Document of The World Bank FOR OFFICIAL USE ONLY FILECOPY Public Disclosure Authorized Report No. 2523a-MOR Public Disclosure Authorized KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE VECETABLE PRODUCTION AND MARKETING PROJECT Public Disclosure Authorized August 16, 1979 Public Disclosure Authorized Europe, Middle East and North Africa Projects Department Agriculture II Division 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. ! CURRENCYEQUIVALENTS Currency Unit - Dirham (DH) US$1 DH4.0 DH 1 = US$0.25 WEIGHTS AND MEASURES 1 millimeter (mm) - 0.039 inch (in) 1 meter (m) - 39 inches (in) 1 kilometer (km) - 0.62 mile (mi) 1 hectare (ha) - 2.47 acres 1 square meter (m2) - 10.76 square feet (sq ft) 1 cubic meter (m3) - 35.31 cubic feet (cu ft) 1 liter (1) - 0.264 US gallon (gal) 1 hectoliter (hl) - 26.4 US gallons (gal) 1 kilogram (kg) - 2.205 pounds (lb) 1 metric ton (m ton) - 2,205.00 pounds (lb) 1 bar - 14.666 pounds per square inch (psi) 1 kilometer per hour (km/h) - 0.6 mile per hour (mph) GOVERNMENT OF THE KINGDOM OF MOROCCO FISCAL YEAR JANUARY 1 - DECEMBER 31 FOR OFFICIAL USE ONLY ABBREVIATIONS CLCA Caisses Locales de Crédit Agricole CNCA Caisse Nationale de Crédit Agricole CRCA Caisses Régionales de Crédit Agricole DE Rural EngineeringDirectorate DMV AgriculturalDevelopment Directorate DRA AgriculturalResearch Directorate BEC European Economic Community FAO/CP Food and Agriculture Organization/CooperativeProgram ICB InternationalCompetitive Bidding MARA Ministry of Agriculture OCE Office de Commercialisationet d'Exportation SASMA Société Agricole de Services au Maroc This document ha a restrictod distribution and may be used by rocipientsonly in the performance of thoir officiai dutbu. Its contnte may not otherwise be disclo ed without Worid Bank authorization. KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE VEGETABLE PRODUCTION AND MARKETING PROJECT Table of Contents Page No. I. INTRODUCTION.................................................. 1 II. THE AGRICULTURAL SECTOR AND THE HORTICULTURAL SUBSECTOR....... 1 A. The Agricultural Sector ................................... 1 B. Bank Involvement in the Agricultural Sector ............... 5 C. The Horticultural Subsector............................... 6 III. THE PROJECT AREA, ITS DEVELOPMENT POTENTIAL AND CONSTRAINTS ................................................... 9 A. Location, Water and Land Resources ........................ 9 B. Land Use, Land Tenure and Population...................... 10 C. Agricultural Supporting Services ......................... 11 D. Packing Stations and Export Facilities .................... 13 E.. Roads and Social Infrastructure........................... 14 IV. THE PROJECT................................................... 14 A. Origin and Objectives..................................... 14 B. Project Description ....................................... 15 C. Cost Estimates ............................................ 18 D. Financing................................................. 20 E. Implementation Schedule................................... 21 F. Procurement............................................... 21 G. Disbursements ............................................. 22 H. Environmental Effect...................................... 24 V. PROJECT IMPLEMENTATION........................................ 24 A. Organization and Management ............................... 24 B. Agricultural Supporting Services.......................... 25 C. Lending Terms and Procedures .............................. 27 D. Marketing Organization and Strategy....................... 29 E. Construction and Maintenance of Roads ..................... 31 F. Accounts and Audits ....................................... 31 G. Progress Reporting, Monitoring and Evaluation............. 32 The report is based on the findings of an appraisal mission in January 1979, composed of Messrs. C. Polti (Agriculturist), N. Imboden (Economist), L. Bou (Marketing Consultant), and Mrs. E. Garibaldi (Agricultural Consultant). Table of Contents (Continued) Page No. VI. THE PROJECT BENEFITS AND JUSTIFICIATION ....................... 32 A. Production .. 32 B. Marketing .. 34 C. Prices .................................................... 40 D. Main Benefits and Beneficiaries . 43 E. Financial Analysis .. 44 F. Economic Analysis ................. .. ....................46 VII. RECOMMENDATIONS ............................................... 48 ANNEXES 1. Table 1: Project Cost and Schedule of Expenditures .... .......... 50 Table 2: Estimated Schedule of Disbursement ..................... 53 2. Table 1: Production Schedule .................................... 54 Table 2: Projected Distribution of Moroccan Vegetable .... ....... 55 Exports Among Western European Countries 3. Selected Documents Available in the Project File .... .............56 Map IBRD 14279 KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE VEGETABLE PRODUCTION AND MARKETING PROJECT I. INTRODUCTION 1.01 The Government of Morocco has requested a Bank Loan to help finance a development program in the horticultural subsector vith emphasis on produc- tion and export of high-value off-season vegetables. The Project, which is on the Government's priority list of development programs in agriculture, would be the Bank's first participation in the horticultural subsector for export in Morocco. The Project was selected because of (i) the importance of fruit and vegetables in foreign trade; (ii) the decline of Moroccan vegetable exports to traditional markets despite increased Western European vegetable imports; and (iii) the need to develop Morocco's existing agricultural poten- tial through modern cropping techniques as well as a new marketing strategy for vegetables. 1.02 The Project was identified in early 1978 when the national export agency (OE) 1/ issued its "Development Plan for Vegetables" (1979-1985), aimed at doubling the value of vegetable exports through (i) the construc- tion of greenhouses, (ii) the modernization of packing and grading infra- structure, and (iii) the development of deep-freezing facilities. The Project is consistent with the Bank's general economic mission's recommenda- tions to support export oriented projects. The Project was prepared by the Government of Morocco with the assistance of FAO/CP from March to December 1978. Project preparation was closely monitored by the Bank. The last Project Brief was issued on November 22, 1978. II. THE AGRICULTURAL SECTOR AND THE HORTICULTURAL SUBSECTOR A. The Agricultural Sector General 2.01 Morocco's population is estimated at 18 million (1977) of which about 60% live in rural areas. Population growth has averaged 2.9% p.a.; 4.8% in the urban sector, 1.8% in the rural sector, the difference being due to rural-urban migration. Agriculture contributed about 14% of GDP in 1977, down from an average of 22% during 1967 to 1970. About 40% of the labor force is employed in agriculture compared to 60% in 1971. Agricultural exports accounted for 35% of total exports in 1977 (falling from about 60% of total 1/ State Board for export and external trade of fruits, vegetables, wine and processed food. -2- exports prior to 1975). The Moroccan economy can be characterizedas pre- dominantly market oriented with state interventionin agriculture occuring through price and credit policy, taxes, import controls,Government invest- ment in infrastructure,Government agriculturalservices, and Government in- vestment in public farming enterprises and agro-industry. Land Use 2.02 Morocco has a total land area of 50 million hectares of which 7.4 million have soils and moisture suitable for cropping,and 20 million are in semi-arid or mountain regions suitable only for grazing. Permanent irrigation covered 690,000 ha in 1977. About 5.8 million ha of the 7.4 million of agri- cultural land are cultivated each year; the remainder is left fallow. About 4.5 million ha are planted under cereals, 500,000 ha under pulses, 400,000ha under fruit trees, 140,000ha under vegetables, 60,000 ha under sugar beet, and the remainder under oilseeds, cotton, and forage crops. Livestock is pri- marily extensive, based on grazing of pasture land. Intensive livestock pro- duction based on cultivated forage crops, barley, or industrial crop residues, is rapidly becoming important in irrigated and high rainfall areas. Most of Morocco's rainfed areas are characterizedby traditionalagricultural prac- tices, and limited use of fertilizers,plant protection, certified seeds and farm machinery. As a result, crop yields and livestock productivityare gene- rally low. AgriculturalPerformance 2.03 Over the last 15 years, agriculturaloutput (in constant prices) grew at an average rate of 2.4% p.a., with wide fluctuationsmainly due to variations in climatic conditions. Domestic agriculturalproduction has not kept up with the increased demand caused by urbanization,and by income and population growth. The result has been a 21% p.a. average increase in food imports from 1970 to 1977 (in current prices), 9.6% p.a. in terms of quantity. The expansion of agriculturalimports, along with a shift of exports to domestic consumption,has maintained a generally adequate food supply and nutritional level. However, poverty pockets exist with significant numbers of people who have nutritionaldeficiencies (para 2.11). 2.04 Performance has varied between agriculturalproducts. In those cases