Document of The World Bank FLE COII

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 3491-BD

BANGLADESH Public Disclosure Authorized

STAFF APPRAISAL REPORT

DRAINAGE AND FLOOD CONTROL II PROJECT Public Disclosure Authorized

October 7, 1981 Public Disclosure Authorized

South Asia Projects Department Agriculture Division B

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

Since August 13, 1979, the Taka (Tk) has been pegged to a basket of currenciesof major trading partners, with the Pound Sterling as intervention currency; consequently the Taka-Dollar rate is subject to change. In the twelve month period, July 1979 through June 1980, this rate fluctuated b1-_tweenTk 14.61 and 16.27 per US dollar. On October 13, 1980, the Taka was officiallyrevalued at Tk 38.45 5o the Pound Sterling (equivalentto Tk 16 per US dollar). Also at that time, the Government narrowed the margin within which the exchange rate in terms of the Pound Sterling will be maintained, from 3.5% to 1% on either side. On October 27, 1980, the exchange rate was again adjusted, to Tk 38.92 per Pound Sterling. The rate below has been used throughout this report except where otherwise stated.

US$ = Tk 16.0 Tk 1 _ US$0O025 Tk 1 million = US$62,500

zEIGHTS AND MEASURES

1 square mile (sq -) - 259.0 hectares

1 acre (ac) - 0.405 hectares 1 foot (ft) 30.5 centimeters 1 maund (md) 37t3 kilograms (82.27 lb) 1 maund per acre (md/ac, 0.037 tons/ac 1 metric ton (ton) - 26.8 maunds 1 cubic foot per second (cusec) = 0.0283 cubic meters per second 1 imperial gallon 4.545 liters

ABRE'7IA TONS .D ACRONTYXMS

BADC = Bangladesh Agricultural Development Corporation DOAEM = Directorate of Agriculture (Extension and Management) DOF = Directorate of Fisheries DP(S) = Directorate of Planning (Schemes) of WDB DTW = Deep Tubewell GDP = Gross Domestic Product GOB = Government of Bangladesh HYV = High-Yielding Variety ICB = International Competitive Bidding KSS = Village Cooperative Society (Krishi Samabaya Samity) LCB = Local Competitive Bidding LLP = Low Lift Pump M = Million m-d = Man-day md/ac = Maund per acre 0 & M = Operation and Maintenance SFYP = Second Five-Year Plar 1980-1985 STW = Shallow Tubewell T & D = Taxes and Duties UNDP = United Nations Development Progra-im WDB = Water Development Board FOR OFFICIALUSE ONLY

GLOSSARY

Aman - Rice planted before or during the (which begins in June) and harvested November - January. (B. Aman - broadcast aman; T. Aman - transplantedaman).

Aus - Rice planted during March and April and harvested during July and August (B. Aus - broadcast aus; T. Aman - transplanted aus).

Beel - A small lake, or body of year-round standing water created by rains or flooding.

Boro - Rice planted in winter and harvested during April to June.

Braus - Rice planted in the late boro season and harvested in the aus season.

District - An administrativeunit containing two or more subdivisions.

Haor - A shallow lake.

Khal - A natural channel.

Kharif - Summer season (May through October).

Paddy - Unhusked or unmilled rice.

Rabi - Dry (winter) season (October through May).

Subdivision- An administrativeunit containing several thanas.

Thana - Smallest administrativeunit in Bangladesh, also called a police station.

Union - A unit of local self-government;there are about ten unions in each thana.

Chara - Small river.

FISCAL YEAR (FY)

July 1 - June 30

IThis documenthas a restricteddistribution and nay be used by recipientsonly in the performanceof | their official duties. Its contenst may not otherwise be disclosed without WorldBank authorization.

BANGLADESH

DRAINAGE AND FLOOD CONTROL II PROJECT

Table of Contents

Page No.

I. INTRODUCTION ...... 1

II. BACKGROUND ...... I General ...... 1 The Agriculture Sector ...... 2 Production Trends ...... 2 IDA Operations in the Agricultural Sector ...... 3

III. THE PROJECT AREA ...... 5 Location ...... 0...... 5 Climate ...... 6 Soils ...... 7 Farm Size, Land Tenure and Population ...... 7 Agricultural Practices ...... 8 Agricultural Inputs and Supporting Services ...... 10

IV. THE PROJECT ...... 12 General Purpose ...... 12 Project Components ...... 12 Engineering Works ...... 15 Implementation Schedule ...... 16 Cost Estimates ...... 16 Financing ...... 19 Procurement ...... 19 Disbursements ...... 20 Joint Project Revolving Fund ...... 21 Accounts and Audits ...... 22 Environmental Impact ...... 22

V. ORGANIZATION AND MANAGEMENT ...... 23 Annual Work Programs ...... *...... 26 Land Acquisition ...... 26 Operation and Maintenance ...... 26 Monitoring and Evaluation ...... 27

VI. PRODUCTION, PRICES, FAR INCOMES AND COST RECOVERY ...... 28 Cropping Patterns ...... 28 Yields and Production ...... 31 Marketing and Prices ...... 33 Farm Incomes ...... 35 Recovery of Costs ...... 37 -ii-

VII. BENEFITS AND JUSTIFICATION ...... 39 Production and Employment ...... 39 Income Distribution ...... 40 Other Benefits ...... 40 Economic Rate of Return ...... 41

VIII. RECOMMENDATIONS AND ASSURANCES ...... 44

ANNEX 1

Table 1 - Land Area, Population, Size of Farm and Land Tenure .... 46 Table 2 - Farm Size and Fragmentation ...... 47 Table 3 - Increases in Yields, Acreage and Production due to the Project in the Chalan Subproject Area ...... 48 Table 4 - Increases in Yields, Acreage and Production due to the Project in the Satla Bagda Subproject Area ...... 49 Table 5 - Increases in Yields, Acreage and Production due to the Project in the Hail Subproject Area ...... 50 Table 6 - Present and Future Crop Yield, Acreage and Production - ...... 51 Table 7 - Present and Future Crop Yield, Acreage and Production - Satla Bagda ...... 52 Table 8 - Present and Future Crop Yield, Acreage and Production - Hail Haor ...... 53 Table 9 - List of Equipment and Vehicles for Civil Works ...... 54 Table 10 - Proposed Fishery Development Component ...... 55 Table 11 - Groundwater Investigation Works at Hail Haor ...... 56 Table 12 - Cost Estimates - Chalan Beel ...... 57 Table 13 - Cost Estimates - Satla Bagda ...... 58 Table 14 - Cost Estimates - Hail Haor ...... 59 Table 15 - Proposed Credit Allocation ...... 60 Table 16 - Estimated Schedule of Expenditures ...... 61 Table 17 - Estimated Schedule of Disbursements ...... 62 Table 18 - Financial and Economic Prices ...... 63 Table 19 - Price of Internationally Traded Commodities ...... 64 Table 20 - Present and Future Net Production Values ...... 65 Table 21 - Annual Gross Benefits (Economic) - Chalan Beel ...... 66 Table 22 - Annual Gross Benefits (Economic) - Satla Bagda ...... 67 Table 23 - Annual Gross Benefits (Economic) - Hail Haor ...... 68 Table 24 - Annual Crop Production Costs (Economic) - Chalan Beel ... 69 Table 25 Annual Crop Production Costs (Economic) - Satla Bagda .. 70 Table 26 Annual Crop Production Costs (Economic) - Hail Haor .... 71 Table 27 - Economic Rates of Return ...... 72

ANNEX 2 - Proposed Fishery Development Component - Draft Terms of Reference for Preparatory Study ...... 73 -iii-

ANNEX 3 - Procedures for Use of Revolving Fund ...... 76

ANN,X 4 - Related Documents and Background Papers ...... 78

CHARTS World Bank 23060 - Implementation Schedule .... #...... 80 World Bank 22907 - Organization of Bangladesh Water Development Board 81

MAPS IBRD 15269 - Chalan Beel IBRD 15653 - Hail Haor IBRD 15654 - Satla Bagda

LIST OF TABLES IN MAIN TEXT 4.1 - Cost Estimates ...... ,, , 18 4.2 - Financial Plan ...... 1 9 6.1 - Change in Cropping Pattern Directly Due to the Project ...... 30 6.2 - Direct Project Effects on Foodgrain Production ...... 32 6.3 - Present and Future Foodgrain Production and Consumption ..... 34 6.4 - Present and Future Farm Production Values ...... 36 6.5 - Farm Income ...... 37 7.1 - Sensitivity Anaysis ...... 43

BANGLADESH

STAFF APPRAISAL REPORT

DRAINAGE AND FLOOD CONTROL II PROJECT

I. INTRODUCTION

1.01 Floods and drainage problems affect two-thirds of Bangladesh's cultivable area. Flood protection is, therefore, a major national objec- tive and the Government of Bangladesh (GOB) has sought IDA technical and financial assistance for drainage and flood control projects being carried out by the Water Development Board (WDB). The first Drainage and Flood Control Project (Credit 864-BD, December 22, 1978) and the Small Scale Drainage and Flood Control Project (Credit 955-BD October 30, 1979) are being implemented.

1.02 The proposed project was prepared by WDB, assisted by a con- sultant (NEDECO, Netherlands) financed under the IDA Technical Assistance Credit 622-BD. In June/July 1980, a mission consisting of Messrs. D. W. Jeffries, H. J. Tennent and P. M. Tamboli (IDA) appraised two sub- projects, one of which, subsequently modified, is included in the proposed project. In February 1981, a mission consisting of Messrs. D. W. Jeffries, H. J. Tennent and M. Maasland (Consultant) reappraised the above mentioned subproject and two other subprojects which had been prepared later and which are now included in the proposed project. A mission consisting of Messrs. L. Vidaeus, Y. Tang and L. Sprague (IDA), in April 1981, appraised the proposed fisheries component of the project in conjunction with other operational activities in Bangladesh.

II. BACKGROUND

General

2.01 With a population of about 92 million and a cultivable area of only 22.5 M ac, Bangladesh presents a complex development problem. The population is poor (per capita income is about US$100), overcrowded (1,550 per sq mile and growing at 2.8% per year), in many cases unemployed (per- haps 25-30%) and largely illiterate (about 75%). Foodgrain imports of about 1.5 M tons, or nearly 15% of total requirements, are needed in the "normal" year to maintain minimum per capita consumption levels. Apart from agriculture, the country has few natural resources and GOB gives priority to agricultural development as the means to benefit the largest number of people.

2.02 To attain self-sufficiency in foodgrains is the major objective of GOB's Second Five Year Plan (1980/81 - 1984/85) with a production -2-

target of 20 M tons by the end of the period. IDA has assisted GOB in drawing up the Medium-TermFoodgrain Production Plan which indicates developmentactivities needed to attain the production targets and emphasizes quick-yielding,low-cost and labor-intensiveprojects. The proposed project is part of that plan and has such characteristics.

The AgricultureSector

2.03 Agriculture accounts for 57% of Bangladesh'sGDP, 75% of all employment and, directly or indirectly,over 80% of its exports. Rice is by far the most important crop and accounts for over 80% of the cultivated area; jute, the principal export and industrial raw material crop, for 6% and a variety of other crops such as wheat, pulses, oilseeds, sugarcane and vegetables for the balance. In recent years, however, wheat acreage has expanded dramatically,from 0.3 M in FY75 to about 1.5 M in FY81, with production reaching 1.2 M tons. The dominance of rice is due to the flat topographyof the country, heavy monsoon rains and river flooding which saturate most soils during the six months rainy season, a conditionwell suited for rice cultivationand toleratedby some jute varieties, but unsuitable for most other crops. The cropping intensityhas averaged about 147% in recent years. During the monsoon (May to October), the rivers rise causing extensive flood damage and during the long dry season (Novemberto April), the rivers are low and severe drought conditions often prevail. Agriculturalproductivity is low, reflecting low use of modern inputs, lack of irrigation facilitiesand use of traditionalfarm- ing methods and practices which emphasize risk avoidance. The average paddy yield of about 0.5 ton per ac is barely half of the average for Asia as a whole.

2.04 Over 80% of all rural households in Bangladesh own less than three acres; the land ownership distributionis highly skewed. Four percent of households own 32% of the land, while 45% of households own 8% of the land. Fifty-four percent of the rural population is virtually landless,owning less than half an acre. The proportion of rural landless is growing rapidly.

Production Trends

2.05 Despite large areas of fertile deltaic soils, temperatures suitable for year-round cropping, an abundance of good quality groundwater for dry season irrigation and abundant labor, Bangladesh has been a food deficit area for more than 20 years. During the 1960s, agricultural output rose at an average annual rate of 2.5% and foodgrainat about 2.4%; however, both lagged behind a population growth of 2.8% per year. Food- grain imports, while down from the peak 2.8 M tons following the combined disruption of the war of liberationand bad drought in 1972/73, have still averaged 1.3 tons over the last five years. Production has fluctuated with weather conditions,but peaks have been rising, from 11.3 M tons -3-

in 1969/70 to 12.6 M tons in 1975/76, and to 13.1 M tons in 1977/78. In 1980/81, foodgrainproduction reached a record of nearly 15 M tons.

2.06 GOB policy of emphasizinguse of inputs such as seeds, fer- tilizers,pesticides and irrigation and of supporting research and exten- sion is beginning to pay dividends. Latest high-yieldingvarieties of rice and wheat released by research stations are finding increasing acceptanceby farmers. Progress in promoting improved farming during the last decade has been encouragingand includes an increase of almost one million acres under modern irrigationmethods, growth in fertilizer con- sumption from about 300,000 tons per annum to almost one million tons (mainlyduring the last five years) and spread of rice and wheat HYV from less than one million acres to about 3.5 M acres.

2.07 There have also been disappointments,in particular the rela- tively modest increase in production from rainfed rice (about 85% of the paddy area and 75% of production)and, until quite recently, the slower than anticipateddevelopment of irrigation. Government'srecognition of the priority of increasing agriculturalproduction to achieve the goal of foodgrainself-sufficiency by the mid-1980s is shown by various recent measures to step up agriculturalgrowth and rationalizefood policies: the formulationof the detailed Medium-TermFoodgrain Production Plan, increasedbudgetary allocationsto agriculturaldevelopment, increased recognitionof the private sector's role in provision of inputs, provision of more effective price support policies and strengthenedagricultural planning. These factors make it possible to foresee a more rapid growth in agriculture.

IDA Operations in the AgriculturalSector

2.08 Consistentwith Government policies, the focus of IDA assistance to Bangladesh in recent years has been on agriculture. In addition to assisting in the preparationof the Medium-TermFoodgrain ProductionPlan, IDA is involved in a major program of financingagricultural and rural development (includingtwo fertilizer import credits, 19 of the 53 new credits approved since independence). Eight projects involve irrigation and the others the developmentof agriculturalextension services, agriculturalresearch, jute cultivation,the seeds industry, inland fisheries, grain storage, agriculturalcredit, area-based rural develop- ment and drainage and flood control. Drainage and flood control have been the main or an important part of several projects: the Chandpur II IrrigationProject (Credit 340-BD, 1972, US$13.0 M) to provide flood protection for about 140,000 ac as well as irrigationfor about 75,000 ac; the Karnafuli IrrigationProject (Credit 605-BD, 1976, US$21.0 M) to provide irrigation,flood control and drainage to 46,000 ac; the Drainage and Flood Control Project (Credit 864-BD, 1978, US$19.0 M) to provide flood control and improved drainage to 46,000 ac and 42,000 ac in two subprojectareas and to rehabilitateand improve the embankment which protects about 180,000 ac against flooding from the BrahamaputraRiver; -4-

the Small Scale Drainage and Flood Control Project (Credit 955-BD, 1979, US$25.0 M) to improve flood protection, drainage and irrigation affecting about 350,000 ac.

2.09 Project implementationhas involved substantialdelays in the past due to difficultiesin hiring consultants,appointment of project staff, timely release of budgetary allocation,approval of contracts, procurementproblems and coordinationamong various implementingagencies. The Government has taken or is taking steps to remedy the most serious bottlenecksand both IDA and Government have given increasedattention to monitoring and supervision. Already these measures have resulted in noticeable improvementsin implementation.

2.10 For many years, IDA has been assisting GOB to improve its water sector planning. As early as the Land and Water Resources Sector Study (ReportNo. PS-13, December 1, 1972), the Bank advocated that Bangladesh focus its investmentsin the irrigation,drainage and flood control sector on activitieswith an earlier impact on foodgrain production rather than on the long-gestation,major flood control and drainage projects that had dominated its program. WDB's program was based on the 1964 Master Plan prepared by IECO (Consultants,USA) for developing water resourceswhich emphasized the protection and drainage of deeply flooded areas even though two-thirdsof the cultivable land is either flood-free or would require flood protection for flood depths of less than three feet. Rates of return are inversely related to the per acre capital investment cost, which is largely a function of depth of flooding. Furthermore,since the financial requirementsof such large projects far exceeded available funding, implementationwas slow and rates of return low. Thus, there appeared to be considerableopportunity to redirect WDB's portfolio to low capital investment per acre schemes in the shalloweror nonflooded areas. The Bank's Hardcore Program Report of February 1973 recommendedcriteria for selectionof such irrigationand flood control projects: that they should contribute to rapid increase in food production,be self-contained or part of a phased plan, be economicallyviable and incorporate labor-intensivemethods. Among the general criteria agreed between IDA and GOB are that total irrigation investment per net arable acre should not exceed US$250 and that the total drainage and flood control investment per net arable acre should not exceed US$200, including cost of land acquisition,both in 1980 prices. The projects appraised in this report would be consistentwith these criteria. In 1976, the Special Project Preparation Cell of WDB, later renamed Directorate of Planning (Schemes), DP(S), was set up to prepare such projects, limited to minor flood embank- ment and drainage improvementworks. The Bank assisted this new cell by financing consultants(NEDECO) under the first Technical Assistance Credit to help DP(S) revise a number of feasibilityreports which had earlier been prepared on various projects. -5--

2.11 At GOB's request, the Bank undertook a joint review with GOB of WDB's operations, its investment program and management. The joint report, issued April 2, 1979 (Report No. 2327-BD), recommended further technical assistance being extended to improve WDB'S planning and implementation capabilities. This is now being carried out with the help of UNDP-financed consultants under a program for which the Bank is the Executing Agency (para 5.03).

III. THE PROJECT AREA

Location

3.01 The proposed project consists of three separate subprojects: Chalan Beel (CB), Satla Bagda (SB) and Hail Haor (HH).

3.02 Chalan Beel is in Rajshahi District, about six miles north of Rajshahi, in the northwestern region of Bangladesh. The project area is within five thanas: Manda, Mohanpur, Bagmara, Tanore and Paba. It covers about 131,000 ac and is enclosed by the Atrai, Fakirni, Sib and Baranai rivers. The area is a relatively flat plain with many low-lying basins (), separated by patches of higher land, mostly levees of existing or old river courses. From about June to October, a large part of the area is flooded to depths of one to up to ten feet due to high river levels and accumulated rainfall. The many beels in the northwestern part of the area retain water after the flood waters have subsided, as much as one to four feet at the normal time of planting a boro crop. The many natural chan- nels are dry in the period from December to May or June and the surround- ing rivers, except the Atrai, also stop flowing (Map 15269).

3.03 Satla Bagda is in the extreme southwestern part of and the northwestern part of , about 17 miles northwest of Barisal, in the southwestern region of Bangladesh. The proj- ect area is in six thanas: Kotwalipara and Tungipara in Faridpur District and Gournadi, Uzirpur, Nazirpur and Banaripara in Barisal District. The area, about 72,200 ac, is a small part of a large delta formed by the three major rivers (the , the Jamuna and the Meghna) and their branches. The lands within the area are basically flat, with the Satla and Bagda beels occupying a large part of the total. Much of the area is subject to daily tidal flooding of backed up non-saline water throughout the year. Flood irrigation is practiced on those lands that are within reach of spring floods, when the tidal difference amounts to about two feet. During the monsoon season, the entire project area, except for the raised lands used mainly for homesteads, is subject to moderate to deep flooding of two to eight feet (Map 15654). -6-

3.04 Hail Haor is in the southern part of Sylhet District, nine miles southwest of Maulvi Bazar, in the northeasternregion of Bangladesh. It covers parts of two thanas: Maulvi Bazar and Srimangal. The project area, about 60,200 ac, contains a permanentwater body (the haor) of 6,000 to 20,000 ac depending on the season, and is bounded by hills in the east, south and west. The lands to the north are fairly flat, containing numerous small beels and extend for about 13 miles to the . The haor is fed by the Lungla River and many seasonal streams (charas) and is drained by the Gopla River. During the rainy season, the Lungla and many charas from the surroundinghills cause a large inflow into the area, which together with the heavy accumulatedrainfall and the overflow from the Kushiyara River causes flooding of most of the area. The higher parts of the area are naturallywell drained; however, drainage of the central part is restricted and determined by the level of the drainage outlet, the Gopla River (Map 15653).

Climate

3.05 The climate in all three subproject areas can be divided into three distinct seasons, from an agriculturalviewpoint. A cool and rela- tively dry season (Rabi or Boro season) extends from the beginning of November up to the beginning of April. The early rainy season (first Kharif or Aus season) extends from April up to June/July and is wet and hot. The late rainy season (second Kharif or Aman season) extends from June/July up to the beginning of November and is wet and warm. The climate allows for the cultivation of tropical crops in the Kharif season and temperatecrops in the Rabi season. In the early as well as the late rainy seasons, one rainfed rice crop can be grown. Cultivationof a Boro paddy crop requires supplementaryirrigation. Rainfall is heavy, but varies considerablyamong the three subprojectareas. Average rainfall in Chalan Beel is among the lowest in Bangladesh,about 55 inches, with 90% falling from June through October. Satla Bagda has mean annual rainfall of about 80 inches, with 89% occuring in May through October. Hail Haor is in one of the areas of highest rainfall in Bangladesh,with about 98 inches annually, 94% of the total falling in the seven months (April till November), equally divided between the early and the late rainy seasons. The mean monthly evapotranspirationvaries from a minimum of two inches in December/Januaryto a maximum of six to seven inches in May. Evapotran- spiration thus exceeds rainfall from November to April.

3.06 The lower temperaturesof the Rabi season (with mean daily tem- peratures from the mid-60s to low 70s) allow the cultivationof temperate crops like winter vegetables,wheat, pulses, and oilseeds in addition to the traditionalcold-resistant Boro paddy. During the Kharif season (with mean daily temperaturesin the low 80s) tropical crops such as paddy, jute, summer vegetables and fruits can be cultivated. Relative humidity is high throughout the year, being highest (about 90%) during the late -7-

rainy season because of the high rainfall and the limited sunshine dura- tion.

Soils

3.07 There are no major soil fertility problems in the three subproject areas and crops are expected to respond well to standard fertilizer applications. A major part of the soils in all three areas is suitable for intensive rice growing. Soils in the Satla Bagda area were given special attention, however, because of the presence of mucky soils and/or soils with high organic content in about 70% of the area. Flood protec- tion and improved drainage, together with irrigation, would result in substantial improvement in these soils making them suitable for more intensive and diversified cropping. This has already been experienced in one small polder which was recently improved under the Early Implementa- tion Projects. 1/ These soils are particularly suitable for intensive vegetable production, but paddy yields are also high under proper manage- ment. The Hail Haor soils are generally sandy loams developed upon alluvium deposited from the overflow of the Kushiyara and Manu Rivers and also outwash of sandy deposits from the surrounding hills. The arable soils appear relatively fertile, but under more intensive cropping will require higher dosages of fertilizers. Soils in Chalan Beel consist of a variety of silts, loams and clays which are fairly fertile and well suited for the main crops in the area.

Farm Size, Land Tenure and Population

3.08 Size of Farm Although somewhat larger than the average in Bangladesh, farms are small in the three subproject areas, averaging 3.3 ac in CB, 3.5 ac in SB and 5 ac in HH compared with 2.8 ac for all of Bangladesh (Annex 1, Table 1).

3.09 Land Tenure Data on land tenure and fragmentation of farm hold- ings were derived from agro-economic surveys carried out by WDB in prepar- ing the feasibility reports for the three subproject areas during 1979 and 1980. Most of the lands in the three subproject areas are owner-operated: 70% in CB, 75% in SB and 67% in HH. Part-owners operate most of the remainder: 25% in CB, 20% in SB and 29% in HH. Landless tenants account for only 5% of the total land in CB and SB and 4% in HH, somewhat less than the national average. Fragmentation into more than ten plots accounts for 45% of all farms in CB, 37% in SB and 67% in HH (Annex 1, Table 2). While there is sometimes advantage in dispersion of plots

1/ A technical assistance program of the Government of the Netherlands for minor schemes in shallow flood or non-flooded areas. farmed to reduce risks of flooding,owners often rent out part of their land and, in turn, rent other land closer to them.

3.10 Population The population of the subproject areas is entirely rural and of high density: about 1,500 per sq mi in CB, 1,700 in SB, but only 900 in HH, compared with a rural population density of 1,510 for all of Bangladesh. This means that there are about two people per arable acre in HH, and about four per arable acre in the other two subproject areas. The land/man ratio, i.e., adult male cultivatorsper net cultivable acre after project development,is 1.5 for CB, 1.4 for SB and 0.35 for HH. Thus, there is an abundance of agriculturallabor even without women and children assisting.

3.11 Based upon the average income per acre and the size of farms, an estimate can be made of the numbers of households in the project areas which have incomes below subsistencelevel. Assuming a per capita cereals consumptionof 16 oz per day, a 20% margin for other foods to achieve a balanced diet, and a 30% margin for non-food expenditures,the per capita subsistencelevel requirementsare estimated to be the equivalent of about 300 kg of rice (or 12 mds of paddy) per year. At the prevailing price levels in Bangladesh,this implies a subsistencelevel income of about Tk 1,400 per annum. The largest percentage of population below subsistence level appears to be found in Chalan Beel and Satla Bagda and the lowest in Hail Haor. A conservativeestimate indicates that two-thirds to three-fourthsof the population in both Chalan Beel and Satla Bagda and 30% in Hail Haor fall below this level, in the order of 200,000 to 230,000 in Chalan Beel, 150,000 in Satla Bagda and 25,000 in Hail Haor. Most of the rest are small farmers whose per capita income is only marginally above the poverty level criteria.

AgriculturalPractices

3.12 Cultivatingtechniques in all three subproject areas are tradi- tional and characterizedby low risk practices. Improved seed, chemical fertilizersand agriculturalchemicals for pest, disease and weed control are used only in very limited quantities. Average yields are low but do not differ much from other places with similar flooding problems in Bangladesh. The main factors affecting present crop yields in the project areas are the long and deep flooding during the monsoon season and prolonged and frequent drought during the winter season, both of which result in low and unpredictableyields. Cropping patterns and crop varieties are determined by the annual flooding. Low yields are often the result of early or late flooding as well as the depth of flooding.

3.13 Rice is the predominate crop, with yields averaging about 15 md/ac, varying from 9 md/ac for B. Aman in CB to 50 md/ac or more for Boro (HYV) in SB. The present average wheat yield is a little above 15 md/ac. -9-

Two other important crops, oilseeds and pulses, yield not more than 5 and 10 md/ac, respectively.

3.14 In Chalan Beel, about 90% of the arable land (85,000 out of 95,000 ac) is cropped with rice during the monsoon season. Less than half is farmed during the dry season. The resulting cropping intensity at present is about 150%. The area under HYV T. Aman is very limited. Braus or Boro HYV is a rabi rice crop produced in lower parts of the area where irriga- tion by pumps or traditional methods is possible. At present, about 12,000 ac of CB area is under command of tubewells and low-lift pumps. Over the next five years, about 900 shallow tubewells will be sunk under The Christian Commission for Development of Bangladesh (CCDB) program, commanding about 18,000 ac. BADC and others are also expected to sink additional wells, estimated to command about 2,000 acres. To completely irrigate the subproject area, a further 1,600 shallow tubewells will also be needed.

3.15 In Satla Bagda, cropping intensity has been increasing in recent years, but is still only about 130%. Rice covers about 70% of the total arable area during the Kharif season (40,000 ac out of 58,000 ac) and at least 30% during the winter season (20,000 ac out of 58,000 ac). The remaining areas are either too deeply flooded or suffer from droughts and are not suitable for rice production. Because of tidal flooding in the dry season, only those farmers cultivating the higher lands are now in a position to avoid crop damage from flooding by changing to an irrigated Rabi crop, i.e., Boro paddy or Braus, harvested in the Aus season. In those areas, irrigation is possible during spring tide or by using low-lift pumps. This practice seems to be gaining and the area under irrigated Rabi crops may continue to increase, especially where Braus is cultivated. Consequently, the rather low average yields in SB can be expected to show some increase in future. As indicated above, yields of the Boro paddy are 50 md/ac and more, well above the national average, as a result possibly of the daily tidal silt deposits. Some farmers in SB grow vegetables during the winter season on peaty soils on beds raised above the high tide level.

3.16 Agriculture in the Hail Haor area is essentially a monoculture of rice, accounting for almost all of the cultivated area during the wet season (46,000 ac) and 80% during the dry season. No irrigation with tubewells or low-lift pumps is found in the project area. Some of the perennial charas are blocked in the winter season for irrigation. A narrow area along the haor is also cultivated during the winter season using indigenous irrigation methods. Almost equal proportions of the total arable area are single and double-cropped, with the predominant cropping system being single B. Aman, single Boro and sequential cropping of Aus followed by Aman, reflecting the different topographical and hydrological conditions in the area. Depending on flood hazard, T. Aus is planted either early or late in the early Kharif season, mainly on the -10-

lands along the western periphery of the area. Triple cropping and the cultivationof vegetables, jute and miscellaneouscrops are relatively limited. The overall cropping intensityis 151%.

3.17 Yields of paddy in HH area vary at present from an average of 15 md/ac for B. Aus to 40 md/ac for Braus. The weighted average paddy yield is close to 18 md/ac. Although B. Aman can withstand flooding, once it has passed the tillering stage, early floods can also damage the crop. Similarly,T. Aman suffers from drought if there is no rain at the time of flowering and grain formation. Boro crops which are generally grown in areas adjacent to beels, can also be affected by prolonged droughts. Transplantedrice varieties are grown on the highest land, but may be subject to flash floods from the charas coming from the surroundinghills. Lower areas, where deep water rice varieties are grown, are subject to deep inundationwhich may occur during the critical stages when the crop is still in its germinationor tillering phase. The extent of inundation varies from year-to-year,but under average conditionsabout 5% of the area cropped with rice is affected,with yield reductions of up to about 50% compared with normal yields.

AgriculturalInputs and Supporting Services

3.18 While demand for modern inputs is growing, it is still very low. Stocks of fertilizer are generally sufficient and available at official, controlled prices. As demand for fertilizer grows, distributionshould be satisfactorysince all three subproject areas are close to BADC principal distributionpoints from which private wholesalers and dealers can obtain supplies. Distributionof pesticideshas also recently been turned over to the private sector, which should facilitate its distributionas the demand grows. Supplies of low-lift pumps and tubewells should also be sufficientin these areas, although in the past, shortages and poor serv- ice have been noted in CB area, the only one of the three areas with a substantialnumber of tubewells and low-lift pumps. BADC has fielded a small number of low-lift pumps in SB area. No effort has been made to promote shallow tubewells or low-lift pumps in the HH area. It should be mentioned that The Christian Commission for Developmentof Bangladesh has been very successfulwith its program of shallow tubewells in CB area.

3.19 Seeds for the project area are generally supplied to the thana fertilizer stores by the BADC district seed developmentofficers, although BADC meets only a very small fraction of the farmers' requirementof quality seeds. Sales are made directly to the farmers or agricultural cooperativesocieties under the supervisionof the thana seed inspectors employed in each thana. With the establishmentof processing plants, assisted by IDA Credit 410-BD and the proposed second seeds project, BADC should be in a position to ensure adequate supplies of quality seeds to farmers in the project areas. -11-

3.20 Institutional services are very limited within the three project areas, probably in part because of their poor accessibility. This is especially true in SB, which is only reached by water. With the construc- tion of the roads proposed under the project, better coverage should be achieved within the project areas.

3.21 Extension services in the project areas are poor to nonexistent. The responsibility for providing agricultural extension and education will be mainly that of the Directorate of Agricultural Extension andiManage- ment, which has been receiving ass.staice from IDA to expand and im-roc-e services throughout the country. The first Extension and Research Project (Credit 729-BD) covered only the northwestern region. The proposed second Extension and Research Project would be extended to a larger area and would focus on building up the effectiveness of field staff where the greatest impact on production could be made. Government has already introduced a modified T and V system of extension throughout the country and extension services in the project areas should improve. Some notable extension and community development work is being furnished in SB area by the National Church Council of Bangladesh which has a directorate in one of the project thanas. It promotes use of HYV by small farmers through demonstration fields, rents out LLPs, forms fishing and poultry coopera- tives and promotes a number of cottage industries. The Christian Commis- sion for Development of Bangladesh also has a successful support program connected with its shallow tubewell program in the CB area.

3.22 There are a number of KSS in CB and SB, but none in HH. Credit facilities are quite scarce in general, although the GOB's 100 Crore Taka Credit Program, which is designed to make rural credit freely available, has never been fully disbursed. As in other parts of Bangladesh, farmers have four sources of institutional credit: BKB, the commercial banks, the traditional cooperative banks and (except in HH) the IRDP/TCCA cooperative program. The average estimated credit per agricultural household in SB (1978-79) was Tk 78, a total of Tk 3,031,000 for 39,000 households. Such an amount would finance only around 6% of the estimated annual production costs for seed, fertilizer, pesticides and animal labor of Tk 850 for one acre of one local Boro and one B. Aman crop. The estimated average amount of agricultural credit per agricultural household in the HH project area (1978-79) amounted to only Tk 143, a total of Tk 1,861,000 for 13,000 households. This would represent only about 3% of the total credit requirement of an average farm of about five ac assuming annual production costs of seed, fertilizer, pesticides and animal labor of Tk 4,492 for one Boro and one B. Aman crop. There are no similar credit data for the CB area, but the amount of institutional credit would also be very small.

3.23 Credit availability and institutional support should improve with the strengthening and expansion of the TCCA/KSS system of cooperatives. IDA's Rural Development Project (Credit 631-BD) sought to strengthen this system as a medium for the channeling and distribution of minor irrigation -12-

equipment, farm inputs, rural credit and agriculturalsupport services. This project has served as a pilot for the proposed Rural Development II Project. The system is being expanded to all thanas, includingHail Haor, the only one of the three subproject areas where it is lacking.

3.24 Agriculturalmarketing is very poorly developed in the project areas largely because the transportationinfrastructure is poor and there is little or no marketable surplus of the main crops. SB is a deficit area and CB and HH produce very limited surplus for the market. Shortage of storage facilities inside the project area would aggravate the problem further if surpluseswere produced. On the other hand, marketing facilitiesappear to be adequate for the cash crops produced. In CB an important cash crop is the betel leaf (grown on about 1,800 ac) with a market in Rajshahi. Jute production is limited to about 2,000 ac. Rape seed, from about 3,000 ac, is almost all sold to middlemen and sent to Rajshahi and Dacca. Except for wheat milling and the husking of rice, no agro-industrialprocessing takes place in the project areas.

IV. THE PROJECT

General Purpose

4.01 The project would empolder the subprojectareas by building embankmentsto eliminate flooding from the surroundingrivers. With the gravity drainage which would be provided at this stage of development, substantialflooding would still occur as the monsoon progresses since drainage depends on the levels of the surroundingrivers, which fall only at the end of the monsoon season. However, the project would enable both a reduction in the depth of flooding and a substantialdelay in the incidence of flooding. Thus, the reduction of the risk factor of flooding that now characterizesthe agriculturalsituation in the project areas would promote an increase in crop production. Farmers would increase the cultivationof HYV rice, losses of the Aus crop due to flood damage would be reduced or eliminated and Aman yields would be improved. As indicated in paras 6.01 - 6.03 and Table 6.1, once seasonal floods are controlled, gross cropping intensitieswill increase on account of more land becoming available for double cropping during the fairly prolonged monsoon season. Crop yields would increase with greater use of crop inputs because of the reduced risk of crop failure due to flood hazard and through increased use of higher yielding varieties of Aus and Aman rice and of Braus.

Project Components

4.02 The Chalan Beel Subprojectwould have the following main components: