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Implementation Completion Report (ICR) Review - Second Agricultural Development Project

1. Project Data:   
Project ID:
Project Name:
Second Agricultural Development Project
Livestock, Agriculture
L/C Number:
Partners Involved:
Prepared By:
John R. Heath, OEDST
Reviewed By:
Andres Liebenthal
Group Manager:
Alain Barbu
Date Posted:

2. Project Objectives, Financing, Costs, and Components:

Objectives: (i) increase and diversify agricultural production and exports; (ii) improve use of natural resources by sowing better pasture in areas of extensive cattle raising, diversifying production in the more intensely farmed areas, and establishing commercial forestry; (iii) encourage competition between providers of long-term agricultural credit; and (iv) promote competition between privately-financed and state-financed extension services.

Components: (i) a credit line to finance farming and complementary working capital investments (87% of actual project cost); and (ii) institutional support for traditional farming (livestock and crops), non-traditional agricultural exports and forestry (13% of actual project cost).
Costs and financing: Total project costs were US$113.9 million (US$132.4 million at appraisal) of which the Bank financed US$65.0 million.The Bank loan was approved on October 31, 1989 and became effective on May 11, 1990. The loan was closed on December 31, 1997, more than two years later than the original closing date: this was to allow full implementation of pasture research programs--which started late--and to accommodate the expanded number of demonstration farms. The project was partly financed by a Japanese grant for 250 million yen.

3. Achievement of Relevant Objectives:

The (major) production objectives of the project were fully realized: pastures were substantially improved, farming was diversified and forestry boomed. (Although pasture improvement was financed by the loan the rapid uptake was driven by a factor outside the project: the fortuitous discovery of a highly-resistant legume, Loyus Rincon). The minor objectives were partially achieved. Credit provison was broadened, with four financial intermediaries competing with the original monopoly provider of farm credit; but availability of long-term credit was not likely to extend beyond project implementation. Progress in promoting private extension services was also partial: 18 demonstration farms were set up (2 more than expected at appraisal) but few farm investment plans were prepared by private agencies.

4. Significant Outcomes/Impacts:

Partly as a result of the effective sector work and policy dialogue pursued by the Bank, the project was implemented in a sound macro and sectoral policy environment. Significant sector policy initiatives included liberalizing the live export of animals and the dairy processing and marketing, eradicating foot-and-mouth disease, and providing incentives for establishing plantations and producing non-traditional farm exports. Planting of eucalyptus and pine covered 269,500 ha, compared to the 160,000 ha forecast at appraisal.

5. Significant Shortcomings (include non-compliance with safeguard features):

Since 1995 the agency charged with promoting non-traditional exports (PENTA) has been rendered ineffective by internal management disputes. The project's design failed to provide adequately for monitoring and evaluation; no performance indicators were specified at appraisal.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
    Ratings are equal: ICR rating does not allow a modest rating to be entered
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

The project shows that project design benefits from being accompanied by sound economic and sector work and project implementation is enhanced by a supportive policy environment. The project also demonstrated that it is possible to promote competition among credit providers and desirable that credit not be targeted to particular subsectors.

8. Audit Recommended?  No


9. Comments on Quality of ICR:

The report is very well structured and clearly written. It would have been stronger if there had been been M&E data to cite. The only estimated versus actual data points are for plantation area. Similar data could have been collected on extent of improved pasture, volume of non-traditional exports produced in project area, and number of farm plans prepared by private and public extension agencies.

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