The Mexico Agricultural Technology Project, supported by Loan 3465-ME for US$150.0 million equivalent, was approved in FY92 and closed on March 12, 1997, two years earlier than planned, with cancellation of US$126.6 million. Staff from the Latin America and the Caribbean Regional Office prepared the Implementation Completion Report (ICR).
The project aimed to increase agricultural productivity and growth by: (a) generating new agricultural technology through research; (b) improving the transfer of technologies to producers, particularly those in poor, rainfed areas; and (c) strengthening the capacity of the National Institute for Forestry, Livestock and Agricultural Research (INIFAP), the public agricultural research agency.
The project was well thought out but failed to achieve its objectives owing to severe macroeconomic strains and policy shifts beyond the control of the implementing agency. When the project was designed, its objectives were fully consistent with the strategy of the borrower and of the Bank; these objectives remain valid. Preparation was solidly grounded in the Bank’s economic and sector work and built on 17 years experience of working with Mexico’s agricultural research and extension system. Project design was generally sound but would have been stronger if the implementing agencies, INIFAP and the Directorate General of Agricultural and Forestry Sector Studies (DGESAF), had exercised more leverage over government programming. Not enough attention was given to involving the Secretariat of Agriculture, Livestock and Rural Development (SAGAR), a branch of the Ministry of Agriculture that managed the traditional public extension system; SAGAR did not fully accept the new approach proposed by the project and was obstructive.
However, the project failed primarily because of two other factors, none of them the responsibility of the executing agency. First, in 1994, a major devaluation led to severe cuts in the government budget for 1995 and 1996. Second, the government changed its approach to research and extension, and scaled back these activities in favor of initiatives growing out of the North American Free Trade Agreement (NAFTA) and the Farm Support Payments Program (PROCAMPO). Hence, key staff were diverted away from the project. Only 16 percent of the loan was disbursed. Project expenditures were absorbed by an agricultural extension system that no longer operates, and by a research agency that has been rendered ineffective by budget cutbacks.
The Operations Evaluation Department (OED) agrees with the ICR in rating the outcome of the project as unsatisfactory and sustainability as unlikely. OED differs from the ICR in rating institutional development as negligible rather than modest, because the erosion of the research and extension system make it probable that gains from the project have been lost. Both the ICR and OED rate the Bank’s performance as satisfactory.
The primary lesson that can be drawn from this project is that government needs to be selective in funding extension and research services, focusing resources on those activities where the private sector is reluctant to intervene. Other lessons are: (i) generic operational issues such as underfunding should be addressed outside the project context; (ii) all implementing agencies must have ownership of the project; and (iii) more flexible assistance methodologies should be explored at a time of significant policy and organizational change.
Overall, the ICR is satisfactory. It provides a lucid and concise description of the design and implementation of the project and provides a comprehensive discussion of lessons learned, making a useful distinction between sectoral and operational issues. The ICR would have been stronger if the introductory section had included some discussion of the critical issue of public versus private provision in the Mexican context.
No audit is planned.