Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 4662-YAR Public Disclosure Authorized YEMEN ARAB REPUBLIC CENTRAL HIGHLANDSAGRICULTURAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT Public Disclosure Authorized February 16, 1984 Public Disclosure Authorized 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 US$1.00 = Yemeni Rials (YRls) 4.50 YRl 1.00 = US$0.22 YRls 1 million = US$222,222 WEIGHTS AND MEASUR~ES 1 millimeter (mm) = 0.039 inches 1 meter (m) = 3.28 feet 1 square meter (m 2 ) 10.76 square feet 1 kilometer (km) = 0.62 miles 1 hectare (ha) = 2.47 acres 1 metric ton (ton) = 2,205 pounds 1 litre (1) ' 0.264 gallons ABBREVIATIONS ARS = Agricultural Research Service CACB = Cooperative and Agricultural Credit Bank CPO = Central Planning Organization CYDA = Copfederation of Yemeni Development Associations DAFRD = Dhamar Agricultural and Forestry Research and Development Project FAO/CP = Food and Agriculture Organization/World Bank Cooperative Program GCC Governorate Coordinating Council IDA = International Development Association IFAD = International Fund for Agricultural Development LDA = Local Development Association MAF = Ministry of Agriculture and Fisheries MIS = Ministry of Trade and Supply ODA = Overseas Development Administration of the United Kingdom PPF = Project Preparation Facility SURDP Southern Uplands Rural Development Project USAID = United States Agency for Internat,ionalDevelopment YAR = Yemen Arab Republic YOMINCO = Yemen Oil and Mineral Corporation GOVERNMENT OF YEMEN ARAB REPUBLIC FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT YEMEN ARAB REPUBLIC CENTRAL HIGHLANDS AGRICULTURAI, DEVELOPMENT PROJECT Table of Contents Chapter Page No. CREDIT AND PROJECT SUMMARY ............................ i - iii I. BACKGROUND ................................................. 1 A. Sectoral Setting ....................................... 1 General .............................................. 1 Development Potential ................................ 2 Agricultural Institutions ............................ 3 B. Agricultural Credit .................................... 5 General .............................................. 5 Operating Policies ................................... 5 Loan Procedures ...................................... 5 C. Government's Development Strategy ...................... 6 D. IDA's Sectoral Strategy ................................ 7 II. THE PROJECT AREA AND ITS DEVELOPMENT POTENTIAL .... .......... 8 A. Description .............................................. 8 Location ............................................... 8 Topography and Elevation ............................... 8 Geology and Soils ...................................... 9 Climate ................................................ 9 Water Resources ........................................ 9 Rural Roads .10 Population and Labor Force .11 Land Tenure and Farm Size .11 Cropping Systems .11 Farm Technology .12 Agricultural Institutions .12 On-going Projects .12 B. Development Potential and Technology .13 The project was identified by FAO/CP in August 1982 and prepared by them in October/November of that year. It was appraised in April/May 1983 by a team consisting of Messrs. T. Haile-Mariam (Team Leader), S. Rana, M. Woldu, L. Revuelta, (IDA); and D. Masterton (Consultant). Messrs. J. Renkewitz and M. Zelaya (EMPWS) evaluated the Water Supply component. IFAD participated in the review of the preparation report, and was represented by Mr. T. Flhaut in final discussions with the Government during appraisal. This document has a restricteddistribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Chapter Page No. III. THE PROJECT .14 A. Design Features ......................................... 14 B. Objectives .............................................. 14 C. Description ............................................. 14 Extension Development ................................. 15 Rural Water Supply Schemes ............................ 16 Studies ............................................... 16 Project Administration ................................ 16 D. Implementation Schedule ................................. 17 E. Cost Estimate ........................................... 17 F. Financing ............................................... 19 G. Procurement ............................................. 20 H. Disbursement ............................................ 21 I. Environmental Impact .................................... 22 IV. PROJECT IMPLEMENTATION ...................................... 22 A. Implementing Agencies ................................... 22 General ............................................... 22 Extension Service ..................................... 23 B. The Borrower ............................................ 24 C. Terms and Conditions of Financing Water Supply Schemes .. 24 D. Progress Reporting, Monitoring and Evaluation .... ....... 25 E. Accounts and Audits ..................................... 25 V. BENEFITS AND JUSTIFICATION ................................... 26 A. Impact on Production ..................................... 26 General ............................................... 26 Extension Program and Adoption Rates .26 Cropping Pattern and Production ........................ 28 B. Marketing, Markets and Prices ............................ 29 Marketing ........................................... 29 Markets ........................................... 29 Prices ........................................... 29 C. Impact on Beneficiaries' Income ....... ..................30 Beneficiaries ......................................... 30 Benefits ........................................ .. 31 D. Economic Rate of Return ............. .................... 33 E. Risks . .......................................... 34 VI. AGREEMENTS REACHED AND RECOMMENDATION ....... .................35 ANNEX 1. Supporting Tables Page No. 1. Population and Villages in the Project Districts ........ 37 2. List of Vehicle Requirements ............I ...... I .... 38 3. Source of Extension Service Staff . .. ... 9 4. Project Cost Estimate .................................... 4' 5. Estimated Schedule of Disbursemencs of EDA Credit. 6. Project Staff ................................. 4. 7. Design Criteria for Rural Water Suipply Schemec .... ...... 43 8. Cumulative Number of Farmers Participating in Project .... 44 9. Crop Output from Areas to be Developed Uder Project .. 45 10. Prices of Key Commodities Used for Project Analysis .. 46 11. Present Cropping Pattern on Total Holding Represented by Farm Models ......... ..... ............. 47 12. Future Cropping Pattern on Area to be Developed Under Project ............ 48 13-18. Annual Incomes and Operating Expenses for Farm Models .... 49-54 19. Field Crop Inputs, Farm Traction, and Labor Requirements Per Hectare at Present ............... .. .................55 20. Field Crop Inputs, Farm Traction, and Labor Requirements per Hectare with Project ........ .........56 21. Crop Production Cost at Present ............ ..............57 22. Crop Production Cost with Project ........... .............58 23. Operation and Maintenance Cost of Citrus with Project .... 59 24. Operation and Maintenance Cost of Vineyard with Project ................................................ 60 25. Operation and Maintenance Cost of Coffee with Project ................................................ 61 26. Economic Cost and Quantifiable Benefit Streams .... ....... 62 ANNEX 2. Selected Documents and Data Available in the Project File .. 63 CHART World Bank 25171 - Organigram of Implementing Agencies MAPS IBRD 17321 - Project Districts IBRD 17322 - Average Annual Precipitation and Elevations IBRD 17323 - Project Area Il STAFF APPRAISAL REPORT YEMEN ARAB REPUBLIC CENTRAL HIGHLANDS AGRICULTURAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of Yemen Arab Republic. Amount: US$ 8 million equivalent. Terms: Standard. Beneficiaries: The Ministry of Agriculture and Fisheries. Project Objectives and Description: The proposed project is the first phase of an agricultural development program in the Central Highlands region of YAR. The key objective of the project is to increase farm income through production and productivity increases. The project would consist of: establishment of an extension service including construction of buildings, recruitment and training of extension staff, and provision of equipment; construction of 15 rural water supply schemes; studies of a possible second phase project; setting up of an organization for the project's implementation; and technical assistance. The project would benefit about 45,000 people. Yields of crops are projected to increase by 40-60% resulting in net farm benefit increases of over 70%. The project would also help to improve the quality of life of the rural population by providing them with potable water. The main risk is possible slow start-up of the project resulting from delay in establishing the project organization. Timely employment of local and internationally recruited staff, and early initiation of the recruitment and training of extension staff would minimize the risk. The Government realizes this