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World Bank Document Document of The World Bank LE COPY FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 2539-PE PERU Public Disclosure Authorized STAFF APPRAISAL REPORT OF THE LOWER PIURA IRRIGATION REHABILITATION PROJECT Public Disclosure Authorized October 15, 1979 Public Disclosure Authorized Regional Projects Department Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents (At February 1979 Exchange Rate) US$1 = Peruvian S/.$205.0 S/.$100 = US$ 0.49 S/.$1 million = US$4,900.0 Weights and Measures 2 1 hectare (ha) = 10,000 m = 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (km ) = 0.39 sq. miles = 100 ha 1 kilogram (kg) = 2.2 pounds 1 liter (1) = 0.26 gallons 1 metric ton (mt) 3 = 1,000 kg = 0.98 long ton 1 million cubic meter (Mm ) = 264.18 million gallons Abbreviations ACCHP: Asociacion de Consultores Proyecto Chira-Piura The Chira-Piura Consultants Association BAP: Banco Agrario del Peru Peruvian Agricultural Bank CAP: Cooperativa Agraria de Produccion Agrarian Production Cooperative CENCIRA: Centro Nacional de Capacitacion para la Reforma Agraria National Training Center for Agrarian Reform CNP: Consejo Nacional de Produccion National Production Council CRIA: Centro Regional de Investigacion Agropecuaria Regional Center of Agricultural Research DDA: Direccion de Desarrollo Agropecuario de DEPECHP Agriculture and Livestock Directorate of DEPECHP DEO: Direccion de Estudios y Obras de DEPECHP Studies and Works Directorate of DEPECHP DEPECHP: Direccion Proyecto Especial Chira-Piura Chira-Piura Special Project DEPERTC: Direccion Proyecto Especial de Rehabilitacion de Tierras Costeras Special Project for Rehabilitation of Coastal Lands DGAC: Direccion General de Agricultura y Crianzas General Directorate of Agriculture and Livestock DGAS: Direccion General de Aguas y Suelos General Directorate of Water and Soil DGC: Direccion General de Comercializacion General Directorate of Marketing DGFF: Direccion General de Silvicultura y Fauna General Directorate of Forestry and Wildlife DGRA: Direccion General de Reforma Agraria General Directorate of Agrarian Reform FOROFFICIAL USE ONLY DOM: Direccion de Operacion y Mantenimiento de DEPECHP Operation and Maintenance Directorate of DEPECHP DRT: Direccion de Rehabilitacion de Tierras de DEPECHP Land Reclamation Directorate of DEPECHP ENCI: Empresa Nacional de Comercializacion de Insumos National Marketing Company EPSA: Empresa Publica de Servicios Agropecuarios Public Company of Agricultural Services FAO: Food and Agricultural Organization FUNDEAL: Fundacion para el Desarrollo del Algodon Cotton Development Foundation ICB: International Competitive Bidding IDB: Banco Interamericano de Desarrollo Interamerican Development Bank IECO: International Engineering Company INIA: Instituto Nacional de Investigacion Agricola National Agricultural Research Institute LCB: Local Competitive Bidding MAA: Ministerio de Agricultura y Alimentacion Ministry of Agriculture and Food UNP: Universidad Nacional de Piura National University of Piura This document has a restricteddistribution and may be used by recipients only in the performance of their officialduties. Its contents may not otherwisebe disclosed without World Bank authorization. PERU LOWER PIURA IRRIGATION REHABILITATION PROJECT Table of Contents Page No. I. THE AGRICULTURAL SECTOR ..... ....................... 1 A. General ............................... 1 The Resource Base ...... ........................ 1 The Coastal Zone ...... ....................... 1 The Sierra ........ ........................... 2 The Selva ........ ............................ 2 Agrarian Reform ....... ......................... 2 Other Policy Measures and Current Trends ........ 3 B. Irrigation and Drainage Subsector .... .......... 4 C. Previous Bank Involvement and Proposed Strategy for the Sector ............................... 5 D. Institutional Framework ........................ 6 II. THE PROJECT AREA ................................... 7 Location ....................................... 7 Climate ... 8 Soils, Topography and Drainage ................. 8 Existing Infrastructure ..... ................... 9 Land Use ....................................... 9 Population and Employment ...................... 10 Land Tenure and Farmer Organizations ........... 10 Agricultural Services ...... .................... 11 Extension .................................... 11 Research ..................................... 11 Agricultural Credit ...... .................... 11 Marketing ... ................................... 12 This report is based on the findings of an appraisal mission consisting of Messrs. J. Roman, E. Brook, M. Raczynski, and D. van der Sluijs (Bank), and Messrs. A. Kogan and C. Bower (consultants) that visited Peru in November 1978 and a follow-up mission consisting of Messrs. J. Roman, E. Brook, and D. van der Sluijs (Bank) and W. Johnston (consultant) in February 1979. Table of Contents (Continued) Page No. III. THE PROJECT ......................................... 12 Project Origin ................ 12 Project Description ............................ 12 Detailed Features .............................. 13 Irrigation Works ............................. 13 Flood Protection Works ....................... 14 Drainage Works ............................... 14 On-farm Investments - Development Credit ..... 14 Equipment .................................... 14 Technical Services ....................... 14 Consultants' Services ........................ 14 Status of Project Preparation .................. 15 Water Supply and Demand ........................ 15 Water Quality .................................. 16 International Waters ........................... 16 Implementation Schedule ........................ 16 Cost Estimates ................................. 16 Financing ......... ............................. 17 Procurement .......... 18 Disbursement ................................... 19 IV. PROJECT ORGANIZATION AND MANAGEMENT ................ 20 Executing Agency ............................... 20 Engineering and Construction of Civil Works .... 20 Land Reclamation, Drainage and On-farm Works ... 20 Operation and Maintenance ...................... 21 Agricultural Extension and Research .... ........ 21 Development Credit ............................. 22 Consultants' Services .......................... 23 Monitoring and Evaluation ...................... 23 Accounts and Audits ............................ 23 V. PRODUCTION, MARKETS, PRICES, BENEFICIARIES AND COST RECOVERY .................................... 24 Future Land Use and Cropping Pattern-- Yield, Production ............................ 24 Market Prospects and Prices .................... 25 Beneficiaries .................................. 25 Water Charges .................................. 26 VI. BENEFITS AND JUSTIFICATION ......................... 27 Benefits ....................................... 27 Risk and Sensitivity ........................... 27 Environmental Impact ........................... 28 VII. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDATION .................................. 29 Table of Contents (Continued) ANNEXES 1. Supporting Tables and Charts 1 Volume of Agricultural Production 2 Climatic Data 3 Land Reclamation Service - Cost Estimates 4 Agricultural Extension Service - Cost Estimates 5 Maintenance Equipment - CIF Peruvian Port 6 Irrigation Water Requirements 7 Water Balance - Medium and Lower Piura Valley 8 Project Cost 9 Schedule of Expenditures 10 Financing Plan 11 Estimated Schedule of Disbursement 12 With and Without Project, Area Development and Cropping Pattern 13 Yields Per Hectare and Volume of Production With and Without Project 14 Producer Prices at Farmgate Level 15 Agricultural Labor Requirement 16 Crops Production Cost per Ha - 1.8-ha Farm Model 17 Crops Production Cost per Ha - 15-ha and 1,000-ha Farm Model 18 1.8-ha Farm Model 19 15-ha Farm Model 20 1,000-ha Farm Model 21 Annual Operation and Maintenance Cost (Civil Works) - O&M 22 Rent and Cost Recovery 23 Project Production Benefits 24 Rate of Return Streams 25 Rate of Return and Sensitivity Analysis Chart No. 20376 Implementation Schedule Chart No. 20375 Organization Chart 2. List of Selected Documents and Data Available in the Project File MAPS IBRD 14158 - Chira-Piura-San Lorenzo System IBRD 14159 - Lower Piura Irrigation Rehabilitation II Project PERU LOWER PIURA IRRIGATION REHABILITATION II PROJECT I. THE AGRICULTURAL SECTOR A. General 1/ 1.01 Agriculture contributes about 13% to Peru's GDP, but it occupies more than 42% of the labor force and accounts for about 22% of total merchan- dise exports. Food processing employs an additional 4% of the labor force and contributes about 9% of the GDP. The value of food production at constant prices increased only at an average of 1% per annum from the mid-1960s to the mid-1970s, while, during the same period, population increased by an average of 2.9% per annum. Consequently, the country's dependence on imported food- stuffs has grown substantially, mainly in dairy products, pulses, vegetable oils and grains such as wheat and maize. At the same time, the volume of agricultural exports declined and by 1975/76 was only about 60% of its 1962/63 level. As a result, the value of agricultural imports as a percentage of agri- cultural exports has increased
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