Document of The World Bank FOR OFFICIAL USE ONLY Report No.6013 PROJECT COMPLETION REPORT GREECE - VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588-GR) December 27, 1985 Europe, Middle East and North Africa Regional Office This document has a restricted distribution and may be used b) recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS ABG - Agricultural Bank of Greece EEC - European Economic Community ERR - Economic Rate of Return CDP - Gross Domestic Product M - Million PCR - Project Completion Report STR - Stremma (0.10 ha = 0.247 acres) FOR OMFICIAL USE ONLY PROJECT COMPLETION REPORT GREECE - VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588-GR) Table of Contents Page No. Preface .... .............. 1 Basic Data Sheet ii Evaluation Summary .... .iii IBRD OVERVIEW OF PROJECT COMPLETION REPORT I* Introduction 1 II. Implementation 3 III. Project Costs ...... 10 IV. Agricultural Impact e...... ..... ... .*... 10 V. Economic Rate of Return 10 VI. Institutional Performance 11 VII. Conclusions and Lessons Learned 13 Appendix I - Project Financing 14 Appendix 2 - Estimated and Actual Loan Disbursement. 15 Appendix 3 - Financial Ratios: Agricultural Bank of Gr5ece 16 COMPLETION REPORT (prepared by Agricultural Bank of Greece) I. Introduction ...... ***e*6********** I II. Project Identification, Preparation and Appraisal... 3 III. Implementation ................ *0 *** **** 8 IV. Financial Performance 20 V. Economic Reevaluation w*see*e***^* 21 VI. Conclusioni .............. ....... ......... 22 Annex M!as - IBRD 13315R(PCR) IBRD 13316 (PCR) IBRD 13317 (PCR) This document has a resicted distributin and may be used by recpiets only in the pformance of their offii duties. Its contents may not otherwise be discosed without World Bank authoriaon. PROJECT COMPLETION REPORT GREECE - VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588-GR) PREFACE This is the Project Completion Report (PCR) for the Vegetable Production and Marketing Project in Greece, for which Loan 1588-GR in the amount of US$30.0 million was approved on May 6, 1978. The loan was closed on June 30, 1984, one year later thau expected. Final disbursement took place on March 1, 1985, and an unused balance of US$5.1 million was cancelled. The PCR consists of an Overview prepared by the Europe, Middle East and North Africa Regional Office and a completion report, which was prepared by the Agricultural Bank of Greece in collaboration with the Ministry of Agriculture. The Overview is based on this latter report, a review of the Staff Appraisal Report (No. 1940-GR of May 5, 1978), the PresIdent's Report (No.P-2322-GR of May 15, 1978), the Loan Agreement dated July 10, 1978, correspondence with the Borrower, and internal Bank memoranda on project issues as contained in relevant Bank files. The efforts on the part of the Agricultural Bank of Greece and the Borrower's Ministry of Agriculture in preparing the basic completion document for this project are greatly appreciated. A copy of the draft repo:t was sent to the Borrower for comments on October 25, 1985. No comments have been received. This project has not been subjected to an audit by OED. PROJECT COMPLETION REPORT CRESCE - VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588G-R) BASIC DATA SHEET KEY PRO Cr DATA ActuSa ot Actual as I Ap a81 Estimated of Appraisal e. t +Actual Estimate Project Coats (US$ million) 84.0 73.3 S7 Loan AMount (USS million) 30.0 30.0 100 Disburmed (US$ m1ilion) 30.,n 24.9 83 Cancelled (USS nillion) 5.1 S Date of Board Approval - 05/06/78 Loan Agreement Date - 07/10/78 Date of Project Effeettveness 01/08/79 05/12/80 300/a Date Physacal Components Completed 12/31/b2 09/30/84 1387i Proportton Then Completed (2) 100 90 90 Loan Closing Date 06/30/83 06/30/84 120/a Economtc Iate of Return (2) 35 29 83 Inatituttonal Performatnce - Fair Technical Performance - Cood 'umber of Loans for Greenhouses - 7.554 CUM4UlATIVE DISBURSEMENTS FY79 FYRo FY81 FY82 FY83 FY84 FY85 Appraisal Estimate (US$ million) 5.0 11.5 18.2 24.7 30.0 30.0 30.0 Actual (8U$ million) 0.0 4.6 9.3 12.4 15.6 20.1 24.9 Actual as I of Appraisal Esttiate 0 40 Sl 50 52 67 V3 Dte of Final Disburseeent March 1, 1985 MISSION DATA Date No. of Mandays Specialteatlons Performance Types of Mission (no./yr) Persons in Field Represented /b Rating /c Trend/d Problems/e Reconnaissance 04/76 4 56 a,h.c,d Pre-preparation 08/76 3 30 b.c.d - - Pre-preparatlon 03/77 1 7 b - - Pre-appraisal 06/17 5 36 a,b.c,d,d - - Pre-appraisal 09/77 4 40 b,d,d.f - - Appraisal 10/77 6 132 a,b,c.d,e,t - - - Follow-up 12/77 1 4 d Sub-total 24 TS Supervision 1 02/78 1 2 d I I none Supervision 2 07/78 2 10 d,d n.m. n.a. n .. Supervision 3 09/78 1 3 d 1 2 none Supervision 4 02/79 1 7 a 1 2 none Supervision 5 02/79 1 2 g n0a. n0.. n.a. Supervision 6 06/79 1 8 a n.a n . Supervision 7 10/79 1 6 J I P. supervision N 05/8u 1 2 d r n.a n. . Supervision 9 05/80 1 6 d I P,T Supervision 10 10/80 1 7 c 2 P,T Supervision 11 02/82 1 5 c n.m. n.a. n.a. SupervisIon 12 03/82 2 30 a,d 2 2 P,F Supervision 13 09/82 1 7 d 3 2 P Supervision 14 07/83 2 24 s.f 3 2 P Supervision 15 06/84 1 5 f 3 2 P.'1 Completion 09/84 1 2 d n.a. n..a n.m. Subtutal 19 126 Total 42 4T3 OTHER PROJECT DATA Borrower Government of Greece Executing Agency Agricultural Bank of Greece Fiscal Year of Borrower January I to December 31 Name of Currency (Abbreviation) Dtachna (Or) Currency Exthange Rate Appraisal Year Average (1977) US$1.00 - Dr 37.2 Intervening Years Average (1978-83) USS1.00 - Dr 54.6 Completion Year Average (1954) USS1.00 - Dr 108.0 Follow-on Project Name Integrated Forestry Projee Loan tisber 1718-CP Lear Msunt (USS *In) 25.0 Date Board Approval 06/05/79 /a Calculated in terms of sonths from date of Board approval. 7i a - agriculturaltit; b * marketing specialist; c - financial analyst; d s economist; a - transportation specialist. f - agro tndustrties specialist. g - other. /c I - proble_-free or minor problems; 2 - moderate problems; end 3 - major problems. 7T 1 - improving; 2 - atitionary; and 3 - deteriorsting. 7ei K - Managerial; F * Financial; T * Technical; P - other. - iii - PROJECT COMPLETION REPORT GREECE - VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588-GR) EVALUATION SUMMARY Introduction Greece became an associate member of the European Economic Community (EEC) in 1962, and a full member in 1981. Because of the country's climatic advantages, the horticultural sector was expected to be a major beneficiary of that membership. Development of horticulture thus was given high priority by the Government. Objectives The main objectives of the project were to (a) increase foreign exchange earnings by expanding production of out-of-season vegetables; (b) strengthen existing research and extension institutions to promote production of high value crops; (c) help raise productivity of smallholders by promoting intensive cultivation; (d) promote improvement in the organization of the export marketing system; and (e) strengthen the Agricultural Bank of Greece (ABG), by helping to improve its lending operations and resource mobilization efforts. To achieve these objectives, the project included construction of greenhouses on about 900 ha, construction of packhouses and cold storages for vegetables, provision of refrigerated tractor trailers, improvement of existing research and extension institutions, and improvement of the marketing system. Implementation Experience The project had a good start, and a number of project activities commenced even before Board presentation. However, slippage in project effectiveness from January 1979 to May 1980 caused implementation delays, particularly with regard to components invoiving institutional changes. The loan closing date was extended by one year from June 1983 to June 1984. Project costs amounted to US$73.3 million, compared with US$84.0 million estimated at appraisal. However, in terms of local currency, actual costs were Dr. 5,590 million, or 82% above appraisal fstimates. The lower than estimated project costs in dollars was due to shortfalls in all project components except the construction of greenhouses, while the additional cost in drachmas was mainly due to the higher than anticipated internal inflation coupled with substantial devaluation of the drachma. Results Three of the six project components, concerned with horticultural production improvements, were successful. Implementation of components - iv - dealing with improvements to the marketing organization was unsatisfactory. Shortfall in the latter components, together with delays in submitting disbursement applications in years vihen the drachma was devalued, led to underutilization of the loan amount, causing the Government to request cancellatian of US$5.1 million from the proceeds of the loan. The project's re-estimated economic rate of return was 29% compared with an appraisal estimate of 35%. Sustainability The prospects for sustainability of benefits from the project's main investments, i.e., greenhouses, appear good. Research and extension activities supported by the project are expected to be beneficial for the foreseeable future. Project components related to marketing largely failed. Although project activities were not greatly hindered as a result, marketing deficiencies remain a constraint to Greece's overall horticulture development and will have to be dealt with if the country's comparative advantage is to be realized. Findings and Lessons The main lesson to be learned is that agreement between the Bank and the Borrower on a set of clear and detailed proposals concerning organi- zational aspects of institutions to be financed under a project is necessary before Board presentation, especially when trying to introduce significant changes involving a number of agencies (in this case, Ministries of Agricul- ture, Commerce and Transportation). Close and intensive collaboration in this project between the Government and the Bank from the initial stages of the project cycle resulted in significant improvements in ABG's operational activities and facilitated project implementation (para. 7 of Overview). Lack of agreement on clear and detailed proposals for the organizational aspects of regional marketing companies caused project implementation delays (para. 21 of Overview). Delays in submission of disbursement applications during the years when the drachma was devalued caused the Government to lose foreign exchange from the proceeds of the loan (para. 10 of the Overview). Lack of Bank field supervision for over 12 months during critical stages for the marketing component might have exacerbated failure in the Bank reaching an agreement with the Government on ways to implement that component (para. 41 of Overview). Failure to introduce changes in the marketing system does not appear to have interfered with successful overall implementation of the project. Though the export through numerous types of growers and traders had hardly changed since appraisal--the proposed changes in marketing were never adopted--exports progressed well. The production of cucumbers, the principal vegetable produced, increased about eightfold in the project area from 1978/79 to 1983/84. Between 1978/79 and 1982/83 the value of total exports of fruits and vegetable from Greece increased from US$369 million to US$445 million to the EEC, and from US$37 million to US$62 million to the Middle East. Fxndamental struetural changes in a marketing system can hardly be made over a short period of time (para. 42 of Overview). GREECE VEGETABLE PRODUCTION AND MARKETNG (LOAN 1588-GR) IBRI) Overview of Projeot Completion Report L. Introduction 1. The attached Project Completion Report (PCR) whi-i was prepared by the Agricultural Bank of Greece in collaboration with the Ministry of Agriculture provides a comprehensive description of project implementation and of the main project achievements and shortfalls. This overview memorandum comments on points requiring further elaboration. It was prepared by staff of the Agriculture I Division.. 2. Background. In 1976, one year prior to project appraisal, agriculture in Greece accounted for about 17.5% of GDP, contributed with about 322 of total exports and employed about 341 of the total active population. Fruits and vegetables accounted for about 601 of agricultural exports with more than half the fruits and nearly all the vegetables being marketed in the European Economic Community (EEC). 3. In 1962, Greece became an associate member of the EEC. Thereafter, the country's agricultural exports to EEC were exempted from import duties thus gained a competitive advantage but they remained subiect to quota restrictions imposed to prevent farm prices from sliding below acceptable levels. In the mid-70's, Greece applied for full membership in the Community, which was granted in 1981. As production costs of fresh fruits and vegetables were lower than those in other member countries due to Greece's climatic advantages, the horticultural subsector was expected to be a major beneficiary of Greek's full membership in the Community. 4. To enable Greek farmers to take full advantage of their competitive position in the EEC market for fresh produce, a number of complementary changes were required in the Greek supporting services, particularly as regard to research and extension, marketing, handling facilities and transportation. In addition, accession to the EEC called for some changes in agricultural credit arrangements as well as major changes in Government subsidy policies. A critical evaluation of Greece's agricultural taxation and subsidy policy was thus necessary to design them up to the EEC requirements. 5. Origin and Preparation. In October 1975, recognizing the need to develop the production and marketing of horticultural products, the Government requested I3RD's assistance in preparing and financing a Fruit and Vegetable Marketing Project. IBRD's reconnaissance and preparation missions (June and September 1976) reviewed the prospects for export-oriented fruits and vegetables, identified marketing and production constraints, and proposed steps for preparing a possible Bank project to assist in the modernization of the horticulture subsector. Subsequently, the Agricultural Bank of Greece (ABG) selected a foreign consultancy firm to prepare the feasibility study, under terms of refereace prepared by ABG with IBRD's assistance. The foreign exchange cost of the study (about US$300,000) was financed by the Greek Government from the proceeds of the IBRD Loan 1165-GR (East Vermion Irrigation Project). 6. The consultants' report completed in June 1977 constituted a reasonably good horticulture subsector study, but the organizational aspects, required changes in Government policies, and cost/benefit analysis needed further elaboration. Subsequently following discussions with two IBRD preappraisal missions, the consultants submitted a revised version of the report, which included sufficient in-depth analysis of abovementioned topics and served as the basis for the appraisal which took place in October 1977. One aspect of the preparation report on which the Bank had views different from those recommended by the consultants and the Government was on the organizational arrangements for the marketing of vegetables. 7. During project appraisal, the Bank recommended the Government to increase the interest rates for agricultural onlending activities and ABG's capital so as to improve ABG's financial viability. In 1978, and prior to negotiations, the Government increased the agricultural onlending rates by 0.51 (to 7.52 for short term and 6.5% for long term) and ABG's capital by about five times. By end 1979, ABG's long-term debt equity ratio was 4.6:1 compared to the 20:1 prevailing at the time of appraisal. In addition, during project preparation and appraisal, the Government and the Bank recognized the need for the Government to carry out a study of interest rates and agricultural subsidies as the basis for rationalizing its agricultural subsidy structure and for negotiating the policy changes required for its entry into the EEC. During negotiations it was agreed that ABG would prepare the study with the Bank assistance as part of Bank's regular project supervision. 8. The main objectives of t Le project, as set forth in the appraisal report, were to (a) increase foreign exchange earnings by expanding production of out-of-season vegetables; (b) strengthen existing research and extension institutions to promote production of high value crops; (c) help raise productivity of smallholders by promoting intensive cultivation; (d) promote improvement in the organization of the export marketing system; and (e) strengthen ABG, by helping to improve its lending operations and resource mobilization efforts. To achieve these objectives, the project included (a) construction of greenhouses on about 900 ha; (b) construction of packhouses and cold storages for vegetables; (c) provision of refrigerated tractor trailers; (d) improvement of existing research and extension institutions; and (e) improvement of the marketing system. These components which formed an integrated project, emphasized out-of-season vegetables in Peleponnesus and Crete, the most important areas for their production. The project, signed on July 10, 1978, was expected to be implemented between 1978 and 1982. 3- R. hmplementation 9. The project had a good start; even before the Loan was signed, the Government selected, sent, and financed a group of seven agronomists for a study tour to Israel, Cyprus and France to observe different methods of - producing out-of-season vegetables. By the end of 1978, ABG had developed new formats for loan appraisal including financial and ecor.omic evaluation of subprojects, introduced them for all its medium- and long-term lending operations, and prepared loan appraisals for all greenhouses to be financed under the project. In addition, the Ministry of Agriculture had selected a new group of eleven extensionists to receive training in production of out-of-season vegetables and was very active in selecting the group of researchers to be sent abroad for long-term training.- The development of the organizational and implementation plan for the marketing companies to be established under the project was, however, lagging behind as the Government was then awaiting the establishment of AGREX, the central state marketing company which was expected to have a significant role in the export market organization. It was not until October 1979, that AGREX was formed and the Government was prepared to consider hiring the required consultants for the estaLlishment of the marketing companies. 10. In spite of all the abovementioned progress in steps for project implementation, it was not until January 26, 1980 that the Loan Agreement was ratified by the Greek Parliament and the loan became effective thereafter on May 12, 1980, nearly two years after the loan signature and after four postponements of the date of effectiveness. This delay in project effectiveness did cause a loss of momentum in project implementation during 1979 and 1980, mainly of components dealing with institutional changes. Disbursements against project expenditures incurred during 1978 and 1979 were also delayed. Moreover, due to such delays, and to the devaluation of the Drachma during 1978-1980, the Greek Government suffered a loss of foreign exchange from the proceeds of the loan. This loss was exacerbated by further delays on submitting disbursement applications to the Bank. Due to this phenomenon and to the shortfall on some of the project components, US$5.lM of the proceeds of the loan could not be utilized in spite of a one-year extension of the closing date, and this amount was cancelled at the Government's request. The books were finally closed on March 1, 1985, 20 months after the original June 30, 1983 closing date. 11. Greenhouses. The construction of greenhouses under the project commenced by 1978, and achievements since the project started were close to the appraisal estimate in spite of the fact that project effectiveness was delayed by over one years. Construction in Peleponnesus was slower than in Crete during the first years of the project, but it picked up during project implementation. Following are the projected (appraisal) and actual area under greenhouses. -4- Cumulat4-e Area under Greenhouse Actual As Year Apprairal Actual 2 of Appraisal (Str)- 1978 1,400 1,050 75 1979 3,300 3,110 94 1980 5,300 4,760 90 1981 7,300 6,360 87 1982 9,000 7,780 86 1983 9,000 9,165 102 1984 9,000 10,750 119 Improvements were introduced in the technical specifications for the greenhouses financed under the project and those improved specifications were made applicable for all greenhouse loans provided by ABG even outside the project area. Most of the greenhouses constructed under the project during the first years used wooden frame but the trend towards those using metallic frame or a combination of wood and metallic frame increased during project implementation, especially for the constructior. of new greenhouses. This explains, in part, the increase in the average cost per strema of greenhouse over the project period from US$3,500 during 1978 to US$8,500 during 1984. Estimated average cost at appraisal was about US$6,600. The wooden frame greenhouse costed less but had a shorter life. According to ABG estimates, both types of technology yielded satisfactory financial and economic rates of return, but returns were reported to be somewhat higher on wooden greenhouses. 12. By the end of 1982, the original completion date, the project area covered by new greenhouses (2,314 str) was already higher than that estimated at appraisal (2,000 str) while replacement of existing greenhouses was about 701 of estimated target (4,964 str versus 7,000 str estimated at appraisal). Due to the high demand for new greenhouses and replacement of old ones, the Bank, at the request of Government, agreed to amend the Loan Agreement to allow construction of new greenhouses on about 3,600 str and replacement of old greenhouses on about 7,400 str. Thus, the total area under greenhouses to be financed by the project was increased from 9,000 str to 11,000 str. By mid-1984, the amended closing date, the project had financed replacement of greenhouses on 7,050 str and construction of new greenhouses on 3,700 str bringing the total area financed under the project to 10,750 at str. This figure is about 19% higher than the one estimated at appraisal. 13. Packhouses. The implementation of the packhouses component had a late start, mainly because of (a) the unexpectedly long periods it took to identify eligible subborrowers, (b) the traditionally slow process of decision-making by the cooperatives and/or unions of cooperatives, and (c) the relatively long period ABG took to prepare tender documents. This was coupled by the Government's decision, in 1980, to postpone approval of packhouse subloans until the marketing organizations had been formed. It was not until 1981 that potential subborrowers were finally identified, although marketing organizations had not been formed. However, approval of subloans was further delayed because beneficiaries of the packhouse component were unable to contribute 202 of proposed investment as a down payment contribution required by Project Agreement. In May 1982, the Government requested the Bank to modify the Loan Agreement to exempt beneficiaries for this component from the down payment contribution. The Bank, however, did not agree to th.s proposal but recommended ABG to require borrowers' contribution as a matter of standard financial principle of financial soundness and as an indicator of borrower commitment. To solve the beneficiaries' apparent lack of cash, the Bank recommended ABG to consider land and labor as borrower's contribution and if such contributions were not sufficient, to extend loans to individual members of cooperatives to be used as contribution to proposed investments. 14. The original implementation schedule included the construction of six new packhou4es with appropriate cooling facilities and the improvement of a number of existing packhouses. The actual implementation at project completion involved the construction of two new packhouses and the improvement of five existing one. Most of these investments were completed during 1984. The poor performance of this component appears to be associated with the continued fragmentation of Greek exports, with most exporters not handling the volume required to support investments in packhouses (see para 17). 15. Refrigerated Tractor-trailers. At the time of appraisal it was recognized that although overall existing fleet capacity was adequate to transport expected future exports, there was a need to upgrade and replace existing units with modern tractor-trailers. According to appraisal estimates, about 40 to 50 tractor-trailers were expected to be procured under the project. This component was initially delayed because the Project Agreement required the potential subborrowers to be experienced trucking companies whose main activities included the export of fresh horticultural produce. That requirement narrowed considerably the potential subborrowers by excluding private individuals licensed to be engaged in the trucking business. It also excluded the possibilities of new companies. These requirements were relaxed during 1981 and 1982 to allow subloans for new companies and for private individuals. The amendments also allowed ABG to exceed the limit of five tractor-trailers per beneficiary. 16. At the end of the project period, 21 subloans were signed for this component comprising seven refrigerated tractor-trailers, four tractors and 12 refrigerated trailers. In addition, one application for Eurokreta, approved by ABG in 1981, for the purchase of 16 tractor-trucks was not effective because the company was unable to obtain a license from the Ministry of Transportation to engage in the trucking business. The major reasons for the shortfalls on this component could be summarized as follows: (a) General slackening of demand for trucks following reduction in business with the Middle Eaaj. There y an apparent surplus of refrigerated trucks reported in Gteece in 1981; (b) The Government delays in granting licenses to new large companies which blocked the financing of 16 trucks under the project; (c) Failure to form large fruit and vegetable export marketing companies which could have utilized refrigerated trucks more effectively; and (d) Very high taxes (about 45%) on imported new trucks, which encouraged purchases and importation of reconditioned trucks which could not be financed under the project. It was,reported -6- that, during 1983, about 700 used trucks were imported into Greece from Germany. Used truck costs (including import duties) were reported to be between Dr. 2.0 to 2.5M against Dr. 5.8M for new ones. It could be concluded that, although this component fell short of appraisal estimates, it does not appear to have been a major constraint in the development of horticultural exports. However, eligibility of imported used trucks for project financing could have improved implementation performance of this component while it would have also helped the project to have a greater impact in the modernization of the transportation services for fruits and vegetables. This possibility, although feasible, was never explored by the Bank or the Borrower. 17. Marketing Organizations. The marketing system in Greece is composed of different forms of organizations including: (a) individual growers or grower partnerships actively selling their own produce in distant markets; (b) individual growers who also own one or more packhouses and export production of other growers; (c) private exporters (not growers) with or without packhouses; (d) marketing cooperatives and unions of cooperatives; and (e) producer groups, highly or loosely organized; This situation has hardly changed since the time the project was appraised. There are still too many exporters of fresh fruits and vegetables in Greece; about 3,500 private exporters and about 1,000 cooperati'.,s have the right to export. This number was to have been reduced by more strict licensing, but existing private exporters have successfully lobbied against tightening the export regulations. 18. In the preparation report, the consuitants recommended the formation of a number of regional export marketing agencies. These were to be commercial trading companies whose shares would be offered to cooperatives and private exporters as well as to AGREX and ABG. Membership was to be voluntary and encouraged by limiting government incentives to regional export marketing agency members. There was also to be a Central Export Coordinating Committee which, however, was not to have a trading function, but have overseas agents to provide market information to regional agencies. The report also proposed the introduction of an auction system at the wholesale stage of marketing in large urban centers. 19. During appraisal, the Government's concept was to promote a number of strong regional vegetable cooperatives and to rely on AGREX to sell their produce. The reasons for this strategy were partly to emulate the relatively successful operations of the Macedonian cooperatives in exporting peaches 1/ 1/ Peach exports are a special case, where packhouses are grouped on the railway line near Thessalonika, and exports sent by INTERFRlGO wagons. -7- and partly due to a strong preference for cooperatives. It was clear, however, that most cooperatives in Greece were weak and that a vegetable export marketing strategy based upon regional marketing companies should plan to build on dynamic sectors (such as producer groups and individual exporters) as well as on the cooperatives. Hence, the Bank proposed that membership in the regional marketing companies be opened to all these groups. 20. The second major point of discussion at appraisal was the function of the Central Export Marketing Company proposed by the Government. This role was to be undertaken by AGREX, a company owned 60% by ABC. In contrast to the Gqvernment'8 proposal, the preparation report proposed, and the Bank agreed, that the Central company should have a coordinating and service role rather than a sales function. The reasoning was that the regional companies should themselves be responsible to their shareholders for their own business and not accept directions from third parties from what would be in effect a "marketing board". 21. ABG and the Bank reached agreement during appraisal on the following common premises: (a) larger unit marketing companies with grower shareholders; (b) provision of experienced management through technical assistance, funded initially by the Government; (c) with some reservations, a two-tier structure, i.e., regional and national levels. The main disagreements centered, however, on the need to broaden the eligibility of shareholders and on the level of regional decision making. Finally, agreement was reached to set up four regional companies. The operational features of the companies were, however, left to be agreed during project implementation. 22. During project implementation the Bank consistently urged ABG to expedite implementation of the marketing component. However, legislative 1/ and other delays, 2/ most of which were outside ABG's control, slowed down the formation of the companies and the hiring of consultants. It was not until December 1981 that the consultant for this component was finally hired. Meanwhile, in 1981, political changes took place in Greece 3/, and ABG in its attempt to implement this component went progressively closer to the Government's original proposal based mainly in the cooperative system for the formation of the marketing companies. The lack of Bank field mission from October 1980 to February 1982 to supervise this project might have exacerbated failure in reaching an agreement with the Government on ways to implement that component (para 41 of overview). 23. Thus, the marketing component has not been successfully implemented largely because the Government, mainly the Ministries of Agriculture, Commerce and Transport, took up to 1982 to agree on a common export marketing strategy l/ The formation of AGREX was finally decreed in October 1979. 2/ Loan Agreement was finally ratified in January 1980, and loan became effective in May 1980 nearly two years after loan signature. 3/ During that year, a socialist government replace the conservative one. -8- and to approve the necessary laws and regulations. In addition, the different proposals submitted to the Bank since 1982 had a number of features, mainly concerning eligibility for shareholding in the proposed regional companies and the functions of the Central Export Marketing Company, which were not acceptable to the Bank. These proposals were similar to those which had been earlier presented to the Bank at appraisal and considered inadequate for promoting vegetable exports because they (a) were mainly based on the cooperative sector and excluded the already well-developed private exporters; and (b) required compulsory marketing of produce through the regional marketing organizations. 24. Currently, the Government has included in its five-year plan a project to establish regional markets (15 or 20 in all) at which all fruits and vegetables would eventually be required to be marketed. Growers will bring their produce to be graded and auctioned. The objective of such a system is to encourage competitive price formation and standardization. The Government plans to hire foreign experts to advise on how to combine the functions of establishing these regional markets and improving exports. The coac of establishing such a system is expected to be financed by the EEC and the Government. A proposal with a number of similar features to this one was prepared by the project financed consultant and submitted to the Bank in 1982 for Bank financing (para 23). In addition, the auction market on a compulsory basis does not appear to be the best solution to the problem of organizing the large number of existing individual small exporters in the Greek context. 25. Extension Activities. Under the project, a good initiative was taken in implementing the extension component, mainly in the areas of greenhouses management, increased capacity for local training, increased farm visits, and increased awareness and knowledge of problems and solutions of vegetable production in greenhouses. Most of the equipment and facilities provided under the project were delivered or constructed by end 1981. In addition, 25 man-months of foreign consultancy services were provided between 1980 and 1982. Out of the 33 man-years of ove.seas training for extension staff provided under the project, about 18 man-years were taken up, and two study tours were arranged for extension officers to visit modern greenhouses, market organizations and extension institutes in various European states. A total of 27 agronomists took part of such training for a period of about 20 days each. Four plastic houses, 2 for each demonstration center (at Kalamatra, Peleponnesus and Messara, Crete) were also constructed under the project and are now being intensively used for local training. 26. Failure to utilize all the training provided for under the project was mainly due to language difficulties of qualified agronomists and the difficulties they encountered in securing places in foreign universities. 27. The two consultants hired under this component participated in developing the training program abroad, the local training activities of both staff and growers in greenhouse management, and the revised list of equipment for the extension component. In addition, they emphasized the need for, and collaborated in, establishing a soil, plant and water laboratory service in an effort to determine, as a matter of urgency, nutritional requirements and measures for solving salinity problems. The consultants made sound recommendations to meet specific growers' concerns, only stopping short of proposing general measures for e'eablishing a more intensive extension program. -9- 28. Following the departure of the extension consultants, farmers' training has been provided by previously trained Greek agronomists in collaboration with the research consultant assigned to Peleponnesus. Local training is provided to agronomists and growers at demonstration centers and involves various aspects of management of vegetables in greenhouses. 29. Research. After a slow start, increasing emphasis in research activities was placed on greenhouse heating, screening of cold resistant varieties, changes in date of planting, crop varieties, nutritional aspects and other cultural practices. Foreign training was provided to 11 trainees for postgraduate studies (eight for M.S. and three Ph.D. degrees). Three foreign consultants, two part time in Crete and one full time in Peleponnesus, were engaged under the project. The two short-term consultants reviewed the ongoing research operations and recommended certain changes in research emphasis, most of which were implemented during the project periods. The contribution of the full-time consultant assigned to Peleponnesus proved to be more fruitful as he was able to recommend, plan, and implement a number of research activities. His emphasis on trials on heating at different temperatures and with different sources of heat, double cropping, crop varieties, date of planting, and other cultural practices has proven to be very successful. It is expected that some of the results of the trials could be transferred, with some modifications, to Crete. His input was also reflected in the ceaching qualities of his Greek counterparts. The main results of the research programs were presented at special meetings (specifically organized for the purpose of this project) to researchers, extensionists and other relevant personnel during 1980, 1982 and 1984. Results are being disseminated tr farmers through the extension system. These meetings have proven to be very useful, and the Government plans to continue them every two years in the future. 30. Twenty-four greenhouses of half a strema each have been constructed for research purposes, of which six are in Peleponnesus and the remaining 18 in Crete. From the equipment and vehicle list envisaged for this component at appraisal, only the vehicles and small chemical testing equipment were procured before the project closing date. Delay in procuring the remaining equipment was due to bureaucratic procedures needed to be followed in the preparation and approval of tendering documents. 31. Study on Interest and Agricultural Gubsidies. The terms of reference and technical framework for the study were prepared by ABG's team of experts with Bank assistance on March 1979. During preparation of the study, three Bank one-expert missions visited Greece to review the status of preparation and the analytical approach of the study. It was finally completed and submitted to the Bank on September 1980, nearly one year behind schedule. The report provided good background information on the historical development of agricultural institutions and policies, and on other aspects of agricultural development. TLe background information was, however, not fully utilized in evaluating the impact of the various policies on agricultural development and in formulating policy recommendations. It was reported, however, to have provided a good basis for the Government's negotiating position with regard to policy changes required for its entry into the EEC. - 10 - E1m. Project Costs 32. At the time of appraisal, total project costs including physical contingencies and expected price increases were estimated at Dr. 3,076.7M (US$84M) with a foreign exchange component (direct and indirect) of US$40M or of about 48% of total costs. The actual cost of the project amounted to Dr. 5,589.7M (US$73.3M) with a foreign exchange component of US$40.7M or about 55.5% of total costs. The lower than estimated total project costs in US$ was due to shortfalls in all project components but the construction of greenhouses, while the additional cost in Drachmas was mainly due to the higher than anticipated internal inflation during project implementation (about 20% per year compared with about 7% per year estimated at appraisal) coupled with about 200% devaluation of the Drachma. TV. Agricultural hnpact 33. As envisaged at appraisal, cucumbers, tomatoes, eggplants, peppers, and melons are the most important greenhouse crops, with cucumbers being the main crop produced and the only crop exported to European markets, mainly to West Germany. Melons are planted in the greenhouses following the cucumber crop. The tomato variety "Early Pack" currently grown in the project area produces large fruits which are suitable for the domestic market and export to Middle Eastern countries but not to Europe whose consumers prefer small tomatoes. The eggplant and pepper varieties presently grown are suitable for the domestic market only. The melon varieties are of excellent quality and are suitable for both domestic and export markets. Export of cucumbers in the project area rose from 4,500 tons in 1978 to about 32,300 tons in 1984, while production rose from 9,600 tons to 80,300 tons during the same period. 34. The continued monocrop orientation of exports is partly due to the still persistent weakness of the marketing organization-the large number of traditional exporters are not strong enough to conduct market research to introduce new export products-but mostly due to the failure to identify appropriate varieties preferred in the European markets suitable for Greek growing conditions. It is expected that the research now being conducted, especially on tomato varieties, will soou provide an adequate type of tomato acceptable in foreign markets. V. Economic Rate of Return 35. At the time of appraisal, the Economic Rate of Return (ERR) on the proposed investments for the Vegetable Production and Marketing project as a whole was estimated at about 35%. No separate ERRs were calculated for individual components because they were considered to be interdependent. The ERR recalculated in the Government's PCR is 29% and is considered to be satisfactory. It is mainly the result of the implementation of the greenhouse component and, te a lesser extent, the extension and research components. Most of the benefits of the latter two components will still reach full development in the years to come. Because the other three components (marketing, tractor trailers and packhouses) were either not implementeid - IL - (marketing organizations) or were completed to a lower level of investment during the present year, no estimates of their impact were available at the time of the preparaticn of the PCR. Therefore, possible incremental benefits due to those components were not included in the Government's PCR calculation. It is also important to note that at appraisal the "without project" situation for the areas where greenhouses were to be replaced, was assumed to be a return to open field cultivation and therefore per strema benefits in the without case situation were estimated at very low levels. In the Government's PCR, it has been assumed that without the project, the existing greenhouses would have been replaced with construction of lower quality greenhouse and therefore yields would be at about 70% of those achieved under improved greenhouse. This assumption is considered to be more realistic then the one adopted at appraisal. VI. Institutional Performance 36. Government. Considerable delays were experienced in obtaining the ratification of the Loan Agreement by the Greek Parliament, a requirement for the project to become effective (para 10). Delays in reaching agreement between the Ministries of Agriculture, Commerce and Transport on the strategy for developing the export market system prevented implementation of the marketing component (para 23) and caused shortfalls in the implementation of packhouses (para 14) and tractor-trailer (para 16) components. To improve the financial viability of ABG, the Government in 1978 raised the agricultural onlending rates by 0.5% and decreed increases in ABG's capital of about 400% (para 7). During project implementation, with a view to compensating the banking system in part for increasing internal inflation rates, the Government decreed several increases in interest rates for the economy as a whole. Currently, agricultural interest rates vary from 14% to 17%, however they are still below the current annual rate of inflation 1/. 37. Since the project started, the Ministry of Agriculture has been very eager and active in implementing the research and extension components. Delays occurred, however, in the preparation of tender documents for procuring research equipment and in approving procurement decisions thereafter. As a consequence, such equipment could not be procured under the project (para 30). 38. Agricultural Bank of Greece. On the whole, ABG has been very effective implementing the project. Early in the project period, ABG developed and introduced new formats and procedures for the appraisal of medium and long term loans (para 9), and, in spite of delays in project effectiveness, it was very active in implementing the project. Loans for construction of greenhouses were close to appraisal targets since the project started (para 11). Some delays in implementing the other two credit components were partly due to internal bureaucratic procedures within ABG in preparing and approving tender documents, but mostly due to the general failure in reaching an agreement on the strategy for developing marketing organizations, which was outside ABG's control. 39. As agreed during negotiations, ABG's long term debt equity ratio, as defined in the Supplemental Letter No. 3 to the Loan Agreement, 2/ was 1J/ Rates of inflation have been at 20% during 1983 and at 18% during 1984. 2/ Short-term debt is excluded from total liabilities. - 12 - kept at about 8:1 during all the project years prior to 1983. However, the long-term debt equity ratio has substantially increased from about 4.5:1 in 1978 to about 9:1 during 1983, while the overall debt equity ratio 1/ increased from 7.5:1 in 1978 to 21:1 in 1983, a nearly 200Z increase due mainly to the rapid growth in short-term debt. During the same period, however, the return on Average Equity increased from about 1% in 1978 to about 82 in 1983 while ABG's net spread increased by 1 point, from 0.4% in 1978 to 1.4% in 1983. 40. Performance of the Consultants. The foreign consultants, appointed to assist the Ministry of Agricultural in designing the extension training system, introduced a number of recommendations which were readily implemented to improve the production of fruits and vegetables (para 26). The consultants employed to assist the Ministry of Agriculture in reviewing the researcl programs have been most useful in providing reorientation of research emphasis, developing a quite successful fruit and vegetable adaptive research plan, and providing training to local counterparts (para 29). The consultant engaged to assist ABG in preparing the detailed features of the regional marketing companies prepared a proposal which was well received by the Government (para 24). It lacked, however, the statutory details for the establishment of the companies, and it was not considered appropriate by the Bank since it excluded the already well-developed private exporters and required compulsory marketing of produce through the regional marketing organizations. 41. Performance of the Bank. During project preparation, the Benk assisted the Government in preparing the terms of reference for the feasibility study and agreed to finance the cost of such study from the proceeds of Loan 1165-GR (para 5). During project preparation and appraisal, the Bank recommended increases in agricultural onlending rates and of ABG's capital to improve ABG's financial viability (para 7) and assisted the Government in the preparation of the technical framework for the study of interest rates and agricultural subsidies (para 31). It, however, underestimated the time and resources required for reaching agreement with the Government in the operational features for the establishment of the marketing organizations. Moreover, lack of field supervision for this project for over a year from October 1980 to February 1982 hbas probably exacerbated the lack of understanding between the Government and the Bank with regard to the establishment of the marketing organizations. 1/ Total debt over total equity. - 13 - Concusions and Lesons Learned 42. In general and in spite of moderate implementation delays and shortfalls in implementing three of the six project components, the project is considered to have achieved most of its major objectives. During the project period-1978-1984-the production of cucumbers, the main product grown under greenhouses in the project area, increased by eight times while the quantities exported increased by about five times. On the other hand, the nu *nefit per strema, before interest and depreciation, increased by about five times. The fact that the improvements to the marketing system were not fully implemented does not appear to have successfully prevented the overall performance of the project as the already existing marketing channels were used to promote project induced production in internal and external markets. Shortfalls in the implementation of the marketing components might, however, have prevented Greece from taking great advantage of the export markets. The improvements to the extension and research programs have already significantly contributed to the development of applied research, to the dissemination of modern and intensive cultivation techniques to farmers, and to increase the productivity of greenhouse cultivation, not only in the project area but also outside it. 43. Close and intensive collaboration between the Government, the consultants and the Bank from the initial stages of the project cycle resulted in a smooth completion of project appraisal and Loan negotiations with significant improvements to the institutional and operational aspects of ABG's work. It also facilitated the successful implementation of three of the six project components without major delays. 44. Lack of clear and detailed organizational agreement for the implementation of regional marketing companies during project appraisal, coupled. with substantial delays in project effectiveness (which prevented hiring of the marketing consultant) and followed by an absence of Bank field supervision missions for about 16 months during a critical stage of project implementation, were the main reasons for the inability to reach agreement on the strategy to be followed to successfully implement the marketing component. 45. Although ABG's long-term debt equity ratio has deteriorated during the project period, from 4.5:1 in 1978 to 9:1 in 1983, its return to average equity increased from about 1% to about 82 and its net spread (before provision for bad debts) from 0.41 to 1.41 during the same period. Document 1768C GREEC VEGETABLE PRODUCTION AND MARKETING (LOAN 1588-GR) PROJECT FINANCING PROPOSED AT APPRAISAL ACTUAL ABSG & of Total ABG & X of Total IBRO Government BeneficiAries Total Cgst IBRO Government Benefigiaries Total Cost Greenhouses 23.4 28.0 12.9 64.3 77 23.50 32.90 14.10 70.50 96 Research and Extension 2.5 - - 4.3 5 0.80 n/s - 0.80 1 - Marketing 0.3 1.2 1.4 2.9 3 0.0 n/s - 0.05 nls a Pickhouses and Cold Storages 1.7 2z1 0.9 4.7 6 0.50 0.40 - 0.90 1 Tractor-Trailers 2.1 2.6 3.1 7.8 9 0.05 0.60 0.40 1.05 1 Total 30.0 35.7 18.3 84.0 100 24.90 33.90 14.51 73.30 100 z 36 42 22 100 34 46 2n 100 1768C 9 - 15 - Agppendix 2 GREECE VEGETABLE PRODUCTION AND MARKETING PROJECT (LOAN 1588-GR) Estimated and Actual Loan Disbursements CUMULATIVE DISBURSEMENT ACTUAL END OF QUARTER As % of (US$ Million) Estimate SAR Estimated Actual FY79 March 31, 1979 2.4 - 0 June 30, 1979 5.0 - 0 FY80 Sept. 30, 1979 6.7 - 0 Dec. 31, 1979 8.5 - 0 March 31, 1980 10.0 - O June 30, 1980 11.5 4.6 40 FY81 Sept. 30, 1980 13.2 5.1 39 Dec. 31, 1980 14.9 6.7 45 March 31, 1981 16.5 8.3 50 June 30, 1981 18.2 9.3 FY82 Sept. 30, 1981 19.8 10.0 50 Dec. 31, 1981 21.5 10.0 47 March 31, 1982 23.1 12.2 53 June 30, 1982 24.7 12.4 50 FY83 Sept. 30, 1982 26.0 13.2 5 1 Dec. 31, 1982 27.0 14.6 54 March 31, 1983 28.0 15.2 54 June 31, 1983 30.0 15.6 52 FY84 Sept. 30, 1983 30.0 16.1 54 Dec. 31, 1983 30.0 16.9 56 March 31, 1983 30.0 18.3 61 June 30, 1984 30.0 20.1 67 FY85 Sept. 30, 1984 30.0 20.6 69 Dec. 31, 1984 30.0 23.2 7, March 31,1985 30.0 24.9 83 - 16 - GREECE VEGETABLE PRODUCTION AND MARKETING PROJECT Appendix 3 (LOAN 1588-GR) PROJECT COMPLETION REPORT FINANCIAL RATIOS: AGRICULTURAL BANK OF GREECE (Million Drachmas) 1983 1982 1979 1978 Debt Equity Ratio Total Liabilities 483,589.7 385,153.9 167,537.0 139,473.0 Total Equity 22,856.0 20,974.7 19,693.9 19,502.0 - 21.2 18.4 8.5 7.5 Long-term Debt Equity Ratio Long-term Liability 203,562.9 171,282.6 104,873.0 92,642.0 Total Equity 22,866.0 20,974.7 19,693.0 19,502.0 R^titrn on Average Equity Net Income/ 1,881.5 191.0 Average Equity 21,915.5 19,597.5 = 8.6 1.0 Gross Revenues on Earning Assets Revenues for Int. & Comm. Earned/ 56,99.5 15,575.0 Average Earning Assets 449,600.0 170,284.5 a .12.7 9.2 Gross Expenditures on Earning Assets Interest & Commissions Paid/ 39,279.0 9,993.0 Average Earning Assets 449,600.0 170,284.5 = 8.7 5.9 Gross Spread on Averag. Earn. Assets Gross Earnings 12.7 9.2 Minos: Gross Expenditures 8.7 5.9 - 4.0 3.3 Administrative Cost on Earning Assets Administrative Expenses! 11,675.5 4,846.0 Average Earning Assets 449,660.0 170,284.5 = 2.6 2.9 Net Spread on Average Earning Assets Gross Spread on Earning Assets 4.0 3.3 Minos: Administrative Cost on Earn. Assets 2.6 2.9 8 1.4 0.4 AGRICULTURAL BANK OF GREECE ), vf0It6tOS $1B(IT ATHENS CO.IPITrON PORT ON THE VEA21E PRODtUC51t AND MP=ING PR}B= IN CREIE AND P OPNNESM A;HDS: JANtWi< 1985 AGRICULTURAL BANK OF GREECE 21. V E N I Z EL LO S I t k t I t AT HENS Table of Contents Paage I. Introduction 1 II. Project Identification Prenaration and appraisal 3 III. Irnlementation 8 IV. Financial Performance 20 V. Econari c Reevaluation 21 VI. Conclusions 22 Tie agricultural sector in Greece reains ; basic branch of the eoonarty sharing about 17% of MP in 1983 frm about 23% in 1965. It accouts for 31% of total exports and empaloys 27% of the active population. Fruts and vegetables accmt f& about 41% of agricultural exports yieldirg nearly aS $ 467 million of foreign exchange in 1983. Mst of the fruits and nearly all of the vegetable exports are marketed in the EEC. Annual gross fixed investnt ireased fran US $ 204 million Ln 1970 tO US $ 565 million in 1983 which accouted -for about 8% of total gross fixed investent in the ecna¢y during the same year. The nain characteristics of Greek agriculture are its small and fragmented land holdings, the smal1 percentage of irrigated land, (only 25% of the culti- vable land), the inefficient organization of the marketing system and the i ate research and extension services. As a result the azrerage farmn inome is low ccapared to the national average incxie and mnany fanners try to increase their earnings with part time eplont or by intnsive cultivation (such as through investments in green houses) of high value crops (such as out of season vegetables). In order to face these problens the Gverrment eiphasizes in the National Development Plan and Investnent Progrmu for the agricultural sector the expan- sion of irrigated area, the consolidation of fragmented land holdings, the improvement of marketing organization and facilities and the expansion of intensive cultivations. Therefore the specific project for vegetable produdtion and marketing held a high priority for implementation. The project included the oonstrn=tion of greenhouses, the improvement of existang research and extension services, the orcanization of marketing com- panies, the construction of packhouses and cold storages for veaetables and supply refrigerated tractor trailers for transport of project commodities. The total cost of the project was estimated US $ 84 million (Dr. 3075,7 million) and the sources of finarce were the Wrld Bank (US $ 30 million), the Agricultural Bank of Greece (US $ 33,9 million) ,the beneficiaries (US $ 18,3 million) and the Covement (US $ 1,8 million). The inmplrenting agency for the major part of the project and credit channel for most of the investments is the Agricultural Bank of Greece. The -2- Ministry of Agriculture also has undertaken the ixrplemntation of the part of the project which deals with research and extension services. The Agricultural Bank of Greece was established in 1929 as an independent banking institution and belongs to the category of Public Banks. The main activities of ABG are: the provision of credit to farners through short term and long term loans, the financing and support of farmers' coopera- tive organizations and the setting up and operation of modern units for the packaging, standardisation and processing of all kinds of farm products. EVxthenmore the Bank undertakes on behalf of the state all of the financial with dealings connected the inplemrentation of the Common Agricultural Policy. The Bank also makes special efforts for a more rational organization of production and for improving the efficiency of Agricultural production units. In addition it accepts time and saving deposits and owns the majority of the stock of an Agricultural Insurance Ccupany. The ABG employs about 6.700 employees and nearly half of its personnel are well e.xnerienced universitv graduates. Its central office is located in Athens but the net work of 187 branches and 159 offices for collec- tion of deposits is wide spread all over the country. The ABG is directed by the Governor and his Deputy,but suprema admini- strative authority is vested on the Board of Directors consisting of 13 members. -3- II. PRDEJr mENrFIQCN, PRPEARATINC AND APPRAISAL The Ministry of Agriclture identified the need for a develcoent project for the production andmsrketing of horticultural products, mainly because of the importance of the above subsector for the agricultural sector of the Greek econauy and the prospect of the entry of the cunntry into the Europen Ecnomic Ccmmity and the consequent need for the adjust- mst of horticultral production and rarketing to the standards of the EEC. under these circumstances the tMJnistry of Agricu-It.re and the Agricul- tural Bank of Greece entrusted the study of the production and marketing of the horticultural products and the preparation of a developmnnt project to the Stevenson and Kellogg consultant ccmpany. In this study the main prcblems of the sector, such as the small and fragmented land holdings, the low labour productivity, the limited income of the producers, the ineffi- ciencies of the marketing channel and the poor research and extension servi- ces were concretely identified. One of the basic findings of the study on which the developrent project was based was the good prospects for the increase of the production of the out-of-season vegetables in the areas of Crete and Peloponnesus due to the favourable weather conditions which prevail in these areas. During the preparation of the study and the developrent project, the Ministry of Agriculture and the Agricultural Bank of Greece. provided the proper assistance to the consulting team of Stevenson and Kellogg in order to carry cut its task effectively. Ihe preparation of the project by the consultant's company followed smoothly the original identification of it by the Ministry of Agriculture and there were no major delays between these successive procedLres. Further- more, we could say that the scope of the project was clear from the beginning and there was no need for any revision dLurin the preparation procedure. The project included adequate information about the producticn conditions, the situation in the marketing channels and inresearch and extension services in the specific areas of Crete and Peloponnesus and for the subsector of out of seascn vegetables. During the preparation of th.e project the executing acencies w-ere fullv informed f or any conditions and rec-uirements concemnnia it. The projec- included provisions and was an oppzor-itv for the inrro-rement of +-e -4- project appraisal procedures used by the Agricultural Bank of Greece, contribut- ing in this wy to the trainina of its perscnel. The appraisal of the project was carried out in October/November 1977 by a team consist of World Bankofficials and other cnsultants. The cmUted financial and econanic rates of return showed that the impleTlentation of the project would benefit the varicus participating entities. In general the idendification, preparation and appraisal procedures were properly cacupleted without any special problem and the collaboration among the participating entities, was smooth and effective. The project was in the Governnmt's priority list of devel opnt programs. in the agricultural sector because of the importance of out of season vegetables subsector in the agricultural economy. The contributicn of the project to the regional development of Crete and Peloponnesus is quite significant since, according to ABG data for the year 1982,the production under greenhouses reprew-snts 10% of the total crop production in Crete and 5% of the total crop production in Peloponnesus. Especially in the regions of Heraclion (Crete) the producticn under greenhouses represents 14% of the total crop production of the region and in Chania 5% of the total crop production. As far as Pelopcnnesus is concerned the sane percentage for Calamata, Pirgos and Sparti is 7%, 4% and 3r respectively. The importance of the project for the area is even greater because of the introduction of new methods of cultivation which would increase productivity in the areas of the project and consequently farners inccoie. The project would consist of the following complementary cc nents: -construction of greenhouses on about 9.000 stremma to permit the producticn of out of season vegetables,-provision of equipment,-training and consultant services and facilities to i=rove existing research and extensicn services, -consultant services and facilities to help organize marketing ca panies mainly to prarote exports,-construction and irmprovement of packhouses and cold storages for vegetables, and-supply of refrigerated tractor trailers for transport of project commodities. Greenhouses The greenhouses cam=onent would involve replacement of small, old and inefficient plastic houses with i=proved standard areerMouses on about 7, OOO stremma and the erection of new oreenhouses on about 2,000 stren.m which were under open cultivation. About 75% of the total area would be located in Crete and the renaining 25% in Peloponnesus. The greenhouses wsld be designed to meet the specific weather and producticn conditions of Crete and Pelopnnesus. Pesearch and Extension Egaipnent and supplies wuld be provided to selected research centers and institutes and to extension services operating in the project areas. The research equipment "Clpennit in-depth investigations in identified areas such as vegetable varieties,heat ventilation greenhouse struc- tures and coverings. The extension service would be provid6d with basic materials and supplies to conduct an effective program. Most of the research ewiiEment would be for centers and institutes in Crete and Peloponnesus,but others,ukhich are located outside these regions but their research programs benefit project needs wcld also be eligible recipients. Apprcocimately 50 nn years of training abroad waRld be provided for 8 research and 30-40 extension personnel. lwo research and two extension consultants, one each for Crete and Pelo- pcnnesus,wculd be provided. Each consultant would have at least one counter- part in additiont%ther local research and extension persanne' wculd be eployed to assist in conducting programs to be developed by the consultants. Each of the research and extension consultants wold serve for about four and three years respectively but the duration of their services is subject to review depending on project needs. Marketing Organization Abcut four marketing copanies wculd be established in Crete and Pelo- ponnesus. These companies would be involved in the marketing of primarily horticultural prodacts in both domestic and export markets. The project wculd provide office buildings and equipment and about 4 man-years of foreian consultant services to help in establishina and organizing the companies and in operating them initially. It would also provide funds to cover salaries o- -6- local coterxpart and support staff and recurrent expenditures during the initial three years of operation. Packhouses and Cold Storages . Six new packhasses with appropriate cooling facilities w.ld be con- stxted and at least as vapy existing packhuss wmld be imroved. They uld be sLitable for nultiproduct use and each of them wwxd have a capa- city of 40 tons per day except one which wzuld have a capacity of only 25 tons. Typical improvecents of existing packhouses woud involve replacement of packing lines and addition of cold stores. Refrigerated tractor-trailers The project would provide 50 refrigerated tractor-trailers each with a standard capacity of 20 tons and adapted to carry standard Europallets. Cost Estirates The total cost of the project including physical contingencies and expec- ted price increases is estinated at Dr. 3.076,7 million (US $ 84 million) with a foreign exchange cmxponent (direct and indirect) of US $ 40 million or 48% of total cost. The cost estinate is based cn June 1978 prices and includes taxes and duties computed at Dr. 430 million (US $ 11.7 million). Physical ccntingencies have been camputed at 10% on all items except for equiPrent and consultant services ihere no such contingencies were provided. Price cuntingencies on all civil works have been computed at annual ccax=ond rates of 9% during 1978-79 and 8% thereafter, continqencies on equipment have been estinated at annual conpound rates of 7.5% during 1978-1979 and 7% thereafter. These are based on the World Bank's "Guidelines on expected Price Increases. Jan. 31 1977". Financing Ihe proposed Bank loan of US $ 30 million wculd f iance abcut36% of the total cost of the project (75% of the foreign exchange caoponent) or about 42% of total cost net of taxes and duties. Of the remaining project cost of US $ 54 millions, ABG wculd finance US $ 33.9 million (40%),beneficiaries US c 18.3 million (22%) and Goveimnent US $ 1.8 million (2%). -7- The Agriltual Bank of Greece and the Ministxy of Aqriculture believe that the inplentation of the project wud lead to increase of the iWare of thebeneficiaries and this fact ccld provide a basis for the futare ecpansicr of the project. -8- III. IMLMNTAC The project was expected to be inplented during the 1978-82 period and procurwent to start towacs the end of 1978 and continue until mid 1982. me loan agreenent of the project was signed on July 10, 1978. After this date according to the provisions of the loan agreent investints were eligible for finance from the loan. However the disbursents had a late start because the declaraticn of the effectiveness of the loin was done an Yay 12, 1980 after the ratificaticn of the loan aggreenut by the Creek Parlianent, %bich took place con Jauary 26, 1980. As a consequence, the disbursemets which started after this date, yielded wsaller amomts in U.S. Dollars because the exchange rate between the US Dollar and the Drachma had chanced in the meantime. The revisions made after the construction of the project had started involved the following: - Consideration of private truck owners as beneficiaries of tractor trailer credit,provided that their main activities included the export of fresh horticultural produce. - In the case of EuroXKreta, a broad based ccpany of Crete,an exeeption was made to the number of tructor trailers to be approved for financing under the project. So 19 tructor trailers were approved for this ccapany but unfortunately it's still awaiting the operating licence from the Ministry of Transportation. - Reallocation of loan amounts and amendirent of the total areaL of green- houses were permittedsothat existing greenhouses to De replaced on about 7.400 str. instead of 7.000 str. reallocating the loan amount from 18.200.000 US Dollars to 14.700.000 US dollars and the additional greenhouses to be placed on 3.600 str. instead of 2.000 str. of open cultivated land realloca- ting the loan amount fran 5.200.000 US dollars to 8.700.000 US dollars. Thus the total area of greenhouses under the project was increased frar. 9.000 str. to 11.000 str. - For the narketing organization camTonent of the project, revisions were made twice for the dates of hirina marketinc consultants and for sub- ritting the orcanizational and unmlem-r.-ator- rlars for the marketing -9- cuanies the establishment of which was dissapointIng. (Ckly two murketing coftpanies were established which haven't operated yet). - The procedure for the realization of civil works for the construction of new padckuses was revised. According to this revision the procuremnt by international bidding was abandoned and the civil works of the new paac- uses could be ndetaken by local coatructors through public bidding. - The study on Agricultural interest rates and subsidies was ccipleted and its findings were very useful. - The closing date of the project was agreed to be the 30th of June 1984 instead of the 30th of June 1982. in ABG the executing agency issued periodic progress reports which were useful to other supervisory agencies as the Ruiistries of Agriculture and National Fconary and also to the World Bank. Prcrnient The problems which occured concern the procarezmt for the construction of the packinghouses and cold stores by Internaticnal Capetitive Bidding. These were due to the fact that the normal procedure for constructing buildings to be used by cooperative organizmans is through public bids where bidders alnrost always are local constructors and the cooperatives didn't agree to change this procedure. After the revision of this point the usual way for the civil work was followed and only the quipment were pr-oced through InternatLonal Bidding. The obvious benefits were not only the achievenent of better prices for the construction of packhouses but also a contribution to the econay of the area because locally produced materials and labor force were used. It rmust be noted that scai delay to this part of the project is due also to cooperatives elections which postponed decision making. -10- fnplementatian Schedule Part Al. Ccnstruction of greenhouses The actual constructions were above the oriainal estimations as far as the new ozeenhouses are concerned. The actual replacements have covered 100,7% of the original estimatiorns and 95,3% of the last cnes (after aendErent) The analyyti- Cal data ccmcerning the constructions is sIown below. Tble 1. Construction of greenhouses (str.) Estimated Actual New Replace- Tbtal New Replace- Tbtal 1978 300 1.100 1.400 820 2.288 3.108 1979 700 2.600 3.300 - 1980 1.200 4.100 5.300 1.226 3.406 4.632 1981 1.600 5.700 7.300 1.970,4 4.506 6.476,4 1982 2.OO e 7.000 9.000 2.313,8 4.963,5 7.277,3 1983 - - - 3.105,4 6.059,7 9.165,1 1984 3.600 7.400 11.000 3.699,8 7.050,3 10.750,1 The new greenhouses, which were constructed by the end of 1982, axe above the original esti$mtions, since 2.314 str. had been constructed instead of 2.000 str. that were estimated originally. Also by the end of Noverber 1984, 3.700 str. had been constructed instead of 3.600 str. that were estimtaed after the anendmrent of the area was nade. As far as the replacement of the existing greenhouses is concerned the area actually used until the end of November 1984 is 7.050 str. instead of 7.400 str. - which were the revised estimates. The loans sioned durinq the vears 1978-1984 are shown in tables 2a, 2b and amounted 4.215 nillicn Drs while the cost of the construction was 5.269 million Drs. The total area of greenhouses which corresponds to the above figures Of signed loans is 11.335 stremTas. The implementation of the qreenhouses component of the project could be considered very good coniared to that of the other coapcnents of it. The total area constructed is 10.750 str. which is 119,4% of that originally estimated and 97,8%0 of the last projection. Also the greenhouses established were better constructions than those existed before because new technical specifications were introdulced. This perrnitted new cultivation techniques to be developed which improved the qualitv and increased the yields of the products. .1. On the other hand, the illplenentation of the cther parts of the project influeneed to scae ectent the ecorts of the products of qreexnhouses .a:d caisequetly their,prices,affectinq nmstly the replacerent of thle exi- sting greenhouses. -12- Part A2. Packhouses and Cold Storages The original impleuntation schedule of this part of the project incltued the construction of six new packbouses with appropriate cooling facilities and the inpruvemt of many existing packhouses. T1 packhouses would have been suitable for mnultiproduct uss and each of them would have a capacity of 40 tons per day except one which would have a capacity of only 25 tons. The inproveirent of existinghuses would involve replaceent of packing lines and addition of cold stores. The actual inplementation involves the improvennt of five existing packIoses in Mires, Paleochora Selinon, Timbaki, Filiatra and Vori-Fan-}i and the construction of two new ones in Finikous and Skala (Table 3). The imprcvements which were made in the existing packhouses concerned the replacement or addition of packing lines and in the new cnes the construc- tion of buildings and the procurement of the necessary marhinery. All the above packhouses have been completed except that of Lakoniki in Skala, which is still in progress. The capacity of each of the above packhouses exceeds 20 tons per day for the cacumbers and scme of them are for multiproduct use (Details are shcwn in table 3). The total amount of loans signed for this part of the project is 126,2 million Drs. which also represents their total cost. P A3. Tractor trailers In this part of the project provision was made of about fifty refrige- rated tractor-trailers each with a standard capacity of about 20 tons. Beneficiaries of subloans under this part of the project had to be experienced trucking arues the mair activities of Which incl.uRe expor4 of fresh horticultural produce. mhe total nu-ter of tractor trailers to be financed for a single beneficiary couldn't exceed five. However exemption was made for Eurokreta,a broad based ccmpany of Crete, and a loan was approved for the procurement of 19 tractor trailers but unzfo-rt- nateiv this caorany didn't aet tne licence to operate as a trucking conp2r. - 13 - Also an other eption was rade and private truck owners were omsidered as ficiaries for credit because the tracking mpanies, despite the efforts made, didn't show intewstto be financed. After this revision, the loans which were signed by private owners a¢mted to 77.705 thousand drs and concened the purchase of 7 refrigerated tractor trailers, 4 tractors and 12, refrigera- ted trailers the total cost of which was 129.174 toand drs. The factors which affected the hplnta of this part of the project, wre the high ontribution of the beneficiaries and the high prices of the new refri- gerated tracto trailers. Part B. Marketing Organization The original ifrplentation schedule of this part of the project concered the establishilnt of four capanleS in Cete and Pe1oponnesus for the -arketing priarily of horticultural products to darestic and export markets, including inter alia about four man-years of foreign consultants' services for this par- pose. The appointment of the consultants should have taken place not later than Deceber 31, 1978 and the suhsion of inplemintation plans for the marke- ting cazpanies not later than June 30,1979. Actually the first regional marketing oanpany under the project was EPSIPAM in Messinia Pelcpornesus which was already in existence but has broadened its soope in 1980 so as to include the -arketing of agriul products in its activities. The new brand of the canpany was AGREK and its shareolders were Agrex 51% and the Central Union of Cooperatives Unions of Messinia 49%. The secnd regional marketing caq3any under the project was IAKMaE S.A.- which was established in 1981 and is located in Scala-Lakonia-Pelo}ia-sus. The shareholders of the campanv are the Union of Agricultural Cooperatives of Lakonia 55%, the Agricultural Cooperative of Glycavrissi 3%, the Agricultural Cooperative of Apidea 0,5% and the Agricultural Bank of Greece 41,5%. For LKONIKT S.A. a loan of 33 Lillion Drs has been also approved for the constrwuon of a packing house and the procuraent of the necessary machniery. No other marketing carpany was established and those established didn't operate because there was a chance in the policy concerng the marketing of the fam oducts.This policy is based on the establishment of Assetbly Markets in the production centers. As far as the euployment of marketing consultants is concerned only one Mr. Hatjisotiriou - was hlred through the Cypriot Consulting Firm N.V. Marketing Ltd (Mr. Vasiliou) &nd started-his duties on the first of November 1981. -14- Mr. Hatjisotiriou us expected to activate the regional marketin cama- nies of the Peloponnesus area (AG4, rAKaI(). qhe Consulting Firm's proposls were submitted during the first quarter of 1982 but the World Bank didn't consider them reasonable. Part C. Researh and Extension Programs a. Research - 1W Research Consultants, one for Crete and the other for Peloponncsus were prwided. Dr. H. Passam plant physiologist has been working in the Vegetable Institute of Kalazmta since Mrch 1981 and Professors R. Carolus and A. Bry uorked on a part tire basis in the region of Crete during 1980 and 1981. *ne above consultants helped the local research centres to plan and carry out various projects concerninq: - the testing of new vegetable varieties with special reference to fruit quality and productivity under unheated conditions. - new cultivation techniques including the use of vibration for fruit- setting of tomatoes, new methods of crop spacing, supDort and pruning, the use of grafting for disease control of certain crops, the use of mulching and of alternative planting substrates and propagation ccposts. - rpVrovenmit of methods of irrigation and fertilization with the assistance of leaf and substrate analyses. - iuprovement of disease and pest control methods includinq the use of biological control techniques and solar sterilization of the soil. - determination of actual production costs and potential maarket returns for the principal greenhouse vegetable crops and investiaaticn of ays to reduce oosts. - the solutien of some special local problems caused b" uater and soil salinitv, or the excessive use of fertilizers and other agrochemicals. Mhe main results of these projects were Dresented at special reetinas to the research, extension and other relevant personnel at Heraclion, durino April 1980, April 1982, and N ay 1984. tich meetinms will be repeated ever" tw vears. -15- - The training of research personmel concerned I1 trainees, 8 of whan were sent abroad under the original orcqmren and an additional 3 who departed this year under a supplerentarv agreenent with the Barnk and are still cCn- tinuing their studies. bhe nujority of trainees have conleted their training and are now reestablishe.. in their research posts. Additionally 3 trainees, with the agreeznt of the Bank, cconverted their studies to the level of Ph.D. degree instead of the level of M.Sc. as originally provided in the loan. Totally the above trainig prorane has comprised 20 nan-years abroad until now. above Ebr of the trainees are for Pelownnesus and the rennining 7 for Crete. A list of these trainees, by subject country and University can be provided if necessary. The equipent and supplies provided for the research centres Included: - the constnzction of new greenhouses for experimental ourposes, the provision of heatina systems, apparatus to monitor the greenhouse enviratwent, apparatus for soil sterilization. - tWo fourwheel transport vehicles - some items of equipirent for chemical residue testing, and for soil and leaf analysis. The reraining equipient for the laboratories is in the process of procure- ment but, owing to delays in purchasing procedure, will not be supplied before the end of 1984. b. Extension Two extension consultants were provided, W. Eric Le Tissier and J.G. Gillow,who worked for 25 mmn months in total-during 1WO,-1-081 and 1982. The above consultants heloed the extension services in the two regions with: - the orcranization of two trainina centres, one in Crete and the other in Peloponnesus,u*hich included. four cTreenhouses. The centres, Which are sti22. in orTe7lazo. are used for the denonstration o' iimroved cultiva-lion practices to extensiocr officers and farvers. -16- - the trainina of extension officers in all asoects of greenhouse operaticn and cultivation. - the train ina of farnvers to izprove cultivation methods, crop production and quality. - ozganizaticn of seminars an special topics of greenhouse operation for both extension officers and farmrs - the semiars being held both at the denmstration centres and in the areas of production. - the provision of infornatian leaflets for training purowses. Followina the departure of the extension consultants, the training of farmers and other extension officers uas undertaken by the previously trained agroncmists with the collaboratim of the research corsultant, Dr. Passam, .to has continued to work in Pelopennesus. Of the 33 nan-years overseas training for extension staff provided for in the programme, approxiLatelv 18 men-vears have been taken up. Thtally, 17 agronomists have been placed in foreicn institutions. Of these, 8 have returned and now work in the areas of the progran!. The renaina 9 will return during 1985. Additionally two familiarization visits were arranced for extension officers to visit modern greenhouses, institutions and markets in various u.roean states. Each visit ciorrised 20 days and in total 27 agronomists took part. Failure to utilize all the training period provided for in the programne was due to language difficulties on the part of some agronomists and also to difficulties in securing places at foreign universities. Of the various itens of equipnt for the extension service provided for in the progranme, the most essential have been purchased and are in use. -17- Costs The total cost of the project including physil cCntingencies 'and expected price increases was estimated at Ds. 3.076,7 millicn (US $ 84 million) with a foreign exchange coqnent (direct and 4 idirect) of US $ 40 million or 48% of total cost. mhe cost estinte was based on June 1978 prices and includes taxes and duties caiuted at Dr. 430 million (US $ 11.7 millicn). The actual cost of the project amted US $ 73.28 million with a foreign exchange cononent of US $ 4).73 million or 56% of the total cost (Table 7). Canp.rison between actual and estirated cost for the various cocrpments of the project shows the following: - The actual cost for the construction of greenhouses is US $ 70.5 million which is 41% more than that estimated while the area of the greenhouses constructed is 19.4% more than the original projection. - Ihe actual cost for the oackhouses and cold stores is US $ 0.90. millicn which is only 22 % of that estimted but onlv two new packhouses were con- structed instead of six and five existing were improved. The high costs of greenhouses and packhouses are due to the high inflation rates. - The actual cost for the refrigerated tractor trailers is US $ 1.01 million which is only 1i-A of that estimated and this is due to the fact that onlv 7 refrigerated tractor trailers, 4 tractors and 12 refrigerated trailers were purchased instead of 50 refrigerated tractor trailers that were esti- mated. - - The actual cost for marketing organization concerns only the cost of the marketing consultant which is US S 59.300. The cost is lower than the estimated because onlv one marketing consultant was hired for sixteen mnnths instead of four man-vears consultina services. - Ihe actual cost for research and extensicn is US $ 812.000 which is 21% of that estimated because the trainLna of extension Derscnnel concerned approximately 18 rman-vears instead of the 33 man-vears ovterseas traanm. -'a- Financial Sources Mhe fiAancial sources of the project were the following: US $ Million I World Bank 30,0 36 Agricultxral Bank of Greece 33,9 40 Beneficiaries 18,3 22 Governvnt 1,8 2 84,0 100 DLtailed financing plan for the different project canponents wcld have been as follows: BRD ABG Beneficiaries Governzrent Total (US $ million) Greenhouses 23,4 28,0 12,9 - 64,3 Reseanc-Extension 2,5 - - 1,8 4,3 Marketinc Organization 0,3 1,2 1,4 - 2,9 Packhouses-Cold stores 1,7 2,1 0,9 - 4,7 Tractor trailers 2,1 2,6 3,1 -7,8 Total 30,0 33,9 18,3 1,8 84,0 The foreign exchange component of the project was estimted US $ 40 million or 48% of the total cost. The percentange of the foreign exchange for the various components of the project was estimated as follows: Greenhouses 42% Reseazch and extension 59% Marketing organization 31% Packhouses-Cold stores 65% Tractor trailers 73% Continaencies 49% Ihe oroposed Bank loan of US $ 30 million was exoected to finance about 36% of the total cost of the project (75% of the foreign exchange component) or about 42% of total cost net of taxes and duties. The beneficiaries o- Jivesu--nrts in greenhouses and in packhouses and cold storaces were to contribute at least 20% each touards the cosrs -19- of these corponents while those elirijble for investnent in tractor trailers expected were to finance 40% of their cost. EKcept for foreign expenditurges an cnsul.tant services which were suR posed to be financed by the World Bannk, costs of estalishinc the proposed naxkting ccnpanies wold have been financed bv equitv contributions of the grower/exporter groups (51%) and of ABC (49%). The actual financing of the project was as follows: US $ Million Nbrld Bank 24,625 33,6 Agricultural Bank of Greece 33,985 46,4 Beneficiaries 14,505 19,8 Goverment 0,162 0,2 Total 73,277 100,0 The actual financing for the different project components was as follows: (US $ Million) IDR ABG Beneficiaries Governent Tbtal Greenhouses 23,376 33,020 14,100 - 70,496 Reseaxrh-Ectensicn 0,650 - - 0,162 0,812 Marketing-Organizatimn 0,052 0,007 - - 0,C59 Packhouses-Cold Stores 0,318 0,580 - - 0,898 Tractor trailers 0,229 0,378 0,405 - 1,012 Ibtal 24,625 33,985 14,50' 0,162 73,277 Tne actual foreign exchanae comDonent of the troject is US s 40,73 mIdllicn or 56% of the total cost. The percentage of the foreign exchange for the various components of the project wes as follows: Greenhouses 56% Research-Extension 81% Marketinc Organization 84% Packhouses-Cold Storacae 39% Tractor trailers 82% (Details for the above figures are shown -r. .tal;es 6C,7). -20.- IV. FIZNCIAL PERFOMCE Ihe financial rate of returu for the qreenhouses corvoent of the project vas estinated higher than 31% which is considered satisfactory ccapared to the figures uhich had been calculated, an tvnical investret rcdels and which ranged betem 22% and 40% according to the product concerned. The conxtations were based ai year 1983 prices of inputs and outputs and an the following assumpticns: - There is one year tixn lag betwen costs and benefits and the durability of the greenhouses is ten years. - For yields, prices, costs etc. actual data for the different crows in the project areas were used until 1984. For the next years the 1984 fiqures were used. = Without project, the area of the new established greenhouses would have been i for open-field cultivation while the existing greenhouses would have been replaced with constructions of lower quality and'as a result with lower yields (About 70% of the new ones with the project). This assumption is considered mocre realistic and is different from that made at the appraisal stage of the project where it was assuned that the entire area would be used for open field cultivation. - Residual value is estimated 10% of the cost of investments. - Details about the figures obtained after the above calculations are sh,cwn in table 8 -21- V. EOt09C REEvALUATICN fhe economic rate of return for the greenhouses conaent of the project is estinated higher than 29% which is ccnsidered satisfactory. The econanic rate of return estimted at the &ppraisal stacne was 35* but. concerned all the caompents of the project and so it cannot be ccxzpared with the figure estimated here. the mamn assulpticns 1-e&addition to those for the estimation of the financial rate of returX are the following: - The shadow price of US Doll=r - is estimated 10% higher than its official exchange rate. Thus whenever . a foreign exchange ccnv=ent is involved there is a 10% increase of the relevant value. - All the components of the project which are imported are free of duties and taxes. - Prices of inputs and eswecially those of fertilizern%z'e subsidized prices. - Labor is valued at the sare rate. - Details about the figures obtained after the above calculations are shown in table '3 -22- VI. CiNCLUSICNS The cbjectives of the project were to (a) increase foreign exchange eamings (and savings) and prc0te ecncanic growth by expanding production of cut-of-season vegetables in tlb high potential regions; (b) help raise labor- productivity on small farms by promting intensive cultivaticn; (c) strengthenexisting research and extensin institutions so as to prcste production of high value crops; (d) strengthen the Agriltr Bank of Greece by enabling it to =Prove its lending operations and recourse mobi- lization efforts. On the wihole we consider that the project succeded its objectives. 7he production of cucumbers itLich was the main product in the areas of the project increased by 8,4 tines fran 1978/1979 to 1983/84. In the same period the quantity of exports of cucmbers produwed in the areas of the project increased by 4,9 times. On the other hand the net benefit per stren- na . before interest and depreciation increased by 4,9 times. During the implementation of the project, fran 1977 to 1984, the Agricultural Bank of Greece and its branches in the areas of the project received considered and approved 7.554 applications for loans for the installation of new green- houses and for the replacenent of the existing ones. We consider that although the part of the project concernincr the market- ing facilities was not fully implemented, this fact did not have an adverse effer cPhe overall perfornance of the project because the already existing marketing chanels were used efficiently for the promotion of the products to the final consuuer. The inprovement of the infrastructure in research and extension faci- lities in the areas of the project contributed sionificantly to the applica- tion and use of mnodern intensive techniques by the fanzers and to the increase ofpreoductivity of cultivation under greenhouses. Table 2a. Subloans siqned during the year for qreenhouses No of ioans Ancunt Cost Area Loan Cost No of Loans 000 Drs. 000 Drs. Streams 000 Drs/str. 000 Drs/str. (1) (2) (3) (4) (5) (6) Replaceernt 278 51.759 64.699 473,8 109 136 1978 New 315 56.888 71.110 570,2 100 125 ¶btal 593 108.647 135.809 1.044,0 104 130 Rrplacenwnt 1.055 288.562 360.702 1.814,9 159 199 1979 New 182 79.428 99.285 249,7 318 398 'Ibtal 1.237 367.990 459.987 2.064,6 178 223 Rpplacernint 828 299.527 374.409 1.165,1 257 321 l1lll} New 310 140.651 175.814 490,2 287 359 Thtai 1.138 440.178 550.223 1.X55,3 266 332 1b.plac\etv'nt 942 306.276 382.845 965,5 317 396 '1981 New 428 177.339 221.674 631,5 281 351 lbtal 1.370 483.615 604.519 1.597,0 303 378 nTNplavnrnt 664 304.729 380.911 871,1 350 437 1(182 tkŽw 325 200.966 251.207 . 548,3 366 458 Thtal 989 505.695 632.118 ' 1.419,4 356 445 R!pla'c'ont 700 486.480 608.100 959,6 507 634 1'983 NL4 409 426.143 532.679 724,1 588 736 lbtal 1.109 912.623 1.140.779 1.683,7 542 677 1placrrvrnt 781 777.440 971.000 1.262,0 616 770 lJ,H4 New 337 618.885 773.606 615,0 1.006 1.258 Tbtail 1.118 1.396.325 1.745.406 1.877,0 744 930 Replawrrvnt. 5.248 2.514.773 3.143.466 7 506,0 'Ihial etw 2:306 1.700.300 2.125-.375 3.829,0 Trt.) ta 17.564 4.215.073 5.268.841 11.335,0 l'Thle 2b. Subloans siqned at the end of the year for greenhouses (Cunviuative) tb of Loans Anount Cost Area Loan CosL 000 Drs. 000 Drs. Stremnas 000 Drs/str. 000 Drs/str. (1) (2) (3) (4) (5) (6) 1Mejiiin'tOOIIXIt 278 51.759 64.699 473,8 109 136 New 315 56.888 71.110 570,2 100 125 Tbtal 593 108.647 135.809 1.044,0 104 130 Pr.p1acrxlw nl 1.333 340.321 425.401 2.288,7 149 186 l 71 tinw 497 136.316 170.395 819,9 166 207 lTtal 1.830 476.637 595.796 3.108,6 153 192 Rr;il acr'uY 2.161 639.848 799.810 3.453,8 185 231 teRn Now 807 276.967 346.209 1.310,1 211 264 4 Total 2.968 916.815 1.146.019 4.763,9 192 240 Prplac.eur'nI: l3.103 946.124 1.182.655 4.419,3 214 268 t IRt New 1.235 454.306 567.882 1.941,6 234 292 7btalt1 4.338 1.400.430 1.750.537 6.360,9 220 275 P: pl acY'f1rI1t 3.767 1.250.853 1.563.566 5.290,4 236 295 VIR2 tk,3w 1.560 655.272 819.090 2.489,9 263 329 Thta . 5.327 1.906.125 2.382.656 7.780,3 245 306 4.467 1.737.333 2.171.666 6.250,0 278 347 1", I New 1.969 1.081.415 1.351.769 3.214,0 336 420 14Fmal 6.436 2.818.748 3.523.435 9.464,0 298 372 5.248 2.5i4.773 3.143.466 7,506 I1R4 Nr.W 2.306 1.700.300 2.125.375 3.829 TUtiltl 7.554 4.215.073 5.268.841 11.335 _ _ __ _. . ....... . ...... .. .- _ Table 3. Subloans signed for Packing hcuses-Gold stores Anmunt Cost Disburseenut Capacity 000 Drs 000 Drs Antunt Year tons/day/prodact Jnqjrovemant of existing packhouses; 1. Union of Coops of Mbssara Crete 4.200 4.200 4.200 1981 QCcumtbers 18 t. 2. Uniio of Coops of Selinon Crete 13.000 13.000 13.000 31983 Cucumbers 20t, 'lUtoes 28 t. 3. C c.pvrative of Tisbaki Crete 11.500 11.500 11..500, 1982 C 4unbers 48 t. 4, CLuoperative of Filiatra Peloponessus 33.500 33.500 33.500 11.000 11981 44 t, Tbnatoes 8 t. 22.500 -1984 t,1ste 8. 5. Cooperative of Vori-Faneramfeni Crete 6.500 6.500 6.500 1983 Cucumbers 24 t. Total .68.700 68.700 68.700 N:w packtuOQusesz 1. Ccx4lparative of Finikous Peloponessus 24.500 24.500 24.500 1984 Cucuirbers 20 t, Toabtoes 25 t (Curzettes 30 t) 2. Iicrniki S.A. .kala Pelcpcnessus 33.000 33.000 - Tbmatoes 50 t. Total 57.500 -57.500 24.500 Grand total 126.200 126.200 93.200 0 . , . , . , _ ^ , . . _. _ . _ _ _~~~~~~~~~~~~~~ Table 4. Subloans signed durinq the year for tractor trailers Amount of Loan Cost 000 Drs 000 Drs Items (1) (2) I .82 C. Nikoloudis 1hessaloniki 4.338 7.230 1 refrigerated tractor trafler N. SavcqxxjIos Chrisoupolis 5.136 8.560 1 IS | V. RLuTy-ioLis Spart I 4.500 7.500 1 l'btal 13.974 23.290 1983 V. Rcunmliotis Sparti 6.000 10.000 1 refrigerated tractor trailer A. Krccalas Thessaloniki 4.270 7.117 1 *U I .. K. Herikos Filiatra 5.886 9.810 1 to D. Koccalas 'hessaloniki 2.470 4.117 1 refriqerated trailer TItal 18.626 31.044 1984 1. PistoqAllos Attiki 3.540 , 5.900 1 tractor e C.P. Manm4nidis Cria Vrissi 1.995 3.325 1 refrigerated trailer ,. Bcwtsikos Attiki 2.520 4.200 1 U S.M. Savaki Attiki 7.200 12.000 3 D. Toannidis Giannitsa 1.955 3.258 1 I S S.ivridis-A.Katirtsoglcu Giannitsa 1.400 2.333 1 n a P,pidas C. Nikolaras Attiki 1.740 2.900 1 St n l.Parcharidis Tnessaloniki 1.854 3.090 1 t n T. AnerjAidis Giannitsa 6.621 11.035 1 refrigerated tractor trailer N. Savoxilos Lliriscupolis 1.200 5.333 1 tractor C. Mhnranidis Cria Vrissi 3.300 5.500 1 tractor P. Verqos Katerini 2.290 3.816 I refrigerated trailer G. Zarolikos Attiki 2.790 4.650 1 o. Chabicdis Giahnitsa 4.500 7.500 1 tractor Tbtal 44.905 74.840 - . I Crand Total 77.705 129.174 , Table 5 Actual Cost per Year for Research and Extension Millicr Drs Equipnent Training and Ccsultant Services Total Year Mater ials . _, _______. Foreign Total Foreiqn Total Foreign Tbtal Foreign Total 1978 _- - - - - - 1979 0,9 1,0 0,6 0,8 _ 1,5 1,8 I 1980 0,6 0,7 0,7 1,2 1,7 2,8 3,0 4,7 4 1981 4,1 4,5 7,6 10,7 3,4 5,3 15,1 20,5 1 1982 14,4 15,3 0,5 0,8 1,7 2,6 16,6 18,7 1983 12,2 12,6 4,7 10,7 0,8 1,3 17,7 24,6 1984 16,2 17,3 3,9 5,5 0,7 1,1 20,8 23,9 'i_tal 48,4 51,4 18,0 29,7 8,3 13,1 74,7 94,2 Table 6 E:stimated Schedule of Wxpenditurts Mlllicn Drts. 1978 1979 1980 1981 1982 1983 19'14 I.J Foreign Total Foreign Total For.eign Total Fbreiqn TIotal Forei itn 1Jbtl Foreign 1itLa Furc:iqsi 'ftAa I. I' vi ...'. I';,14 GLtainhcuses 114,8 273,2 152,6 363,1 175,8 415,6 182,6 430,6 153,,5 362,3 77'J,3 IJUi,b fucitrch and 6,2 8,0 44,4 68,2 14,0 25,4 11,8 22,7 7,7 17,6 U4,I I ,"i K4irKetincg oixani- 2,8 3,7 19,2 45,0 4,7 23,7 2,0 20,0 - - 2i, 9',4 iWwultdnt siervices) (2,8) 13,7) 15,5) (7,41 (2,8) (3,7) * H- H_ I^ - 111 li,t) Cold storage 26,1 37,4 44,4 65,7 23,1 37,5 5,5 10,5 - - 99,1 151,1 , l'ractor trdilers 26,2 35,9 36,0 49,3 43,6 59,6 43,3 59,2 32,5 44,4 1ld,t. 2!It, i CigtWqsrkciOs 13,3 29,0 38,2 78,4 65,9 133,3 88,3 176,6 90,6 180,8 !)t,J 5)Ju,I Total j 189,4 387,2 334,8 669,7 327,1 695,1 333,5 719,6 284,3 605,1 _ . Actual Eq3enditures Million Dr4. t;k..mnthseS 65,5 135,8 254,8 460,0 316,9 550,2 339,1 604,5 345,1 632,1 622,9 1140,8 960,0 1745,4 29U4, 5 N.-XtArch and - - 1,5 1,8 3,0 4,7 15,1 20,5 16,6 18,7 1707 24,6 20,8L 23, t 74, !,4,2 K&SaOtIng Organi- _ _! I - _ st Lsn . (QAIbultant services) _ _ - _ _ _ _ _ 3,9 4,3 _ - _ _ j 9 4)3' ,Litckhoues s;,;id stara'ej 4,2 18,5 2,5 16,2 1,5 11,5 26,4 47,0 JI-tj 9J,. Tt.cLor traLlers w 19,5 23,3 25,6 31,0 59,1 74,'4 i04..1x J,I . .. 665,5 135,8 256,3 461,8 319,9 554,9 358,4 643,5 387,6 694,6 667,7 1207,9 066,3 1'91,1 JUl., I ,das', S. _ ) YYUGOSLAVIA 4r I ALBANIA \7 , * ; 9 v , p~~~~~~rlHfSSA& -40' LARI SSA 'reve2a IONIAAI W StA . PATRAS ha PELOPONN ESUS 37- -~~~~~~- 36' GREECE VEGETABLE PRODUCTION AND MARKETING PROJECT _ -35' MAIN PORT - IfMAIN ROAOS RAILWAYS * 0 MAJOR TOWNS -*- INTERNATIONAL BOUNOARIES - ,-, lASS .s AFT C'~ . 1331F,F fMAY 1978 1 lhi i8iU '.'AP UiSCLAI','Eh HAS 8(ztN UPDATED 20 211' 22 23' I RD 1331SR (PCR 8 U L G A R I A 26 st27 2a 2 N A ~~~~~~~~~~~~~~~~~~~~to IV$Iya~ t~~~ ~~ -441 f 3xant- oS4t* ret ;tiI TURKEY Kowa a Ale odroupQH FLONt4UI -. ......... -e 4,IWED KINGDOM ACiAAN N 8 "'S Z. A o' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 q ^VA(.xt ,t m so , tfTNA T z oo AEGEAN / L 25 So 75 to 3 KILOMTERS UAHNS SEA ,AU 4. 5f 37- (. 3 6-! (PCRI 35.- e " *" X9' A1' .A318 octA zo,vtoirre~1005.8 800 8.0~.8 . ) 5 ,Et5 t S Ct, L w t~~~~~~~~~rh.V& - W-W 008410,-41oo honioA IRAKLION c . b-=Sh l8 10.0!4001550 .04 " 059A° 25_ 271 28- 29- * issamos Timbakio I-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ o 1 20 30 40 o 5 10 is 20 25 Miles IBRD 13316 IPCR) GREECE YUGOSLAVIA BULGARtA Vegetable Production and Marketing Project ALBANTrR r CRETE S ') G R E E C E . - ) TLIRKEY V New research facilities $? Laboratories ,Athens -Greenhouse zones e esug Market centers Packing plonts and refrigerated units '5 - llNational roads Areco of map - Secondary roads Ports 3- 3 + Airport 25. Th..OW ha4$ 0,44$ a THIS PCR MAP IS EASED ON IBRD 13316. 04tw$*. $ JANUARY 1978 PPOJECT INFOR.ATION . br N. AND THE [ORD MAP DISCLAIMER HAVE a&* 8EEN UPDATED. O.W,eee ,O$ nap a noe dpFo* _ IRAKLION3 / ~~~~~~~~~Kostellion -Tzermiod n Nikol / iti { yKav~~~ ~ ~~~~~~~~~~~~~~~~~usi/ lerapetra JULY I_ A(ndrovidia GREECE Vegetable Production and Marketing Project PELOPONNESUS T New research focilities X Laboratory Greenhouse zones I Market centers Pocking plants and refrigerated units - Notional roads Secondary roads Ports + Airports THIS PCR MAP IS BASED ON I1RO 13317, JANUARY If PROJECT INFORMATION AND THE IBRD MAP DISCLA HAVE BEEN UPDATED 0 io 20 30 to Kil~*mt 0 5 to I5 20 25 I5 t , , IA M.Ws ioYUGOSLAVIA- ..BUGARI ~-J ALRANIA1 4C~~~~~~~~~~~~~0 _S G R E e c E \ TURKEY *tl* . . M* B /~vsvt' ( ~vvvtdIn |- co . vn1 Wd M lW b. C,0., .. b. _ ..... .. - IBRD 13317 (PC Pe op n n esu S -GOS PIR X V % |z- t~~~~~~~~~~~~~~~~~~~Novpoion LITRIPOLI Sachoro ,RtPOLIS egs lo.. ,:is Kuporissio 'Filiotro ~~~~~~ ~~~~Sporti Y 197& LA. AT ,LAItAER Longo -Methoni .- \,$Yithieft \14nmMi v Dwm - ,i _ bus o - oe._ e c d nGct Of I