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         Agricultural Rehabilitation & Diversification

The St. Vincent and the Grenadines Agricultural Rehabilitation and Diversification project, supported by Loan 3016-STV for US$1.4 million equivalent and Credit 1980-STV for SDR 1.1 million, was approved in FY90. The loan and credit were fully disbursed and closed on schedule in December 1996. The Government of Japan provided a grant of US$0.4 million in support of the project during implementation. The Latin America and the Caribbean Regional Office prepared the ICR. The borrower’s contribution is attached as Annex B.

The project’s main objectives were to promote the growth and diversification of agricultural production and exports, improve income distribution, and promote more efficient use of underutilized and scarce land resources. Project components aimed to transfer 2,500 acres of cultivable state land to 745 small farmers, improve access roads serving these lands, strengthen the land administration and extension capabilities of the Ministry of Agriculture (MoA) through staff training and provide project management assistance. The project’s design reflected the need to privatize inefficient government-owned agricultural estates, the demand for land by smallholders, and the expectation that preferential markets in the European Union (EU) for bananas, the major crop, would disappear after 1992. However, despite the project’s title, and even though diversification of cropping was said to be an important objective, the project design did not include explicit proposals toward that end.

The project achieved its physical objectives, but the urgency of the need for crop diversification decreased when the EU extended the preferential market for bananas. Allocation of land was completed ahead of schedule, although costs were higher than planned even though only 1,563 acres of cultivable land proved available for allocation to 743 smallholders. Hence the average size of smallholdings was lower at 2.1 acres per family (compared with the planned 3.36 acres). More access roads than planned at appraisal were funded (33 miles compared to 20). Road works ran into difficulties when it became apparent that the appraisal road designs provided inadequate protection in steep terrain against erosion by heavy rainfall. Training to strengthen MoA was provided. Cost overruns of about a third were financed by the Japanese grant and government resources. The economic rate of return (ERR) for the project was reestimated at 17 percent, compared with 22 percent at appraisal. The ICR does not provide sufficient details to validate the lower ERR, which is attributed to the relatively small amounts of cultivable land transferred and the higher-than-expected costs for land allocation and road development. The government is seeking further external assistance to support future operations.

The Operations Evaluation Department (OED) agrees with the ICR’s ratings of project outcome as satisfactory and institutional development as substantial. OED rates sustainability as uncertain rather than likely because there has been little progress on crop diversification in preparation for the expected loss by 2002 of the profitable market for bananas, holding size averages less than two-thirds of the area considered necessary at appraisal to attract and hold small farmers, and maintenance, rehabilitation and upgrading of the severely eroded access roads is dependent on additional grant funds. OED agrees with the ICR’s rating of Bank performance as satisfactory overall, despite some deficiencies at appraisal.

The ICR is satisfactory. It presents a substantial plan for future operations, but could have been improved with the addition of supporting data for the ERR estimation and a discussion of the implications of the reduced holding size. The ICR offers some valid project-specific lessons, but has no comment on the major lesson: the high administrative costs to the Bank of such a small project and, in that light, the inadequate justification for Bank involvement.

No audit is planned.

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