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Implementation Completion Report (ICR) Review - Agricultural Productivity Improvement Project


  
1. Project Data:   
ES Date Posted:
08/12/2004   
PROJ ID:
P048505
Appraisal
Actual
Project Name:
Agricultural Productivity Improvement Project
Project Costs(US $M)
 551.1  555.6
Country:
Mexico
Loan/Credit (US $M)
 444.5  444.5
Sector, Major Sect.:
Agricultural extension and research, General agriculture fishing and forestry sector, Central government administration, Sub-national government administration,
Agriculture fishing and forestry; Agriculture fishing and forestry; Law and justice and public administration; Law and justice and public administration
Cofinancing (US $M)
   
L/C Number:
L4428      
   
Board Approval (FY)
  99
Partners involved
 
Closing Date
06/30/2003 06/30/2003
         
Prepared by: Reviewed by: Group Manager: Group:  
John R. Heath
Ronald S. Parker Alain A. Barbu OEDST

2. Project Objectives and Components:

a. Objectives

"To increase capitalization of small farmers and improve their productivity and income by promoting the adoption of sustainable agricultural production systems, by providing technical and financial assistance to eligible beneficiaries under a matching grant scheme" (Project Appraisal Document).

The project contributed to the Rural Alliance Program (Alianza), which supported delegation of administration and decision-making to the states. The program is intended to supply a decentralized, demand-driven means of channeling technical and financial assistance directly to small farmers, based on matching-grants.

b. Components

(i) Productive investment (Expected cost, US$343.3 million, actual cost, US$378.3 million). Provision of grants for demand-driven investments in small irrigation development and modernization, improved pasture establishment and management, improved dairy production and technology and marketing, and (for poor farmers) on-farm infrastructure, equipment and supplies.
(ii) Production Support Services (Expected, US$172.9 million, actual US$172.9 million). Support for applied research and technology transfer as well as demand-driven extension, technical assistance and training for small farmers.
(iii) Institutional Strengthening and Project Administration (Expected, US$34.9 million, actual US$0). Includes training and technical assistance for staff at central and state levels; and establishment of a monitoring and evaluation system.

c. Comments on Project Cost, Financing and Dates
The PAD said that the federal government would contribute 14 percent of project costs, the state governments 6 percent and the Bank 80 percent. It is unclear from the ICR what share of the actual cost was met by state governments.


3. Achievement of Relevant Objectives:


Although it is difficult to isolate the impact that the project had within the Alianza program, significant results were obtained. The physical targets set at appraisal were, in most cases, exceeded. The economic rate of return was re-estimated at 15.5 percent. The household income of beneficiaries increased by 60 percent (compared to an appraisal estimate of 25 percent) and that their productivity increased by 20 percent (rather than the projected 25 percent). On the other hand, institutional achievements were modest and the project did not contribute significantly to the Alianza program's decentralization objective.

4. Significant Outcomes/Impacts:

  • Irrigation systems were improved over an area of 198,000 ha (appraisal target: 300,000 ha);
  • Pastures were established on 4.1 million ha (target: 2 million ha);
  • Milk output was established or improved for 50,000 production units (target: 10,000 units);
  • "Rural support" activities reached 763,000 beneficiaries (target: 750,000).

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

  • The part of the loan devoted to strengthening the Ministry of Agriculture and state Alianza agencies, and to developing a comprehensive monitoring and evaluation system failed to disburse.
  • With respect to support for agricultural research and extension, the ICR cites output data (e.g. increases in funding for different programs) but no compelling evidence of results. The text gives more weight to the shortcomings of these research programs than to their strengths, even though the component is rated satisfactory.
  • 6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Outcome:
    SatisfactorySatisfactory
    Institutional Dev.:
    ModestModestThe part of the Bank's loan in support of institutional development failed to disburse but the ICR notes that the government funded some (modest) improvements under the program budget.
    Sustainability:
    Highly LikelyLikelyThe project's substantial physical achievements make it likely that results will be sustained; but for a highly likely rating to be justified , more evidence would have had to be provided than was the case --in the absence of data from a survey of a sample of the subprojects. Rating will be revisited in the PPAR.
    Bank Performance:
    SatisfactorySatisfactory
    Borrower Perf.:
    SatisfactorySatisfactory
    Quality of ICR:
    Unsatisfactory

    7. Lessons of Broad Applicablity:

    • In countries like Mexico where Bank funds tend to be "non-additional" more than usual attention must be paid at the design phase to creating incentives for the line agencies to participate and to working out (before loan aproval) the details of a system for monitoring and evaluating project results.
    • Projects that are assigned to the Bank's program of targeted interventions need to contain within their design the necessary mechanism to ensure that funds are indeed properly targeted.

    8. Audit Recommended?  Yes

              Why?  
    To see whether funds were allocated in a manner appropriate for a "targeted interventions' project and to assess the likely sustainability of subproject investments, particularly those under the rural development (PADER) program.

    9. Comments on Quality of ICR:

    The iCR has a number of shortcomings:
    It acknowledges that, in some quarters, the Alianza program was reviewed as regressive but argues that the project sought to mitigate this through targeting to poorer farmers and poorer states. But there is no evidence of mitigation presented in the ICR. Thus, there is no data on the socioeconomic profile of the beneficiaries, or how project funds were distributed between poor and less poor beneficiaries, or between poor and less poor regions (all of Mexico's 32 states participated in the program).

    The economic rate of return (15.5 percent) is based on the extrapolation of results from 37 farm models that were defined at appraisal; but it is not clear if these estimates are based on the results from a sample survey of beneficiaries that is representative of each model--or whether they are derived from a re-run of the appraisal model, adjusting certain price and quantity assumptions.

    Annex 1 of the ICR says that the household income of beneficiaries increased by 60 percent (compared to an appraisal estimate of 25 percent) and that their productivity increased by 20 percent (rather than the projected 25 percent). It is not clear how these numbers were derived: support for them is not evident either in the economic analysis (Annex 3) or the Borrower's report.

    One-third of project costs were absorbed by support to a Rural Development Program (PADER) which aimed to provide goods and technologies to farmers with "relatively lower levels of development, living in highly disadvantaged municipalities and localities". Yet despite the size of the investment (US$147 million), costs and benefits are not assessed: Annex 3 says that "85 percent of the resources received by poor farmers through this program were too small to merit an economic analysis". The ICR notes (p.6) that for this program, which was run by the Ministry of Agriculture, "limited information is available about the type of investment and results".

    In Annex 2 (fourth table) the CoF. column contains numbers that are the sum of the Bank and Govt figures and do not show what co-financing actually was.

    In Annex 4, it is not clear how many supervision missions actually took place.

    In Annex 5 institutional development is rated substantial, which does not square with the rating in section 2 (modest).

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