9 0.9 10,800 10,800 1,316 1,316 601 660 274 274 196 196 1977 1.75 1.75 0.91 0.91 10,800 10,800 1,316 1,316 647 712 279 279 197 197 1978 1.77 1.85 0.92 0.92 10,800 10,900 1,316 1,316 604 660 284 290 198 198 1979 1.79 2.05 0.93 0.93 10,800 11,100 1,316 1,316 583 640 289 305 199 199 1980 1.81 2.35 0.94 1.05 10,800 11,300 1,316 1,382 530 583 294 325 200 213 1981 1.82 2.70 0.95 1.20 10,800 11,560 1,316 1,448 530 583 298 345 202 230 1982 1.83 2.85 0.96 1.35 10,800 11,760 1,316 1,514 530 583 302 365 203 248 1983 1.84 2.90 0.97 1.45 10,800 11,760 1,316 1,580 530 583 306 390 204 260 1984 1.85 2.95 0.98 1.5 10,800 11,760 1,316 1,640 530 583 310 420 205 265 1985 1.86 3.00 0.99 1.53 10,800 11,760 1,316 1,640 530 583 314 445 206 268 1986 1.87 3.05 1.00 1.55 10,800 11,760 1,316 i,640 530 583 317 464 208 271 1987 1.87 3.08 1.00 1.56 10,800 11,760 1,316 1,640 530 583 317 472 208 272 1988 1.87 3.11 1.00 1.57 10,800 11,760 1,316 1,640 530 583 317 484 208 273 1989 1.87 3.14 1.00 1.58 10,80S 11,760 1,316 1,640 530 583 317 496 208 274 1990 1.87 3.17 1.00 1.59 10,800 11,760 1,316 1,640 530 583 317 508 208 275 1991-2001 1.87 3.20 1.00 1.60 10,800 11,760 1,316 1,640 530 583 317 520 208 276 Off Season 1976 2.60 2.60 5,800 5,800 310 310 1977 2.60 2.60 6,300 6,300 315 315 1978 2.63 2.70 6,800 7,600 320 330 1979 2.65 2.90 7,300 8,400 325 350 1980 2.67 3.20 7,300 10,200 330 375 1981 2.69 3.40 7,300 11,000 340 400 1982 2.71 3.50 7,300 11,160 350 425 1983 2.73 3.55 7,300 11,160 360 450 1984 2.75 3.60 7,300 11,160 365 475 1985 2.77 3.65 7,300 11,160 370 495 1986 2.79 3.70 7,300 11,160 373 515 1987 2.80 3.73 7,300 11,160 375 520 1988 2.80 3.76 7,300 11,160 375 535 1989 2.80 3.79 7,300 11,160 375 550 1990 2.80 3.82 7,300 11,160 375 565 1991-2001 2.80 3.85 7,300 11,160 375 580 W = without project W = with proiect MALAYSlA NORTH KELANTAN RURAL DEVELOPMENT PROJECT LEMAL IRRIGATION COMPONENT Economic Analysis - Production Values Padi Production Gross Value of Production Producti on Costs Lemal Kubang Gadong Lemal Kubang Gadong Lemal Kubang GadonR ------(ton) ------(M$ '000) ------(M$ '000) …------V V V V V V V w w w Year Main Season 1976 18,900 18,900 1,184 1,184 11,360 11,359 781 781 2,959 2,959 258 258 1977 18,900 18,900 1,197 1,197 12,298 12,298 852 852 3,013 3,013 259 259 1978 19,116 20,165 1,211 1,211 11,546 12,180 799 799 3,067 3,161 260 260 1979 19,332 22,755 1,224 1,224 11,270 13,266 783 783 3,121 3,385 262 242 1980 19,548 26,555 1,237 1,451 10,360 14,074 721 846 3,175 3,672 263 294 1981 19,656 31,212 1,250 1,738 10,417 16,542 729 1,013 3,218 3,988 266 333 1982 19,764 33,516 1,263 2,044 10,475 17,763 736 1,192 3,262 4,292 267 375 1983 19,872 34,104 1,276 2,291 10,532 18,075 744 1,336 3,305 4,586 268 411 1984 19,980 34.692 1,290 2,460 10,589 18,387 752 1,434 3,348 4,939 270 435 1985 20,088 35,280 1,303 2,509 10,647 18,698 760 1,463 3,391 5,233 271 439 1986 20,196 35,868 1,316 2,542 10,704 19,010 767 1,482 3,424 5,456 274 444 1987 20,196 36,221 1,316 2,558 10,704 19,197 767 1,491 3,424 5,550 274 446 1988 20,196 36,574 1,316 2,575 10,704 19,384 767 1,501 3,424 5,692 274 448 1989 20,196 36,926 1,316 2,591 10,704 19,571 767 1,510 3,424 5,833 274 449 1990 20,196 37,279 1,316 2,607 10,704 19,758 767 1,520 3,424 5,974 274 451 1991-2001 20,196 37,632 1,316 2,624 10,704 19,945 767 1,530 3,424 6,115 274 453 Off Season 1976 15,080 15,080 9,063 9,063 1,798 1,798 1977 16,380 16,380 10,598 10,598 1,985 1,985 1978 17,884 20,520 10,802 12,394 2,176 2,508 1979 19,345 24,360 11,278 14,202 2,372 2,940 1980 19,491 32,640 10,330 17,299 2,409 3,825 1981 19,637 37,400 10,407 19,822 2,482 4,4C0 1982 19,783 39.060 10,485 20,702 2,555 4,743 1983 19,929 39,618 10,562 20,997 2,628 5,022 1984 20,075 40,176 10,640 21,293 2,664 5,301 1985 20,221 40,734 10,717 21,589 2,701 5,524 1986 20,367 41,292 10,795 21,885 2,723 5,747 19B7 20,440 41,627 10,833 22,062 2,737 5,803 1988 20,440 41,962 10,833 72,240 2,737 5,970 1989 20,440 42,296 10,833 22,417 2,737 6,138 z 1 1990 20,440 42,631 10,833 22,594 2,737 6,305 1991-2001 20,440 42,966 10,833 22,772 2,737 6,473 a x W = Without project W = with proiect MALAYSIA NORTH KELANTAN RURAL DEVELOPMENTPROJECT LEMAL IRRIGATION COMPONENT Economic Analysis - Net Value of Production Lemal Kubang Gadong Total Incremental Main Season Off Season ______----______-- (H$ '000) ------(H$ '000) ------(M$ '000) ____ --- ((M$ 000) _ W w w W W W W-W Year 1976 8,400 8,400 7,265 7,265 523 523 16,188 16,188 0 1977 9,285 9,285 8,613 8,613 593 593 18,491 18,491 0 1978 8,479 9,019 8,626 9,886 539 539 17,644 19,444 1,800 1979 8,149 9,881 8,906 11,262 521 521 17,576 21,664 4,088 1980 7,185 10,402 7,921 13,476 458 552 15,564 24,428 8,864 1981 7,199 12,544 7,925 15,422 463 680 15,587 28,646 13,059 1982 7,213 13,471 7,930 15,959 469 817 15,612 30,247 14,635 1983 7,227 13,489 7,934 15,975 476 925 15,637 30,389 14,752 1984 7,241 13,448 7,976 15,992 482 999 15,699 30,439 14,740 1985 7,256 13,465 8,016 16,065 489 1,024 15,761 30,554 14,793 1986 7,280 13,554 8,072 16,138 493 1,038 15,845 30,730 14,885 1987 7,280 13,647 8,096 16,259 493 1,045 15,869 30,951 15,082 1988 7,280 13,692 8,096 16,270 493 1,053 15,869 31,015 15,146 1989 7,280 13,738 8,096 16,279 493 1,061 15,869 31,078 15,209 1990 7,280 13,784 8,096 16,289 493 1,069 15,869 31,142 15,273 1991-2001 7,280 13,830 8,096 16,299 493 1,077 l5,89 31,206 15,337 W = without project x W = with project MALAYSIA NORTHKEIANTAN RURAL DEVElOPMET PROJECT LEMALIRRIGATION COMPCNMT Economic Analysis - Rate of Return Costs Incremhntal Net Value Incremental Year of Production Construction G0M Total Net Benefits ------ONip 000------__----. ___ 1976 0 0 0 0 0 1977 0 3,785 0 3,785 (3,785) 1978 1,800 7,885 56 7,941 (6,141) 1979 4,088 10,408 172 10,580 (6,492) 1980 8,864 7,254 326 7,580 1,284 1981 13,059 2,208 433 2,641 10,418 1982 14,635 466 466 14,169 1983 14,752 466 466 14,286 1984 14,740 466 466 14,274 1985 14,793 466 466 14,327 1986 14,885 466 466 14,419 1987 15,082 466 466 14,616 1988 15,146 466 466 14,680 1989 15,209 466 466 14,743 1990 15,273 466 466 14,807 1991-2001 15,337 466 466 14,871 &conomic Rate of Return: 42% 3iL 4 r ANNEX 12 Page I MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT LEMAL IRRIGATION COMPONENT Economic Analysis of Alternative Tertiary Canal Systems General Benefits of a Tertiary System 1. The tertiary canal system to be constructed in the Lemal irriga- tion area would provide various kinds of economic benefits, deriving from the following improvements on the existing field-to-field delivery system: (a) Increased area cropped. Only 62% of the padi land can be cropped in the dry season with the present system of field-to-field delivery, largely because of the undulating nature of the terrain. The corresponding figure for the wet season is 92%. The proposed tertiary system would permit an additional 960 ha to be cropped during the wet season and an additional 3,860 ha during the dry season, with an overall cropping intensity of 197% at full development. (b) More timely water delivery. At present, fields farthest from the canals experience a delay of 30 days or longer in water delivery from the time that irrigation begins on fields nearest the outlet. Late planting in the wet season has a serious depressive effect on yields, since the crop is often at an immature stage when the monsoon begins (normally in November) and is extremely suscept- ible to flood damage. The risk of flood damage also encourages farmers to use taller and hardier traditional varieties for the wet-season crop, foregoing the increased yields possible with the new short varieties. Late planting means that farmers must harvest and dry the crop during rainy periods, reducing both the yields and grade of padi produced, and that planting during the subsequent wet season is delayed. Also, cumulative phasing problems occasionally lead to the foregoing of an entire dry-season crop on land which is technically under command. The proposed tertiary system, combined with ANNEX 12 Page 2 drainage and flood control elements in the Lemal irrigation component, would enable the great majority of farmers in the area to follow optimum planting and harvesting schedules and practices. (c) Better water control. The tertiary system would permit a better regulation of water levels in individual fields, and would encourage farmers to drain their fields for fertilizer applications once they realize that sufficient water would again be available afterwards on a timely basis. (d) Savings of water. A tertiary delivery system, equipped with measuring advices at the offtakes to the quaternaries, should reduce the wastage of water through overwatering by farmers unsure of future supplies, percolation and seepage, and over- spilling. Saving of water would permit a reduction in pumping costs. 2. The benefits of the proposed tertiary system outlined above are difficult to quantify in the context of the integrated engineering sub-project proposed for Lemal, as the increases in overall cropping intensity and yields anticipated are jointly dependent on improvements in flood protection, major and minor drainage, access, and maintenance included in the component, not to mention the agricultural extension and farmers organization activities included in other components. It is generally assumed that, as an integral part of an irrigation intensification program, a tertiary system needs no separate economic justification. In the present case, however, the detailed analysis which was required to determine the optimum choice of design for the tertiary system (paras 3-6) provided an opportunity to extend the analysis one step further to the calculation of a rate of return for the tertiary sys- tem per se (para 7). Optimum Choice of Tertiary System 3. As part of its planning for a proposed national program of on-farm irrigation development, DID in 1975 invited bids for a large central contract covering irrigation distribution systems throughout Peninsular Malaysia. Bids were received on most known forms of conveyance systems, including earth and various concrete-lined excavated canal systems and several types of structural systems, including GRP and concrete flumes, and steel and plastic pipe. Excavated earth canals were the least-cost method quoted, while among structural systems the lowest bid was for GRP flumes. DID recognized that certain features of the GRP system would provide important economic benefits as opposed to the conventional excavated system which could far outweigh the increased investment cost of the system. These features are: (a) Ease and speed of installation. The elimination of excavation and lightness of the material permits rapid installation with minimum disturbance of existing double- cropped areas. ANNEX 12 Page 3 (b) Reduced maintenance. Weed control is almost totally eliminated,while damage to the structurecan be repaired rapidly in the field. In case of severe damage, sections can be easily replaced. (c) Reduced right-of-wayacquisition. GRP flumes occupy less than 20% of the valuable padi land required for excavated canals. Aside from the economic value of the land, the politial and legal problems associatedwith acquiringright-of-way are reduced, eliminatingone of the prime causes of project delay. (d) Seepage is almost totally eliminated,reducing pumping costs. Eliminationof seepage also facilitatesproduction of dry foot crops within the command area during the dry season. 4. Tables 1-3 quantify some of these factors for excavated earth and GRP flume systems utilized as the tertiary distributionnetwork within the Lemal component. The basic parameters,including prices, input usage, yields, rates of development,and maintenancecosts, are derived from the overall economic analysis of the Lemal component (Annex 11). The analysis allocates the incrementalnet benefit (or negative cost) flows of the GRP flume system against the incrementalconstruction cost flow, as opposed to the earth canal system (Table 4). The rate of return to this incrementalinvestment, or equalizingdiscount rate, is estimated at 45%, easily justifying the higher initial investmentcost of the flumes. 5. The major assumption required for the analysis was the comparative rate of irrigationdevelopment. While four years would be required to com- plete the GRP flume system without disturbing existing crops, it was estimated that six years would be required to complete the earth canal system with the same restriction. The latter assumptionis quite conservative,given con- structionconditions on the East Coast, and may understate the advantages of the GRP flumes. 6. The calculateddiscount rate is insensitiveto a reductionof the period of analysis to 10 years, as the major benefits occur within the firstx seven years. A delay of all net benefits (and negative costs) of GRP flumes by one year, while maintainingprojected construction schedules, reduces the equalizingdiscount rate to 31%, which still easily justifies utilizing the flumes. Rate of Return of Tertiary System 7. A similar analysis was made of the simple economic rate of return of investmentin the GRP flume tertiary system, representingthe optimum choice of design for water distributionin the Lemal area, given the com- pletion of the remainderof the component,particularly the flood control and drainage works. The rate of return on investmentin this system, as opposed to continuing to rely largely on field-to-fieldflooding, is 40%. MALAYSIA ANNEX 12 Table 1 NORTHKELANTAN RURAL DEVELOP4ENTPROJECT LEMAL IRRIGATION COMPONENT Alternative Rates of Irrigation Development Wet Season Earth Tertiary System (1) (2) (3) (4) (5) (6) Padi Gross Production Net Value Year Area Yield Production Value Costs of Production (ha (ton/ha) --(tons)F-- --- MS-M i lion)-- 0 10,800 1.75 18,900 11.36 2.96 8.40 1 10,800 1.75 18,900 12.22 3.01 9.21 2 10,900 1.81 19,729 11.92 3.13 8.79 3 11,000 1.86 20,460 11.93 3.29 8.64 4 11,200 1.95 21,840 11.58 3.49 8.09 5 11,400 2.15 24,510 12,99 3.76 9.23 6 11,600 2.40 27,840 14.76 4.o6 10.70 7 11,760 2.60 30,576 16.21 4.59 11.62 8 11,760 2.95 34,692 18.39 4.94 13.45 9 11,760 3.00 35,280 18.70 5.23 13.47 10 11,760 3.05 35,868 19.01 5.46 13.55 GRP Flume Tertiary System (7) (8) (9) (10) (11 ) (12) (13) Padi Gross Production Net Value Net Benefits Year Area Yield Production Value Costs of Production to GRP I/ (ha) (ton/ha) -- (tons)------(M$ Million)------ 0 10,800 1.75 18,900 11.36 2.96 8.40 1 1o,800 1.75 18,900 12.22 3.01 9.21 2 10,900 1.85 20,165 12.18 3.16 9.02 0.23 3 11,ooo 1.95 21,450 12.51 3.39 9.12 0.48 4 11,200 2.15 24,080 12.76 3.67 9.09 1.00 5 11,400 2.40 27,360 14.50 3.99 10.51 1.28 6 11,60o 2.65 30,740 16.29 4.29 12.00 1.30 7 11,760 2.90 34,104 1B.08 4.5o 13.49 1.87 8 11,760 2.95 34.692 16.39 4.94 13.45 9 11,760 3.00 35,200 18.70 5.23 13.47 10 11,760 3.05 35,868 19.01 5.46 13.55 L/ Column 12 minus Column6. NOTE: All parameters assume remainder of project, including flood control works and drainage, is implemented. MALAYSIA AINThJEX1 2 Table 2 NORTHKELAIITAN RURAL DEVELO?9,WT PROJECT LE:IAL IRRIGATION CONPONINT Alternative Rates of Irrigation Development Dry Season Earth Tertiary System (1) (2) (3) (4) (5) (6) Padi Gross Production Net Value Year Area Yield Production Value Costs of Production (ha (ton/ha) -- ttons)------(M' Yillion ------ 0 5,800 2.60 15,080 9.06 1.80 7.26 1 6,300 2.60 16,380 10.60 1.98 8.62 2 7,000 2.66 18,620 11.25 2.28 8.97 3 7,700 2.75 21,175 12.35 2.61 9.74 4 8,700 2.85 24,795 13.14 3.11 10.03 5 9,500 3.05 28,975 15.36 3.55 11.81 6 10,100 3.30 33,330 17.66 4.14 13.52 7 10,600 3.55 37,630 19.94 4.77 15.17 8 11,160 3.60 40,176 21.29 5.30 15.99 9 11,160 3.65 40,734 21.59 5.52 16.07 10 11,160 3.70 41,292 21.88 5.74 16.14 GRP Flume Tertiary System (7) (8) (9) (I10) t11 ) (12) (13) Padi Gross Production Net Value Net Benefits Year Area Yield Production Value Costs of Production to GRP i/ (ha 7ton/aJ --(tons)------M$ Million)…------ 0 5,800 2.60 15,080 9.06 1.80 7.26 1 6,300 2.60 16,380 10.60 1.98 8.62 - 2 7,600 2.70 20,520 12.39 2.51 9.88 0.91 3 8,400 2.85 23,940 13.96 2.9)l 11.02 1.28 4 10,200 3.05 31,110 16.49 3.83 12.66 2.63 5 11,000 3.30 36,300 19.24 L-.40 14.84 3.03 6 11,160 3.50 39,060 20.70 )i.7h 15.96 2.44 7 11,160 3.55 39,618 21.00 5.02 15.98 0.81 8 11,160 3.60 40,176 21.29 5.30 15.99 - 9 11,160 3.65 40,734 21.59 5.52 16.07 10 11,160 3.70 41,292 21.88 5I7L 16.14 1/ Column 12 minus Column 6. NJOTE: A11 parameters assume remainder of project, including flood control works and drainage, is implemented. MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT LEMAL IRRIGATION COMPONENT Alternative Cost Schedules for GRP Flume and Earth Tertiary Systems Opportunity Cost of Land Construction Costs Taken Out of Production 1/ Operation & Maintenance Costs 2/ Difference Difference Earth GRP Difference Year Earth GRP Due to GRP Earth GRP Due to GRP (Maintained) (Maintained) Earth GRP Due to GRP ------(M Million) ------(M Million) ----(ha)------(ha)------(M$ Million)------ 0O - _ _ _ 1 -.55 -2.94 -2.39 -.04 -.01 .03 1,620 3,420 -.02 -.01 .01 2 -.74 -2.94 -2.20 -.06 -.02 .04 3,900 6,840 -.04 -.03 .01 3 -.74 -2.94 -2.20 -.08 -.03 .05 5,980 10,260 -.07 -.04 .03 4 -.74 -1.47 - .73 -.11 -.03 .08 8,170 11,970 -.09 -.05 .04 5 -.74 - + .74 -.14 -.03 .11 10,350 11,970 -.12 -.05 .07 6 -.55 - + .55 -.15 -.03 .12 11,970 11,970 -.14 -.05 .09 7 - - - -.16 -.04 .12 11,970 11,970 -.14 -.05 .09 8 - - - -.17 -.04 .13 11,970 11,970 -.14 -.05 .09 9 - - - -.19 -.04 .15 11,970 11,970 -.14 -.05 .09 10 - - - -.19 -.04 .15 11,970 11,970 -.14 -.05 .09 etc. - - - -.19 -.04 .15 11,970 11,970 -.14 -.05 .09 1/ Assumes remainder of project, including flood control works and drainage, is implemented. Value is based on projected yields, cropping intensities, input usage, and economic prices. 2Bs) o-i 2/ Based on estimated 0&M costs of M$4.18/ha for GRP flume tertiaries, and M$11.53/ha for earth tertiaries. I ANNEX12 Table )z MALAYSIA NORTH KELANTANRURAL DEVELOPMNT PROJECT LEMAL IRRIGATIONCOMPONENT Calculationof EqualizingDiscount Rate on Investment (GRPFlume Vs Earth TertiarySystems) Net Benefits of GRP Flumes Net Production Net Production Construction Land O&M Benefits Benefits TotalNet Year Costsj/_ Costs ( Costs J/ Wet Season IV_ Dry Season 5/_ Benefits ------(M$ Million)------ 0 - - - 1 -2.39 .03 .01 _ - -2.35 2 -2.20 .04 .01 .23 .91 -1.01 3 -2.20 .05 .03 .48 1.28 - .36 4u - .73 .08 .04 1.00 2.63 3.02 5 .74 .11 .07 1.28 3.03 5.23 6 .55 .12 .09 1.30 2.44 4.50 7 - .12 .09 1.87 .81 2.89 8 - .13 .09 - - .22 9 - .15 .09 - - .2h[ 10 - .15 .09 - - .24 11-20 - .15 .09 - - .24 Equalising Discount Rate: 45% 1/ From Table 3. 2/ FrormTable 3. 2/ Fror Table 3. i From Table 1. 5 From Table 2. ANNEX 13 Page 1 MALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT LEMAL IRRIGATION COMPONENT Incomes, Taxes, and Cost Recovery 1. The purpose of this Annex is to examine: (a) the economic status of the farm population of the Lemal area at the present time; (b) the effects of the Lemal project works on total incomes of the population for various representative farm holdings; (c) the levels of production - related taxes paid by the project beneficiaries in relation to to project costs and benefits; and (d) the ability of the beneficiaries to pay additional pro- duction-related taxes. 2. The analysis is based on surveys conducted in June, 1975, by the Economics and Statistics Branch of the Ministry of Agriculture and Rural Development. The surveys covered the sub-areas of Sungei Lemal and Pasir Mas, which together represent 97% of the proposed area to be covered by the water distribution, drainage, and access road systems included in the component. Further surveys of the Alor Pasir irrigation sub-area and the Kubang Gadong area (which will benefit only from the flood control works) were conducted in October/November 1975, and their results have also been incorporated in the analysis. Farm Family Income Levels 3. The distribution of households in various income groups, and the breakdown of annual incomes by source, are given in Table I for the pre- project situation. The data indicate that the average pre-tax family income in the project area is M$1,230 (US$479) per annm, which implies that the per capita income in the project area is M$228 1/ (US$89). This income is ex- tremely low by Malaysian standards; the Critical Consumption Level (CCL) for Malaysia was estimated at M$463 (US$180) per capita in 1975, while current per capita income for the nation as a whole is about M$1,700 (US$660). 1/ Average family size in the project area is 5.4 persons. ANNEX 13 Page 2 Furthermore, only about 10% of the project area population receive pre-tax incomes in excess of the CCL, and the incomes of this small group are chiefly derLved from non-farm, and particularly from non-padi sources. Median income in the project area is in the region of M$900 (US$350), or about M$167 (M$65) per capita. Sources of Farm Family Income 4. Average farm family income in the project area is derived largely from farm enterprises (66%), supplemented by income earned in off-farm acti- vities (30%) and unearned income (4%), chiefly gifts and remittances. Approx- imately 73% of farm income, or half of total income, is derived from padi farming, with the remainder deriving from tobacco, rubber, fruits, vegetables, livestock and poultry, in order of importance. One effect of the project will be the increased importance of padi income in total income, as land and effort currently devoted to tobacco planting and offfarm labor is reallocated to increased padi production. Padi Land Distribution 5. The average padi area operated by a farm family in the project area is about 0.7 ha. The distribution of farm sizes is as follows: Padi Area % of Average in % of Total (ha) Farms category Area (ha) Small 0 - 0.5 24 0.3 10 ledium 0.5-1.2 61 0.7 59 Large 1.2+ 15 1.5 31 100 0.7 100 It is quite obvious that the project area is characterized by extremely small padi farms, and that the 1.2 ha padi farms are large only in a relative sense. Only 3% of household farm an area exceeding 2 ha of padi, and they account for about 8% of the total area. Tenure Status 6. Padi farmers in the project area may be divided into three categories according to the tenure status of the padi lands they operate. The three classes are: (a) Owners, who own all the land they operate. This group represents 32% of all farmers and 35% of all padi land, with an average holding of 0.8 ha of padi; ANNEX 13 Page 3 (b) Tenants, who rent all the land they operate. This group represents 18% of all farmers and 16% of all padi land, with an average holding of 0.6 ha of padi; and (c) Owner-tenants, who own a portion of the land they operate and rent the remainder. This group represents 50% of all the farmers and 49% of all padi land, with an average holding of 0.7 ha of padi. Overall, 60% of all padi land in the area is owner-operated and 40% is rented. Taxation 7. The major tax burden borne by project area padi farmers is the Islamic tithe (zakat) paid each season to the Kelantan Department of Religious Affairs, which uses the receipts to finance Islamic schools and teachers, welfare expenses, and maintenance of mosques. Zakat is com- pulsory on all Moslem padi farmers in Malaysia, although the rate actually paid varies from State to State ranging between 4% and 10% of gross padi production. Except for a neglible number of ethnic Thais, all project area farmers are Moslems and are liable to pay zakat, except for those unable to produce sufficient padi for family subsistence 1/. Zakat payments equal 7% of gross padi production in each of the Lemal sub-areas, as well as in other irrigated areas in Kelantan, and it is anticipated that this rate will be maintained in the future. Current payments in Lemal amount to 210 kg/ha of padi per annum, or M$85/ha (US$33/ha) in current farmgate prices. The level of zakat payments thus exceeed O&M costs for the existing irrigation systems in Lemal, which currently average M$69/ha (US$27/ha). 8. Irrigation and land charges in the Lemal area range between M$10/ha (US$4/ha) and M$32/ha (US$13/ha), depending on the reliability of irrigation and drainage service provided in the various sub-areas. The average rate is about US$10/ha. The State Legislature of Kelantan has approved an increase in rates to a maximum of M$47/ha (US$18/ha) for irrigation and land charges combined, and it is expected that these rates will be charged by full project development. Farm Models 9. The diversity of income sources and tenure status in the project area to some extent complicate the selection of representative farm enter- prises. In order to simplify presentation while retaining a considerable degree of realism, it is assumed that off-farm earned income, unearned in- come, non-padi farm income, and degree of land ownership are all correlated with area of padi operated. With this assumption, farm income analysis can be restricted to the following three model cases: 1/ Defined at I ton per family per annum. ANNEX 13 Page 4 Padi % of Padi Non-Padi Off-Farm Category Area Land Owned Farm Income Income (Ha) (M$) (M$) Small 0.3 55% 110 170 Medium 0.7 60% 250 340 Large 1.5 65% 350 700 In the constructionof the farm models (Tables 2, 3, and 4), it is also assumed that yields and cropping intensityare inverselycorrelated with the area of padi operated. Each of these assumptionsis based on the statisticalresults of the farm sureys. Nevertheless,each compositemodel may reflect only a small number of actual cases. Effects of Project on Family Incomes 10. The effects of the project on the various categoriesof farm enter- prises at full developmentare presented in Tables 2-4. For the average- sized padi farm, net padi income would increaseby 82%, total income by 39% and disposal income (after payment of production-relatedtaxes) by 35%. Total pre-tax income of the average farm family would still be substantiallybelow the CCL (para 3). While pre-tax family income of the largest farm model category would marginallyexceed the CCL, disposable income would not. It is possible that about 15% of the total populationwill have pre-tax incomes above the CCL at full development,depending on the non-farm labor market at that time. 11. The above analysis is based on the average farmgate price (M$400/ ton) prevailingin 1975, which may rise as high as M$470/tonby the end of 1976 depending on availabilityof supply to the Governmentmills. The CCL is also expressed in 1975 prices, however, and the price of rice is the single most importantdeterminant of the CCL. Increasesin the rice price thus cause the CCL to rise, and are thus unlikely to lift many Lemal farmers above the poverty line. IncrementalTaxation and Cost Recovery 12. The capital costs of the Lemal componentamount to M$1,721/ha (US$670/ha),excluding those elements (flood control and access roads) which benefit large populationsnot dependenton padi production. The incremental O&M costs would amount to M$32/ha per annum at full devlopment. Assuming a 10% discount rate over a period of 25 years, full cost recovery from project beneficiarieswould require incrementalannual payments of M$222/ha (US$86/ha) for the period. Actual incrementalirrigation and land charges would range betweem US$5.2/haand US$10.4/ha for the three categoriesof model farms. ANNEX 13 Page 5 When discounting these costs and charges at 10% discount rate over a period of 25 years, the cost recovery index would vary between 6% for a 0.3 ha farm and 12% for the 0.7 and 1.5 ha farms. Alternatively, if the zakat tax is considered as a project charge, the cost recovery index would be 52%. The rent recovery would vary between 8 and 53% for the three re- presentative farm models (Table 5). Considering the fact that even after completion of the project nearly 90% of project beneficiaries would still receive a net income at or below the CCL, and the absolute tax level on the farmers, the present levels of water charges are considered acceptable. 'ALAYSI4 NORTHKELINTAN RJRAL DEVELOP4ENTPROJECT LEIM4ALIRRIGATION COMPONENT Farm Iaidly Income Distribution & Composition, 1975 Income Groups 2o-qronen- s o 114100-.M 00- M$800- M$1,000- M$1,500- M$2,000- M3,000- All 'ot 1 In- one 199 799 999 11,49? 1,999 2,999 5,999 Farms …______-_9------1 975 M ----- …------ If Wrm Houseliolds 22 22 13 20 10 6 7 100 Hverage Total Familv Income 329 671 891 1 ,20L 1,739 2,371 1,,828 1,230 nf' Whior Fai 199 403 535613 1,172 521 1,589 588 Ot,-e- Farm Incwofie 88 1 ol! 123 210 23L 1,122 335 221 J: f-~arrn Tncome 1,2 161, 234 351 322 616 2,320 373 Remittanees and Gifts - - - - 12 112 58L L9 SourceE: (1) Socio-Economic Survey of Lemal-Pasir Mas irrigation Scheme, July 2, 1975. (2) Socio-Economic Survey in Kubang Gadong and Alor Pasir Agricultural Areas, Nov. 5, 1975. Ministry of Agriculture and Rural Development, Kuala Lumpur. % ANNEX13 Table 2 MALAYSIA NORTHKELANTAN RUIL4L DEVELOPIMNT PROJECT LEMarLITR' ATTOWC-O10ONENT Farr Model - 0.3 ha Padi F2rm Without ProjectJ With Projectv Cropping Intensity 170% 200% Yield: tons/ha 2.2 main season, 3.2 main season, 2.0 dry season. 4.0 dry season. Production 1.27 tons 2.16 tons Price YM$OO/ton M$400/ton Gross Value of Production N$508 M$864 Cash Inputs:?J Seeds $ 6 $2 8 Land Preparation 31 42 Fertilizer and Chemicals 33 101 Implements 8 11 Rent 85 113 Hired Labor 8 21 M$t71 MT296 Net Padi Income M$337 ,$568 (ther Income 280 290 Total Income M$617 '%77 Irrigation Charges iT$10 1$14 Zakat Payments 11 46 Disposable Income M$596 M$798 (Per Capita) (.N$i'rL) (I4t Unpaid Family Labor 49 days 70 days NOTE: It is assumed that 55% of the land is owned, 45% is rented. j/ Projectionsrefer to 1985, the eighth year of project development. / Assumptionsregarding input usage are detailed in Table 6. 'Table3 MALAYSIA NOPTHKELA:ITTAN RURAL DEVELOPNENT PROJECT LEMALIRPIGATION COMPOIE-MT Farm Model - 0.7 ha Padi Farm Without Projectik With Projecbl Cropping Intensity 160% 190% Yield: tons/ha 1.9 main season, 3.0 main season 2.6 dry season 3.7 dry season Production 2.42 tons 4.43 tons Price M$400/ton M$400/ton Gross Value of Production M¢968 M$1,772 Cash Inputs:9Y Seeds M$ 13 M$ 19 Land Preparation 76 104 Fertilizer and Chemicals 64 208 Implements 14 21 Rent 138 166 Hired Labor 22 90 M$ 327 M$ 6W Net Padi Income .$ 641 M$1,164 Other Income 590 550 Total Income MW1 M Irrigation charges M$ 19 M$ 33 Zakat Payments 57 124 Disposable Income M$1,s155 M$1,557 (Per Capita) (M3214) (M$o89) Unpaid Family Labor 100 days 140 days NOTE: It is assumed that 60% of the land is owned, 40% is rented. I/ Projections refer to 1985, the eighth year of project development. 2/ Assumptionsregarding input usage are detailed in Table 6. ANNEX 13 Table 4 MALAYSIA NORTHKELANTAN RURAL DEVELOPMENT PROJECT LEMALIRRIGATION COMPONENT Farm Model - 1.5 ha Padi Farm Without Project/ With Projecti/ Cropping Intensity 150% 180% Yield: tons/ha 1.j5 main season, 2.3 main season, 2.2 dry season 2.8 dry season Production 3.90 tons 6.81 tons Price M$400/ton M,1400/ton Gross Value of Production M $1,560 M$2,724 Cash Inputs:v Seeds M$ 26 M$ 38 Land Preparation 126 167 Fertilizer and Chemicals 105 389 Implements 24 32 Rent 225 268 Hired Labor 48 157 i3w5F MT1,051 Net Padi Income N $1,006 M$1,673 Other Income 1,050 950 Total Income TN172_056 M$2,623 Irrigationcharges M$ 36 M$ 76 Zakat Payments 109 191 Disposable Income N$1,911 M$2) (Per Capita) (CN$?3514) Unpaid Family Labor 160 days 220 days NOTE: It is assumed that 65% of the land is owned, 35% rented. j/ Projections refer to 1985, the eighth year of project development. / Assumptions regarding input usage are detailed in Table 6. MALAYSIA NORTHKELANTAN RURAL DEVELOPMENT LENALIRRIGATION COMPONENT 3enefit and Rent Recovery (1 ) ~~(2? (3) ()(5) (6) Rent Size of Incremental Incremental Incremental Management& Incremental Recov vy Cost Model Net Family Family Labor Zakat Urncertainty Project Irrigation Id -x Recov,ry 2 Farm Income)./ Cost P Allowance_/ Ren Charges (6 . 5 Index/ (ha) ______--__-1 976 ------0.3 2hl 8h 35 72 50 4 8 6 0 7 183 1i0 67 lh 111 18 16 12 1 .5 567 240 82 170 75 h0 53 12 1/ From tables 2-h. 7/ Valued at an estimated market wage of 9$L/day. 3/ Valuedl at 30% of incremental income (1). I REquals (1) -/ 2) + (3) + (M)7. 3/ It is assumed that incremental farm incomes, project rent and water charges would build up to full development levels with similar time streams and would remain at full development levels for the life of the project so that the ratios at full developmentwould eqal the ratios of discounte(dpresent values. 6/ Equals column 6 /Mj$222/ha(from para 12) x size of farm (ha This calculation aTso proceeds from assumption in footnote 5. ANNEX 1 Table 6 MALAYSIA NORTHKELANTAN RURAL DEVELOPMENT PROJECT LEMALIRRIGATICN COMPONENT Assumed Input Usage Seeds = without 30 kg/ha (local at M$0.1)/kg) with 3J kg/ha every two seasons improved variety at i4f$0.L7/kg Land Preparation= without 50% tractor at i1$75/ha 50% buffalo at M$50/ha with 80% tractor 20% buffalo AgrochemXicals = without negligible with 10-15 kg of BHC granula per ha at 4$1 per kg 1-2 applicationsof Malathior per ha at M$7.b per applicati'on per ha Fertilizer average cost of N:M$1.88/kg (70% (45% 1) at 14$05/kg (30% mix (15,15,7.5)at M$0.55/kg Without With Urea May_ E Urea Mix v kg/ha kgakg/ha ga 7ha kg/ha Model I 54 69 34.6 112 1L3 71.8 Mlodel II )17 60.5 30.3 102 131 Model III 3L 43.5 21.8 79.5 102 51.1 Hired Labor = valued at M$2.5 per day ANNEX 14 Page 1 MALAYSIA NORTH KELANTANRURAL DEVELOPMENTPROJECT RURAL ROAD COMPONENT Economic Analysis 1. For purposes of economic evaluation, the rural road component may be divided into two elements, the Pasir Mas - Rantau Panjang alignment which would serve a comparativelyhigh volume of existing internationaland domestic through traffc as well as its immediatehinterland, and a large number of lower standard access roads which would primarily serve the needs of local farm populations. These differentfunctions, and the differing availability of data relating to volumes and costs of transport,prescribe different ap- proaches to the economicanalysis of these elements. The Pasir Mas - Rantau Panjang Road 2. Recent trafficcounts undertakenin conjunctionwith the Malaysia HighwayMaintenance Study estimatedthe average traffic on the present link at 2,321 vehicles per day (v.p.d.),consisting of 926 commercialfreight vehicles and 1,395 passengervehicles. Approximately60% of this traffic, representingmost of the present through-traffic,would be diverted to the shorter proposed new link. Estimatesof the detailed compositionof this traffic,based on national surveys adjusted to Kelantan conditions,are as follows: PassengerVehicles Freight Vehicles Motorcycles 24% Light Vans 45% (incl. 4-wheel drive) Automobiles 49% (incl,.4-wheel drive) Medium Trucks 40% Taxis 22% Heavy Trucks 15% Buses 5% 100% 100% 3. The trafficvolume on all Kelantan highways has been growing at a 7% annual rate in recent years. A 6% growth rate in normal trafficvolume has been assumed over a 20-year evaluationperiod for the Pasir Mas - Rantau Panjang link, representinga closer approximationto the 5.5% projected national trafficgrowth rate. As the new road would provide initial access ANNEX 14 Page 2 to a considerable amount of rice, rubber and tobacco land, some new traffic would be generated in excess of the minor reduction in local traffic on the old alignment, which is anticipated to follow the reduction in maintenance effort on that link (para 6). The incremental generated traffic is estimated at 200 v.p.d. in the first year of operation, growing at 10% per year for the first five years and 6% thereafter. The present composition of traffic is expected to continue throughout the evaluation period. 4. Detailed estimates of vehicle operating costs on paved roads in Malaysia were calculated by the Highway Planning Unit in 1972 for the seven vehicle types mentioned above (para 2). These figures, converted to world prices and updated to mid-1976 levels, were used to evaluate total vehicle operating costs on the new alignment. They have been checked with the re- sults of a survey of taxi, trucking and trading firms in Kelantan, and have been found to be in substantial agreement with current commercial tariffs (adjusted for excise taxes and customs duties) for transport on the high- standard Federal highway routes. Vehicle operating costs on the existing alignment, which is typically in a poor state of repair despite intensive maintenance efforts by the State PWD, were estimated to be 1.5 times as high as those on high-standard Federal highways. This factor represents a weighted average of cost ratios derived 1/ for running and fixed costs of the four major vehicle types on three categories of road surface conditions. 2/ These calculations indicate that weighted average vehicle operating costs on the existing alignment of M$0.59 per vehicle-km for freight vehicles and M$0.20 per vehicle-km for passenger vehicles will be reduced to M$0.39 and M$0.14 respectively, on the proposed new alignment. 5. In addition to operating costs savings due to improved road surface conditions, through-traffic would benefit from a reduction in distance travelled from 24 km at present to 21 km, or 12.5%. Total vehicle operating cost savings would be M$1.86 per trip for passenger vehicles and M$5.97 per trip for freight vehicles. 6. Maintenance costs on the existing link are abnormally high. The western portion of the alignment runs beside the Golok River and bears the full force of the annual river floods. The eastern portion passes through a depression where a high water table and frequent local flooding cause per- manently saturated sub-bases and consequent pavement deterioration. Con- struction of the proposed new link to serve the high volume of through-traffic would permit a reduction in maintenance effort on the old link to average levels for Federal and State roads in Malaysia (US$3,100 km), which would be appropriate for a rather heavily travelled State feeder road. 1/ Malaysia Highway Maintenance Study, Vol. II - Supporting Data, Table 9-07, Kampsax/Berger, 1974. 2/ These ratios were also checked with local transport tariffs on partially- paved roads, and were found to substantially agree. ANNEX 14 Page 3 7. Benefit and cost streams are presented in Table 1. The economic rate of return of constructing the new Pasir Mas - Rantau Panjang road is 41%. Access Roads and Agricultural Development 8. The road density in the heavily populated agricultural areas of North Kelantan is low by Malaysian standards, and many of the most densely populated sub-areas of the region are surprisingly inaccessible even during the dryer months of the year, and are totally inaccessible on a commercial basis during the monsoon season. The effects of the lack of easy access are to some extent hidden by the comparatively dense settlement pattern and high level of agricultural land use, but these patterns should be viewed as natu- ral responses to lack of access rather than indications that lack of access is not a constraint to the economic development of the region. Settlement in Kelantan has historically been based on subsistence rice culture on the northern flood-plain and subsistence fishing in the coastal districts, activities which can support dense populations (at low levels of income) with a minimum of access. The later introduction of rubber and the process- ing of copra was readily and widely accepted, as both activities produce products which are comparatively valuable per unit of weight and hence relatively less vulnerable to high costs of transport. At the present, however, incomes from all these sources are extremely low, due chiefly to the pressure of population on available resources in the established areas, the relative unsuitability of the Kelantan floodplain for rubber, and the low levels of technology employed. Programs to raise agricultural incomes in the region, through increases in yields and double-cropping of rice, promotion of field crops like tobacco, groundnuts, soybeans, cassava, and sugar, intercropping of pineapples and bananas with rubber, and the initia- tion of a modern livestock industry, are typically heavily dependent on the availability of easy access for extension workers, input supplies, and the marketing of output. In view of the commitment of the Government to agri- cultural intensification programs in the region, including the irrigation, agricultural extension, and Farmers Development Center components of this project, transport costs on existing village tracks are becoming a serious and binding constraint on agricultural development. 9. Selection Procedure. The access road element was originally formulated and proposed by the Kelantan State FOA, which had concluded that lack of access was the single most serious constraint to the expansion of FOA programs to commercialize agriculture in North Kelantan. The original proposal included 800 km of roads, selected largely on the basis of the population density and agricultural productivity of areas served. During project preparation, agreement was reached with the Ministry of Agriculture and the Kelantan State Government that: (a) the roads would be assigned priority rankings on the basis of potential agricultural production and need for improved access; ANNEX 14 Page 4 (b) the Kelantan State PWD would survey the highest priority roads (totalling about 300 km) and prepare semi-detailed cost estimates for each of these links; and (c) the Ministry of Agriculture would undertake socio-economic surveys of a representative sample of proposed roads in order to estimate the economic rates of return of roads in various geographical sub-areas. 10. The roads were assigned priority rankings by the State Planning Unit of the Kelantan State Government - in consultation with local officials of DOA, FOA, DID, PWD, District Officers, and Members of Parliament and of the State Assembly - utilizing semi-detailed land use maps and census surveys to estimate potential goods and passenger traffic. After selecting one of two possible standards of construction for each road on the basis of pro- jected traffic 1/, PWD surveyed about 40 high-priority links totalling over 300 km in length, and prepared cost estimates for each road. An MOA team then conducted economic sureys of eight links totalling 52 km in length, including 16 km in the coastal region primarily serving coconut, tobacco, and rainfed padi areas; 22 km in the floodplain region primarily serving irrigated padi areas; and 14 km in the foothill region primarily serving rubber areas. The surveys covered area, production, and sales of crops, frequency of travel to the towns, and modes and costs of travel and transport. 11. On the basis of the survey results, estimates were made of exist- ing and future exportable agricultural surplus production and passenger traf- fic for access road influence areas in coastal, floodplain, and foothill areas (Tables 2-i). For purposes of comparability, model roads of 10 km length and 60 km gross influence area were used for each area. 2/ The projected increases in yields and area planted of the various crops assume the implementation of the agricultural extension, Farmers Development Centers, and irrigation components of this project, but in general estimated yields at full development are below present nationwide average smallholder yields. The major improvement in agricultural practice expected to follow road construction is an acceleration of the trend toward intercropping field crops with rubber and coconut, particularly pineapple in replanted rubber areas and tobacco in coconut areas. During the process of comparing costs and benefits of various types of roads, the list of roads proposed for in- clusion in the project was shortened to the 28 links totalling about 190 km given in Annex 5, Table 1. 1/ Roads with projected levels of traffic exceeding the equivalent of about 20 v.p.d. were assigned a PWD 01 standard design. Roads with lower levels of expected traffic were assigned a sub-PWD standard. Dimensions corresponding to these standards are given in Annex 5. 2/ The average trip length on a 10-km access road was assumed to be 6 km. ANNEX 14 Page 5 12. TransportCost Savings: Unit transportcosts in the agricultural areas range from about M$0.80/ton-kmfor 3-ton trucks, 1-ton vans, and 4-wheel drive vehicles on partiallypaved State roads and good laterite access roads, to M$1.50/ton-kmfor trishaws 1/ on similar roads, to about M$5.00/ ton-km for bicycles and motorcycleson the type of village tracks which would be replaced by access roads under the project. Most village produce (includ- ing padi, tobacco leaves, copra, and rubber)now moves by bicycles, which are loaded to about 80 kg and pushed to the nearest town, highway, or tobacco- curing center by the farmers themselves or by paid laborers. 2/ Because of frequent unbridgedchannels which must be forded,many existing areas can only be served by bicycles or shoulder-yokes. The new roads would provide access by various types of motor vehicles and trishaws,as well as increase the pro- ductivityand ease of bicycle transport. For purposes of economic analysis, average unit goods transportcosts are assumed to decrease from M$4.50/ton-km to M$1.50/ton-kmwith the project. 13. On improvedaccess roads daily passenger traffic typicallyincludes several bus trips, occasionalautomobiles, scores of motorcycles,and hundreds of bicycles. While some of this traffic is purely social or school-related, much of it involves commutingto work, essential purchasingof consumer items, tools, or inputs, or marketing of poultry and other small items. Passenger flows for project roads were estimated by assuming an average of three such bicycle trips per week per household. The time required for these trips was evaluated at M$0.25/hr,about half the average wage rate for labor. At an average speed of 6 km/hr on existing tracks, the unit value of these trips is M$0.04/passenger-km. For purposes of economic analysis, it was assumed that this cost would be halved by constructionof access roads. 14. Economic Rate of Return: Economic rates of return for the various model roads, based on transportflows presented in Tables 2-4 and cost para- meters discussed above, are derived in Tables 5-7, and summarizedbelow: Sub-Region Rate of Return Coastal 27% Floodplain 32% Foothill 29% 1/ Bicycle-poweredcarriages or sidecars. 2/ As this method can produce no more than about 1.5 ton-km per day on existing tracks, a maximum of M$7.50 per day can be earned from this exhaustingactivity. MALAYSIA NOitTHKELANTAN RURAL DEVELOPMENT PROJECT Economic Analysis of Pasir 14as - Rantau Panjang Aoad Year Construction Reduction in Transport Benefits Net and Maintenance Maintenance Cost Savings on Benefits Costs of Costs of on Normal Generated New Road Old Road Traffic Traffic Benefits ------(M$ '000) ------1978 -1,300 -1,300 1979 -3,000 - -3,000 1980 -984 225 -759 1981 -50 115 2,524 79 2,668 1982 -65 150 2,675 87 2,8L7 1983 -65 150 2,835 95 3,015 1984 -65 150 3,006 105 3,196 1985 -65 150 3,186 115 3,386 1986 -65 150 3,377 121 3,583 1987 -1,500 225 3,580 129 2,0L3i 1988 -50 115 3,795 136 3,996 1989 -65 150 L,022 145 L,252 1990 -65 150 h,26L 153 4,502 1991 -65 150 L,520 163 4,768 1992 -65 150 4,791 172 5,048 1993 -65 150 5,078 183 5,346 199L -1,500 225 5,383 194 4,302 1995 -50 115 5,706 205 5,976 1996 -65 150 6,o48 218 6,351 1997 -65 150 6,411 231 6,727 Rate of Return : 1%.a CD MALAYSIA NORTH KELANTANRURAL DEVELOPMENTPROJECT RURAL ROAD COMPONENT Estimated Transport Volumes - Coastal Areas, Model 10 km Road A. Goods Traffic - Without New Road Padi Coconut Tobacco Fruit & Vegetables Groundnuts Fish Output Output Output Output Output Output Total Trans- Trans- Trans- Trans- Trans- Trans- Normal Year Ha Yield ported-/ Ha Yield ported Ha Yield ported Ha Yield ported-/ Ha Yield ported ported Inputs Tonnage (tons) 1 1,100 2.0 660 960 0.7 670 420 11.0 4,620 160 6.0 190 100 1.8 180 1,000 370 7,690 10 1,100 2.4 790 1,140 0.7 800 620 11.0 6,820 160 6.0 190 300 2.2 660 1,000 440 10,700 B. Goods Traffic - With New Road Padi Coconut Tobacco Fruit & Vegetables Groundnuts Fish Output Output Output Output Output Output Total Trans-I! Trans- Trans- Trans-2 / Trans- Trans- Generated Year Ha Yield ported Ha Yield ported Ha Yield ported Ha Yield ported Ha Yield ported portee Inputs Tonnage (tons) 5 1,150 2.35 810 1,050 0.7 735 600 11.5 6,900 200 6.0 240 300 2.2 660 1,000 400 1,670 10 1,200 2.50 900 1,200 0.7 840 800 12.0 9,600 250 6.0 300 500 2.5 1,250 1,000 500 3,690 C. Passenger Traffic - Without New Road Population of Influence Area Trips/Annum/Household Year (Households) (by adults) Trips/Annum 1 560 156 87,360 10 717 156 111,852 D. Passenger Traffic - With New Road Population of Influence Area Trips/Annum/Household Generated Year (households) (by adults) Trips/Annum 5 627 170 8,778 10 717 190 24,378 Note- Yields given are tons/ha; Output transported is tons. 4 1/ 30% of production. 2/ 20% of production. MALAYSIA NORTH KELANTAN RURAL DEVELOPMENTPROJECT RURAL ROAD COMPONENT Estimated Transport Volumes - Floodplain Areas, Model lOkm Road A. Goods Traffic - Without New Road Padi Rubber Tobacco Groundnut Coconut Output Output Output Output Output Total Trans- Trans- Trans- Trans- Trans- Normal 1 Year Ha Yield portedt Yield ported Ha Yield ported Ha Yield ported Ha Yield ported Inputs Tonnage (tons) 1 3,360 3.2 4,300 1,000 0.6 600 100 11.0 1,100 50 1.8 90 100 0.7 70 130 6,290 10 3,400 3.6 4,896 1,000 0.6 600 100 11.0 1,100 100 2.0 200 100 0.7 70 200 7,066 B. Goods Traffic - With New Road Padi Rubber Tobacco Groundnut Coconut Output Output Output Output Output Total Trans- Trans- Trans- Trans- Trans- Generated Year Ha Yield portedI/ Ha Yield ported Ha Yield ported Ha Yield ported Ha Yield ported Inputs Tonnage (tons) 5 3,400 3.5 4,760 1,000 0.7 700 150 11.5 1,725 100 2.2 220 100 0.7 700 200 1,565 10 3,500 3.7 5,180 1,000 0.7 700 200 12.0 2,400 200 2.5 500 100 0.7 700 350 2,764 C. Passenger Traffic - Without New Road Population of Influence Area Trips/Annum/Household Year (Households) (by Adults) Trips/Annum 1 2,150 156 335,400 10 2,752 156 429,312 P. Passenger Traffic - With New Road Population Influence Area Trips/Annum/Household Generated Year (Households) (by Adults) Trips/Annum 5 2,408 170 33,712 10 2,752 190 93,568 Note: Yields given are tons/ha; Output Transported is tons. 1/ 407.of production. MALAYSIA NORTH KELANTANRURAL DEVELOPMENTPROJECT RURAL ROAD COMPONENT Estimated Transport Volumes - Foothill Areas, Model lOkm Road A. Goods Traffic - Without New Road Padi Rubber Intercropped Pineapple Tobacco Output Output Output Output Total Trans- Trans- Trans- Trans- Normal Year Ha Yield ported Ha Yield ported Ha Yield ported Ha Yield ported Inputs Tonnage (tons) 1 660 2.0 1,320 2,700 0.6 1,620 200 5.6 1,120 150 11.0 1,650 73 5,783 10 900 2.4 1,980 3,000 0.7 2,100 350 6.5 2,275 400 11.0 4,400 311 11,066 B. Goods Traffic - With New Road Padi Rubber Intercropped Pineapple Tobacco Output Output Output Output Total Trans- Trans- Trans- Trans- Generated Year Ha Yield ported Ha Yield ported Ha Yield ported Ha Yield ported Inputs Tonnage (tons) 5 850 2.35 2,000 3,000 0.7 2,100 350 6.5 2,275 450 11.5 5,175 260 1,697 10 1,100 2.50 2,750 3,300 0.8 2,640 450 6.8 3,060 600 12.0 7,200 400 4,984 C. Passenger Traffic - Without New Road Population of Influence Area Trips/Annum/Household Year (Households) (by Adults Trips/Annum 1 850 156 132,600 10 1,090 156 170,040 D. Passenger Traffic - With New Road Population of Influence Area Trips/Annum/Household Generated Year (Households) (by Adults Trips/Annum 5 950 170 11,660 10 1,090 190 37,060 Note: Yields given are tons/ha; Output transported is tons. sm hli-L5EX1a Table 5 KALAY SI, NORTH KELJTA1N IRURLT DEVELOYPINT FROJECT RURALROAD COPCITENT Rate of IZeturn - Coastal hreas, P'odel 10 InmRo?d Transport Cost Savings Normal Generated Norraal Generated Total Total Year Passenger Passenger Goods Goods Benefits Costs ------w----(X$- O 0 ______ 0 - - - - - 600 1 20 - 138 - 158 20 2 20 - 142 3 165 20 3 21 - 147 7 175 20 !.I 21 1 152 11 185 20 5 22 1 158 15 196 20 6 23 1 164 19 207 80 7 2h 2 171 22 219 20 8 25 2 178 25 230 20 9 26 2 185 28 21X1 20 10 27 3 193 33 256 20 11-20 27 3 193 33 256 40 Economic Rate of Return: 27?" ANNlEX141 LALYSI-ii iG.TH I %i'TAiAR DRAIJDEVELCPI'EMT PR.OJECT RURALRQOA)D CCiTP0NENIT Ral-_teof R Areas. iTode1 10 km Road Transport Cost Savings Norrmal Generated iqorrial Generated Total Total Year Passe lFer Passenger Goods Goods Benefits Costs 0 - - - - - 600 1 90 - 113 - 193 20 2 8)2 - 116 3 201 20 3 1 119S6 210 20 i! 2 121 10 219 20 589 1L 123 14 230 20 f, 92 6 125 18 2.41 80 7 95 8 126 21 250 20 98 9 120 23 256 20 100 10 127 24 261 20 103 11 127 25 266 20 11-20 103 11 127 25 266 40 .onro-rio Rate of Return: 32% T:ci:e 7 ALAYSTA -IO2;r-iK3LLg-).UiT URLI DiZVIL0LThI.',i;:.i iUni?.A ROADO3iCul1JOT5 Rate of Return - Foothill Areas, Nodel 10 kmi Road Transport Cost Savings Normal Generated Nomaal Generated Total Total Year Passenger Passenger Goods Goods Benefits Costs ______(PI$F 'oooT)------______ 0 - - - - - 600 1 32 - 104 - 136 20 2 33 - 122 2 157 20 3 33 - 144 5 182 20 4 34 1 161 9 205 20 5 35 1 182 15 233 20 6 36 1 196 22 255 80 7 37 2 198 29 266 20 8 38 2 198 35 273 20 9 39 3 199 40 281 20 10 41 4 199 45 289 20 11-20 41 4 199 45 289 h0 Economic Rate of Return: 2 9% ANNEX 15 Page 1 MALAYSIA NORTH KELANTANRURAL DEVELOPMENTPROEJCT SMALL-SCALE IRRIGATION COMPONENT Economic Analysis 1. About 15 discrete small irrigationsystems would be constructed under the component. The areas identifiedby DID as suitable for irriga- tion vary considerablyin topographyand in water supply available during the dry season, which implies considerablevariation in the degree of double-croppingattainable at full development. Based on prior experience constructingsimilar schemes in Kelantan and other States, DID projects an upper limit of 50% double-cropping(150% cropping intensity)for any indi- vidual small irrigationscheme at full development. At the other extreme, it is possible that some schemesmay not have sufficientdry-season water supply to permit double-cropping,in which case the scheme benefits would derive entirely from increasedyields and eliminationof crop failure during the wet season. 2. An economic analysis was carried out for each of the two extreme cases outlined above, to determine the probable range of rates of return to be expected for individual schemes (Tables 1-3). Although each analysis was based on data for the entire area to be served under the component, the conclusionsare meant to apply only to extreme individualcases. Case 1 assumes that only one crop would be produced annually,with average yields increasingfrom the present 1.2 ton/ha to 2.0 ton/ha when water and drainage facilitiesbecome available,building up to 2.5 ton/ha by 1987. Case 2 assumes that double-cropping would be progressively introduced, covering 50% of the area by 1985, along with wet-seasonyield increases identical to those in Case 1. Costs are not varied for the two cases, which may tend to overstate the rate of return in Case 2 and understateit in Case 1 but only by negligibleamounts. 3. Incrementalpadi productionof about 1,500 tons for Case I and 3,400 tons for Case 2 would be consumed by the farmers and their families or sold in the locality of the proposed schemes, which are generally situated in rice-deficitareas primarily dependenton rubber production. These areas generally import their rice requirementsthrough Kota Bharu, between 30 and 60 km distant, and the padi produced in the small schemes has accordinglybeen valued M$15/ton higher than similar grades produced in Lemal to cover the transportcost to the areas. In addition,it is assumed that farmers in the scheme areas would plant HYV varietiesduring the dry season when there is little chance of localized flooding. Prices ANNEX 15 Page 2 tor the native varieties have been set equal to those for similar varieties in the Kubang Gadong sub-area of Lemal, 1/ excluding the transport cost differential, implying a 10% price premium for the traditional long-grained varieties over HYV rice, as in Lemal. Assumed input usage and costs are given in Table 4. 4. The calculated rate of return for Case 1 is 12%, while that for Case 2 is 22%. All of the systems to be constructed under the component are expected to fall within this range. 1/ See Annex 11, Table 1. MAIAYSIA NORTHKELANTAN RURAL DEVPOR0NT IROJECT SMALL-SCALEIRRIGATION COMPCUENT Economic Analysis - Basic Data Year Cultivated Ar,e/ Yields Productci Costs Price of Padi ------h------(ton/ha)------(M$/ha)------(M$)--- 'et Season 1976 1,300 1,300 1.20 1.20 234 234 676 1977 1,300 1,300 1.20 1.20 234 234 727 1978 1,300 1,170 130 1.23 1.23 2.00 238 238 300 679 1979 1,300 910 390 1.23 1.23 2.10 238 238 320 656 1980 1,300 585 715 1.26 1.26 2.15 241 241 330 598 1981 1,300 260 1,040 1.26 1.26 2.20 241 241 340 598 1982 1,300 1,300 1.29 2.25 245 345 598 1983 1,300 1,300 1.29 2.30 245 350 598 1984 1,300 1,300 1.32 2.35 248 355 598 1985 1,300 1,300 1.32 2.40 248 360 598 1986 1,300 1,300 1.35 2.45 252 360 598 1987-2011 1,300 1,300 1.35 2.50 252 360 598 2j Izigated Productio Service Area Irrigation Iptenit YiLd _PCost ---- (tha) ------UP ------tha)--- ltav) -- FTJ ---- ^-- Dry Seastm 1976 0 0 0 - _ 616 1977 0 0 0 - - 662 1978 130 25 33 2.140 330 619 1979 390 28 109 2.60 336 598 1980 715 32 229 2.70 342 545 1981 1,040 35 364 2.75 354 545 1982 1,300 40 520 2.80 360 545 1983 1,300 45 585 2.85 366 545 1984 1,300 48 624 2.90 372 545 1985 1,300 50 650 2.90 378 545 1986 1,300 50 650 2.90 384 545 1987-2011 1,300 50 650 2.90 390 545 W = without project W = with projct The irrigable area is expected to cuwnlate as follows: met season 1978 (October 1977-April 1978) - 10M; 1979 - 30%; 1980 - 55%; 1981 - 80%; 1982 - 100%. V/ It is assumed that the area brought under command in year n is double cropped at the following rate: year n - 25%; n+l - 35%; n+2 - 40%; n+3 - 50%. Table- 2 MALAYSIA NORTH KELANTANRURAL DEVELOPMENT PROJECT SMALL-SCALEIRRIGATION COMPONENT Economic Analysis - Production Values Padi Production Production Net Production Incremental Year Production Value Costs Value NPV w w w W W --- (tons) -- -… ------(M$ '000) ------…--… Wet Season - 1976 1,560 1,560 1,054 1,054 304 304 750 750 0 1977 1,560 1,560 1,134 1,134 304 304 830 830 0 1978 1,599 1,699 1,086 1,154 309 317 777 837 60 1979 1,599 1,938 1,049 1,271 309 341 740 930 190 1980 1,638 2,274 980 1,380 314 376 666 984 318 1981 1,638 2,616 980 1,564 314 416 666 1,148 482 1982 1,677 2,925 1,003 1,749 318 448 685 1,301 616 1983 1,677 2,990 1,003 1,788 318 455 685 1,333 648 1984 1,716 3,055 1,026 1,827 323 461 703 1,366 663 1985 1,716 3,120 1,026 1,866 323 468 703 1,398 695 1986 1,755 3,185 1,049 1,905 328 468 721 1,437 716 1987-2011 1,755 3,250 1,049 1,944 328 468 721 1,476 755 Dry Season -1976 0 0 0 0 0 0 0 0 0 1977 0 0 0 0 0 0 0 0 0 1978 0 79 0 49 0 10 0 38 38 1979 0 283 0 169 0 36 0 133 133 1980 0 618 0 337 0 78 0 259 259 1981 0 1,001 0 545 0 127 0 418 418 1982 0 1,456 0 794 0 187 0 607 607 1983 0 1,667 0 909 0 214 0 695 695 1984 0 1,810 0 986 0 232 0 754 754 1985 0 1,885 0 1,027 0 245 0 782 782 1986 0 1,885 0 1,027 0 249 0 778 778 1987-2011 0 1,885 0 1,027 0 253 0 774 774 W = Without project W = with project ANNEX 15 Table 3 XALAYSIA NORTHKEIANTkU RURAL DEVELORPNT PROJECT SHALL-SCALEIRRIGATION COMPONENT Rate of Return IncrementalNet Net Benefitsfrom Costs ProductionVeale Investments Year Investment O&M Total Case 1 Case 2 Case I Case 2 --_------TM 'OOO) ------1976 0 0 0 0 0 0 0 1977 1,440 0 1,440 0 0 (1,440) (1,440) 1978 1,200 5 1,205 60 98 (1,145) (1,107) 1979 1,200 15 1,215 190 323 (1,025) ( 892) 1980 960 28 988 318 577 ( 670) ( 411) 1981 - 41 41 482 900 441 859 1982 - 52 52 616 1,223 564 1,171 1983 - 52 52 648 1,343 596 1,291 1984 - 52 52 663 1,417 611 1,365 1985 - 52 52 695 1,477 643 1,425 1986 - 52 52 716 1,494 664 1,442 1987-2011 - 52 52 755 1,529 703 1,477 Note: Case 1: Cropping intensity at full developmnt = 100%; economic rate of return = 12%. Case 2: Cropping intensity at full development = 150%;econon.c rate of return = 22,f. ANNEX 15 Table a7 MALAYSIA NCRTHKELANTAN RU.AL DEVELUMT PROJECT SMALL-SCALEIRRIGATION COMPONENT Assumed Input Usage Land -reparation without buffalo 80% at 20$/ha tractor 20% at 30$/ha with buffalo 50% tractor 50' Agrochemicals without none with 15 kg of BHC granula per ha at iH$1per kg 2 applicationsof Malathionat 14$7. per applicatior Fertilizers= without 18 kg N (2 bags of 20 kg oi urea (45% N) at $10 per bag (economicprice)) with 47 kg N (4 bags urea, 2 bags of 36 kg mix (15,15,7.5)at $20 per bag) Labor without 92.5 man days at M$1.5/manday(shadow wage) 131.5 man days at M$1.5/manday Seeds without 42 kg/ha at $0.4/kg with 35 kg/ha at $0.43/kg kNNEX 16 Page 1 IALAYSIA NORTH KELANTAN RURAL DEVELOPMENT PROJECT Studies Kelantan State Land Development Schemes 1. The project would include a study of the rehabilitation require- ments of the 27 existing land development schemes presently under the juris- diction of the Kelantan State Land Development Board. Much of the land area of the schemes remains undeveloped, and an important element of the study would be the identification of areas within scheme boundaries suitable for agricultural development. Following a review of existing land use and soil survey data, field surveys would be undertaken by the study team to assess land and water resources, appropriate cropping patterns, and input supply, processing, transport, and marketing possibilities and needs of the various scheme areas. A serious deficiency of the existing schemes appears to be lack of access and this aspect would merit considerable attention. 2. The study team would produce a project proposal of feasibility standard including: (a) an agricultural development plan, including proposals for target incomes, farm sizes, and cropping patterns, and agri- cultural supporting services such as marketing, input supply, processing, and credit. The agricultural plan would also include yield projections and a schedule of agricultural development; (b) an infrastructure development plan, including proposals for construction of various standards of roads, processing centers for rubber, low-cost housing and water supply (possibly on a sites-and-services model), schools, and rural clinics. Proposals for infrastructure investments should be based on analyses of projected requirements and usage; (c) a management plan, inlcuding proposals for management of the implementation phase of a possible rehabilitation project as well as for the subsequent operation of fully-developed schemes. Preparation of this plan would involve a financial analysis of the scheme entities in line with the agricultural and infra- structure development plans. Preparation of the management plan will require close liaison with the Federal Ministry of ANNEX 16 Page 2 Agriculture and the State of Kelantan, and with the Federal Land Development Authority and the Federal Land Rehabilita- tion and Consolidation Authority for purposes of assessing comparative experience; and (d) an economic analysis which would investigate the desirability of various levels of development of the schemes and provide a justification for the level of development selected. 3. The study would implemented by a consulting firm with experience in agricultural development work and familiarity with Malaysian conditions. About 21 man-months of experts' services would be required, the principal participants being an agronomist experienced in tropical (including tree-crop) agriculture, an engineer, and an economist/financial analyst. For purposes of costing implementation by an international firm has been assumed (US$ 6,500 per man-month), but qualified local consulting firms would not be excluded. The study team would report to the project Steering Committee, co-chaired by the State Secretary of Kelantan and the Secretary-General of the Ministry of Agriculture. At the working level, counterpart assistance would be provided by the State Planning Unit of Kelantan and the Economics and Statistics Branch of the Ministry of Agriculture. Recruitment of consultants is expected to be completed by December, 1976, with work beginning in February, 1977 and com- pletion of a final report in August, 1977. Testing of Glass-Reinforced Polyester Flumes 4. The project would include an accelerated testing program to con- firm the long-term structural and chemical properties of the glass-reinforced polyester (GRP) flume system proposed for use in the Lemal irrigation com- ponent. The objectives of the program would include: (a) producing refined estimates of system reliability, safety factors, and durability under field conditions, of the GRP flume system as presently engineered, manufactured, and installed; (b) devising possible improvements in system design or in the manufacturing and installation process which would not increase system cost and which could be incorporated in the proposed works without alteration of the existing contract; and (c) devising economical improvements in the system which would be justified in terms of increased reliability, and which would preserve the GRP system's advantages over alterna- tive tertiary distribution systems, should the present design prove inadequate. This possibility arises be- cause of certain properties of the system which permit ANNEX 16 Page 3 large proportionalincreases in tensile strength and chemical and ultravioletresistance with small propor- tional increasesin the thicknessof the fibreglass laminate. In the unlikely event that major strcutural changes involvingsubstantial cost increasesprove necessary, the tertiary system would be retendered. 5. The testing program would involveprototype testing, laboratory tests on specimens,and field observationand testing of about 800 m of GRP flumes that have been in service for approximatelyone year (two padi cropping seasons) in the Tanjung Karang area. The prototype testing would include: (a) tests of deflection under various loadings for various periods of time, including tests to destructionwithin reasonableload factors; (b) tests of the water absorptioncharacteristics of the heavy hardwoods used in flume construction. Struts and beams would be tested in both exposed and GRP encased states;and (c) tensile tests on flume wall sections,in wet and dry states and after exposure to ultravioletradiation. 6. Flume specimenswould be sent overseas for acceleratedaging testing in accredited laboratories. The major tests to be performed would involve ultravioletradiation testing in accordancewith standardsequiva- lent to ASTM DesignationsD-1499 and D-2565. 7. Field testing would involve accuratemeasurement of deflection of the flumes in service,ponding tests for leakage, and a thorough inspectionof flumes for possible delaminationdue to immersion,ultra- violet radiation, impact damage, or deflection. 8. The study would be implementedunder the supervisionof DID. The services of an individualchemical engineer expert in the manufactureand use of reinforcedplastic and fibreglassequipment would be required for a period of about three man-months. While some laboratorytesting may be practicable in Malaysia,particularly in the Rubber Research Institute, the Forest Research Institute,and the Universityof Malaya, many of the tests can only be executed at overseas testing laboratories. In addition, procurementof equipment required to undertakethickness and hardness testing of flume sections and subsequentquality control of the product after manufacture and installationwould be included in the project. All tests would be completedby May 15, 1977, with a final report submitted for Bank review by June 15, 1977. A brief interim report would be com- pleted and sent to the Bank by November 30, 1977. IBRD 12003 APRIL1976 102: IT Kg Awong-~TrngO, 6f PengPHU .E N A C i < \ t ) ~~~~~~~~~~~~~~~~~Kg Semut .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~M! ...... i<, ~ ~ A1 - -- Village Roads 0~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~K 20iPii 2sPpin, '1 leow 0 tudK inpt 5L 5°30' Paniang gS ~ ~~~~~L 9 BQOris(EitigWachokSchn 5'30' MLES A Quorres E....s...... ng)Tok B30 09 0~~~~~~~~~IRIAIN RJC U SmallProjects ~ ~ ~ K esu P eoasIgto roetAe G eteUSain - -Jrcl -(; VExillinag StoteRoads (v I ! 0 Sta ndard 6100 Rhar~l~~ ~ ~al~ ~ ~NOT ~ ~~~~~~~Dsrc KELRIANTION PRURLJBudre EELPMNCPOJC A~~~~~~~~~~~~~~~~~~~~~~~~~-Sae~udre L A PWD Of fice 102°Wors30 ..-..... Itratoa oudre ...... ~ ~~~ ~ ~ ~~~~~~~2'3 ______t______'__ __ _ - 04 t Snaroin ondarde IBRD 12004 STHAILAND M APRIL 1976 "REA OF MAPRA AY I ) .g '.'EAK2'ELA'-.Th"9bRf g. LEMAL IRRIGATIONAREA KL-ANTO ' 5' LANGOR. , - : Forl tXTTeT.ero G _T z ,TUMPAT P -Xt K '{ . SLUMATERA mpb~~~~~~~~~~~~~~~~~~~~~~~ ProposedweTida Gatesacan Pump,/ N IRRIGATION WORKS 0 \t) X---0 \ g \CExisting Field Choannels \+-- ys\ -/ -j PropoiseingDrPinsand Rovers - Existing Mon Rads 2 \ 4 5 6 ~ A Flood ProtectIon Bonds Proposed P WD. Roads (Sub Standard)Drains KLOMRTRES Irrigation Scheme Boundares g Proposed BundsForm = < _ < \ @~~~~~~~~~~~~~~~~~~~~~~Proposed Tidal Gates aznc Pumps +> . \ ~~~~~~~~~~~ROADWORKS ~~~~~~~~~~~~ ~~~~~~~~~~~Existing MAain Roads AO\x2°t ~~~~~~~~~~~~~~~~~~~~~ExistingEarth Roads RailwNays - - Proposed PWD. Roads (01 Standard) o~~~~~~~~ 1 23 * 456A *A Flood Protection Bunds Proposed P. W D. Roads (Sub PW D. Standard) KILOhVETERS Irrigation Scheme Boundaries - Proposed Form Roads (Upgrading of o I 2 3 4 Penggawa Road) MILES ...... Proposed Farm Roads )on Canal Bank)