RESTR I CTED Report No. PA-128a Public Disclosure Authorized Tlis report is for officiaiuse only by the BankGsoup and specificallyauthorized orgmiZations or persons.It may not be published,quoted or ated withoutBank Group authorization.The BankGroup does not acceptresponsibllity for theaccwacy or completenessof the report. INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONALDEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL REPORT MORONDAVA IRRIGATION AND RURAL DEVELOPMENT PROJECT MALAGASY REPUBLIC Public Disclosure Authorized May 26, 1972 Public Disclosure Authorized Agriculture Projects Department CURRENCYEQUIVALENTS Currency Unit - Franc Malgache (FMC) US$1.00 - FMG 255 FMG 1.00 - US$0.0039 FMG 1 million = US$3,900 WEIGHTS AND MEASURES 1 hectare (ha) = 2.47 acres 1 kilometer (km) 2 - 0.62 mile 1 square kilometer (km ) = 0.3886 square mile 1 cubic meter (m3) 3 = 35.31 cubic feet 1 million cubic meters (Mm ) = 810.7 acre-feet 1 kilogram (kg) = 2.205 pounds 1 ton - 2,205 pounds 1 ton of paddy = 660 kg of rice 1 ton of seed cotton 370 kg of lint cotton ABBREVIATIONS AMVR - Aire de Mise en Valeur Rurale (Rural Development Area) BNM - Malagasy National DevelopmentBank CFDT - CompagnieFrancaise pour le Developpementdes Fibres Textiles IRAM - Institut de RechercheAgronomique Malgache GR - Rural Engineering Department SCMV - Service Central de Mise en Valeur of the Ministry of Agriculture SODEMO - Societe pour le DeveloppementEconomique de la Region de iMorandava FISCAL YEAR January 1 to December 31 MALAGASYREPUBLIC APPRAISAL OF THE MORONDAVAIRRIGATION AND RURAL DEVELOPMENTPROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............ .. .................i-ii I. INTRODUCTION ............................... 1 II. BACKGROUND ............................................ 1 III. THE PROJECT AREA ...................................... 2 General ................................ 2 Climate ................................ 3 Soils, Topography and Drainage ................ 3 Agriculture ................................ 3 Transportation ........ ................ 4 Present Status of Project Irrigation Facilities ....... 4 IV. TIE PROJECT ........................................... 5 Project Description .................... 5 Project Works ............................. 6 Water Supply, Demand, and Quality .............. 7 Engineering Design ............................ 7 Cost Estimates ............................ 8 Financing ............................. 8 Procurement ............................. 9 Disbursement ..........................................10 Accounts and Audit ....... .............................10 V. ORGANIZATION AND MANAGEMENT ........................... 10 Project Authority ..................... 10 Settlement and 11ealth Control ......................... 12 Civil Works ............... .............. 13 Agricultural Research .............................. 13 Supporting Agricultural Services ...................... 14 Operation and Maintenance ............................. 14 Project Charges ................................ 15 This report is based on the findings of an appraisal mission which consisted of Messrs. C.J.M. Le Moigne and C.G. Moret (IDA) and J. Marinet, G. Laques, and A. Degremont (consultants). -2 - PaRe No. VI. PRODUCTION,MARKETING, PRICES, AND FARM INCOME ........ 16 Production ............................................16 Marketing .............................................18 Prices ............ ....................................18 Income of Rice Cultivators ............................ 18 Income of State Farms ................................. 19 VII. BENEFITS AND JUSTIFICATION ............................ 20 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS................ 21 ANNEXES 1 - ClimatologicalData at Morondava 2 - Soils 3 - Description of the Project 4 - Construction Schedule 5 - Water Supply, Demand, and Quality 6 - Cost Estimates 7 - Equipment 8 - Estimated Schedule of Expendituresand Disbursements 9 - Project Authority (SODEMO) 10 - Settlement and Health Control 11 - Research Station 12 - Productionwithout and with the Project 13 - Marketing 14 - Economic Analysis *AP Projected Land Use and Irrigation Network MALAGASYREPUBLIC MORONDAVAIRRIGATION AND RURAL DEVELOPMENTPROJECT SUMMARYAND CONCLUSIONS i. This report appraises a project for irrigationand rural develop- ment in the Morondava Region, for which an IDA credit of US$15.3 million is proposed. The project is part of the Government program to accelerateregion- al developmentand encourageland settlementon the west coast of the island. (It would also contribute toward the Government'smajor goals in the agriculturalsector, namely increasingrice production and diversificationof exports.1 Becausewater supply is vital for agriculturaldevelopment in this region, the Government'slong term plans for the Morondava Plain call for irrigationof some 30,000 ha. ii. In 1970, the Associationextended a credit of US$5.0 million equivalent (Credit214-MAG) to assist Government in implementingthe Lake Alaotra IrrigationProject - located about 200 km north of Tananarive- for the productionof high quality rice. Progress on that project is satis- factoryand work is on schedule. iii. The proposedMorondava Irrigationand Rural DevelopmentProject would provide irrigationto three operationallyindependent units totaling 9,300 ha. The first unit of 4,700 ha would be devoted to rice cultivation by some 2,300 farmersof which about 1,200 are already in the area; the second unit would be developedas a state farm specializingin tobacco and peanut production on 2,700 ha; and the third unit would be developedas a state farm for cotton production on 1,900 ha. About 1,000 familieswould be settled as permanent laborers on the two state farms. About 2,000 ha of the project area are presentlyproductive while the remainderi bush. The projectwould include constructionof a diversion dam, irrigationand drainage systems, farm roade, and on-farm developmentworks; constructionof 10 new villages and expansionof 10 existing ones, togetherwith all necessary public facilities;introduction of a health program to controlbilharzia; settlement of about 2,100 families and an increase in the holding size of the 1,200 families already in the area; purchase of equipment;establishment of a research station; and the creation of a project authority"Societe pour le DeveloppementEconomique de la Region de Morondava" (SODEMO). iv. Estimatedtotal project cost ls US$27.0 million. The proposed IDA credit of US$15.3 million, or 57% of the total, would finance the foreign exchange costs. Project works would be constructedby contract following international competitivebidding, except for up to US$1.0 million worth of small and scatteredcontracts for constructionof settlementand health control facilitiesthat would be awarded on the basis of local competitivebidding. Equipmentmaterial and supplieswould also be procured through international competition;it is estimated that about US$3.8 million in foreign exchange would be required for these items and for the cost of foreign consultants. - ii - v. Overall responsibilityfor the project would rest with SODEMO, a corporationto be establishedby Governmentspecifically for project im- plementation. The day-to-day operationswould be directed by a General Manager, assisted by four deputies in charge of settlementand social affairs, administrationand finance, technicalmatters, and research. Headquarters would be in the town of Morondava, and three operationalunits would have offices in the field to manage rice farming and the two state farms, each functioningindependently of the other. The Rural EngineeringDepartment (GR) of the Ministry of Agriculturewould be responsiblefor construction of major civil works and drainage system; it is in charge of all similarworks throughout the country. The Service Central de Mise en Valeur of the Ministry of Agriculture (SCMV) would keep the Associationinformed of progress on the project and would be responsiblefor carrying out feasibilitystudies for a second phase irrigationproject in the Morondava Plain. Consultantswould assist SCMV, SODEMO, and GR in the implementationof the project. vi. At full agriculturaldevelopment in 1983, the net value of produc- tion is expected to be about US$3.1 million, compared with a level of US$0.1 million without the project. The economic rate of return would be about 16%. Net annual foreign exchange earnings would amount to about US$2 million by the end of the constructionperiod and about US$3 million at full develop- ment. A sensitivityanalysis indicates that, under a number of adverse conditions,the economic rate of return would still exceed 12%. Per capita income of the project beneficiarieswould increase from the present subsis- tence level of US$45 to US$100-140 at full development. The projectwould thuisassist a very poor section of Malagasy's rural population,but, even at full developmenttheir income would still be below per capita rural income, estimated to reach about US$140 by the mid-1980's. vii. The project is suitable for an IDA credit of US$15.0 million. The borrower would be the Government of the Malagasy Republic. MALAGASYREPUBLIC MORONDAVAIRRIGATION AND RURALDEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of the Malagasy Republic has requested an IDA credit of US$15.3 million to assist in financing the Morondava Irrigation and Rural DevelopmentProject, which is located in the Morondava Region on the west coast. Works would include constructionof