Report No. 697a-GUI FILE Appraisal of COPY Pineapple IDevelopment Project Guinea June 12, 1975 Western Africa Regional Office Not for Public Use Document of the Intemational Bank for Reconstruction and Development International Development Association This report was prepared for official use oniy by the Bank Croup. It may not be published, quoted or cited w thout arank Croup authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRECY IQUIVALENTS Us$1 = 20.46 Syli Syli 1 = us$.o4s Syli 1 million = US$48,878 WEIGHTS AND HEASUERS 1 hectare (ha) = 2.47 acres 1 kilogram (kg) - 2.2 lb 1 metric ton (m ton) = 2,204.6 lb 1 square kilometer- (km2) = 0.386 square miles ABBREVIATIONS BGCE - Banque Guinéenne du Commerce Extérieur BNDA - Banque Nationale de Développement Agricole ENAD - Entreprise Nationale Agricole de Daboya IFAC - Institut Français de Recherches Fruitiéres Outre-Mer INRAF - Institut National de Recherches Agronomiques de Foulaya MCE - Ministère du Contrôle d'Etat RMWA - Regional Mission in Western Africa FISCAL YEAR October 1 - September 30 GUINEA PINEAPPLE DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................ i-vi I. INTRODUCTION ....................................... 1 II. BACKGROUND ......................................... 1 III. THE PROJECT ........................................ 5 A. Pineapple Component .......................... 5 - Nucleus Estate and Outgrowers Development .. 6 - Improvement of Fruitex Services .... ........ 10 - Pineapple Cultivation Research .... ......... il B. Technical Assistance Component for Rice and Livestock .................................. IV. COST ESTIMATES AND FINA4CING ARRANGEMENTS .... ...... 12 Project Costs ................................ 12 Procurement and Disbursement .... ............. 15 Consultancy Services ......................... 17 V. ORGANIZATION AND MANAGEMENT ........................ 17 General ..... 17 Organization and Staffing .................... 18 Technical Assistance ......................... 18 Financial Structure and Control .... .......... 19 Project Financing Arrangements .... ........... 21 VI. PRODUCTION, MARKETS AND PRICES, OPERATING RESULTS NUCLEUS ESTATE AND OUTGROWERS, AND GOVERNMENT/ENAD/ FRUITEX REVENUES ................................... 24 VII. BENEFITS AND JUSTIFICATION ......................... 26 Viii. AGREEMENTS REACHED WITH THE BORROWER . ............... 29 This report is based on the findings of an appraisal mission, comprising Messrs. R. E. Rowe, G. Losson (Headquarters), C. de Troyer (Regional Mission to Western Africa), and Siebert (Consultant), which visited Guinea in October/ November, 1974. TABLE OF CONTENTS (Continued) ANNEXES 1. Nucleus Estate: Technical Details 2. Project Cost Estimates - Nucleus Estate Table 1 - Investment Costs Table 2 - Operating Costs in Estate Development Period Table 3 - Renewals in Estate Development Period Table 4 - Smallholder Program Table 5 - Other Pineapple Activities/Fruitex Transport Service and Workshops Table 6 - Pineapple Research Table 7 - Training Fellowships Table 8 - Technical Assistance Component 3. Specifications of Irrigation System Map 11445R - Pineapple Estate Irrigation Works Chart 9394R - Construction and Developme.nt Schedule 4. Fruitex Vehicle Fleet 5. Harvesting, Handling, Transport, Markets and Prices Appendix- Price of Export Cartons Table 1 - World Pineapple Production and Trade Data Table 2 - Price Relationships "Free on Rail" Consuming Country; FOB: Farm Gate 6. Research 7. Rice and Livestock Studies Appendix - Outline of Feasibility Study Report 8. Estimated Schedule of Disbursement 9. Fruitex Table 1 - Balance Sheet Table 2 - Income Statement 10. Nucleus Estate Table 1 - Projected Operating Accounts Table 2 - Sources and Application of Funds Table 3 - Projected Balance Sheets TABLE OF CONTENTS (Continued) ANNEXES (Continued) 11. Operating Account and Cash Flow - 4 Ha Irrigated Holding Table 1 - Operating Account Table 2 - Cash Flow 12. Operating Account and Cash Flow - 4 Ha Rainfed Holding Table t - Condensed Operating Account Table 2 - Cash Flow 13. Banque Nationale de Developpement Agricole - Balance Sheet 14. Calculation of Economic Rate of Raturn Table 1 - Calculation of Economic Rate of Return Table 2 - Nucleus Estate Table 3 - Outgrower Program Map 11444R - Location of the Project Area Chart 9841 - Organization Chart GUINEA PINEAPPLE DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS Background i. Guinea has asked IDA to help finance (a) measures to improve its flagging fresh pineapple export industry and (b) studies of the country's rice growing and livestock production sectors. The project appraised in this report was prepared by Government and the Bank's Regional Mission to Western Africa (RMWA), the former employing Energoprojekt (Yugoslavia) as consultants for the irrigation engineering and economic aspects of the pro- ject, and RMWA employing Institut Francais de Recherches Fruitieres Outre- Mer (IFAC) as consultants for pineapple cultivation and export matters. The project was appraised in October 1974. ii. Up-to-date information on agricultural production in Guinea is difficult to obtain and in many cases probably is non-existent. However, analyses of the last twenty years' import and export data relating to agri- cultural commodities indicate that the agriculture sector is stagnating. Performance in the agriculture sector reflects economic performance overall, two results of which are severe balance of payments difficulties leading to drastic limitations on imports. Shortages of imports and problems in allo- cating priorities for them have been consistent and major limiting factors to Guinea's economic development. Since Independence in 1958 it appears that GNP increased by about 2.5% annually, somewhat less than population growth, and thus that real per capita incomes declined slightly. In 1972 GNP was estimated at about US$450 million and per capita income at US$90. iii. Guinea, with a broad range of eco-climatic zones, from semi-arid to tropical rain forest, has the potential for a well-diversified agricul- ture, but so far this has been little exploited. The basic problem of the rural sector appears to be the lack of real incentives for producers. This is due to Government policies that have tended to maintain producer prices at artificially low levels, and at the same time to restrict the availabil- ity of consumer goods in rural areas. Farmers receive low prices and have few consumer goods to buy with the little surplus cash they have. However, there is a broad range of additional secondary constraints that range from the specific, such as poor transportation facilities, lack of foreign ex- change for crucially needed imports and low levels of technical know-how, to the general, such as defects in the institutions serving the sector, especially research, extension, input supply, credit and marketing. - ii - iv. The project proposed in this report would be a first step in vitalizing the agriculture sector. Its pineapple component would demon- strate the advantages of an integrated approach towards development of a specific agricultural commodity over the diffused and multi-agency system operating currently. The studies of the rice and livestock sub-sectors should result in the preparation of carefully designed development programs needed to permit exploitation of these two important sub-sectors, and lead to a reduction in the cost of food imports and, in the case of livestock, development of an as yet unexploited export asset. v. Guinea is unique among the countries of sub-Saharan Africa in being the first to develop a sophisticated tropical fruit growing and ex- porting industry. Initially the industry was based on bananas, largely produced on expatriate-owned plantations, and by 1955 banana exports were about 100,000 tons annually, valued at US$4 million. However, since the 1960's the banana trade has been in steady decline with producers caught in a web of increasing costs, problems with labor, pest and disease attack, and difficulty in obtaining the large volume and variety of imports needed for banana production. Only about 600 tons were exported in 1973. The decline of the banana helped the fresh pineapple exporting industry since many growers switched to pineapples under the stimuli of favorable prices paid by the USSR and East European countries, and the advantage of a crop less susceptible to pests and diseases and requiring less labor. Exports of fresh pineapples grew from 50 tons in 1957 to 7,000 tons in 1966 and to 11,000 tons in 1972 valued at about US$2.5 million at world market values for fresh pineapples. In 1973 exports dropped to 7,000 tons and it appears that they were even lower in the 1974/75 crop season. The reasons for this latter decline are many but include the inability of Government agencies to effectively provide the package of research, extension, input supply, and transportation services needed by growers. The Project Vi. The pineapple component of the project would consist of: a. establishing an irrigated nucleus pineapple estate of sufficient size to cultivate 420 ha of pineapples annually; b. providing pineapple growers in the Kindia area, all of whom are organized in coopera- tives, with the package of support services required to permit them to maximize their productivity; c. strengthening the State fruit exporting company's (Fruitex) road-transportation and fruit handling capacity through the provision of new vehicles and spare parts, the construction and equipping of a vehicle workshop, and providing specialized equipment to facilitate the loading of pineapples at the Port of Conakry; - iii - d. conducting trials and studies of internal and external transport arrangements for fresh pine- apples, including trial shipments of pineapples to new markets, especially to Western European countries; e providing internationally recruited specialists to initially operate the nucleus plantation, develop the irrigation system, provide services to outgrowers, and to establish and run the Fruitex workshop until such time as Guineans have been trained under the project to assume these functions; f providing Guineans with overseas training fellowships in irrigation, pineapple marketing, and vehicle maintenance; and g carrying out field trials with pineapples in which recent experience gained abroad would be tested under Guinean conditions. A new State-owned company, Entreprise Nationale Agricole de Daboya (ENAD), has been established to carry out parts (a) and (b) of the project. Fruitex would be responsible for parts (c) and (d). vii. The project would employ the well-tested and proven system of nucleus estate and associated outgrowers. The nucleus estate would develop basic cultivation techniques, engage in applied research, train personnel, serve as a demonstration to outgrowers, and generally act as the base from which the broad range of support services needed by outgrowers would be provided. Very importantly the nucleus estate would guarantee a basic supply of high quality fruit for export such a basic supply being a sine qua non for the efficient operation of any fruit exporting industry. The pineapple nucleus estate and its associated outgrowers would be located near the town of Kindia in the eastern part of Lower Guinea; Kindia is a trading center of some 35,000 people and administrative headquarters of the region. viii. The technical assistance component concerning the rice and live- stock elements of the project would be handled by the Ministry of Rural Development and consist of: a. employing qualified consultants to (i) make an analysis of the rice growing prospects of Guinea, and recommend appropriate policies for stimu- lating rice production and (ii) following the review of this analysis and recommendations by Government, the preparation of a rice develop- ment program and specific investment projects - iv- in rice production suitable for external, and particularly for World Bank Group financing; and b. employing qualified consultants to examine the livestock potential of Guinea with the same objectives as in (a) above. Management ix. ENAD and Fruitex are "Entreprise Nationale", they have no Boards of Directors but are managed by Directors, assisted by Deputy Directors and Chief Accountants. ENAD is under the control of the Ministry of Agriculture and Fruitex under that of the Ministry of External Trade. The statutes of the two enterprises permit them to undertake project responsibilities. To carry out the project both ENAD and Fruitex would need some foreign management assistance in the early years of prcject implementation, as well as technical assistance from a qualified pineapple research organization. The Manager of the nucleus estate would be recruited internationally as would be the Estate Engineer, a Research/Extension Officer, who would be responsible for research work on the estate and for extension work with outgrowers and the Workshop Manager who would take over the workshop of the Fruitex Transport Service for a period of three years. The project would provide for the train- ing of Guinean staff to fill all the foregoing positions within the IDA credit disbursement period. As it is essential for the success of the project to use up-to-date technology, an agreement would be entered into between ENAD and a qualified pineapple research institution under which the latter would provide a broad range of technical assistance, including advisory visits and foliar analysis services. Costs and Financing x. Expected project costs are Syl 175 million (US$8.5 million) of which the foreign exchange component would be Syl 116 million (US$5.7 million) or 66% of project costs. Base cost estimates are at late 1974 prices, and since Government has stated that it would waive any such taxes, are free of import taxes and duties as well as of any other direct taxes other than income taxes on project staff which would be small. Physical contingencies of 10% have been applied to all base costs. Esti- mated price increases amount to about 27% of base cost estimates plus physical contingencies. An IDA credit of US$7 million on standard terms is proposed. This would be equivalent to 82% of project costs and would cover all foreign exchange costs, US$5.7 million, plus 45% of local cur- rency costs, Syl 26 million. The remainder of expected project costs would be met by outgrowers who would be required to meet 20% of incremental on-farm costs from their own resources, Syl 3.7 million (2%); and by Gov- ernnent, Syl 28 million (16%). xi. About US$400,n0o of the IDA credit and Syl 1.6 million of Govern- ment's contribution would be used by the Ministry of Rural Development for v the technical assistance component of the project. The remainders of the IDA credit, US$6.6 million, and of the Governnent's contribution, Syl 26.4 million, would be passed on to ENAD and Fruitex. ENAD would receive that part of the IDA credit to be applied to nucleus estate and outgrower opera- tions as a loan for 25 years bearing interest of at least 6%, and the re- mainder of the IDA credit and Government's own contribution as a grant. Fruitex would receive its funds as a grant. Procurement xii. All contracts over US$50,000 for the procurement of vehicles, farm and irrigation equipment, electrical and mechanical plant, fertilizers and other farm inputs, and packing materials (totalling about US$2.8 million) would be through international competitive bidding in accordance with IDA guidelines. Procurement contracts for amounts of less than US$50,000 would be through competitive bidding advertised locally. Domestically manufactured goods would be allowed a preference of 15%, or the level of applicable import duty, whichever is lower when comparing domestic bids with those of foreign manufacturers. Contracts for the installation of the irrigation system, land clearing and construction and rehabilitation of buildings (totalling about US$1.2 million) would be individually too small and too dispersed over time (5 years) to attract international contractors and would therefore be awarded on tlhe basis of competitive bidding advertised locally and in accordance with procedures to be agreed with IDA. Contracts with consultants (about US$300,000) for the rice and livestock studies, and those required under the pineapple component of the project for technical assistance, training of Guinean staff, and investigation of new markets (totalling about US$600,000) would be obtained under arrangements agreeable to IDA, as would be inter- nationally recruited staff (about US$900,000). An estimated US$2.8 million would be_expended on items such as local staff salaries, labor, personnel allowances, operating costs of vehicles and equipment and other general expenditures that would not lend themselves to competitive procurement. The foregoing estimated amounts are net of physical and price contingencies for which about US$2.5 million is provided. The difference of US$2.6 million between the sum of the procurement items and contingencies listed above, US$11.1 million, and total expected project costs, US$8.5 million, represents nucleus estate operating costs (see Annex 2, Table 2) in the IDA credit disbursement period which would be covered by self- generated revenues, but which, for convenience, Government has indicated that it would procure in the same way as items financed by IDA. Financial Results xiii. Guinea's fiscal system is based on those employed by the centrally planned countries. One feature of it is that Government may, and frequently does set prices for inputs and outputs that are not linked to economic de- nominators. This is the position in the case of pineapples where the pro- ducer price is very high when compared with those paid elsewhere. Another feature of the system is that for public enterprises conventional financial - vi - criteria, such as a rate of return, are not considered appropriate and given the pricing controls employed are frequently irrelevant. The latter would be so in the case of the nucleus estate. However, through budget control procedures involving the annual review by Governnent of detailed cost esti- mates and production targets that have been agreed with IDA during negotia- tions satisfactory levels of production efficiency and financial discipline would be ensured. Outgrowers would continue to be motivated by price and during negotiations assurances were obtained froin Government that it would guarantee that, inter alia, producer prices would be set that would provide an incentive for outgrowers to produce pineapples. Credit would be provided to outgrowers at a minimum interest rae.e of 9% and outgrowers would be required to pay for the costs of advisory and other support ser- vices provided to them. Benefits and Justification xiv. The principal direct benefits from investment in the project would be the pineapples produced on the nucleus estate, and the increment in the outgrower production of pineapples induced by the project. At maturity of the project these would total about 10,200 tons annually with a gross value of about US$3 million at world market prices. It is assumed that all pro- ject production would be marketed in the USSR and Eastern Europe. The economic rate of return from the combined directly productive pineapple components, i.e. the nucleus estate and smallholder programs, is estimated, at about 18%; at about 15% for the nucleus estate alone; and at about 38% for the outgrower program alone. Recommendation xv. Given the assurances and conditions set out in Chapter VIII the project is suitable for an IDA credit of US$7 million. GUINEA PINEAPPLE DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of Guinea has asked IDA to help finance (a) mea- sures to improve its flagging fresh pineapple export industry and (b) stud- ies of the country's key rice growing and livestock production sectors. 1.02 The project was identified by a joint Headquarters and Regional Mission to Western Africa (RMWA) team in early 1973 following a request by Government to finance a major irrigation scheme in the general area of the proposed pineapple estate. Analysis showed this scheme to be impractical but indicated that a much smaller operation involving pineapples could be viable. The project was prepared by Governnent and RMWA, the former employ- ing Energoprojekt (Yugoslavia) as consultants for the irrigation engineer- ing and economic aspects of the project, and RMWA employing Institut Francais'de Recherches Fruitieres Outre-Mer (IFAC) as consultants for pine- apple cultivation and export matters. The project was appraised in October 1974 by a mission comprising Messrs. Rowe and Losson (11Q), de Troyer (RMWA) and Siebert (consultant). 1.03 The proposed operation would be the fourth by the Bank Group in Guinea. The three earlier operations, all Bank loans, are concerned with the enclave type Boke bauxite mining venture. The first, of US$1.7 million, SI-GUI/1966, was an engineering loan; 557-GUI/1968 for US$64.5 million was for construction; and 766-GUI/1971 for US$9.0 million was to increase pro- ject production capacity. The venture became operational in October 1973 and generally is progressing satisfactorily. Il. BACKGROUIID 2.01 General. Guinea has a surface area of 246,000 km and a popula- tion of about 5 million people increasing at a rate of about 2.8% annually. Lying between 7° and 13°N of the equator the climate is tropical. Bordered by Guinea-Bissau, Senegal, and Mali to the north, Ivory Coast to the east, and Liberia and Sierra Leone to the south, Guinea has about 300 km of coast line on the Atlantic Ocean to the west. 2.02 There are four main eco-climatic zones. Lower Guinea is the humid low-lying coastal plain and is characterized by fresh water and mangrove swamps; it contains Conakry, the capital and principal port. Middle Guinea, -2- the Fouta Djalon, lies at altitudes of between 600 and 1,500 m and is impor- tant for food crop and livestock production, it is the center of concentra- tion of the N'dama trypanosomiasis tolerant breed of cattle; Upper Guinea lies to the east of Fouta Djalon, is an area of lower altitude and lias a much drier climate; the Forest Region lies to the south and south east and is covered by wet tropical forest. Guinea has the potential for a well- diversified agriculture, but so far this has been little exploited. Popul- tion pressure is nowhere heavy and is Mighest in Lower Guinea, about 20/kn and lowest in Upper Guinea, about 7/km . 2.03 At Independence in 1958 Guinea was a largely rural economy with most people engaged in traditional small-scale agriculture and livestock pro- duction. The traditional sector produced the country's staple foods, rice, cassava, maize, sweet potatoes and livestock. The modern sector comprised bauxite, iron ore and diamond mining and the plantation production of bananas. Although employing less than 10% of the active population the modern sector generated more than half of exports and most of public revenues. 2.04 In pursuit of socialist objectives Governnent placed heavy empha- sis on the development of manufacturing and transport infrastructure after Independence, and nationalized all activities in the modern sector includ- ing commerce and trade. The performance of most of the public enterprises then and subsequently created has been poor, and in the early sixties the iron ore, and diamond mining industries virtually collapsed with resulting losses in export earnings that caused severe balance of payments difficul- ties and cut-backs in imports. Since that time shortages of, and problems in allocating priorities for imports have remained major limiting factors to Guinea's economic development. These and other adverse developments have caused the share of exports in GNP to decline from 20% ta 15% since Independence. In the same period it appears that in constant prices GINP increased by about 2.5% annuallv, somewhat less than population growth, and real per capita incomes declined slightly. In 1972 GNP was estimated at about US$450 million and per capita income at US$90. 2.05 There are no signs that the current situation of economic stagna- tion, balance of payments difficulties, and serious foreign debt problems will improve in the short run, although new bauxite mining projects now coming on stream should result in an improved balance of payments position and increased Government revenues in the longer term. It is clear, however, that improvement of the living standards of the great bulk of the people can only be possible through the better exploitation of Guinea's undoubtedly rich agricultural potential, but this would require major changes in Govern- ment policies concerning economic development. The need for such change is illustrated by the situation in the agriculture sector that is described below. - 3 - 2.06 The Agriculture Sector. Up-to-date information on agricultural pro- duction in Guinea is difficult to obtain and in many cases probably is non- existent. However, analysis of the last twenty years' import and export data indicates a situation of stagnation. The value of exports of bananas, pine- apples, coffee and palm kernels which traditionally have comprised the bulk of Guinea's agrieultural exports fell from a peak of about US$22 million in 1960 to about only USi11 million in 1970. Conversely the value of farm originating imports grew over the same period, food alone from about US$6 million in 1957 to US$14 million in 1973; of this, rice, Guinea's staple food, accounted for US$0.8 million in 1958, and US$10 million in 1972. Imports of rice are now about 70,000 tons annually. 2.07 The basic problem of the rural sector appears to be the lack of real incentives for producers. This is due to Government policies that tend to maintain producer prices at artificially low levels, and at the same time restrict the availability of consumer goods in rural areas. Consequently farmers receive low prices and find few consumer goods to buy with such surplus cash they may have. Government policies, possibly unwittingly, thus favor urban dwellers and industrial workers at the expense of those in rural employ- ment. These policies have led to the development of a "parallel" black market in all commodities, as well as much smuggling of farm produce, such as coffee, to neighboring countries in return for consumer goods that are then sold on the parallel market. Prices of goods on the parallel market offer a commentary on the value of the Syli; domestically grown commodities are about five times as expensive as in neighboring countries and imported goods ten times. A careful comparison of retail prices for 22 main consumer goods, ranging from basic staple foods such as rice and sugar, to gasoline and clothing indicated an average of 6-7 times in 1973; on this basis.a Bank economic mission estimated a shadow rate of exchange of Syli 135-150 per US$ at that time. Taking into account the devaluation of the dollar in terms of major European currencies during the past two years, a shadow rate of Syli 120-125 or about six times the official rate appears reasonable at present. This issue is discussed further in Annex 14. 2.08 Removal of Government controls on producer prices and the provision of more consumer goods for rural areas would remove the basic constraint on the rural sector but it is unlikely that such action alone would result in a revitalization of the sector. This is because the price issue masks a very broad range of other constraints ranging from the specific such as poor trans- portation facilities, lack of foreign exchange for crucially needed imports and low levels of technical know-how, to the general, such as defects in the institutions serving the sector, especially research, extension, input supply, credit and marketing. Improving production and productivity in the rural sector requires far-reaching change that will be a slow and onerous task due, not least, to institutional inertia. Under these circumstances the most practical course of action appears to be to tackle the problems of agricultural development on a fairly narrow front initially. For example, implementation of a program of rice development with the clear objective of increasing production and reducing foreign exchange outflows rather than broader programs aimed at im- - 4 - proving the overall rural situation that would involve revamping a wide range of Governnental institutions and policies. Well-executed programs with relu atively narrow objectives would demonstrate the value of a carefully designed and rational approach to the problens of the sector. 2.09 The project appraised in this report would be a first step in the direction recommended above. Its pineapple component would be a concentrated effort at solving a specific problem and the studies of the rice and livestock sub-sectors should result in the preparation of carefully designed development programs needed to permit exploitation of these two important sub-sectors and lead to a reduction in the cost of food imports and, in the case of livestock, development of an as yet unexploited asset. It is not possible at this time to determine whether Government will be prepared to make the basic policy changes concerning incentives that are needed to make any substantial invest- ment in rice and livestock viable. However, it is possible that Government's willingness to make the necessary changes in the pineapple sub-sector (see Chapter V) is indicative of a preparedness to accept change in the agriculture sector overall. 2.10 The Fruit Sub-Sector. Guinea is unique among the countries of sub- Saharan Africa in being the first to develop a major and sophisticated tropical fruit 1/ growing and exporting industry. Initially the industry was based on. bananas, largely produced on expatriate-owned plantations, and by 1955 banana exports, principally to France, were about 100,000 tons annually and valued at US$4 million. Technical standards of the industry were high and supported by the French research institute, Institut Francais de Recherches Fruitieres Outre-Mer (IFAC) whose headquarters until Independence were in Guinea, see para 3.04. After Independence, many expatriate planters left the country and a breakdown occurred in the organization of the industry. Additionally IFAC withdrew its personnel and there was a switch in the banana trade away from France to the USSR and eastern Europe. Since that time the banana trade has been in steady decline with producers caught in a web of increasing costs, problems with labor, pest and disease attack, and difficulty in obtaining the large volume and variety of imports needed for banana production. Only about 600 tons were exported in 1973. The decline of the banana helped the fresh pineapple exporting industry since many growers switched to the crop under the stimuli of favorable prices paid by the USSR and East European countries, see Chapter VI, and the advantage of a crop less susceptible to pests and diseases and requiring less labor. Exports of fresh pineapples grew from 50 tons in 1957 to 7,000 tons in 1966 and to 11,000 tons in 1972 valued at about US$2.5 million at world values for fresh pineapples. In 1973 exports dropped to 7,000 tons and in the 1974/75 crop season appear to have been even lower. The reasons for the latter decline include the inability of Government agencies to effectively provide the package of research, extension, input supply, and transportation services needed by growers. The proposed project would correct this situation. l/ Citrus fruit, although grown in the tropics, are not classified as "tropical fruit". 2.11 Guinea exports some small quantities of fresh mangoes. There are three fruit canning plants which used about 5,000 tons of fruit, mostly pine- apples, in 1973. Most of the production of these plants is exported. 2.12 Institutions. Overall responsibility for the agricultural sector rests with the Ministry of Rural Development (Ministere du Developpement Rural). This is a "super" Ministry which controls two other ministries responsible for subsectors within the agricultural sector. These are: the Ministry of Agri- culture and Cooperatives (Ministere de l"Agriculture, des Brigades et des Cooperatives de Production), hereinafter called Ministry of Agriculture; and the Ministry of Livestock and Fisheries (Ministere de l'Elevage et de la Peche), hereinafter called Ministry of Livestock. Responsibility for trade and marketing rests with the Ministry of Trade. This is also a "super" Ministry, and the Ministry of External Trade, which controls Fruitex, the State fruit exporting company, comes under its responsibility. III. THE PROJECT A. Pineapple Component 3.01 The pineapple component of the project would consist of: (a) establishing an irrigated nucleus pineapple estate of sufficient size to cultivate 420 ha of pineapple annually; (b) providing pineapple growers in the Kindia area with the package of support services required to permit them to maximize their produc- tivity; (c) strengthening Fruitex's road transportation and fruit handling capac- ity through the provision of new vehicles and spare parts, the construction and equipping of a vehicle workshop, and providing specialized equipment to facilitate the loading of pineapples at the Port of Conakry; (d) conducting trials and studies of internal and external transport arrangements for fresh pineapples, including trial shipments of pineapples to new markets, especially to Western European countries. (e) providing internationally recruited specialists to initially operate the nucleus plantation, develop the irrigation system, provide services to outgrowers, and to establish and run the Fruitex workshop until such time as Guineans have been trained under the project to assume these functions; -6- (f) provide Guineans with overseas training fellowships in irrigation, pineapple marketing, and vehicle maintenance; and (g) carrying out field trials with pineapples in which recent experience gained abroad would be tested under Guinean conditions. 3.02 Responsibility for the execution of the pineapple component of the project would rest with two wholly owned State companies: (a) Entreprise Nationale Agricole de Daboya (ENAD) which has been established as an independent State enterprise for purposes of the project under the Ministry of Agriculture; and (b) Fruitex, an existing State enterprise responsible for the marketing and exporting of fruit. ENAD would establish and manage the nucleus pineapple estate, provide support services to pineapple outgrowers, and carry out field trials (parts a, b, and g of the pineapple component of the project). Fruitex would be responsible for the transport and marketing of pineapples produced under the project; its transportation and fruit handling capacity would be strengthened and it would conduct trials and studies on transport arrangements and shipments to new markets (parts c and d of the pineapple component of the project). Both ENAD and Fruitex would be provided with internationally recruited specialists and training fellowships (parts e and f of the pineapple component of the project). Nucleus Estate and Outgrower Development 3.03 The project would employ the well-tested and proven system of nucleus estate and associated outgrowers. The nucleus estate would develop basic ctllti- vation techniques, engage in applied research, train personnel, serve as a demonstration to outgrowers, and generally act as the base from which the broad range of support services needed by outgrowers would be provided. Very importantly the nucleus estate would guarantee a basic supply of high quality fruit for export such a basic supply being a sine qua non for the efficient operation of any fruit exporting industry. 3.04 The Project Area The nucleus estate would be established close to the village of Daboya about 15 km from the town of Kindia, see Map 11444R attached to this report. Kindia with some 35,000 people is in the eastern part of Lower Guinea and is a traditional trading center and administrative headquarters. One edge of the nucleus estate would border the Kindia-Conakry road, a well-constructed bitumen surfaced road of 120 km. Kindia also is linked to Conakry by railway but service is inadequate due to the poor condition of rolling stock. The national agricultural research and training institute, Institut National de Recherches Agronomiques de Foulaya (INRAF) is located about 5 km from the nucleus estate site. INRAF occupies facilities that originally housed IFAC; apart from favor- able growing conditions one reason for the concentration of fruit growing activity in the Kindia area has been the location of this institute. -7- 3.05 The altitude of the area is about 400 m. Distinct dry and wet sea- sons occur and rainfall averages 2,200 mm with most falling in the May through October wet season. Temperature variations are relatively small, a maximum of 4ÇC, and the coolest weather occurs at the height of the rains in July/August. Humidity is relatively high throughout the year. Relief is quite pronounced and broken with numerous plateaus intersected by small streams. Some streams are perennial in most years and could permit a very limited amount of cheap pump irrigation. The nucleus estate site comprises one of these plateaus. Soils generally are sandy clays. Rock and laterite outcrops are common and continguous cultivable areas rarely extend to more than 30 ha. When com- pletely planted the estate would comprise a series of blocks, or fields of pineapples interspersed with areas of uncultivated land. 3.06 The long dry season makes heavy yields of pineapples impossible unless irrigation is used when yields in excess of 60 ton/ha can be achieved by growers using a full range of inputs. A few growers use small sprinkler irrigation systems, but to overcome the water problem many plant in swampy areas which require drainage in the wet season. On some swampy sites up to 50 tons/ha can be obtained but this technique has the disadvantage that fruit quality can be low. On the higher land water is the limiting factor, but yields of 30 tons/ha can be achieved with the use of fertilizers and other farm inputs. Current average yields in the Kindia area are probably about 20 tons/ha. The area's sandy soils have a low nutrient content and require heavy fertilization if high yields are to be obtained, see Annex 1. Pineapple cultivation in the project area is well developed with growers using, when these are available, fertilizers, herbicides, insecticidal treatments against mealy bugs, and ethylene for fruiting control. Because of climatic conditions Kindia produces a pineapple of very high quality. 3.07 The area under pineapples varies between 600 ha and 900 ha in the Kindia area of which 200-300 ha are in production in a single year. A pine- apple crop occupies the ground for nearly three years; the first 18 months are the growing phase, over the next few months the crop is harvested. Thereafter the plants are left to produce the suckers that are needed to plant the next cycle of the crop. Consequently under current Guinean technology for each one ha of pineapples harvested in one year three ha are occupied by pineapples. Fruiting is controlled so that export fruit are produced in the five months, December through April. The area produces 4,000-6,000 tons of pineapples annually, although production has been closer to the lower figure in recent years. About 300 growers are involved and individual holdings range between one and four ha. The owners are constituted in one regional cooperative that acts as inter-mediary for its members in the supply of credit and inputs and in the sale of the crop. 3.08 Apart from some production of mangoes, for both domestic and export markets, other agriculture in the Kindia region is restricted to a very low standard of cultivation of the staple food crops, rice - both upland and swamp, cassava, maize, sweet potatoes, coco yams and fonio, a low yielding small grained and grass-like cereal. There is virtually no use of improved seed and inputs and yields are low. Cultivation is mainly by hand. -8 3.09 Land Tenure and Acquisition An area of about 750 ha has been selected for the nucleus estate; this should provide the amount of plantable land needed for the estate in reasonably sized blocks, see para 3.05. The land is now used for low productivity shifting cultivation. Within the 750 ha there are a number of traditional dwellings, but the only other "fixed" assets are some very young plantings of budded mangoes. The land, as throughout Guinea, is owned by the State which grants rights of usage and which may cancel such rights in the public interest, as it would do in respect of land needed for the estate. In the latter case the Governor of Kindia would vest these in ENAD. Problems are not anticipated since compensation would be paid for "fixed" assets and the people affected would be those most likely to benefit from the nucleus estate in terms of employment and the increase in economic activity. Further, actual dispossession would take place only as the land was needed. During negotiations assurances were obtained that usership of the estate site would be vested in ENAD. 3.10 Labor Pineapple growers in the project area are finding it increas- ingly difficult to obtain labor at prices that make pineapple cultivation profitable. The problem seems one of incentives; food and consumer goods are difficult to obtain at official prices and on the parallel market are costly and often impossible to obtain. Alternatives are to work at the mining enclaves where, although the numbers of job are limited, rations at official prices are part of the compensation, or to engage in farming from which family food supplies and some cash are assured. To obtain enough workers, ENAD would have to obtain and provide to its workers a minimum scale of rations at official prices in line with those presently provided to salaried workers in towns. As a minimum this probably would include 6 kg of rice monthly per member of the worker's family and an allocation of vegetable oil. Some private growers are already introducing such arrangements. In this report an unskilled labor cost of Syl 63 net per manday is employed, equivalent to Syl 78 including provision for foremen and social security; this is in line with wages paid by INRAF, the major agri- cultural employer in the area, and the mine located close to the project area. During negotiations government indicated that they would ensure that enough consumer goods would be available at official prices for ENAD's workers. 3.11 Nucleus Estate Development Program Work on the estate would begin in late 1975 with the detailed soil and topographic surveys, including aerial photography at 1:5,000, needed to plan the detail layout of the irrigation system. An estate development plan would then be prepared which would have the following objectives: 1976 1977 1978 1979 1980 Total lia planted to pineapples (April - December) 40 60 90 90 140 420 Cumulative ha planted 40 100 190 280 420 420 1977/78 1978/79 1979/80 1980/81 1981/82 on wards lia in production (December - April) 40 60 90 90 140 3.12 Planting Material The pineapple is vegetatively propagated and the first 150 ha of the estate would have to be planted with well grown and disease-free suckers of the Smooth Cayenne variety. Collection of such suck- ers would commence in early 1976. With 150 ha planted the estate would be self-supporting in planting material thereafter. The estate would select out- growers with high quality planting material and provide these with fertilizers to induce the development of well-grown suckers which would then be purchased at Syl 0.6/sucker. A description of estate development and operational tech- niques is at Annex 1. Details of estate investment requirements, e.g. hous- ing, vehicles, plant, and equipment are at Annex 2. 3.13 Irrigation Details of the sprinkler irrigation system that would be installed for the nucleus estate are described in Annex 3. The water source would be the existing Kale reservoir which with another reservoir at Banieya on the River Bassa serves a hydroelectric power station at Donkea. The project's irrigation water requir ments have been calculated by IFAC on the basis of a requirement Sf 4,000 m /ha over a five-month period, and a max- imum requirement of 1,000 m /ha/month utilized in four 7-day periods in which the duration of irrigation would be 16 hrs/day. The system is designed to these requirements. At maturity the estate would use less than 0.5% of the water available in the reservoir and for which no other purpose is envisaged so far. Main features of the sytem would be a pumping station with four ver- tical electric pumps of 90 kw delivering 75 l/s with a lift of 116 m. The pumps would be energized by a 6 km line from Donkea. Service from Kale would be by a 800 m main on the surface serving a network of about 17,000 m of buried secondaries. The secondaries would service 12 protable laterals each equipped with 18 sprinklers operating at 2.5 atmospheres. The system would be developed in three phases; the first phase being temporary and pumping from the Kouloukoure River. The phasing would be as follows: 1976 1977 1979 Phases I (temporary) II III Ha under irrigation 40 190 420 (cumulative) Start construction February 76 February 77 February 79 Commissioned November 76 November 77 November 79 3.14 Outgrowers ENAD would provide, through the management of the nucleus estate, the following services to outgrowers: advisory services; input supply- irrigation equipment, sprayers, tools, fertilizers, and agro-chemicals; and packing materials. Banque Nationale de Developpement Agricole (BNDA) in association with ENAD would provide growers with credit as necessary to meet - 10 - the costs of farm inputs, irrigation equipment, and packaging materials, see Chapter V. During the five year project development period, it is expected that some 340 ha of outgrower pineapples (about 50% of the hectarage now grown in the Kindia area) would be brought under the project in accordance with a program approximately as follows: 1977 1978 1979 1980 Ha planted to outgrower pine- apples (April-December) 40 80 100 120 Cumulative ha planted - 120 220 340 1978/79 1979/80 1980/81 1981/82 Ha in production (Dec-April) 40 80 100 120 Of which irrigated 2.6 7.8 15.6 26 3.15 Outgrowers with access to a perennial stream would be assisted to install simple sprinkler irrigation systems. A typical unit would be a small 5 cv diesel-powered mobile sprinkler set serving 4 ha. 3.16 Packing and Transport The nucleus estate would build and operate its own packing station. Construction would start in PY 2 with a building that would encompass packing facilities for 1,500 tons annually as well as a garage and store. Subsequently the building would be converted by stages to handle up to 4,500, 6,000 and 9,000 tons by building a new garage and store and installing in the original building additional lines for inspecting, grading and packing the fruit. The estate would use farnn tractors and trailers to bring fruit from the field to the packing station. Outgrowers as now would pack their fruit at field side and transport to either cooperative centers or stations set up for the season by the Ministry of External Trade where inspec- tors inspect the condition and grading of the packed pineapples. Transport from these "stations de conditionnement" and from the estate packing station to the port would be by the Fruitex Transport service. Improvement of Fruitex Services 3.17 Transport In common with most other Government agencies Fruitex suffers a chronic shortage of foreign exchange. Thus its vehicle fleet of 22 trucks, see Annex 4, is in generally poor repair with only 15 vehicles in satisfactory condition. The Fruitex vehicle park and garages are more than adequate in terms of space, but repair equipment is non-existent apart from some hand tools and the buildings themselves are collapsing for want of repair. Under the project 10 x 10-ton trucks would be purchased, 2 in PY 2, 3 in PY 3, and 5 in PY 4, together with spares for existing vehicles and appropriate workshop equipment and the workshop and garages would be repaired. A workshop manager would be recruited internationally to supervise the work- shops and to train Guinean staff, and training overseas would be provided for two Fruitex mechanics. Appointement of the workshop manager is a condition of disbursement of the credit against equipment needed for Fruitex. Additionally, funds would be provided under the project for a review of Fruitex's transport organization, operating and pricing procedures including recommendations for their improvement. 3.18 Dock Loading Pineapple cartons are now loaded at Conakry either in nets or by a banana conveyor. Provision is made under the project for Fruitex to purchase additional and specialized equipment for use by ENTRAT, the State stevedoring company. The specifications for the equipment would be approved by IDA, and this would be a condition of disbursements of the credit for the loading equipuent. 3.19 Marketing To improve Fruitex's marketing operations fellowships would be provided for four staff members to study pineapple production, packaging, handling and marketing abroad. Additionally the product would finance trial shipments of pineapples to West European markets and test the shipment of pineapples in auto-refrigerated containers. As discussed in Annex 5 a barrier to Guinea extending its markets is the lack of refrigerated liner services such as are enjoyed by its competitors. Pineapple Cultivation Research 3.20 Applied research on pineapple is carried out by INRAF, but Guinea has fallen far behind its competitors in this respect. In Annex 6 some of the priority research needed if Guinea is to be competitive on open markets is discussed. Of high priority is work on shortening the production cycle, nutrition and the development of a system of foliar analysis; other key areas are spacing, fruiting control, measures to reduce nematode infestations and the physiological disease called yellowing. Under the project funds would be provided to initiate, commencing in project year 2 (PY2), a program of applied research on pineapples. The applied components of this research such as fertilizer use would be carried out on the nucleus estate. At negotiations assurances were obtained that prior to March 31, 1976 agreement would be reached wîth IDA on the scope of the overall research program and of the delineation of research responsibility between INRAF and the nucleus estate management. B. Technical Assistance Component for Rice and Livestock 3.21 The technical assistance component of the project would be handled by the Ministry of Rural Development and consist of: (a) employing qualified consultants to (i) make an analysis of rice growing prospects in Guinea, and recommend appropriate policies for stimulating rice production and (ii) following - 12 - the review of this analysis and recommendations by Govern- ment, the preparation of a rice development program and specific investment projects in rice production suitable for external, and particularly for World Bank Group financing; and (b) employing qualified consultants to examine the livestock potential of Guinea with the same objectives as in (a) above. An estimated 25 and 22 man months of consultants' time would be required on the two operations respectively. Provision would be made under the project to provide the consultants with all needed equipment and support services. Work on the studies would start in the fall of 1975 and be largely completed by the end of 1976. During negotiations assurances were obtained from Government that the consultants employed, and the terms of their employment would be mutually acceptable to Guinea and IDA. Terms of reference for the studies are at Annex 7. IV. COST ESTIMATES AND FINANCING ARRANGEMENTS Project costs 4.01 Expected project costs are SYL 175 million (US$8.5 million) of which the foreign exchange component would be Syl 116 million (US$5.7 million) or 66%' of project costs. Project costs are detailed in Annex 2 and summarized in the following table; -13- Foreign Local Foreini Total Local Forei±n Total Exchange ---I-U --- U ------- - A. PMneapple Camponent I. Nucleus Estate Land Development 6,535 3,838 10,373 319.4 187.6 507.0 37 Irrigation System Install'n 5,185 21,399 26,584 253.4 l,045.9 1,299.3 80 BuJlding Construction 3,532 5,228 8,760 172.6 255.5 428.1 60 Vehicles & Farm Equipment 765 4,317 5,082 37.4 211.0 248.4 85 Supervision of Dev'ment 12,780 12,882 62 624.6 629.6 1,254.2 52 Subtotal 28,797 47,664 76,461 1,407.4 2,329.6 3,737.0 62 II. Smallholder Program Building Construction 165 252 417 8.1 12.3 20.4 60 Vehicles 87 493 580 4.2 24.1 28.3 85 Salaries & Allowances Extension Staff 5,036 1,600 6,636 246.1 78.2 324.3 24 Vehicles Running Costa 250 700 950 12.2 34.2 46.4 74 Incremental On-farm Costs Irrigation Sets & Sprayers 228 1,277 1,505 11.2 62.4 73.6 85 4gricultural Chemicals 697 2,785 3,482 34.1 136.1 170.2 80 Other Materials 141 565 706 6.9 27.6 34.5 80 Labor 784 - 784 38.3 - 38.3 0 Irrigation O & M 335 335 670 16.3 16.4 32.7 50 Incremental Packing_& Trans. 1,821 14,157 5,978 89.0 203.2 292.2 70 Subtotal 9,5544 12,164 21,708 466.4 594.5 1,060.9 56 III. Other Pineapple Activities Strengthening Fruitex Transport Service 3,290 11,228 14,518 160.8 548.8 709.6 77 Pineapple Research 1,651 2,824 41475 80.7 138.0 218.7 63 Training 28 1,162 1,190 1.4 56.8 58.2 98 Subtotal 4,969 15,214 20,183 242.9 743.6 986.5 75 B. Technical Assistance Component Rice - Consultants - 2,750 2,750 - 134.4 134.4 100 Livestock - Consultants - 2,1423 2,1423 - 118.4 118.4 100 Vehicles & Other Costs 792 757 1,549 - 37.0 75.7 49 Subtotal 792 5,930 6,722 38.7 289.8 328.5 88 Total Project Coats 1. Base Cost Estimates 44.,102 80,972 125,074 2,155.4 3,957.5 6,112.9 65 2. Physical Jontingencies 0%) 4,410 8,097 12,507 215.5 395.7 61102 65 3. Expected Price Increases eS7à 9,915 26,941 36,856 484.6 1316.8 1,801.4 73 Total Expected Cost of Project 58,427 116$010 174s437 29855.5 5,670.0 8,525.5 65 - 14 - 4.02 Base cost estimates are at late 1974 prices and are free of import and other direct taxes except income taxes on local staff salaries which are small. Governnent has stated that it would waive import taxes on goods needed for the project and confirmation of this was obtained during negotiations. Physical contingencies of 10% have been applied to all base costs. Estimated price increases amount to about 27% of base cost estimates plus physical con- tingencies and have been computed according to the following compound rates: (a) 16% in 1975, 14% in 1976, 12% in 1977-79 and 10% thereafter for civil works and buildings: (b) 12%, 10%, 8% and 7% respectively for the same periods for vehicles, equipment, farm inputs, and expatriate staff and con- sultant costs; and (c) 5% annually for all local costs. 4.03 Proposed Financing An IDA credit of US$7 million on standard terms is proposed. This would be equivalent to 82% of project costs and would cover all foreign exchange costs, US$5.7 million, plus 45% of local currency costs, Syl 26 million. The remainder of expected project costs would be met by private pineapple growers who would be required to meet 20% of incremental on-farm costs from their own resources, Syl 3.7 million (2%); and by Govern- ment, Syl 28 million (16%). The proposed financing plan is summarized below: Summary of Financing Plan IDA Government Farmers Total - - - - - - - iS$1000 - - - - - - - A. Pineapple production Component (ENAD, estate, smallholders 4,000 916 129 5,045 and research) B. Fruitex transport component 730 10 -- 740 C. Technical Assistance component 270 58 -- 328 D. Unallocated 2,000 362 51 2,413 TOTAL 7,000 1,346 180 8,526 4.04 The IDA credit would be disbursed over the fiscal period 1975/76- 1979/80 and in this period the nucleus estate development would be virtually completed. However, additional capital expenditures of Syl 4.3 million would be needed in 1980/81-1981/82. Government would meet these costs from its own resources and assurances to this effect were obtained during negotiations. Working capital would be required by the estate in the IDA credit disbursement period and at negotiations assurances were obtained from Government that it would provide ENAD with such working capital. - 15 - 4.05 Retroactive financing îs required for activities such as aerial photography of the nucleus estate site, employment of key staff, employment of consultancy services, and the purchase of fertilizers needed for sucker production prior to project signature. It was agreed that retroactive financing would be provided up to a maximum of US$100,000 provided that these expenditures are not incurred earlier than June 1, 1975. Procurement and Disbursement 4.06 All contracts over US$50,000 for the procurement of vehicles, farm and irrigation equipment, electrical and mechanical plant, fertilizers and other farm inputs, and packing materials (totalling about US$2.8 million) would be through international competitive bidding in accordance with IDA guidelines. Domestically manufactured goods would be allowed a preference of 15%, or the level of applicable import duty, whichever is lower when comparing domestic bids with those of foreign manufacturers. Procurement contracts for amounts of less than US$50,000 would be through competitive bidding advertised locally in accordance with Government procedures acceptable to IDA. Contracts for the installation of the irrigation system, land clearing and construction and re- habilitation of buildings (totalling about US$1.2 million) would be individually too small and too dispersed over time (5 years) to attract international con- tractors and would therefore be awarded on the basis of competitive bidding advertised locally and in accordance with procedures to be agreed with IDA. Contracts with consultants (about US$300,000) for the rice and livestock studies, and those required under the pineapple component of the project for technical assistance, training of Guinean staff, and investigation of new markets (totalling about US$600,000) would be obtained under arrangements agreeable to IDA, as would be internationally recruited staff (about US$900,000). An estimated US$2.8 million would be expended on items such as local staff salaries, labor, personnel allowances, operating costs of vehicles and equip- ment and other general expenditures that would not lend themselves to competi- tive procurement. The foregoing estimated amounts are net of physical and price contingencies for which about US$2.5 million is provided. The difference of US$2.6 million between the sum of the procurement items and contingencies listed above, US$11.1 million, and total expected project costs, US$8.5 mil- lion, represents nucleus estate operating costs in the IDA credit disbursement period which would be covered by self-generated revenues, but which, for con- venience, Government has indicated that it would procure in the same way as items financed by IDA. To avoid delay in the implementation of the Project, tlhe Government requested IDA to make suitable arrangements, on financial terms and conditions acceptable to Guinea, for the provision of pineapple experts' services to assist ENAD in the plantation development and for the recruitment by IDA of ENAD's and FRUITEX's expatriate staff, such experts and expatriate staff to be made available to Guinea under Secondment Contracts. 4.07 The IDA credit would be disbursed as follows: - 16 - Cate6ory US$'0 0 I 1,000 80% of civil works including estate land clearing and development costs incurred by ENAD; II 2,000 100% of foreign expenditure if directly imported, or 90% of local expenditure if locally procured of the costs of vehicles, tractors, spare parts, irrigation equipment, packing materials, fertilizers and other farm inputs required for the estate and the smallholder and research components; III 200 80% of civil works costs incurred by Fruitex; IV 400 100% of foreign expenditure if directly imported, or 90% of local expenditure if locally procured of the costs of vehicles, workshop equipment, loading equipment, containers and spare parts required by Fruitex; v 700 100% of foreign expenditures on consultants' and experts' services; VI 100 100% of foreign expenditure of the costs of overseas training fellowships; vIl 600 100% of the costs of salaries and allowances, net of taxes, of internationally recruited staff; and VIII 2,000 Unallocated iotai 7,000 4.09 Disbursements would be against import documentation, contracts and certified records of expenditures. For disbursements made against certified records of expenditures, documentation would not be submitted for review as a matter of course, but would be retained by ENAD, Fruitex and the Ministry of Rural Development for scrutiny by Bank supervision missions. Any funds remaining in the credit account after completion of the project should, if deemed by IDA at that time to be warranted, be employed in similar activities in the pineapple sub-sector. A schedule of estimated disbursements is at Annex 8. 17 Consultancy Services 4.10 An estimated 47-man months are required for technical assistance in planning the rice and livestock subsectors, and about 80-man months in connection with pineapple research, irrigation and the marketing and trans- port studies. V. ORGANIZATION AND MANAGEMENT General 5.01 The profitable marketing of a perishable commodity such as pineapples demands a high degree of integration of production, transport, and marketing activities. Several Governmental agencies are now involved in producing, transporting and exporting the crop, and in importing and distributing inputs to producers. This has led to inefficiencies and export data indicate that the present system is unable to sustain a healthy fresh pineapple exporting industry. 5.02 Given the financial magnitude and the technically sophisticated and commercial nature of the nucleus estate, it is clear that this part of the project should be managed by an agency with a reasonable degree of autonomy. In Guinea such autonomy is possessed by an "Entreprise Nationale". 5.03 Entreprise Nationale Agricole de Daboya (ENAD) was created by Decree No. 200 PRG, dated May 17, 1975, for the purposes of carrying out the nucleus estate and outgrower components of the project. The Decree enables ENAD to participate in a wide range of agricultural production including cereal and livestock production, but its first stage objective, however, is the creation of an irrigated nucleus estate for the production of fresh pineapple for export. In addition to operating the pilot estate, ENAD is empowered to supply pineapple growers in the Kindia area with the production inputs and other support services that they need; directly import all farm inputs and other goods necessary for both estate and outgrower operations; and carry out research into pineapple production. ENAD will be managed by a Director (%.eneral Manager) who has been appointed, and who will be responsible to the Ministry of Agriculture. In common with other Entreprises, ENAD has no Board of Directors. 5.04 Fruitex was established in April 1971 following reorganization of "Guinexport" the then sole Government export agency. Since its creation Fruitex has been faced with declining supplies of fruit for export and, because it has suffered an acute shortage of foreign exchange, has had problems in carrying out its own limited functions. Fruitex has no Board of Directors and is managed by a Director, assisted by a Deputy Director and a Chief Accountant. The enterprise is under the control of the Ministry of External Trade which itself is responsible to a "super" Ministry of Trade. Staff - 18 - total about 90, of whom 28 are at headquarters; the remainder are drivers, mechanics, and warehouse clerks. Senior staff appear competent and accounts well maintained. However, as the Entreprise's role in the industry is largely passive, its performance can give only a partial indication of the quality of its personnel. Organization and Staffing 5.05 ENAD Chart 9841 attached to this report describes the organization of the new company. The Manager of the nucleus estate would be recruited internationally as there are no Guineans available who have the necessary experience and qualifications to manage such a sophisticated operation. The Manager would have a Guinean deputy who should be able to take over respon- sibility for the estate by the end of the credit investment period. Other key staff would be an Estate Engineer responsible for the irrigation system and plant and equipment, and a Research/Extension Officer who would be re- sponsible for those aspects of the research program carried out on the estate, and for extension work with outgrowers. These two positions would be filled by internationally recruited staff whose deputies would be Guinean. A list of estate staff is in the cost estimates at Annex 2. In view of the import- ance of obtaining suitable staff assurances have been obtained during negoti- ations that the posts of Director ENAD; Estate Manager; Deputy Estate Manager; Estate Engineer, research/extension officer and Accountant would be filled with persons with qualifications and experience mutually acceptable to Government and IDA. A condition of credit effectiveness is appointment of the Director ENAD and of the Estate Manager. 5.06 Fruitex No organizational changes are required at this juncture although following the study of internal and external transport arrangements discussed in para 5.10, changes might be required. A Workshop Manager would be recruited internationally for a period of three years. In this time Fruitex staff would be upgraded through in-service and overseas training. Assurances were obtained during negotiations that the qualifications and experience of the Workshop Manager and his Deputy would be mutually acceptable to the Government and IDA. A condition of disbursement of credit funds for equipment needed by Fruitex would be the appointment of the Workshop Manager. 5.07 Since close cooperation between ENAD and Fruitex is essential for the efficient collection and marketing of project production, assurances have been obtained that ENAD would enter into a contract with Fruitex satis- factory to IDA which inter alia would require Fruitex to provide for the prompt collection, transport and marketing abroad of pineapples produced by ENAD and its associated outgrowers. Technical Assistance 5.08 It is essential that Guinea be in receipt of up-to-date technology concerning the pineapple industry. without this the pineapple component of the project would not be viable. Consequently, arrangements would be made with a qualified pineapple research institution which would provide for: - 19 - - starting August 1975, a technician for three months to organize sucker production by smallholders and generally to assist in initiating estate development; - 2 x 2 week visits annually by a senior specialist; - 4 x 2 week visits annually by other specialists; - a foliar analysis and fertilizer recommendation service; and - extracts, articles, and scientific papers relating to pineapple cultivation and the pineapple trade. Technical assistance is required for a dual purpose namely to supervise and assist in estate and outgrower development and to assist in carrying out the research component of the project. Assurances have been obtained that ENAD would make arrangement satisfactory to IDA for such technical assistance. Conclusion of satisfactory arrangements would be a condition of effectiveness. Assurances have also been obtained that INRAF would enter into arrangements with ENAD satisfactory to the Association to assist in carrying out the research component of the project. Arrangements for technical assistance would be made through and with the assistance of IDA (Para. 4.06). Financial Structure and Control 5.09 Financial Structure An "Entreprise Nationale" has no formal capital structure, and its "equity" is the value of its fixed assets. For example, Fruitex has an equity stated as Syl 20 million in 1973 of which Syl 15 million in vehicles; this appears an over-estimation. Fruitex's income stems from sales of export fruit. Proceeds from these sales are based on prices set by Government, see para 5.14, and are credited, in Sylis, to Fruitex's account with Banque Guineenne du Commerce Exterieur (BGCE). Transfers are made from BGCE to Banque Nationale de Developpement Agricole (BNDA) and this account is the source of funds for purchasing pineapples and other fruit and for operating expenses. Prices paid to producers by Fruitex are also set by the Government. Any losses made by Fruitex are reimbursed by (a) Caisse de Perequation which itself is funded by import duties on certain, and mainly, luxury items, and (b) the Ministry of Trade's Fonds d'Intervention de Commerce (FIC). Any profits made by Fruitex may be retained, but such sums as are surplus to agreed budget expenditures, see para 5.11, are paid into FIC. In short, in the financial sense Fruitex is a self-accounting and revenue earning Government department whose deficits are met by Government and whose surpluses are at the call of Government. Similar types of arrangement will apply to ENAD when it starts its operations. Balance sheets for the first two years of Fruitex's operations are at Annex 9, together with the profit and loss account and operating statement for fiscal year 1972/73. They show clearly that Fruitex is not financially independent and that in the years under review its revenues from fruit exports were inadequate to cover its expenses. - 20- 5.10 Much could be done to improve the efficiency of Fruitex's fruit exporting operations through better planning for the fruit sub-sector as a whole. Proposed project activities in pineapples constitute a plan for the medium run for one commodity and which Fruitex can use as a base for forward planning of its transport, handling and exporting activities. Similar plans are needed for the other fruit, importantly bananas and mangoes even though the plan might be to phase out exports of one or another of these fruits on the grounds of their exports being uneconomic. This planning will involve such matters as examination of the terns of trade between Guinea and its trading partners and providing adequate incentives to producers. In view of the sensitivity attached to such issues the preparation of such a plan would be best conducted by the Government. During negotiations assurances were obtained from the Government that by June 30, 1976, it would have prepared, for discussion with IDA, a broad plan for the fresh fruit sector covering the period to 1980. It is proposed that during project supervision IDA should provide assistance to the Government in the preparation of such a plan. 5.11 Budgetary Control, Funding Procedures, Accounts and Audits. An Entreprise is subject to strict expenditure control. The Entreprise produces a draft budget which is submitted for consideration by the appropriate Minister, in the case of Fruitex - External Trade and that of ENAD - Agriculture, from whomi it passes for final approval to the Ministre de Controle d'Etat (MCE) in the Prime Minister's Office. Disbursement controls are rigorous, thus checks issued by Fruitex have to be endorsed by the Ministry of External Trade, and expenditures exceeding Syl 1,000 require prior approval by MCE, the latter takes about two days. Another important control is that concerning foreign exchange, and for all its imports the Entreprise has to obtain licenses from Commission Nationale des Licences. 5.12 In order to facilitate project execution it was agreed that the following procedures be followed: i. the budgets for ENAD and the Transport Service of Fruitex as approved respectively by the Ministry of Agriculture and the Ministry of External Trade would be submitted to IDA for comment three months before the beginning of the financial year together with a schedule of all import licences needed during the fiscal year; ii. following IDA comments on the budgets Government would cause that on the basis of quarterly estimates prepared by ENAD and/or Fruitex and in advance of the start of each quarter a. sufficient funds would be placed in ENAD's and/or Fruitex's account with BNDA (or drawing rights established) to neet all local expenditures in the coming 3 month period. - 21 - b. sufficient foreign exchange would be made aavailable to ENAD and/or Fruitex by BGCE for the coming 3 months, and c. import licences scheduled for the quarter would be issued by the Commission. 5.13 Fruitex accounts currently are satisfactorily maintained but there is no analytical accounting. Auditing of Fruitex accounts is now carried out by MCE on a continuing basis and appears satisfactory; again, however, the audit seems to be restricted to a straight-forward check of expenditures and revenues. Under the project ENAD and Fruitex's Transport Service would keep records consistent with sound accounting practices and adequate to reflect their operations and financial conditions and ENAD and Fruitex would employ independent and qualified auditors to audit those records. Assurances were obtained during negotiations that: i. ENAD and Fruitex would appoint auditors for the above purposes acceptable to IDA; M. copies of ENAD's and Fruitex's Transport Service accounts and the auditors' reports thereon would be submitted to the Bank within six months of the end of the fiscal year; and iii. the report of the auditors would be of such scope and in such detail as the Bank may reasonably request. Project Financing Arrangements 5.14 The Guinean fiscal system and arrangements for financing development projects in the public sector (excluding enclave projects such as the bauxite mining venture financed by the Bank) are based on the system employed in the centrally planned countries of Eastern Europe. Targets are set for each enter- prise with respect to annual production volume, revenues, production costs, and benefit (profit) along with those for allocations of an enterprise's earnings. Prices, of both inputs and outputs, are set and controlled by Government. Under this system the primary responsibility of an enterprise is to attain its targets. As all investment financing and key operational decisions are centrally coordinated and necessary funds are provided by the Government directly. or indirectly through Government owned agencies, the financial viability of an enterprise cannot necessarily be judged by its benefit. Consequently, the usual conventional financial criteria can be applied to enterprises in Guinea, such as the proposed nucleus estate, to only a very limited extent. For outgrowers the position is different; their motivation clearly is financial and the cash returns from growing pineapples must be adequate to ensure their continued interest in the crop. 5.15 Estimated cash flows for the nucleus estate and associated outgrowers are at Annexes 10, 11 and 12. These are expressed in 1974 prices for both - 22 - inputs and outputs and show satisfactory returns to both the estate and out- growers. The flows are expressed in 1974 prices because the sales prices for pineapples that are set by Government, see para 6.05, are not tied to the world price for fresh pineapples, but are set at levels estimated to provide a satisfactory incentive for the production of pineapples. Since pineapple prices are fixed "arbitrarily" they cannot be forecast. Annexes 10, 11 and 12 show, however, that in terms of prices for inputs and outputs ruling in 1974, pineapple production under estate or outgrowers conditions would be financially attractive. The cash flow indicates, however, that the ruling pineapple price (based on a fob price of Syl 9,718/ton) may be generous under circumstances where producers can obtain and use farm inputs at 1974 prices without constraint and thus benefit from high yields (as they would under the project), while being barely adequate under circumstances where farm inputs are in short supply and yields are low (as at present). 5.16 Currently the price issue has not been considered by Government, and it would be unrealistic to expect any early conclusion on the detail of price arrangements that would be appropriate for the project. Indeed, as estate pineapple plantings would not be in production until late 1977, and outgrowers' plantings not until 1978, there is no urgency for the resolution of such detail. On the other hand, as producer prices for pineapples appear to need some adjustment, para 5.15, the following principles of price and financing arranrge- ments have been agreed with Government during negotiations: i. producer prices for pineapples would not be such as to encourage inefficient production; ii. the financing arrangements would ensure an adequate degree of financial discipline; iii. participating outgrowers would be required to meet the costs of support services, including extension services, provided to them by ENAD; and iv. participating outgrowers would, as and when needed, receive loans for the development of their holdings on terms that would properly reflect the costs of lending, and provide for the risk of bad debts. 5.17 The above principles have been incorporated in a side letter. At the same time assurances have been obtained that not later than June 30, 1976, agreement would be reached with IDA on: i. the formula for establishing and the actual price to be paid to outgrowers for pineapples produced in the 1977/78 season, and the prices to be paid by outgrowers for inputs and Fruitex services; and - 23 - ii. the mechanism for subsequent revisions of pineapple and input prices. It has been agreed that the proceeds of the IDA credit employed by the nucleus estate and outgrower components of the project should be onlent to ENAD as a loan at not less than 6%, the loan to have a term of 25 years including a grace period for interest and capital of 6 years. Signature of a subsidiary loan agreement reflecting this between BNDA acting on behalf of Government and ENAD would be a condition of credit effectiveness. It is proposed that the Government's contribution to ENAD as well as Government's contribution to and the proceeds of the IDA credit destined for Fruitex would be passed on as a grant and incorporated as equity in the two enterprises. 5.18 Distribution of Inputs and Provision of Credit to Outgrowers Presently Fruitex imports and distributes to pineapple growers cardboard packaging cases. Entreprise Nationale d'Importation de Materiel Agricole (Agrima) imports agricultural equipment for distribution to growers. Fertilizer, seeds and pesticides are imported by the National Enterprise ENISEP. Growers' purchases are financed by BNDA through Credit National Pour le Commerce, l'Industrie et l'Habitat, only bank with branches throughout the countryside and with which all growers are required to have accounts. BNDA is a substantial undertaking, see balance sheet at Annex 13. Fruitex makes its payments for fruit to BNDA which automatically recovers outstandings and credits producers with the balance. Under the project ENAD would import and distribute all the farm inputs required for its registered outgrowers. BNDA as now, would assume the debt of individual outgrowers through crediting ENAD's account with the value of inputs supplied and recover outstandings by direct deductions from growers' sale proceeds. Outgrowers would also be provided with credit for labor and rations as needed. (see para 2.10). BNDA credit for pineapples has terms varying from 1-5 years and bears interest of 6% for one-year loans and of 5% for those with a longer term. Given the indications of a domestic inflation rate of 5% (see para 4.02), it was agreed during negotiations that the minimum interest rate would be 9% and that a pro-forma loan agreement for use between registered outgrowers and BNDA/ENAD would be submitted to IDA for approval. 5.19 An interest rate of 9% for onlending to outgrowers and an interest rate of at least 6% for onlending by BNDA and ENAD have been agreed. Gov- ernment additionally has agreed to submit to IDA, not later than June 30, 1976, a study of BNDA's lending policies and procedures. This study would in particular include a thorough assessment of BNDA's interest rate policies. If this study concludes that an increase in interest rates applicable to loans made to state-owned enterprises is justified, the onlending rate to ENAD would be revised accordingly. The above agreement has been incorporated in a side letter. VI. PRODUCTION, MARKETS AND PRICES, OPERATING RESLITS NUCLEUS ESTATE AND OUTGROWERS, AND GOVERNMENT/ENAD/FRUITEX REVENUES 6.01 Production. It is estimated that on the nucleus estate yield/ ha/crop would rise from 35 tons/ha in Project Year (PY) 3 (1977/78), to 60 tons/ha in PY 9 (1983/84). Improvements in vield would reflect the experience and skills acquired by project staff, better selection of planting material and refinement of cultural teclniques, especially fertilizer use. With research it should be possible, as in other countries, to reduce the time land would be tied up in a single crop from three years to about two years, see Annex 1. However, no account is taken of this possibility in the calcula- tion of rates of return. For outgrowers it is estimated that yields on irri- gated farms would reach between 50 and 55 tons/ha after about a three-year period, and that on non-irrigated farms they would average 30 tons. In proj- ect calculations it is assumed that project production would stabilize at about 10,200 tons annually by PY 9, of which the estate 8,400 tons and out- growers an increment of about 1,800 tons. The latter figure is based on the assumption that without the project potential project outgrowers would conti- nue to grow pineapples and obtain average yields of about 20 tons/ha. The latter assumption, given the recent sharp decline in production, is highly speculative. 6.02 Not all pineapples produced would be suitable for export as fresh fruit. It is estimated that ultimately 8% of estate production and 10% of smallholder production would be suitable only for canning - juice and seg- ments, and that this would'be sold to the SIFRA cannery at Forecariah, see para 2.11, and on the local fresh fruit market. 6.03 Markets and Prices. World pineapple production is in excess of 4 million tons, but of this only a very small proportion enters world trade as fresh fruit. About 90,000 tons 1/ were so recorded in 1969 and probably the figure today is closer to 140,000-150,000 tons, an insignificant amount compared with such fruits as apples, oranges, lemons and bananas. The prin- cipal exporters of fresh pineapples and their main markets are Brazil to Argentina, Mexico to the U.S.A., Ivory Coast to France and Western Europe, Taiwan to Japan, Guinea to the USSR, and the Union of South Africa to the U.K. Smaller exporters are the Azores, Cuba, Kenya, Cameroon, the French Antilles, Honduras and Costa Rica. More details of the world trade in pine- apples are at Annex 5. 1; These figures ex,lude exports from Malaysia to Singapore (30,000<30,0 tons annually in the 1960's) since these are canned in Singapore and re-exported as canned fruit. 6.04 Ivory Coast is now the world's largest exporter of fresh pine- apples and dominates the market in Western Europe supplying about 72% of con- sumption in 1972 and much higher proportions In 1973 and 1974 when 43,000 and 67,000 tons respectively were exported. Exports of 75,000 tons from the Ivory Coast are foreseen by the authorities of that country for 1980 when demand in Western Europe is estimated to reach 100,000 tons. A study by the Ivory Coast's Comite de Coordination des Ventes de l'Ananas Frais de Cote d'Ivoire (COVENAS) indicates that by 1980 traditional suppliers to Western Europe could be providing some 97,000 tons. Given the dynamism and momentum of the Ivory Coast industry, the capacity of the suppliers such as South Africa to quickly expand exports and the entrance of Cuba, Honduras and Costa Rica on the market (the efforts of the two latter being facilitated by their existing banana trade with Europe), the scope of Guinea breaking into the West European markets in any significant way in the short run appears small. Consequently, while the prospection of such markets and their develop- ment, if justified, would be carried out under the project, it is assumed in project calculations that Guinea's pineapple exports would continue to be to Eastern Europe and the USSR. Studies of demand in Eastern Europe and the USSR are necessarily subjective but COVENAS estimates requirements of 20,000 tons by 1980. As the traditional and principal supplier to these markets and given her trade linkages, it is reasonable to expect that Guinea would conti- nue to receive priority in this market. 6.05 World export prices for pineapples, at least for deliveries to Western Europe, have remained relatively stable in recent years, the late 1974 fob price Abidjan being around CFAF 66,000 (US$300)/ton. The Bank's Economic Analysis and Projections Department expects prices to increase in line with general inflation albeit with some lag. The price paid to pineapple producers in Guinea is an artificial price as described in para 5.15). It is based on an fob price of Syl 9,718/ton; at the official exchange rate this is nearly double the price Guinea would receive were she exporting to Western Europe. The price paid for processed fruit is now Syl 2,500/ton. Relation- ships between cif, fob and farm gate prices are shown in Annex 5. 6.06 Operating Results: Nucleus Estate. Cash flow statements and operating accounts for the nucleus estate are at Annex 10. In these it has been assumed that 1974 prices for both inputs and outputs would obtain throughout the life of the estate. At 1974 price parities the financial rate of return from investment in the estate would be about 20%, but as explained in para. 5.14 this is conjectural. 6.07 Operating Results: Outgrowers. Cash flows and operating accounts for two outgrower type operations are at Annexes 11 and 12. As in the case of the nucleus estate they are illustrative. They show the costs of and results from developing new 4 ha irrigated and 4 ha rainfed holdings. The financial data show that on the basis of 1974 cost and benefit parities returns to outgrowers are very satisfactory. In the calculations it is assumed that outgrowers would meet 20% of all capital and recurrent costs from their own resources, and finance capital costs with 4 year, and replace- ment of irrigation equipment with 6 year loans being 9% interest, and recur- - 26 - rent crop costs with seasonal loans at 9%. On an irrigated farm following two initial years of deficits net cash income after debt service averages about Syl 175,000/halannum through the seventh year when the grower's initial loan is repaid, and some Syl 260,000 thereafter. The returns per manday em- ployed would be about Syl 220 and 376 in these same periods compared with the current daily labor rate of Syl 63. On the rainfed farm comparative figures are Syl 74,000 and Syl 144,000/ha/annum and Syl 173 and 262/manday respectively. The high returns to outgrowers reinforce the opinion expressed in para. 5.15 that current producer prices may be over-generous under condi- tions where outgrowers can obtain inputs without constraint. 6.08 Governnent Revenues. The principal revenues accruing to Gov- ernment from the productive components of the project would constitute the benefit made by ENAD on the nucleus estate which cannot be quantified at this time; repayment of the proceeds of the IDA credit onlent to ENAD for the nucleus estate and outgrower components; and taxes paid by additional Fruitex staff members as well as taxes paid by outgrowers on their increased incomes. Other revenues such as payments by outgrowers for services would merely offset the costs of these services. Current tax rates are a flat 5°o for any amount less than Syl 3,000/annum, and 10% on all amounts above this level. It is important that the pricing and credit arrangements for outgrowers, while providing for a fair return, should not be over-generous. A meaningful cash flow for Government cannot be presented at this time. 6.09 It is not possible to forecast the results of Fruitex's tradi- tional marketing activities, and thus the benefit to Government from these operations. These results will depend upon the volume of fruit that comes forward and this will be a function of a range of factors currently out of Fruitex's control and which cannot be predicted at this time. liowever, the activities of ENAD should at least sustain pineapple production and therebv provide a base for Fruitex to plan and execute its operations more efficiently. VII. BENEFITS AND JUSTIFICATION 7.01 The principal objective of the project is to increase the pro- duction of fresch pineapples; this would be met through the creation of the nucleus estate and increasing the production of those outgrowers who choose to participate in the project. As the proposed nucleus estate would not be created without the project, and as it would in no way interfere with the present production of pineapples by individual farmers, its production would be strictly additional and entirely a consequence of the project. Estate production is estimated to reach 8,400 tons annually by PY 9. It is more difficult to assess the incremental pineapple production resulting from the outgrower component of the project and although an estimate of 1,800 tons of annual incremental production is suggested in para 6.01, this is highly specu- lative. The pineapple industry is in sharp decline (see paras 2.10 and 6.01) and, without the project, farmers' interest in pineapples could well decrease - 27 - even further. Any estimate of the rate at which production would decrease with- out the project would be subject to much error. Thus, in the calculation of the economic rate of return for the project it is assumed, as a proxy, that the 340 ha of pineapples catered for under the outgrower component of the project would be new plantings started from scratch and the total costs and benefits of such an undertaking are taken into account in the calculation. This approach probably underestimates the incremental rate of return of the outgrower component of the project, see para. 7.04, but is the safest approach under the circumastances. 7.02 The economic rate of return of the pineapple component of the project is 18%. Exportable production has been valued at market prices for fresh pineapples in Western European countries (para. 6.05); and all foreign exchange benefits and costs have been converted to Sylis at the shadow ex- change rate (para 2.07). The world price for pineapples has been used in the absence of a more accurate estimate of the economic value of pineapple exports to the USSR and other centrally planned countries. Its use implies that in return for exports of pineapples Guinea obtains goods and services in return that approximate to those that could be purchased on the world market with the proceeds of sales of similar quantities of pineapples on the world market. As there is no reason to believe that the trade agreements between Guinea and the USSR and other countries are unfair to Guinea this appears a realistic assumption. 7.03 A sensitivity analysis indicates that simultaneous cost increases and benefit decreases of 10% would result in a rate of return of about 9% indicating high sensitivity to relatively small changes in production effi- ciency. Separate rates of return have been calculated for the nucleus estate and the outgrower components of the project; they are 15% and 38% respectively. These separate rates, however, have limited meaningfulness since they result from an allocation to each component of foreign technical assistance and ma- nagement costs that is necessarily arbitrary. Details of the rate of return calculations and the results of sensitivity tests, including those employing alternative shadow rates are at Annex 14. 7.04 For the sake of completeness a calculation has been made of the possible incremental rate of return from investment in the outgrower component of the project. In this a comparison was made of the costs and benefits in- involved in holdings in "with" and "without" project situations, see para. 6.01. A rate of return of about 40% on încremental investments is indicated. This supports the opinion expressed in para. 7.01 that the method used in calculating the rate of return for the outgrower component of the project is conservative. 7.05 In the above estimates of rates of return, account is not taken of the costs and benefits of other pineapple activities such as improving Fruitex's transport service, staff training, research, transportation studies, - 28 - and the prospection of new markets. The full cost of transporting nucleus estate and outgrower pineapples to point of export are included in the rate of return calculation described in para 7.01 and consequently the estate and project outgrowers would bear their fair shares of the costs of improving the service. Improvements in efficiency of production through research and transportation studies would bring benefits over and above those assumed in the rate of return calculations, as should successful market prospection. 7.06 The studies of the rice and livestock sectors are essential if sound development of these two important industries is to proceed with subse- quent economic and social benefits to the economy. Importantly, developments in these sub-sectors, should they take place, would be the first permitting the involvement of substantial numbers of rural people in well-conceived and adequately financed development programs. 7.07 Investment in the project will not lead to improvements in the living standards of any very significant number of people. About 800 jobs would be created or sustained by the project. However, the project would introduce to Guinea a number of concepts and techniques that in the longer run should benefit significant numbers of rural people and without which Guinea's agriculture will continue to stagnate. 7.08 Risks. There are serious problems impeding the realization of Guinease considerable economic potential and the risk of the pineapple com- ponent failing to achieve all its objectives must be rated as relatively high even though Governnent would afford a high degree of managerial and financial autonomy to the project. Of note are problems such as a) the problem of providing adequate incentives for labor, and b) the chronic difficulty of the availability of foreign exchange. As Guinea will not be able to make a major breakthrough in the West European fresh pineapple market in the short run, project earnings will be in Sylis crdited to ENAD's account by Government and the Enterprise will be dependent upon allocations of foreign exchange from Government. Currently, many public entities, such as the railways and port, suffer a crippling shortage of foreign exchange. 7.09 The justification for accepting the high risks involved in the project is that it appears at this time to be the sole opportunity for intro- ducing and demonstrating some of the basic organizational and development techniques that must be adopted if progress is to be made in the rural sector. - 29 - VIII. AGREEMENTS REACHED WITH THE BORROWER 8.01 During negotiations assurances were obtained that: (a) usership of the nucleus estate site would be vested in ENAD (AR para. 3.09 and CA Section 3.07); 1/ (b) agreement would be reached with IDA on the scope of the overall research program and the delineation of research responsibility between INRAF and the nucleus estate management prior to March 31, 1976 (AR para. 3.20 and CA 3.08b); (c) the consultants employed for the rice and livestock sub- sector studies and project preparation work and the terms of their employment would be mutually acceptable to Guinea and IDA (AR para. 3.21 and CA Section 3.03c); (d) Government would provide funds to meet any additional capital expenditures incurred subsequent to the IDA credit disbursement period, and would provide ENAD with working capital required by the nucleus estate (AR para. 4.04 and CA 3.02c); (e) the positions of General Manager; Estate Manager; Deputy Estate Manager; Estate Engineer, Research/Extension Officer; Accountant; ENAD and Fruitex Workshop Manager and Deputy Workshop Manager would be filled with persons with qualifications and experience mutually acceptable to Government and IDA (AR paras. 5.05 and 5.06 and CA 3.09 and 3.10); (f) a contract satisfactory to IDA would be entered into between ENAD and Fruitex which would interalia require Fruitex to promptly collect, transport and market abroad the pineapples produced by ENAD and its associated out- growers (AR para. 5.07 and CA Section 4.07); (g) arrangements satisfactory to IDA would be made by ENAD and INRAF to cover respectively technical assistance for estate development and smallholder extension services and for the research component of the project (AR para. 5.08 and CA 3.03a ii and 3.08a); lJ AR = Appraisal report CA = Credit Agreement - 30 - (h) Government would, by June 30, 1976, complete preparation of a broad plan for the fresh fruit sector covering the period to 1980 and would discuss this with IDA (AR para. 5.10 and CA Section 4.03); (i) the arrangements for budgeting and providing the funds, foreign exchange, and import licenses needed for the project as set out in para 5.12 would be followed (AR para 5.12 and CA Sections 3.02f and 4.05); (j) the auditing arrangements set out in para 5.11 would be followed (AR para. 5.13 and CA Section 4.01); (k) agreement would be reached with IDA not later than June 30, 1976, on: (i) the formula for establishing and the actual price to be paid to outgrowers for pineapples produced in the 1977/78 season, and the prices to be paid by outgrowers for inputs and Fruitex services; and (ii) the mechanism for subsequent revisions of pineapple and input prices (AR para. 5.17 and CA Section 4.06); (1) proceeds of the IDA credit employed by the nucleus estate and outgrower components of the project would be onlent to ENAD as a loan at an interest rate of not less than 6% with a term of 25 years including a grace period for interest and capital of 6 years (AR para. 5.17 and CA Section 3.02a); and (m) a proforma loan agreement for use between registered outgrowers and BNDA/ENAD would be submitted to IDA for approval, and that the minimum interest rate for outgrowers would be 9% (AR para. 5.18 and CA Section 4.04b). 8.02 Additionally, during negotiations government indicated that: (a) it would make available to its estate workers sufficient consummer goods at official prices (AR para. 3.10); (b) goods imported for the project would be free of import duties and taxes (AR para. 4.02); and (c) it would complete, not later than June 30, 1976, a study to review BNDA's lending policies and procedures (AR para. 5.19). - 31 - 8.03 Conditions of effectiveness would be that: (a) the general manager and estate manager have been appointed (AR para. 5.05 and CA Section 6.01a); (b) a contract has been signed between Fruitex and ENAD (AR para. 5.07 and CA Section 6.01d); (c) arrangements acceptable to IDA have been entered into by ENAD to provide for supervision and assistance in estate development and smallholder extension services (AR para. 5.08 and CA Section 6.01b); and (d) a subsidiary loan agreement has been signed between BNDA on behalf of Government and ENAD (AR para. 5.17 and CA Section 6.01c). 8.04 Conditions of disbursement would be: (a) for disbursement against equipment needed by Fruitex, that the workshop manager has been appointed (AR para. 3.17 and CA Schedule 1 para. 4 (c)); and (b) for disbursement against dock loading equipment that the specifications for this equipment have been approved by IDA (AR para. 3.18 and CA Schedule 1 para. 4 (b)). 8.05 Retroactive financing of up to US$100,000 for expenditures incurred after June 1, 1975 on fertilizers, aerial photography, key staff and con- sultancy services has been agreed (AR para. 4.05 and CA Schedule 1 para. 4 (a)). 8.06 On the basis of the above assurances and conditions, the project is suitable for an IDA credit of US$7.0 million. ANNEX 1 GUINEA PINEAPPLE DEVELOPMENT PROJECT NUCLEUS ESTATE: TECHNICAL DETAILS A. General 1. The pineapple is neither an annual nor a perennial plant. In some countries it has proved possible through research to make the pineapple al- most an annual; however, this entails a great deal of work that so far has not been initiated in Guinea. Under conditions in Guinea the time taken from planting a sucker (these form at the base of the pineapple plant in its leaf axils and constitute new pineapple plants possessing identical genetic make- ups to their parent) to harvesting its fruit takes an average of 18 months. To this must be added another year after harvest during which suckers on the harvested plant grow to a stage when they themselves can be removed and used to establish a new stand of pineapples. After removal of the suckers the old plants are destroyed. Given the time needed to re-prepare the land for plant- ing the overall cycle is about 3 years and any given piece of land can only produce pineapples once every three years. Consequently, when fully develop- ed the nucleus estate of 420 ha net is estimated to have 140 ha in production in any one year. However, it should prove possible, within the next decade, through research, and particularly plant selection, to reduce the production cycle from three to two years. 2. Initially the nucleus estate would have to buy its suckers from existing growers. Thus the planting program and source of suckers would be as follows: Year 1 (1976) 40 ha, using 2 million suckers, all from existing growers Year 2 (1977) 60 ha, using 3 million suckers, all from existing growers Year 3 (1978) 90 ha, using 4.5 million suckers, of which 2.5 million from existing growers and 2 million from the estate itself. Year 4 (1979) 90 ha, using 4.5 million suckers all from the estate. Year 5 (1980) 140 ha, using 7 million suckers all from the estate. Land Clearing 3. The project area has a very light tree and shrub cover. Clearing can be either by hand or mechanical. Currently Agrima operates an equipment hire service; using this service clearing costs are estimated at Syl 3,600/ha and if land levelling is carried out at the same time Syl 4,800/ha, plus an additional Syl 500 for labor. A clearing cost of Syl 5,300 is used in the ANNEX 1 Page 2 cost estimates. With hand labor the cost would be about 25% less. The choice of clearing method would be left to the Estate Manager. Land Preparation 4. Following levelling, the land would be disk plowed (8 h/ha with 65 hp tractor, plus one day of hand labor) and given two disk harrowings (4 h/ha, 45 hp tractor, 0.5 manday). Between the two diskings a basic dressing of 500 kg/ha of rock phosphate plus 500 kg/ha of magnesium lime would be applied (1 h/ha, 45 hp tractor). For replanting land already in pineapple, i.e. the procedure that would be followed when the estate was mature, the first opera- tion would be to "bush-hog" the old pineapple plants to speed up their sub- sequent decomposition and thus reduce nematode and mealy bug populations (6 h/ha 65 hp tractor, 1 manday). Depending on conditions the old pineapple material would be burnt either before or after bush hogging. After some years of cultivation a sub-soiling (8 h/ha, 65 hp tractor, 1 manday) probably would be necessary. Preparation of Planting Material 5. For suckers collected from outgrowers the first step would be to disinfect them against mealy bugs. To facilitate this the outer leaves would be stripped away before dipping in an insecticidal solution. Stripping (33) and dipping (15) would take an estimated 48 mandays for the 50,000 suckers required per ha. Grading suckers would take 10 mandays per ha. Disinfection would not be required for suckers produced on the nucleus estate as these would be produced under a regime of mealy bug control. Harvesting the suckers to plant one ha would require an estimated 42 mandays. Planting 6. Marking out the areas to be planted would be through using a hand- drawn spiked wheel. Thereafter holing and planting (50,000 stands/ha) would be by hand with all operations requiring a total of 60 mandays/ha. Pest Control 7. At this time a need for nematode control is not foreseen since tillage operations carried out in the dry season prior to planting should be adequate to control nematode infestations. Similarly the need for ant control (ants are associated with mealy bugs, see below) prior to planting is not foreseen. However a formicidal treatment (20% Dieldrin Emulsifiable Concen- trate) would be integrated with mealy bug control sprayings. 8. Weed Control. Weed control would be effected by a combination of herbicides and hand weeding. A preplanting treatment, using a herbicide of the Karmex type, would be applied to the pineapple beds before they were planted and be followed by a post-planting inter-bed treatment. The first would be carried out by hand (2 mandays/ha); the second by machine (1 h/ha). These initial treatments would be followed by 2-3 mechanical sprays during ANNEX 1 Page 3 the life of the crop. A total of about 16 kg/ha of herbicide would be needed per crop. Hand weeding (4-10 mandays/ha/operation) would be carried out as needed; between 2 and 4 rounds would normally be necessary. In project esti- mates it is assumed that 30 mandays would be employed in this way. 9. Mealy Bug Control. As a vector of a range of virus diseases the mealy bug is the most serious pest of pineapples in Guinea. Control would be effected by an average of 8 sprayings with a Diazinon type insecticide, 4-6 in the vegetative period of the crop, and 2-3 on areas from which suckers are being harvested. Spraying would be by high volume sprayers (3,000 L/ha) mounted on high clearance tractors. Each treatment would deliver 1 litre of A.M./ha. Fertiliser 10. Exact fertiliser requirements would be determined through foliar analysis and related fertiliser trials. However, for estimating purposes it is assumed that in addition to the basic dressings of phosphorous and mag- nesium the following nutrients would be required for each pineapple plant: - N - nitrogen - 10 gms of which 8 in the vegetative period and 2 subsequent to harvesting to induce sucker production. - K2O - potash - 18 gms of which 16 in the vegetative period and 2 gms subsequent to harvesting. 11. Nitrogen: 3 gms applied with the diazinon see above as a foliage spray in 6 applications of 1.1 gms of urea each; 7 gms applied in the form of sulphate of ammonia in the axils of the leaves in 3-4 applications, of which one after harvest. Total fertiliser requirements/ha would thus be: Urea (45% N) : 330 kg/ha Sulphate of Ammonia (21% N): 1,665 kg/ha 12. Potash: All potash would be applied in the form of sulphate of potash (48% K20) in the leaf axils and at the same time as the sulphate of ammonia. 4.5 applications would be made of which one post harvest. Total requirements would be sulphate of potash: 1,800 kg/ha. Fruiting Control 13. Fruiting would be controlled, to ensure production of the fruit in the December-April season, through the use of an enthylene spray. The spray would be made up of 30 kg of active powdered carbon, and 2 kg of ethylene in 6,000 1 of water/ha. The spray would be delivered in two passes by a high clearance tractor mounted sprayer. ANNEX 1 Page 4 Preparation of Fruit for Export 14. Reduction af the -.rown: this Involves tr.iuming the leaves of the crown for presentational purposee, to reduce we4ght, and to faci.litate packing - 20 mandays/ha. Proteetion against the sun: t.o prev,ent sun scald it is necessary to sh-ade the fruit against the -.sun. In March-Apr.il at the period of peak insolation this would be achieved,through pulling the longer leaves over the fruit and tieixxg them in -this psition,. At other.times a very light covering of grass or s-traw on the top o.'f the fruit would be sufficient - 31 mandays/ha. Harvesting and packing: 15. For exports to Eastern Europ.e and the USSiR fruit wauld be harvested when they showed color i-n the 2ud and 3rd rows (M2 ,and M3) of the segments that distinguish the exterior of -the pineapple. -At .this stage of ripeness it is essential to avoid bruising -and -the estatewould be -supplied with equipment appropriate for the transport of fruit :rom the -field to the packing station. An estimated total of 1.'60 mandays/ha is required for harvesting and packaging. 00021O P3A-t t_l'y 5 2 -2 21 7 P 97 Pt3 ',a 72 Oooaboooa - 6552 12 6 7 573 il- - E--oot 46st 6 43 o, ~ ,0 0 tloatolO-OloS20T2000bOatîOa ~ ~ _7 46 612 612 _20 - -2- - 06007 - S~~~~~~~~~2 S 45 5 17- - labor O 2~~~~~~~~~~~~~~~~I 16 le 5 - - 016-total 25 7.3~ ~~~~~~ 6 61 23 02 - - 7 t. 88~~~~0 ,380 7.3 6675- - - tooa 00oa91a00 ho 56 79 70 £22 -il -6-i- abor ~~~~~~~~~~~~~P1 1' 31 1 t- - - - - Ooootl$aer ~ ~ ~ ~~~~ ~1,380 62131 0I30 - 5-6 taya -looo1aoa60o 1,00 1.50 - FToloooStt. 1£i 16 112 - - I2 L 15 ~ PaToloTOas 66 60 36~~~~~~~~~~~~13 23 - 10-tta 1536 L37 2.9 ,6 - 576 Fùapîîg loalSaT - 71011 Oaa-O -5I 61,66 8- 6-_ - 12,162 19 155 - - - 51186 7.15l TbaTO tapOta 3.635~~~~~~~.6 88 - 24931 - to-ObO£oaltW201tOOO 16 97 - 676 .- - - - OvO-Total 51~ ~~6 6.329 - 0699 - 1.6 3 3._ 1,0 8 OrîlOîga aatearla~ ~~~~~~~~~~~~~n a £1370T SOTIT h02 -- 130 - TAO htodo- 122 - 10-8 2a,p0 Žo6 01-6 - ,7, 29 . ,3 §- 1-8 -,3 1 20000- o15oai-3-007a lm 2101 -ll - 1e - _l4 9 .0A 0-oô. ttalMS 226 1_4329 36015 - 63594 Rl 27..25 -1-.91 50.2 ToaoTloiolTooa -~~~~~~~24a 21 4-. 1 - 7 - e 79 E- - -9 OalOa n 1050 g0 -~ E 611 - - - -~ OaOOo aad frathOlatOOaa ~ ~ I1n- £1,6. - - . a i5 -l - -K1 - 41- i9- 016-total - 1,226~~~~~~4 9 50 - 1.670 33 76.3 - . î.v 7~6. 60111612 Oaoa,1a.aîO ~ ~ ~ ~ ~ 140 m 6 OooabI5OoîoOoî2o? 251oasîaao0a.0.yo 2 900 - - - Co,e,aoo 2%6to Oa0o 1 30 2- - -5 1 2. 4 2 000110001100 - 102,OTlatî Otgiîîar 1 600 - - -~~~1 25 3 76 - 4 ,c2 Cooîîoaatioa- 600,Jooloa-30a03 S 910 65 261 - - 3 6 3 011- 900~1171 0.680 360 294 ,720 10 53 2 - 0.700 7.3 Oooata-oottoo - Offool bOn o 1 -.60 38 76 7 000 26 10 .6 2 5 20 000010 0? T1ao02îo1tr 112 0,010 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~11 18 l /159o200111612101000 ~~ ~~66 26 5 604 - .39 1.43 11 36. -39 - 1993 ;. 03.a-aIOoa-a 2. 19010011$, 00? 0Oaî'5 5 E5 62000100100 700~ ~~~ ~~~ ~~~~ 30 65Il. . - - - 000OoaO 7. £111 2- 620 2 5126-- 36 2 650p 1 029 1 £29~~~~~~~~~~67 2 3547 -5 .)_ - - 35 6500 0 205 -~~~~~~~~~~I15 206 2 tro.8 -5 2- 1375 05 1 60870 8 011001021020 040 1 260 - 91 256 568 - - 1.253 1-6 61.126 7 7 Tal 2 (ST' '000> Diosatar o~~~~~~~~ ~ i4f 1 1- t 25 t 14 i4 147 - 00 - 1h0 oh: 880 - OopaOvtatstoToaaogsO 7~~~ l25 i 12, t l27 1 105 1 125 - 625 - 175 725 875 D072:7 66 CE- 0000i-0 1 216 t s1S t 11-1 464 - 16 116 696 A,fieSMa,-t a 1i o,ld a:ao-a4 7 7(0 7 - 54 .0421 -4 030 15084 t 79 75 1 708 - 7 390 - 7 79 546 - 5000177000ae0 t 77 ~~1 7 'q 7 7 7 7' 3,90 - i>340 0.iaeo:-effoo- 1 ~ B 1 70 -78 1 8 390 - 7570 546 1.~ 6~ 61 2 1,7e 0, 5 328 -777 09 ParaadloallAaroooao t 73 t - 30~~~~~~~ ~~~~ ~~~~~~~~~~~~~~4 - 7 39m 0a, - oa1eO2ff S 03- 28 - 79 84 - f,Iaoao (VoSiolo.. O~~~~21 5 4~ 1,77 O 170 O 477 -011 O 477 170 3,030 00,71077,7 ~~~~~~~ ie UB 3 1:6 7 176 '04 - 40 - 94 1.400 - C0-:otal _____ 7,377 2 99,J57 O 0,~~~~1,35715,242 EaaOOtoo t-1 771-17- 140 1 5.0 ioI - --- - Paraît 0,7010000 ~~~1,000 t1l00 , Q- -- EorIoO:l40 -îoO,,ooOt.,oaî 14 C _1- - - 1.4- 2,405c -c - - -l'. Olooopplsopaelot' 000 t ~~~1756 O1,11 - 1.01 - 1,11 8 5.886 8,700 500-îaSU 2143 11~~~~~~~~~~~~~ - 0- ,751 OC 21.1. 077 007 17,070 405.2 00701 77077 _____ 79,176 717.5 7,750~~~~~~~~5,~ 3,25p-,2 75,607 39. 207,70100,010 0 1,77 l'o 750 - -15150.7 lo:aoalfîoo î,~~~~~~~~~~7 so 7792 ~ 2 709 b~ 945 - 37 157 1,215 - OOakop~~~~~~~~~~~~~~~~~~~~~~8 6 0,,5:0 o 72 -4 0 6 0 90070777170 700 - -~~~~~~~~~~~~~~~ 6 6 'I 60 730 Trooke '77 ~~~~~~~~~l, "36 4~ 1,710 - Oo 157~ 0,0:1 - Total Vehlalet 2 0i l- 9- 4,2oo9 80 o0. 3l 93-1 t____ 3~ 7ooeoroatCaoowl 37~~~~~~~~~~~~8 213 2 13 010 729 - 213 1l50 7a,eO,ooOl:ooOOl 19~~~~~~~~~~~ i - 17 '7 105 47 277 FI5r000,00 17 L 1 Total 07,710,7,7,0 . 1~~~~~~~~17 - 27a - 1,022 75 35-2 1,0 200 So-:o- 65 hp 47 70 - 0 528 1,1o7 7,5 - 1E9 1,15 0,7,1 7,al'rlla 0> - '9 - 177 j7 70) 7 - 09 709 1 o--oro,1i2losaoaoo 1 2 - 576 -613 0,171 717 7,17 37600 boa 0000:0,7 O - b~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 12 Oosooyoooovo' 1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~55- 15 3,b 1 21 21~~~~~~~~~~~~~~~~~~7 - 7 63 Woat-a 7 9 - 10 -5 Il - 15 - 15~~~~i 4- 45 24 724 1'6 Tota,l Tet7oOpos 426 - 95 - 4l - O37' _2 02 507 81 02209 ,7 o9 271 ~ 15 509 41,1 0k0 01ae05108 - 122 101 244 lI- -470 787'0 7014 521 ,eaîmsalOts 87 - 189 2 45 - 94 363 1,108 -447 471 poOo,she, Sa.00s,e ~~~ ~ ~~92 - 101 - 02-52 297 381 1,193 - - 433 464 919 SaCb-toal Fertiîlseaer 210 - 30 - 57 - 62 85 0.052 80 l000.6 1.230 51.214 5.047 205.1 Toee,OSaIlsa - Olsel Ean 09105l9 52 - 129 - 227 - 84 - 3074 - 100 - 439 482 1,980 aIe qaCO -lesîsa 22 - 46 - 1 81 - 08 - 318 . 126 106 580 - Oa-goold..-aîhoOalqoOala - - 35 - 8 - 4 - 12 12 46 0,771,08e. - Osoa,so Oqolaelsaa 3~~~~ ~~~20 2520 - 30 - 432 587 1,764 -67 42 300 - tlosOAo2s-t - 0 - 4 il00 1 02 - 348 174 174 698 FasOaagaiolsOOaoOasîd - - 14 2 0 Il3 - 1 - 6 - .48 48 192 -1slTaC 45 - 67 - 11 101 - 17 - j71 - 157 157 785' - Toas Fsoo 00000e 450 991 1 0451 1.731 -2.224 - 6.849 80 067.0 2.859 2.935 12,643 490-3 Toa eq -ee e -00 cîspO- Cc=4612.5 ,o,o oCCah 330 To e-Chse ot3 i00ooe .5. 055 Oaol. oaOSo1 R- 1-- 6.2003 .a,05 29,4509 (37;30( I49,6007 ) (57.350) (63,1009 - - Pospe-tOa a Plsao,og ssa >1,6000> 3 ,4003 t 2,ooo - - -- Tesaspara offlaio eer (1,6809 1 ,520) 12,10003 - - - -s.ti.s,-d (sl oo 140) 6 210> 315) (315> 9 490> ) 540-total ~~~~~(3.4200 _5 IlIn9. 4.415> 315) (__..A90) - - Osa CaSa, asqatoeasoa ~~~(2,780> (10,370) (05,0353 (36,8850 349,110) - - - (57,330> (65,1.005 Isba, O-s, 9 Syl 793ssdsy 2j7 909 1.933 2.807 3.831 9.688 4 47,39 5.079 19,138 - taba- Co- fa, Ooîaîa6 84 1-60 252 337 897 - 37 337 1.571 - Toas1 IsC- 273 893 2.121 3,129 4.168 1Q03514 O 4,810 5.415 10,809 - 0tCspip,.; 3 tita 8 50 tEesoo osoîsoOral ssoOe'sot.taoe y01 .2/1K81 282 661 1 007 14399 1,471 4,730 30 110.6 1,734 1,734 L.990 100.9 Ptsld ~tmo 0 2 391 - - 71 a7 249 - Ca-ats 6 Ot6911og 851 1.6/kg 1,920 2,860 4,1320 9,120 - - 3,760 8,980 23,840 Tat1 P.skllos- 1,980 2.900 41,351 9,111 90 330.6 5.831 9,047 14 089 1.059.6 rooskro Sol 0.983/ko - - ~~~~~~~~~~~~.10,4/ 1,069 2.654 5.603 30- 82.2 3.539 5.304 14.646 214.0 68o,eoot off-08, Nobed 7 156 0~75 360 41-0 1.279 20 12.5 358 383 2,000 10.5 .800108110T 0]010D 1.081 ~ 12.118 16 111 19,603 73.331 78.310 31 1,89496 28,039 31.920 136,273 3.453.6 (900 Gu PI4EAPPLE DEVELOPTR PROJECT PRIOJECIo WS 1STNDTES (SylOOO) RENEWAS 3N ESTAXE DEVELPeITW PERIOD Project Yer PY 1 p 2 PY 3 PY 4 PY 5 Total FE p 6 PY 7 FE October 1 - Septeeber 30 1975176 1976177 1977178 1978179 1979/80 1975-80 FE % us$'000 1980181 1981/82 GRAND TOTAL US$'000 Tractors 65 hp - - - - - Tractors 45 hp - - - Tractors, Higb Clearance - - - - - Automobilea, 2,000 cc - - - 204 - 204 - - - 204 408 Automobiles, 1,000 cc - - - 102 51 153 - - 51 51 255 Piciups - - - - - - - - 78 - 78 minibus Motorcycles - - 10 50 50 110 - - 70 50 230 - Trucks - - - - - - - - - 256 256 - Office Equipment end Furniture - - _ _ _ _ _ _ _ 100 100 - Workshop Equipment - - - - - - - - - 240 240 - BASE COST REEAIJES - - 10 356 101 467 85 19.4 199 901 1,567 66.8 (8ÇZ I. ANNEX 2 GoIEn1 Table 4 PINEAPPLE DE-ELOPMENT PROJECT EEIOJECT COT ESTIATES SMALIE0LDER FROGRAM Projact YPEr n I n2 n 3 n 4 n 5 Total YE October 1 - Sept 30 1975/76 1976177 1977/78 1978/79 1979/80 1975-80 Fi% USSOOO Buildings Inva stnt (certain coats shred d th pinéapple research) Houaing 10OM2 - 50%i 316 - _ _ - 316 60 9.2 Water and Electricity - 15 of* 47 - - - - 47 60 1.3 Furniture - 50% 54 - - - - 54 70 1.8 Sub-total 417 - - - - 417 60 12.3 Vehicles & E puipment (initial investment and recevi) Pickup Truck ** 56 - - 84 - 140 - - Truck 5 ton - 276 - - - 276 Motorcycles 22 il 22 il 22 88 Bicycles - 9 6 12 - 27 Spare Parts 15% of ** 8 41 - - - 49 Sub-total 86 337 28 107 22 580 85 24.1 Salaries snd Allovances Extension/Resarch Officer (Expatriate 50%) 500 500 500 500 - 2,000 90 78.2 Agronomiat 1 116 1 116 1 116 1 116 1 116 580 - Asuistant Agronccmist 1 78 1 78 1 78 1 78 1 78 390 Irrigation TechIi.ian - 1 116 1 116 1 116 1 116 464 Extension Agents - 3 198 5 330 9 594 9 594 1,716 Drivers 1 59 2 118 2 118 2 118 2 118 531 - Secretary/Clerk 66 66 66 66 66 330 Lbor 2 57 5 142 5 142 5 142 5 142 625 Sub-total 876 1.334 1 ,466 1 730 1.230 6.636 24 78.2 Fruitex Oparatina COuts Pickup (20,000 km) 46 46 46 46 46 230 80 9.0 Truck (15,000 kl) - 135 135 135 135 540 80 21.0 Motorcyclea il 17 17 17 17 79 80 3.0 Maintenance cf Eouaing - 14 29 29 29 101 25 1.2 Sub-total 57 212 227 227 227 950 34.2 On-face Invetuanta (Inoretcental) Irrigaticn Sets 2 154 4 308 6 362 B 616 20 1,440 - Sprayers 10 8 20 15 25 19 30 23 85 65 - Sub-tntal 162 323 381 639 1.505 85 62.4 on-fatr Inputs (Increxental) Fertilisers - 87 301 818 675 1,881 O 73 .5 Pesticides - 69 296 535 7)0 2,601 80 62.6 Other Materials 45 149 230 282 706 80 27.6 Labor - - 1ii 283 360 784 - Irrigation Operation & Maintenance - 35 106 212 317 670 59 16.4 Sub-total _ 236 3993 2.079 2.334 5.642 - 180.1 Packinz and Transport Cartons and other Materials Syl 1.9/kg - - 711 1,421 1,809 3,941 90 173.3 Trevaport - 368 735 334 2,037 30 29.9 Sub-total - - 1.079 2,156 2 743 5.978 70 203.2 BASE COST S o4LIdOxDER pROGRi 1 46 2.281 416 621.708 36 594.5 ANNEX 2 GUIIEA Table 5 PINEAPPLE DEZVL0PMENT PROJECT PRojEcT COST ESTIMATES (Syl ' 000) OTHER PINEApPII ACTIVITIES FRUITEX TRAWSPORT SEBVICE AND WOEKSEOPS Project Year Py 1 PY 2 PY 3 PY 4 PY 5 Total October 1 - September 30 1975/76 1976/77 1977/70 1978/79 1979/80 1975-80 FE 7. us$0ooo Purchase of 10 Trucks - 2 662 3 933 5 1,655 - 10 3,250 85 135.0 Spares for Trucks 15% - 99 149 248 - 496 85 20.6 Spares for Existing Fleet of Trucks - 500 500 - - 1,000 85 41.5 Dock Loading Equipment and Spares 2 - 1,150 - - - 1,150 85 47.8 Buildings - Transport Workshop 33Dm2) - 1,640) - - - 1,640 60 48.1 Storage and Office 70m ) Workshop E.juipment - 1,600 - 1,600 85 66.5 Pickup Truck and Spares for Wshop Manager 97 - - - - 97 85 4.0 Pickup Operating Costs 69 69 69 - - 207 80 8.1 Rent of House for Wshop Manager 200 200 200 - - 600 - - Furniture for House 108 - - - - 108 70 3.6 Salary & Allovances -Wshop Manager 1,000 1,000 1,000 - - 3,000 80 117.3 Sub-total 1.474 6.920 2851 903 - 13,148 492.5 Studies and Surveys Study of Organization of Fruitex Transport Service - 250 - - - 250 80 9.8 Market Prospection - Purchase of Auto-refrigerated Containers - - 580 - - 580 85 24.1 - Operational Costs - - 270 270 - 540 85 22.4 Sub-total - 250 850 270 - 1,370 56.3 BASE CDST 0TRER PIFEAPPL ÂCTIVITIES 1,474 7.170 3,701 2.173 - 14.518 77 548.8 ANNEX 2 GUINEA Table 6 PINEAPPLE DEVELOP1HENT PROJECT PROJECT COST ESTIMATES (Syl'OOO) PINEAPPLE RESEARCH-/ Project Year PY 1 PY 2 PY 3 PY 4 PY 5 Total October I - September 30 1975/76 1976/77 1977/78 1978/79 1979/80 1975-80 FE % S$'000 Buildingr 2 Housing (10m2- @ Sy 6,230) - 50% * 316 - - - - 316 60 9,3 Store ( 60m @ Syl 2,640) 158 - - - - 158 55 4.2 Water and Electricity 15% of * 47 - - - - 47 60 1.3 Furniture - 50°b 54 - - - - 54 70 1.8 Sub-total 575 - - - - 575 59 16.6 Vehicles and Equipme-t (Initial InveBtment and Renevals) Pickup Truck (33%) ** 28 - - 28 - 56 85 2.3 Tractor and Special Equipment 1 431 - - - - 431 85 17.9 Motorcycles 1 22 - 1 22 - 2 44 85 1.8 Spare Parts 15% of ** 69 - - - - 69 85 2.9 Sub-total 550 - 22 28 - 600 24.9 Salaries and Allowances Research/Extension Officer (Expatriate 50%4) 500 500 500 500 - 2,000 80 78.2~ Agronomist 116 116 116 116 - 464 - - Assistant Agronomist 78 78 78 78 - 312 - - Sub-total 694 694 694 694 - 2.776 - 78,2 Operating Costs Labor for â§ha Research Block 18 36 36 36 - 126 - - Tractor and Equipment 16 32 32 32 - 112 80 4.3 Pickup (10,000 km) 23 23 23 23 - 92 80 3.5 motorcycles il il il il1 - 44 80 1.7 Maintenance of Buildings 9 24 24 - 57 25 0.7 Water and Electricity 5 5 5 - 15 70 0.5 Farm Inputs - 26 26 26 - 78 80 3.0 Sub-total 68 142 157 157 - 524 1.37 BASE COST 0 B R 1.882 8T6 873 879 - 4-475 61 -4 1/ Certain costs are shared with amallholder program. ANEX 2 Table 7 GU}NEA PTI t f - , a <~~~~~~~~~~~~~~~~~~~UIds A Masscta !- Dya `5f ` -GUI,he' `/tare o K îip .4Oo¼ SIERRA . / Th,iiB0ikdhi,d ihhod n nn4 thii hîttP di ôtL C e ERIA l19olhiS9Wh 5d °'1 ~~~a g g _ ~ I | _ '$00 ~ O W Oc. w _ _ ._ O ~ ~ o j~ W - go. I tsœ œ !msWs g o I I NO N. *8 Rg r- 1't' o- o-t - 'O -a8 _ M _-' _4 V 0 0 Oœ' 'J N g cac i -o "'a~~~~~~~ _a , _O N. DON J ar- t _j -..- - ',0> o w e W > W ~ ~ ~ ~ ~ ~ ~ ' 03 O j. W' M3Œ jNN8wX ai Mo N.» Q\ j N j N N w _ P~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o w 4 O» tn jA M M j' M o GUINEA PINEAPPLE DEVELOPMENT PROJECT Operating Account and Cash Flow: 4 ha Rainfed Holding Cordensed Operating Account (Sylis) 1976/77 1977/78 1978/79 1979/80 and subsequent years CCsTs First 1.3 ha cycle - on farm costs (from Annex 12, Table 1) 45,305 39,361 29,203 Less: /1 Labor (mandays) Weeding (24) (24) ( 5) Irrigation (5) ( 5) (5) Harvesting & packirg (26) Subtotal labor (29) 2,262 (55) 4,290 (10) 780 Fertilizers (50%) 1,651 3,740 1,204 Karmex /2 (50%) 1,365 1,755 Irrigation system O&M 5,720 5,720 5,720 On farm costs rainfed holding 1 st cycle 34,307 23,856 21,499 On farm costs subsequent cycles 34,307 23,856 34,307 79,662 Packing export fruit Syl. 1,900/ton 52,630 66,690 Growers transport Syl. 112/ton 3,640 4,368 OPERATING COSTS BEFORE CONTINGENCIES 34,307 58,163 135,932 150,720 Physical contingency 3,430 5,816 13,593 15,072 TOTAL OPERATINO COSTS 37,73/ u3,97] 14525 155,792 Prodlction (tons) (32.5) (39) Revenue from export fruit (tons at Syl. 8,735) (27.7) 241,960 (35.1 ) 306,599 Revenue from process fruit (tons at Syl. 2,500) (4.8) 12,000 (3-9) 9,750 TOTAL REVFNUES 253,960 316,349 OPERATING SURPLUS (DEFICIT) (37,737) (63,979) 104,435 150,557 /1 These deductions reflect the less sophisticated nature of the rainfed holding and its anticipated lower yields. 13 /2 or similar chemical. CD ANNEX 12 Table 2 G U I N E À PINEAPPLE DEVELOPME1T PROJECT OPERATIlG ACCOUNT AND CASH FLOW: 4 HA RAINFED HOLDING CASH FLOW 1976/1977 1977/1978 1978/1979 1979/1980 1980/1981 1981/1982 1982/1983 1983/1984 and subsequent APPLICATION OF FUNDS (SYL.) OPERATING LOSSES 37,737 t>3,979 INVESTMENTS Sprayer (renewed each 3 years) 800 800 800 Land Clearing 10,140 10,140 10.140 Sub-total 10,940 10,140 10,140 800 800 Physical Contingency 1,OY4 1,014 1,014 80 Sc 12,034 11,154 11,154 sMn een DEBT SERVICE 1/ , On Initial Investrnt Loan -19,635 39,27< 39,270 39,270 1?,635 On Seasonal Loan- 19,635 45,57 6,30 06 6,3 6,00 6'300 0,300 Total Debt 8ervice 1965 4,70 i,7 65,5705956,0 TOTAL APPLICATION OF FUNDS 499,771 75,133 30,7S9 46,450 45,570 45,070 25,935 6,300 SOURCES OF FUNDS Operating Surplus 104,435 150,557 150,557 150,557 150,557 150,557 Initial Investment Loan 39.817 60,106 8,923 TOTAL SOURCES OF FUNDS .. - ------- 19 --_-- GROWERS NET RETURN (9,954) (15,027) 82,569 1 04,107 104,987 104,987 124,622 144,257 Number of Deys Worked 373 543 784 784 784 784 784 784 RETURN PER DAY WORKED 78 78 183 211 212 212 237 2,c 1/ Loan amsortization and interest; the loan is repaid over 4 years at 9%. Z/ Interest only; the loan is repaid within a year and rolled over from year to year. ANNEX 13 GUINEA PINEAPPLE DEVELOPFENT PROJECT BANQUE NATIONALE DE DEVELOPPEMENT AGRICOLE Balance Sheet September 30. 1972 (sylis) ASSETS LIABILITIES Fixed Assets 4,590,724.1 Capital 36,863,789.5 Buildings 3,304,274.6 Equity 26,863,789.5 Equipment 6 Furniture 1,257,034.5 Government Grant 10,000,000.0 Transport Equipment 29,415.0 Depreciation 1,474,582.7 Lons Term Loans 294,915,967.6 Reserves 63,064,890.0 Long Term Advances Legal Reserves 564,890.0 a. Public Collectives 1,233,000.0 Special Reserves 7,500,000.0 b. State Agencies 288,169.276.6 Statutory Reserves 25,000,000.0 c. Private Sector 3,777,509.5 Special Provision for Credit 30,000.000.0 Sinking Fund 1,730,536.8 CURRENT LIABIUITIES 566,605,394.2 Deposits 5,644.7 State 6,896,693.9 Receivable Accounts 33,098,841.2 Public Agencies 22,820,040.7 Private Deposits 120,856,227.1 Fides, Liquidation 3,152,078.3 Term Deposits 13,711,539.3 Drafts 2,332,406.3 Payables 7,222,112.2 Various Debtors Account with BGCE 57,379,967.2 Account with Credit National 329,445,669.5 a. State 750,181.0 Other Creditors 3,622,390.5 b. State Agencies 214,004.0 Charges Payable 430,363.3 c. Private Sector 6,653,256.8 Memorandum Account 1,168,203.0 d. Personnel Advances -- Checks Payable 718.781.2 Advance Payments 342,123.0 Deposits of Effects 2,333,406.3 Memorandum Accounts 16,148.4 Money in Circulation 484,456,363.8 Receivable Profits 19,638,643.4 Liquid Assets 821,557,786.9 Short-term Advances a. State -- b. Public Agencies 572,917,963.4 c. Private Sector 36,240,833.9 Medium-term Advances a. State 11,443,724.2 b. Public Agencies 7,644,925.6 c. Private Sector 88,189,981.4 Portfolio Claim to Currency 762,500.0 Discounted Draft -- Postal Cheeking Account 4,810,701.2 Cash on Band 99,547,157.2 Net Profit 1,698,299.5 1L154,163,319.8 1,154,163,319.8 ANNEX 14 Page 1 GUINEA PINEAPPLE DEVELOPMENT PROJECT Calculation of Economic Rate of Return General 1. The rate of return for outgrower operations has not been calculated on incremental benefits and costs (see para. 7.01). The cost and benefit streams represent the full investment and operating costs of developing new irrigated and rainfed holdings and the total yields therefrom. In the calcula- tion it is assumed that 80 ha of irrigated outgrow holdings would be established under the project and 260 ha of rainfed holdings. Life 2. The life of the nucleus estate is taken as 21 years, thereby allotting to the main investment, i.e. the irrigation system, a life of 20 years. As the system would be fully maintained throughout its life this probably is a somewhat conservative assumption. Accent is not taken of any residial value which also is a conservative assumption. For outgrowers a project life of 14 years is used; this is the life times of two irrigation sets, seven years each. A similar duration is used for rainfed holdings. Costs 3. The investment and operating costs used are those appearing in Annex 2, and further detailed in Annex 11 - Nucleus Estate, and Annexes 12 and 13 for outgrowers. A 10% physical contingency has been applied to all costs throughout the life of the project. 4. All labor, on the nucleus estate and outgrowers holdings, whether hired or family labor, is costed at Syli 78/man day, see para. 3.10 of main report. Local labor is virtually the only local cost element in the project; thus shadow rating of local labor could be used instead of applylng a shadow rate of foreign exchange. At the official exchange rate, a salary of Syli 78/ man day would amount to US$3.80 which is obviously well above the equilibrium rate in a country with an average rural per capita revenue of $55 per year. Based on this latter figure a more appropriate shadow rate of local labor can be established: Assuming that in the rural sector each adult worker has 1.5 dependent (i.e. that there are on average two working age members in a family of five) the annual income of an adult rural worker would average about $138 or USé57.5 per day based on 240 working days per year. Such a shadow rate of labor would correspond to a salary of Syli 11.8 at the official exchange rate; expressed differently the shadow rate of exchange of the Syli would have to be Syl 135.6 = 1 US$ so as to have the shadow rate of USt57.5 coincide with the official salary level of Syli 78/man day's; this is reasonably ANNEX 14 Page 2 close to the shadow rate of exchange of Syli 120-125 estimated on the basis of retail price comparisons between Guinea and neighboring countries (see para. 7 below). Thus, rather than using a shadow wage rate of US,57.5 per day, a shadow exchange rate of Syli 122.76 per US$ has been used equivalent to six times the official exchange rate. Benefits 5. The yields and prices employed are those appearing at paras 6.01 and 6.05 respectively in the main report. The price used in calculating project benefits is the "world price"; as there is no "world price" for pineapples, the price on the French market (the largest in Europe) is used as a proxy. 6. Estimating outgrower yields is difficult since on rainfed holdings, which are assumed to comprise 78% of all outgrowers holdings, yields will depend very much upon the location of the holding; those in wet valley bottoms for example should produce much more heavily than the 30 tons/ha predicted; possibly up to 45 tons/ha. At this time it is not known what proportions of rainfed holdings would be located on "dry" slopes and "wet" planting sites, it is assumed that all rainfed outgrowers will use only 50% of the full ferti- liser requirement and only 50% of the weedicide requirement. It seems reason- able to assume that growers on "dry" slopes would not benefit from and thus not use the full level of inputs. Exchange Rate 7. Foreign exchange benefits and costs have been converted to Syli at a shadow exchange rate equal to six times the official rate (see para. 2.07 of main report and para 4 of this Annex). The same rate has been used to convert local costs (almost exclusively local salaries) into US$. Estimates of a shadow rate of exchange are based on a comparison of retail prices in Guinea's parallel market with those in neighboring countries. As Guinea's official sector is entirely state-controlled, particularly foreign trade, the notion of effective protection is not useful in these circumstances. Thus, the shadow exchange rate is best estimated through a comparison of local prices with those in neighboring countries. Obviously, this could not be done on the basis of prices in the official market, which is not in equilibrium as demonstrated by the application of a comprehensive system of rationing and price controls and in addition covers only a small portion of the total economy outside mining and public administration. A comparison of free market retail prices of 22 products including basic foodstuffs like rice, sugar, vegetables and meat, as well as products like gasoline, soap and textiles, led the 1973 Bank economic mission to Guinea to estimate the shadow rate of exchange of the Syli at 135-150 per US$ or six to seven times the official rate. Taking into account the devaluation of the dollar in terms of major European currencies during the past two years, a shadow rate of Syli 120-125 or about six timbs the official rate appears reasonable at present. This compares well with a rate of Syli 135.6 derived at by comparing estimated shadow wage rates (expressed in US$) with actual rates expressed in Sylis (para. 4 above). ANNEX 14 Page 3 Sharing of ForeiRn Mâna§ement and Technical Assistance Costs Between Nucleus Estate and OutRrcrwers 8. The costs of the expatriate estate manager, and the technical assistance employed by the nucleus estate, see Anaex 2, Table 2, have been prorated as they occur on-a hectarage basis between the nucleus estate and the outgrower program. Sensitivity Analysis 9. The rate of return.for the overall project.is 23%. Sensitivity tests show that the rate would fall to 15% if'benefits fell by 10% and costs increased by 10% simultaneeusîy.. A decline inbenefits of 25X would bring the rate down to 11%. Additional results are-shov ,below: ------------Proj,ect Components----- -------- Overall Nucleus Estate Outgrower Program Standard Rate (Syl 122.76 =mUS$1) 18.25 14.95 37.55 Yields Minus 10% 13.45 10.95 28.35 Yields Minus 25% 4.15 2.85 11.55 Costs Plus 10% 13.95 11.35 29.15 Costs Plus 15% & Yieldsa Minus 10% 8.85 6.95 19.75 Exchange Rate at Syl 40.92- US$1 7.65 5.75- 17.85 Exchange Rate -at Syl 20.64 - US$1 negative negative negative 10. The lowest shadow'exchange rate compatible with an acceptable overall rate of return would be âaout Syli 4Û.927 per- US$ or twice the. officiai rate. There can be little,doubt.,that the present equilibrium rate of foreign exchange in Guinea is at least that much. TAble I GUINEA PINEAPPLE DEVELOPHENT PROJECT CALCULATION 0F ECONOHIC RATE OF RETURN- (lyl 000) 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992193 1993194 1994/95 BENEFITS N-l.eos Estte - - 40,278 60,420 90,630 120,990 189,876 236,376 258,120 258,120 258,120 258,120 258,120 258,120 258,120 258,120 258,120 258,120 258,120 258,120 outgrowers - -- - 29,116 65,730 89,843 112,459 118,916 121,169 121,169 121,169 121,169 121,169 121,169 121,169 84,724 46,587 24,139 - - Total - - 40,278 89,536 156,360 210,833 302,335 355,292 379,289 379,289 379,289 379,289 379,289 379,289 379,289 342,844 304,707 282,259 258,120 258,120 COSTE (IEcolditg 107 Physi cal Contioge..y) (UEedjooted) Thveecnonnt Casts 11,965 24,273 5,851 15,492 4,339 2,152 2,384 1,302 1,579 1,735 1,931 1,240 1,226 1,254 1,240 1,224 1,220 1,198 1,189 1,189 operating Caste 7,575 15,541 22,762 30,962 39,788 44,984 53,304 58,320 60,465 60,465 60,465 60,465 60,465 60,465 60,465 54,889 49,182 45,835 41,636 41,636 Total 19,540 39,814 28,613 46,454 44,127 47,136 55,688 59,622 62,044 62,200 62,396 61,705 61,694 61,719 6i,705 56,i13 56,4G2 4"G33 42,S5 42,82' (Unadjusted) FE Component 11,874 25,469 13,649 26,940 22,466 24,895 29,424 31,132 32,429 32,513 32,619 32,246 32,238 32,253 32,246 29,138 25,964 24,086 21,754 22,171 Adjusted FE Cost 71,244 152,814 81,894 161,640 134,796 149,370 176,544 186,792 194,574 195,078 195,714 193,476 193,428 193,518 193,476 174,828 155,784 144,516 130,524 133,026 LC Cnet 7,666 13,427 14,639 19,344 22,045 23,020 26,264 28,490 29,615 29,687 29,777 29,459 29,453 29,466 29,459 26,812 24,109 22,508 20,522 20,379 Total 78,910 166,241 96,533 180,984 156,841 172,390 202,808 215,282 224,189 224,765 225,491 222,935 222,881 222,984 222,935 201,640 179,893 167,024 151,046 153,405 Econemic Rate of Return 18.25 percent S.esitivity Costs Benefits E08 + 187 - 13.95 - - 10% 13,45 + 10 10% 8.85 - + 25% 27.85 - - 235% 4.15 1/ Letails t Tables 2 -ed 3 ANNEX 14 Table 2 GUINEA PINEAPPLE DEVELOPMENT PROJECT CALCULATION OF ECONOMIC RATE OF RETURN NUCLEUS ESTATE (Syl'000) 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85-1993/94 1994/95 Annual Average BENEFITS Pineapple and Sucker Sales - Financial - - 12,161 18,242 27,364 36,510 56,771 70,675 77,479 77,979 77,979 Pineapple and Sucker Sales - Economic - - 40,278 60,420 90,630 120,990 189,876 236,376 258,120 258,120 258,120 COSTS (Tncluding 10% Plhysical Contingency) Investments 11,965 23,176 4,404 13,665 2,668 1,510 1,Ir,8 - - - - Operating 7,575 13,330 17,788 21,563 25,885 28,643 35,116 39,647 41,636 41,536 41,636 Renewals - - il 392 111 219 991 1,068 1,189 1,189 1,189 Less Costs Allotted to Outgrower Program - 917 1,243 1,412 1,328 549 549 549 549 549 275 Total Financial Costs 19,540 35,588 20,961 34,207 27,336 29,823 36,726 40,166 42,276 42,276 42,550 FE Component 11,874 23,683 9,692 20,418 13,191 15,125 19,185 20,626 21,754 21,754 22,171 Adiusted FE Component 71,244 142,098 58,152 122,508 79,146 90,750 115,110 123,756 130,524 130,524 133,026 LC Component 7,666 11,905 11,269 13,789 14,145 14,698 17,541 19,540 20,522 20,522 20,379 Total Economic Costs 78,910 154,003 69,421 136,297 93,291 105,448 132,651 143,296 151,046 151,046 153,405 Economic Rate of Return 14.95 AtaRI 14 T.hl. GUIM9A PINEAPPLE IDVELOPFENT PROJECT CALCULATION OF ECONOMIC RATE OF RETURN OUTGRC';ir PROGRAM (Syl '88) 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986187 1987/88 1988/89 1989/90 1990/91 1991/92 1992193 BENEFITS PFl.epple SaIe, 1/ Irrlg.tod - - 2,578 8,544 18,462 32,329 37,258 39,511 39,511 39,511 39,511 39,511 39,511 39,511 35,560 27,658 15,804 Reifef _ _ 26,538 57,186 71,381 80,130 81,658 81,658 81,658 81,658 81,658 81,658 81,658 81,658 49,164 18,929 8,335 Total - - 29,116 65,730 89,843 112,459 118,916 121,169 121,169 121,169 121,169 121,169 121.169 121169 84&724 46-S87 241,39 COTS (Including 107 Physicel Conting-ncy) On-Fero-Ioveetee-t. 544 1,065 1,404 1,442 399 201 210 366 522 718 27 13 41 27 13 14 - Oo-Fsr)-0prerti.g 1,185 3,273 7,537 12,050 14,738 16,585 17,070 17,226 17,226 17,226 17,226 17,226 17,226 17,226 11,933 6,446 3,319 Fruiteex -l vestmet 553 371 31 118 24 24 24 24 24 24 24 24 24 24 22 17 9 Frettes - lperstisg 1,026 1,701 1,862 2,153 1,683 1,603 1,603 1,603 1,603 1,603 1,603 1,603 1,603 1,603 1,320 1,100 880 81-cr. of NRclueu ltate CGuts - 917 1,243 1,412 1,328 549 549 549 549 549 549 549 549 549 385 220 110 Total Fi...,ia1 CGsts 3,308 7,327 12,077 17,175 18,092 18,962 19,456 19,768 19,924 20,120 19,429 19,415 19,443 19,429 13,673 7,797 4,318 FE Copepoe.t 54% 1,786 3,957 6,522 9,275 9,770 10,239 10,506 10,675 10,759 10,865 10,492 10,484 10,499 10,492 7,384 4,210 2,332 Adjuetsd FE CGut 2/ 10,718 23,739 39,129 55,647 58,618 61,437 63,037 64,048 64,554 65,189 62,958 62,985 62,995 62,950 44,300 25,262 13,990 LC Ceepuc.ot 46% 1,522 3,370 5,555 7,900 8,322 8,723 8,950 9,093 9,165 9,255 8,937 8,931 8,944 8,937 6,298 3,587 1,986 Total Ecuonoi Coste 12,240 27,109 44,684 63,547 66,940 70,160 71,987 73,141 73,719 74,444 71,887 71,836 71,939 71,887 50,590 28,849 15,976 Irueusto Ruts cf Retors 37.5 percent 1/ V9lusd et ecuooleft pri-es (Aunes 5, TIbls 4). 2/ using a ebadusg sexcb,R cute cf FF 1.00 - Syl 28. IBRD 11444R MAY 1975 Friguiocbe t 02'~~~~Gol - are/ 7= .. q L>fuatarf1ba ~~~~~Kornparnoe ,/ Doboyo ~ ~ ouoy - < ;t Foulayc | `t~~~~~~~~~~~~~Fola J X Segi>\ / S Sabouya~~~~~~boy lO S~~~~~~~~~AOY4 DAM 400< (P ooect`ed) NNt G U N E A N t PPIN EAPPLE DEVELOPMENT AND x3\,444<4V> 4"2 TECHNICAL ASSISTANCE PROJECT LOCATION OF THE PROJECT AREA The boundaritsotown on tihis map do fot g- Pineapple Estate imply endortenton or noe.ptreo by the ' . ` Main roads Wor?ddtettk atd itt offtlilteo _ l' , SENEGAL b Breokct ' - - Res lrood -* J -~~~~~~~~~~~~~~~~~~~~~ ~~Reserooirs GUINEA BISSAU. = 9 Future reservoir B~~~~~~ssàn, --~~~~~~~~~~~~~~~~~~~ ~~Rivers - Bi(n4u,>; -_- -> - -'-o" .Contours in neters =, G U I N E A BrAdges Conakry "O AtIQyntic ,-SIERRA r0Nt <.~ 0~t F LEONE . O c e a n 1= > \ rvs ' <,o 000 2,000 3,000 4,000 5,00ù , R 0 -000 r METERS - .. 15. { LIBERI A , ,DPo 2,,0 3,,00, 4.0,00 5,000 t ~~~~~~~~~~~~~~YARDS GUINEA - PINEAPPLE DEVELOPMENT AND TECHNICAL ASSISTANCE PROJECT ESTATE COMPANY ORGANIZATION CHART Director Accountant Administration Supply Rsac/xeso Appointmnent condition of effectiveness Internationally recruited Qualifications acceptable to IDA Wortd Bank-9841