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Barbados: Agricultural Development Project (Loan 2782-BAR)

The Barbados Agricultural Development project, supported by Loan 2782-BAR for US$4.0 million, was approved in FY87. The loan was closed in FY96, twenty-one months late. A total of US$100,000 was canceled. The Implementation Completion Report (ICR) was prepared by the Latin America and the Caribbean Regional Office. The borrower prepared its own ICR, but did not comment on the Bank ICR.

The main objectives of the project were to assist the Government of Barbados to (i) define, and begin to implement, an agricultural development strategy that would be technically feasible and financially and economically sound; and (ii) increase production of, and incomes from, crops other than sugar. The project supported three activities: an agricultural sector study, technical assistance for agricultural diversification, and credit for agro-industries.

All three project activities were implemented. The sector study was carried out jointly by a team of consultants and staff from the Ministry of Agriculture, Food, and Fisheries (MAFF). Following extensive public discussion, a new policy was published in the 1994/95 Medium Term Agricultural Strategy. Extensive support was provided to MAFF and to representatives of the private sector on aspects of diversification, including long and short-term external courses and study tours (including attendance at major trade shows), five workshops on topics such as cut-flower production and post harvest handling, and short-term specialist services on topics such as cotton research. Specialized equipment and planting material was also imported, e.g., for the MAFF Tissue Culture Laboratory, to assist in the propagation of improved cultivars of flowering plants.

Credit was extended to 12 agro-industrial operations, including cut-flower production, production of syrups and general food processing. All but two appear likely to be viable. Utilization of the credit funds from the project was slow, because demand for credit was reduced by a recession and their market determined, commercial terms were no more attractive than other sources. Changes were made, including providing consultants to help potential clients with the preparation of investment proposals.

Nevertheless, there were problems in implementation which limited the project's impact. Most of these implementation problems reflected inadequate design and required heavy supervision. An overvalued currency aggravated the problems of the sugar industry, and its leaders, fearing that diversification would lead to a reduction in subsidies, lobbied against the proposed development strategy, partly because they had not been sufficiently consulted during preparation and appraisal. Another problem was that, the project comprised two disparate elements, assistance to MAFF, and a line of credit. The Ministry of Finance and Planning was to direct and coordinate both the activities of the Central Bank (which handled the credit line) and MAFF. This proved unsatisfactory and MAFF took over prime responsibility, but coordination with the Central Bank remained problematic.

Although the overall value of non-sugar crop production did not change significantly during the project, there was a shift from low-value, low technology crops to higher value, higher technology crops. In 1988 cotton, yams and sweet potatoes made up 80 percent of the value of non-sugar agricultural exports, but by 1993 the share of these crops had fallen to 40 percent and they had been replaced by crops such as sweet peppers, hot peppers, and cut flowers. The project also created a valuable group of professional and technical staff with training and experience in the production of products other than sugar. No ERR was calculated at appraisal or completion.

In agreement with the ICR, the Operations Evaluation Department (OED) rates project outcome as satisfactory, institutional development as substantial, sustainability as likely, and Bank performance as marginally satisfactory.

This project shows, that where a project seeks fundamental change in sectoral strategy, public and private stakeholders must be fully consulted early in the project cycle. Also, the appraisal of credit operations should include analysis of the supply and demand for credit, and the way banks might use project funds during periods of excess liquidity.

The ICR provides a good account of project implementation. It is noteworthy that, although Barbados is no longer borrowing from the Bank, it has agreed to monitor a series of indicators focusing particularly on performance in crop diversification and report annually to the Bank. No audit is planned

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