World Bank Document

ReportNo. 779a-BD FILECopt Bangladesh:Appraisal of the KarnafuliIrrigation Project

Public Disclosure Authorized (Haldaand IchamatiUnits)

December31, 1975 Irrigation and Area Development Division South Asia ProjectsDepartment Not for PublicUse Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Documentof the World Bank

Thisdocument hasa restricteddistribution and may be usedby recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. CURRENCY EQUIVALENTS

The Bangladesh Taka is officially valued at 30 to the Pound Sterling. The Pound now floats relative to the US Dollar and coosr- quently the Taka, US Dollar rate is subject to change. The rate below has been used throughout this report, except where stated to the con- trary.

US$1 - Tks 13.0 Tk 1 - US$0.077 Tk 1 million - US$77.000

WEIGHTS AND MEASURES

1 acre (ac) - 0.405 hectare (ha) 1 mile (mi) - 1.609 kilometers (km) 1 square mile (sq mi) - 640 ac (259 ha) 1 foot (ft) - 30.5 centimeters (cm) 1 maund (md) - 82.3 lbs (37.3 kg) 1 metric ton (ton) - 26.8 md 1 cubic foot per second (cfs) - 0.028 m3/sec PRINCIPAL ABBREVIATIONS AND ACRONYMSUSED

BADC - Bangladesh Agricultural Development Corporation BAISSC - Bangladesh Agricultural Inputs, Supplies and Services Corporation BRRI - Bangladesh Rice Research Institute CEC - Central Evaluation Committee GDP - Gross Domestic Product GOB - Government of Bangladesh HYV - High Yielding Varieties (of rice) IRDP - Integrated Rural Development Program IRRI - International Rice Research Institute (Philippines) MFWP - Ministry of Food Control, Water Resources and Power NEC - National Economic Council PEP - Project Evaluation Proforma PIC - Project Implementation Committee TAO - Thana Agriculture Officer TEO - Thana Extension Officer TCCA - Thana Central Cooperative Association TIP - Thana Irrigation Program TTDC - Thana Training and Development Center UAA - Union Agriculture Assistant VEA - Village Extension Agent WDB - Water Development Board

GLOSSARY

Aman - Rice planted before or during the monsoon and harvested in November or December (B. aman is broadcast, T. aman is transplanted) Aus - Rice planted during March and April and harvested during July and August (B. aus is broadcast, T. aus is transplanted) Boro - Rice planted in winter and harvested during the period April to June Khal - Natural drainage channel Paddy - Unhulled rice Project Eval- - A project report prepared for the Planning Commission. uation Pro- Approval of the PEP by the NEC is required before forma (PEP) local funds for the project can be released. Thana - Smallest administrative unit in Bangladesh. There are 413 thanas in the country. Six or seven thanas form a District, and there are 19 Districts in the country Union - A unit of local self government. There are about 10 unions in each thana

FISCAL YEAR

Ju 1 - June 30

BANGLADESH

APPRAISAL OF KARNAFULIIRRIGATION PROJECT

(HALDAAND ICHAMATIUNITS)

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ...... i - ii

I. INTRODUCTION ...... 1

II. BACKGROUND ...... 1

General ...... 1 AgriculturalDevelopment ...... 2 Irrigation Development ...... 3

III. THE PROJECT AREA ...... ; 4

General.. 4 Climate.. 5 Topography and Soils . . 5 Existing Irrigationand Drainage 6 Farm Size and Land Tenure. 7 AgriculturalProduction . . 8 Transportationand Marketing . . 8

IV. THE PROJECT..9 :D . ~ enra ...... 9 General..9 Project Features.. 9 Water Quality, Demand and Supply . .12 Engineering Design...... 13 ConstructionSchedule . .13 Cost Estimates. 13 Financing . .16 Procurementsand Contracts . .16 Disbursements . .16 Accounts and Audit . .17 EnvironmentalImpact . .17

This report is based on the findings of an appraisal mission which visited Bangladeshin September-October1974, comprisingMessrs. R.R. Morton, P. Garg, U. Hpu, P. Ljung, and A. Feinstein (Consultant). Mr. L. Sprague contributedto the Annex on Fisheries. -2-

Page No.

V. ORGANIZATIONAND MA1AGEMENT...... 17

Implementationof Project Works ...... 17 Consulting Services ...... 18 Operation and Maintenance ...... 19 AgriculturalSupporting Services ...... 19 Recovery of Costs ...... 21

VI. PRODUCTION, MARKETING, PRICES AND FARM INCOMES ... 22

Crop Calendars and Cropping Patterns ...... 22 Yields and Production ...... 23 Marketing ...... 24 Prices ...... 24 Farm Income ...... 25

VII. BENEFITS AND JUSTIFICATION ...... 26

General ...... 26 Rice Production ...... 26 Employment Opportunities ...... 27 Income Distribution ...... 27 Economic Rate of Return ...... 27

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 29

ANNEXES

1. AgriculturalDevelopment 2. Climatic Data 3. Project Works 4. Fisheries Development Program 5. Irrigation Water Requirements 6. Construction Schedule 7. Cost Estimates 8. Schedules of Expenditures, Proposed Credit Allocation, and Disbursements 9. Agricultural Supporting Services 10. Present and Projected Cropping Patterns and Production 11. Prices for Economic and Financial Analyses 12. Crop Inputs and Farm Budgets 13. Farm Labor Analysis 14. Economic Analysis

NAP NO.

11537 Project Location 11538 Project Area BANGLADESH

KARNAFULI IRRIGATION PROJECT

(HALDA AND ICHAMATI UNITS)

SUMMARY AND CONCLUSIONS i. Agriculturedominates the economy of Bangladesh. It accounts for over half of GDP, 75% of employment,and over 80% of exports. Although rice is grown on about 80% of the cultivatedacreage and represents about two- thirds of the value of agriculturalproduction, rice production has not been able to meet the requirementsof a rapidly growing population. In 1960/61 food grain imports amounted to 0.7 million tons and had, by 1974/ 75, risen to 2.4 million tons. The First Five-Year Plan (1974-78)gives high priority to increasingrice production through promotion of modern inputs (improvedseeds, fertilizersand pesticides)and through further expansion of irrigationfrom low-lift pumps and tubewells. ii. The proposed project would provide irrigation,flood control and drainage to a net area of about 38,000 ac in the lower Halda River Basin, and 8,000 ac in the lower Ichamati River Valley. Because of the irrigation facilities to be provided under the project, the dry season rice area would expand from the present 20,000 ac to about 38,000 ac. In the wet season, project works would reduce flooding and provide supplementaryirrigation. This would increaseyields and permit a shift from local to high yielding rice varieties on 15,000 ac. About 840 units of 7-10 hp diesel-powered low-lift pumps, each serving an average area of 45 ac, would irrigate the area from an extensive network of natural and project-improvedchannels (khals). In the Halda Unit, the khal system would be supplied by tidal recharge whereas in the Ichamati Unit it would be by a main pumping plant. In both areas, high-level khals would be filled by relift pumping stations. Both project areas would be protected from outside flooding by perimeter embankmentsand regulators on the khals. The Ichamati pumping plant would serve to drain excess water in the unit during the wet season. Khal excavation and the regulators would make navigation by small boats possible in most parts of the project area. In addition to pumps and civil works, the project would provide a fisheries developmentprogram as well as workshops, equipmentand vehicles for both operation and maintenanceand agricultural supporting services.

iii. The Water DevelopmentBoard, under the Ministry of Flood Control, Water Resourcesand Power, would have overall responsibilityfor execution and management of the irrigation and flood control component of the project works. Several Government agencies would be involved in implementingthe project. Interagencycoordination would be provided by an interdepartmental Project ImplementationCommittee chaired by the Project Director. The Minis- try of Forests, Fish and Livestock would be responsiblefor the implementation of the fisheries development componentof the project. A Central Eval- uation Committee comprising senior representativesof the various ministries - i:i -

and agencies involved and chaired by the Minister of Flood Control, Water Resources and Power, would periodicallyreview project progress and resolve coordinationproblems. Consultantswould be engaged to assist in project implementation.

iv. The estimatedcost of the project is US$30.3 million equivalent of which US$9.4 would be in foreign exchange and US$2.6 million equivalent in local taxes and duties. Out of the proposed credit of US$22.0 million, US$18.9 million would be used for financing the full foreign exchange costs and some local costs, or about 68% of the total project cost net of taxes and duties. The remainingUS$3.1 million of the proposed credit would refinance an earlier technicalassistance credit (Credit S-14-BD). Contracts for the supply of vehicles, equipment and imported materials amounting to about US$3.6 million would be awarded after internationalcompetitive bidding. Because internationalcompetitive bidding would not be practical for the civil works, which are small, simple, labor intensive and scattered, these works, with an estimatedcost of US$17.0 million, would be awarded on the basis of competitivebidding locally advertised. Foreign contractors would not be precluded from bidding. Project implementationwould take four years.

v. At full developmentby 1984, annual paddy production in the project area is expected to reach about L41,000tons compared to the current 93,000 tons and a projected productionof 115,000 tons under "without project" conditions. The project related increase of 26,000 tons (17,000 tons of milled rice) would represent a net foreign exchange savings of about US$3.3 mi1lion annually. The project would lead to an increased income for some 20,000 farm families,most of whom are very small farmers operating on an average about 1.6 ac. Average farm income would increase from about US$90 to about US$120 per capita per year. At the projected World Market price for milled rice of US$250 per metric ton cif Chittagong,the project's economic rate of return would be about 15%.

vi. The proposed project is su:Ltablefor an IDA credit of US$22 million equivalent. The Borrower would be the People's Republic of Bangladesh. BANGLADESH

APPRAISAL OF THE KARNAFULI IRRIGATION PROJECT

(HALDA AND ICHAMATI UNITS)

I. INTRODUCTION

1.01 The Government of the People's Republic of Bangladesh (GOB) has requested an IDA credit of US$22 million -- US$18.9 million for financing the Karnafuli IrrigationProject and US$3.1 million for refinancing an earlier technical assistance credit -- Credit S-14-BD. This would be the fourth IDA credit for irrigation projects since Bangladesh independence. Two IDA credits have also been provided to finance technical assistance to the Government in project preparation. The status of IDA-financed projects for irrigationdevelopment in the country is described in Chapter II.

1.02 Feasibility studies for the Karnafuli Project were carried out for the Bangladesh Water Development Board (WDB) by a joint venture of consulting engineers -- InternationalEngineering Co., Inc., USA, and Rahman and Associates,Bangladesh. The studies began in 1970 under IDA Credit S-10-PAK. When disbursementsfor this credit were suspended in December 1971 due to the war of independence,a draft report on a combined irrigation and flood control project had been completed. On resumption of studies under Credit S-14-BD, dated April 9, 1973, the basic data was updated and the irrigationand flood control components analyzed on a phased development basis. A revised feasibilityreport was completed in March 1974.

1.03 This report is based on the findings of the appraisal mission, comprisingMessrs. R.R. MIorton,P. Garg, U. Hpu, P. Ljung and A. Feinstein (Consultant),who visited Bangladesh in September-October1974. Mr. L. Sprague contributedto the Annex on Fisheries.

II. BACKGROUND

General

2.01 Bangladesh has an area of 55,000 sq mi of which 8,500 sq mi are forested, about 5,000 sq mi are rivers and swamps, and about 35,000 sq mi are cultivable. The population density of Bangladesh is among the highest in the world with about 1,400 persons per sq mi (a total population of 77 million in 1974, increasingat about 3% annually). Practically all suitable land has been brought under cultivation. At least one-third of the land is flooded every year due to its location on the alluvial delta plain of three of the world's largest rivers - the Brahmaputra,Ganges and Meghna. -2-

2.02 About 90% of the population live in rural areas and at least 80% are dependent on agriculture,predominantly rice and jute cultivation. About one-third of all rural householdsare landless and about two-fifthsof the labor force is under-employedall year around. Although nearly three-quarters of the adults are illiterate,currently some 56% of the children ages six to ten are enrolled in primary schools. The per capita income which has been constant since the mid-1960s of about US$100 (in 1975 prices) per year is among the world's lowest. The country'smost pressing problem is an overall food deficit and the resultant outflow of foreign exchange for essential food grain imports.

AgriculturalDevelopment

2.03 Agriculture contributesabout 55% of GDP and accounts for about 80% of exports -- mainly raw jute, jutegoods, and some tea. Possibilities are limited for expanding the cultivatedarea of 22.5 million ac and gains in productionwill require more intensive land use and higher yields. While soil fertility is generally good and temperaturesallow year-round cropping, irrigation is essential for crop production during the dry season (November - March). About 2.5 million ac are deeply flooded (over 15 ft) annually and cultivationis possible only after the flood subsides in November. An additionalarea of 5.5 million ac is flooded from 3-15 ft and is therefore only suitable for one crop of low-yieldinglong-stalk or floating rice. In addition, abnormal floods, cyclones and drought often limit production (Annex 1).

2.04 The total cropped area in 1973/74 was 30.5 million ac: rice, 24.4 million ac; jute, 2.0 million ac and other crops 4.1 million ac. The cropping intensity is about 140%. Although the area of 22 million ac of rainfed rice has not changed significantlysince 1960, irrigated dry-season rice has increased from 1.0 to 2.6 million ac. Rice production in the 1960's, not keeping pace with the population, increased at an average of 2% per year. The present level of annual food grain imports is 2.0 - 2.5 million tons, or about 20% of total consumption.

2.05 The average land-holdingvillager owns about 1.5 ac. He may rent another acre from farmers with larger holdings. His total area is usually fragmented into four to five plots. Most of the rice produced by the average farmer goes to feed his family; his cash earnings are small and he is usually in debt.

2.06 A primary objective of the Government is to improve village living standards by raising agriculturalproduction. As the short-termapproach to increasingfood grain production, the First Five-Year Plan (1974-1978) proposed a rapid spread of high yielding rice varieties (HYV),with the provision of fertilizers,pesticides and, where possible, of irrigationby low-lift pumps and tubewells.

2.07 Ministriesand agencies principally involved in agriculturaldevelopment are: -3-

Ministry of Agriculture - responsible for the procurement and through the Bangladesh distribution of seeds, fertilizers, Agricultural Development insecticides, low-lift pumps, tube- Corporation (BADC) 1/ wells and fuel for operation;

Ministry of Agriculture - responsible for research, training through its specialized and extension; departments

Ministry of Local Government, - responsible for developing and ex- Rural Development and Coop- panding farmers' cooperatives and eratives through its Rural cooperative associations and for Development and Cooperative strengthening local government Division and its Integrated institutions; Rural Development Program (IRDP)

Ministry of Flood Control, - responsible for the planning, design Water Resources and Power and construction of water development through its Water Development projects. Board (WDB)

Irrigation Development

2.08 For centuries, Bangladesh farmers have used bucket-lift irrigation methods for cultivating a dry-season rice crop (boro) on land near low-lying water bodies and perennial rivers. Almost no water resource development took place until WDBwas established in 1959 and BADCin 1962. Irrigation is now available for about 2.5 million ac: 0.2 million ac by gravity supply; 0.2 million ac by groundwater from tubewells; 1.1 million ac by low-lift pumps, and 1 million ac by traditional methods. Flood protection has been provided for about 1.5 million ac, of which 1.3 million ac is primarily saline water protection in the coastal region. Partial flood protection is provided for about 0.9 million ac.

2.09 The IDA has financed two completed large scale water control projects: Dacca Demra (Credit No. 1-PAK, 1961, US$1 million) provides flood protection for about 10,000 ac and irrigation for about 15,000 ac, and Brahma- putra Right Embankment (Credit No. 39-PAK, 1963, US$5 million) gives partial flood protection for a gross area of about 580,000 ac. The IDA also financed 3,000 low-lift pump sets in 1967 (US$4.1 million from Credit No. 76-PAK) and 3,800 pump engines in 1968 (US$3.5 million from Credit No. 117-PAK) to provide irrigation for about 275,000 ac. Currently, IDA is financing construction of the Chandpur II Irrigation Project (Credit No. 340-BD, 1972, US$13.0

1/ In mid-1975, the Bangladesh Agricultural Development Corporation (BADC) was reorganized into Bangladesh Agricultural Inputs, Supplies and Serv- ices Corporation (BAISCC). All subsequent references to BADC in this report should be taken to imply BAISCC. -4-

million), to provide flood prot:ectionfor about 140,000 ac and irrigation for about 75,000 ac; the Northwest Region Tubewells Project (Credit No. 341-BD, 1972, US$14.0 million) to provide irrigation from groundwater for about 180,000ac, and the Barisal Irrigation Project (Credit No. 542-BD, 1975, US$27.0 million) to provide irrigation for about 140,000 ac by low-lift pumping. An additional irrigationand flood protection project (Muhuri Project), prepared along with the Karnafuli Project with the help of IDA Credit No. S-14-BD (1972, US$3.15 million) is under processing and will be presented to the Board after evraluationof the bids for the major civil works contract. The IDA is also financing a Technical Assistance Credit (Credit No. 409-BD, 1973, US$4.0 million) to assist the Government in planning and preparing several types of projects, including irrigation schemes. In addition, US$18.2 million has been disbursed under the Recon- structionImport Credit (CreditNo. 345-BD, 1972, US$50.0 million) and US$1.0 million under the Third Import Program Credit (515-BD, 1974, US$75.0 million) for materials and spare parts for tubewells and low-lift pumps.

2.10 The major item in irrigation development is currently the low- lift pump program of BADC. However, pump utilization -- about 15-20 ac per cfs -- is far below its potential and this is partially due to the Government'slarge subsidy of farmers' pump costs which allow profitable utilizationwith inefficientpractices. Frequently, pumps are located where water supply is inadequate for optimum irrigation. Inadequate supply of spare parts and other maintenance problems have also adversely affected the program. There is a lack of practical advice to farmers in the organization and management of pump groups, and group membership is unstable. Fuel and fertilizer supplies are also unreliable.

2.11 The Government is taking steps to correct these deficienciesand is now giving priority to projects that would create suitable conditions for expansion of low-lift pump irrigation. With the provision of water control, the Karnafuli project area would become suitable for such a development. Flood levels in the project area do not inhibit the cultivation of HYV rice during the monsoon season, and existing khals (channels) provide a natural water distributionsystem.

III. THE PROJECT AREA

General

3.01 The project would comprise two sub-projects-- the Halda Unit and Ichamati Unit -- located around two tributariesof the Karnafuli River in southeastBangladesh, some 130 mi from Dacca (Map 11537). About 244,000 people live in the area, of which 190,000 belong to farm households. The nearest town is Chittagong,located at the mouth of the Karnafuli River, ten miles west of the project. It is the main port of Bangladesh and is a divisional and district headquarterswith good transportationand marketing facilities. 3.02 The Halda sub-projectarea is situated on the wide, flat plain of the lower Halda River and comprises parts of the Rauzan and Hathazari thanas of the Chittagong District. It has a gross area of 48,000 ac and a net agriculturalarea of 38,300 ac. The area's population is about 207,000 of which 160,000 belong to farm households.

3.03 The Ichamati sub-projectarea is situated on the east side of the valley of the Ichamati River and comprises a part of Rangunia thana, 1/ also of the Chittagong District. It has a gross area of 10,000 ac and a net agriculturalarea of 7,900 ac. It is somewhat less densely populated than the Halda area and has a population of about 37,000 with 30,000 belonging to farm households. Both areas are interlacedwith numerous small rivers and khals.

Climate

3.04 The project area has three main seasons: the monsoon from June to October, during which about 80% of total annual rainfall is recorded; the dry season from November to February,which has very little rainfall and the lowest temperaturesand humidities,and the pre-monsoon season from March to May, which has the highest temperaturesand evaporation rates with occasional heavy rain storms. Cyclones, originating in the Bay of Bengal in April-May and September-November,periodically cause severe damage along the coast, west of the project area. However, because of its location, the project would not be affected by cyclones.

3.05 Mean monthly temperaturesvary between about 67aF in January and 83°F in May. The mean dirunal range in temperaturesis about 20°F in the dry season, and 9°F in the rainy season. Relative humidity ranges from 65% to 85%. Annual rainfall averages about 110 inches. Evaporation ranges from 3 inches in January to 6 inches in May (Annex 2).

Topography and Soils

3.06 Most of the area consists of wide, flat, flood plains, intersected by the two rivers and numerous khals. Elevations in the Halda Unit range from about 6 ft above mean sea level (YSL) in the low areas, to about 14 ft MSL along the river banks. In the Ichamati Unit, elevation is from 8 ft MSL in a large saucer-shapeddepression (named Gumai Bil) that occupies about half the unit's area to about 20 ft MSL along the river banks and 25 ft MSL at the northern and western project boundaries. In both units, soils are deep and nearly level. Where slight natural gradients occur, individual plots have been leveled to form terraces. Topsoil textures range from loam to clay, with silty clay loam and silty clay being the most common.

1/ Rangunia thana is one of the four thanas in Bangladesh that will receive a comprehensivepackage of family planning services under the Population Project (CreditNo. 533-BD, 1975, US$15 million). (For further details, see Annex 9, paras 9-10). -6-

Soil permeabilityis low to moderate and is excellent for rice production. The two areas are seasonally flooded with depths seldom exceeding 4 ft in the Halda Unit but slightly above 5 ft in the Gumai Bil depression of the Ichamati Unit. With a delayed transplanting,the majority of the two areas is suitable for transplantedaman during the wet season although yields are below optimum. During the dry season, irrigation is essential for rice cultivation. Vegetable and winter (rabi) crops are cultivatedwith residual soil moisture after harvest of the wet season crop. The many rivers and khals supported by tidal-inducedback water from the Karnafuli River make the area suited for irrigation by low-lift pumps. This has already been adopted by the farmers where water is available in sufficient amounts during the dry season.

Existing Irrigation and Drainage

3.07 The principal source of water for the project areas is the Karnafuli River, which is regulated by the Kaptai Reservoir some 40 mi upstream of Chittagong (30 mi from the Halda and 15 mi from the Ichamati outlet). Diurnal tidal fluctuations in the Bay of Bengal back fresh water up the Karnafuli into the Halda and Ichamati Rivers and thence into the khals throughoutthe project areas. Present low-lift pump irrigation is dependent on this tidal recharge in most parts of the area. However, the limited duration of the high tides reduces both the irrigatedarea per pump and the number of pumps that can be profitably used.

3.08 Present irrigation in the project area is primarily by 2 cfs capacity low-lift pumps. These are rented by BADC to farmers organized under the Thana Irrigation Program (TIP). The BADCcollects the pumps at the end of the dry season for maintenance and storage during the monsoon. It is also responsible for the supply of fuel and lubricants, fertilizers,pesticides, and seeds. The TIP is responsible for organizing pump groups, providing pump operators,and collecting fuel and rental charges. Some 410 pumps are currently fielded in the Halda project area, while 60 are in the Ichamati area. Average area per pump is about 40 ac. It is unlikely that these numbers of pumps could increase substantiallysince pump utilization is already limited by water availabilitywith pumping from many khals possible only at high tide. Run-off in the Halda and Ichamati drainage basins and their tributary khals is too low during the dry season to aid this situation appreciably.

3.09 Flood protectionand drainage in the project area is rudimentary. Khals convey excess water to the principal rivers, which are backed up during tides. Large areas are thus flooded several times during a monsoon season with consequent reduction of crop yields. -7-

Farm Size and Land Tenure

3.10 The Halda Unit has an estimatedpopulation of about 207,000 distributedin 10,000 non-farm households, 5,000 householdsof landless agriculturallaborers 1/ and 18,000 farm households. The number of non- agriculturalworkers is relatively high in this area due to ample fishing opportunitiesin the Halda River, a well developedmarketing system and the proximity to the urban labor market in Chittagong.

3.11 The Ichamati Unit has an estimated population of about 37,000 distributedon 1,200 non-farm households,800 households of landless agricultural laborers 1/ and 3,900 farm households. The two project areas are among the most densely populated in Bangadesh (2,600 persons per sq mi compared to the national average of 1,400). Consequently,farms are smaller than in most parts of the country.

3.12 At present, a minimum area of about 1.5 ac is required to support an average farm family at a subsistencelevel. However, as can be seen below, about 60% of all farming householdsare either landless or operate farms smaller than this size. If all households are included in the com- parison, only about 20% have holdings in excess of 1.5 ac.

No. of Holdin sLb Area of HoldingsL/b Average_Lb Farm Size/a as % of Totaf as % of Total Family Size (Persons)

Less than 0.25 ac 22 2 5.0

0.25 - 1.00 ac 28 8 5.7

1.00 - 2.50 ac 24 20 6.9

2.50 - 5.00 ac 17 32 8.0

Over 5.00 ac 9 38 9.9

/a Operated area (owned and rented).

/b The farm size distributionin the two units are almost identical. The figures given here are averages for both areas.

3.13 The average farm size is 1.9 ac of which 1.6 ac are cultivated and the remaining 0.3 ac is farmstead,ditches and foot paths. If the holdings below 0.25 ac are excluded, the average is 2.4 ac. An agro- economic sample survey indicates that a relatively high proportion,

1/ Holding less than 0.25 ac. - 8 - over 20%, of the land is owned by absentee land owners, mainly persons who have--permanentlyor, more often, temporarily--migratedto Chittagong, or by non-farm households in the area. Only about two-thirds of the farmer-owned area is owner operated since farmers exchange land under a variety of arrangementssuch as share cropping, cash-lease or long-term rental. Share cropping, the most common type of lease, is usually based on a 50-50 sharing of the crop with expenses shared on a variable basis between the landowner and the sharecropper. The exchange of land is a way of minimizing the risk of a major crop loss, and is consequently most common in areas subjected to frequent floods such as in the Gumai Bil depression. About 5% of the farms are tenant operated.

Agricultural Production

3.14 Rice is by far the most important crop and accounts for 94% of the cropped area. There are three crops of rice - aus, aman, and boro. Aus, a crop with a short growth period, is usually broadcast with the early rains in March-April and harvested in July-August. Aman, the main crop, is all transplanted. It is sown generally in June-July, transplanteda month later and harvested in November-December. However, in some low-lyingareas, transplantingis delayed until the monsoon flood recedes. Boro, which is cultivatedwith irrigation,is sown in December- January, transplanteda month later and harvested in May-June.

3.15 Aus is grown on 20,000 ac, aman on 42,000 ac and boro on 22,000 ac. The HYV rice is becoming increasinglypopular and accounts for 48,000 ac, or 56% of the area under rice cultivation. The local variety yields are relatively low: 0.5 tons of paddy per ac for aus; 0.8 tons per ac for aman, and 0.9 tons per ac for boro. The HYV aus, aman and boro presently give yields of about 1.0, 1.2 and 1.7 tons per ac, respectively.

3.16 During the dry season, about 4,800 ac of pulses, oilseeds and vegetables are grown utilizing residual soil moisture after the harvesting of the rice crop. Sugarcane, a year-round crop, occupies about 400 ac. No jute is grown in this area.

3.17 The present cropped area is about 90,000 ac which, on a net cultivated area of about 46,000 ac, gives an overall cropping intensity of 194% (the average for Bangladesh is 136%). In most of the project area, the cropping intensity is about 200% but the average is pulled down by the low-lying Gumai Bil depression in the Ichamati Unit, which is liable to a flooding depth of about 5 ft or more and thus has a cropping intensity of only 125%. The total production is: 93,000 tons of paddy; 500 tons of pulses and oilseeds; 3,400 tons of vegetables, and 4,000 tons of sugarcane. Present and projected farming practices are detailed in Annex 1. Cropping patterns and yields are detailed in Annex 10.

Transportationand Marketing

3.18 The transportationnetwork within the project area is only skele- tal. The Chittagong - Kaptai Highway, which cuts through both the Halda and - 9 - the Ichamati Units, and the Chittagong- RangamatiHighway, through the Halda Unit, are the only paved all-weatherroads in the area. Other roads are generally usable only during the dry season. The Chittagong-NazirHat Railroad follows the western border of the Halda Unit and carries about 15,000 passengers per day. However, frequent bus service on these roads gives good con- nections to Chittagong. The Karnafuli,Halda and Ichamati rivers are used throughoutthe year for both cargo and passenger transport. During the monsoon season, the large network of khals forms a widespreadwater transport system, thereby permittingaccess to most villages.

3.19 - The farmers usually take their paddy by carry-pole,oxcart or boat to the village market where it is bought by intermediarytraders, who either bring the paddy to the town markets for resale to wholesale dealers or have it milled by local hullers for direct sale. About 200 rice hulling machines are operating in the area and major rice mills exist in Chittagong. Many of the private dealers have small go- downs (generally10-20 tons capacity) for the storage of paddy and rice.

IV. THE PROJECT

General

4.01 The proposed projectwould provide irrigation,flood control and drainage,and improved agriculturalsupporting services to farmers in a net area of about 38,000 ac in the lower Halda Valley and 8,000 ac in the Ichamati Valley. Irrigationwould depend on low-lift pumps drawing from an improved khal system,which would be supplied by tidal recharge in the Halda Unit and a main pumping plant in the Ichamati Unit. The pumping plant would also be used for drainage during the monsoon season. The project would enable a major increase in crop yields through the constructionof facilities to create favorable conditionsfor growing HYV rice.

Project Features

4.02 The main componentsof the project, details of which are given in Annex 3, are as follows: halda Unit - Major Works

(a) sixteen gated regulatorsat the outlets of khals to the Karnafuli and Halda rivers;

(b) five cargo-transferstations at selected regulator sites;

(d) twenty-sevenrelift pumping stations with a total of 71 low-lift, 2 cfs pumps (or equivalent) to supply the khals in the higher areas;

(e) about 710 low-lift, diesel-powered 2 cfs pumps (of which about 410 are for replacing the existing pumps) to raise water from the khals to adjacent farm lands;

(f) small earthfill khal check structures, and

(g) flood-protection embankments about 36 mi long, with some burrow areas to be used for drainage and irrigation water supply.

Ichamati Unit - Major Works

(a) a main pumping plant at Mahfez khal with about 150 cfs pumping capacity for irrigationand flood drainage;

(b) a relift pumping plant with about 50 cfs pumping capacity;

(d) three gated regulators at the outlets of khals to the Karnafuli and Ichamati rivers;

(e) improvementof about 16 mi of existing khals and the excavation of about 4 mi of new khals;

(f) about 130 low-lift, diesel-powered, 2 cfs pumps (of which about 60 are for replacing the existing ones) to raise water from the khals to adjacent farmlands;

(g) a box culvert under the Chittagong-KaptaiHighway;

(h) two khal check structures,one of them gated, and

(i) flood protection embankmentsabout 12 mi long, along with an exterior diversion channel.

Minor Works and Supporting Services (both Units)

(a) workshops, equipment and vehicles for maintenance of civil works and pumps;

(b) transportation (fie.ldvehicles, motorcycles, bicycles), and agricultural equipment (hand sprayers, grain dryers); - 11 -

(c) to strengthenagricultural extension and supportingservices and the establishment of six agriculturaldemonstration areas;

(d) consultantsto assist the Government in project implementation,and

(e) fisheriesdevelopment program (Annex 4).

4.03 The project would provide a reliable water supply to the 20,000 ac presently under inadequateirrigation and expand the irrigatedarea to 38,000 ac. In the wet season, the project would reduce flooding and allow supplementaryirrigation. This would permit both higher yields and a shift from local varieties to HYV varieties on 6,000 ac. About 840 low-lift pumps, 1/ powered by a 7-10 hp diesel engine each serving an average area of 45 ac, would irrigate the area from an extensivenetwork of natural and project-improved khals. In the Halda Unit, the khal system would be supplied by tidal recharge whereas in the Ichamati Unit, it would be by a main pumping plant. In both areas, high level khals would be filled by relift pumping stations. Low- lift pumping has already been adopted in the project area, but expansionis limited by the water availability. Khal excavationand the regulatorswould make small-vesselnavigation possible in most parts of the project area.

4.04 On-FarmWater Distribution. Farmers in the project area, and elsewherein Bangladeshwhere low-lift pumps are used, have shown an ability to adopt irrigationwith only little additionalon-farm improvement works. Paddy fields are already leveled and, in most cases, are fully or partiallydiked. water distributionis from plot-to-plotwith some small ditches constructedby the farmers. Difficultiesare often the result of improper location of the pump or inadequatepump group management. Pump groups would be formed in the project area under the direction of IRDP, which would be assisted in pump siting and distributionlayout by WDB and the project consultants. Pump groups would complete their own water distributionsystems within areas served by each low-lift pump. The IRDP would conduct training programs in improved irrigationpractices for selected members from each pump group at the Thana Training and Develop- ment Centers (TTDC).

4.05 FisheriesDevelopment Program. The carp spawn fishery is a unique and importantfishery on the Halda River. It is a major component of the Bangladeshfishery industry. The project concept, of regulating khal flows with no regulationof the Halda River itself,was designed to have minimal effect on the fishery. However, knowledgeof the fishery is limited and further specialiststudy of the Halda fishery is considered essentialin implementationof the project. The proposed credit,

1/ Most of the 470 units currentlyin the project area will become due for replacementduring the project implementationperiod. - 12 - therefore,provides for detailed specialist studies of the fish habitat on the Halda River with particular regard to the potential effect of the project on fisheries in the area. The planned research program would also encompassfisheries in the Ichamati and Muhuri Rivers and the Chandpur II IrrigationProject (CreditNo. 340-BD) currently under development. The studies would include recommendationsregarding location and costs of prawn and carp hatchery facilitiesthat could serve the three project areas. (For further details see Annex 4.) Expatriateconsultant services would be required and the program, including constructionof a carp spawning and rearing station in the Chandpur project area is estimated to cost about US$4.4 million equivalent,with $2.4 million as foreign exchange.

Water Quality, Demand and Supply

4.06 Quality. The rivers entering the project area provide good quality water well suited for irr:Lgation.Water quality measures have been carried out at a point severaL miles downstreamof the mouth of the Halda River since the constructionof the Kaptai power plant. Salinity levels at this point are generally no higher than 100 parts per million (ppm). Occasionallysalinity has risen to several hundred ppm and only once to above 2,000 ppm, which is undesirablefor irrigation. However, these readings coincidedwith spring tides and were made well below the project area. Thus, sea water intrusionwould not pose any supply or operational threat to the project.

4.07 Demand. Monthly pumping requirementsin the dry season would increase from 4 inches in January to 11 inches in February then decline to 6 inches in May (Annex 5). The total irrigationrequirements for the boro crop would be 42 inches or some 133,000 ac ft. The peak pumping from the khals during February would average 1,700 cfs for about nine hours per day. Supplementaryirrigation for the aman crop in Septemberand October would require about 26,000 ac ft in a typical year.

4.08 Supply. The project:would depend primarily upon the Karnafuli River for its irrigationwater supply. The Karnafuli has been regulated since 1962 by the Kaptai Reservoir,at the river's outlet from the Chitta- gong Hill Tracts. With an average year-roundflow of 20,000 cfs, the Karna- fuli discharges from 4,000 to 8,000 cfs (8,000 to 16,000 ac ft per day) throughoutthe dry season. This compares with peak project demands of some 1,300 ac ft per day. The Water and Sewer Authority is presently planning an intake on the Halda River to divert about 30 cfs to the Chittagongmunicipal water supply. Eventually,these withdrawals could approach 100 cfs. Combined with peak project requirements,these demands are less than 20% of minimum releases. A minor part of the catchment area for the Kaptai Reservoir is located in India. Any likely diversions in India would have no effect on the supply of water to the project areas. Consequently,there is ample water available for the project.

4.09 The Kaptai power plant presently serves a combined base-load and load-followingrole in the eastern electrical grid of Bangladesh. A third - 13 - unit, scheduledfor 1976, will increase the plant's capacity from 80 to 130 MW, permittingmore peak operation and increasedwet-season genera- tion. According to Power DevelopmentBoard Operation plans, base flows will always be comfortablyin excess of project diversion requirements.

4.10 Water would enter the two project units through regulator structures at the khal outlets to the Karnafuli,Halda and Ichamati Rivers and, in addition, through the main pumping plant at Mahfez Khal in the Ichamati Unit. When tides back up these rivers to levels above those in the khals, the regulatorgates would automaticallyopen and permit flow into the project area until, with the receding tide, river levels fall below those of the rechargedkhals. The gates would automaticallyclose and khal water levels would graduallydecline with pumping, until the onset of the following high tide. With khal improvementsand relift pumping provided under the project,water would freely circulate to within 3/4 mi of all irrigated land.

EngineeringDesign

4.11 The project feasibilitystudy effectivelycovers the planning and preliminarydesign for the engineeringworks and the agriculturaldevelopment plan. The WDB would be responsiblefor the detailed engineeringdesign, with technicalsupport from the consultants(para 5.04). The WDB has already completed the design of the main pumping plant and the regulator at the mouth of Whitaker Khal in the Ichamati Unit.

ConstructionSchedule

4.12 The constructionof the project is estimatedto take four years. The WDB has already started constructionof the main pumping plant at Mahfez Khal and the Whitaker Khal regulator in the Ichamati Unit. Constructionis exceedinglyslow due to lack of funds and, to date, only the foundationhas been completed. The proposed project would provide funds for the completion of these structures. Other constructionworks would begin in January, 1976 and should end in mid-1978 (Annex 6). About 40% of the Halda Unit and 20% of the Ichamati Unit would be operationalfor the 1977-78 dry season.

Cost Estimates

4.13 Total project costs are estimatedat US$30.3million equivalent, includingUS$2.6 million in taxes and duties. The foreign exchange component is estimatedat US$9.4 million or 31% of the total. Estimates are based on preliminarydesigns, with unit prices at May 1975 levels. These prices are based upon costs prevailingin Bangladeshas appropriate. Phys- ical contingenciesof 15% have been applied to civil works costs and the cost of equipmentand vehicles for the fisheries developmentprogram and 5% to all other equipmentand vehicle costs. Projected price increases due to inflationhave been applied to estimatedannual expendituresat the followingpercentage rates: -14 -

Foreign Exchange

Year Civil Works Equipment Local Costs

1975 16 12 25 1976 14 10 20 1977 12 8 17 1978 12 8 15 1979 12 8 13

The resulting expected price increasesamount to US$7.7 million, or 34% of the estimated project cost at 1975 prices and 25% of the estimated total project cost.

4.14 Estimated project costs, presented in greater detail in Annex 7, are summarizedbelow: - 15 -

For- For- % of Local eign Total Local eign TotalLa Total ----(Taka million)- - …-----(US$million)-- (%)

I. Halda Unit Land Acqui- sition 27.9 - 27.9 2.15 - 2.15 7.1 Construction 76.7 28.2 104.9 5.90 2.17 8.07 26.6 Low-lift Pumps 5.4 11.6 17.0 0.42 0.89 1.31 4.3 Subtotal 110.0 39.8 149.8 8.47 3.06 11.53 38.0

II. Ichamati Unit Land Acqui- sition 6.3 - 6.3 0.48 - 0.48 1.6 Construction 21.8 12.2 34.0 1.68 0.94 2.62 8.6 Low-lift Pumps 1.1 2.2 3.3 0.08 0.17 0.25 0.8 Subtotal 29.2 14.4 43.6 2.24 1.11 3.35 11.0

III. Equipment and Vehicles 1.9 4.2 6.1 0.15 0.32 0.47 1.6

IV. Consulting Services 3.0 5.5 8.5 0.23 0.42 0.65 2.2

V. Design, Man- agement and Administration 18.2 - 18.2 1.40 - 1.40 4.6

VI. Fisheries Development Program 18.9 24.2 43.1 1.45 1.85 3.30 10.9 Basic Cost 181.2 88.1 269.3 13.94 6.76 20.70 68.3

VII. Physical Contingencies 16.7 8.0 24.7 1.29 0.62 1.91 6.3

VIII. Expected Price Increases 73.8 26.1 99.9 5.67 2.02 7.69 25.4

TOTAL PROJECT /b lb/cc COST 271.7- 122.2 393.9/ 20.90/c 9.40 30.30-/C 100.0

/a Discrepanciesin currency conversions due to rounding.

/b Includes Tk 33.8 million taxes and duties.

/c Includes US$2.6 million equivalent taxes and duties. - 16 -

Financing

4.15 The currently proposed IDA credit of US$18.9 million (excluding US$3.1 million for refinancingcredit S-14-BD) would finance the full foreign exchange costs and some local costs or about 69% of the total project costs net of taxes and duties. The GOB would contribute the remaining US$11.4 million through annual budget appropriations. To ensure prompt payments of local expendituresfor all goods and services assurances have been obtained that the Government would establish two revolving funds -- one for the irrigationand flood control component and one for the fisheries developmentprogram -- and that it would replenish these funds on the first of each month to maintain balances adequate to cover the estimated expendituresfor the following three months. A condition of disbursement for the irrigation and flood control component and for the fisheries developmentprogram would be that initial contributionsof Tk 2.0 million and Tk 500,000, respectively,have been made to the funds.

Procurementand Contracts

4.16 Vehicles, equipment and materials would be procured after international competitivebidding in accordance with Bank Group Guidelines. A 15% preference margin, or prevailing customs duty if lower, would be extended to local manufacturersin evaluation of bids. Small off-the-shelf items costing less than US$10,000 each, which are not practical for international tendering, would be purchased through normal Government procurement procedures which are satisfactoryto IDA. Such purchases would be limited to a total of US$200,000.

4.17 Civil works with an estimated cost of US$17.0 million (including contingencies)would not be suitable for internationalcompetitive bidding. These works which are relatively small and simple would be scattered over a wide area and constructionwould be seasonal and suitable for labor intensive methods. For these works, contractswould be awarded on the basis of competitivebidding, advertised locally and in accordance with procedures acceptable to IDA.

Disbursements

4.18 Disbursements from the proposed credit would be made at the rate of 100% of the cif cost of directly imported vehicles, equipment and materials; at 100% of the ex-factory price of goods manufacturedlocally, and at 65% of the off-the-shelfprice if procured locally. For consultant services and staff training, disbursementwould cover the actual foreign exchange costs plus 50% of local costs. Disbursementfor civil works would be at the rates of 100% and 60% of certified monthly foreign and local expenditures,respectively. Disbursementwould not be made against: previous work on the main pumping plant or the Whitaker Khal regulator; the costs of land acquisition;local costs of agriculturalextension services; - 17 - staff salaries, overhead and expenses of implementingagencies, and taxes and duties. Undisbursedfunds would be cancelled unless an alternative use was approved by IDA. The categories to be financed, the allocation of the proposed credit, and expenditurepercentages to be disbursed under each category are summarized in Annex 8. Estimated expenditureand disbursement schedules are also shown in Annex 8.

Accounts and Audit

4.19 Assurances have been obtained that GOB would cause WDB, BADC, the Department of Fisheries and other departmentsand agencies responsiblefor carrying out any part of the project, to prepare and maintain project accounts and financial statements in accordance with sound accounting practices, and it would employ independentauditors acceptable to IDA to audit these project accounts and that certified copies of audited accounts and of the auditor's report would be sent to IDA within six months of the close of each fiscal year.

EnvironmentalImpact

4.20 Halda River is an important spawning ground for carp in Bangladesh. It is a major source of supply of carp fry and fingerlingsused for stocking tanks throughout the country. As there is no structure proposed on the Halda River, the project itself is expected to have minimal impact on breeding conditions. However, knowledge about the fishery is limited and the project provides for specialist studies (Annex 4). Regarding public health, the project should improve conditions because of the increasedavailability of fresh water on a year-round basis. Schistosomiasisis not present in Bangladesh. Consequently,no adverse environmentaleffects are expected to result from the project.

V. ORGANIZATIONAND MANAGEMENT

Implementationof Project Works

5.01 The Water DevelopmentBoard (WDB), under the MMWP would have overall responsibilityfor management and executionof the project works except those included under the fisheries development program. The WDB would be directly responsiblefor project preparation,design and constructionof all civil works. In order to streamlineWDB's operations and to improve its performance,the GOB has recently made a number of organizational changes -- among them are the appointmentof a full-time chairman for the Board, separationof planning and implementationwings within the Board and a greater delegation of authority to the regional chief engineers. Responsibilityfor procurementand distributionof low-lift pumps would belong to BADC. The IRDP would be responsiblefor the formation of farmers' pump groups and their integrationinto the Thana Central Coopera- tives Association (TCCA) structure (Annex 9). The Ministry of Agriculture would be responsible for strengtheningextension services to the farmers. - 18 -

The Ministry of Forests, Fish and Livestock would be responsible for the implementation of the fisher:Les development component of the proje t.

5.02 In order to ensure coordination between the various departments and agencies responsiblefor implementationof the irrigation and flood control component, a Project ImplementationCommittee (PIC) would be established. The PIC would be chairedby the Project Director and consist of senior officers of the participatingagencies. The Project Director would be a senior WDBofficial. Problems not resolved at this level and problems in implementationof the fisheries development component would be referred to the Central Evaluation Committee (CEC). The CEC was formed for the Barisal Project (Credit No. 542-BD) by a Government order dated December 13, 1974 to periodically review progress and problems on IDA- financed projects and would thus function also for this project. The members of the committee are the Secretariesof the various Ministries concerned with project implementation and the Chief, Flood Control and Water Resources Division,Planning Commission. Appointment of the Project Director and the members of the PIC would be a condition of disbursement for the irrigationand flood control component.

5.03 Annual Work Programs. Annual programs for the irrigationand flood control works and for the fisheriescomponent, to be prepared by the Project Director and the Director of Fisheries, respectively,would detail the activitiesand works to be implemented. Assurances have been obtained from GOB that the annual work programs - supportedby maps, detailed description,and cost estimates of the physicalworks to be executed -- would be sent to IDA for review and comment by December 31, 1975 and by August 31 of each;subsequent year.

ConsultingServices

5.04 The Governmentwould retain a consultant,acceptable to IDA, to assist WDB, and the other agencies concerned in implementation of the irrigation and flood control component. The consultant would assist WDB in the preparation of works programs, designs and contract documents and the supervisionof construction. Given the minor role of the consultant in this project, it is envisaged that, for reasons of economy and efficient service, the consultant to be engaged for the proposed Muhuri project, would also work for this project. However, the Governmentwould have the option to select another consultant. It is estimated that about 100 man-months of consultantservices would be required for the irrigation and flood control component. Terms of reference for the consultantsare given in Annex 3. The appointmentof qualified and experiencedconsultants, acceptable to IDA, on terms and conditionssatisfactory to IDA, would be a conditionof disbursementfor the irrigationand flood control component. - 19 -

5.05 The Government would also retain consultants,acceptable to IDA, to assist the Department of Fisheries in the implementationof the fisheries developmentprogram. These consultantswould assist in: the preparation of works programs, designs and contract documents and the supervisionof constructionof the carp hatchery at Chandpur; the initial operationof the hatchery, and the investigativeprograms in the Chandpur II, Muhuri and Karnafuli Irrigation Project areas. A total of about 190 man-months of consulting services would be provided for the fisheries development program. Terms of reference for these consultantsare given in Annex 4. The appointment of qualified and experiencedconsultants, acceptable to IDA, on terms and conditions acceptable to IDA, would be a condition of disbursementfor the fisheries developmentprogram.

Operation and Maintenance

5.06 Irrigation and Flood Control Component. The WDB would be responsible for 0 & M of the main and the relift pumping plant and for maintenance of khals and embankments.The annual cost of 0 & M and replacements is estimated at Tk 7.5 million. The BADC would be responsiblefor the provision of fuel and maintenance facilities for low-lift pumps. Assurances have been obtained from the Government that: (a) sufficient funds would be made available at all times to operate and maintain all facilities in accordance >Ath sound engineeringpractices, and (b) the Project Director would be responsible for preparationof detailed manuals specifying project 0 & M procedures. These manuals would be submitted to IDA for review and comment within 24 months of the signing of the Credit Agreement.

5.07 Carp Hatchery. The Department of Fisheries would be responsible for the 0 & M of the carp hatchery in the Chandpur Project area. The project would provide funds for an expatriate hatchery management specialist and for part of the costs for 0 & M equipmentand materials for the first two years of operation of the hatchery to ensure that adequate operating procedures are established. Assurances have been obtained from the Gov- ernment that: (a) sufficient funds would be available at all times to operate and maintain all facilities in accordance with sound hatchery management practices, and (b) the Director of Fisheries would prepare detailed manuals specifying 0 & M procedures. These manuals would be submitted to IDA for review and comment within 24 months of the signing of the Credit Agreement.

AgriculturalSupporting Services

5.08 The Ministry of Agriculture is responsible for agricultural research and extension,and, through BADC, for procurement and distribution of agriculturalinputs in the project area, while the Ministry of Local Government,Rural Developmentand Cooperativesis responsiblefor the Integrated Rural Development Program (IRDP), cooperatives,and the Thana Irrigation Program (TIP) (Annex 9). The IRDP at present only covers the Rangunia thana. - 20 -

5.09 AgriculturalResearch. The Bangladesh Rice Research Institute (BRRI),which was establishedin 1970 and works in close cooperationwith the InternationalRice Research Institute (IRRI),Los Banos, Philippines, is responsible for research on various aspects of rice improvementand production, and for rice production training. The BRRI and its substations are adequately staffed with qualified personnel and their work progress has been satisfactory. The project would draw on the services and facilities of BRRI, including the Institution'ssub-station at Comilla located about 90 mi northwest of the project area.

5.10 AgriculturalExtension Services. The Directorateof Agriculture (Extensionand Management) in the Ministry of Agriculturemaintains extension agents at both the thana and union levels. The Union Agricultural Assistants (UAA), an average of ten per thana, are the basic field extension workers. Their work is supervised by Thana Agriculture Officers (TAO). As there is a vital need to strengthen agriculturalextension, the Government plans to replace the TAO's who are mostly diploma holders, with college graduate Thana Extension Officers (TEO) to ensure higher technical competence. It also plans to extend extension services to the village level by appointing a minimum of two Village Extension Agents (VEA), to replace the present one UAA, in each Union. The Rural Training Project, ap- praised by IDA with Board Presentationscheduled for December, 1975 would help to produce more trained personnel for posting as VEA.

5.11 The BRRI would give rice production training to TEO, who would in turn, give this training to VEA and selected farmers from each pump group at Thana Training and Development Centers (TTDC) during periodic one-day courses organized by IRDP. In agreement with the farmer's groups, two pump units near to each of the three TTDC would be designated as demonstration areas. These would serve as focal points for training VEA and farmers under practical conditions. Assurances have been obtained from GOB that the Ministry of Agriculture, in consultation with the Ministry of Local Government, Rural Development and Cooperatives would prepare a detailed program for training and agricultural extension services in the project area for review with IDA within one year of signing the Credit Agreement. Assurances have also been obtained that GOB before completion of the project would extend IRDP to cover the two remaining thanas (Rauzan and Hathazari) in the project area. The credit would provide funds for procurement of additional field vehicles, motorcycles and bicycles to improve training and extension services to the farmers, as well as funds for equipping the six small demonstration areas.

5.12 Seed. The BADC would be responsible for multiplyingand distributing HYV seeds. Seed multiplicationwould be done on BADC farms and also on approved private seed farms under the registered seed growers' scheme. Once new varieties have been introduced to an area, farmers retain seed from their previous harvest or obtain seed from their neighbors. However, to sustain high yields, it would be necessary to periodicallyintroduce fresh seed. The IDA-financedCereal Seed Project (CreditNo. 410-BD, 1973) aims to improve the quality of seed production. One of the proposed six seed processing - 21 - plants would be established at Chittagong, 10 mi west of the project area. Distribution to farmers would be made through TCCAcooperatives, and approved private dealers.

5.13 Fertilizer. The BADCwould also procure and distribute fertilizers to TCCAand approved private dealers for distribution to farmers as at present. This procedure has been quite satisfactory until recently, when BADC could not obtain adequate supplies for distribution. Fertilizer use in the project area increased from an average of 20 lb of nutrient per ac in 1965-66 to 57 lb nutrient per ac in 1972-73, but this dropped to 50 lb in 1973-74 due to a short supply. Fertilizer use is expected to increase to an average of 120 lb nutrient per ac at full development. The Bangladesh Fertilizer Proj- ect (Credit No. 527-BD, 1975) aims to increase the annual production of nitrog- enous fertilizer by 528,000 tons of urea (243,000 tons nutrient), and bilateral aid would help to increase the supply of phosphate and potash fertilizer. It is envisaged that the requirement for additional storage facilities would be provided under a proposed IDA fertilizer marketing and distribution project. A study of these requirements is presently financed by the Technical Assis- tance Credit (No. 409-BD, °73).

5.14 Other Inputs. Agrochemicals and sprayers for plant protection are now procured by BADC,and are distributed to farmers through TCCAand approved dealers at subsidized costs. The proposed credit would provide for procurement of ample sprayers for the project area. Since harvesting generally takes place in the pre-monsoon season with its thunder storm rains, rice production from the boro crop in the project area is reduced by a lack of paddy drying facilities. In view of the major increase in boro crop production generated by the project, the proposed credit would provide funds for procurement of 30 simple diesel-powered dryers to be operated by cooperatives and located in villages throughout the area. These dryers would have sufficient capacity to ensure optimum production from harvested paddy.

Recovery of Costs

5.15 The Irrigation Ordinance of 1963, which is still in effect, allows user charges of up to 10% of the increased gross income from a project. The First Five-Year Plan proposed that such a charge should be levied for large- scale gravity-irrigation projects, gradually increasing from Tk 50 per ac in 1974 to Tk 150 per ac in 1978. This recommendation has so far not been implemented and at present no water charges are collected.

5.16 Following the First Five Year Plan, BADC, in 1974, substantially increased the rental charge for low-lift pumps. The farmers now pay an annual rental fee of Tk 600 per pump which covers maintenance and a minor part of the capital costs, plus their own operating costs. The rate of pump subsidy is scheduled to be reduced over the plan period. In 1974, the total cost to the pump group (rent plus operating costs) was about Tk 100 per irrigated ac while the farmers usually paid about Tk 125 per ac to the head of the pump group, who realized some profit from the operation. During the 1974175 boro season, the cost to the pump group rose to - 22 -

Tk 140 per ac. With the project, the annual cost of low-lift pump irrigation including fuel, maintenance and recovery of the pump cost over seven years at 10% interest,would be about Tk 310 per ac, or 13% of the projected increase in net farm incomes. For the civil works and the major pumping stations, the annual 0 & M costs and capital recovery costs (at 10% interest) would amount to Tk 200 per ac and Tk 630 per ac, or 8% and 27% of the incrementalnet farm incomes, respectively (Annex 112).

5.17 With the present level of charges (Tk 140 per ac), 6% of the increase in net farm incomes would be collected giving a cost recovery ratio of 12%. If full costs for the low-lift pumps and only 0 & M costs for the civil works, together representingTk 510 per ac or 22% of incrementalnet farm incomes, were collected, the cost recovery ratio would be 45%. It is judged that a recovery of a substantialpart of the capital cost would seri- ously affect the incentivesof the participatingfarmers.

5.18 Assurances were obtained that within two years of the Credit signing, the Government, in consultationwith IDA, would prepare proposals to recover from the project beneficiaries,the full costs for operation,maintenance and replacementof the low-lift pumps (amortizedover the expected life of the pumps with a reasonable rate of interest) plus the operation and maintenance costs of the civil works plus as large a proportion of the capital costs of the civil works as is compatible with the maintenance of adequate incentives for the farmers. Assuranceswere also obtained that the Government would start the recovery of the proposed charges within 18 months of the completion of the physical works included in the project.

VI. PRODUCTION,MARKETING, PRICES ANDFARM INCOMES

Crop Calendars and Cropping Patterns

6.01 Rice would continue to be the dominant crop after completion of the project, but there would be considerable changes in the relative importance of the various rice crops. The reliable water supply would enable cultivation of HYV boro in most areas in the dry season. Irrigated HYV boro produces much higher and more stable yields than aus and, since their growing seasons overlap, the increase in the HYV boro area would be accompaniedby a decrease in the area under aus. The availability of supplementary irrigation in the wet season would increase the comparative advantage of HYV aman over local T. aman and cause a shift to HYV aman. On the whole, the cropping intensity would increase from 150% to 186% in the Ichamati Unit while basically remaining constant at 203-204% in the Halda Unit (Annex 10).

6.02 The present and projected future cropping patterns are as follows: - 23 -

Halda Unit Ichamati Unit Future Future Future Future without with without with Present Project Project Present Project Project (---… ------thousand acres------… -

Rice (paddy) Aus (Local) 11.0 6.0 5.5 1.0 0.5 1.0 Aus (HYV) - rainfed 7.0 8.0 - 1.5 1.4 0.1 - irrigated - 4.0 4.0 - 0.6 1.0 T. Aman (Local) 20.0 10.0 4.5 3.0 1.8 0.6 T. Aman (HYV) - rainfed 15.0 5.0 - 3.8 3.0 1.0 - irrigated - 20.0 30.0 - 2.0 5.0 Boro (Local) 2.0 - - - - - Boro (HYV) 18.0 20.0 28.0 2.2 2.4 5.0

Subtotal 73.0 73.0 72.0 11.5 11.7 13.7

Other Crops Rabi crops 3.4 3.4 3.4 0.2 0.2 0.2 Vegetables and Sugarcane 1.4 1.4 1.4 0.2 0.2 0.4

Subtotal 4.8 4.8 4.8 0.4 0.4 0.6

TOTAL 77.8 77.8 76.8 11.9 12.1 14.3

Yields and Production

6.03 Estimated paddy yields at present and at full development are summarized below:

Future without Future with Present Project Project lds/ac tons/ac Mds/ac tons/ac Mds/ac tonsTac

Aus (Local) 14 0.52 15 0.56 17 0.63 Aus (HYV) - rainfed 28 1.04 30 1.12 32 1.19 - irrigated - - 40 1.49 47 1.75 T. Aman (Local) 21 0.78 22 0.82 24 0.89 T. Aman (HYV) - rainfed 32 1.19 34 1.27 36 1.34 - irrigated - - 40 1.49 45 1.70 Boro (Local) 25 0.93 - - - _ Boro (HYV) 46 1.71 48 1.79 52 1.94 - 24 -

Only very minor yield increasesare assumed possible without the project. These yields were projected assuming that fertilizeruse in the project area would increase from an aggregate 5,000 tons per year at present to about 11,000 tons per year at full development. Use of pesticides is projected to increase to about 60 tons. Paddy productionwould increase from 93,000 tons at present to 141,000 tons at full development (Annex 10).

Marketing

6.04 The project area, which is one of the most developed in Bangladesh, presently has a food grain surplus of about 30% of total supply. 1/ The 48,000 ton increase in paddy production would increase the surplus to 63,000 tons or 45% of total production by 1985, even with the projected population increase. From a national point of view, there would be no problem in marketing this surplus since Bangladesh food grain imports have doubled over the last decade to over two million tons and, with a projected population growth of 2.9% per year, annual food grain demand is expected to reach 20 million tons by the late 1980s.

6.05 Not only does the project area export some 20,000 tons of rice but also the volume of internal sales is high - about 12,000 tons. Con- sequently, all chains in the marketing system are well developed. The project areas are located only about 10 mi from Chittagong, the second largest city in the country, and rail, road and river communications are well developed. Thus, it is reasonable to expect that the marketing system would readily keep pace with the increased rice production.

6.06 The hulling industry adapted efficiently to the increaseddemand when HYV rice and pump irrigation were introduced in the late 1960s and early 1970s. Presently, there are about 200 private hullers operating in the area. These hullers generally have a capacity of about 10 md of paddy per hour. At present, they are working well below capacity. Con- sequently, it is expected that the private sector will be capable of handling the increased volume of paddy from the project.

Prices

6.07 Prices for rice and farm inputs used in this report are derived from the Bank's projected 1985 world market prices in 1975 constant prices. Productionof crops other than rice is relatively small and most of the output is consumed locally. Projected prices for these products are based on the historical ratios between their prices and the price of rice, since these ratios have been fairly constant during the last decade.

1/ Based on an assumed per capita consumptionof 16 oz per day. (The average consumptionin Bangladesh in the late 1960s was just below 16 oz.) - 25 -

6.08 Based on a projected world market price of US$320 per ton fob Bangkok for high grade rice (5% broken), the price for low-to-mediumqual- ity rice (25%-35% broken) cif Chittagong is estimatedat US$250 per ton. After allowance for transport and handling, the equivalent farm gate price is Tk 75 per maund of aman paddy, which is the preferred variety. Boro and aus are priced somewhat lower.

6.09 An adjustment of the official exchange rate (approximatelyTK 13 - US$1) for the protection provided by import restrictionsand duties, giving a shadow exchange rate of Tk 16 - US$1, has been done in the economic analyses. The assumptionbehind the shadow exchange rate and all projected prices used for financialand economic analyses are discussed in Annex 11.

Farm Income

6.10 Income to farm households includes the net value of crops produced on the farm and off-farm earnings from paddy processing,wage labor and fishing. Most of the rice is consumed on the farm but part of the production from larger farms is sold. The high population density and complex land tenancy arrangementshave resulted in a wide variety of live- lihoods and income levels in the project area.

6.11 Present and projected farm budgets have been analyzed on the basis of three representativefarm sizes: 1.0 ac, 3.0 ac and 5.0 ac (Annex 12). Only the value of crop production has been included as income in this analysis. Off-farm incomes are discussed in para 6.12. Since GOB intends to reduce or eliminate subsidies for agricultural inputs and low-lift pumps, it is assumed for this analysis that no subsidies will exist in the future. The annual net income from farming, includingthe imputed value of produce consumed on'the farm (in 1975 terms), for the three representativefarm types, presently without irrigation, are:

Present Future with Project Increase in Farm Size (Tk) (Tk) Percent

1.0 1,970 3,540 80 3.0 5,490 10,300 88 5.0 8,170 15,500 90

In the derivation of these farm incomes, cash payments for hired labor and inputs, including the O&M and capital recovery costs of low-lift pumps, Tk 310 per ac (para. 5.16) has been charged as production costs. It is also assumed that the farmers will pay a fee of Tk 200 per irrigated ac to cover all 0 & M costs of the main and relift pumping plants and civil works. The estimates for the 3.0 ac farm are based on a cropping pattern that reflects the average for the project area. A slightly higher intensity is assumed for the 1.0 ac holding and a slightly lower intensity for the 5.0 ac holding. - 26 -

6.12 Off-farm employment is substantial in the project area. Families with 1.0 ac holdings typically have off-farm incomes of about Tk 1,600 per year. For these families, off-farm employment is a necessity, since a minimum holding of about 1.5 ac is required to support the average farm family. A larger proportion of the members of the richer farm households have at least some elementary education and, consequently,better employment opportunities are open to them. This brings the off-farm income of the families holding 3.0 ac and 5.0 ac farms up to Tk 1,800 and Tk 2,100, respectively. The total labor requirementswould increase about 15% under the project. For families holding 1.0 ac farms, these increased oportunities to work on the farm would not, to any noticeable extent, conflict with off-farm employment. Since the daily income from off-farm employment for the larger farmers is higher than the cost of hiring farm labor, requirements for these farms would be met by hired farm laborers. Consequently,off-farm incomes would not decrease due to the project. The total family income for the submarginal farmers (1.0 ac holding), small farmers (3.0 ac holdings) and large farmers (5.0 ac holdings) would increase at least 44%, 66%, and 71%, respectively, under the project if non-farm incomes remain at their present level. How- ever, the project would have substantial indirect employment effects in addition to the employment opportunities created in agriculture (Annex 13). This would lead to increased non-farm incomes for the landless laborers and submarginal farmers.

VII. BENEFITS AND JUSTIFICATION

General

7.01 Bangladesh presently Imports about 20% of its food grain demand. This severely strains its already troubled foreign exchange situation. The primary national benefit from the project would be increased rice production and the resultant foreign exchange savings. The population in the project area would benefit directly from increased farm incomes and an increase in employment opportunities in agriculture, transportation and marketing. The project would also discourage migration to the already overcrowded urban areas of Dacca and Chittagong.

Rice Production

7.02 The project would provide reliable irrigation to an area of 38,000 ac. This would cause a major shift in the cropping pattern and increase the production of milled rice by some 17,000 tons over the projected production without the project. This represents annual gross foreign exchange savings of about US$4.3 million (in 1975 dollars) based on a projected rice price of US$250 per ton cif Chittagong. After deducting foreign exchange costs of spares and replacements,fuel, fertilizer,and pesticides, the net annual foreign exchange savings attributableto the project would be about US$3.3 million. - 27 -

Employment Opportunities

7.03 Increased production would result from the cultivation of high yielding rice varieties and shifts in the cropping calendar, rather than more intensive land use. Therefore, farm labor requirements in the area at full development would increase by only about 15%. Over the same period, the available labor force would increase from an estimated 73,000 in 1974 to about 88,000 in 1985 (excluding women, who in Bangladesh normally do not work in the field), that is by about 21%. Annual field labor requirementsin the area presently total an estimated 6.8 million man-days, about 39% of the present labor supply, and would reach about 7.8 million, or about 37% of the estimated supply at full development (Annex 13). The 26,000 landless laborers presently supply about 1.0 million man-days of farm work and this amount would increase 40-45% with the project.

7.04 The employment opportunitiesfor landless laborers in marketing and transportionwould increase substantiallyas a result of the increased rice production. The project would increase the marketed volume of paddy from about 48,000 tons at present to 89,000 tons, or about 85%.

Income Distribution

7.05 Agriculture in the project area is relatively well developed compared to other areas in Bangladesh. Nevertheless,farms in the area are smaller than in most other parts of the country and the proportion of landless laborers is somewhat higher. Consequently,it is estimated that the present average per capita income in the project area is only about US$90 1/ compared to the national average of US$100. Due to the unbalanced income distributionin the project area, about 70% of the families have a per capita income of less than US$90.

7.06 The project would increase the net farm incomes of the "submarginal" farmers (1.0 ac), who presently do not have irrigation,by about 80% and the incomes of "small" (3.0 ac) and "large" (5.0 ac) farmers by about 90% (para. 6.11). However, the demand for hired labor would increase and create additional employment for landless laborers and sub-marginalfarmers. The median income would increase from about US$70 at present to about US$90. The project would, therefore, substantiallyreduce the level of absolute poverty In the area.

Economic Rate of Return

7.07 The project's rate of return on the irrigation and flood control component is estimated to be about 15% (Annex 14). The rates for the sub- projects are:

1/ This estimate is based on a "normal" world market price of rice (5% broken) of US$320 per ton fob Bangkok. - 28 -

Halda Unit 15%

Ichamati Unit 14%

The economic analysis is based on the following assumptions:

(a) a three year construction period;

(b) full agricultural development is reached five years after the completion of the project;

(d) all farm labor is valued at about 50% of the peak market wage (see Annex 13) and construction labor at the market wage;

(e) allowance is made for the protection provided by import restrictions and duties by using a shadow rate of US$1.00 = Tk 1.6;

(f) costs and benefits of fisheries development program are excluded from the analysis;

(g) taxes, duties and subsidies are omitted, and

(h) a 40 year project life.

Other important benefits, such as higher employment and income in trade and industry based on agricultural production in the project area, were not quantified.

7.08 The sensitivity of the estimated rate of return to changes in costs, prices and other assumptions is as follows:

(a) completion delayed two years 13%

(b) increase in construction cost of 15% 13%

(d) (a) + (b) 12%

(e) (a) + (b) + (c) 10:%

(f) increase in cost of crop inputs by 15% 14%

(g) increase in fuel and operating cost by 25% : 14% - 29 -

(h) all farm labor valued at full market wage : 14%

(i) Taka valued at the official exchange rate of Tk 13 = US$1 13%

(j) Taka valued at a shadow exchange rate of Tk 19 - US$1 : 17%

VIII. AGREEMENTSREACIED AND RECOMMENDATIONS

8.01 Assuranceshave been obtained from GOB that:

(a) the Governmentwould establish two revolving funds--one for the irrigationand flood control componentand one for the fisheriesdevelopment program--and would replenish the funds, on the first of each month, to maintain balances adequate to cover estimatedexpenditures for the followingthree months (para. 4.15);

(b) the WDB, BADC, the Departmentof Fisheries and other departmentsand agencies responsiblefor carrying out any part of the project would prepare and maintain project accounts and financialstatements in accordance with sound accountingpractices, and independent auditors acceptableto IDA would be employed to audit project accountswhich would be sent to IDA within six months of the end of each fiscal year (para. 4.19);

(c) the Project Director and the Director of Fisheries would prepare and submit to IDA, for review and comment, annual works programs for the irrigationand flood control componentand the fisheriesdevelopment program by December 31, 1975 and by August 31 of each subsequentyear (para. 5.03);

(d) the Project Director would prepare detailed operation and maintenancemanuals for the irrigationand flood control componentand submit these to IDA, for review and comment,within two years of signing the Credit Agreement (para. 5.06);

(e) sufficientfunds would be made availableat all times to maintain all project facilities in accordance with sound technicaland financial standards (paras. 5.06 and 5.07); - 30 -

(f) the Department of Fisheries would prepare detailed operation and maintenance manuals for the carp hatchery and submit these to IDA, for review and comment, within two years of signing the Credit Agreement (para. 5.07);

(g) the Ministry of Agriculture,in consultationwith the Ministry of Local Government, Rural Development and Cooperatives,would prepare a detailed program for training and extension services in the project area, and submit this to IDA for review and comment, within one year of signing the Credit Agreement (para. 5.11);

(h) the Rauzan and Hathazari thanas would be incorporated into the IRDP structure (para. 5.11);

(i) within two years of the Credit signing, the Government, in consultationwith IDA, would prepare proposals to recover from the project beneficiaries,thefull costs for operation,maintenance and replacementof the low- lift pumps (amortizedover the expected life of the pump with a reasonable rate of interest) plus the operation and maintenance costs of the civil works plus as large a proportion of the capital costs of the civil works as is compatiblewith the maintenance of adequate incentives for the farmers. Also the Gov- ernment would start the recovery of the proposed changes within 18 months of the physical works included in the project (para 5.18).

8.02 Conditions of disbursementfor the irrigation and flood control component 1/ would be that:

(a) the Government would have made an initial contribution of Tk 2.0 million to the revolving fund (para. 4.15);

(b) the Project Director and the members of the PIC have been formally appointed (para. 5.02), and

(c) a consultant,acceptable to IDA, would have been appointed upon terms and conditions satisfactory to IDA (para. 5.04).

1/ Items I(a), II(a) and III(a) in the Proposed Credit Allocation (Annex 8, Table 2). - 31 -

8.03 Conditions of disbursementfor the fisheriesdevelopment program 1/ would be that:

(a) the Government would have made an initial contribution of Tk 500,000 to the revolving fund (para. 4.15), and

(b) a consultant,acceptable to IDA, would have been appointed upon terms and conditions satisfactoryto IDA (para. 5.05).

8.04 With the above assurances, the proposed project is suitable for an IDA credit of US$22 million under standard IDA terms. The Borrower would be the People's Republic of Bangladesh.

December 31, 1975

1/ Items 1(b), IT(c), II(d), IlT(b),and III(c) in the Proposed Credit Allocation (Annex 8, Table 2).

ANNEX1 Page 1

BANGLADESH

KARNAULI IRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Agricultural Development

The Role of the Agriculture Sector

1. Agriculture dominates the economy of Bangladesh. It employs directly about 80% of the labor force, generates 55% of the Gross Domestic Product (GDP), and accounts for over 90% of the country's foreign exchange earnings. The major exports are raw jute and jute manufacture. Nearly three quarters of all industries are based on agriculture and growth is highly dependent on it. The production of rice, by far the most important crop, is insufficient for feeding the rapidly increasing population, which was estimated at 77 million in 1974. Accordingly, the import of food grains has been increasing from 0.7 million tons in 1960-61 to as much as 2.8 million tons in 1972-73. The production of vegetable oils, pulses, and other protective and protein-rich foods have also been inadequate and the deficits have to be made up by imports.

2. Therefore, the First Five-Year Plan of the Government of Bangla- desh (1973/74 to 1977/78) gives major emphasis to agricultural development with the main objective of gradually replacing the traditional and greatly unstable agriculture by a modern agriculture capable bf sustained growth. The specific aims are: to attain self-sufficiency in the production of food grains; to increase the production of foreign exchange earning crops, and to increase the supplies of protein food.

Constraints to Agricultural Development

3. Bangladesh is a generally fertile deltaic plain of 55,000 sq mi of which approximately 35,000 sq mi is cultivated. Temperatures allow year- round cropping and the spread of rainfall over eight months from March to October enables farmers to practice double cropping in areas not likely to be deeply flooded during the wet season or inundated with saline water. However, agricultural development is constrained by a number of related factors:

(a) Possibilities for further expansion of the cultivable area of 22.5 million ac are limited, and therefore agricultural production can be increased only by more intensive use of the cultivable area and by more efficient production each time it is used. ANNEX 1 Page 2

(b) About 2.5 million ac are deeply flooded (over 15 ft) and cultivationof such land is possible only after the flood subsides in November. A further 5.5 million ac are annually flooded from 3 to 15 ft and are suitable for cultivationof only one crop of' floating rice.

(d) Abnormal floods, droughts and cyclonic storms occur from time to time and hamper agriculturalproduction.

(e) With a population density of over 2,000 per sq mi of cultivatedland, farms are very small (2.5 to 3 ac on the average) and fragmented,and agricultureis characterized largely by subsistencefarming.

4. To attain the specific aims indicated in paragraph 2, the First Five-YearPlan gives priority to increasingagricultural production through programs for intensive land use and higher yields. This is to be achieved by: acceleratingthe spread of seed-based technologyinvolving improved cultural practices; increasing the use of HYV seed, fertilizersand pesticides, and using small and quick-yieldingtypes of irrigationand drainage development(e.g., low-lift pumps and tubevells). Emphasis is also placed on improving the supportingservices includingplanning, research, extension and credit, as well as on developmentof the necessary rural infrastru- ture.

Crops and Cropping Seasons

5. The total cropped area in Bangladesh is 30.5 million ac, which, on a net cultivated area of 22.5 million ac, gives a cropping intensity of about 136Z (Table 1). This must be considered as remarkable since at least one third of the land is deeply flooded every monsoon season. Rice accounts for 24.4 million ac or 80% of the cropped area, jute 2.0 million ac or 7% and other crops the remaining four million ac or 13%. Rainfed and flood-dependent rice accounts for about 22 million ac and this has not changed significantly since 1960. Irrigated dry season rice, however, increasedfrom 1.0 to 2.5 million ac during this period. The last five years of rice productionhas averaged 10.7 million tons.

6. There are three crops of rice - aus, aman and boro. Aus, a crop with a short growth period, is usually broadcastwith the early rain in March-April and harvested in July-August. Mostly traditional varieties are grown. Yields are usually low due to heavy weed growth, heavy incidence of pests and diseases and poor tillering. Aman, the main crop, is either broadcast (B.) or transplanted(T.) dependingon water availabilityand ANNEX 1 Page 3 flood depths. The B. aman, which has a 220-250 day growth period, is sown about the same time as aus and may elongate up to 15 ft depending on the depth of flooding during the monsoon. It is harvested in November-December. The B. aman is a low input crop due to inherently low and unstable yields. The T. aman is sown in June-July, transplanted a month later, and harvested in November-December. It has an average growth period of 150 days. The yield is higher and the crop is more reliable than B. aus and B. aman. The boro crop which is cultivated with irrigation in the dry season, is sown in December-January, transplanted a month later, and harvested in May-June. Rice yield potential is highest during the boro season.

7. Jute is sown about the same time as aus paddy and harvested in July-August. Pulses and oilseeds are winter or rabi crops. These are sown in November-December and harvested in February-March. Temperate zone vegetables such as cabbage, cauliflower and tomatoes, are also grown as rabi crops, whereas tropical vegetables, such as brinjal, okra, gourds and pumpkins are grown as kharif or wet season crops. Sugarcane is planted in November and harvested more than a year later between December and March.

High Yielding Varieties of Rice (HYV Rice)

8. A number of HYV varieties of rice have been released in Bangladesh since 1966 (see Table 2). Of these, one dwarf variety called IR-8 which is non-sensitive to photo period and very responsive to fertilizer application has been found to do well with controlled irrigation as a boro and early aus crop. The yield of this variety is two to three times that of the local varieties and therefore the farmers are highly inclined to take up this crop. With availability of irrigation mainly from low-lift pumps, the area under this variety has increased from zero to over one million acres in the country and production has been boosted from 0.6 to 2.0 million tons during the last seven years.

9. Recently released were two other varieties, Chandina (BRRI-1) and Mala (BRRI-2). Both are suitable for boro and aus seasons. They have a shorter life period, are taller and of better eating quality than IR-8. It is expected that they will gradually replace IR-8.

10. For the aman crop, a number of high yielding varieties have been tried but none could be introduced on any scale until 1970. At that time, a new IRRI variety imported from the Philippines (IR-20 or Irrisail) was found suitable as a transplanted aman crop. However, it cannot withstand flooding over one foot. The area under this crop has presently reached 1.2 million ac -- mostly under rainfed conditions.

December 1975 KANIAFULIIRRIGAiTION PROJE-CT (HALIAAND ICHAIarItUN=)S Areg Under ffSn (Qoa in Bumaldesh (Nilion Acres)

1960-61 1964-65 Average 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74

1. Rice

(a) Aus 6.64 7.32 6.96 8.22 7.66 8.46 7.88 7.42 7.24 7.68 (b) Aman 14.52 14.67 14.06 1l.68 )l-4h 14-84 14.18 13.37 14.12 14.13 (cj) oro 1.04 1.14 1.39 1.53 2.01 2.18 2.42 2.19 2.43 2.60

Total Rice 22.2C 23.13 22.41 24.43 24.07 25.48 24.48 22.98 23.79 24.41

2. Wheat 0.15 0.14 0.18 0.19 0.29 0.30 0.31 0.31 0.30 0.30 3. Other Cereals 0.22 0.20 0.24 0.26 0.29 0.28 0.30 0.25 0.18 0.24 4. Pulses 0.93 0.83 0.90 0.89 0.92 0.91 0.92 0.89 0.78 0.70 5. Oilseeds 0.74 0.67 0.70 0.75 0.80 0.78 0.76 0.69 0.68 0.63 6. Spices 0.41 0.36 0.39 0.42 0.41 0.42 0.40 0.39 0.38 0.35 7. Sugarcane 0.32 0.38 0.41 0.42 0.41 0.40 0.40 0.35 0.32 0.36 8. Potato 0.14 0.15 0.17 0.19 0.21 0.21 0.21 0.19 0.19 0.20 9. Sweet Potato 0.10 0.11 0.15 0.16 0.17 0.18 0.18 0.17 0.16 0.15 10. Fruits & Vegetables 0.62 0.58 0.58 o.60 0.63 o.64 0.63 0.58 0.58 0.59 11. Jute 1.73 2.20 2.17 2.34 2.17 2.46 2.20 1.68 2.21 2.02 12. Cotton 0.01, 0.04 0.04 0.04 0.03 0.03 0.02 0.03 0.04 0.02 13. Tea 0.08 0.10 0.10 0.10 0.11 0.11 0.11 0.11 0.11 0.11 14. Tobacco 0.10 0.11 0.11 0.11 0.11 0.11 0.11 0.10 0.12 0.11 15. Others 0.10 0.54 0.49 O.54 0.51 0.53 0.50 0.39 0.40 0.31

Total All Crops 27.8F 29.54 29.04 31-44 31.13 32.84 31.53 29.11 30.24 30.50

Net CroppedArea Including Current Fallow 21.92 22.33 22.43 22.48 22.41 22.49 22.48 22.47 22.47 22.48

CroppingIntensity 127S 132% 129% 140% 139% 146% 140% 130% 135% 136% CD

Source: Bureau of Agricultural Statistics, Ministry of Agriculture BANGLADESH

KARNAFULI IRRIGATION PROJECT (hALDA AND ICHAMATI UNITS)

Some New High Yielding Rice Varieties 1/

Maturity Height Yield 3/ Grain Table Name Season 2/ (days) (cm) (md/ac) Type Quality Additional Remarks

IR-5 Aman 140 110 45 Medium Good Highest yielding aman released so far, but has to be transplanted in early June because of low cold resistance when temperature drops in October and November. Little acceptanceby the farmers, since it did not readily fit into rotations.

IR-8 Boro/ 170 100 50 Coarse Fair Cold sensitive, photo insensitive, medium resistance to sheath blight (Aus) (140) but susceptible to other diseases and pests. 4/

IR-20 Aman 120-135 110 40 Medium/ Very Good Fair drought and cold tolerance, mildly photosensitive, resistant to (irrtsail) Fine bacterial blight, and medium resistance to leaf streak and stem borer.

IR-442 Aman 140-150 125-150 45 Medium/ Good Fair drought tolerance, non-cold tolerant, non-photosensitive, reaction (late aus) Fine to pests and disease not fully assessed, can resist flood up to 5 feet and be totally submerged for six days.

BRRI-I (Boro)/ (150) 85 50 Medium Good Poor drought tolerance, cold resistant, photo insensitive, resistant (Chandina) Aus 130 bacterial blight medium resistant stem borer. Water requirements about 15% lower than IR-8.

BRRI-2 (Boro)/ (150) 115-120 50 Medium Very Good Similar to BRRI-1, but faster initial growth rate. The first HYV (Mala) Aus 130 suitable for aus.

BRRI-3 Boro 160-170 80-85 50 Medium Ryood DrTought tolerant photo insensitive, cold sensitive, resistant to t Aus 130 90-95 40 bacsterial blight and root rots, moderately resistant to leaf streak, (Aman) (140) (100) (45) stem borer. Wide flexibility in transplanting time (December-August).

Purbachi Boro/ 150 90 40 Coarse Very Poor Poor drought tolerance, cold susceptible, photo insensitive, extremely (Chinese) (Ais) (130) disease and pest susceptible.

NOTES: I/ Other varieties are undergoing pre-release trials. 2/ Secondary season within brackets. 3/ Estimated long-term average on farms. 4/ Bacterial blight, sheath blight, leaf streak, root rots and stem borer - when not mentioned very susceptible.

1E D BANGLADESH

KARNAFULIIRRIGATION PROJECT

(HALDAAND ICHAMATI UNITS)

Climatic DEta (Chittagong Station)

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Season Dry Pre-Monsoon Monsoon Dry

Temperature (OF)

Mean of max. monthly 87 90 98 103 105 96 93 94 94 94 89 88 Mean 67.3 71.6 78.3 83.1 83.0 82.6 82.1 81.7 82.2 81.3 74.7 69.2 Mean of min. monthly 47 49 60 66 67 71 74 72 74 61 57 51

Relative IIumidity( 67.4 65.3 66.7 71.9 75.6 83.5 85.4 85.2 84.1 80.5 72.3 71.1

Wind Velocity (mph) 3.4 4.2 4.0 8.2 8.2 7.2 8.5 6.o 5.6 3.3 2.0 2.6

Daylight (hrs/day) 11.0 11.5 12.0 12.7 13.2 13.5 13.4 12.9 12.3 11.7 11.1 10.8

Sunshine (% of daylight hr) 86 82 76 75 67 41 40 41 49 67 89 85

Evaporation (inches) 3.48 3.94 5.46 6.03 6.10 4.32 4.54 4.64 4.34 4.04 3.53 3.06 Precipitation(inches)

Mean monthly 1/ 0.43 0.77 2.17 4.48 10.39 22.29 25.35 22.72 12.56 8.71 1.45 0.57

Minimum 0 0 0 0 0 8.24 7.28 0.11 3.33 1.77 0 0 Lower quartile 0 0 0.40 1.74 5.24 16.01 16.67 14.45 8.18 5.51 0 0 Median 0.03 0.37 1.35 3.22 9.14 21.07 23.54 22.93 12.22 8.81 0.14 0 Upper quartile 0.54 1.04 2.20 7.06 13.78 30.34 29.54 29.65 14.71 10.82 1.44 0.18 Maximum 2.69 4.59 14.81 13.97 24.99 37.76 52.66 42.78 29.88 22.79 10.52 5.76

1/ Of months having rainfall

Source: Meteorological Department, Government of Bangladesh ANNEX3 Page 1

BANGLADESH

KARNAFVLIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Projects Works

1. The project would improve water control over a gross area of 48,000 ac in the lower Halda Valley and 10,000 ac in Ichamati Valley, thus enabling dry-season irrigationof 38,000 net ac through the provision of a reliable fresh water supply and low-lift pumps. It would also reduce the extent, depth, and duration of flooding during the wet season and permit supplementary irrigation of the aman crop. Both the Halda Unit and the Ichamati Unit would be constructed over a four-year period (Annex 6).

Halda Unit

2. The aim of this unit is to provide water for dry-season irrigation on 32,000 net acres on both banks of the Halda River. Tidal action will fill the numerous khals of the area twice daily through gated regulators on khal outlets to the Halda and Karnafuli Rivers. The construction of new khals and the deepeningof existing ones will permit the distributionof water to low-lift pumps throughoutthe project area and to 27 relift stations supplying khals in higher peripheral areas. In addition, flood protection would be provided by means of perimeter embankments.

3. Regulators. Nine regulators in the east portion and seven west of the Halda River will operate to admit water to the khals during the dry season and to drain the project area in the wet season. Each structurewill have from two to eight reinforced concrete barrels with 6 ft wide by 5 ft high flap gates at either end. During the dry season, the riverside gate will be locked in a raised position, leaving the inner gate free to conduct water to the khals when tide-induced river levels are higher than the water levels within the project. With the ebbing tide, these gates will automatically close, retaining the water within the project area though river levels are lower. With the advent of the monsoon season, riverside gates will be lowered and interior gates will be locked in a raised position. Thus, high river levels will close the outer gate, preventing the backing up of water into the project area. When tides recede and khal water levels are higher than those in the river, the gates will automaticallyopen to drain excess interior water. ANNEX 3 Page 2

4. Cargo Transfer Facilities. At the mouths of five principal khals, facilities will be built to carry small country boats around the regulator structures and over the embankments. Each facility will consist of a water- tight box into which a boat can be floated and secured. The box will then be raised along rails by winches and lowered into the water on the other side of the regulator. Each installation will be operable by two men.

5. Khal Improvement. In the eastern part of the project area, 5 mi of new khals will be excavated and 23 mi improved. In the western area, similar work will be done for 1.5 mi and 18 mi respectively. This will require the excavation of about 0.5 million cu yd of earth, some of which will be used to build check embankments at khal outlets where regulators will not be built. Khal improvement is required to ensure the circulation of ample water to all low-lift pump sites and to the relift pump batteries. The resulting system will put all of the net irrigable area within 3/4 mi of a dependable water supply. In the lower area, fed directly by tidal recharge, all khals will have their inverts at mean sea level (MSL) or lower, while khals in the relift area will be excavated to at least elevation 4 ft MSL.

6. Lift Stations. At 27 points around the periphery of the tidal recharge area, earth embankmentswill be constructedas checks between the lower and upper khals. At each of these points, a number of low-lift pumps will be provided to lift water to the higher reaches of the khal, from which it can be withdrawn for irrigation. For maintenance economy, these pumps will be of the same type as the 2 cfs irrigationpumps. The number of units at a particularlift stationwill be sufficient to supply a day's irrigation water to the upper area in a 12--hourpumping period. In all, 71 pumps will be supplied.

7. IrrigationPumps. The projectwould provide 2 cfs capacity pumps which, when operatingan average of 8-9 hours per day, would irrigate 40 to 50 ac. The pump lift from the khals would seldom exceed 10 ft. Ideally for such discharge/lift conditions, an axial-flow pump operated through a speed reductiongear by a 5 hp diesel engine would be most efficient. How- ever, this size unit is not widely manufactured, and efficient maintenance would be dependent on imported spare units and replacement parts. To date, all pump experiencein Bangladeshhas been with heavier duty, and simpler, centrifugal pumps, and such pumps are currentlybeing both assembled and manufacturedin the country. They are generally designed for a head lift of 40 ft and operated by imported 16 hp diesel engines. While maintenance can be carried out locally, the capital cost of these units and their fuel consumption,in relation to required duty, are unnecessarilyhigh. There is, therefore,an urgent need to develop for Bangladesh,a low-cost pump- engine unit to deliver capacitiesof about 2 cfs over a static head range of 4 ft to 12 ft, with an operating speed consistentwith optimum engine life and fuel consumption. Under the Barisal IrrigationProject (Credit ANNEX 3 Page 3

No. 542-BD, 1975, US$27.0 million), the Government and the project consultants will undertake a detailed review of low-lift pump technology and will prepare designs and specificationswhich should aim at (a) a reasonable balance between efficiency and initial cost and (b) simplicity in design and fabrication to allow a wider choice of suppliers, including local manufacturers.

8. The low-lift pumps currently in use in the project area were procured from a number of manufacturers (Indian, German, Japanese, British and American) and the variety of types imposes an unnecessary burden on the ADC maintenanceworkshops. Thus, the new pumps to be supplied under the project will be the standardizedand more efficient pump unit to be provided under the Barisal Project. A total of about 710 irrigation pumps will be required in the Halda area, 300 of these will be provided under the project.

9. Embankments. The embankmentfor the east side will run for 24 mi along the Karnafuli and Halda Rivers and then up the left bank of Sarta Khal, which defines the northern boundary of the project. On the west side, the embankmentwill extend from the Chittagong-KaptaiHighway, up the Halda and back along the right bank of Sonai Khal. The embankmentswill prevent overflow of the Karnafuli and Halda Rivers into the project area for all flows up to the 50-year flood. Material for the embankmentswill be excavated from borrow trenches along the inside of the dike. These ditches will then improve drainagewithin the project area and provide irrigationwater for pumps now drawing from the adjacent rivers. All embankmentswill have a crest width of 14 ft suitable for paving, if this is ever desired. The total quantity of earthfill required for these works will be about 4.5 million cu yd.

10. Operation.Maintenance and Buildings. The project would provide workshops, equipment, vehicles and buildings for the operation, maintenance, and interim replacementand reconstructionof the project works, including low-lift pumps and headquarters facilities.

Ichamati

11. The Ichamati Unit on the left bank of the Ichamati River will be similar to the Halda development,bringing a dependable irrigationwater supply to 6,000 net ac and flood protection to a gross area of 10,000 ac. The main difference is that a major pumping plant on the Karnafuli River will fill the khals of the project area, which, lying some 12 mi upstream of the Halda area, can rely less upon tidal fluctuationsin the Karnafuli and Ichamati Rivers. In addition, a single relift pumping station will supply higher areas, rather than a number of small pump batteries as in Halda. ANNEX3 Page 4

12. Minor Works. The unit will have three gated regulator structures similar in design and function to those at Halda; the project will not depend upon them for irrigation water, but when tides permit recharge, they will result in energy savings at the main pumping plant. Khal improvement will be carried down to elevation 5 ft MSL in the low-lying area and to elevation 14 ft MSL in the relift area. This will provide a depth of at least 2 ft of water for dry-season pumping. Improvements will be made along 16 mi of khals, and 4 mi of new khals will be excavated, for a total volume of 400,000 cu yd. Two check structures will be built: an earthfill one to prevent water in the lower area from returning to the Ichamati River and a gated one between the lower and relift areas to prevent back flow in the dry season but permit drainage in the flood season. The project will supply 70 low-lift, 2 cfs irrigation pumps, to bring the total number in the project area up to about 130. Finally, operation and maintenance facilities would be provided in proportion to those for Halda.

13. Main Pumping Plant. Located at the mouth of Mahfez Khal on the Karnafuli River, this plant will have four 40 cfs units serving both irrigation and drainage functions. For this reason, each bay will have two upstream and two downstreamgates, enablingdischarge, as well as gravity flow, in either direction. The units will be single-stageaxial-flow pumps driven by 125 hp electric motors. The pumping station will be reinforced concrete and will contain an erection bay and control room, an overhead bridge crane, and all essentialauxiliary mechanical and electrical equipment. A half-mile upstream of the station, a new culvert will be constructed on Mahfez Khal where it passes under the Chittagong-KaptaiHighway.

14. Relift Pumping Plant. A smaller plant with three 17 cfs units will be built on Kurmai Khal to lift irrigation water to 2,100 net ac. The pumps will be driven by 25 hp electric motors. The units will be protected by a reinforced concrete roof and serviced by means of a monorail hoist. Each bay will have slide gates upstream and downstream for dewatering and flood-season gravity drainage. A flap gate on each discharge line will close when the pump is shut off to prevent backflow from Kurmai Khal.

15. FEbankments. A perimeter dike 12 mi in length and with 350,000 cu yd of earthfill will protect; the project area from 50-year-frequency floods in the Karnafuli and Ichamati Rivers. Along much of its length, construction will consist of slightly raising and improving existing embankments, bringing the crest width up to 8 ft. Borrow material for the northern stretch of the dike will be excavated from the outside of the embankmentso that the resulting ditch will divert wet-season runoff from the area north of the project to the Ichamati River.

AlternativesInvestigated

16. The feasibilitystudy examined the possibilityof extending the irrigatedarea in the Halda Unit from 32,000 ac to 34,000 ac. This would, however, require the constructionof two primary pumping plants plus some ANNEX3 Page 5 rather extensive channel improvements. The economic rate of return of this expansion would be only 2-3%. The study also examined the extension of the drainage system. The economic rate of return of this incremental investment (which had to be combined with the irrigation expansion), was also on the order of 3%. This left two basic alternatives for the Halda sub-project: irrigation only (Stage 1) and irrigation plus flood control (Stages I & 2). The cost estimates in Annex 7 and the analysis of project benefits in Annexes 10, 12, and 14 are presented for Stage 1 and Stage 2 separately.

17. In a similar manner, three alternativedevelopment plans were investigatedfor the Ichamati Unit. The economic rate of return for the whole project unit turned out to be substantiallyhigher than for only partial development. Consequently,the results from this analysis are not presented in this report.

December 1975 ANNEX 3 Appendix 1 Page 1

BANGLADESH

KARNAFULI IRRIGATIONPROJECT (HALDAAND ICHAMATI UNITS)

Draft Terms of Reference for Consultants for Irrigationand Flood Control Components

General

1. The Government of Bangladesh, through the Water Development Board (WDB), would like to engage the services of a consulting firm to assist WDB in preparing the work programs, designs, specificationsand contract documents and in supervisingthe constructionof the project facilities. The consultantswould also provide on-the-job training to the technical and professionalstaff assigned by the Board to this project. It is expected that consulting services would be required for a four-year period begin- ning about January 1976. The consultingrequirements are estimatedto total about 100 man-months of professional expatriate staff.

The Project

2. The proposed project would provide irrigation,flood control and drainage, and improved agricultural supporting services to farmers in a net area of about 38,000 ac in the lower Halda Valley and 8,000 ac in the Ichamati Valley. Irrigationwould depend on low-lift pumps drawing from an improved khal system,which would be supplied by tidal recharge in the Halda Unit and a main pumping plant in the Ichamati Unit. The pumping plant would also be used for drainage during the monsoon season. The project would enable a major increase in crop yields through the constructionof facilities to create favorable conditionsfor growing HYV rice. The main components of the project are as listed below:

A. Halda Unit - Major Works

(a) sixteen gated regulators at the outlets of khals to the Karnafuli and Halda rivers;

(b) five cargo-transferstations at selected regulator sites;

(d) twenty-sevenrelift pumping stations with a total of 71 low-lift, 2 cfs pumps (or equivalent) to supply the khals in the higher areas;

(e) about 710 low-lift,diesel-powered 2 cfs pumps (of which about 410 are for replacing the existing ones) to raise water from the khals to adjacent farm lands;

(f) small earthfill khal check structures,and

(g) flood protection embankmentsabout 36 mi long, with some burrow areas to be used for drainage and irrigation water supply.

B. Ichamati Unit - Major Works

(a) a main pumping plant at Mahfez khal with about 150 cfs pumping capacity for irrigation and flood drainage;

(b) a relift pumping plant with about 50 cfs pumping capacity;

(d) three gated regulators at the outlets of khals to the Karnafuli and Ichamati rivers;

(e) improvementof about 16 mi of existing khals and the excavation of about 4 mi of new khals;

(f) about 130 low-lift, diesel-powered,2 cfs pumps (of which about 60 are for replacing the existing ones) to raise water from the khals to adjacent farmlands;

(g) a box culvert under the Chittagong-KaptaiHighway;

(h) two khal check structures,one of them gated, and

(i) flood protection embankments about 12 mi long, along with an exterior diversion channel.

C. Minor Works and Supporting Services (both Units)

(a) workshops, equipment and vehicles for maintenance of civil works and pumps; ANNEX3 Appendix 1 Page 3

(b) transportation(field vehicles, motorcycles,bicycles) and agriculturalequipment (hand sprayers, grain dryers), and

(c) to strengthen agriculturalextension and supporting services and the establishmentof six agriculturaldemonstration areas.

Responsibilitiesof the Consultant

3. The responsibilitiesof the consultantswould be as follows:

A. Engineering Services

(a) review of all pertinent reports, data, preliminary project planning and design for the project, in particular the Feasibility Report dated March 1974;

(b) assistingWDB in:

(i) formulationof final project plan;

(ii) formulationof design criteria for all structures, channels and canals;

(iii) preparation of detailed project layout, scope of contracts, engineeringand constructionschedules;

(iv) preparation of final constructionplans and drawings, detailed designs, specificationsand tender documents;

(v) preparation of cost estimates of project works;

(vi) pre-qualificationof contractors,evaluation of bids and drafting of contract documents;

(vii) preparationof specificationsand tender documents of vehicles and equipment to be procured by the project and assistance in the evaluation of the bids;

(viii) supervision of construction of all civil works, including installation of electrical and mechanical equipment, certificationof monthly progress meas- urements for interim and final payments to contractors, approval of constructionequipment, methods and materials, and direct supervisionof all works in relation to contract specifications; ANNEX 3 Appendix 1 Page 4

(ix) preparationof O&M manual, and

(x) provision of on-the-job training to WDB's staff.

B. Reports:

The consultant shall maintain full and continuous liaison with designated officers of the Board. Regular project review meetings will be held as determinedby the Board. In addition, the consultant shall prepare and submit to the Board the following documents:

(a) an InceptionReport, three months after the contractual starting date of the consultant,present- ing the conclusionsand recommendationsof the consultanton items of Section 3A; b(i), b(ii), b(iii);

(b) quarterlyprogress reports, at calendar quarters, describingprogress of works in detail and sum- marizing the consultant'sstaffing and activities during the reporting period and his work program for the coming quarter. The reports will present a summary statementof all of the consultants' certified expenditureson the project to that period and a detailed forecast of expenditures for the coming quarter, together with a summary forecast for the subsequentthree quarters. Each report will incorporate updated schedules for all construction contracts, and

(c) a final report, on completion of the consultants' contractual services, incorporating a full set of "as-constructed" drawings and identifying all aspects of the completed project works which require specialized operation and maintenance procedures, and detailing such procedures.

Services to be Provided to Consultant

4. The following will be provided by the Board to the consultant:

(a) all available maps, drawings, data, reports and any other information pertinent to the design and execution of the project;

(b) reasonable office accommodation equipped with necessary furniture and utilities in the project area;

(d) reasonable furnished family living quarters acceptable to the consultant;

(e) exempt or bear the c:ostof, any taxes, duties, fees, levies or other impositionsimposed under Bangladesh laws and regulations or the laws and regulations in effect in territoriesor any political subdivision or agency thereof, on the consultantand his personnel (other than personnel who are citizens or permanentresidents of Bangladesh) in respect of:

(i) any payments made to the Consultant or to such personnel in connection with the carrying out of the agreed-to services;

(ii) any equipment,materials and supplies brought into the country for the purpose of carrying out the services and which will subsequently be withdrawn therefrom, and

(iii-) any property brought into Bangladesh by the personnel of the consultantand his dependents for their personal use and which will subsequently be withdrawn therefromupon departures of such personnel; however, to qualify for these exemptions, shipment of such property will have to be arranged by contract no later than three months after the arrival of the staff members;

(f) facilitate prompt clearance through customs of any equipment,materials and supplies required for the services and of the personal effects of the consultants' personnel;

(g) ensure that the consultants' personnel and their dependents are promptly provided with any necessary entry and exit visas, residence permits, exchange permits and travel documents required for their stay in the territoriesof the Government, and

(h) issue all necessary permits and authorizations for the carrying out of the services.

Necessary Procedures to be Followed by Invited Consulting Firms

5. Invited consulting firms are requested to submit their proposals addressed to ...... (name)...... (address). The proposals must reach ...... (name) not later than . (date and time). ANNEX 3 Appendix 1 Page 6

6. The proposals should state clearly the following:

(a) terms and conditions under which they would carry out the duties and responsibilitiesspecified above (financial terms are not desired at this stage);

(b) the proposed composition of the team (with names and qualifications)which they intend to assign to the project both in the field and at the home office, number of man-months of each individual,for both expatriateand Bangladesh personnel, and

(c) a list of vehicles and equipmentwhich they anticipate would be required in the carrying out of their work. ANNEX4 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Fisheries Development Program -

Introduction

1. Knowledge about fisheries in Bangladesh is very limited. Virtually no data exist on which an assessment of the ecological effects of irrigation and flood control projects can be made. Consequently,this credit would provide support to the Department of Fisheries,under the Ministry of Forests, Fish and Livestock,in preparingand implementingprograms to insure that three IDA-financed irrigation projects do not result in a decline in fisheries production. The project would provide: a carp hatchery in the area covered by the Chandpur II Irrigation Project (Credit No. 340-BD); vehicles, boats and scientific equipment for the research station at Chandpur, and consultantsto assist in developmentof the research station and in the design, constructionand operation of the hatchery. The technicalassistance would make the Department of Fisheries capable of assessing the impact of future irrigation and flood control projects on fisheries,and, capable of designing programs to remedy any negative effects ivich might result from such projects. The consultants terms of reference would include: monitoring fishery development within the Chandpur Project area; studies of fishery developmentin the proposed Muhuri Irrigation Project area and the Karnafuli IrrigationProject area, and preparationof programs for increasing fish yields in these areas including the preliminarydesign of a carp spawning facility, probably located on the lower Halda River, as well as a shrimp spawning facility, possibly located in a saline estuary of the Meghna River delta.

2. This Annex gives a background on fisheries in Bangladesh, with specific emphasis on the three project areas, and describes the works, equipment and services this credit would provide.

Fisheries in Bangladesh

3. Inland fisheriesin Bangladesh are of considerableeconomic importanceand rank second to agriculturein contributingto the GNP. Avail- able fish productionstatistics are, however, unreliable and estimates given

1/ This Annex is based on the findings of Mr. L. Sprague who visited Bangladesh in April 1975. ANNEX4 Page 2 by different Government agencies are often at variance with each other. The total production of fish from inland waters in 1970 was estimated at 730,000 tons. There are some 500,000 - 600,000 full time fishermen and some five million people derive a substantialpart of their livelihood,directly or indirectly, from fish productionand trade. Due to the revival of the export trade with India and the development of a shrimp export trade with the US, Japan and Europe, the fisheries sector contributed about US$7 million to foreign exchange earnings in 1974.

4. Traditionally,fish is a very valued item in the Bangali diet furnishingmore than 80% of the intake of animal protein. Once, in the not- too-distant past, the fisheries were considered adequate to furnish the animal protein requirements of the country. In the recent past, however, a combination of factors has changed the picture radically and, at present, the average per capita consumption of animal protein is among the lowest in the world. Among these factors are: the rapid population growth; injudicious fishing practices; increased pollution from rural and urban industries; changes in agricultural practices, including increased use of chemicals; lack of adequate Governmentsupport for fisheries development,and the favoring of agriculture over fisheries in most resource conflictswithout an adequate evaluationof relative benefits.

5. In spite of the unfavorable development of fisheries in Bangladesh, the potential for substantial gains is excellent. The inland fishery is considered not to be excelled either in area or potential by any other fresh water fishery in the world. The main inland fishery resources are: (a) rivers, estuaries and their tributaries; (b) fresh water and brackfish water impoundments; (c) man-made lakes; (d) tanks and ponds, and (e) paddy fields. No reliable information about the areas of these different types of water is available and the full potential can, consequently, not be accurately assessed.

6. The most important commercial fish are carp, prawns and the Indian shad (Hilsa ilisha). Over 200 different species of fish and prawns have been recorded in Bangladesh, of which about ten groups comprising 30 species are of principal economic importance (Table 1).

7. Unlike marine fisheries, inland fisheries are labor intensive. The fishermen operate a variety of gear ranging from primitive types of fish baskets and traps to the most efficacious and modern types of gill nets and seines. Bangali fishermen are generally credited with considerable traditional skill and professionalingenuity. Commerciallycaught fish are marketed through wholesalerswho auction the catch to retailers in big cities. In small towns, fish are sold directly to retailers. Fish are usually pre- served in ice at the landing terminals and very often marketed in an un- satisfactory condition. Some fish, particularlythose caught in remote areas, are sun dried. In recent years, some private companies have set up freezing plants in Chittagong for shrimps and prawns. ANNEX4 Page 3

Bank Involvement in the Fisheries Sector in Bangladesh

8. While considerable theoretical information and practical experience from other countries exist, there is a substantial lack of specific technical information about conditions in Bangladesh. This has so far pre- vented the Bank Group from financing any major fisheries project in the country. The Land and Water Resources Sector Study, 1/ published by the Bank in 1972, provided a comprehensive assessment of the problems facing fisheries in Bangladesh and outlined an action-program, which focused on institutional changes, research and potential pilot s-1emes. In order to alleviate the impact on coastal communities brought about by the cyclone in November 1970, IDA financed the Coastal Area Rehabilitation and Cyclone Protection Project (Credit No 339-BD, 1972, US$25.0 million), 2/ which contained a fisheries sub-project to replace boats and materials lost in the cyclone.

9. The feasibility studies for the Chandpur II Irrigation Project (Credit No 340-BD), and the proposed Muhuri and Karnafuli Irrigation Proj- ects included consultant studies of the fisheries in the areas. In early 1973, a Bank mission with IBRD/FAO cooperative program assistance visited Bangladesh to assist GOBin identifying and preparing an Inland Fisheries Project for possible financing by the Bank Group. Further studies are underway, financed in part by the Technical Assistance Credit (No. 409-BD), to obtain more detailed information concerning lakes and ponds in the northwest, which may provide a suitable basis for an inland fisheries project.

10. Sufficient technical information is now available for the design of a carp hatchery facility in the Chandpur II Project area. In order to strengthen the Ministry of Forests, Fish and Livestock's capability to execute fisheries development projects, equipment and consulting services would be provided to its research station at Chandpur. The consultants would also carry out detailed studies of the fisheries in the Muhuri and Karnafuli Project areas which would result in programs for improving fish yields in these areas and in the design of a carp spawning facility, possibly located on the lower Halda River in the Karnafuli Project area. It is envisaged that financing for these programs can be taken up in connection with future inland fisheries or irrigation projects. Fisheries in the Chandpur Project Area

11. The present fisheries in the Chandpur Project area, still largely unaffected by project construction, include both a "fin-fish" and prawn fishery. The species involved in the fisheries include a wide variety of fishes. Most important are the carp (Cyprinidae) of which the most prized are: the major carp; Katla, Catla catla; Mrigal, Cirrhina mrigala; Kalbous, Labeo calbasu, and Rohu, L. rohita. Others that contribute significantly to the catch include catfishes, Clariidae and Heteropneustidae, gobies, Gobiidae, snakeheads, Ophiocephalidae, and climbing perch, Anabatidae. A large variety of additional minor species may appear in the commercial fishery and particularly in the subsistance fishery.

1/ IBRD Report No. PS-13. 2/ Replaced Credit No. 228-PAK of 1971. ANNEX 4 Page 4

12. The prawn fishery catches at least six species. The giant freshwater prawn, Macrobrachium rosenbergi, contributes an estimated 60% of the catch. Approximately 30% of the prawn catch consists of M. malcolmsonii. Four other smaller species constitute the remaining 10%.

13. The commercial fin-fish fishery (mainly for major (Indian) carp) is conducted in the South Dakatia River and the larger khals (natural channels). The subsistance fishery, primarily for fin-fish, is concentrated along the smaller waterways. The catch of fin-fish is estimated to be in the range of 1,000 - 1,500 tons per year. The prawn fishery is primarily commercial and conducted in the South Dakatia River and the major khals. The catch of some 40 - 50 tons per year is largely exported. There are 3,000 - 4,000 full-time fishermenin the project area.

14. An important characteristicof the Chandpur fishery is that many of the spawning adults are never, or at least not long, in the area. The major carps spawn somewhere upstream, probably in the Meghna River and the giant prawn downstream in the saline estuary.

15. The freshwaterprawn has rather exacting requirementsfor the successful completionof its life history. These requirementsare not found in the Chandpur area. The eggs are laid and carried by the female for about two and a half weeks before they hatch. When they hatch, the larvae must be in brackish water (12-16 parts per thousand of salt) or reach brackish water within four to five days. When the larval development is completed, about two and a half months after hatching, the juveniles drop to the bottom and start migrating by crawling along the bottom to fresh water where they will grow to maturity. Since the only brackish water found close to the Chandpur area is about 50 mi downstream in the Meghna River delta, it is presumed that the larval developmentoccurs there. The shrimps enter the Chandpur area at the end of this migratory cycle. The details of this cycle are largelyunknown.

16. Also, the spawning of carp requires specific hydrologicaland ecological conditions,which are not present in the Chandpur area (see para 24). Carp young are washed in with the flood from the Meghna River. Survival and growth rates of these young fish, and to a lesser extent the shrimp, almost certainlydepend upon the high production of fish food when three quarters of the land is flooded. The water is then reasonably clear, shallow, warm, full of nutrients and relatively still for several months. The young major carps grow to 7-8 inches long before flood waters begin to recede in September or October. The role of floods for providing food for shrimp is not known but has been found to be significant in many other parts of the world.

17. The Chandpur II Irrigation Project contains an embankmentaround the project area and regulatorswith sluices at the northern and southern inlets of the South Dakatia River. With the project works, and the resultant exclusion of flood inflow, only an insignificantnumber of shrimps and carps can enter the area. ANNEX4 Page 5

18. Since conditions favorable for carp spawning are not present in the area, eggs and fry must be supplied from alternativesources. The supply of such eggs and fry from natural spawning areas is already becoming inadequate,and, consequentlya hatchery facility utilizing induced spawning techniques is regarded as the only feasible way of supplyingyoung fish to the project area. Such a facility would be provided under this project.

19. Much less information is available about the requirements of a fresh water prawn hatchery, even though some success has been reached with such facilities in Malaysia, the Hawaiian Islands and a few other similar tropical areas. It is, however, clear that such a facility preferably should be quite large and located well outside the Chandpur Project area. Adequate background information on salinity levels, pollution effects, land structure, land availability, transportation of fry, costs of construction, operation, maintenance, etc., are wholly inadequate to recommend physical facilities at this time and a considerable amount of investigation will be required to provide data on these and related factors. Equipment and consulting support for such an investigation would be provided by this project.

20. After implementation of the carp hatchery facility at Chandpur, the water hyacinth, Echinochornia Crassipes, will be almost the only factor restraining fishery development. Except for a few miles at each end, thic floating plant now covers the South Dakatia River from bank to bank from February into July or August when it is washed away by the floods. Follow- ing the institution of water control measures, the growth of the water hyacinth may become a serious problem since it will no longer be cleared by flooding. Chemical control of the water hyacinth is possible but would eliminate most or all of the biological productivity of the water and fishery. Furthermore, chemical control results in the dying of the weed and its sinking to the bottom where it is very slowly oxidized. Annual growth far exceeds decay rates and eventual fouling of many of the waterways might be expected. Part of the fisheries program would be concerned with adequate measures to control the water hyacinth.

Fisheries in the Muhuri Irrigation ProJect Area

21. Existing fisheries in this area are presently of only minor importance. The primary feature of the proposed Muhuri Irrigation Project would be a cross-dam and a regulator at the mouth of the Feni River. These works would create a shallow fresh water reservoir in the present Feni estuary and stabilize water levels in the Feni, Muhuri and Selonia Rivers as well as in the numerous khals in the area. It is expected that the project would exclude the giant fresh water prawn and some migratory fish from the area. The existing fishery in the Feni River estuary appears to be very small, possibly not more than 5 kg/'ac, but the reservoir would have the potential of becoming an important production area. However, because of its size and the difficulty of instituting fisheries regulation and management in the reservoir, it is not expected to have the yield potential of managed ponds or even the rivers and khals. An estimated 80 kg/ac of surface water ANNEX4 Page 6 yield per year is probably a realistic target. In combination with the increased water surface area that would be created by the regulator, this yield increase would mean a manyfold increase in the catch.

22. To fully realize the fish production potential of the waters in the Muhuri Project, it would be necessary to stock the area with fingerlings of major carp and possibly other species rather than rely on natural propagation, to devise a management system for the fisheries appropriate to the local socio-economic conditions and to introduce pond culture into the project area. However, none of these steps can be taken on the basis of the present level of available information. This project would provide equipment and consulting services for the preparation of a fisheries program for the Muhuri Project area.

Fisheries in the Karnafuli IrrigationProject Area

23. The carp spawn fishery is an almost unique and very important fishery on the lower Halda River from Sattaghat near Gahira to its con- fluence with the Karnafuli River.

24. Conditions required for spawning of the commercially important carp species in rivers are not fully understood. However, it is known that spawning takes place during the early part of the monsoon season, usually in late May or early June, when there is a very rapid rise in water -- one meter or more, which occurs within a period of a few hours -- with a simul- taneous decrease in water temperature. It also has been observed that the spawning activity takes place at or near the surface in relatively shallow areas (two to three meters) of the river. Little or no spawning takes place in deep places or along edges of the river where the banks are steep. Gen- erally, the same spawning grounds are utilized year after year. There are other spawning grounds for major carp in Bangladesh,none of them, however, as importantas that on the Halda River.

25. The young fish grow rapidly in calm waters such as flooded agricultural lands, ox-bow lakes, and ponds. However, because adult fish of these carp species normally spawn only in rivers and then only during the monsoon season, fish eggs and young fish (commonlycalled fish seed or fry) must be collected annually from these rivers for stocking in other waters.

26. Subsequent to the spawning, fishermen with small boats and fine- mesh nets rapidly collect great masses of spawn as the semibuoyanteggs drift rapidly downstream in the turbulent flood waters. Carp eggs are placed in live-wells in the boat and subsequentlytransferred to very small, excavated pools located adjacent to the river. Eggs hatch within 10 to 20 hours and, after a period of a few days, the fry are shipped in clay jugs to various regions of the country and many are exported to India. Due to difficult transport conditions, including flooded roads, unreliable transport and the rather delicate nature of very young fish (characteristicof practically all fish species),mortality during shipment is often high. ANNEX4 Page 7

27. The peak carp spawning period in a particular river normally is confined to a period of 4 to 12 hours and there is usually only one such mass spawning period each year although occasionally two and, rarely, three or more major spawning occurrences; may be recorded during the spawning season.

28. There is general agreement among fisheries scientists, fish farmers, fish fry collectors and dealers that supplies of fry from traditional spawning grounds all over Bangladesh have decreased sharply during past years with a rather precipitous decline occurring in the past few years. The significant decline of fish fry supplies has been attributed in part to a de- terioration of the spawning habitat through modification of the river courses. For example, annual stocks of carp fry taken from the Halda River declined from 326 to 145 million from 1945 to 1953 following excavation of canals that essentially cut off several loops of the river. Although straightening of the river course may have improved small craft navigation by reducing the distances between river ports, it has also irreparably damaged adjacent spawning grounds to the extent that these areas are no longer utilized for spawning purposes. Other factors thought to contribute to the recent decline of fish fry stocks (1972 production was estimated at 25% below average production recorded for the previous two years) included major irrigation and embankment projects, industrial and urban river pollution, and the increased use of agriculturalinputs required for the new varieties of rice.

29. The project concept, of regulatingkhal flows with no regulation of the Halda River itself, was designed to have a minimal impact on the fishery. However, knowledge of the fishery is limited and further specialist studies of Halda carp spawning are consideredessential in the implementation of the project. The proposed credit, therefore,provides for detailed specialiststudies of the fish habitat on the Halda River with regard to the potential effects of the project and for the design of a carp spawning facility probably to be located on the Halda River.

30. Other fisheries in ponds, khals and the other rivers in the Karna- fuli Project area are of minor importance relative to the carp spawn fishery. They are comparable to existing and potential fisheries in most other areas of Bangladesh. There is some movement of fish through the khal outlets which would be regulated under the proposed project. Since the regulators would be open during high tide in the dry season and during low tide in most of the wet season, it is not anticipated that the yield reduction would be significant. Improved yields would require fisheries management including stocking to supplement natural reproduction. Stocking would be required particularly because flood control measures may limit the natural restocking of off-river areas. This stocking would be especially important in the Ichamati Unit, which presently is more flooded than the Halda Unit. Furthermore, most of the water in the Ichamati Unit would be supplied by a major pumping plant and not through khal regulators. It is possible that the fisheries in the Ichamati Unit would be effected by the effluent from the Karnafuli Paper Mill at Chandraghona, 3 mi upstream from the pumping plant. ANNEX 4 Page 8

31. In spite of these minor negative aspects of the project, it is highly likely that fish yields can be increased substantiallywith improved fisheriesmanagement.

Components of the Fisheries DevelopmentProgram

32. The primary objective of the fisheriesdevelopment program would be to create a Bangali ability to carry out field investigations to assess the impact of irrigation and flood control projects and to design fisheries development projects. Consequently, an essential feature of the program would be the employment of specialist consultant technical assistance personnel who could be absorbed into the working staff of the Department of Fisheries. The consultants would assist the Government in conducting a major investigation of fisheries in the Chandpur, Muhuri and Karnafuli Project areas. The 192 man-months of consulting services that the credit would provide is estimated to cost US$1.3 million. In addition, the project would provide equipment, vehicles and boats to be used for the investigative program, both at the existing research station at Chandpur town and in the field.

33. The project would also provide funds for a carp hatchery in the Chandpur Project area to remedy the project's negative effects on the carp fishery and to serve as a focus of research on the design and operation of hatchery facilities. A training program would also be carried out at the hatchery. The Governmentwould be assisted by consultants in the design, constructionand operation of the hatchery.

34. The investigativeprogram and the physical componentsof the fisheries developmentprogram are described below. Draft terms of reference for consulting services are outlined in Appendix 1 to this Annex.

InvestigativeProgram

35. The investigativeprogram would be carried out by the Department of Fisherieswith the assistance of consultants. The studies would be along the followingmain lines of investigation:

(a) inventories of fisheries and their related economic activities in the Chandpur, Muhuri and Karnafuli Project areas, including:

- magnitude of the fisheries of each specie in terms of numbers, weights and value;

- origin of the recruitment of fish to the areas and routes of migration;

- balance between commercial and subsistance fisheries;

- type and location of landing facilities and marketing outlets; ANNEX 4 Page 9

- socio-economic characteristics of fishermen (number of full-time and part-time fishermen, capital equipment, incomes, skills, etc.);

- regulationsof fisheriesand their enforcement,and

- monitoringchanges in the variables listed above during the completionand initial operation of the Chandpur Project to collect data that can be used for assessment of future irrigation and flood control projects of this type.

(b) assessment of fisheries potential in the Chandpur, Muhuri and Karnafuli Project areas, with special emphasis given to the carp spawn fishery on the lower Halda River, including:

- physical environment (salinity,temperature, pollutants,hydrology, etc.);

- aquatic vegetation;

- important predator control, and

- potentials for development of other fish and shrimp species for commercial or subsistance purposes.

- inventory of fresh water shrimp fisheries in Bangladesh;

- spawning grounds and routes of migration, and

- physical requirements for spawning both in natural habitats and in hatcheries.

(d) based on the studies listed above, developmentof programs for the improvement of fisheries in the Chandpur, Muhuri and Karnafuli areas, would include:

- hatchery site investigations;

- preliminarydesign of a carp spawning facility, probably to be located on the lower Halda River;

- preliminary design of a fresh water shrimp hatchery, possibly located in the Meghna River delta;

- recommendations regarding needed changes in fisheries management practices, regulations, enforcement and infrastructure, and ANNEX4 Page 10

- assessmentof costs and benefits of the proposed programs.

(e) assessmentof the proposed Chandpur hatchery's effectiveness with the special objective of refining the design and operation of future carp hatcheries;

(f) monitoring the carp stocking program in the Chandpur Project area in order to identify problems and to assess costs and benefits.

Vehicles, Boats and Equipment for the Chandpur Research Station and for the Field Investigations

36. Work at the station is divided into three phases: (1) Fisheries Biology, (2) Fisheries Technology, and (3) Fisheries Training. The Fisheries Training Institute is operated for the training of extension personnel employed by the Department of Fisheries. Extension workers are required to complete a training program of 18-months before they are assigned to the field. The Institute has its own building and a training staff of about six teachers and ten training aides.

37. The Fisheries Technological Division is housed in a good building with several moderately well-equipped laboratories. It has a staff of about 15 research officers and 15 aides.

38. The Fisheries Biology Division is housed in a separate building. It has a staff of about 20 research biologists and 30 aides. Work in this division consists of research on pond fertilization, water chemistry, biology and life cycles of mussels and shrimp, pituitary spawning of fish, toxicity of insecticides to fish, taxonomy of fish and parasites of fish. The research being done by research officers and biologists has historically been of good quality. However, many of the research personnal need additional training in fisheries. Most have B.S. or M.S. degrees in Botany and Zoology but have had no formal work in fisheries.

39. Poor soil quality is a factor that severely limits the future development and expansion of the station. Ponds built at the station go dry during the dry season (except for a few which have a depth of approximately 12 ft) since the soils have an inadequate clay content for the re- tention of water. Ponds are filled entirely by rain water with some seepage through sandy soils and these ponds can be drained only by pumping. Another undesirable feature is that during years of extremely heavy rainfall, flood waters overtop the ponds resulting in damage to dams and premature termina- tion of experiments.

40. Although some features make establishment of a large research station for pond fish culture at Chandpur impractical, certain research facilities and equipment should nevertheless be added. The station is ANNEX 4 Page 11 ideally located for research on fish population dynamics in riverine and adjacent irrigated environments. Therefore, research relating to capture fisheries and irrigation project fisheries should be expanded at the Chandpur station.

41. Its proximity to the Chandpur Project area offers a unique opportunity to strengthen the fisheries investigativeand management institutional framework,as well as to develop an effective working relationship 'between the operation of the proposed carp hatchery facility and the management of the Chandpur IrrigationProject. Future work at the station should involve obtaining significantdata and experience in order to develop the in-house capability to design, and operate improved hatchery facilities.

42. A modern research vessel designed for work on the major river systems of Bangladesh will be provided by an agreement between GOB and the Danish Government. The vessel, which will be delivered in 1975, will primarily be used for fisheries investigations. A significantamount of the vessel's operation will be concerned with investigations which seek to clarify the distributionand abundance of carp, fresh water shrimp, and to define the major migrations of these species throughout the flood plain system. The work of the vessel would assist in determining if it is possible to operate the water control structures of the Chandpur Project in a way that is compatible with flood control, and agriculture objectives and at the same time provide fisheriesbenefits to the project areas. Since the vessel would be of utmost importance for the investigationof the Chandpur fisheries, the project would provide funds for equipment and materials to cover part of its operations and maintenancecosts over four years up to a maximum of US$60,000 each fiscal year. 1/

43. In addition, the project would provide the following equipment and material for the research station and the field investigations:

1/ This would not duplicate the provisions made by the Danish Government. ANNEX 4 Page 12

Approximate cif cost in US$

3 pickup trucks 20,000

3 boat trailers 5,000

3 fiberglass boats with motors 28,000

1 200 gallon fish transport tank on trailer 2,000

Equipment for pollution studies, chemical analysis 33,000

Sealant for tanks 45,000

Field Laboratory equipment1/ 50,000

183,000

Carp Hatchery Facility

44. A modern fish hatchery complex is needed to supply the great numbers of fry and fingerlingsrequired to stock the waters within the Chandpur Project area. Constructionof the hatchery would involve construction of ponds and hatchery buildings on about 50 ac of land to be provided by GOB. The hatchery would also serve as a focus for the Department of Fisheries training and research activities. The training program would establish a domestic competence to operate and maintain carp hatchery facilities. The research program -- carried out under the direction of the Chandpur Research Station -- would help refine the design of future carp hatcheries.

45. Major elements requiring significant capital outlays include the following:

(a) construction of hatchery ponds;

(b) construction of concrete tanks for spawning of carp species and growing carp from larvae to fry;

(c) construction of a field laboratory with facilities for storage of fertilizers and feeds, garage, workshop and offices;

1/ For a tentativelist see Table 2. ANNEX4 Page 13

(d) constructionof a fish hatching laboratory;

(e) construction of a training and dormitory building, and

(d) purchase of equipment required in hatchery operations and the transportof fish to various locations in the project area.

46. The various components are discussed in paragraphs 47-54 and the costs are summarized below:

Costs Taxes Local Foreign and Duties Total ( …------Taka Million ------)

Item

Land Acquisition 1.00 - - 1.00

Civil Works Ponds 2.88 0.45 0.20 3.53 Concrete Pools 0.62 0.50 0.18 1.30 Buildings 1.19 0.25 0.09 1.53 Subtotal 4.69 1.20 0.47 6.36

Vehicles and Equipment Tubewells and Generator 0.35 0.50 0.18 1.03 Vehicles and Boats 0.08 0.53 0.58 1.19 Laboratory Equipment 0.06 0.30 0.13 0.49 Field Equipment 0.03 0.15 0.07 0.25 Pipes, Valves, etc. 0.24 2.00 0.90 3.14 Subtotal 0.76 3.48 1.86 6.10

Design, Management and Administration 1.20 - - 1.20

Basic Cost 7.65 4.68 2.33 14.66

Physical Contingencies/1 0.82 0.70 0.35 1.87

Expected Price Increases 2.85 1.64 0.88 5.37

TOTAL COST 11.32 7.02 3.56 21.90

/1 15% of civil works, equipmentand vehicles.

The major components of the hatchery facilitywould be: ANNEX 4 Page 14

47. Earthen ponds. The surface water area of the complex would Le about 15 ha. Earthen banks would be required to provide ponds of convenient production units of approximately 1 to 2.5 ac in size. The ponds would be designed with an overflow system whereby each pond could be filled and the water level maintained throughout the breeding season. Step (brick) walkways would be constructedon one side of each pond to facilitate rapid removal of young fish through seining with minimum damage to fish resulting from reduced oxygen, handling, etc. Clay soil of good quality would be used in the banks. All banks would be constructed with a top width of 2 meters and a slope of 2:1. Such a bank, with an assumed height of 3 meters, would have a cross- section area of 24 m2 . Banks of lesser widths (1 m) and steeper slopes (1.5:1 or 1:1) could be utilized, thus reducing the volume of earth needed, but the added costs of utilizing brick rip-rap to eliminate sloughing off banks would result in greater total construction costs.

48. Concrete pools. These would be required for: holding brood fish for relatively short periods; selective breeding and hybridization work, and holding of eggs and rearing of fry. A minimum of 30 reinforced concrete pools would be constructed. These pools would have an inside measurement of about 25 square meters with a water depth of about 1 meter -- thus having a volume of about 25 cubic meters. The general area would first be leveled and excavated to receive a stabilizing course of boulder or brick, covered by a 150 mm leveling course of cement (1:4:8 mixture) upon which the pond floor and side walls would be constructed. The latter course, also 150 mm wide would be a 1:2:4 cement mixture with reinforcement steel for added structural strength. Each pool would be equipped with a water inlet and an outlet. The water supply line, 50 mm in diameter, would span the length of a series of pools. In addition, a drainage canal, with a sufficient slope to quickly drain water from overflowing pools away from the area (thus preventing the foundation from settling and the walls from cracking) would line the pools.

49. Fish Hatching and Holding Building. A fish hatching and holding house would be required for spawning of local carp species and of the Chinese grass carp in particular. It would also serve as the principal facility for holding fingerlings,harvested from rearing ponds, until the fish have voided feces and been counted and/or weighed prior to their distribution. This facility would be carefully located in order to provide optimum accessibility from the various fingerling production ponds within the hatchery complex. Suggested dimensions of the combination fish hatching and fish holding facility are 15 x 16 meters or a total of 240 square meters.

50. Field Laboratory and Training Facilities. A field laboratorywith adequate storage rooms for fish feeds and fertilizers,a garage workshop and office space would be constructed. This building would be located so that its facilities could be reached with convenience by station personnel but still be secure from pilferage. The overall size would be 9 to 25 meters or 225 square meters. A training and dormitory facility would be needed to house visiting biologists and fish culturists during the fish breeding ANNEX 4 Page 15

season when around the clock work is required to successfully induce the carp to spawn. It would also be used for training of fisheries personnel associated with the project. It :Ls estimated that an area of 225 square meters would include sleeping space for 12 to 16 persons as well as a lecture hall, bathroom and kitchen facilities.

,51. Tubewells. Since a secure supply of good quality water is the prime requirement for an effective carp spawning facility, the hatchery complex also requires three wells equipped with stand-by diesel driven engines and pumps. Six diesel engine, 20-25 hp driven pumps, would be needed.

52. Stand-by Generator. Electrical service in the project area is unreliable, and a stand-by diesel electric generating system would be available as it is essential that brood fish be spawned at precisely the right time day or night, during the breeding season in order to obtain fish eggs of acceptablehatchability as wel:Las high viability of fry.

53. Tank. A water storage tank of reinforced concrete (approximately :2 x 4 meters and 3 meters in tota:L height) would be constructed. The tank would have several 150 mm outlet ports to supply water by gravity feed to field water lines supplying the various ponds of the hatchery complex. The tank will also provide potable water, through a secondary pump, to the dormitory and laboratory facilities.

54. Equipment and Vehicles. The project would provide: one 2-ton truck; two pick-up trucks; one tractor with trailer; two boat trailers; two fiberglassboats with motors; two 200 gallon fish transport tanks on trailers; laboratory equipment, and field equipment.

55. Staff Training. During the first year of constructionof the hatchery, ten staff members of the FisheriesDirectorate would undergo training in India for one month during the carp spawning season to observe and actively participate in carp breeding programs with emphasis on master- ing the skills needed for induced spawning techniques. The same program would be repeated for five additional staff members the following two years. Funds would be provided by the project to cover the foreign exchange cost of this training. Also, an additional in-country training program would be carried out at Chandpur for 12 fisheries officers by personnel who have received training in India. This two to three week training program would be held immediatelyprior to the peak of the fish spawning season in order that the participantscould quickly gain experience by assisting in the carp spawning operation. The consultants providedby the project would be available to assist in this training.

56. Operation and Maintenance. In order to ensure that proper operating and maintenance procedures are established for the hatchery, a qualified and experiencedhatchery management specialist would be provided by the project for a period of three years. The projectwould also provide funds ANNEX 4 Page 16

for the foreign exchange cost of equipment and materials for operating the hatchery during the first two years after its completion. (This amount would, however,be limited to US$50,000 per year.) The principle techniquesfor operating the carp hatchery and estimated productionare described in Appendix 2 to this Annex.

December 1975 ANNEX4 Appendix 1 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Draft Terms of Reference for Fisheries Consultants

1. The primary objective cf consultant technical assistance would be to create a Bangali ability to carry out field studies to assess the impact of irrigationand flood control projects and to design fisheries development projects. Consequently,an essential feature in the employmentof consultant technical assistance personnel is that they would be absorbed into the working staff of the Department of Fisheries and that they would spend the majority of their time in the field. They would act as Government staff and share full responsibilitiesin their fields of competence to the extent requestedby the Government. There would be one or two Governmental counterparts (in the case of the hatchery facility possibly more) who would take up the responsibilitiesof the technical assistance staff after t;keer departure. Since a number of different specialistswould be required, it is believed that the necessary services could best be provided by a firm of consultants specializingin fisheries. Since some of the consulting requirementswould be highly specialized,it is expected that the firm would seek individuals for short-term assignments from outside its own core staff.

2. Prime responsibility for the design and operation of the Chandpur hatchery and the investigativeprograms at Chandpur, Muhuri and Karnafuli would rest with the Department of Fisheries, which would provide all necessary personnel and equipment. The consultantswould provide the required specialized technical skills. The specialists who would be employed under the project would include:

3. Senior Fisheries Biologist (Administration). He would assist the Department of Fisheries in: organizing the team for the technical field investigations;site selection, design, tender evaluationand supervision of constructionof the Chandpur hatchery; advising on staff selection,and coordinatingresearch and training activitiesat the hatchery. He would have an advanced degree in Biological Sciences, at least ten years experience in the fisheries field of which at least five would have been in the conduct of independent,original technical investigationand 3 to 5 years of additional experience in the management of integrated technical teams. He would have demonstrated a thorough familiarity with the problems of working and living in the field in developing countries. This position would be provided for a period of four years.

4. Senior Fisheries Biologist (Research). He would work closely with the senior staff of the Departmentof Fisheries in developingthe investigation program. He would assist in: selecting staff for the technical investigations;preparing cost estimates,lists of equipment required for ANNEX 4 Appendix 1 Page 2 the investigationsand a detailed work program for field investigations,and in analyzing the requirementsfor short-term consultants. He would have a Ph.D. or an equivalent degree in Biological Sciences and extensive interest in and aptitude for field work. He would be experienced in technical in- vestigationsin fisheries,but his speciality may be in any subject agreed upon between the Department of Fisheries and IDA. Primarily, he must have demonstrated the qualities of imagination in designing investigative work, adaptability to difficult technical and field conditions, resourcefulness in getting the job done with available materials manpower and funds, and flexibility of mind in assigning priority to those issues which further the program objectives. The individual will be required to prepare fully competent technical reports and may, with the approval of the Department of Fisheries, also prepare articles for publication in international scientific journals. The consultant would be required for the extent of the technical investigation and for subsequent report writing up to a period of three and a half years.

5. Fisheries Biologist (Research). This individual should have similar qualificationsas above but with less experience. This consultant could be employed for about 12 months so that 3 to 4 individuals could serve in this capacity, each bringing different skills and approaches to the task, during the three and a half years the position would be provided.

6. Hatchery Management Specialist. This individualwould be required at, or prior to, the time of review of tender documents for the hatchery facility. He would, under the supervision of the Senior Fisheries Biologist (Administration), assist in the review of site location, tender documents, design specifications and day-to-day construction of the hatchery facility. He would develop the operational plan for the hatchery facility and a plan for the distribution of the fry and fingerlings produced. He would also develop, in cooperationwith the Department of Fisheries and the Senior Fisheries Biologist, a program foL assessing the effectivenessof the fry and fingerlingdistribution, as well as a program for training hatchery technical personnel. The specialist would have at least ten years experience with hatchery construction, management and operation with at least five years as manager and at least three years of his experience would have been with so called "warm water species." He would have had experience in staff training and well documented experience in personnel management. Funds for this position would be provided for a three year period.

7. Unspecified. An additional 24 months of uncommitted specialists' time is included to meet needs for expertise in socio-economic surveys, pollution studies, fish physiology, fish diseases and for special problems not foreseen at present or to extend, if required, the period for the experts listed above. These funds would also be used for short-term consultants (such as Indian hatchery managers)who would lecture at the training programs discussed in paragraph 55. ANNEX4 Appendix 2 Page 1

BAIGLADESH

KARNAFULIIlRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Carp Hatchery in the Chandpur Area Spawning Techniques and Production

Spawning Techniques

1. Fry production can be iinduced by hormone treatment only during the regular cycle of reproductiorn. This is probably because the fish mature in response to subtle photoperiodic changes. It may be possible in the future to breed and select carp for greater flexibility in breeding and thereby increase the efficiency of hatchery facilities.

2. The carp breeders are raised in large ponds. A few months prior to the breeding season, two- to four-year old adults are collected and stocked as brood fish in ponds. Proper care of the breeders is taken and with the advent of monsoon when the fish become fully mature and the temperature of the water goes down, breeding operations are started. Fully ripe males which freely ooze milt when gently pressed on the abdomen are selected. Selection of a female breeder in prime condition is rather difficult. Healthy breeders weighing 1.5 to 6.0 kg are preferable, as they are easier to handle than larger fish which are quite strong.

3. Breeders are selected and collected in hand nets and weighed. The quantity of pituitary extract required is next calculated from the weights of breeders and the suspension prepared. The breeder, wrapped inside a hand net, is then placed on a soft cushion and injected intramuscularly. One set of breeders, consisting usually of two males and one female, is then introduced into one breeding hapa. 1/ The breeding hapa are fixed by bamboo poles in the marginal waters of ponds.

4. Spawning ordinarily takes place within 3 to 6 hours after the release of the injected breeders. The eggs, which are non-adhesive,sink,

1/ A breeding hapa is a rectangularmosquito net container (or a plastic net) with a cover which opens on one side where it can be securely tied after introductionof the breeders. Size of hapa varies from 1.8 m x 0.9 m x 0.9 m to 3.6 m x 1.8 m x 0.9 m according to the size of breeders. ANNEX 4 Appetndix2 Page 2

and after fertilization swell to the size of a pea. Approximately 8 to 10 hours after fertilization, the embryo starts a twitching movement. By that time, the eggs are properly water hardened and are removed from the breeding hapa. A quantitative assessment of the eggs is made from the total volume and the percentageof developingeggs is estimated from samples. The eggs are next distributeduniformily over a number of hatching hapa. 1/

5. The hatching hapa are tied to bamboo poles in marginal waters of ordinary ponds. About 0.075 to 0.1 million eggs are uniformlyspread on the stretched bottom of the inner hapa. The eggs hatch out in 15 to 18 hours after fertilizationat a temperatureof 21 to 31°C. After hatching, the hatchlings escape to the outer hapa through the meshes of the inner one. Eggs cases and bad eggs are left in the inner hapa which is removed when all the eggs have hatched out. The hatchlings are left undisturbed in the outer hapa until the third day after hatching. By that time, the yolk is almost absorbedand the young fry start feeding. They are subsequently collected and stocked in nursery ponds.

6. The hydrologicaland climatic conditionsobserved during induced spawningof carps has shown that (i) spawning occurs both in clear as well as in turbid waters and during day or night, (ii) injected fish breed successfullywhen the water temperature ranges between 24 to 31°C, the optimum being around 27°C, 2/ (iii) fish breed through a fairly wide range of pH and dissolvedoxygen contents of water, (iv) cool, rainy days give better results than hot, sultry days, and (v) rain and fresh rainwaterare conducive to successfulspawning.

7. The above breeding technique for carp is used throughout India with slight modificationssuited for the particularenvironment. In several places where the water temperaturein ponds is above the optimum, the injected carps are introducedin breeding hapa fixed in flowingwaters in rivers. The temperatureof river water is at least 2°C below pond temperature.

Estimated Productionfrom the Chandpur Hatchery

8. A female carp, 3 to 6 kg in weight, has a high fecundity,producing an average of approximately200,000 eggs per spawning. However, mortality

1/ A hatching hapa consists of an outer hapa made of thick-meshedcloth of nylon stitched in the shape of a rectangulartrough without any cover (size - 1.8 m x 0.9 m x 0.9 m) and inner hapa of similar shape and made of round-meshedmosquito net (size - 1.75 m x 0.75 m x 0.45) fitted inside the outer one. 2/ If the fish spawn at a higher temperature,the percentageof fertilization and hatching is relatively low. ANNEX4 Appendix 2 Page 3 from the recently spawned and fertilized eggs through the larvae and very early fry stages approaches 50%, even under good management procedures.

9. Ponds of the proposed hatchery facility, when subdivided into fingerling production units would afford a total of about 40 ac of rearing ponds with a capacity of producing about 20-25 million small fingerlings. The sizes of fingerlings produced are recommended to be smaller than those ordinarily utilized for stocking farm ponds. The numbers produced may therefore be somewhat greater. They require less space and feed costs are reduced. Since the emphasis of the hatchery activities should be on release of fry and fingerlings into the open waters of the project, the smaller fish will be less subject to immediate recapture by local fishermen. On the other hand, they may be somewhat more subject to predation by fish and other predators. Almost no experience is available from which to validate the specific effectiveness of a stocking program such as that recommended. However, stocking of inland lakes of equivalent areas has proven to be successful. Reasonable care must be taken to release fry and fingerlings into shallow brush protected areas from which they can disperse through the project area. Some fingerlings are expected to be available for sale and release in local ponds.

10. About 25-30 million carp fry will be needed for the 20-25 millibi fingerlings that the proposed facilities could produce. At the anticipated 50% survival rate from egg to fry state, about 50-60 million eggs will be required. Hence 300-350 female carp must be successfully spawned to provide the required number of fry for the production ponds of the facility out of a breeding population of about 5,000 carp.

11. With good management and the intensive use of cloth spawning hapas, it should be possible to hatch an additional 50-70 million fry for release in various parts of the project area. ANNEX4 BANGLADESH Table 1

KARNFULIIRRIGATION PROJECTS

(HALDAAND ICHAMATIUNITS)

Principal Types of Commercially Important Fish Species

I. Carps a) Catla catla Freshwater b) Labea rohita t c) Cirrhina mrigala " d) Labeo calbasu it II. Cat fishes a) Heteropneustesfossilis " b) Clarius balrachus " c) Silonia silondia " d) Pangasius pangasius Freshwater and estuarine e) Tachysulrus iella Estuarine f) Plotosus canius III. Feather backs a) Notopterusmotopterus Freshwater b) N. chitala t IV. Murrels a) Ophicephalus striatus Freshwater b) 0. gachua " c) 0. marulius " V. Indian shad a) Hilsa ilisha Freshwaterand estuarine VI. Perch a) Lates calcarifer Estuarine VII. Pomfrets a) Pampus chinensis Estuarine b) Stromateusspp. " VIII. Thread fins a) Polydactylusindicus Estuarine b) Polynemus paradiseus " c) Eleutheronematetradactylum " XI. Mullets a) Mugil tade Estuarine b) M. parsia n X. Prawns a) Macrobrachiumrosenbergii Freshwater b) Penaeus carinatus Estuarine c) P. indicus it d) Metapenaeus monoceros e) M. brevicornis f) Leander styliferus t ANNEX4 Table 2 BANGLADESH

KARNFULI-:RRIGATION PROJECTS

(I4ALDAANID ICHAMATI UNITS)

Tentative List of Equipment for Chandpur Research Station and Field Investigations

Field Laboratory Equipment

50 Aquaria 2 Compound microscopes 2 Binocular scopes 1 Drying oven 2 Dehumidifiers- air conditioners 1 Refrigerator- freezer 1 Chest-type home freezer , Thermometers, Max - Min. 1 Thermometer,Recording 1 Water still or resin filter 1 PH meter 1 Electric generator or other source 1 Butane or other gas source 1 Analyticalbalance 1 Water pump and pressurized storage tank to deliverwater at 20 ft. head 1 Torsion balance 1 Centrifuge 1 Water bath 1 Oxygen meter 1 Air compressor,to 16' p.s.i., 20 gal. tank 1 Hammer mill with 15 hp)electric motor 1 Air compressor 1 Eckman dredge 1 Kemmerer water sampler 1 Magnetic stirrer 1 Titrationlamp 1 W4aterbath, thermostatlic,26" x 15" x 16" ) Dissecting kigs 1 Spectronic 20 colorimeterwith line voltage regulator, moisture-proofmodel 2 Portable low-lift pumps with electric motors 2 Portable low-lift pumps with diesel or gasoline motors 2 200-gallon fish transportation tanks, fiberglass 2 100-kg platform scales 2 1-kg torsion balances 1 Rainfall recorder 1 Plankton net 2 Hach Chemical Analysis Kits Glassware,hardware, and miscellaneousequipment ANNEX5 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Irrigation Water Requirements

1. Theoretical monthly crop water requirements were determined on the basis of the modified Penman indices for Comilla multiplied by appropriate growth stage factors. Peak percolationwas taken as 3.5 inches per month, a conservativelyhigh figure in view of the impermeablesoils in the area which are further tightenedby the plow pan. Pre-plantingand transplanting requirementswere taken as equivalentto six inches over the cropped area.

2. Rainfall was assumed 100% effectivefor the boro crop season since it is low in amount during March and April and would then be retained by the banked paddies, while in May ample pumping capacity would be available to compensatefor any loss through runoff. Lower-quartilemonthly rainfall were adopted as a further conservativefactor.

3. Water losses from low-lift pumping would be small due to the compact service areas (average 45 ac per pump) and the proximity of the channels to the irrigated fields. Water losses from the channels serving a pump group would run to lower lying irrigated areas or return to the channels and would thus not be lost to the system. Operation losses would also be low since each service area would be small and the pump can be stopped as soon as irrigationrequirements are met. In view of this, and the conservative percolation and rainfall criteria, an overall efficiency of 85% was assumed.

4. Boro crop nurserieswould be sown from late December through January. Transplantingwould take place about a month after planting and the crop would be harvested from late May through June. This calendarhas been simplified to determinemonthly pumping requirements. The resulting demands are derived in Table 1 and summarizedas follows:

Month Inches of Water Pumped

January 3.9 February 10.8 March 10.1 April 10.4 May 6.7 Total 41.9 ANNEX5 Page 2

Over the entire 38,000 ac, this amounts to about 133,000 ac-ft for the boro crop. Pumping requirements are greatest in February, reaching nearly 0.4 inches per day. At this time, a 2 cfs pump serving 45 ac would have to operate for eight or nine hours per day. Aman crop irrigation would be about 20% of that for the boro crop and could easily be handled by the pumps.

December 1975 ANNEX5 BANGLADESH Table 1

KARNAFULIIRRIGATION PROJECT

(HALDAAND ICHAMATIUNITS)

Boro Rice Water Requirements (In inches)

Month January February March April Mav Total

Evaporationindex 2.0 2.7 4.2 4.9 5.3 Crop factor 0.60 1.25 1.32 1.42 1.40

Evapotranspiration 1.2 3.4 5.5 7.0 7.4 24.5

Preplantingand transplanting 2.0 4.0 - - - 6.0

Percolation 0.1 1.8 3.5 3*5 ,3-5 12.4

Gross fieldrequirements 3.3 9.2 9.0 10.5 10.9 42.9

Effectiverainfall - - 0.4 1.7 5.2 7.3

Net field requirements 3,3 9.2 8.6 8.8 5.7 35.6

Pump requirements 3.9 10.8 10.1 10.4 6.7 41.9

(1M~

H \J1 BANGLADESH KARNAFULI IRRIGATION PROJECT (HALDA AND ICHAMATI UNITS) Construction Schedule

1975 1976 1977 1 978

I F M1AS< NID JI FIMIAl M JS S NID JIF IM IA r 1GLLN ID JIF IM IA SJJOvNID

Land Acij, s.1 i

Dcirs, Is] . , .L Haida Un,it

Channel Improvemnent

I~~~~~~~~~~~~~~~ :hem

Carpo Transfer, Pac Imns

Cln,cks Stuctires

Em bankmenskts

Ichamati Unit

Channe,l Improvements

Re!qulatnr Structures

Chr-ck Stir. I ares

Civil VVorns Pim,ps & Mntors Gates & Hoists Tran,smission & Flectri:a WVork

Wet Season

World Bank-9810 BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDA AND ICHAMATI IDETS)

Cost Estimates

Taxes Taxes Local Foreign and Duties Total Local Foreign and Duties Total ------(Taka Million) (US$ Million Equivalent)- Halda-Irrigation (Stage 1)

Land Acquisition 6.3 - - 6.3 0.48 - o.480

Construction

Regulators 31.4 19.1 6.0 6.5 2.42 1.47 o.46 4.35 Cargo Transfer Facilities 5.1 2.7 0.7 8.5 0.39 0.21 0.05 o.65 Channel Improvements 1.5 0.1 - 1.6 0.12 0.01 - 0.13 O & M Facilities 1.7 1.3 0.1 3-10 0.10 0.01 0.24 Subtotal 39.7 23.2 6.8 69.7 3.06 1.79 0.52 5.37

Low-Lift Pumps 1.4 11.6 4-0 I72 0.11 0.89 1.31

Total Halda Stage 1 47.4 34.8 10.8 93.0 3.65 2.68 0.83 7.16

Halda-Flood Control (Stage 2)

Land Acquisition 21.6 - - 21.6 1.66 - - 1.66

Construction

Embankmnents 25.8 3.4 1.6 30.8 1.98 0.26 0.12 2.36 Regulator 1.4 0.9 0.1 2.4 0.11 0.07 0.01 0.19 Cargo Transfer Facilities 0.5 0.3 - 0.8 0.04 0.02 - 0.06 0 & M Facilities 0.8 o.4 - 1.2 o.o6 0.03 0.09 Subtotal 285 1.7 _ 2.19 0.38 0.13 2.70

Total HIaldaStage 2 50-1 5.0 1.7 56 .8 3-85 0.38 0.13 4.36

a Discrepancies in currency conversions due to rotunding. BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAIATI UNITS)

Cost Estimates

Taxes Taxes Local Foreign and Duties Total Local Foreign and Duties Total =Taka(-- Million) ------(US Million Equivalent)- Ichamati Unit

Land Acquisition 6.3 - 6.3 0.48 - - 0.48 Construction

Embank:mentsand Checks 1.5 0.1 - 1.6 0.12 0.01 - 0.13 Regulators 6.0 3.6 1.0 10.6 0.46 0.28 0.08 0.82 Channel Improvements 1.2 - - 1.2 0.09 - - 0.09 MaiinPtmuping Plant and Culvert 8.0 7.2 2.2 17.4 0.62 0-.5 0.17 1.34 Relift Pumping Plant 0.9 0.9 0.4 2.2 0.07 0.07 0.03 0.17 0 & M Facilities o.6 0.4 - 1.0 0.05 0. - 0.08 Subtotal 18.2 12.2 1.4 0.94 0.2B 2.63

Low-Lift Pumps 0.3 2.2 0.8 3.3 0.02 0.17 0.06 0.25

Total Ichamati Unit L 14.4 4.4 1.91 1.11 0.34 3.36 Vehicles and Agricultural Equipment 0.6 4.2 1.3 6.1 0.05 0.32 0.10 0.47

Consulting Services 3.0 5.5 - 8.5 0.23 0.42 - 0.65 Design, Management and Administration 18.2 - - 18.2 1.40 - 1.40 Total Irrigation and Flood Control 144.1 63.9 18.2 226.2 11.09 4.91 1.40 17.40

a/ Discrepanciesin currency conversions due to rounding. BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATI UNITS)

Cost Estimates

Taxes Taxes v Local Foreien and Duties Total Local Foreign and Duties Total ------(Taka Million) ------(U lion Equivalent) - Fisheries Development Program

Vehiclesand Equipmentfor ChandpurResearch Station 0.4 2.4 1.2 4.0 0.03 0.18 0.10 0.31

Hatcheryin ChandpurArea

Land Acquisition 1.0 - - 1.0 0.08 - - 0.08 Construction 4.7 1.2 0.5 6.4 0.36 0.09 0.04 0°49 Equipmentand Vehicles 0.7 3.5 1.9 6.1 0.05 0.27 0.15 0.47 Design and Administra- tion 1.2 - - 1.2 0.09 - - 0.09 Subtotal 7 87 0.19 1.13

Technical Assistance

- Consulting Services 3.0 13.4 - 16.4 0.23 1.03 1.26 Training 0.3 0.3 - 0.6 0.02 0.02 0.04 0 & M ResearchVessel 1.8 2.4 1.1 5.3 0.14 0.18 0.08 0.40 0 & M Hatchery 0. 1.0 0.4 2.1 0.°5 0.08 0003 o.16 Subtotal 5 . 17.1 I2U. 0-4 1.31 0.11 -1. Total FisheriesDevelotpment Program 13.8 24.2 5 43.1 1.05 1.85 0.40 3.30

PhysicalContingencies 14.0 8.0 2.7 24.7 1.08 0.62 0.21 1.91

ExpectedPrice Increases 66.0 26.1 7.8 99.9 5.08 2.02 0.59 _.L69 GRAND TOTAL 237-9 122.2 I93.9 18.L30 2.60 30.30 a/ Discrepancies in currency conversions due to rounding. ANNEX8 Table 1 Page 1 BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAANI) ICHAMATI UNITS)

Schedule of Expenditures

Total a/ Year Cost - 1975 1976 1977 1978 ------(Taka Million) ------Halda - Irrigation (Stage 1)

Land Acquisition 6.3 2.0 2.4 1.9 - Expected Price Increases 1.7 0.2 0.6 0.9 - Subtotal 8.0 2.2 3.0 2.8 -

Construction 69.7 6.0 18.6 22.9 22.2 PhlysicalContingencies 10.4 0.9 2.8 3.4 3.3 Expected Price Increases 32.0 0.7 4.5 10.8 16.0 Subtotal 112.1 7.6 25.9 37.1 975

Low--LiftPumps 17.0 - - 6.7 10.3 Plysical Contingencies 0.8 - - 0.3 0.5 Expected Price Increases 5.5 - - 1.7 8 Subtotal 23.3 - - 8.7 l76

Total Halda Stage 1 143-4 9.8 28.9 48.6 56.1

Halcda- Flood Control (Stage 2)

Land Acquisition 21.6 6.5 8.6 6.5 - Expected Price Increases 6.0 0.8 2.1?* Subtotal 27.6 7.3 10.7 9.6

Construction 35.2 3.1 11.1 12.7 8.3 PhysicalContingencies 5.4 0.5 1.7 1.9 1.3 Expected Price Increases 16.0 0.4 2.9 6.4 6. Subtotal 56.6 0 1.7 21.0

Total Halda Stage 2 84.2 11.3 26.4 30.6 15.9 Ichamati Unit

Land Acquisition 6.3 0.6 3.2 2.5 - Expected Price Increases 2.1 0.1 0.8 1.2 Subtotal 7 0.7 7 3.7

Construction 3b.0 1.8 13.3 13.8 -. 1 Physical Contingencies 5.2 0.3 2.0 2.1 0.8 Expected Price Increases 13.L 0.2 3.2 6.4 3.6 Subtotal 52.6 2.3 18., 22.3 9.5

a/ Discrepanciesdue to rounding. ANNEX8 Table 1 Page 2

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICH.AMATIUNITS)

Schedule of Expenditures

Total a/ Year Cost 1975 - 1976 1977 1978 ---- (Taka Million)------

Low-Lift Pumps 3.3 - - 0.6 2.7 Physical Contingencies 0.2 - - 0.0 0.2

Expected Price Increases 1.1 - - 0.1 1.0 Subtotal 4.6 -7 3.9

Total Ichamati Unit 65.6 30 22 26.7 13.4

Both Units

VJehiclesand Equipment 6.1 - - 2.9 3.2 Physical Contingencies 0.3 - - 0.1 0.2 Expected Price Increases 2.1 - - 0.8 1.3

Subtotal 8.5 - 3.8 4.7

ConsultingServices 8.5 2.7 2.4 1.7 1.7 Expected Price Increases 1.9 0.2 0.4 o.80.5 Subtotal 10.7 2.9 2.8 2.2 27

Design, Managementand Administration 18.2 5.4 4.7 4.5 3.6 Expected Price Increases 6 0.7 1.1 2.1 2.6 Subtotal 21.7 6.1 5.8 6.6 6.2

Total Irrigationand Flood Control 336.8 33.1 86.4 118. 98.8

a/ Discrepanciesdue to rounding. ANNEX 8 Table 1 Page 3

BANGLADESH

KARNAFULIIRRFIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Schedule of Expenditures

Total Costa/ 1975 1976 1977 1978 1979 ------Taka Million)------

Fisheries Development Program

Vehicles and Equipment for Chandpur Research Station 4.0 1.0 2.0 1.0 - - Physical Contingencies 0.6 0.1 0.3 0.2 - - Expected Price Increases 0.7 0.1 0.3 0.3 - - Subtotal 373 77 72g :7

Hatchery in Chandpur Project Area 14.7 0.7 6.o 6.2 1.8 - Physical Contingencies 1.9 0.0 0.7 0.9 0.3 - Expected Price Increases 5.5 0.1 1.5 2.8 1.1 - Subtotal 22.1 O.8 Z2 9.9 3.2 -

Technical Assistance 24.4 1.2 5.5 6.1 6.8 4.8 Expected Price Increases 5.3 0.1 o.6 1.3 1.8 1.5

Subtotal 29.7 ___ 3 7: 7 Z 3

Total Fisheries Development Program 57.1 3.3 16.9 18.8 11.8 6.3

TOTAL PROJECT 393.9 36.4 103.3 137.3 110.6 6.3

(US$ million) W 30.3 2.8 7.9 10.6 8.5 0.5

a/ Discrepanciesdue to rounding. BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDA AND ICHAMATI UNITS)

Proposed Credit Allocation

Amount of the Credit Allocated (Expressed in US DollarsEquivalent)

I. CIVIL WORKS

(a) Irrigation and Flood Control Component 10,000,000 ) ) 100% of foreign expenditures (b) Carp Hatchery 530,000 ) and 60% local expenditures II. EQUIPMENT,VEHICLES AND MATERIALS ./

(a) Irrigation and Flood Control Component 2,500,000 )100% of foreign expenditures ) for directly iqMorted goodo (b) FisheriesDevelopment Program 659,000 ) ) 100% at -fctory cost for (c) 0 & M Research Vessel 240,000 ) looally manufactured goods. (60,000 per year) ) ) 65%of cost for imported goods (d) 0 & M Carp Hatchery 100,000 ) procured locally. (50,000 per year) )

III. TECHNICALASSISTANCE

(a) Consulting Services - Irrigation and Flood Control Component 650,000 ) 100% of foreign expendltures

(b) ConsultingServices - FisheriesDevelopment ) 506 of local expendituroe Program 1,45,000 )

TOTAL 18,900,000

Excludingmaterials financed under CategoryI. r4cD ANNEX8 Table 3

BANGLADESH

KARNAFULIIRRIGATION PROJECT

(HALDAAND ICHAMATIUNITS)

Schedule oi'Disbursements 1/

Bank Fiscal Year AccumulatedDisbursements and Semester US$ Million Equivalent

1976

1st

2nd .1

1977 1st 6.5 2nd 8.5

1978

1st 12.0

2nd 15.0

1979

1st 18.5

2nd 21.0

1980

1st 21.5

2nd 22.0

1/ IncludesUS$3.1 million to refinance the IrrigationEngineering Technical Assistance Credit S-14 BD. ANNEX 9 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Agricultural Supporting Services

General

1. The Ministry of Rural Development,Cooperatives and Local Govern- ment is responsiblefor the IntegratedRural DevelopmentProgram (IRDP), cooperatives, the Thana IrrigationProgram (TIP) and Rural Work Programs (RWP). The Ministry of Agriculture is responsiblefor agriculturalresearch and extension,procurement and distributionof agriculturalinputs, and installation,operation and maintenanceof low-lift pumps and tubewells. The success of any agriculturaland rural developmentwork depends on effective coordinationbetween these two Ministries at all levels.

Rural DevelopmentPrograms

2. With the objectiveof tapping rural initiativesand associating the rural populationwith rural development, the Government introduced three closely related programs: the Rural Works Program (RWP); the Thana Irriga- tion Program (TIP), and the IntegratedRural DevelopmentProgram (IRDP). The first two provide the infrastructureon which to develop the productive capacity of the land, and the third provides the cooperativeorganization throughwhich increasedproductivity can be realized. The above programs were initiatedby the BangladeshAcademy for Rural Developmentwhich, after extensivesocio-economic research and experiments,recommended that all rural developmentactivities should be based at the thana level where there should also be a Thana Training and DevelopmentCenter (TTDC) for integrating rural developmentactivities of different departmentsand for giving training to model farmers and local leaders in various fields.

3. RWP was first started on a countrysidebasis in 1962 and included the constructionand maintenanceof roads, bridges, irrigationchannels and culverts,community buildings and embankments. It made considerablepro- gress until about 1967 when it began to deterioratedue to political inter- ference and later because of annihilationof local governmentinstitutions. The Governmentproposes to revive the program with several changes, including reestablishmentof local government institutionsin modified forms with more representationin project committeesby village institutions. The GOB also intends to maintain stricter supervisionand financialcontrol of project works. It will also emphasizewater development. So far, only the Union Councilshave been elected,and pending the election and formationof the Thana and District Councils, the Circle Officer (Development)is responsible for RWP in the thana and the Deputy Commissioneris in charge at the district level. ANNEX 9 Page 2

4. TIP, started in 1966, provides the infrastructureto systematically carry out formation of pump or tubewell irrigation groups in order to develop other small scale drainage and wat:er control schemes. The RWPhas been expanded into TIP in order to finance the training of: model farmers; irrigation group managers; members of the managing committees; pump and tubewell operators, and mechanics. The RWP will also finance TIP workshops and go- downs. The rapid expansion of low-lift pump irrigation from 320,000 ac in 1968 to over 1.2 million ac in 1973 was achieved under the TIP. However, advice in the organization and management of pump groups was lacking, group membership was unstable and pump utilizationwas inefficientand therefore the program did not function as well as it should have. The role of the Circle Officer (Development)has been undermined for the past two years. To strengthenTIP, he will again be given the administrativeleadership at the thana level with responsibilitiesfor initiationand approval of low-lift pump schemes and selection of sites for deep tubewells.

5. IRDP is a program to organize rural people into a two-tier cooperative structure consisting of small village cooperatives and the Thana Central CooperativeAssociation (TCCA). It would take on functions such as supervised credit, input distribution,and machinery use. The coverage of IRDP will be extended from 99 Thanas in 1972 to 250 throughoutBangladesh by 1977. The IRDP is already functioning in one of the thanas (Rangunia)where thte project is located, and assuranceswill be obtained from the Government that IRDP will extend into the remaining two thanas (Rauzan and Hathazari)before completion of project works.

6. TTDC is a key element in integratingrural development activities of different departments. At this center are the offices of the thana level officials from each development agency:

1. The Circle Officer (Development) 2. The Thana AgricultureOfficer 3. The Thana IrrigationOfficer 4. The Thana Fisheries Officer 5. The Thana Cooperative Officer 6. The Project Officer IRDP 7. The Thana Livestock Officer

In addition to the offices, the TT:DChas a meeting hall, a workshop and storage facilities. It provides training for model farmers and local leaders in various fields.

Extension

7. The Directorate of Agricultural Extension and Management, under the Ministry of Agriculture,is responsiblefor extension through demonstrations and training programs. AgriculturalOfficers are assigned to extension services at divisional,district, subdivisional,thana and union levels. SubdivisionalAgricultural Officers and above, are college graduateswhereas ANNEX 9 Page 3 most of the Thana AgriculturalOfficers (TAO) and about 50% of the Union AgriculturalAssistants (UAA) are matriculatesor high school graduates,who are trained in the AgriculturalExtension Training Institute for two years. The remaining 50% of the UAA have no basic training in agriculturalextension. The TAO is responsible for coordinatingextension work at the thana level and supervisingUAA, (an average of ten per thana) who are the basic field extensionworkers, plant protectionworkers and statisticalassistants. The TAO and UAA are generallynot providedwith transport of any kind.

8. The First Five-Year Plan aims to strengthen agricultural extension services throughout the country. Agriculture graduates will be assigned as Thana Extension Officers, and TAOs will serve as their deputies. The plan also aims to more than double the number of UAA who will eventually be re- named Village Extension Agents (VEA). Salaries would be raised, particularly for lower level officers, and better transportationand facilitieswould be provided. The IDA-financedRural Training Project will assist in increasing the output of trained middle level agriculturalextension workers for employment as VEA and will also provide equipment and materials for extension.

9. Rangunia thana is one of the four thanas in Bangladesh that will receive a comprehensive package of family planning services under the Population Project (Credit 533-BD, 1975, US$15 million). One feature of this project is that the UAA will introduce family-size considerations into the advice he gives to the farmers. With the relative high requirements for agricultural extension services that would result from the Karnafuli Project, Rangunia would give interesting insight into the feasibility of the "UAA- approach" for family planning. The Population Project will provide funds for an evaluationof the effectivenessof this program and the conflicts between agricultural extension and family planning. Given this evaluation process, it is anticipated that any conflicts in the UAA's time can be resolved and would not jeopardize the extension services that would be required under the presently proposed project.

10. To improve extension service in the project area, the project would provide transportation to extension workers as well as some agricultural equipment for use in the six demonstration areas. When the detailed equipment lists are prepared for Rangunia thana it would be made certain that duplicate funds are not provided for equipment already supplied under the Population Project.

Research

11. The Bangladesh Rice Research Institute (BRRI), a semi-autonomous body under the Ministry of Agriculture, is responsible for research on various aspects of rice improvement and production, and for training extension workers in rice production. The BRRI which was first established in 1970, works in close cooperation with the International Rice Research Institute (IRRI), Los Banos, Philippines. The IRRI gives technicalsupport by occasionally providing experts and consultants;exchanging research materials; training scientists,and procuring equipment. The Ford Foundationhas been the ANNEX 9 Page 4 major donor of foreign exchange for equipment. The USAID is sharing the cost of training abroad with the Ford Foundation. Moreover, IDA Credit 410-BD provides for developmentof physical facilities at the main BRRI station at Joydepur and its substations.

12. So far, BRRI has been concentratingon screening, selecting and field testing materials supplied by IRRI, while paying increasing attention on developing new varieties including crosses between the exotic and local materials. The high yielding varieties of rice (HYV) that have been released include IR-8, IR-5 (Irrisail), Purbachi, BRRI-1 (Chandina) and BRRI-2 (Mala) which are all suitable for the project area (Annex 1, Table 2).

13. Four substations for rice research have been set up to supplement the research activities at the main BRRI station in Joydepur in order to make it possible to select and test varieties under differentclimatic and hydro- logic conditions. One of the substationsis located at Comilla about 90 mi northwest of the project area. It has a 92 ac field, two research officers, one farm superintendent and several field assistants.

Seeds

14. Bangladesh Agricultural Development Corporation (BADC), a semi- autonomous body under the Ministry of Agriculture, is responsiblefor importing, producing and distributing rice seed in Bangladesh. Seed of HYV rice may be imported ocassionally by BADCfor distribution to farmers. But, in general, HYV rice seed is multiplied locally on BADC farms and by private growers who are approved by BADC under Registered Growers Schemes. Farmers usually retain seed from the previous harvest or obtain seed from their neighbors, but may ocasionally obtain fresh seed from BADC through TCCA and UAAs to introduce new varieties or to sustain high yields. The BADC has recently started a new seed production program with IDA Credit 410-BD to produce about 10,000 tons of certified rice seed annually. Under this program, BADCwill distribute certified seed through TCCA as well as approved private dealers. One of the six seed processing plants will be established at Chittagong, ten miles west of the project area.

Fertilizer

15. The BADC is responsible Eor the procurement and distribution of fertilizer. Fertilizer is brought into the project area mostly by road and rail from the Chittagong port and from Fenchuganjand Ghorasal fertilizer plants. Distributionis made through TCCA and approved private dealers located in every hat (small market place). This procedure has been working satisfactorily, but recently, due to shortage of supplies and consequent introduction of complicated sales procedures, it has not been possible for farmers to get timely deliveries or desired quantities. With the additional productionof 500,000 tons of urea from the proposed new factory at Ashunganj to be financed by IDA (Credit No. 527-BD, 1974), there should at least be no problem regarding the availabilityof urea in about five years. ANNEX 9 Page ',

16. In the past, farmershave been reluctant to use high dosages of fertilizeron rice and other crops. The local varietiesof rice are not very responsiveto fertilizerapplication and are susceptibleto lodgingwith higher fertilizerdosage. Farmers also frequentlyrisk losing their investment on wet season rice (aus and aman) due to flood, drought or pests. However, with the introductionof high-yieldingrice varietieswhich are responsive to fertilizer, farmers are now well aware of the benefits of using higher dosages of fertilizerson HYV rice. Annual fertilizerrequire- ments in the projectarea would rise from about 5,000 tons at present to 11,000 tons at full development.

17. The cost of triple super phosphate (TSP) and muriate of potash (M/P) is currentlysubsidized by the Government, however GOP aims at elimi- nating the subsidy completely in the course of the plan period. (For further details see Annex 11, Table 2). As the increased use will be on MYVrice, it is expected that elimination of subsidy will not adversely affect fertilizeruse.

Plant Protection

18. Pesticidematerials and applicationequipment are importedby BADC and handed over to the Plant ProtectionDivision (PPD) of the Direc- torate of AgriculturalExtension. PPD is responsiblefor ground operation which involves trainingof farmers, storage and distributionof pesticide materials, and storage,maintenance and use of applicationequipment.

19. The PPD has a plant protectioninspector in each district,with assistants at the thana level. There are only two or three sprayer operators, called mukadams, in each thana. Their role is to operate the motorized sprayers and to train and supervise the farmers spraying with hand sprayers. The supply of functioningsprayers is, however, very limited, and farmers often have to apply liquid pesticidesby splashing them on crops with bundles of sticks, leaves or reeds. This is very wasteful.

20. Major rice pests are stemborers, leafhopper, army worm, rice hispa, leadfolder and rice mealy bug, of which the first two frequently cause severe crop damage. So far, the damage caused by disease is less serious than that from pests. Pesticides are sold at subsidized prices through TCCA and private dealers approved by BADC. To ensure adequacy of sprayer equipment, the project will procure and distribute sprayers in the project area.

Credit

21. A survey conducted in 1966 showed that farmers in Bangladesh were getting credit to the extent of 86% from non-institutional sources (friends and relatives 52%, landowners,traders and money lenders 34%), while institutional sources provided only 14% (cooperatives8%, the AgriculturalDeve- lopment Bank 5% and "Taccavi"or relief 1%). The amount of institutional credit has increasedabout four times since then but because of rapid inflation, there has been only a slight increase in real terms. During the ANNEX 9 Page 6 same period, there was a considerable increase in the utilization of low-lift pumps, and in HYV rice seed and fertilizer input (6 times, 10 times and 2-1/2 times, respectively). Accordingly, it does not appear that there has been any appreciable increase in t:he relative importance of agriculture credit from institutional sources.

22. Of the different types of institutional credit, the Government has decided to discontinue"Taccavi" since it is, in fact, a sort of relief grant rather than a loan. Other agriculturalcredit institutionsare also, for the most part, in severe financialtrouble since the recovery rate has been very low. They have weak finiancialstructures because of little capital, few deposits and heavy dependenceon advances at concessionalrates from the Government and the BangladeshBank. Their equity has been greatly impaired by borrowers' defaults, and their income is insufficientto cover borrowing costs at current rates and administrative expenses. In addition, they have organizationalproblems such as inadequate staffing and accounting methods. Loans are not supervised effectivelyand are probably misused to a large extent.

23. However, in spite of grave weaknesses in agriculturalcredit institutions, Bangladesh farmershave rapidly increased their use of low-lift pump irrigation,fertilizer and HYV seed. Their inputs have apparentl-been financed largely out of the farmer's own resources, from sale of small por- tions of his crop or from income earned in secondaryoccupations. This sug- gests that, while viable credit institutionsmay make it easier to modernize agriculture,the inabilityof agriculturalcredit institutionsto operate efficientlyand to expand at a rapid pace may not be a serious impedimentto agriculturaldevelopment in Bangladesh. 1/

24. Nevertheless,the Government intends to improve credit availability through IRDP which has a better recovery rate than the Agricultural Develop- ment Bank and the CooperativeBank (70% as against 30% and 22%). The IRDP will establisha two-tier cooperativestructure consisting of small village cooperativesand a federation (TCCA) at the thana level. The TCCA functions as a supportive organizationto promote the growth of primary cooperatives. It also helps integrate them into a unified cooperativesystem. The main activities of the TCCA are: (a) to extend agriculturalcredit through the primary societies affiliatedwith it; (b) to establishmembers' savings deposits; (c) to assist in planning and supplying inputs and services,and (d) to train primary cooperativemanagers and model farmers. Primary cooperatives comprise 30-50 farmers associatedat village level for the purpose of sharing the use of a low-lift pump and tubewell as well as marketing facilities.

1/ IBRD report No. 455-BD "Bangladesh- Developmentin a Rural Economy." ANNEX 9 Page 7

25. Nationalized commerical banks, more specifically the Solani Bank, have recently begun providing agricultural credit in some parts of Bangladesh and may develop agricultural lending operations in the project area in which case they would lend to primary cooperatives through the TCCA. Their experience in commercial banking, adapted to agricultural credit operations, would impose more vigorous financialdiscipline in agriculturalcredit operations.

26. A Bank Group mission reviewed the agriculturalcredit situation in 1973 and discussionsare continuingwith the Government, to consider proposals for improvingthe country'sagricultural credit institutions.

December 1975 ANNEX10 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNIT)

Present and ProjectedCropping Patterns and Production

General

1. The present cropped area for the whole project is about 90,000 ac, which on a net cultivablearea of 46,000 ac, gives a cropping intensityof 195%. This is considerablyhigher than the average of 136% for the whole country. Rice is the dominant crop and accounts for 94% of the cropped area. Minor crops, mostly pulses, oilseeds, chillies,vegetables and sugarcane, account for the remaining 6%. Jui:eis not grown in the area. Cropping calendarsare shown in Figure 1.

Present Cropping Patterns and Procluction

2. Halda Unit. The present:cropping pattern is presented in Table 1. The cropped area in this unit is 77,800 ac which, on a net cultivable area of 38,300 ac, gives a cropping intensityof 203%. About 95% of the area is double cropped (35% aus followed by T. aman, 8% aus followedby rabi crops or vegetables,and 52% T. aman followedby boro). About 4% of the area is triple cropped in the sequence aus - T. aman - rabi crops. Sugarcane is grown all year round on 1% of the area. The Halda Unit is thereforeone of the most intensively cultivatedareas in the country.

3. High yielding rice varietties(HYV) account for 40,000 ac or 55% of the area under rice. Since fertilizeruse in the ChittagongDistrict, where the project is located, is higher than in other parts of the country, the average paddy yields in the project area are also higher. The yields of local aus, T. aman and boro are 14, 21 and 25 md of paddy per ac, respectively. These can be compared with HYV yields of 28, 32 and 46 md per ac for aus, T. aman and boro, respectively. The present overall yield of paddy is estimatedat 29.3 md per ac or 1.10 ton per ac. Lack of proper flood control and dry season irrigationare presently the major restrictionsto a total shift to high yielding varieties.

4. Present cropped areas and productionare given below (for further details see Table 1): ANNEX 10 Page 2

Area Production (1,000 ac) (1,000 ton)

Rice (paddy) - Aus 18 13 - Aman 35 34 - Boro 20 33 Subtotal 73 80

Other Crops - Rabi crops 3.4 0.9 - Vegetables 1 .0 2.8 - Sugarcane 0.4 4.0 Subtotal 4.8 Total All Crops 77.8

5. Ichamati Unit. The present cropping pattern is presented in Table 2. The cropped area is 11,900 ac which, on a net cultivable area of 7,900 ac, gives a cropping intensityof 150%. The overall cropping pattern is affected by the prolonged flooding in excess of 5 ft in the Gumai Bil depressionwhere the cropping intensityis only about 130%. About 5,000 ac, or 63% of the net cultivable area, are double cropped. Double cropping includes aus followed by T. aman and boro followed by T. aman. Some 37% of the area is cropped with a single crop of T. aman.

6. The transplanting of aman is normally delayed until the flood recedes. This reduces yields somewhat below what could be expected with the high input of fertilizers under ideal conditions. In spite of this, yields are basically the same as in the Halda Unit. Flooding and the lack of dry season irrigationare severe constraintsto a more intensiveculti- vation.

7. The present cropped area and production are as follows:

Area Production (1,000 ac) (1,000 ton)

Rice (paddy)- Aus 2.5 2.1 - Aman 6.8 6.9 - Boro 2.2 3.8 Subtotal 11.5 12.8

Other Crops - Rabi crops 0.2 0.04 - Vegetables 0.2 0.56 Subtotal 0.4 Total All Crops 11.9 ANNEX 10 Page 3

Future Cropping Patterns and Production

8. Increased irrigationfrom the project would enable expansion of boro rice cultivation in the dry season from 20,000 ac to 33,000 ac. The cultivationof HYV boro (primarilyIR-8) would, however, replace cultivation of aus since the harvesting of this variety generally cannot be completed in time to allow the next planting before the early rains. The HYV varieties would be grown for the entire boro crop and 90% of the aman crop (in areas not likely to be flooded by more than one foot). Local T. aman would give higher and more stable yields since supplementaryirrigation could be given in case of drought or shortage of rainfall. Total paddy production is projected to increase from 93,000 tons at present to about 141,000 tons at full development.

9. Halda Unit. The future cropped area and productionare also given in Table 1. The projected cropped area is 76,800 ac which, on a net cultivable area of 37,700 ac, gives a cropping intensity of 204%. It will be noted that the net cultivablearea at full developmentwill be less than that of the present by about 600 ac which will be required for construction of flood protection embankments. Rice will continue to dominate, accounting for 93% of the cropped area (aus 12%, T. aman 44% and boro 37%). The minor crops will account for the remaining 7%. The most significant change wi-1 be the increase in the boro acreage from 20,000 to 28,000 ac, the irrigated HYV T. aman area from nothing to 30,000 ac and the irrigated HYV T. aus also from zero to about 4,000 ac. At fuLl development,the total paddy production would be 118,000 tons as against 80,000 tons at present. Some 46% would be produced in the dry season and 54% during the wet season.

10. Ichamati Unit. The future cropped area and productionare given in Table 2. The projected cropped area is 14,300 ac which, on a net cultivable area of 7,700 ac, gives a cropping intensityof 186% which is a great improvementfrom that of the present 150%. About 200 ac are needed for con- structing flood embankmentsand the net cultivable area will be reduced by this amount. Rice will continue to dominate, accountingfor 96% of the total cropped area (aus 15%, T. aman 46% and boro 35%). The most significant changes will be the increase in boro acreage from 2,200 to 5,000 ac and irrigatedHYV T. aman from zero to 5,000 ac and HYV T. aus from zero to 1,000 ac. At full development,the total paddy production from this unit would be 22,500 tons as against 12,800 tons at present. Some 44% of this would be produced during the dry season and 56% during the wet season.

11. In evaluatingthe project, it has been assumed that the IR-8 boro crop would expand at the expense of aus. This is a conservativeassumption since it is quite possible that Chandina, which has a shorter life than IR-8 (see Annex 1, Table 2), will replace IR-8 to some extent and this will make it possible to raise a crop of aus or vegetableson part of this land during the aus season. ANNEX 10 Page 4

Future Crop Yields

12. With an assured water supply, flood control, improvedfarm management, an adequate supply of inputs, expanded use of HYV seed, and an improved extension service, crop yields are projected to increase over a five year developmentperiod as shown below:

Present Future Yield Yield ------md/ac------

Aus (local) 14 17 Aus (HYV) rainfed 28 32 Aus (HYV) irrigated - 47 T. Aman (local) 21 24 T. Aman (HYV) rainfed 32 36 T. Aman (HYV) irrigated -45 Boro (local) 25 Boro (HYV) 46 52 Pulses and oilseeds 6 7 Vegetables 75 120

December 1975 ANiNEX 10 BANGLADESH Table 1

KARNAFULI IRRIGATION PROJECT

(HALDA UNIT)

Area. Yield and Production of Crops - Present. Future Without and With Project--Stages 1 and 2

PRESENT FUTURE WITHOUT PROJECT FUTURE WITH PROJECT FUTURE WITH PROJECT Stage - I Stage - 2 CROPS Area Yield Production Area Yield Production Area Yield Production Area Yield Production (I,000 ac) (md/ac) (1,000 tons) (1,000 ac) (md/ac) (1,000 tons) (1,000 ac) (md/ac) (1,000 tons) (1,000 ac) (md/ac) (1,000 tons)

RICE (PADDY)

17 3 Aus - Local 11 14 6 6 15 3 6 15 3 5.5 - HYV, rainfed 7 28 7 8 30 9 ------HYV, irrigated - - - 4 40 7 8 45 14 4.0 47 7 Subtotal 18 19 13 18 27 19 14 32 17 9.5 30 10

2' Amnan - Local 20 i i6 G 22 8 22 7 4.5 4 - HYV, ranfed 15 32 18 5 34 6 ------HYV, irrigated - - - 20 40 30 27 42 42 30.0 45 50 Subtotal 35 26 34 35 34 44 35 37 49 34.5 42 54

Boro - Local 2 25 2 - - - - _- - - - 54 - HYV 18 46 31 20 48 36 24 52 47 28 52 Subtotal 20 44 33 20 48 36 24 52 47 28 52 54

TOTAL PADDY 73 29 80 73 36 99 73 41 113 72 44 118

OTHER CROPS

Pulses 1.4 6 0.3 1.4 7 0.4 1.4 7 0.4 1.4 7 0.4

Oilseeds 0.5 6 0.1 0.5 7 0.1 0.5 7 0.1 0.5 7 0.1

Chillies 1.5 8 0.5 1.5 9 0.5 1.5 9 0.5 1.5 9 0.5

Potatoes and Vegetables 1.0 75 2.8 1.0 120 4.5 1.0 120 4.5 1.0 120 4.5

Sugarcane 0.4 270 4.0 0.4 300 4.5 0.4 300 4.5 0.4 300 4.5

TOTAL OTHER CROPS 4.8 4.8 4.8 4.8

TOTAL ALL CROPS 77.8 77.8 77.8 76.8

Net Cultivated Area 38.3 38.3 38.3 37.7 13

Cropping Intensity 2037 203% 203% 204% 0 ANNEX 10 BANGLADESH Table 2

KARNAFULI IRRIGATION PROJECT

(ICHAMATI UNIT)

Area. Yield and Production of Crops - Present, Future Without and With Project

PRESENT FUTUREWITHOUT PROJECT FUTURE WITH PROJECT CROPS Area Yield Production Area Yield Production Area Yield Production (1,000 ac) (md/ac) (1,000 tons) (1,000 ac) (md/ac) (1.000 tons) (1,000 ac) (md/ac) (1,000 tons)

RICE (PADDY)

Aus - Local 1.0 14 0.5 0.5 15 0.3 1.0 17 0.6 - HYV, rainfed 1.5 28 1.6 1.4 30 1.6 0.1 32 0.1 - HYV, irrigated - - - 0.6 40 0.9 1.0 47 1.8 Subtotal 2.5 22 2.1 2.5 29 2.8 2.1 32 2.5

Aman - Local 3.0 21 2.4 1.8 22 1.5 0.6 24 0.6 - HYV, rainfed 3.8 32 4.5 3.0 34 3.8 1.0 36 1.3 - HYV, irrigated - - - 2.0 40 3.0 5.0 45 8.4 Subtotal 6.8 27 6.9 6.8 33 8.3 6.6 42 10.3

Boro - Local _ _ _ _ - HYV 2.2 46 3.8 2.4 48 4.3 5.0 52 9.7 Subtotal 2.2 46 3.8 2.4 48 4.3 5.0 52 9.7

TOTAL PADDY 11.5 30 12.8 11.7 35 15.4 13.7 44 22.5

OTHER CROPS

Pulses and oilseeds 0.2 6 0.04 0.2 7 0.05 0.2 7 0.05

Potatoes and vegetables 0.2 75 0.56 0.2 120 0.89 0.4 120 1.79

TOTAL OTHER CROPS 0.4 0.4 0.6

TOTAL ALL CROPS 11.9 12.1 14.3

Net Cultivated Area 7.9 7.9 7.7

Cropping Intensity 150% 152% 186% ANNEX10 Figure 1

BANGLADESH KARNAFULIIRRIGATION PROJECT (HALDA AND ICHAMATIUNITS) CroppingCalndar

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

Crops -

B. aus

T. aus

T. aman

Boro

Rabi

Sugarcane Harvesting

LEGEND

-:, 13:B. broadcast rice T: transplanted rice. Rabi: winter crops other than rice, including pulses, Nursery Growing period mustard, potatoes and chilies. period in the field World Bank-9689(R) ANNEX11 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Prices for Economic and Financial Analyses

General

1. The estimated future farm gate prices of rice and agricultural inputs are derived from projected 1985 world market prices in 1975 currency values 1/ with appropriateadjustments for freight, handling and processing. Production of other crops is relatively small and most of the output is consumed locally. Projected farm gate prices for these products are based on the typical ratio between their prices and the price of rice.

2. Bangladesh has experiencedrapid inflation since independence. Drastic price increaseson several essential commoditieshave been caused by severe shortageson the domestic and internationalmarket. Other prices have been controlled at relatively low levels. This has resulted in black market prices on controlled goods that differ substantiallyfrom official prices and in severely distorted relative prices.

3. In order to isolate the effects of the project from the effects of expected changes in relative prices when the economic situation in Bangladesh stabilizes,projected 1985 prices are used both for present and projected future farm budgets. The pattern of domestic (financial)prices, arrived at in this manner, is quite close to the price situation in the early 1970's.

4. For the financialanalyses, including farm budgets, the approximate official exchange rate of US$1.00 = Tk 13.0 is used. International price comparisonscarried out before the devaluation in May 1975 and analyses of the system of import duties indicate that a rate of Tk 16.00 = US$1.00 is a reasonable estimate of the value of foreign exchange to the economy. Con- sequently, this value has been used in the economic analysis.

1/ Forecasts from the Bank's Economic Analysis and ProjectionsDepartment, (Draft,April 1975) in 1973 currency values, adjusted by a factor of 1.34 in order to bring the estimates up to May 1975 currency values. ANNEX 11 Page 2

Rice

5. The projected 1985 price used as a basis for economic and financial analyses is US$224 per metric ton of low to medium quality rice (25Z-35% broken) fob Bangkok. 1/ This represents a sharp decline from the shortage related prices which have recently averaged more than US$400 per metric ton. Adding shipping and insurance costs, this gives a projected price of US$250 per metric ton cif Chittagong. lransport and marketing costs between Chitta- gong and likely deficit areas are added to the cif price in order to give the local market price for millecl rice. Assuming an average milling yield of 65% and deducting the costs for local transport and milling gives a financial farm gate price of Tk 75 per maund for aman varieties,which have roughly the same quality as imported rice. Prices for boro and aus in 1973 and 1974 were about 89% and 86% of the aman price.

Other AgriculturalProducts

6. Before the recent rapicd increase in rice prices, the ratios between the price of other crops and the price of rice were fairly stable. After the expected relative decline of the rice price, these ratios should stabilize around their historic long-t:ermvalues. The estimated 1985 farm gate prices for different crops are shown in Table 1. Since these crops are not internationallytraded, the economic farm gate prices are assumed to be the same as the financial prices.

Diesel Fuel

7. The price of high speed diesel fuel (HSD) is expected to remain on its present level of about USS'12.50per barrel fob Ras Tanura (Saudi Arabia). This gives a cif price of US$13.50 per barrel in Chittagong. The cost for in country marketing andltransport is Tk 2.20 per gallon and taxes and duties amount to Tk 1.70 per gallon. This gives a projected price of Tk 8.80 per gallon for the farm budget analysis and an economic price of Tk 8.20 per gallon when taxes are deducted and the Taka is evaluated at the shadow exchange rate.

Fertilizers

8. By 1985, Bangladesh is likely to be self-sufficientin urea and may even have a small surplus for export. The opportunitycost for urea

1/ The Bank's Economic Analysis and Projections Department's latest forecast for 1985 is US$320 per metric ton of high quality rice (5% brokens). The price for low to medium quality rice is assumed to be 70% of the price for high quality rice (see note in Annex 11, page 1). ANNEX 1 1 Page 3 is consequently based on the price fob Chittagong. The international urea price is projected to decline from the present shortage-related high of around USU65 per kilogram nitrogen nutrient fob Persian Gulf to USU34 per Kg in 1985. The proximity to major markets in Southern Asia gives an expected price of US435 per kilogram nutrient fob Chittagong. Adding the costs for marketing and transport to deficit areas gives a financial price of Tk 88 per maund of urea (46% N) in the project area.

9. The prices of phosphateand potassium fertilizersare likewise projected to decline from the present highs of USJ72 per kg phosphate nutrient fob Morocco and US012 per kg potassium nutrient fob Vancouver to US147 per kg and US.9.3 per kg, respectively. Transportationand insurance are expected to add an average of about USU6.0 and USJ5.8 per kg nutrient, respectively. Adding the costs for local marketing and transport gives the estimatedunsubsidized prices to the farmers in the project area of Tk 128 per maund of triple super phosphate (46% P2 05) and Tk 54 per maund of muriate of potash (60% K). The correspondingeconomic prices are shown in Table 1.

Pesticides

10. The two most common chemicals for rice plant protection in Bangla- desh are diazinon (granular) and sumithion (emulsifiable concentrate). Their prices which are assumed to remain at their present levels, are shown in Table 1.

Taxes and Subsidieson AgriculturalInputs

11. Most agriculturalinputs are procured by BADC and sold to the farmers at subsidized prices. The amount of subsidy has recently been reduced and further reductions are recommended in the First Five Year Plan. Urea is presentlysold at an unsubsidizedprice while the rate of subsidy for most other inputs is about 60% (see Table 2). The present farm budgets are calculated with the present rate of subsidies while the future farm budgets are based on the assumption that all subsidieswould be removed.

Agricultural Labor

12. One part of the wage for farm workers is paid in kind, normally two meals per day. The cash part increased substantiallyduring the last 1-2 years when rice prices skyrocketed,and the real wage remained basically constant. In the mid-sixties,the peak wage was Rs 3-4 or equivalent to about 0.20 maund of paddy. Around 1970, the peak wage was about Rs 5 in the project area (also, this is roughly equal to 0.20 maunds of paddy). In 1974 when the peak wage had risen to about Tk 14 it was just worth 0.18 md of paddy. ANNEX 11 Page 4

13. It is assumed that in the long run, the peak market wage will equal 0.20 maunds of paddy. Consequently,it is assumed that the peak market rate will follow the trenc'of the rice prices and be about Tk 15 per man-day in 1985. The wage during the agriculturalslack season is approximatelyequal to half the wage during the peak season.

December 1975 ANNEX11 Table 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Summary of Price Proj,ections for 1985

Financial Price Economic Price Crops /aund Tk/maund

Aus paddy 65 79 Aman paddy 75 92 Boro paddy 67 82 Pulses 100 100 Oilseeds 190 190 Chillies 190 190 Vegetables 46 46 Potatoes 52 52 Sugarcane 15 15

Agricultural Inputs

Urea (46% N) 88 106 TSP (46% P205) 128 156 W1P (60% KJ 54 64 Diazinon 800 950 Sumithion 3,100 3,700 Diesel fuel 8.80o 8.20 2/ Peak wage rate 15 3/ 15 3/ Animal power 10 4/ 10 /

1/ The financialprices are shown net of subsidies. 2/ Tk/gallon. ~*/ Tk/man-day. L' Tk/animal-day. BANGLADESH

KARNAFULI IRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Subsidy Situation for Major Inputs in 1974 /

SubsidizedPrice Estimated Cost to GOB in 1974 to Farmers Subsidy in 1974 GOB actual In percent of procurement and Estimate based on GOB cost Input distribution cost world market price 1973/7 1974/75 Tk _

Urea v/ Tk/md 42 84 30 (50) (-8) _

TSP Tk/md 113 93 20 40 73 65

M/P Tk/md 68 72 I 30 385

Diazinon Tk/lb 5.5 free 2 3.5 64

Sumithion Tk/lb 20 free 8 12 60

i/ The Government estimate is based on actual cost of local productionwhile the estimate used here is based on the world market price. The projected world market price for urea is close to the cost of local production. The GOB price is dated April 1974 and is likely to have increased somewhat since then. Consequently, the price to the farmers is approximately the same as the cost to GOB.

/ For TSP and M/P the estimates from GOB differ slightly from the estimates based on the world market price. This can be explained by the rapid changes in world market prices in 1973 and 1974, which means that the date of purchase has a considerableeffect on the price. i/ This table was prepared based on the latest available data. It does not incorporate the effects of the break down of the Ghorsal urea plant in September 1974 or the devaluationin May 1975. However, it is expected that GOB will adjust the prices to take recent developments into account.

p F ANNEX 12 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Crops Inputs and Farm Budgets

General

1. Present agriculturalpractices in the project area are discussed in Annex 1. The expected overall changes in cropping patterns, yields and production due to the project are described in Annex 10. This Annex discusses the impact on the individual farm. The purposes of this micro analysis are:

(a) to estimate the effects of the project on farm incomes for representativefarm sizes and cropping patterns in order to determine their distributionalimpact;

(b) to compare the income levels of the project area farmers with those of farmers in other areas;

(d) to analvz- :he effects of different Governmnt policies regarding input subsidies and water charges.

Crop Input Requirements

2. Present and projected unit input requirements under the project are given in Table 1. The estimated current levels of inputs are derived from an agriculturalsurvey carried out in the project area in 1970. These results have been adjusted and updated with information supplied by the Ministry of Agricultureand BADC. Future requirements are based on recom- mendationsby the Directorateof AgriculturalExtension and Managementand on observed cultural practicesof the progressivefarmers of the area. For the differentinputs, the estimatesare:

(a) Fertilizers. The generalizeddoses recommendedtend to be based more on abstract notions that balanced doses are per se good, rather than on well-documented evidence. They appear to overstate the importanceof TSP and M/P. Consequently,while farmershave rapidly increasedthe applications of urea, the TSP and M/P consumptionis only slowly increasing. The recommendedmix is 100:100:50 (urea: TSP: M/P) while the present mix is roughly ANNEX12 Page 2

100:39:11. In "futurewithout project" conditions, this is expected to improve slightly to 100:52:21. It is unlikely that the farmers even after full development of the project will apply the recommendeddoses and the "future with project" mix is assumed to be 100:60:30. This means that while roughly the full recommended dose of urea is applied, only 60% of the recommended TSP and M/P dosages are used.

(b) Farm Labor. Labor requirements for each operation and crop are presented in Table 1 and the resulting monthly labor requirements in Table 2. These estimates are based on the assumption that no substantial change in farming practices will take place.

(c) Irrigation. In the economic analysis, the costs of pumps, fuel and maintenance are treated separately as part of the initial and recurrent project costs. In the farm and crop budgets, the average per acre cost to the pump group for irrigation is entered as a lump sum in the crop and farm budgets.

(d) Animal Power, Seeds and Other Requirements. Bullocks used for land preparation are usually owned by the larger land holders and rented by the smaller holders. However, the imputed cost of a pair of bullocks to the owner is roughly equal to the daily rental charge. This has consequently been uniformly applied for all crops and farm sizes. The estimated crop inputs also include requirements for seeds and depreciationof farm equipment.

Crop Budgets

3. Crop budgets based on financial prices are presented in Table 1. The prices used in this analysis are discussed in Annex 11. The present subsidized prices are used for the present crop budgets while no subsidies are assumed for the future. The proportion of labor requirements supplied by the household varies with farm size (see para 4 below).

Model Sizes for the Farm Budget Analysis

4. Households in the project area can, somewhatarbitrarily, be classified into four groups according to their economic situation:

Landless workers, most of whom earn their living as daily workers in the fields, in construction or distribution, make up about 44% of the households in the area.

Sub-marginalfarmers cultivateless than 1.5 ac of land, which is presently the minimum area required to support ANNEX12 Page 3

an average family. Usually more than half of the household income comes from work outside the family farm. In the farm budget analysis, a 1.0 ac farm has been chosen to represent those 27% of the households that operate more than 0.25 ac but less than 1.5 ac.

Small farmerscultivate an area of 1.5 - 4.0 ac and typically have a per capita income that is well below the national average. About 19% of the households belong to this category, which is represented in the farm budget analysis by a 3.0 ac farm.

Large farmers are defined as the "upper 10 percent." These farmers own more than 4.0 ac. However, they are far from being "large" by any standard. Their families typically number about ten persons and their per capita income rarely exceeds $100. The median holding size for the "large" farmers is roughly 5.0 ac and this size has been chosen to represent this group in the farm budget analyses.

Farm Budget Analyses

5. At present, 50-55% of the farms have dry season irrigation. The remaining 45-50% of the farms will be provided with low-lift pump irrigation under the project. Both groups of farmers will benefit directly from the project, but to a differentextent. Consequently,six farm models have been chosen for the budget analyses: 1.0, 3.0 and 5.0 ac farms, presentlywith irrigationand without irrigation.

6. Budgets on an annual cash flow basis for the six representative farm models are given in Tables 3-5. The followingassumptions have been made in the analysis:

(a) Crop Yields and Total Input Requirements

Projected yields used in the analyses are given in Annex 10. Crop inputs have been estimatedbased on the input requirements discussed above and given in Table 1.

(b) Hired Farm Labor

The monthly labor requirements (based on Table 2) have been calculated for each farm size. Since the number of family members varies with the farm size, the total labor availability for each farm model has been calculated. On the average, 30% of available family labor is employed outside the farm. Since the average daily wage for outside work is generally higher than the cost of hiring farm labor, non- farm work is usually given preferenceover farm work. Based ANNEX12 Page 4

on the 1970 socio-economic survey in the project area, the monthly amount of hired labor for each farm model was estimated with the following formula:

Hired man-days = Total Earm labor requirements minus net available family labor plus 10% of total farm labor requirement.

This means that even if the family theoretically can supply all labor, on the average 10% of the requirements are hired and that outside work is given priority over work on the family farm.

Current levels (see Tab].es 3-5) are estimated from the socio- economic survey. The reasons for the higher non-farm incomes for the large farms are their large family sizes and, primarily, better educat:ional background which results in higher wages. The number of days worked outside the farm is shown in Annex 13, Figure 1. The project will increase the demand for labor in the area (see Annex 13). Although the non-farm income for the sub-marginal farmers will increase somewhat by the project, it has been assumed as constant in the analysis.

(d) Net CultivatedLand

The area given in the surveys is based on the gross size of the farms. Since a part of this area is taken up by homesteads,ditches, paths, trees, etc., the net cultivated area is somewhat lower. The figures given in Tables 3-5 are based on the results of the agriculturalsurvey.

(e) Prices

Present and future productionand inputs are valued using the projectedfinancial prices (in 1975 Taka) which are discussed in Annex 11.

(f) Subsidies

For the present budgets, it has been assumed that urea is unsubsidizedwhile other fertilizersand pesticidesare subsidized to the extent of 60% (see Annex 11). No subsidies are assumed to exist in the future. ANNEX12 Page S

(g) CroppingPatterns

Reflectthe averagefor the projectarea, but give a somewhat higher intensity for the small farms and somewhat lower for the large farms.

(h) Irrigation Costs

Without Government subsidies, the average per acre cost of secondarypump irrigation,including fuel, driver, maintenance and pump rent or installment payments, re- covering the initialinvestment cost over sevenyears, would be about Tk 310. It is further assumed that the farmers will pay a water charge of Tk 200 per ac that would cover the O&M costs for civil works.

(i) Family Sizes Based on the 1970 agro-economicsurvey, the following family sizes have been assumed:

Holdings Number of Persons Number of Workers

1.0 ac 6.3 1.9 3.0 ac 7.7 2.3 5.0 ac 8.6 2.6 Distributional Effects of the Project

7. For farms that will be provided with irrigation under the project, the income levels will change as follows: ANNEX 12 Page 6

Farm Gross Value of Production Net Value of Nonfarm Total Family Model Production Cost Production Income Income (1) _ (2) (-3)=(1)-(2) --(4) (5)=(3)+(4)

------Tk ------… 1 ac farm P 2,460 490 1,970 1,600 3,570 W 3,010 760 2,250 1,600 3,850 Wi 4,680 1,350 3,330 1,600 4,930 W 5,010 1,470 3,540 1,600 5,140 Increase 2 66 - 57 - 34 3 ac farm P 7,380 1,390 5,490 1,800 7,290 W 9,060 2,750 6,310 1,800 8,110 Wi 14,110 4,460 9,650 1,800 11,450 W 15,070 4,770 10,300 1,800 12,100 Increase % 66 _ 63 - 49 5 ac farm P 12,110 3,940 8,170 2,100 10,270 W 14,800 5,570 9,230 2,100 11,330 WI 23,020 8,550 14,470 2,100 16,573 W 24,560 9,060 15,500 2,100 17,600 Increase % 66 - 68 - 55

/a P = present, W future without project Wl future with stage 1 of project (irrigationonly), W = future with project (both irrigation and flood control),increase due to project = (W-W)/W.

Consequently,for farmerswho will be provided with irrigation,the net income from farming will increase 57-68%. The corresponding total family income will increase 34-55%.

8. The family income figures give an exaggerated picture of income inequalities since the family size increases with the farm size. The present per capita income for the 1.0 ac farmers and the 5.0 ac farmers is Tk 570 and Tk 1,190, respectively. After the project is implemented, the comparablefigures will be Tk 820 and Tk 2,050. 1/ The average per capita income in the project area is presentlyUS$85 compared to the national average of US$85-100. Two-thirdsof the families have a per capita income of less than US$85.

Farmers' Ability to Pay Water Charges

9. The gross and net production values will increase on the average Tk 2,860 and Tk 2,370 per irrigated acre 2/, respectively. According to the

1/ The farm income figures presentedabove includes the inputed value of home consuption valued at farmgate prices. To make them comparable to national income figures they have to be adjusted for the difference between farmgate and local retail prices. Income estimates in US dollars take this into account. 2/ Before water charges. ANNEX12 Page 7

1963 IrrigationOrdinance, this would permit a water charge of about Tk 290 per irrigated acre, which is somewhat below the unsubsidizedpump charge. However, the ordinance refers primarily to gravity irrigation schemes and not to schemes like the KarnafuliProject (see para 5.15).

10. The annual operating, maintenance and capital recovery costs for low-lift pumps would be Tk 310 per irrigatedac. The annual O&M costs for civil works and relift pumps and replacement of the relift pumps every seventh year are Tk 180 for the Halda Unit. The annual O&M costs for civil works and the main and relift pumping plant in the Ichamati Unit are Tk 300 per irrigated ac. On the average, the annual O&M costs would be about Tk 200 per irrigated ac. The recovery over 30 years at 10% interest of all civil works investments would require a water charge of about Tk 590 per irrigated ac in the Halda Unit. The recovery of all capital costs in the Ichamati Unit would give a water charge of Tk 870 per irrigated ac. The overall capital recovery cost would be Tk 630 per irrigated ac. Consequent- ly, if all costs were recovered, the total charge would be Tk 1,080 and Tk 1,480 per irrigated ac in the Halda and Ichamati Units, respectively. If the water charge was set at the same level in both units, the total charge would be Tk 1,140 per irrigated ac.

11. For the estimation of the farmers' ability and willingness to pay water charges, the concept of project rent has to be introduced. In simple terms, project rent can be defined as the incremental net income when all factors of production, except water and related services supplied by the project, are given the rewards that are required for their cooperation. In a world without uncertainty and interpersonal differences, project rent is equal to the net incremental farm income minus the necessary rewards to family labor and management for their extra input of labor and entrepreneurship.

12. This calculation is complicated by the uncertainty about the yields and to some extent, the crop prices that the farmers can expect. One way of handling this problem is by introducingexplicit probabilitydistributions and a function that shows the "utility" or "value" of different income levels. (The theory behind the utility function is that the value of an additional dollar is less if the income already is US$100 than if it is only US$50.) Un- fortunately, this procedure would lead to severe estimation problems. Some studies of farmers' behavior, however, show that a simpler approach is feasible. The risk aversion of small farmers can be taken into account by using a certainty equivalent (CE) instead of the expected value (EV). 1/ If the yields have a normal distribution which is known, CE can be expressed as a function of EV:

CE = EV - n * s

Where s = the standard deviation n = a factor that expresses the farmers' risk aversion.

1/ For a fuller but still non-technicaldescription of these concepts, see for example H. Raiffa: "DecisionAnalysis," Addison-Wesley,1968. ANNEX 12 Page 8

13. Some empirical studies from other countries indicate that the farmers' choice of cropping patl:erns and production techniques can be accurately predicted for values of n in the interval 1-2. Historic yield figures from the project show that the yields in two years out of three are within roughly ±20% from their average values. This gives s = 0.2 * EV.

Since the farmers in the project:area are very poor, we assume that n 3 2. Consequently,CE = 0.6 * EV. However, it is not very likely that two crops fail in the same year. Based o01these considerations,we assume for the calculationof project rent thal:the certaintyequivalent of the gross farm income is 20% less than the average, or expected,gross farm income. How- ever, HYV rice gives more unstable yields than local varieties since it is more susceptibleto pests and d:Lseases, small variations in the water level and interruptionsin the water supply. Consequently,it is likely that the farmers will regard HYV paddy as more of a risk than local paddy even after the implementationof the project. The project is expected to cause a shift from local to HYV rice. Thus, it is assumed that CE=0.80*EV for the "without project" situation and CE=0.78*E:Vfor the "with project" situation.

14. The next problem that arises in the calculationof project rent is the value of family labor. Regressionsbased on the agro-economicsurvey in the project area and on other studies in Bangladesh give a marginal productivityof labor equal to 0.15-0.20md of paddy per man-day for average sized farms. This result has two implications:

(a) that hired labor basically is paid according to its marginal productivity(see Annex 11), and

(b) that family members also required an implicit return to their labor that is equal to the average market wage.

15. The overall labor demand would increase 10-15% with the project (Annex 13). The market wage would move upwards and family workers would require a somewhat increased return for their labor in order to compensate for their lost leisure. The elasticityof the labor supply is impossible to calculate due to lack of data. However, based on fragmented information from other countrieswith similar economies, an elasticityof 2 seems to be conservativelyhigh. (A check on this assumptioncan be achieved from the economic supply curve of labor shown in Annex 13, Figure 2, which indicates an elasticityon the order of 1 in its middle range.) This implies that the reward to farm labor should increase at least about 6%. Consequently,it is assumed that the average wage for both hired and family labor would increase from 0.17 to 0.18 md of paddy per man-day with the project.

16. The reward for management and entrepreneurshipcan, in part, be related to the capital employed in the production if this is not included in the crop production cost. Bul: it is primarily a premium for the special skills that farm management requ:Lre. It has been assumed that the "management fee" is equal to 5% of the net return from farming. ANNEX 12 Page 9

17. These considerations give the following table for farms presently without irrigation. The project rent per irrigated ac is roughly the same for all farm sizes and the results for the 3.0 ac farm is summarizedbelow:

Future Without Project Future With Project (Tk) (Tk)

1. Expected Gross Value of Production 9,060 15,070 2. Certainty Equivalent of (1) 7,250 11,750 3. Crop Inputs 2,000 2,930 4. Labor Inputs 4,670 5,890 5. Management Fee 120 310 6. Implicit Land Rent 460 2,620 (6) = (2) - (3) - (4) - (5) 7. Project Rent 2,160 8. Project Rent per Irrigated Acre 1,030

18. The theoretical project rent that has been calculated above does not take into account the variations between farms, since it is calculated as an average value. If the full project rent was collected in water charges, half of the farmers would -- in theory -- be willing to pay the charge while the other half would not think that irrigationwas worth the charge.

19. Exactly what allowance should be made for this, when an appropriate level of water charges is determined, is difficult to say. Allowing a 20% reductionto take account of the variation in land quality and "human variation" give a reasonableupper limit of the water charge. Thus, the potential water charge would be in the order of Tk 800 per irrigatedac.

20. Six basic alternativelevels of water charges can thus be identified: ANNEX 12 Page 10

Water Charge as Percent of Total Charge Incremental Cost per Irrigated Net Farm Recovery Altern- Acre Income Index ative Description (Tk) ( t

1 Present policy: A 40% subsidy of the costs for low- lift pumps and no other charges 140 6 12 2 Farmers pay full cost for low- lift pumps and no other charges 310 13 27 3 Full costs for low-lift pumps plus a charge covering total O&M costs for civil works 510 22 45 4 Full costs for low-lift pumps plus a charge in line with the Irrigation Ordinance (10% of incremental gross farm income) 600 25 53 5 Potential water charge based on the concept of project rent (para 11-17) 800 34 70 6 Full costs for low-lift pumps plus O&Mcosts plus capital recovery of civil works 1,140 48 100

19. The analysis clearly shows that full cost recovery (Alternative6) would undoubtedly stretch the farmers ability to pay too far and their in- centive to use irrigationwater would be severely impaired. A cost recovery in line with Alternative 3 or 4 should, on the other hand, be feasible. However, still a number of other factorshave to be taken into account when a decision is made about the exact level of water charges; the most important are:

(a) The project rent is highly sensitive to variations in the expected crop prices. A 20% reduction of crop prices means a 40% reductionof the project rent and would give a potential water charge of about T'k500 per ac.

(b) About one quarter of the farmers in the area already have low- lift pumps. The project would provide a more stable source of water and also some flood protection for their farms, but their gains would be relatively small (Tables 3-5). An analysis along the lines of paras 11-19 indicatesthat the potentialcharge for the project's services for this group would be about Tk 220 per ac in addition to the full cost for low-lift pumps. This amount is basically equal to the annual 0 & M cost for civil works. ANNEX12 Page 1-1

(c) It is difficult to update and monitor the incremental gross and net farm incomes and the "rent" due to the project in a situation of rapid inflation.

(d) The inflation also means that the capital recovery cost for civil works have to be tied to a price index otherwise the charge would quickly become nominal.

(e) The relatively low incomes in the project area might create strong political pressure to keep the water charge at a low level.

(f) The difficulty of having substantially different water charges in the project area than in other parts of Bangladesh. In light of these factors, it is recommended that at least full cost for low-lift pumps plus 0 & M for civil works be - recovered. This represents a tripling of the present charge. The 1.0 ac, 3.0 ac and 5.0 ac farms would, under Alternative 3, pay a charge that is equal to 21-22% of their incremental net farm incomes. It would be desirable to have a progressive charge structure, but it is not possible to collect such charges for the low-lift pumps since these are distributed and operated through the primary cooperative societies. The inadequate land registration system and other administrative problems rule out a progressive betterment levy to recover the 0 & M cost for civil works.

Subsidies

20. At present, most agricultural inputs are subsidized by the Govern- ment. These subsidies are clearly regressive, as can be seen from the following Table, which is based on the assumption that the present subsidized prices remain unchanged in the future:

Fertilizer and Net Farm Income Without Fertilizer Pesticide Subsidy and Pesticide Subsidies Farm Size (Tk) (Tk)

1.0 ac P 110 1,860 W 170 2,250 W 330 3,540 3.0 ac P 320 5,170 W 575 6,310 W 900 10,300 5.0 ac P 510 7,660 W 900 9,230 W 1,620 15,500

These subsidies benefit the large farmers more than the small farmers and farmers with irrigation more than farmers without irrigation. Consequently, they have a questionable effect on income distribution. Even more important ANNEX 12 Page 12

is the indicated "automatic" increase in Government expenditure. The implementation of the project would increase the Government's annual cost for fertilizers and pesticides to Tk 15 million.

21. The change in cropping pattern that would follow the provision of irrigation water would increase the amount of subsidy per planted acre by roughly Tk 200. If the present system of subsidies and water charges remains unchanged, the total per acre subsidy at irrigation would be:

Tk/ac/year

Annuity on the investment in irrigation facilit:ies 630 Operation and maintenance of major irrigation facilities 200 Not recovered capital cost for low-lift pumps 170 /a Subsidies on fertilizers and pesticides 100 /a

Total 1,100

/a GOB is, step-wise, reducing subsidies for low-lift pumps, fertilizersand pesticides (see Annex 11).

22. The projectwould primarilyresult in a shift in the cropping pattern from local aus to HYV boro. With no subsidies, the net cash income 1/ from local aus is Tk 630 per ac and from HYV boro Tk 1,400 per ac. With the present level of subsidies, the net cash income 1/ from local aus is Tk 635 per ac and from HYVboro Tk 2,530 per ac. Consequently, with subsidies, the cash income would increase Tk 1,895 per ac of which 60% would come from subsidies and only 40% from pure productivity increase.

23. As can be seen from the previous Table, most of the present subsidies come from the low cost of irrigationwater. There are indications that farmers in Bangladeshuse less fertilizer than what is optimal. The subsidiescan in this case be taken as an incentiveto use more fertilizers. However, the use of irrigationwater is very profitableto the farmers even if the cost of water is increasedsubstantially. r)ecember 1975

1/ Assuming that on the average 25% of the labor is hired. ANNEX 12 BANCLADESH Table I Page 1 of 3 pages KARNAFULI IRRIGATION PROJECT (HALDA AND ICHAMATI UNITS)

Crop Input Requirements (Financial Prices)

T. Aman (Local) Aus (Local) T. Aus (HYV) T. Aus (HYV) (rainfed) (irrigated) WI W P W WI w P W I W P W W1 WIP

FERTILIZERS AND PESTICIDES 0.3 0.4 0.4 0.5 0.2 1.4 1.5 _ 1.5 - 1.7 1.7 2.0 Urea (46% N) (md /ac) 0.1 0.1 0.1 35 35 44 132 - 132 - 150 150 176 15 (Tk /ac) 5 9 9 18 70 0.2 0.2 0.3 0.8 - 0.8 - 0.9 1.0 1.2 0.1 (46% P 0 ) (md fac) 0 0 0 0.1 0.6 38 TSP 2 5 102 - 115 128 154 4 26 26 (Tk /ac) 0 0 0 13 24 102 - 0 0.1 0.1 0.1 0.1 0.2 - 0.2 - 0.5 0.6 0.7 M/P (60% K) (md /ac) 0 0 0 0 0 5 5 5 3 11 - 11 - 27 32 38 (Tk /ac) 0 0 0 0 0.005 0.005 0.005 0.01 0.01 - 0.01 - 0.01 0.01 0.01 0.005 Diazinon (md /ac) 0 0 0 0 4 4 - 8 - 8 8 8 1 4 (Tk /ac) 0 0 0 0 2 8 0.005 0.005 0.005 - 0.01 - 0.01 0.01 0.01 0.005 /ac) 0 0 0 0 0.01 0.01 16 Sumithion (md 31 - 31 31 31 3 16 16 (Tk /ac) 0 0 0 0 7 31 - 86 86 107 284 - 284 - 331 349 407 23 Subtotal 5 9 9 31 106

ANNUAL FAMILY AND HIRED LABOR 22 22 22 22 22 - 22 - 22 22 22 22 Preparation (m-d/ac) 17 17 17 17 18 18 18 18 18 18 - 18 - 18 18 18 Planting and (m-d/ac) 2 2 2 2 Nursing 11 11 12 12 12 - 12 - 12 13 14 10 Crop Management (m-d/ac) 6 6 6 6 25 25 26 27 28 - 28 - 32 33 34 24 Harvesting and (m-d/ac) 21 22 22 23 Threshing 76 76 78 80 - 80 - 84 86 88 74 Subtotal 46 47 47 48 79

OTHER INPUTS 17 17 17 17 17 - 17 - 17 17 17 Power (a-d/ac) 15 15 15 15 17 17' Animal 170 - 170 170 170 170 170 170 (Tk /ac) 150 150 150 150 170 170 - 0.6 0.6 - 0.6 0.6 0.6 0.6 0.6 0.6 (md /ac) 1.4 1.4 1.4 1.4 0.6 0.6 - Seed 11 - 11 11 11 7 7 7 7 (Tk /ac) 16 16 16 16 11 11 - 10 15 15 1' 20 30 - 40 - 30 30 40 Miscellaneous (Tk /ac) 10 10 10 10 192 192 192 201 211 - 221 - 211 211 221 187 Subtotal 176 176 176 176 0 0 0 0 0 0 - 0 - 200 200 200 Low-Lift Pump Cost (Tk/ac) 0 0 0 0 BANGLADESH ANNEX 12 Table 1 KARNAFULI IRRIGATION PROJECT Page 2 of 3 pages (EALDA AND ICHAM4ATIUNITS)

Crop Input Requirements (Financial Prices)

T. Aman (HYV) T. Aman (HYV) Boro (Local) Boro (HYV) Srainfed) (irrigated) P W wH w P W WI W P W WI W P HI1 W

FERTILIZERS AND PESTICIDES

Urea (46Z N) (md /ac) 1.6 1.7 1.7 1.7 - 1.8 1.9 2.0 0.8 - - - 1.8 1.9 2.1 2.1 (Tk /ac) 80 150 150 150 - 158 167 176 40 - - - 90 167 185 185

TSP (46% P2 05 ) (ind/ac) 0.6 0.8 0.8 0.8 - 0.9 1.0 1.2 0.3 - - - 0.7 1.0 1.2 1.2 (Tk /ac) 24 102 102 102 - 115 128 154 12 - - - 28 128 154 154

M/P (60% K) (md /ac) 0.1 0.2 0.2 0.2 - 0.3 0.4 0.6 0.1 - - - 0.1 0.4 0.6 0.6 (Tk /ac) 3 11 11 11 - 16 22 32 3 - - - 3 22 32 32

Diazinon (md /ac) 0.01 0.01 0.01 0.01 - 0.01 0.01 0i01 040n9n - - 0.01 .01 0.01G C.Gi (Ti /ac) 2 8 8 8 - 8 8 8 1 - - - 2 8 8 8

Sumithion ('d /ac) 0.01 0.01 0.01 0.01 - 0.01 0.01 0.01 0.005 - - - 0.01 0.01 0.01 0.01 (Tk /ac) 7 31 31 31 - 31 31 31 4 - - - 7 31 31 31

Subtotal 116 302 302 302 - 328 356 401 60 - - - 130 356 410 410

ANNUAL FAMILY AND HIRED LABOR

Preparation (m-d/ac) 22 22 22 22 - 22 22 22 22 - - - 22 22 22 22

Planting and (m-d/ac) 18 18 18 18 - 18 18 18 18 - - 18 18 18 18 Nursing

Crop Management (m-d/ac) 12 13 13 13 - 13 14 14 12 - - - 15 16 [6 16

Harvesting and (m-d/ac) 28 29 29 29 - 31 32 33 26 - - - 33 34 36 36 Threshing

Subtotal 80 82 82 82 - 84 86 87 78 - - - 88 90 92 92

OTHER INPUTS

Animal Power (a-d/ac) 17 17 17 17 - 17 17 17 17 - - - 17 17 17 17 (Tk /lac) 170 170 170 170 - 170 170 170 170 - - - 170 170 170 170

Seed (md /ac) 0.6 0.6 0.6 0.6 - 0.6 0.6 0.6 0.6 - - - 0.6 0.6 0.6 0.6 (Tk /ac) 11 11 11 11 11 11 ll 7 _ _ _ 11 il il il

Miscellaneous (Tk /ac) 30 30 30 40 - 40 50 50 10 - - - 30 40 50 50

Subtotal 211 211 211 221 - 221 231 231 187 - - - 211 221 231 231

Low-Lift Pump Cost (Tk/ac) 0 0 0 0 - lOD 100 100 140 - - - 740 310 310 310 BANGLADESH ANNEX 12 Table 1 KARNAFULI IRRIGATION PROJECT Page 3 of 3 pages (HALDA AND ICHAMATI UNITS)

Crop Input Requirements (Financial Prices)

Pulses & Oilseeds Chillies Potatoes & Vegetables Sugarcane

P W WI W P WI W P W WI W P W WI W

FERTILIZERS AND PESTICIDES

Urea (46% N) (md /ac) 0 0 0 0 0.2 0.2 0.2 0.2 1.5 3.0 3.0 3.0 0.9 1.1 1.1 1.1 (Tk /ac) 0 0 0 0 10 18 18 18 75 264 264 264 45 97 97 97

TSP (46% P2 05 ) (md /ac) 0 0 0 0 0.1 0.2 0.2 0.2 1.0 2.3 2.3 2.3 0.5 0.9 0.9 0.9 (Tk /ac) 0 0 0 0 4 26 26 26 40 294 294 294 20 115 115 115

M/P (60% K) (md /ac) 0 0 0 0 0.1 0.1 0.1 0.1 0.4 1.2 1.2 1.2 0 0 0 0 (Tk /ac) 0 0 0 0 3 5 5 5 12 65 65 65 0 0 0 0

Diazinon (md /ac) 0 0 0 0 0 0 0 0 0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02 (Tk /ac) 0 0 0 0 0 0 0 0 2 8 8 8 2 16 16 16

Sumithion (md /ac) 0 0 0 0 0 0 0 0 0.01 0.01 0.01 0.01 0 0 0 0 (Tk /ac) 0 0 0 0 0 0 0 0 7 4j 31 31 0 0 0 0

Subtotal 0 0 0 0 17 49 49 49 136 662 662 664 67 228 228 228

ANNUAL FAMILY AND HIRED LABOR

Preparation (m-d/ac) 10 10 10 10 15 15 15 15 22 22 22 22 22 22 22 22

Planting and (m-d/ac) 2 2 2 2 22 22 22 22 22 26 26 26 18 18 18 18 Nursing

Crop Management (m-d/ac) 3 5 5 5 20 22 22 22 16 24 24 24 14 16 16 16

Harvesting and (m-d/ac) 18 20 20 20 36 38 38 38 40 58 58 58 86 94 94 94 Threshing

Subtotal 33 37 37 37 93 97 97 97 100 130 130 130 140 150 150 150

OTHER INPUTS

Animal Power (a-d/ac) 8 8 8 8 5 5 5 5 17 17 17 17 15 15 15 15 (Tk /ac) 80 80 80 80 50 50 50 50 170 170 170 170 150 150 150 150

Seed (md /ac) 0.4 0.4 0.4 0.4 0.2 0.2 0.2 0.2 - - - - _ _ _ _ (Tk /ac) 5 5 5 5 20 20 20 20 130 160 160 160 300 340 340 340

Miscellaneous (Tk /ac) 5 5 5 5 10 10 10 10 20 30 30 40 40 40 40 40

Subtotal 90 90 90 90 80 80 80 80 320 360 360 370 490 530 530 530

Low-Lift Pump Cost (Tk/ac) 0 0 0 0 0 0 0 AhNEX 12 Ta-ble,C

13iNGIJiDEH

KARRAFULIIRRIGATION FPJECT

Mont.ply Labor Requirements Mn man-days per acre)

Halda Ichamati CROP January rebruary March April FAY Jun, gY August Septeember October Ioveber Deosiber Total Unit Unit

d 1c ) P C0. 7 13 2 2 -3 10 0 0 0 3 47 x W1 0 0 7 13 2 2 13 11 0 0 0 0 .7 X W 0 0 7 13 2 2 1L 10 0 0 0 0 42 X 2

Au,s P 0 0 7 26 10 4 18 12 0 0 0 0 79 X A HYV,raicfed' 7 O 0 7 28 10 2 '1 12 0 0 0 0 80 x x WIf ------W C 0 7 28 10 4 19 13 0 0 0 0 El - X

n ~P ------_ - _ _ - (HYV, irrig. 7 2 0 7 29 10 4 21 14 0 0 0 ° Sq X X W_ 0 0 7 28 10 9 22 14 0 0 0 0 86 X --- W 0 0 7 28 11 , 22 15 0 0 0 0 S6 X X

Amar P 0 C 0 0 0 7 1• 21 3 3 17 E 7L X X (Local), 0 0 0 0 0 7 19 21 4 3 18 6 76 X I 12 0 0 0 0 0 7 152 21 L 3 16 8 76 X ___ w C 0 0 0 7 1, 21 1 L 19 8 78 Y I

P 0 0 0 0 0 7 1S 21 )a 24 20 9 SC X X 'HYV, rainfed) V O 0 0 0 0 7 1 21 5 4 20 10 £2 X I WI ------W 0 C C 0 0 7 25 21 5 4 21 10 83 - X

Aman P - (h-YV, irrig..) F 0 3 0 0 C 7 1, 22 2 4 21 10 8. X x WI 0 0 0 0 0 7 15 22 9 4 21 1 5 --- * C 0 0 0 0 7 1, 22 5 5 22 11 97 x x

3srs P 12 27 3 3 1l 16 0 0 0 0 C 4 7' X - (locze.1) lir------

-lorc25 -2 -~ - -L 2------B- - - scrc P 12 2: 4 . 12L 22 C 0 0 0 C 4. 83 X X 8317) II 12 2z 14 22 0 0 0 0 0 LI 9o X WI 12 r r 5 15 23 0 0 0 0 0 4 92 X --- - 12 2E 3 i5 23 o 0 0 0 C L 92 K x

OTHER ROPS

uAises and Cilseeds P 1 0 0 0 0 33 X X V 2 2 7 13 0 0 C 0 0 0 j 37 X I Wi 2 2 7 13 0 0 D 0 0 0 , 8 37 X --- W 2 2 7 13 0 0 0 0 0 0 96 37 X X

h_lliesc p 17 21 C C C C 0 0 2 '17 93 X V 6 6 -1 27 0 0 0 0 0 0 25 17 97 X - WI 6 6 16 2K 0 0 ? 0 0, C 25 17 97 X --- W 6 6 19 25 0 0 0 0 0 0 25 17 97 X

ctatoes and aegetables F , 6 2Vl 20 0 C D 0 C 0 2F 20 100 X X Vw 4 30 25 0 0 0 0 0 32 22 130 X X WI 2 z 30 2E 0 0 3 C 0 0 32 2h 130 X --- W 3. 3 30 28 0 0 1 0 0 C 32 224 130 X X

,ugarcane F 26 26 26 10 2 2 2 2 2 2 16 2 1240 X ;V 21 26 28 14 2 2 2 2 7 2 .6 21 T,C X _ WI 28 28 28 14 2 2 2 .2 2 2 16 2L2 150 X W 28 28 28 14 2 2 2 2 3 2 16 24 150 X -

1/ P = Present F Future without project Wl= Future with stage I of project IHalda Unit) SN W = Future with project a -

2' X = Grewn - = Not grown or negligible a:reage li-ot applicable ANNEX 12 Table 3

BANGLADESH

KARNAFULI IRRIGATION PROJECT (HALDA AND ICHAMATI UNITS)

Financial Budgets for 1.0 ac Farm

Presently without Irrigation Presently with Irrigation P W WI W2 P W Wi W2

Cropped Areas (Acres)

Aus - Local 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.1 - HYV, rainfed 0.3 0.5 ------HYV, irrigated - - 0.1 0.1 - 0.1 0.1 0.1 Subtotal 0.7 0.7 0.2 0.2 0.1 0.2 0.2 0.2

Aman - Local 0.5 0.3 0.2 0.1 0.5 0.2 0.2 0.1 - HYV, rainfed 0.3 0.5 - - 0.3 - - - - HYV, irrigated - - 0.6 0.7 - 0.6 0.6 0.7 Subtotal 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8

Boro - Local - - - - 0.1 - - - - HYV - - 0.6 0.6 0.6 0.6 0.6 0.6 Subtotal - - 0.6 0.6 0.7 0.6 0.6 0.6

Paddy, total 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 Other Crops 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Total Cropped Area 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 Net Cultivated Area 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Cropping Intensity (%) 200 200 213 213 213 213 213 213

GROSS PRODUCTION VALUE (Tk) 2,460 3,010 4,680 5,010 3,600 4,l10 4,680 5,010

Farm Production Costs (Tk)

Crop Inputs 390 660 890 970 b80 840 890 970 Hired Labor 100 100 120 140 120 120 120 14o Total m90 760 1,010 1,110 600 960 1,010 1,100

Net Production Value Before IrrigationCosts (Tk) 1,970 2,250 3,670 3,900 3,000 3,h50 3,670 3,900

Irrigation Costs (Tk)

Low-Lift Pump Costs - - 220 220 100 220 220 220 Water Charges _ - 120 140 - - 120 1h0 Total - - 3h0 360 100 220 3h0 360

NET PRODUCTION VALUE (Tk) 1,970 2,250 3,330 3,540 2,900 3,230 3,330 3,5h0

Non-Farm Income (Tk) 1,60o 1,600 1,600 1,600 1,600 1,600 1,600 1,600

TOTAL FAMILY INCOME (Tk) 3,570 3,8,o 4,930 5,140 4,500 4,830 4,930 5,140 ANNEX12 Table 4 BANGLADESH

KARNAFULI IRRIGATION PROJECT (RALDAAND ICIA.IATI UNITS)

Financial Budgets for 3.0 ac Farm

Presently without Irrigation Presently with Irrigation

P v WI W2 P _ Wi W2

Cropped Areas (Acres)

Aus - Local 1.3 0.5 0.3 0.3 0.6 0.3 0.3 0.3 - HYV, rainfed 0.8 1.6 ------HYV, irrigated - - 0.5 0.3 - 0.5 0.5 0.3 Subtotal 2.1 2.1 0.8 0.6 0.6 0.8 0.8 0.6

Aman - Local 1.4 1.0 0.5 0.3 1.4 0.6 0.5 0.3 - HYV, rainfed .1.0 1.4 - - 1.0 0.2 - - - HYV, irrigated - - 1.9 2.1 - 1.6 1.9 2.1 Subtotal 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4

Boro - Local - - - - 0.2 - - - - HYV - - 1.6 1.8 1.6 1.6 1.r 1.8 Subtotal - - 1.6 1.8 1.8 1.6 1.6 1.8

Paddy, total 4.5 4.5 4.8 4.8 4.8 4.8 4.8 4.8 Other Crops 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Total Cropped Area 4.8 4.8 5.1 5.1 5.1 5.1 5.1 5.1 Net Cultivated Area 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Cropping Intensity (%) 188 188 204 204 204 204 204 204

GROSS PRODUCTIONVALUE (Tk) 7,380 9,060 14,110 15,070 10,390 13,070 1L,110 15,070

Farm Production Costs (Tk)

Crop Inputs 1,190 2,000 2,700 2,930 1,420 2,520 2,700 2,930 Hired Labor 700 750 750 Z70 570 680 750 770 Total 1,890 2:,750 3,S40 3,700 1,990 3,200 3,h05 3,700

Net Production Value Before IrrigationCosts (Tk) 5,h90 6,310 10,660 11,370 8,L00 9,870 10,660 11,370

Irrigation Costs (Tk)

Low-Lift Pump Costs - - 650 650 250 650 650 650 Water Charges 360 420 - - 360 420 Total - - 1,010 1,070 2 6m 1,010 1,070

NET PRODUCTIONVALUE (Tk) 5,490 6,310 9,650 10,300 8,150 9,220 9,650 10,300

Non-Farm Income (Tk) 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800

TOTAL FAMILY INCOME (Tk) 7,290 8,110 11,450 12,100 9,950 11,020 11,450 12,100 ANI1" 12 Table 5 BANGLADESH

KARNAFULI IRRIGATION PROJECT (HALDA AND ICHAMATI UNITS)

Financial Budgets for 5.0 ac Farm

Presently without Irrigation Presently with Irrigation P v WI W2 P W WI W2 Cropped Areas (Acres)

Aus - Local 2.4 1.2 0.6 0.6 1.1 0.6 0.6 0.6 - HYV, rainfed 1.2 2.4 ------HYV, irrigated _ - 0.8 0.4 - 0.8 0.8 0.4 Subtotal 3.6 3.6 1.4 1.0 1.1 1.4 1.4 1.0

Aman - Local 2.2 1.6 0.8 0.5 2.2 0.8 0.8 0.5 - HYV, rainfed 1.6 2.2 - - 1.6 0.4 - - - HYV, irrigated _ - 3.0 3.3 - 2.6 3.0 3.3 Subtotal 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8

Boro - Local - - - - 0.3 - - - - HYV - - 2.6 3.0 2.6 2.6 2.6 3.0 Subtotal - - 2.6 3.0 2.9 2.6 2.6 3.0

Paddy, total 7.4 7.4 7.8 7.8 7.8 7.8 7.8 7.8 Other Crops 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 Total Cropped Area 8.0 8.0 8.4 8.4 8.4 8.4 8.4 8.4 Net Cultivated Area 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 Cropping Intensity (7) 185 185 195 195 195 195 195 195

GROSS PRODUCTION VALUE (Tk) 12,110 14,80023,020 24,560 17,00021,510 23,020 24t 1.560

Farm Production Costs (Tk)

Crop Inputs 1,960 3,220 4,400 4,760 2,320 4,150 4,400 4,760 Hired Labor 1.980 2.35o 2.520 2,570 2.280 2.X4802.52 2.570 Total 3,940 5,570 6,920 7,330 ,606,630 5920 7,330

Net Production Value Before Irrigation Costs (Tk) 8,170 9,230 16,100 17,230 12,4oo 14,88016,100 17,230

Irrigation Costs (Tk)

Low-Lift Pump Costs - - 1,050 1,050 h4o 1,050 1,050 1,050 Water Charges - 580 680 - - 580 680 Total - - 1,630 1,730 O 1,050 1,630 1,730

NET PRODUCTION VALUE (Tk) 8,170 9,230 14,470 15,500 11,990 13,830 1h,470 15,500

Non-Farm Income (Tk) 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100

TOTAL FAMILY INCOME (Tk) 10,270 11,330 16,570 17,600 lh,090 15,93016,570 17,600 ANNEX 13 Page 1

BA_GLADESH

KARNAFULI IRRIGATIONPROJECT (HALDAAND ICHAMATIUNIT)

Farm Labor Analysis

General

1. The population density :Ln the Karnafuli area is one of the highest in Bangladesh and this has resulted in relatively small farms and a large number of landless households. Fitshing and commercial activities are important in the area but underemployment is still substantial.

2. The poorest 40% of the families in the two project areas are landless or operate farms smaller than 0.5 ac. The project effect on this group depends on how much employment the project will generate. Little employment data exist but some rough estimates based on the 1970 agro-economic survey and the 1961 and 1974 censuses, are presented in this Annex.

3. Because of relativelyhigh underemployment,current wage levels (reported in the project area) probably overstate the economic opportunity cost of farm labor. For the economic analysis, shadow wage rates have been derived using the economic supply curve for labor, shown in Figure 1. The assumptionsbehind the curve are discussed below.

Labor Supply

4. Preliminary results from the 1974 census give a population of 207,000 in the Halda Unit and 37,000 in the Ichamati Unit. The population of the Haida Unit grew at an annual rate of 1.4% during both the 1951-61 and the 1961-74 periods. It is projected that the overall rate of growth of the Bangladesh population will be higher during the late 1970s and early 80s than during the 60s. Consequently,for this analysis it is assumed that the populationof the Halda Unit will grow at an annual rate of 1.5%.

5. The population of the Ichamati Unit grew at an annual rate of 2.8% between 1951 and 1961 and 3.0% between 1961 and 1974. The populationdensity in the Ichamati area is somewhat less than density in, for example, the Halda and Muhuri areas, where the populationis growing at about 1.5% annually. For this analysis, it is assumed that the growth rate will continue to be about 3% up to 1985, when the density is comparable to that of the Halda area, and that it will slow down to about 1.5% after 1985.

6. In Bangladesh,women normally do not work in the fields and, therefore,only males are included in the estimatesof the agricultural ANNEX 13 Page 2 labor force. Adjusted labor force participation rates from the 1961 census applied to the age-sex distribution from the 1974 census give a male labor force of 73,000 or 30% of the project population. The estimates of labor supply, given below, have been made using 240 days per year. This allows for less than a full day's work for persons of extreme ages who are also included in the labor force estimates. During peak agricultural activities, people work more hours per day and basically all available labor is engaged in agriculture. Consequently, the peak monthly labor supply is higher than the average for the year.

Year Population Male Labor Force Annual Labor Supply (persons) (persons) (million man-days)

1974 244,000 73,000 17.5 1980 270,000 81,000 19.4 1985 295,000 88,000 21.1 1990 318,000 95,000 22.8

Labor Demand

7. Besides agricultural production, the labor force is involved in: (a) farm and home maintenance; (b) off-farm subsidiary occupations such as handicrafts, fishing, commercial activities, clerical and other services; and (c) new development schemes. Some of the activities under (a) and (b) are undertaken by women. Category (c) includes local construction work but besides the proposed project no major works have been planned for this area.

8. Farm labor. Estimates of monthly farm labor requirements for various crops are given in Annex 12, Table 2. Estimates of the total monthly labor demand are given in Tables 1 and 2. Based on detailed calcula- tions of labor supply and requirements for different farm sizes, the following demand for hired farm labor has been estimated:

Million man-days Hired Supplied Total Supplied by Supplied by by landless requirement family labor other farmers laborers Total

Present 6.75 5.14 0.60 1.01 1.61

Future without project 7.30 5.44 0.62 1.24 1.86

Future with project 7.76 5.67 0.65 1.44 2.09 ANNEX13 Page 3

9. Without the project, total farm labor requirements would fall from 39% of the supply at present to about 35% in 1985. With the project, the farm labor demand would still fall but only to about 37% of the supply in 1985. The project would consequently just reduce the rate with which the underemployment in agriculture would increase. The demand for hired labor, however, would increase somewhat faster than the total labor demand and a larger portion of the employment opportunities is expected to go to the landless laborers.

10. Non-farm employment. The project area, which is one of the most developed in Bangladesh, presently has a food grain surplus of about 30% of supply. 1/ The 48,000 ton increase in paddy production would increase the surplus to 63,000 tons or 45% of total productionby 1985, even with the projected population increase. Not only does the project area export some 30,000 tons of paddy but also the volume of internal sales is high (about 18,000 tons). Consequently,the marketing system is well developed and offers a substantialnumber of employmentopportunities. The marketed volume of paddy is projected to inicrease about 85% with the project:

Future Future Present without project with project …--*- (tons of paddy) ------

Marketed internally 18,000 28,000 26,000

"Export" from the project area 30,000 36,000 63,000

Total volume of sales 48,000 64,000 89,000

11. Fishing in the rivers, khals and ponds in the project area creates a substantialnumber of employmentopportunities. Most of the fishing is done for home consumptionbut it provides the primary source of protein and is quite important in the family budget (Annex 4).

12. The carp spawn fishery in the Halda River, however, provides a substantialsource of cash income to approximately6,000 fishermenmost of whom are landownersand farmers. The average annual income per spawn fisher- man is estimated to be between Tk 1,500 and Tk 3,000.

13. During the dry season, stone and fire wood collecting in the Chittagong Hill Tracts are rather importantoccupations for the people in the Ichamati area. Because of the rather high cash incomes in the two areas, there is a substantial demand for different types of traditional services.

1/ Based on an assumed per capita consumptionof 16 oz per day. (The average consumptionin Bangladesh in the late 1960s was just below 16 oz.) ANNEX13 Page 4

14. r The communications to Chittagong are very good. About one bus every ten minutes connects the Halda Unit with Chittagong and the railway from Chittagong to Nazirhat (some 5 miles north of the Halda Unit boundary) carries about 15,000 passengers everyday. Consequently,Chittagong is an important secondary source of employment for the people in the project area.

15. At present, a farm size of about 1.5 ac is required to support an average farm family, however, only about 20% of the households have holdings larger than 1.5 ac. Thus, most of the farmers get a substantial part of their income from non-farm employment. Householdswith holdings smaller than 1.0-1.5 ac get more than half their income from off-farm employment. The 1970 agro-economicsurvey included a couple of questions about off-farm employment and the results are suu.iarizedin Figure 1. As can be seen from this figure, even men on the largest farms (over 5 ac) work, on the average, 55-60 days outside their own farm. Submarginal farmers (holding less than 1.5 ac) typically work 80 or more days outside the farm. Landless laborers work on the average about 200 days per year, a quarter of which is in farming.

16. Consequently,it is very difficult to classify the labor force in the area but with some generalizations,the following composition emerges:

Non-agricultural workers (Less than 50 man-days per year in agriculture) 17,000

Landless agricultural workers (Owning less than 0.25 ac but working more than 50 man-days per year in agriculture) 9,000

Submarginal farmers (holding 0.25-1.5 ac) 19,000

Small farmers (holding size 1.5 - 4 ac) 17,000

"Large" farmers (holding more than 4 ac) 11,000

Total labor force 73,000

17. Using these figures and Figure 1, the total volume of off-farm employment was estimated. The present overall employment situation is:

million man-days

Total supply 17.5 Work on family farms 5.1 Hired farm labor 1.6 Non-farm employment 7.0 Surplus 3.8 Under-employment rate 22% ANNEX 13 Page 5

Consequently, about 48% of the total employment is outside agriculture and the "average" person in the labor force works about 16 days per month.

18. A similar analysis for the Muhuri area showed that 45% of the total employment was outside agriculture and that the "average" working month was only 11 days. This confirms the impression by most outside observers that the project area is one of the most highly developed in Bangladesh.

19. The present peak labor demand occurs in August when virtually everybody is employed. Consequently, the monthly supply of farm labor can lbeestimated at about 1.1 million man-days. The wage rate can then be assumed to equal the ecommic opportunity cost of farm labor. The peak monthly supply of farm labor is projected to increase to about 1.25 million lby1985.

20. Without the project, saLes and cash incomes from farming are ex- pectedto increase about 30% and the input of fertilizersis expected to increase about 60%. The value of agriculturalproduction is expected to grow slightly faster than the poptulation. Since it is assumed that all subsidies would be removed during the period 1975-1985, total net farm incomes would increase only 13% w:Lthout the project.

21. The project would increELse the marketed volume of rice and the cash incomes from farming about 40% ancl the input of fertilizers about 35%. Since farming would be more cash oriented after the implementation of the project, the value added in agriculture-related trade and transport and in the distribution of non-farm goods and services is expected to increase more rapidly than the value added in agriculture. The net farm income would increase about 19% due to the project.

22. In view of the complex employment situation in the area and the lack of data on consumption patterns, it is difficult to make any accurate projections of non-farm employment. However, Arthur Gibb has made an ambitious study of agricultural modernization and non-farm employment in an area in the Philippines.1/ The socio-economicstructure of the area he studied was in the early 1960s_quitesimilar to the present structureof the Karinafutiarea. The onlv major differencewas that the proportionof tenant farmerswas smaller than in the Karnafuli area. Since wealthy landlordspre- sumably have a higher preferencefor goods imported to the area (for example motor vehicles and radios), the relative impact on the local economy of a change in agriculturalincomes can be assumed to be larger in the Karnafuli area than in the area Gibb studied. He calculated the elasticity of demand for formal sector non-agriculturallabor with respect to changes in agricultural income, i.e. the percentage chanze in non-farm employment when the

1/ A. Gibb, AgriculturalModernization, Non-Farm Employmentand Low-Level Urbanization - A Case Study of a Central Luzon Sub-Region,Ph. D. Thesis, Universityof Michigan, 1974. ANNEX 13 Page 6

agriculturalincome increased 1%. The data he supplied makes it possible to calculate the elasticity for the total non-agriculturalemployment. For the period 1961-1971, this elasticitywas on the order of 0.9-1.3. It was argued above that the impact on the non-farm employment of a certain change in agricultural incomes should be larger in the Karnafuli area than the area Gibb studied in the Philippines. A rough check on the applicabilityof Gibb's results to the Karnafuli area can be achieved by correlating the change in agricultural production and the change in non-agricultural employment between the two latest census years (1961 and 1974). These figures indicate an elasticity of about 1.1. Consequently, Gibb's lower figure (0.9) should give a conservativelylow estimate of the impact of the project.

23. Agriculturalincomes -- after deducting all crop productioncosts except the cost of labor -- would increase 13% up to 1985 without the project. With the project, agriculturalincomes would increase 34%. This would give an 11% increase in non-farm employmentwithout the project and a 31Z increase with the project. Thus the overall employment situation is projected to change as follows:

1985 Without With 1974 ProJect ProJect ------(million man-days)------

Work on family farms 5.1 5.4 5.7 Hired farm labor 1.6 1.9 2.1 Non-farm employment 7.0 7.8 9.2 Surplus 3.8 6.0 4.1

Total labor supply 17.5 21.1 21.1 Under-employment rate 22% 28% 19%

24. The employment situation in the project area would, consequently, deteriorate without the project. However, the project would directly and indirectly increase employment 10-15% and lead to a slightly lower underemployment rate than the present.

Economic Opportunity Cost of Farm Labor

25. Scarcity of detailed data on farm income levels, off-farm employment opportunities, and the agricultural labor force profile makes the evaluation of economic shadow rates for farm labor extremely subjective. Economic farm labor costs were estimated by using monthly shadow rates reflecting different opportunity costs associatedwith various segments of the labor force and slack and peak periods during the year.

26. On the basis of available information about the project area and experience from similar areas, it is postulated that the marginal opportunity ANNEX13 Page 7 cost of farm labor can be represented by an "S-shaped" curve. The marginal opportunity cost of farm labor is positive at all levels of demand and increases when more labor is absorbed into field work. The increase in opportunity cost is initially slow and reflects the scarcity of alternative productive employment, but it is more rapid when the full labor supply is utilized. At employment levels above the maximum available in the area, the opportunity cost would again increase at a slower rate since a large number of migrants would be attracted to the project area from neighboring areas where there is substantial underemployment. In practice, it is reasonable to approximate this idealized "S-shaped" curve by three straight segments.

27. Figure 2 gives the curve of approximate shadow rates used in the analysis. The curve shows the estimated marginal opportunity cost of labor as a function of demand (expressed as a proportion of the supply). The shape of the curve is based on the following assumptions:

(a) at minimum employment levels, the marginal cost would be the value of additiona]. consumption needed for family members to undertake field work (Tk 1.0 per man-day 1/), plus the value of foregone activities such as fishing, home improvement, etc., (Tk 1.5 per man-day);

(b) when the monthly employment just exceeds the off-peak family labor supply 2/ (60% of the full supply), the marginal cost would be the minimum market rate (Tk 7.5 per man-day);

(c) at a monthly labor demand correspondingto the present peak level, the marginal cost would be equal to the maximum market rate (Tk 15 per man-day, see Annex 11);

(d) when the employment is equal to or larger than the estimated supply of farm labor from the area, the labor would be drawn from non-farm activitiesand opportunitycost would increase to about Tk 18 per man-day, since at this wage rate, a large number of migrants would be attracted to the project area.

1/ Taken as 75% of the current average daily consumption of food grains (16 oz per day).

2/ Farm family members of the labor force not regularly employed else- where during slack periods. ANNEX13 Page 8

28. The economic oportunity cost of farm labor is equal to the area under the curve up to the employment level for each month. The increased monthly labor costs due to the project are shown in Table 2. 29. The total labor requirement will increase from 7.30 million man- days without the project to 7.76 million man-days with the project. The economic cost for this increase is Tk 3.32 million which gives an implicit cost of Tk 7.11 per man-day.

December 1975 ANNEX 13 Table 1

IANGLADESH

KARNAFULIIRRIGATION PROJECT

IALDA UNIT

Future Economic Cost of Farm Labor

Monthly Farm Economic Cost Labor Requirement due to Project IhLW 2w Stage . Stage 1 + 2 Month ---- (1,000 man-lays) ------(Taka 1,000) ----

January 272 320 368 +238 +514

February 592 704 816 +893 +2,016

March 308 300 288 -31 -99

April 610 515 419 -651 -1,271

May 413 453 476 +240 +384

June 746 850 917 +1,073 +1,875

July 832 780 682 -546 -1h,434

August 976 935 872 -538 -1,307

September 166 168 169 +8 +11

October 131 160 169 +111 +146

November 785 796 826 +113 +431

December 485 532 558 +309 +486

Total 6,315 6,512 6,560 +1,219 +1,752

Incremental economic cost per man-day 6.19 7.15

'W = future without project WI = future with stage 1 of p:roject W = future with project ANNEX13 Table 2

BANGLADESH

KARNAFULIIRRIGATION PROJECT

ICHAMATIUNIT Future Economic Cost of Farm Iabor

Monthly Farm Labor Reauirements Economic Cost W L/ due to Pro&ect Month T1,000 man-daysT (Taka l,OOj)

January 31 62 +1)48

February 69 142 +548

March 37 47 +45

April 83 77 -38 May 55 89 +195

June 109 169 +602

July 146 137 -92 August 176 170 -81

September 32 32 0 October 25 31 +23

November 142 1L8 +64 December 81 9 +103

Total 986 1,201 +1,517

Incremental economic cost per man-day 7.06

1/ W= future without project W = future with project BANGLADESH KARNAFULI IRRIGATION PROJECT DaysWorked (HALDA ANO ICHAMATI UNITS) Outside the The RelationshipBetween Farm Size Famriv Farm and Off-Farm Employment per Worker per Year

1 70

160-

140

130

120 -

tlO -

100 -

90 -

60 -Total

50 -

40 , Non Farm Work

30 -

10 4 Farmwor:aaadi 1 ev 10 " t T f Size (ac) 1 2 3 4 5 6 7 8 9 19 11 12 13 14

oldBaN,- 8811 ANNE 1 3 Figure 2

BANGLADESH KARNAFULIIRRIGATION PROJECT (HALDA AND ICHAMATI UNITS) MarginalEconomic Cost of FarmLabor

TAKA/MAN-DAY

20.0

18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

LABOR DEMAND 0 'hAS % OFLOCAL 10 20 30 40 s0 60 70 80 90 100 110 120 SUPPLY

World Bank-9687(R) ANNEX 14 Page 1

BANGLADESH

KARNAFULIIRRIGATION PROJECT (HALDAAND ICHAMATIUNITS)

Economic Analysis

Assumptions

The economic analysis is based on the following assumptions:

(a) Benefits. The direct benefits of the project would be: increased agricultural production; reduced transport costs through improved navigation possibilities on khals, and increased fish yields. The project would also have substantial secondary employment effects in trade and transport. In this analysis, however, only increased agricultural productiondue to the project is counted as a project benefit. Expected crop yields and acreages are shown in Annex 10. Farm.gate prices for paddy are derived from the Bank's projectedworld market price for 1985 in 1975 currency values while prices for minor crops are based on domestic market prices as discussed in Annex 11. The benefits are summarized in Tables 1 and 2 for the Halda and Ichamati Units, respectively.

(b) Crop ProductionCosts. Per acre input requirementsare shown in Annex 12. Prices for inputs other than farm labor are discussed in Annex 11. Crop productioncosts are summarized in Tables 3 and 4.

(c) Pricing of Labor. Farm 'Labor is evaluated at a seasonally adjusted opportunitycost. The economic cost per man-day is estimatedat Tk 7.1 whlichis equivalentto 95% of the peak wage rate. (For a detailed analysis,see Annex 13). Unskilled constructionlabor has been valued at market wages.

(d) Low-Lift Pump Costs. It is estimatedthat about 500 and 70 low-lift pumps will operate in the Halda and Ichamati Units, respectively,even without the project. Since there will be about 780 and 130 pumps in the Halda and IchamatiUnits, respectively,after the implementationof the project, in- -vestmentand 0 & M costs are based on 280 and 60 pumps, respectively,for the Halda and Ichamati Units. It is assumed -that the pumps will be replaced every seventh year. The annual cost per pump is shown in Table 5. ANNEX14 Page 2

(e) Land Acquisition. Agriculturalland used for project works, has been valued at its opportunitycost based on the resulting loss of crop production. This is reflected in future cropping patterns.

(f) Investment Costs. All investment costs, net of taxes and duties and price contingenciesare included in the economic analysis. The fisheries development program is excluded from the investment costs.

(g) DevelopmentPlanning. Constructionwould be phased over three dry seasons. 1/ It is estimated that flood protection will be provided to about 40% of the Halda Unit and 20% of the Ichamati Unit after the two first dry seasons. A major part of the khal excavation and a number of the khal regulators would also be completed after two years. Thus, it is assumed that about 20% of the agricultural benefits would be obtained in the last constructionyear. Most of the new low-lift pumps will be delivered in the last construction year. However, the formation of pump groups might lag somewhat and it would take a couple of years until the farmers have adopted their cropping patterns. Farmers in the project area are the most progressive in Bangladesh and have been quick to utilize low-lift pumps and to grow HYV rice. Consequently, it is assumed that full agricultural benefits would be reached five years after the completion of project works. (This means that the agriculturaldevelopment would take six years.)

(h) Prices. Prices for internationally traded goods used in the economic analysis are based on a shadow exchange rate of US$1 = Tk 16.00 (approximately twice the official rate) in order to reflect the effective protection provided by duties and import restrictions. The price assumptionsare discussed in more detail in Annex 11.

Economic Rate of Return

Resulting cost and benefit measures are shown in Table 6. Assuming a 40-year life of the project, the following economic rates of return have been estimated:

1/ These three dry seasons cover parts of four calendar years. ANNEX 14 Page 3

Karnafuli Project (Halda and Ichamati Units combined): 15%

Halda Unit 15% Irrigation component (Stage 1) : 14% Flood control component (Stage 2) : /a 18%

Ichamati Unit 14%

/a Based on the incremental investment for flood control if it is combined with the irrigation component. If the two stages are not combined, the rate of return of flood control would be about 10%.

SensitivityAnalysis

Several tests were made to determine the sensitivity of the rate of return estimates to various alternativeassumptions. These reflect the uncertainty in some of the more important factors in the analysis. The results, which are presented in Table 7, show that the project is moderately sensitive to changes in the price of rice and the shadow exchange rate and delays.

December 1975 AN IL, Table 1

BANGLADESH

KARNAFUIIIRRIGATION PROJECT (HALDAUNIT)

Annual Gross Benefits (Economic)

Gross Value Paddy Price (Tk million)--

Aus 79 38.71 35.55 22.24

Aman 92 109.48 120.52 134.14

Boro 82 78.72 102.3 119.39

Subtotal 226.91 258.41 275.77

Other Crops

Pulses and Oilseeds 145 1.93 1.93 1.93

Chillies 190 2.57 2.57 2.57

Vegetablesand Potatoes 49 5.88 5.88 5.88

Sugarcane 15 1.80 1.80 1.80 Subtotal 12.18 12.18 12.18

Grand Total 239.09 270.59 287.95

Less 5% Losses 2/ 11.95 13.53 14.4o

AnnualGross Benefits 227-.1 257.06 273.55

Increase due to Project - 2?~.92 46.41

1/ W = Future without project W1 = Future with stage I (irrigation)of project W = Future with project (irrigationplus flood control)

v/ In transportand handling. ANNEX1J Table 2

BANGLADESH

KARNAFULI IRRIGATION PROJECT (ICHAMATI UNIT) Annual Gross Benefits (Economic)

Gross Value Paddy Price (Tk million) (Tk/md)

Aus 79 5.81 5.31

Aman 92 20.39 25.34

Boro 82 9.45 21.32

Subtotal 35-65 51.97

Other Crops

Pulses and Oilseeds 145 0.20 0.20

Potatoes and Vegetables 49 1.18 1.18

Subtotal 1.38 1.28

Grand Total 37.03 53.35

Less 5% Losses 1.85 2.67

Annual Gross Benefits 35.18 50.68

Increase due to Project - 15.50

/ W= Future without project W = Future with project

2/ In transportationand handling. ANNEX 14 Table 3

BANGLADESH

KARNAFUII IRRIGATIONPROJECT (HALDA UNIT) Annual Crop ProductionCosts (Economic)

ProductionCost Price (Tk million) (Tk/md) w 11W 1/

Urea (46% N) 106 11.62 13.02 14.19

TSP (46% P205) 156 8.89 10.79 12.28

M/P (60%K) 64 1.27 2.06 2.52

FertilizersTotal 21.98 25.87 28.99

Diazinon 950 0.61 0.62 0.63

Siumithion 3,700 2.33 2.37 2.41 Farm Labor 2/ - - 1.22 / 1.75 a/

Animal Power 10 -/ 12.88 12.88 12.72

Seed 90 4.40 4.40 4.31

Miscellaneous - 2.39 2.53 3.26

Total Crop ProductionCosts 44.59 49-89 54.07

Incrementdue to Project - 5.30 9.48

1/ W = Future with Project, WI = Future with stage 1 of project, W = Future with project. 2/ See Annex 12. 2/ Increment due to project. W Tk/animal-day. ANNEX ? Table L

BANGLADESH

KARNAFULIIRRIGATION PROJECT (ICHAMATI UNIT)

Annual Crop ProductionCosts (Economic)

Production Cost Price (Tk million) (Tk/.d) wWW I/

Urea (46% N) 1061 1.88 2.70

TSP (46%P 205) 15t6 1.42 2.30

M/P (60% K) 64 0.22 0.46

3.52 5.46

Diazinon 95() 0.10 0.12

Sumithion 3,700 0.37 o.48

Farm Labor 2/ - - l.52 2/

Animal Power lc 4/ 2.03 2.36

Seed 9C 0.67 0.81

Miscellaneous -0.37 0.61

Total Crop ProductionCosts 7l06 11.36

Increment due to Project - .30

1/ W = Future without project W = Future with project 2 See Annex 12 / Increment due to project W Tk/animal-day AmNEX14 Table 5

BANGLADESH

KARNAFULIIRRIGATION PROJECT

(HAIDA AND ICHAMATIUNITS)

Annual Operating and Maintenance Costs For Low-Lift Pumps

With presently used low-lift pumps of 2 cwuec nominal capacity, the reported consumption rates are as follows:

Diesel Fuel 0.625 gallons/hour

Lubricating Oil 0.00625 gallons/hour Assuming:

Pump discharge - 2 cusec approximately2 acre inches/hour

Pump service area - 45 acres

Boro pumpage = 42 inches

Aman pumpage - 8 inches

Diesel price = 8.2 Tk/gallon

Lubrication Oil Price 25.0 Tk/gallon

Gives:

Volume 145 x (42 + 8) - 2.250 acre inches

Time = 2.250 - 1,125 hours

Diesel Consumption = 700 gallona = Tk 5,740

Lubrication Oil - 7.0 gallons = Tk 180

Total Fuel and Oil - Tk 5,920

Annual Costs Tk

Fuel and oil 5,920

Driver 1,200

Minor Spares /1 300

BADC Overhead 580

Total 8,000

/1 Major spares are bought at the same time as the pumps and the cost of these - are included in the costs for the pumps. BANGIADESH

KARN'AFULIIRRIGATION PROJECT (HALDAAND ICHAMATI UNITS)

Cost and Benefit Streams (Tk million)

Civil Works low-Lift Pumps Crop Production Construction Operating Investment and and and Gross Value Crop Net Value of Replacement Maintenance Replacement Operating of Production Crop Production = Year Costs Costs Costs Costs Production Costs Net Benefits (1) (2) (3) (4) (6) (7) = (5)-(6) 1 140.0 0.0 0.0 0.0 0.0 0.0 0.0 2 85.8 0.0 0.0 0.0 0.0 0.0 0.0 3 64.8 2.0 14.3 1.2 12.4 2.9 9.5 4 0.0 6.5 0.0 2.7 35.5 7.9 27.6 5 0.0 6.5 0.0 2.7 48.8 10.8 38.0 6 0.0 6.5 0.0 2.7 55.7 12.4 43.3 7 0.0 6.5 0.0 2.7 58.8 13.1 45.7 8-9 0.0 6.5 0.0 2.7 61.9 13.8 48.1 10 0.0 6.5 14.3 2.7 61.9 13.8 48.1 11-16 0.0 6.5 0.0 2.7 61.9 13.8 48.1 17 0.0 6.5 - 14.3 2.7 61.9 13.8 48.1 18-23 0.0 6.5 0.0 2.7 61.9 13.8 48.1 24 0.0 6.5 14.3 2.7 61.9 13.8 48.1 25-28 0.0 6.5 0.0 2.7 61.9 13.8 48.1 29 26.8 6.5 0.0 2.7 61.9 13.8 48.1 30 0.0 6.5 0.0 2.7 61.9 13.8 48.1 31 0.0 6.5 14.3 2.7 61.9 13.8 48.1 32-37 0.0 6.5 0.0 2.7 61.9 13.8 48.1 38 0.0 6.5 14.3 2.7 61.9 13.8 48.1 39-40 0.0 6.5 0.0 2.7 61.9 13.8 48.1

)-D:b ANNEX14 Table 7

BANGLADESH

KARNAFULIIRRIGATION PROJECTS

(HALDAAND ICHAMATI UNITS) SensitivityAnalysis

Rate of Return BasicCase 15% Shadow Exchange Rate

(i) Foreign exchange valued at the official rate of US$1.00 - TK 13 13% (ii) Foreign exchange valued at US$1.00 = Tk 19 17% Price Labor

(i) Farm labor valued at the peak market wage (Tk 15/man-day) 14% (ii) Farm labor valued at the market wage in the slack season (Tk 7.5/man-day) 15%

Commodity Prices decrease by 15% 12%

Crop Inputs Prices increase by 15% 14% Construction and Replacement Costs increase by 15% 13% Fuel and Operating Costs increase by 25% 14%

Irrigated Area per pump reduced from 45 ac to 40 ac 14% Delays

(i) Construction completed after 5 years instead of 3 years 13% (ii) Full agricultural development reached after10 yearsinstead of 6 years 13%

IBRD 11537 APRIL 1975 J2-30'

91,00 lKasba '%J 30 Ramchandra DA CA BANGLADESH Mu,adnagar 'M Noroyanganj KARNAFULIIRRIGATION PROJECT PROJECT LOCATION dwo0 Debi r 23'30'- Daudkondi -i3-30 Chandina 0 Comilici M I LL A River systems Barura N, A Railways Matiob m 20 I D I N f District boundaries C, H I T VA G 0 ,,, G International boundaries ganj Laksham B I Parashurom towns Chouddogramo H I 'I', District 0 Otherurban areas

A c 25 0 j R 0 5 10 15 20 Rarngani unab MUHU RI 23,oo,- 40 0 10 2 ECT O OPOSED) nb Karnafufi A K H L Reservoir' haumohani Lakshmipur Begamgoni, 0 NNI 08howanigani Bashurnato ULATO I N D I A CONSTRUCTI,oN Nookholi & Companiganjo (Pqozi 91 Mh -p d. M REGULATOR. -D f,*Y -,p.- b, C hOD ro'hirhat 0 (PROPOSED)% KARNAFULI N A N Fatikghhari 8 H U T ,\FRCtECT NEPAL? v f ,, " Ron(lemati 100 150 t kunda Z, 0 50

azir Hot' HALDA, kI

V Ramgati ICHAM T U N I T,,__;

G 0 A N 0 dmghona c T T CZ? Hatic, 24- Pah tali

IN D 0 Chittagc Ik

Elandarban Bengal B ay o f 'e; MA 92-00,

9,CY-3d

18RD11538 APRIL 1975 BANGLADESH < ( fAi!i, KARNAFULIIRRIGATION PROJECT

NT PROJECTAREA

ProjectBoundary c - ~>iLK dB _ (C ociuso srcflood dLALANAGARI3enuocl menh crone onear NT {j s ,4 /, , = U* Khal Regulators A NewPChanInels

tEMtANKMEN] A MAin Pumping Plant Por*u Hochnunod Check Structure so)K ~~~~~~~~~~~~~~~~~~~Channellnmproernent A Portable Pump Lifts ~-t--Khal Closure DikeK.cool n F'lood Embanrkments

to! Cargov S X Transfer Pocil,tVes Culverts olrco\ / I ~~~~~~~~~~~~LiftAreasho I ~ cno h 0 0 7 ~~~.2, ~~~~~~~NKooloor S Not Seroed0100 high shod Mo u - .- Proposed 33 kV Lines / N: 33 kV Lines - 132kV Lines REITPM O L. ~~ ~ ~ ~~____MetalledRoads cc~~~~~~~~~~~IPLuNT

Unmetalled Rocads ttN

Railroads P|Too S tr:no- River, Khal I Jia - -= Old River Channels :O-International Boundarres

I 1~~~~~~otedfler-u-con sc.in of oarea show

h ~NOIA ~ ~ ~ ~ ~ ~ ~~~GLI Kp-~~~

T.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'i-, CHhotA.2i-.rc

r0Cnaun In2

I I I I lrurn T 0 " MILES rI5te.LhI1 HALDA UNIT m ICHAMATI UNIT S crA fl Nfl~~~~~~~~~~~~~~~~~~~~~4s Nh-~~~~~~~IES