Report No. 1587-BD

Bangladesh FILE COPYJute ProjectDecember 29, 1977

South Asia Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

This doc-ument has a restricted distribution and may he used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

The Bangladesh Taka is officially valued at 26.70 to the PoundSterling. The Pound now floats relative to the US Dollar and consequentlythe taka, US Dollar rate is subject to change. The rate below has beenused throughout this report except where otherwise stated.

US$1 = Tk 15.0Tk 1 = US$0.067Tk 1 miLlion = US$67,000

WEIGHTS AND MEASURES

1 acre (ac) = 0.405 hectare (ha)I mile (ml) = 1.509 kilometers (km)1 seer - 2.06 lb (0.78 kg)i maund (md) = 40 seer or 82.27 lb (37.3 kg)1 metric ton (MT) 26.8 mdI katcha bale jute = 4 md1 pucca bale jute = 5 md

FOR OFFICIAL USE ONLY

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

ADA - Assistant Director of AgricultureADB - Asian Develolpent BankBADC - Bangladesh Agricultural Development CorporationBJRI - Bangladesh Jute Bsearch InstituteBKB - Bangladesh Agriciulture Development Bank (Bangladesh Krishi Bank)DAJ - Directorate of Agriculture (Jute)GOB - Government of BangladeshHYV - High Yielding VarietiesIJCS - Intensive Jute Cultivation SchemeIRDP - Integrated Rural Development ProgramISO - Input Supply OfficerJEA - Jute Extension AssistantJEO - Jute Extension OfficerJFA - Jute Farmers' AssociationKSS - Village Cooperative Society (Krishi Samabaya Samity)SB - Sonali BankSMS - Subject Matter SpecialistTCCA - Thana Central Cooperative Association

GLOSSARY

Aman - Rice planted before or during the monsoon and harvestedin November or December (B. aman is broadcast, T. amanis transplanted)

Aus - Rice planted during March and April and harvested duringJuly and August (B. aus is broadcast, T. aus is transplanted)

Block - Smallest unit in the Intensive Jute Cultivation Scheme -200 or 400 acres jute

Boro - Rice planted in winter and harvested during April to JuneChar - Low-lying sandy landDistrict - Administrative unit in Bangladesh. There are 19 Districts

in the countryKatcha bale - Jute bale compressed by manually powered press, weighs 4 maundsPaddy - Unhulled ricePucca bale - Jute bale compressed by hydraulic press, weighs 5 maundsThana - Administrative unit in Bangladesh. There are 413 thanas in

the countryUnit - Intermediate unit in the Intensive Jute Cultivation

Scheme - formed by 5 to 10 blocks - about 2,000 acres juteZone - Largest unit in the Intensive Jute Cultivation Scheme - formed

by 25 units - about 50,000 acres jute

FISCAL YEAR

July 1 to June 30

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

BANGLADESH

APPRAISAL OF THE JUTE PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ...................... i - iii

I. INTRODUCTION .................................... . 1

II. BACKGROUND ............ ................... ..1

III. THE PROJECT .............. . .... ................. 7

A. Brief Description .* ..................... 7B. Detailed Features ..... ............. 8C. Implementation Schedule ................ . 11D. Cost Estimates and Financing ............ 12E. Procurement and Disbursements ........... 14F. Accounts and Audits ........... .......... 15

IV. ORGANIZATION AND MANAGEMENT .................. 16

A. Coordination .......... 16B. Project Agencies ............ ............ 16C. Training ................................ 18D. Credit Arrangements ........... .......... 19E. Monitoring and Evaluation ............... 21

V. PRODUCTION, MARKETING AND FARMERS' BENEFITS .. 21

VI. ECONOMIC JUSTIFICATION .................... ... 24

VII. RECOMMENDATIONS ................................. 26

Schedule A - Lending Terms and Conditions

Annex 1 - Jute Production

Table 1 - Area Sown to Jute

Annex 2 - Intensive Jute Cultivation Scheme

Table 1 - IJCS Activities 1973/74-1975/76Table 2 - IJCS Survey Classification of FarmersTable 3 - Summary Results of IJCS SurveyTable 4 - IJCS Location of Existing Scheme and of New Scheme

Annex 3 - Jute Research

Table 1 - Organization Chart Jute Research Institute

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Appendix I - Provisions for Stren.ythening Jute Research

Appendix 2 - Terms of Reference oE Consultants to be ProvidedUnder a UNDP Project

Appendix 3 - Topics for Consideration for a Research Program

Annex 4 - Credit for Production and Marketing

Table I - Sonali Bank Growth from 1972Table 2 - Sonali Bank Condensed Balance SheetTable 3 - Sonali Bank Condensed Statement of Net IncomeTable 4 - Sonali Bank Staffing PatternTable 5 - Sonali Bank Existing Branch Network in Intensive

Jute Cultivation Scheme AreaTable 6 - Sonali Bank Production Loans through TCCA

Annex 5 - Internal Jute Market:Lng

Table 1 - Jute Marketing Costs Loose Jute Storage at Village LevelTable 2 - Jute Marketing Costs Storing with Katcha BalingTable 3 - Income and Cash flow for Farmers' Group Jute Marketing Activity

Annex 6 - Organization

Appendix I - Project Agencies and their Project Related ActivitiesAppendix 2 - Draft Terms of Reference for AdvisorsAppendix 3 - Guidelines for Duties. and Qualifications of DAJ Staff

Annex 7 - Monitoring and Evaluation

appendix - Draft Terms of Reference for Project Evaluation

Annex 8 - Implementation Schedule

Table 1 - Implementation Schedule

Schedule 1 - Recruitment Schedule for HeadquartersSchedule 2 - Recruitment Schedule for ADA, DADA, SMSSchedule 3 - Recruitment Schedule for JEO and ISOSchedule 4 - Recruitment and Service Schedule for AdvisorsSchedule 5 - Transport Procurement ScheduleSchedule 6 - Implements Procurement ScheduleSchedule 7 - Construction Schedule

Annex 9 - Cost Estimates

Table I - SummaryTable 2 - Short Term CreditTable 3 - Marketing InfrastructureTable 4 - ImplementsTable 5 - Extension Service StaffingTable 6 - Extension Service AllowancesTable 7 - Buildings and Office Equipment

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Table 8 - Transport

Table 9 - Extension Service Materials and Equipment

Table 10 - Technical AssistanceTable 11 - Percentage Used for Price Contingencies

Annex 10 - Crop Production Costs and Returns

Table 1 - Jute Production CostsTable 2 - Financial Returns from Jute

Table 3 - Costs and Returns Local Aus

Table 4 - Costs and Returns Improved Aus

Annex 11 - Reporting Requirements

Appendix 1 - Guidelines for Headings and Contents of the Quarterly Report

Table 1 - Credit Withdrawals

Table 2 - Project Implementation Summary

Table 3 - Jute Production InformationTable 4 - Jute Marketing

Table 4a - Consolidated Jute Marketing Income and Expenditure (IJCS)

Table 4b - Consolidated Jute Marketing Income and Expenditure (IRDP)

Table 5 - Short Term Credit Physical Information

Table 6a - Short Term Credit Financial Information Credit Through

Directorate of AgricultureTable 6b - Short Term Credit - Financial Information Credit Through IRDP

Table 6c - Short Term Credit - Financial Information Total Credit

Table 7 - IJCS Staff InformationTable 8 - Progress of ConstructionTable 9 - Progress of Construction Tenders and Contracts

Table 10 - Progress of Tenders and Orders for Building Materials

Table 11 - Progress of Tenders and Orders for Implements, Equipment,

Furniture and Materials other than Building Materials

Annex 12 - Economic Analysis

Table 1 - Economic Price for PaddyTable 2 - Economic Price for JuteTable 3 - Alternative I - Sown Area, Yields and Production

Table 4 - Alternative I - Prices and Benefits

Table 5 - Alternative I - Production Cost and Incremental WorkingCapital

Table 6 - Alternative II - Sown Area, Yields & Production

Table 7 - Alternative II - Prices and Benefits

Table 8 - Alternative II - Production Cost and Incremental Working

CapitalTable 9 - Sensitivity Analysis of Economic Rate of Return

Table 10 - Sensitivity Analysis of Economic Rate of ReturnJute Marketing Component

Annex 13 - Schedule of Estimated Disbursements

Annex 14 - List of Documents and Titles Included in the Project File

Chart I - W.B. 17424: Implementation ScheduleChart 2 - W.B. 17096: Credit from DAJ to FarmersChart 3 - W.B. 17337: Credit from IRDP to FarmersChart 4 - W.B. 17095: DAJ Headquarters Organization

Map IBRD 12761

BANGLADESH

JUTE PROJECT

SUMMARY AND CONCLUSIONS

i. This report appraises a jute project covering 16 districts ofBangladesh. The project would support a five year program costing US$33.3million to increase the productivity of jute cultivation, thus making theproduct more competitive in world markets, and introduce a trial jute mar-keting scheme aimed at improving marketing efficiency and increasing farmgate prices.

ii. Jute is Bangladesh's most important cash crop. It is grown by al-most half its farmers, provides 80% of the country's export revenue and isthe raw material for the country's most important industry. In recent yearsBangladesh jute has faced many problems. World demand has dropped with changein packaging technology, competition from synthetics and, until 1975, highprice of jute products. Fiber production has declined owing to high paddyprice and diversion of jute land to paddy production. With the 1975 Takadevaluation, Bangladesh jute products became competitive with synthetics andwith two good rice crops and decline in food grain prices, jute productionhas partially recovered.

iii. To remain competitive, jute yields must be increased, productioncosts lowered, manufacturing efficiency improved and marketing streamlined.To ensure stable production, an effective jute pricing mechanism should beintroduced. Past and ongoing program credits are supporting the manufactur-ing industry; a recent IDA Foodgrain Price Policy Review Mission is develop-ing recommendations for a foodgrain and jute pricing mechanism; and thisproject would focus on fiber production and marketing aspects.

iv. Jute yields have been static for decades, but a package of improvedpractices identified by the Bangladesh Jute Research Institute (BJRI) overten years ago showed that more than double current average yields are possible.In 1973 the Government of Bangladesh (GOB) introduced the Intensive Jute Cul-tivation Scheme (TJCS) which combines intensive extension work with assuredcredit and inputs supplies. The scheme covered 0.3 million acres in 1976and reportedly expanded to 0.5 million acres in 1977. An IDA supervisedsurvey has shown a 50% average yield increase under the scheme and resultantreduced production costs per bale of jute. The project would strengthen thisscheme with specialist staff, vehicles, housing and incremental credit andexpand its coverage to one million acres.

v. Jute marketing at the village level is monopolized by middlemen whofrequently exploit farmers by short weighing and undergrading of produce.Jute may change hands several times before reaching mills or exporters. Lackof storage in production areas causes fiber spoilage and lack of baling pressesincreases transport costs and strains the limited transport facilities. The

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present system is expensive and farmers do not receive full reward for effortsto improve production. The project would introduce a trial under which storageand baling facilities would be provided to farmers to enable them to obtain abetter price for their product.

vi. The project would include:

(a) Incremental short term production and marketing credit(US$14.3 million);

(b) Jute storage sheds and baling presses (US$1.0 million);

(c) Implements for farmers (US$1.5 million);

(d) Incremental extension staff (US$4.7 million);

(e) Staff housing and office equipment (US$9.3 million);

(f) Motor vehicles, motoccycles, and bicycles (US$1.7 million);

(g) Extension equipment and materials (US$0.2 million); and

(h) Consultants, overseas training and monitoring (US$0.6 million).

vii. Of the estimated total US$33.3 million project cost, which includesUS$3.8 million duties and taxes, US$8.6 million or 26% would be foreign ex-change costs. The proposed US$21 million IDA credit would finance about 71%of total project cost net of ditties and taxes.

viii. Vehicles and other e9nuinment would be purchased over a four yearperiod and dispersed in rural areas. To ensure adequate maintenance andspares, they would be procured after local competitive bidding among localfirms and representatives of foreign suppliers having adequate local mainte-nance facilities. Office furn:-ture and jute farming implements would be oflocal design and manufactured ;.ocally and wouid be procured by local competi-tive bidding. Civil works would each be small, widely scattered geographicallywith some in locations with difficult access and would be constructed over afive year period. The works would not be suitable for international competi-tion and contracts would be subject to local competitive bidding. Existingprocedures for local competitive bidding are satisfactory.

ix. GOB would onlend US$X.8 million of the credit to Sonali Bank, theleading commercial bank in Bangladesh, now fully nationalized, for lending tojute farmers for production and marketing either through the Directorate ofAgriculture (Jute) (DAJ) the present channel, or in the 11 "thanas" coveredby the Rural Development Project (Credit 631-BD) and a similar Asian Develop-ment Bank Project, through cooFeratives under the Integrated Rural DevelopmentProgram (IRDP). If successful, IRDP could in time become the main creditchannel for the Intensive Jute Cultivation Scheme, as more of its cooperativesare strengthened by measures similar to those being implemented by the RuralDevelopment Project. At present, different lending institutions charge farmers

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different interest rates for crop production loans. GOB has now indicatedits intention to introduce a uniform rate of about 12% per annum, to beapplied to all agricultural development loans - short and medium term. On-lending terms and conditions under this project have been tliscussed andagreed with the Government.

x. US$12.6 million of the credit would be channeled to DAJ, the mainimplementing agency. DAJ, which would have no responsibilities outsidethe operation of IJCS, would be responsible for most project activities --providing extension and inputs in the entire project area and implementingthe production credit program and the pilot marketing scheme outside thespecified 11 thanas. Under this marketing scheme farmers would have theirfiber graded, baled and stored in stores constructed and equipped with balingfacilities provided by the Project. These stores would be operated by IRDPcooperatives or DAJ in the 11 thanas, and by DAJ in the other project areas.Farmers would receive the government minimum farmgate prica for their fiber,which would be sold, in due time, as appropriate, to mills and exporters,taking advantage of seasonal price fluctuations. Farmers would be chargedmarketing fees and rental charges, to cover costs. This activity is to beundertaken on an experimental basis and would cover, at maturity, about 3%of forecast production from the project area. If successful, this pilotmarketing scheme could be refined as appropriate and supported by IDA undersome future GOB project.

xi. Coordination between the two main project agencies (DAJ and SonaliBank) and a number of supporting agencies dealing with inputs, research andmarketing would be attained through a national coordination committee,supported by district level committees.

xii. About one million farm families would benefit from improved juteproduction which would increase jute yields, reduce production cost per unitof jute and consequently improve farmers' income. Nearly all are small far-mers, over 90% owning 2 acres of land or less. Up to 100,000 families wouldbenefit from higher prices and secure sales outlet for part of this produc-tion, which would result from the trial marketing scheme; other jute farmerswould benefit indirectly from improved prices due to increased competitionin marketing.

xiii. The project would increase jute yields and reduce production costs.This would enable Bangladesh to either maintain jute production at presentlevels and release approximately 400,000 acres for paddy growing or, alterna-tively, use its improved competitive position to capture a larger share ofthe world market for jute and its substitutes, although possibly at somewhatlower prices. In practice, the actual situation resulting from the projectwould presumably be somewhere between these two alternatives, with some increasein the total jute production and some decrease in the jute acreage in non-IJCSareas. The rates of return of the two extreme alternatives are both above 50%,indicating that the rate of return of the project in either case would also beabove 50%. The rate of return of the marketing component alone is about 50%.

xiv The project is suitable for an IDA credit of US$21 million onstandard terms.

BANGLADESH

APPRAISAL OF THE JUTE PROJECT

I. INTRODUCTION

1.01 The ongoing 13 projects supported by IDA in the agricultural sector(with total IDA credits of US$236.2 million) include five irrigation projectsand one each for cyclone area reconstruction, foodgrain storage, cereal seedproduction, fertilizer production, agricultural training, rural development,shallow tubewells, and extension and research. Past and ongoing programcredits have supported the jute manufacturing industry and continue to doso. This project would be the first to focus on jute production and market-ing. It would meet the special needs of the Bangladesh economy for quickyielding projects in key sectors of the economy to increase rural income,and employment. The project would safeguard future prospects of thecountry's most important cash crop and source of export revenue.

1.02 Progress in implementing IDA supported agricultural projects sinceBangladesh attained independence in 1971, has been slow. However, over thetwelve months preceding appraisal of this project there has been a markedacceleration owing to improvements in GOB's project administration, partlydue to effective follow-up by the IDA Resident Mission. While many projectimplementation problems persist, these as well as recent improvements in per-formance were taken into account in project design and the objectives andtargets of this project which is based on strengthening a successful ongoingGOB program, should be attainable.

1.03 The project was prepared by GOB staff with help from the ResidentMission. This report is based on GOB's Preparation Report and on findings ofan appraisal mission comprising Messrs. G. Stern, S. Bhatia, S. Suntharalingam(IDA) and T. Warda1e (consultant) that visited Bangladesh in November/December1976. The mission was assisted by Messrs. D. Beal (FAO/IBRD/CP), F. Haworthand S. Shaikh (consultants) members of the Extension and Research Projectappraisal mission that visited Bangladesh during the same period and byMr. L. Plesch (Loan Officer). A project file supplementary to this reporthas been prepared for project supervision and management use.

II. BACKGROUND

General

2.01 Bangladesh with an area of 55,000 square miles and a population ofabout 81 million, growing at 3% per annum, is among the most densely populatedcountries in the world. Due to this as well as meager natural resources,poor physical infrastructure and frequent natural calamities much of the _population lives at or below absolute poverty levels. The current annualper capita income of US$110 is among the lowest in the world.

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2.02 Since Independence the country's development efforts have met withmixed fortunes. Rehabilitation from cyclone and war damage was a notableachievement, but overall economic performance has been below expectation,partly for reasons beyond GOB's control. In the last 18 months the newadministration has initiated determined measures to speed up development byimproving the efficiency of the public sector and by encouraging the privatesector to play a greater role. Results have been encouraging and have beenassisted by favorable climatic conditions which have led to two successiverecord harvests. GOB's efforts to improve economic performance attach greatimportance to exports which will continue to be dominated by the jute industryfor the forseeable future.

Agriculture

2.03 Agriculture dominates the economy. About 90% of the populationlives in rural areas mostly dependent on agriculture. The sector accounts for55% of GNP, 75% of all employment and over 80% of all exports. In recent yearsthe sector has been unable to feed the rapidly increasing population, expandexport revenue sufficiently, or provide adequate employment to the largelyunskilled and illiterate labor force.

2.04 Practically all the cultivable area of 22.5 million acres is alreadyunder cultivation and future production gains will require more intensiveland use and higher yields. Total cropped area was 30.1 million acres in1974/75, and cropping intensity 134%. Rice (24.2 million acres) is the mostimportant food crop and jute (1.4 million acres) the most important cash crop.

2.05 While soils are fertile and temperatures allow year round cropping,agricultural development is constrained by serious natural difficulties. Thecountry is dominated by the delta of one of the greatest river systems in theworld which, together with monsoo'a rains (75% of total precipitation fallsin three to four months), causes widespread flooding during part of the year.Some 5.5 million acres are flooded annually. On the other hand, only about 2.5million acres are irrigated. The rivers present transportation difficulties,and facilities for moving farm produce and inputs are inadequate and expensive.In addition, cyclone disasters are frequent.

2.06 Perhaps even more restri-ctive are sociological constraints. Some30% of village dwellers are landless and among the farmers who own land about50% cultivate 2.5 acres or less, wqhich is usually fragmented into four or fiveplots.

2.07 Generally, Bangladesh farmers are hardworking and receptive toproven improved farming practices, However, their efforts are often frus-trated by inadequate agricultural research and advice, and inadequate suppliesof inputs and credit. The Intensive Jute Cultivation Scheme (IJCS) developedby the Bangladesh Ministry of Agriculture (see para 2.14) has shown encourag-ing success in delivering correct advice, credit and inputs to jute farmersand therefore forms the basis for this project.

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Jute Production Trends

2.08 Jute plays a crucial part in the Bangladesh economy. It providesabout 80% of export revenue and is the raw material for the country's mostimportant industry.

2.09 Since independence in 1971 the Bangladesh jute industry has facedserious problems. The world market for fiber and manufactured jute goodshas stagnated, and manufactured jute goods have come under increasing pressurefrom competing countries and from synthetics. The area under jute declinedfrom about 2 million acres to 1.2 million acres in 1974, while fiber produc-tion dropped from 7.2 million bales in 1969/70 to 3.9 million bales in 1974/75-- the lowest production in 20 years. The acreage drop was due to a shift byfarmers to paddy owing to high paddy prices in recent years, while the drop inexports resulted from the high price of Bangladesh jute fiber and jute goods.With good rice harvests in the last two years and a consequent decline in therice price, the jute acreage has again increased. The May 1975 Taka devalua-tion has improved the competitiveness of Bangladesh jute products and led toa recovery of exports.

2.10 To ensure the competitiveness of Bangladesh jute fiber and goods,particularly vis-a-vis synthetics, there must be assurance of regular suppliesof fiber and goods at competitive prices. Measures are needed to improve theefficiency of jute production, marketing and manufacture and the effectivenessof the jute fiber pricing mechanisms. The farm gate jute price is determinedby the Jute Ministry without adequate information on costs and returns of juteand competing paddy crops and this factor has contributed to jute productionfluctuations (para 2.09). Steps for improving jute manufacture have beentaken under the Fourth and Fifth Imports Program Credits (Credits 591-BD and676-BD); a sixth Imports Program Credit, which would also support jute manu-facture, is at an advanced stage of processing. This project would focus onincreasing yields and improving crop quality. The findings of an IDA supportedFood Policy Mission which visited Bangladesh earlier this year should help inestablishing a satisfactory jute price mechanism.

Jute Production (Annex 1)

2.11 The Bangladesh climate and most of its soils are particularly suit-able for jute production. Ample water supplies for growth anad fOL x,.iug givethe country an advantage over others in quality jute production. Varieties ofboth Capsularis and Olitorius species are grown. The former resists floodingand constitutes about 60%-70% of the crop. About 0.5 million acres of lowlandare sown to jute every year because other crops are not competitive in theseflood prone situations. About the same acreage is planted to jute as part ofthe traditional crop rotation. Acreage in excess of this basic one millionfluctuates according to the jute/rice price relationship.

2.12 Jute areas are grouped into three regions: the Jat, Northern andDistrict Regions (see map IBRD 12761). The heaviest jute producing districtsare Mymensingh (Jat), Rangpur (Northern) and Faridpur (District). Becauseof better soil and plentiful retting facilities, jute in the Jat area giveshigher yields and has higher quality than jute grown in other areas. The

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project would concentrate on expanding improved jute cultivation in the Jatareas, and in Rangpur and Faridputr districts which together contain about threefourths of the total jute acreage. Because of a higher proportion of season-ally flooded and water logged land, about 80% of the jute in the Jat andNorthern areas is Capsularis, whEreas it comprises only 40% of the total inthe District with a higher proportion of well drained soils. In parts ofthe Northern and District areas retting water is scarce and this factor de-presses fiber quality. In addition, the Northern area lacks storage andbaling facilities and is remote from the jute manufacturing and fiber ex-porting centers, so that jute farmers there have greater difficulties withjute marketing than in other areas. The pilot marketing component of theproject (para 3.10) would pay particular attention to this area.

2.13 Since most farmers continue to use traditional methods for juteproduction, yields have stagnated for decades at about three bales per acre.Yields of up to six bales per acre have however been obtained in recent yearsby farmers who have adopted extension service recommendations.

Intensive Jute Cultivation Scheme (IJCS) (Annex 2)

2.14 This scheme started to function in 1973 and by 1976 had coveredabout 290,000 acres. It is executed by the Directorate of Agriculture(Jute)(DAJ) which arranges credit and inputs for participants and teachesthem a proven package of improved practices including:

a. use of good seed of recommended varieties;

b. seed dressing to prevent plant disease;

c. line sowing and improved weeding methods;

d. correct sowing and harvesting times;

e. correct fertilizer use; and

f. plant protection, mainly against insect pests.

The scheme is orgnized irtn ripe 70nes pphb hsA8 by Pn Asa±stant D4rectorof Agriculture (ADA), which in turn are subdivided into 150 units of about2000 acres, each supervised by a Jute Extension Officer (JEO), and 1500 juteblocks of 200 acres each with a Jute Extension Assistant (JEA).

2.15 Participating farmers are required to be members of Jute Farmers'Associations (JFA's) each coinciding with a block, to provide a focus forextension and to facilitate inputs and credit distribution by DAJ. JFA haveformed committees at unit, zonal and national level to exchange experiencesand to discuss problems.

2.16 The combination of concentrated extension and effective inputsand credit distribution through JFiA's has been successful. GOB evaluation

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confirmed by a Bank assisted sample survey showed that jute yields of parti-cipants in 1975 averaged 4.5 bales per acre compared to 2.9 bales outsidethe scheme and that net returns per acre were an estimated Tk 765 and Tk 330

respectively.

2.17 While results at the farm level have been very good other implementa-tion targets have not been achieved by IJCS. Of the 1976 goal of 0.7 millionacres only 0.3 million acres were covered. Inadequate finance and lack ofpersonnel have been the main constraints. The situation has improved recentlyand IJCS had adequate staff to cover 0.5 million acres during 1977. Somemajor handicaps remain, including lack of accommodation for JEA, inadequatetransport, and insufficient farm implements. Extension officers' effective-ness is constrained by administrative tasks and by lack of technical back up.Finally, for larger scale expansion, the credit program needs strengthening.The project would address these deficiencies. IJCS supporting services, notcontrolled by DAJ are described in paras 2.18-2.24 below.

Research (Annex 3)

2.18 The Bangladesh Jute Research Institute (BJRI) under the Ministry ofJute is organized into three Directorates -- Agricultural Research, TechnologyResearch and Seed Multiplication. The Agricultural Research Directorate witha staff of 40 scientists carries out plant breeding, and research intocultivation practices, plant protection and retting. There have been fewadvances since a package of improved practices was identified over ten yearsago. Work has been handicapped by lack of land at BJRI and a new main researchfarm is now under development. The Asian Development Bank (ADB) Jute SeedProject and a supporting UNDP Jute Seed Research and Production Project arehelping to finance develop-nent of research farms, equipment, transport, ex-perts ar,u overseas training. Tnis should help to step up research activitiesand no additional investment is needed for the time being.

2.19 BJRI provides training for IJCS staff, but linkage between research,extension and farmers is inadequ-ate. Improvement of such liaison would beattempted under the project appraised in this report (para 3.09).

Inputs

2.20 The Seed Directorate of the BJiG is responsible for production anddistribution of certified jute seeds. Its present annual capacity is about750 tons of seed, enough for about 200,000 acres jute and the entire supply isreserved for IJCS. Seed quality is satisfactory, but because seed processingfacilities are inadequate, supplies are reduced by adverse weather at harvest-ing time and therefore fluctuate from year to year. In the current season,for instance, supplies have been unsatisfactory. The ongoing ADB Jute SeedProject aims to provide processing facilities and expand production to 2,000tons seed per annum which would be enough to renew all jute seed once in threeyears.

2.21 The Bangladesh Agricultural Development Corporation (BADC) hasdeveloped an efficient fertilizer supply system for IJCS. Jute staff informBADC of the requirements, which are delivered by a BADC subagent appointed

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for each jute block. BADC is expanding its fertilizer storage facilities andin addition, IDA is financing a fertilizer marketing and distribution study tohelp BADC to reorganize and strengthen its distribution network to cater foranticipated increase in fertilizer demand for all crops. The study will alsoexamine the possible need for new investments to improve fertilizer distribu-tion. With these measures, the fertilizer supply system should be satisfactory.

2.22 Pesticides are stocked at thana level by the Directorate of Agri-culture (Extension and Management) -DEM- of the Ministry of Agriculture andsold to farmers at half price. An ongoing project supported by UNDP aims atstrengthening the plant protection activities of DEM. DEM is also in charge ofthe general extension service and its effectiveness is being improved by theadoption of the Training and Visit (T&V) system of agricultural extension. AnIDA-financed project (Extension and Research Project-Credit 729-BD) supportsthe T&V extension system in the North-West Region of the country. In addition,GOB is investigating the possibility of handing the pesticides trade over tothe private sector. These modifications would improve the quality of the plantprotection service and enable extension staff, under the guidance of plantprotection specialists, to teach the farmers correct and safe pesticide use.However, deliberations are at an early stage and the outcome is yet uncertain.In the meantime, the existing system has served IJCS farmers adequately.

Credit (Annex 4)

2.23 An IDA Agricultural Credit Review mission to Bangladesh in 1975pointed out that operations of the two main agricultural credit agencies --the Bangladesh Cooperative Bank (BJSB) 1/ and the Bangladesh AgriculturalBank (BKB) -- 2/ were seriously corLstrained by their delinquent debt burden.Both IDA, with financing under Credit 622-BD and ADB are providing technicalassistance to review the overall agricultural credit system and make recom-mendations for its improvement. BK<B has provided IJCS farmers with credit,but, because of collateral requirements, the Bank's relatively small branchnetwork and complex procedures, larger farmers have benefitted mainly.Recovery reportedly averages 85% on BKB loans to jute growers.

2.24 To improve the situation GOB has asked commercial banks to increasetheir agricultural credit. Sonali Bank (SB), the largest commercial bank (nownationalized) has taken a lead in this field. Against Government guarantee,it is already providing inputs credit to IJCS amounting to Tk 4.7 million in1976, by lending to DAJ, which onlends to farmers. Loans are for six monthsand recovery levels in 1975 and 1975 were 92% and 90% respectively. With itsstrong reserve base, large and expalding branch network and experience inagricultural lending and jute markeAing, Sonali Bank would be well qualifiedto provide IJCS credit arrangements in the future, as planned for the project(para 3.03). Its management is keenly interested in expanding assistance ofthis type to smallholders and has agreed to provide up to Tk 90 million ofits own funds for IJCS credit requirements.

1/ Bangladesh Jatiya Samabaya Bank.

2/ Bangladesh Krishi Bank.

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Domestic Jute MSarketing (Annex 5)

2.25 Domestic marketing involves farmers, a variety of jute traders,

jute mills and government corporations. Most farmers sell small ungradedlots of jute at village markets to village middlemen. The product maychange hands a number of times, as it is assembled into larger lots before

it reaches large traders or government corporations in secondary markets.There, jute may be stored for varying periods and is consigned either asloose jute or, after katcha baling, 1/ to terminal markets or jute mills.

There are many variations of this procedure and jute may bypass secondarymarkets.

2.26 GOB declares a minimum farmgate price, but in some years, par-ticularly when there is a heavy crop, most farmers have to sell at the lowerprices that are set by traders. The farmer is in the weakest position in

the marketing chain, often subject to traders' harassment and collusion.Short weighing and downgrading by middlemen is widespread, but at present,most farmers have no alternative sales outlet.

2.27 Two Government jute corporations, under the Ministry of Jute, havebeen established to buy jute from farmers and by competing to ensure thatfarmers receive the minimum price. However, the corporations have too few

buying centers (only 280) to be effective. The corporations have also beenhandicapped by severe management and financial problems and it is expected thatconsultants, financed under UK bilateral assistance, will shortly commence astudy of the operations of these corporations and make recommendations forimprovements.

2.28 In addition, jute marketing is constrained by inadequate storage andbaling facilities in the production areas, and the pricing system makes suchA small allowance for grade differences that there is little incentive forfarmers to improve jute quality.

III. THE PROJECT

A. Brief Description

3.01 The principal objectives of the project would be to improve theproductivity of jute farming, and thus farmers' incomes by helping them toincrease yields, improve quality of fibre and reduce production costs. Aboutone million acres of jute would be the subject of project actions which would

be carried out over a five year period and which would provide:

a. Jute Production

i. Short term credit

1/ katcha baling is a manually operated mechanical baling process. Anaverage katcha bale weighs 4 maunds.

ii. Equipment - seed drills and hand hoes;

iii. Extension Services - salaries for incremental staff, housing,transport, extension materials and equipment;

b. Jute Marketing

i. Short term credit

ii. Marketing Infrastructure - jute stores and baling presses; and

c. Technical Assistance - consultants, overseas training andmonitoring services.

B. Detailed Features

Jute Production

3.02 The ongoing Intensive Jute Cultivation Scheme (IJCS) covered 0.5million acres in 16 districts in 1977. The project would strengthen IJCS withproduction credit, additional staff, transport and housing and would expandits coverage to one million acres by 1981. Expansion would be mainly concen-trated in seven districts (Mymensingh, Tangail, Dacca, Comilla, Jessore,Rangpur and Faridpur - see Map) which have the heaviest jute concentrationand most favorable growing conditions. The following components would supportjute production:

3.03 Short Term Credit (Annex 4). The project would provide Tk 125million for production credit unc-er the arrangements described in paras 4.12through 4.16 and Schedule A. Sor,ali Bank would channel credit to farmersand the exerution of a subsidiary loan agreement, satisfactory to IDA, betweenGOB and Sonali Bank and ratification of a project agreement between IDA andSonali Bank (SB) would be conditions of effectiveness. Project credit wouldbe for credit requirements incregental to the Tk 20 million level disbursedto farmers under IJCS in 1977. Credit requirements are based on field surveysthat indicate about 60% of jute growers would seek seasonal credit.

3.04 Equpment. 25,000 seed drills and 20,000 hand-pushed hoes would besupplied to the IJCS expansion areas. As in the ongoing scheme, DAJ would ownthe equipment and would distribute it to farmers' associations. Both typesof equipment are locally made; seeders cost Tk 500 each and hoes Tk 300.Although their use is beneficial the cost of these implements is very highcompared with the income of most farmers. Given this cost, and that on theaverage farm they are used for a very short period of time purchase of theseimplements is beyond the means of the majority of farmers. Purchase by jutefarmers' associations and rental to individual members is an option, butwould involve a degree of cash collection and record keeping inconsistent withthe investment concerned, an average of about Tk 14,000 per association.Another factor is that the design of the seed drills requires improvement toensure a more even sowing rate. For the present, therefore, provision of these

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implements would continue to be financed 100% by GOB. The ADB financed SeedsProject is providing an agricultural engineer to work on improved designs for

the seed drills and when these implements are improved, GOB will considercharging a fee for use of both the drills and the hand hoes.

3.05 GOB's Directorate of Agriculture (Extension and Management) carriesa large stock of hand sprayers and assurances have been obtained that it wouldmake available from its stock the 20,000 units estimated to be required for

pest control for the project. Sprayers have a small cost (about 300 Tk each)and are usually bought jointly by a group of farmers; it has therefore beenpossible for the banks and cooperatives to finance their purchase under short-term loans in the past. Under the project, SB would provide short-term creditfor their purchase.

3.06 Extension Staff. Over the five year period the project would sup-

port the following new IJCS staff: 9 senior administrative and technicalstaff for headquarters, 11 ADA each with a deputy ADA at the zonal level and250 JEO's and support staff at the unit level. In addition, to relieve exten-sion staff of administrative burdens, 500 Assistant Input Supply Officers(ISOs) would be employed to deal with distribution of equipment, credit andinputs. Forty Subject Matter Specialists (SMSs) would be appointed, two toeach zone (a plant protection specialist and an agronomy/extension specialist),to provide technical backup to other field staff, conduct field research anddemonstrations and participate in training JEO and JEA. Appointment of thesestaff is critical to the success of the project and 47% of project costs wouldbe incurred in providing for their salaries, offices, equipment, transport andhousing. Assurances have been obtained that GOB would make sufficient budgetprovision for payment of adequate travel and daily allowances for extensionstaff.

3.07 Housing and Office Equipment. At present, JEA suffer much hardship

due to lack of suitable housing. To overcome this problem, 2500 houses wouldbe constructed under the project, one for each JEA. Each house would have afloor area of about 300 square feet which would include a small office/store.A 200 square foot pole and roof-type shed would be attached to the house whereJEA would meet with groups of jute farmers. Construction materials would dependon availability in each locality. Actual housing standards and designs wouldduplicate, as far as possible, those employed for housing construction underthe Extension and Research Project (Credit 729-BD). Project buildings wouldbe maintained by DAJ and assurances have been obtained that GOB would provideadequate funds for such maintenance. The preparation and supervision of thebuilding component would be contracted by DAJ to a local consulting firm ofarchitect/engineers which would be responsible for assisting GOB in the pre-qualification of bidders, preparation of tender documents and evaluation ofbids, procurement of building material if required and supervision of con-struction works. Assurances have been obtained that a consulting firm withqualification, experience and terms of reference satisfactory to IDA would beappointed before April 1, 1978. The project would also provide 250 sets ofoffice furniture for new unit offices, including typewriters and calculators.

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3.08 Transport. To ensure adequate mobility for DAJ staff, the projectwould include purchase of 34 motor vehicles, (10 speedboats would be providedfor areas deeply flooded, the remainder 24 would be mostly fourwheel drivevehicles) for headquarters and zonal staff, 1060 motorcycles for Deputy ADAs,SMSs, JEOs and ISOs and 2500 bicycles for JEAs. Motor vehicles would bedepartmentally owned. Assurances have been obtained that the bicycles andmotorcycles would be made available to the staff of DAJ under arrangementssatisfactory to IDA. They will be sold on credit with adequate incentivesto encourage staff to purchase vehiicles, and in accordance with a formulaprepared for the Extension and Research Project (Credit 729-BD).

3.09 Demonstration and Field Research Materials and Equipment. The proj-ect would provide funds for inputs3 for at least one field demonstration orfield trial per jute block each year. The demonstrations and trials would bedesigned by SMISs in close collaboration with BJRI staff; coordination of thejute research program at the national level would be ensured by the Coordina-tion Committee (para 4.01). The project would also provide extension staffwith teaching materials such as charts, leaflets, posters, projectors andslides.

Marketing

3.10 The proposed marketing scheme would offer farmers an alternativesales outlet to village middlemen and would aim to increase the price farmersreceive and give incentives for improving grades. The project would financeconstruction of storage sheds, each equipped with a katcha baling press, to beowned and operated by DAJ. Farmers would deliver jute to the sheds and wouldreceive the government minimum farmgate price for jute delivered. The jutewould be graded, baled and stored to take advantage of the seasonal pricerise. After sale to private exporters, government corporations or jute mills,farmers would be paid the balance of the sales proceeds, less interest andservice charges. In selected thanas, cooperatives operating under the Inte-grated Rural Development Program (IRDP) would be permitted to lease the shedsfrom DAJ and carry out themselves the marketing operation. In each of thesemarketing units, a committee comprising representatives of DAJ, Sonali Bankand JFAs would guide and supervise the management by DAJ or TCCA.

3.11 The scheme would fulfill a most important need, but the proposedoperation has not been tried in Bangladesh before. Calculations (Annex 5,para 17) indicate that it should be financially feasible, but there would bedifficult managerial and organizational problems to overcome. Despite strongtechnical backup, to be financed by the project, the risks involved in themarketing component are considerabLe. Consequently, the component has beenkept small -- 50 sheds to handle 3J,000 tons jute, about 3% of forecast pro-duction for the project area. If successful, large scale replication couldbe considered for a follow-up project.

3.12 Short Term Marketing Credit. The project would provide Tk 30 mil-lion short term credit for purchase of farmers' jute under the arrangementsdescribed in para 4.17.

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3.13 Marketing Infrastructure. Jute storage sheds equipped with balingpresses would be constructed under the pilot marketing scheme. Sheds wouldhave corrugated iron sheet and local pole walls, corrugated iron sheet andtimber truss roof, and rammed earth floor. Fifty sheds, each with 2,000katcha bale (8000 maunds) storage capacity would be constructed. Each wouldserve a unit of five jute blocks. Design is based on the assumption thatfarmers would sell only part of their jute through the marketing scheme and,with at least one turnover, the storage capacity of each shed would be suf-ficient to handle about one third of the jute produced in the 2000 acre unitarea. As the design is not definitive DAJ would test a number of variationson this theme.

Technical Assistance and Training

3.14 Two internationally recruited experts would assist the Director ofAgriculture (Jute) -- a project management expert for 24 months and a market-ing specialist also for 24 months; the cost of such assistance is estimated atUS$5,000 per man-month. Draft terms of reference are given in Annex 6,Appendix 2. Assurances have been obtained from GOB that the consultants wouldbe appointed promptly on terms and conditions satisfactory to IDA and in anycase not later than -- management expert - April 1, 1978; market specialist- July 1, 1978.

3.15 The project would include a detailed evaluation of IJCS to be car-ried out, under the supervision of the Planning Cell of the Ministry ofAgriculture, by a suitably qualified socio/economic research institute underterms and conditions satisfactory to IDA. Guidelines for the system to beemployed are given in Annex 7. Assurances have been obtained from GOB that acontract, acceptable to IDA, for this work would be signed by March 1, 1978.

3.16 The project would also finance a total of 48 weeks overseas train-ing for project staff and for selected JFA members and Sonali Bank staff.

C. Implementation Schedule

3.17 All project components, except construction of houses, would becompleted in four years (Annex 8 and Chart 1). Coverage of IJCS would beexpected to expand by 50,000 acres in the first year and by 100,000 acres,150,000 acres and 200,000 acres respectively in the succeeding three years.Staff recruitment, construction, purchase of transport equipment and mater-ials, and build up of credit disbursements would be phased accordingly. GOBconsiders, however, that a faster rate of implementation may be feasible andsuch an eventuality should not be ruled out. Since the siting of JEA houseswould depend upon the location of the individual jute blocks and some of thesewould not be established until the fourth year, house construction would con-tinue into the final and fifth project year.

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D. Cost Estimates and FinancinR

3.15 Total project costs are estimated at US$33.3 million equivalent,including US$3.8 million in duties and taxes with a foreign exchange componentof US$8.6 million or about 26% of total cost. Estimates are based on June1977 costs. A 10% physical contingency has been allowed for civil works and5% for transport, extension materials and technical assistance. Price con-tingencies have been applied for staff pay and allowances at 6% a year; forcivil works at 9% a year from 1977 to 1979 and at 8% a year from 1980 onwards;and for all other costs at 7.5% a year from 1977 to 1979 and at 7% from 1980onwards. Total contingencies amount to US$8.6 million or 26% of total costs.Project costs are summarized below. Detailed costs are given in Annex 9.

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Foreign

Local Foreign Total Local Foreign Total Exchange----- Tk million ---- ----- US$ million --- %

I. Short Term Credit

Production 75.36 50.24 125.60 5.03 3.35 8.38 40Marketing 30.00 - 30.00 2.00 - 2.00 -

Subtotal 105.36 50.24 155.60 7.03 3.35 10.38 32

11. Implements

Seed Drills 12.50 - 12.50 0.83 - 0.83 -

Hand Hoes 6.00 - 6.00 0.40 - 0.40

Subtotal 18.50 - 18.50 1.23 - 1.23

III. ExtensionServices

IncrementalStaff Sal-aries andAllowances 58.55 - 58.55 3.91 - 3.91 -

Buildings andOfficeEquipment 70.55 24.44 94.99 4.70 1.62 6.32 26

Transport 10.83 10.82 21.65 0.72 0.73 1.45 50

Materials andEquipment 1.46 0.86 2.32 0.10 0.06 0.16 38

Subtotal 141.39 36.12 177.51 9.43 2.41 11.84 20

IV. MarketingInfrastructure

MarketingFacilities 7.94 3.07 11.01 0.53 0.20 0.73 27

Subtotal 7.94 3.07 11.01 0.53 0.20 0.73 27

V. TechnicalAssistance

Consultants - 3.60 3.60 - 0.24 0.24 100

OverseasTraining 0.40 1.62 2.02 0.02 0.11 0.13 85

Monitoring 2.36 - 2.36 0.16 - 0.16 -Subtotal 2.76 5.22 7.98 0.18 0.35 0.53 66

Base Cost Estimate 275.95 94.65 370.60 18.40 6.31 24.71 26

Physical Contin-gencies 8.55 3.55 12.10 0.56 0.24 0.80 30

Price Contingencies 85.31 31.32 116.63 5.69 2.08 7.77 27

Total Cost (withcontingencies) 369.81 129.52 499.33 24.65 8.63 33.28 26

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3.19 The financing plan would le as follows:

SonaliGOB Bank IDA Total

Short term credit - 6.46 7.84 14.30Implements 0.40 - 1.08 1.48Exterision services 4.86 - 10.95 15.81Marketing Infrastructure 0.56 - 0.48 1.04Technical Assistance - - 0.65 0.65

5.82 6.46 21.00 33.28

The proposed IDA credit of US$21 milLion would finance about 71% of the totalproject cost (excluding duties and taxes) and would cover foreign exchangeand about 50% of local costs. To en;ure prompt payment of local costs in-curred, GOB would establish a revolv:ing fund, the project fund, to be operatedby the Director of Agriculture (Jute'. Assurances have been obtained thatGOB would establish this fund and that it would replenish it periodically tomaintain balances adequate to cover expenditure for the ensuing three months,witn a minimum of Tk 1 million. Initial payment of Tk 2 million into thisfuind would be a condition of credit Effectiveness.

3.20 GOB's funding for the project depends on the approval by theNational Economic Council (NEC) of the Project Proforma (PP) for the Project.The ministries involved have now submitted the4r PPs to the Planning Com-mission; their approval by NEC would be a conditiorn of effectiveness.

E. Procurement and Disbursez'nts

Procurement

3.21 DAJ would be authorized by 0;B to carry out all project procurementdirectly. Seed drills, hand hoes and office furniture to a total of $1.6million would be of local design and maanufacture and would be purchased afterlocal competitive bidding using GOB's procedures. These are satisfactory toIDA. Extension materials, mostly charts, posters, pamphlets, blackboard, etc.with total cost between US$10,000 to 25,000 would be purchased locally whilefertilizers and pesticides for field t-rials in the same order of value wouldbe purchased from GOB agencies which are the sole importers. Motor vehicles,motorcycles, bicyles, baling presses and office equipment to a total of $2.3million would be purchased over a four-year period and would be widely dis-persed in rural areas. It would therefore be difficult to ensure adequatemairntenance and spares for a small nunmber of a variety of imported vehiclesand equipment. They would thus be prccured after competitive bidding adver-tised locally, in accordance with IDA guidelines; there are in Bangladeshenough local firmls and representatives of foreign firums to ensure a sufficientdegree of competition and to provide adequate services for maintenance andspares. Small off-the-shelf items, costing less than US$10,000 each, couldbe purchased by prudent shopping through normal commercial channels. Suchpurchases would be limited to US$300,000 in total.

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3.22 Civil works, though of total estimated cost of US$9.5 million (including contingencies) would each be small (none exceeding US$20,000 in value),scattered over a wide area and would be constructed over a five year period.These works would not be suitable for international competitive bidding andcontracts would be awarded on the basis of competitive bidding advertisedlocally, following procedures acceptable to IDA. DAJ may have to provide somematerials such as cement, iron sheets and timber to contractors and in thisinstance procurement would be on the basis of competitive bidding advertisedlocally in accordance with procedures satisfactory to IDA. For all contractsfor goods or civil works exceeding US$100,000 in value, draft tender documentsand bid evaluations would be submitted for IDA review before issue or award.Assurances have been obtained that GOB would follow procurement proceduresoutlined in this and in the preceding paragraph.

Disbursements

3.23 Disbursements would be made for: (a) 55% of eligible expendituresfor net incremental loan disbursements; (b) pay and allowances for incrementalstaff: 55% of total expenditures; (c) construction materials and civil works:100% of foreign expenditures and 70% of local expenditures; (d) vehicles andequipment: 100% of foreign expenditure for directly imported goods or 100% oflocal expenditures (ex factory costs) for goods manufactured locally, or 70%of expenditures for goods procured locally; (e) consultants, overseas trainingand monitoring: 100% of total expenditures. Disbursement for the creditcomponent, item (a) and for incremental staff costs, item (b) would be madeagainst certificates of expenditure, the documentation for which would not besubmitted, but would be available for review during project supervision.Disbursements against all other items would require full documentation.

F. Accounts and Audits

3.24 Sonali Bank, DAJ and the Jute Ministry would be the agencies con-cerned with project disbursements. They would maintain separate accountsfor the project, which would be audited annually, together with disbursementdocuments, by independent auditors acceptable to IDA. DAJ would also maintainaccounts for its jute marketing activities which would also be subject to inde-pendent audit. Certified copies of audited accounts and auditors reports wouldbe sent to IDA within six months of the close of each fiscal year. Assuranceshave been obtained that the accounting and auditing procedures described abovewould be observed.

3.25 Assurances have been obtained that to undertake the audits of theproject accounts, independent auditors satisfactory to IDA would be appointed.The appointment of commercial auditors satisfactory to IDA for the SonaliBank's project accounts will be a condition of effectiveness.

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IV. ORGANIZATION AND MANAGEMENT

A. Coordination

4.01 DAJ, Sonali Bank, IRDP and the Jute Ministry would be project imple-menting agencies, while BADC, BJRI and the Directorate of Agriculture (Exten-sion and Management) would provide supporting services. Activities of theagencies are listed in Annex 6, AppE,ndix 1 and project organizational stuctureis shown on Charts 2 and 3; WB 1709C and 17337. A national committee would beestablished to coordinate the work cf these agencies and to review progress ofthe project. Its membership would include the Secretary, Ministry of Agricul-ture (Chairman) and a representative from the Ministry of Finance, Ministry ofPlanning, Ministry of Jute, IRDP, Jute Research Institute, Sonali Bank, andBangladesh Jute Association. The Director of Agriculture (Jute) would besecretary and representatives of other servicing agencies would be coopted asnecessary. The Coordination Committee would meet at least every two monthsto review the progress and problems of the project.

4.02 In addition, coordination committees would be established at thezonal level. These committees would comprise the Assistant Director ofAgriculture (Jute) Chairman, and a representative each of Sonali Bank, BADC,Directorate of Agriculture (ExtensioTi and Management), JEA, Bangladesh JuteAssociation, the Government Jute Corporations and IRDP if participating in theproject in the zone. Where jute marlceting is being tested a representative ofa government jute purchasing corpora:ion would also be a member. The committeewould meet monthly and send records of its meetings to the national committee.Assurances would be sought that coordination committees as described would beestablished and their establishment waould be a condition of Board presentation.

B. ProjEct Agencies

Directorate of Agriculture (Jute) (DAJU

4.03 The direction and management of IJCS would be the only task of DAJ.DAJ would be responsible for extension, purchase of implements, transport andequipment; housing construction; employment and training of staff, provisionof credit to farmers and the pilot marketing scheme. DAJ is now headed by anAdditional Director but a post of Director would be created. This Director,to be responsible to the Secretary of Agriculture, would be assisted by aproject unit headed by an Additional )irector and comprising supervision,administrative, technical, and markeing units. It would be a condition ofeffectiveness that the Director and the Additional Director have been appointed.Staff of the project unit would include a building engineer, a project advisorand a marketing advisor (Chart 4, WB 70'95 and Annex 6, Appendix 3). Existingheadquarters staff would be able to iritiate procurement and staff recruitment,but to sustain and accelerate project execution, prompt appointment of a senioradministrative officer, a senior finarce officer and the building engineer

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would be necessary. Assurances have been obtained that these three o. fcers

would be appointed by March 1, 1978 and that all additional headquarter staffwould be appointed by May 1, 1978.

4.04 At full development DAJ would be organized into 20 zones each of about50,000 acres jute. Each zone would comprise about 25 units of 2,000 acres. Inturn, each unit would be subdivided into about 5 blocks of 400 acres. Farmersof each block would, as now, be organized into a JFA of about 500 jute farmers.In 11 thanas covered by IDA and ADB financed rural development projects somewhatdifferent arrangements would be made, see para 4.12, but the role of DAJ wouldbe basically similar. Each zone would be administered by an ADA, assisted by adeputy and two SMSs, each unit by a JEO with an ISO to handle administrativetasks and, a JEA at each block, would undertake extension and assist farmersobtain inputs and credit. Existing blocks cover 200 acres jute; expansion to400 acres would in most cases take place by merging neighboring blocks.

4.05 Extension activities have for some time been successfully organizedon the "Training and Visit" basis with JEA receiving regular biweekly trainingand visiting JFA subgroups on a fixed day once every two weeks. The JEAs aresupervised by JEOs who also tour on a fixed schedule. This system would becontinued. However, with the strengthening of general extension services inthe northwest of the project area by the IDA-supported Extension and ResearchProject, the eventual merger of the jute extension services with general agri-cultural extension should be considered. Both projects would have evaluationcomponents. In addition, the Agricultural and Rural Training Project (Credit621-BD) includes a study of extension services. This study would be conductedin the second year of the Extension and Research and Jute Projects and wouldexamine the means and timing of merging jute extension with general extension,should this be desirable. Study findings together with evaluation results fromthe two projects would provide information for a joint GOB/IDA review of thefuture organization of jute extension. Assurances have been obtained that GOBwould carry out the extension program for the project in a manner acceptableto IDA.

4.06 The Headquarters marketing unit would be responsible for designand implementation of the trial marketing scheme. With help of field staff,and in the 11 rural development thanas in consultation with the IntegratedRural Development Program (IRDP) it would select JFAs to participate in thescheme. In non-IRDP areas DAJ would employ management and labor to purchase,store, bale and sell JFA members' jute. DAJ would charge a fee per maundcalculated to recover full operating costs (including amortization of capitalinvestments), based on a double turnover of the storage capacity.

4.07 In those areas selected for marketing trials which are located inthe 11 IRDP thanas, the thana multipurpose cooperatives, the Thana CentralCooperative Associations (TCCAs), would have the choice of either letting DAJconstruct and operate the jute stores as in non-IRDP areas or of leasingstores and presses from DAJ and operating them themselves. It is expectedthat this second alternative should eventually establish a pattern for coopera-tives' involvement in jute marketing. Rent payable to DAJ under this alterna-tive would be on a per maund throughput basis and adequate to recover full costs

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(amortization, maintenance and insurance) in the event of throughput reachingdouble the level of storage capacity. GOB would establish marketing fees andrental charges, such fees and charges to be reviewed annually and revised asnecessary. Agreement between GOB an<! IDA on these fees and rental chargeswould be a condition of disbursing against the marketing credit component.

Input Supply Services

4.08 DAJ with assistance from JEA committees would, before each juteseason, prepare total IJCS requiremerLts for fertilizer, jute seed, pesticides,and spray pumps. Assurances have been obtained that GOB would cause:

(a) BADC to continue to supply IJCS fertilizer requirementson a priority basis and in good time for jute sowing;

(b) the Seed Directorate of BJRI to meet IJCS requirements; and

(c) the Directorate of Agriculture (Extension and Management)to stock at district and thana level adequate supplies ofpesticides to meet IJCS forecast requirements.

C. Training

4.09 Regular and special intensive staff training is a key feature of thetraining and visit extension system practiced by DAJ. Such training includesfortnightly one day training for JEAs and ISOs, monthly two day training forJEOs and longer preseason courses for all field staff. The training programwould be drawn up and coordinated by the training specialist at DAJ Headquarters.'BJRI would help conduct courses for senior staff, Sonali Bank would assist inteaching administrat.ve, credit and jute marketing procedures to ISO, and theJute Ministry would provide training in jute grading. Assurances have beenobtained that GOB would cause such a program to be carried out.

4.10 Unlike the Village Extension Agents (VEAs) who are diplomates of oneof the Agricultural Training Institutes, most JEAs have no preservice qualifi-cations. This lack of formal training has not proved to be an impediment toJEAs performing their duties, due to the adequacy of in-service training.It has, however, meant that promotional opportunities open to JEAs have beenlimited and this would be corrected by sending batches for diploma trainingto Agricultural Training Institutes, or at similar institutions. GOB is con-sidering the most appropriate syllabus for such training and the length ofcourse needed to qualify JEAs at the same level as VEAs. Such qualificationwould facilitate the amalgamation of tae two services, should this be recom-mended. An assurance has been obtained from GOB that proposals for thistraining would be submitted to IDA by M4arch 31, 1978.

4.11 There is lack of experience in Bangladesh with commodity marketingoperations supported by credit and managed by farmers' groups. To providesuch experience, the project would fin<nce short overseas visits for selectedfarmers, DAJ staff and bankers. Assurances have been obtained that suchtraining visits would be subject to IDA approval.

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D. Credit Arrangements

4.12 Production and marketing credit would be provided by the SonaliBank. In the 11 thanas 1/ now subject to either IDA (Credit 631-BD) or ADB-supported rural development projects under the Integrated Rural DevelopmentProgram (IRDP) of the Ministry of Local Government, Rural Development andCooperatives, the loans would be made to the TCCA/KSS 2/ cooperatives, whichwould onlend to their jute growing members. TCCAs are the thana apex soci-eties and KSS their constituent village primary societies. The KSSs would beserviced technically by the Directorate of Agriculture (Jute) in the same wayas JFAs in other parts of the country (para 4.04).

4.13 In other thanas Sonali Bank credit would be channeled to DAJ andthen through the JFAs to their individual members. These are the existingarrangements and they work satisfactorily (para 2.24). JFAs have no legalstanding and given GOB's current intentions of increasingly employing TCCA/KSS as the medium for farmer credit, it is not considered desirable to pro-vide them with such standing at this time. These arrangements, however, areonly temporary. Agricultural credit in Bangladesh is now being reviewed bya team of consultants financed under an IDA Technical Assistance Credit(622-BD); the review, expected to last about two years, will make recommenda-tions for improving the existing situation. By September 1980, GOB wouldreview the effectiveness of the project credit mechanisms under this project -

the TCCA/KSS and JFA systems - with the objective of determining the bestarrangements for supplying jute farmers with credit. Assurances to thiseffect have been obtained and any changes made in the credit system withinthe project development period would be agreed with IDA.

4.14 TCCA/KSS in the IRDP thanas have membership procedures andrequirements that might exclude some jute farmers. Consequently, IRDPhas agreed to modify for jute farmers two membership requirements for atwo year transitional period in which:

(a) as part of their first production loan, jute farmerswould be permitted to borrow the Tk 10 required topurchase a share in KSS 3/; and

1/ These so-called 'rural development thanas' are: Kotwali, Sherpur,Gabtali, Sariakandi, Muktagacha, Trisal, Gaffargaon, Raiganj, Kazipur,Serajganj and Ullapara. However, no IJCS program is presentlyscheduled in Sherpur thana. In the future, additional thanas may becovered by similar projects.

2/ Thana Central Cooperative Association/Village Cooperative Society(Krishi Samabaya Samity).

3/ This requirement amounts to an entrance fee that new members haveto pay.

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(b) the amount of jute production loans would not berestricted to a multiple of ten times the sum oftheir shareholdings and amounts in their KSSsavings accounts.

Assurances have been obtained that these membership modifications would beadopted not later than March 1, 1978. Jute farmers wishing to join KSSwould be required to be clear of nny debts owing to precursor cooperativesin the IRDP Thanas or, if still in debt to such cooperatives, to have thesedebts rescheduled in line with procedures agreed with IDA under the IDA-supported Rural Development Project (Credit 631-BD).

4.15 Credit requirements of JFA members would be assessed by DAJ staffand a loan in the amount recommended for all JFAs in a zone would be made bySonali Bank to a DAJ account controlled by the ADA for the zone. For inputsloans, Sonali Bank would disburse directly to JFA suppliers, such as BADC,against certified receipts of inputs delivered to JFA; cash loans would bepaid to the farmers by Sonali Bank. The ADA and his staff would maintain therecords of each JFA including the individual accounts of its members. SonaliBank would be responsible for collecting repayments from farmers but DAJ asthe primary borrower would be info~-med of any delinquencies or problems, andits staff would be involved in the follow-up of such cases. In the 'ruraldevelopment thanas', credit requirements of KSS would be assessed by theTCCA/KSS assisted by DAJ staff and credits in cash and kind would be dis-tributed by the KSS to its members. KSS would maintain on-lending recordsand be responsible for the collection of loan repayments. During the twoyear transition period, TCCA would verify and endorse loans recommended byDAJ and Sonali Bank for KSS and following such endorsement Sonali Bank woulddeal directly with the KSS.

4.16 Farmers, either as JFA or KSS members, would be eligible for thefollowing production credit: credit in kind Tk 100 per acre; credit in cashTk 150 per acre. Production credit would be repayable within nine months andat a minimum interest rate of 12 percent per annum. This would involve anincrease over the 10.5 percent now charged to JFA members but would not actas a disincentive for farmers to ob-ain credit (see farm budgets in Annex 10)and would be consistent with the GOB objective of standardizing the rate foragricultural lending at 12 percent. Assurances have been obtained that anyfarmer would be excluded from receiving future loans if:

(i) he has defaulted on his previous loans and interest, or;

(ii) he belongs to a JFA or KSE with a recovery rate onprevious loans below 75%.

4.17 The project would include Tk 30 million short term credit for market-ing. This amount is based on the forecast government minimum farmgate priceand a total storage capacity of 400,000 mds. Marketing credit would be pro-vided by Sonali Bank to TCCA/KSSs anl to DAJ for purchase of farmers' jute atthe 50 centers involved in the pilot marketing scheme. Credit for this pur-pose would also bear interest at 12 percent per annum. Rates and lendingterms are listed in Schedule A; assur7ances have been sought that they wouldbe adopted for the implementation of the project.

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E. Monitoring and Evaluation (Annex 7)

4.18 The basis of the project monitoring system would be the quarterlyprogress reports of JEAs and JEOs; formats for these reports would be preparedby DAJ. These reports would be reviewed by the zonal or districts coordinationcommittees and then forwarded to DAJ headquarters which would compile them andtransmit them to GOB and IDA the aggregated version. A draft outline of thequarterly reporting procedures to IDA is shown in Annex 11. Assurances wouldbe sought that formats for all these reports would be prepared and sent to IDAbefore March 1, 1978.

4.19 Overall project evaluation would be the responsibility of the Plan-ning Cell of the Ministry of Agriculture. Since it would require variedexpertise, the project evaluation would be contracted to a local researchinstitute under the supervision of the Planning Cell. Evaluation would entaildata collection by means of three surveys each year, one just before jutesowing, another during jute harvesting and the third at the end of the market-ing season. These surveys would evaluate effectiveness of the services tojute farmers (including quality of the jute seeds and timeliness of theirdistribution, and adequacy of plant protection and of pesticides distribution),progress of project implementation, training program of the extension staff,and project costs and benefits. Reports resulting from the surveys would beconsidered by the project Coordination Committee (para. 4.01) and IDA and, ifnecessary would include recommendations for modifications to the project.

V. PRODUCTION, MARKETING AND FARMERS' BENEFITS

Yield and Production

5.01 Surveys carried out on all types of jute land, from lowlands subjectto flooding to well drained uplands soils, indicate present average yields of14.5 mds of fiber per acre for jute grown under traditional methods and offiber 22 mds per acre under the ongoing IJCS, although yields of up to 30 mdsper acre have been achieved. The project is expected to raise average yieldsto 25 mds per acre on one million acres. Yield increase would result from useby participating farmers of improved seed and by their adoption of correctsowing and harvesting dates; line sowing (resulting in optimum plant popula-tion and better weed control); correct fertilizer use; and effective plantprotection. As a result annual production on the one million acres subject toproject action should increase from 3.7 million bales at present to 5 millionbales in the sixth year of the project. Such a project induced increase of1.3 million bales in Bangladesh jute production would amount to 15% of fore-cast 1985 world exports and, if placed on the world market, could as discussedbelow have a depressive impact on world jute prices. Assurances were obtainedthat during the project period, GOB would not expand the coverage of IJCSbeyond a million acres unless it establishes that the proposed expansion willhave no adverse impact on the implementation of the project and on the bene-fits derived from jute production in the country.

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World Market Prospects

5.02 With 85% of Bangladesh jute production exported in roughly equalquantities of fiber and manufactured goods, production levels eventually dependon the share Bangladesh obtains cf the world market for jute or similar fibers.Jute is mainly used for packaging, carpet backing, ropes and wall hangings.Demand, which expanded steadily until the mid 1960's has declined since then,due to changes in packaging technology and competition from synthetic substi-tutes. With continuing technology changes and competition from synthetics,world Jute consumption is projected to grow at 1.4% during the 1970s and at0.4% between 1980 and 1985. However jute consumption is expected to growsubtantially only in the producing countries. Consequently some decline inthe international trade in fiber Ls anticipated.

5.03 Short term export prospects for Bangladesh remain reasonably favor-able but in the longer term the s:ize of the jute market will depend on reliablesupplies, price and the success of research and development efforts to findnew uses for traditional products as well as new uses for jute. Without theproject and the savings it would bring in production costs Bangladesh's shareof the market for the 1980s has been projected by the Bank Economic Analysisand Export Projection Department (EAPD) at 0.5 million MT fiber and 0.5 mil-lion MT goods, equivalent to about 5.5 million bales. With about 0.5 millionbales required for domestic use, a total jute production of about 6 millionbales would be needed to meet market demands. At this level of production in1985 Bangladesh jute exports would be sold at an estimated price of US$344 perton (in 1977 constant dollars).

5.04 The project would lower jute production costs by about 23% in finan-cial terms and by about 31% in econlomic terms (Annex 10, Table 1). Tentativeanalysis conducted by the Bank indLcates that by lowering the export price by10% which would be possible with the lower farm production costs, Bangladeshmay be able to expand exports by up to 20% to about 6.6 million bales or atotal production of about 7 million bales.

Farmers' Benefits

5.05 Benefits from reduced jute production costs estimated at Tk 14 permaund and from increase in yield from 15 to 25 mds per acre (Annex 10, Table 1)would make project participation very attractive to farmers. With farmgateprices over the last three seasons ranging from Tk 60 to Tk 90 per maund (the1976/77 government announced minimum price), net returns per acre would varybetween Tk 115 to Tk 550 for non IJCS farmers and between Tk 560 and Tk 1,310for IJCS farmers (Annex 10, Table 2).

5.06 Jute directly competes fo: land with aus paddy since their sowingand harvesting dates are similar. W4hile the respective acreages of the twocrops depend largely on relative profitability, other factors such as theneed to grow food, land suitability, availability of retting water, risksand labor requirements, affect farmers' decisions on which crop to plant.GOB believes that, based on traditional technology for both crops, the juteacreage remains stable when the farzigate jute price is 1.3 times that of

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paddy, which corresponds roughly to the present ratio of the two prices.Most aus is grown by traditional technology yielding 12 mds paddy per acrewith an estimated net return of Tk 250 at the present GOB floor price forpaddy of Tk 74 per maund. (Annex 10, Table 3). In upland areas improvedtechnology is spreading under which farmers achieve yields of 20 mds paddyper acre with net returns of about Tk 700 (Annex 10, Table 4). At currentprice levels, traditional jute seems more profitable than traditional paddyand the same applies for the two crops under improved technology. However,improved paddy is already competitive with traditional jute. Consequently,it is unlikely that there would be much diversion from jute to paddy in thebest jute areas where IJCS expansion would be concentrated (see map). How-ever, in other parts of the project area, particularly the Southwest, whereconditions are favorable for improved paddy and where no IJCS expansion isplanned, some paddy production may take the place of jute.

Pricing

5.07 Regulation of jute supplies, to ensure that production is in linewith market requirements, would be a key requirement for the success of theproject. For this purpose GOB should design an effective jute and paddypricing mechanism based on supply and demand information, production andmarketing costs and the interrelationship of jute and paddy prices. An IDAFoodgrain Price Policy Review Mission has recently examined the requirementsfor a foodgrain pricing mechanism. It has recommended establishment of ahigh level interdepartmental Food Policy Commission that would advise GOB onall policy aspects that affect foodgrain production and supplies. Jute priceand production policies affect foodgrain supplies and would have to be coveredby the Commission. The Commission would only be effective if adequate serviceswere established to monitor and analyze farmgate prices and for collecting cropproduction cost and return data. Alternately, GOB may prefer to establish aseparate but equally high level jute policy commission which could commissionand supervise market and cost studies and would advise GOB on domestic andexport prices and market opportunities. Such commission would need to col-laborate closlyv with the Food Policy Commission.

5.08 Besides having regard to the alternative use of land for paddyproduction, pricing policies for jute should be aimed at maintaining exportprices at stable and competitive levels vis-a-vis synthetics while maximizinglong-run economic benefits through achievement of an optimal mix between rawjute and jute goods exports. The policies should allow for prices to beflexibly adjusted in response to short-run changes in demand and supply con-ditions without disrupting the long-term objectives. Further, while thepolicy should be aimed at ensuring adequate and stable supplies of raw juteto mills and for export, it should also provide growers with an adequatereturn and jute mills with reasonable raw material costs after taking farm-to-mill marketing costs into account. Assurances wete obtained from GOBthat a study of the pricing policies and internal marketing of raw jute andjute goods and a study of world export markets for the same products, wouldbe initiated by March 1, 1978 under terms of reference satisfactory to IDA.This study is now expected to be undertaken under UK bilateral assistance andwill also satisfy the requirements of the proposed Sixth IDA Imports ProgramCredit. Based on the findings of this study, assurances were obtained that

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by December 31, 1978, GOB would submit to IDA for review, a plan, includingan implementation timetable, for establishing a jute price mechanism.

Budgetary Impact

5.09 The annual operating ancL maintenance cost after completion of thefive year development period woulcL be small - about US$0.77 M, at US$0.77per farm family. This additional requirement compares with GOB budgetaryallocations in 1976/77 of US$199., M for agricultural development projectsand US$511 M for total current expenditures in the same year.

VI. ECONOMIC JUSTIFICATION

Economic Benefits (Annex 12)

6.01 By increasing per acre yields of jute and reducing production costsof jute fiber, the project would provide Bangladesh with the following alter-native opportunities:

i. maintain jute production at present levels and utilizeresources released, mainly land, for other crop production,mainly paddy;

ii. use its improved competi-ive position to capture a largershare of the world marke- for jute and its substitutes,at lower prices; and

iii. a combination of (i) and (ii).

6.02 A combination of increased jute exports and a swi-tch of some landfrom jute to paddy is most likely to occur in practice. The exact combinationfor maximizing returns from the project is so complex to forecast, dependingas it does upon such factors as world prices for paddy and jute and theirsubstitutes, that its calculation would be subject to very large margins oferror. Further, it is highly unlikely that in practice GOB would be ableto fine tune jute and paddy price relationships so carefully that each yearthe optimal mix of crops and thus optimal economic benefits would be obtainedfrom project investments.

6.03 Economic analysis indicates that if Bangladesh chose to maintainjute production at current levels, about 6 million bales, and utilized theabout 400,000 acres so released from jute production for growing paddy(Alternative I) the economic rate of return (ERR) for the project would beover 50%. The analysis also shows that an ERR of over 50% would be obtainedif jute production rose to 7.0 million bales, the situation that would occur ifthe 400,000 acres surplus to those required to generate 6 million bales re-mained in jute cultivated in the traditional manner (Alternative II), despitethe fact that exports would have to be made at world prices some 10% lowerthan under the first alternative (see para 5.04). These relatively high

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rates of return are typical of this type of project where relatively low in-vestments in extension and other farmer support services are employed to bringabout substantial improvements in the efficiency of utilization of existingresources.

6.04 The economic rate of return is sensitive to the level of juteprices. For instance, under Alternative II - where a higher level of juteexport causes a lower export price - the ERR is lower than under Alternative I(but still over 50%). This indicates that, if jute were to be grown on a largeacreage (above 1.7 million acres of Alternative II), the resulting increase inproduction may well be more than offset by the decrease in export prices andthe ERR could fall below acceptable levels. The world market price couldalso, for exogenous reasons, be lower than presently forecast. If the worldprice for jute declined by 15% in the case of Alternative I the ERR wouldremain at over 50% while a similar price decline in the case of AlternativeII, would result in a fall in the ERR to 20%. Provided GOB establishes andoperates efficiently the intelligence and price fixing mechanisms described inparas 5.07 and 5.08 the risk of over-production would be small and justifiedgiven the project's large potential benefits.

6.05 Another risk is that, because of continuing fluctuations of thejute/paddy price ratio, farmers would keep switching from one crop to theother (para 5.06). Here also, this risk will be minimized if the pricefixing mechanism referred to in the paragraph above works efficiently. Inaddition, in the IJCS areas, where farmers get a better return on theirjute production than in non-IJCS areas, a higher paddy price would be re-quired to entice them to switch to paddy. To this extent, the geographicalexpansion of IJCS should lessen the propensity of farmers to switch fromjute to paddy. This would cause a dampening of the fluctuations of thejute (and the paddy) area, which in turn should cause a lessening of fluc-tuations in production and price.

6.06 The project would benefit about one million farm families, or aboutsix million people. Practically all of the beneficiaries would b1 smallfarmers, with farms of less than two acres. About 100,000 families wouldalso benefit from higher prices and secure sales outlets for part oi theirjute which would result from the trial marketing scheme.

VII. RECOMMENDATIONS

7.01 During negotiations, agreements were reached with GOB on the follow-ing principal points:

(a) The Directorate of Agriculture (Extension and Management)would make available under terms suitable to IDA adequalenumbers of sprayers of design and in condition satisvas Mto the Director of Agriculture (Jute) (para 3.05);

(b) The Government would make sufficient budget provision :rrpayment of adequate travel and daily allowances for cn:.ionstaff (para 3.06);

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(c) The Government would prov:ide adequate funds for maintainingproject buildings (para 3.07);

(d) A consulting firm, with qualifications, experience andterms of reference satisfactory to IDA would be appointedto assist DAJ in the preparation and supervision of thebuilding component before April 1, 1978 (para 3.07);

(e) Bicycles and motorcycles would be made available to thestaff of the Ministry of Agriculture under arrangementssatisfactory to IDA (para 3.08);

(f) The following consultants would be appointed promptly onterms and conditions satisfactory to IDA.

(i) Project Management Advisor by April 1, 1978; and

(ii) Marketing Specialist by July 1, 1978 (para 3.14).

(g) By March 1, 1978 a program (including time schedule) forproject evaluation would be submitted to IDA for approvaland an organization with qualifications, experience andterms of reference satisfactory to IDA would be recruited(para 3.15);

(h) The Government would establish the Project revolving fundwith Tk 2 million initial contribution and would replenishit periodically to maintaia balances adequate to coverexpenditures for ensuing tiree months, with a minimum ofTk 1 million (para 3.19);

(i) The Government would observe specified procurementprocedures (para 3.22);

(j) The Government would observe specified accounting andauditing procedures (para 3.24);

(k) The Government would appoint independent auditors satis-factory to IDA for the project (para 3.25);

(1) The Government would establish specified coordinationcommittees (para 4.02);

(m) A senior administrative ofificer, a senior finance officer, anda building engineer would be appointed in DAJ headquarters byMarch 1, 1978 and additionel headquarter staff would beappointed by May 1, 1978 (para 4.03);

(n) The Government would carry out the extension program ina manner acceptable to IDA (para 4.05);

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(o) The Government would instruct:

(i) BADC to continue to supply IJCS fertilizerrequirements on a priority basis;

(ii) the Seed Directorate of BJRI to meet IJCS seedrequirements; and

(iii) the Directorate of Agriculture (Extension andManagement) to stock adequate supplies of pesticidesand sprayers (para 4.08);

(p) The Government would carry out an inservice trainingprogram for JEOs, ISOs and JEAs (para 4.09);

(q) By March 31, 1978, the proposals for the training forJEAs at Agricultural Institutes, or at similar institu-tions, would be submitted to IDA (para 4.10);

(r) Overseas training proposals would be subject to IDAapproval (para 4.11);

(s) The Government would conduct a review of project creditoperations by September 1, 1980 and would agree with IDAany change in the IJCS credit system during the projectdevelopment (para 4.13);

(t) TCCA/KSS membership modifications for jute farmers wouldbe adopted by Maich 1, 1978 (para 4.14);

(u) A farmer would be excluded from future loans:

(i) if he has defaulted on his previous loans andinterest; or

(ii) if he belongs to a JFA or KSS with a recovery rateon previous loans below 75% (para 4.16).

(v) It would adopt credit interest rates and lending terms,and conditions satisfactory to IDA (para 4.17);

(w) Formats for monitoring the various components of the projectwould be prepared and sent to IDA before March 1, 1978(para 4.18);

(x) The coverage of IJCS would not be expanded beyond one millionacres unless the Government establishes that the proposed ex-pansion will have no adverse impact on the implementation ofthe project and on the benefits derived from jute production(para 5.01);

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(y) A study of the pricing policies and internal marketing of,and world market possibilities for, raw jute and jute goodswould be initiated by March 1, 1978, (para 5.08); and

(z) By December 31, 1978, GOB would submit to IDA for review, aplan, including an implementation timetable, for establishinga jute price mechanism (para 5.08).

7.02 GOB has met the following condition for presenting this projectto IDA's Board of Executive Directors:

The Project Proformas havE been submitted to the PlanningCommission by the ministries concerned (para 3.20).

7.03 The following would be conditions of credit effectiveness:

(a) The execution of a Project Agreement between IDA andSonali Bank had been ratified by GOB (para 3.03);

(b) GOB had signed a Subsidiary Loan Agreement, satisfactory toIDA, with Sonali Bank (para 3.03);

(c) A Project revolving fund had been established and hadreceived on initial payment of Tk 1 million (para 3.19);

(d) The Project Proformas had been approved by GOB (para 3.20);

(e) Independent auditors satisfactory to IDA had been appointedfor auditing the accounts of Sonali Bank (para 3.25);

(f) Coordination committees have been established at the nationaland zonal level (para 4.02'; and

(g) The Director and the Additional Director of Agricultureof DAJ have been appointed to the Project Unit (para 4.03).

7.04 It would be a condition of disbursement of the marketing creditcomponent, that marketing and rental fees acceptable to GOB and IDA had beenagreed to (para 4.07).

7.05 With the above assurances and conditions, the proposed projectwould be suitable for an IDA credit of US$21 million on standard IDA terms.The borrower would be the Government of Bangladesh.

SCHEDULE APage 1

BANGLADESH

JUTE PROJECT

Prolect Lending Terms and Conditions

The following lending terms and conditions would be used in imple-

menting the project and would not be altered without prior IDA agreement:

Interest Margin Use of Margin(M) (%)

(1) Onlending of IDA Funds

GOB/Bank of Bangladesh toSonali Bank. 3.00 3.00 0.75 to cover IDA

service charge and2.25 as contribu-tion GuaranteeFund -

(2) Onlending by Sonali Bank (SB)of Blend of On-lent IDA andOwn Funds

a. To lute trowers throuhDepartment of Jute (DAJ) 2'SB to DAJ 10.50 5.70-- 'To return 9% on SB

funds employed and3.00% on on-lentIDA funds

4.80 Cost of specialSB field service

10.50

DAJ to Farmers 12.00 1.50 Collection commis-sion

12.00

SCHEDULE APage 2

b. To jute growers throughTCCA/KSS

SB to TCCA 7.50 5.70 To return 9% onSB funds employedand 3.00% onon-lent IDA funds

1.80 Costs of specialSB field services

7.50

TCCA to KSS 9.50 2.00 - TCCA service charge9.50

KSS to Farmers 12.00 1.00 KSS service charge

1.50 Collection commis-sion

12.00

(3) Other Lending Terms and Conditicns

(a) Repayment period for production loans not to exceed 12months and for marketing loans not to exceed 9 months;

(b) A farmer would only qualify for a production or marketingloan if:

(i) He is a member of a JFA or KSS acceptable to GOB;

(ii) He is not in default on previous production or marketingloans;

(c) No loans would be made by TCCAs to any KSS in which mem-bers' defaults in the payment of principal and interestrequired under loans, for jute production and marketingin the preceding three years, represent more than 25%of the aggregate amounts of the principal and inte-rest.

(d) No loans would be made to farmers belonging to JFAs inwhich members' defaults in t:he payment of principal andinterest required under loans for jute production andmarketing in the preceding t:hree years, represent morethan 25% of the aggregate amounts of the principaland interest.

SCHEDULE APage 3

(e) Loan ceiling for production loans to be Tk 250 per acre basedon Tk 100 for inputs and Tk 150 for hired labor. A marketingloan would be equal to the Government's minimum farmgate pricefor jute multiplied by the quantity of jute delivered by thefarmer receiving the loan.

1/ Rural credit arrangements in Bangladesh are currently under study byconsultants (financed under IDA Technical Assistance Credit 622-BD) andmany elements of the system are ad hoc in nature and will remain sountil study is complete. Such is the case of the Guarantee Fund whichwas established in 1974 to provide a cushion against overdues in theagricultural credit sector. Operational rules for the fund have notbeen established and currently its funds are used by the BangladeshBank for the refinancing of agricultural credit institutions.

2/ Derived as shown below:

Cost of Funds to Sonali Bank

Credit Amount Interest/Charges Total Cost(US$ million) (%) (US$ million)

(a) IDA Funds 7.84 3.00 0.235(b) Own Funds 6.46 9.00 0.581(c) Total 14.30 5.70 0.816

The cost for Sonali Bank of its own funds (9.00%) is equivalent to theBangladesh Bank rate plus 1%e This cost of 9% would be to cover interestpaid by Sonali Bank on deposits (plus cost of attracting and administeringdeposit accounts), or on borrowing from Bangladesh Bank, and to providenormal margin of profit.

3/ In previous projects involving TCCA and financed by IDA a 2.50%service charge has been built into the interest rate structure. Inthis project, due to the services provided by DAJ to the TCCA/KSSand the more direct lending route of SB to TCCA/KSS, a reduction inthe provision to 2.00% is considered justified.

ANNEX IPage 1

BANGLADESH

JUTE PROJECT

Jute Production

Introduction

1. Jute has been grown for centuries in Bangladesh and has long beenused as a fiber by villagers. The first introduction into world trade wasfrom Bengal by the East India Company at the end of the 18th Century. Exten-sive production and manufacture started in the mid-19th century and, in termsof volume has become the second most important natural fiber in the world,after cotton. The fiber is used for packaging materials, carpet backing,furnishings, upholstery, tarpaulins and rope. Jute stalks the byproduct,after the bark (which contains the fiber) has been stripped, is an importantsource of fuel and fencing material in the rural areas.

2. Jute is the most important cash crop in Bangladesh and in the grow-ing season covers about 20% of the total cropped area and about 30% of thecropped area in the main jute growing districts. Jute fiber and jute goodsexports provide about 80% of Bangladesh's foreign exchange and the fiber isthe raw material for the most important industry in the country.

Varieties

3. There are two varieties of jute, white or Capsularis jute (Corchorusclapsularis) and tossa or Olitorius jute (C. olitorius). Of these Capsularisconstitutes about two-thirds of the total crop. It resists waterlogging andeven flooding in the later stages of growth and is consequently sown on lowland. Olitorius on the other hand does not tolerate waterlogging and istherefore grown on higher ground.

4. Recommended strains developed by the jute research services areD-154 and C-6 for Capsularis and 0-4 for Olitorius. These varieties weredeveloped pre World War II but some improvement by selection has been achievedsubsequently. Increasing jute fiber yields is technically difficult partic-ularly because of the small amount of genetic material available. A furtherconstraint in Bangladesh is the lack of access to jute strains developed else-where. While improved material is being tested the chance of a breakthroughto much higher yielding strains (as happened for paddy and wheat) is unlikelyin the near future.

Climate and Soil

5. Both climate and soils are ideal for jute production in the Ganges -Brahmaputra delta of the Indian subcontinent. About 90% of the world jute

ANNEX 1Page 2

supply is grown there despite many attempts to grow jute elsewhere. 1/ Thecrop will thrive on a range of soils from friable clay to sandy loam. Soiltype is mainly determined by its suitability for forming a fine seedbed neededfor the small seed of the crop.

6. In most years, climatic conditions in Bangladesh are ideal for juteproduction. Temperatures range Erom 70 F to 95 F with high humidities (about90%) in the latter stages of the crop. Jute needs about 35-40 inches of rain.As usually happens in Bangladesh, early rains should be light because bothjute varieties are sensitive to waterlogging when small. Rain showers shouldbe interspersed with hot dry periods to allow weeding. The bulk of rainfallshould fall when the crop is more mature. Heavy rains and consequent floodingprovide widely distributed water needed for retting. Because of its climateand fertile alluvial soil, Banglidesh has a comparative advantage over otherjute producing countries with respect to yield and fiber quality.

Cultivation

7. Sowing Capsularis takes place with early showers from mid March toearly April. Olitorius needs longer daylight hours and if sown too earlybranches and flowers prematurely. It is thus sown from mid April to mid May.Traditionally, seed is broadcast sown and only farm yard manure is appliedbefore sowing. Research has shown yield increase from use of fertilizersand from line sowing. The latter practice also reduces the seed rate, weedingcosts and facilitates plant protection. Fertilizer use has been limitedbecause of shortages except for participants of the Intensive Jute CultivationScheme (IJCS) (Annex 2) and adoption of line sowing is constrained by lack ofsatisfactory drills and the need to complete sowing in a very short periodwhile soil moisture is at the right stage.

8. Two to three timely weedings are a prerequisite for good yields.Because aus paddy requires weeding at the same time there is considerablecompetition for hired labor during this season. Line sowing allows use ofa wheeled hand push hoe which almost halves weeding costs. Jute is subject toa number of pests and diseases but only farmers participating under IJCS takeprotective measures such as seed dressing and spraying against leaf eatingpests and mites.

9. Jute is ready for harvesting when seed capsules start forming andfor Capsularis this takes place during July and for Olitorius during Augustand September. There is a trade off between yield and fiber quality, earlyharvest producing low yields of high quality fiber and vice versa. Theneed for sowing a paddy crop after jute may, to some extent, determine theharvesting date.

1/ In recent years large scale jute production is believed to be takingplace in China.

ANNEX 1Page 3

10. Harvesting and subsequent retting are labor intensive operationswhich need to be performed over a short period and which coincide with themain paddy transplanting season of the year. Consequently, as with weeding,much of the harvest and post harvest operations are done by hired labor.Retting is critical to fiber quality and availability of clean retting waterdetermines fiber quality in any locality.

Improved Technology

11. Recommendations developed by the Bangladesh Jute Research Institute(BJRI) more than a decade ago can double jute fiber yields, from 3 to 6 balesper acre. These recommendations form the basis for IJCS (Annex 2) and comprisethe following items:

(a) Improved seed and use of recommended varieties;

(b) Seed dressing to prevent plant diseases;

(c) Line sowing;

(d) Correct fertilizer use 1/;

(e) Correct sowing times;

(f) Plant protection - (mainly against semi looper, hairycaterpillars and jute mites); and

(g) Correct harvesting dates.

.12. Research (Annex 3) has not been able to announce any further notableadvances in the last few years. Some subjects which deserve early attentionare adjustment of fertilizer dose according to soil type, improved pestcontrol, particularly to control recent increase in mite, population and themore elusive target of variety improvement.

13. Jute is sown at the same time as the aus paddy crop and is tosome extent interchangeable with it (para 15). Except where land is toodeeply flooded, Capsularis is followed by transplanted aman, the main paddycrop of Bangladesh. Since jute harvesting is more flexible than paddy,Capsularis has some advantage over the competing aus crop with respect toensuring timely transplanted aman crop. Olitorius harvest on the other handis usually too late to be followed by a paddy crop and it is succeeded bypulses, oilseeds and wheat. When paddy prices are high, Olitorius grown onhigh lands is more likely to be replaced by paddy and consequently the projectwould give highest priority to Capsularis areas.

1/ Present recommendations for the all country is: Urea - 45 seers,triple super phosphate - 11 seers and muriate of potash - 16 seers.However, an applied research program is proposed (Annex 3, Appendix3) to test the validity of this recommendation and, if necessary,to modify it.

ANNEX IPage 4

Production Areas

14. Jute areas are grouped into three regions: the Jat (east of theJamuna River and north of Noakhali district), Northern (mostly north of theGanges and west of the Jamuna) and District (mostly south of the Ganges andwest of the Meghna) (See map IBRD 12761). The heaviest jute producing dis-tricts are Mymensingh (Jat), Rangpur (Northern) and Faridpur (District).Because of better soil and plentiful retting water, jute in the Jat area giveshigher yields and has higher quaLity than from the other areas. The projectwould concentrate on expanding imaproved jute cultivation in the Jat areas andin Rangpur and Faridpur districts in the other areas which together containabout three fourths of the total jute acreage. Because of a higher proportionof seasonally flooded and water logged land, about 80% of the jute in the Jatand Northern areas is Capsularis5, whereas it comprises only 40% of the total inthe District with a higher proportion of well drained soils (Table 1). Inparts of the Northern and District areas retting water is scarce and thisfactor depresses fiber quality. In addition, the Northern area lacks storageand baling facilities and is remote from the jute manufacturing and fiberexporting centers, so that jute farmers there have greater difficulties withJute marketing than in other areas. The pilot marketing component of theproject would therefore pay particular attention to this area.

15. The total area sown to jute varies from year to year. For instance,in 1972/73 the area was reported to be as high as 2.2 million acres jute andas low as 1.3 million acres in 1975/76. However, part of the jute area issown to jute every year. Of this, about 0.5 million acres is "Char" land(low land near river banks) where there is little alternative to jute produc-tion. About 0.5-0.8 million acres jute are sown every year as part of thecrop rotation practiced by farmers who report that jute improves yields ofsubsequence rice crops. Additional jute acreage would compete directly withaus paddy for use of cultivated land. This competition is highly responsiveto relative profitability of aus rice or jute cultivation. The project area,particularly the districts in which IJCS would be expanded includes most areason which jute is grown every year.

ANNEX 1Table 1

BANGLADESH

JUTE PROJECT

Area Sown to Jute by Districtand Areas 1970/71 and 1972/73 to 1975/76

(in thousand acres)

1970/71 1972/73 1973/74 1974/75 1975/76Capsularis Olitorius Total Total Total Total Total

JAT AREA

Dacca 149 42 191 184 165 124 94Mymensingh 378 64 442 489 318 312 317Tangail 100 21 121 132 111 101 74Comilla 118 20 138 155 128 81 72

Area Total 745 147 892 960 785 618 557

NORTHERN AREA

Bogra 34 23 57 45 51 16 33Rangpur 336 38 374 379 346 249 273Dinajpur 103 6 109 77 93 73 66Rajshahi 26 43 69 73 77 43 41

Area Total 499 110 609 547 567 381 413

DISTRICT AREA

Noakhali 29 1 30 21 17 12 11Sylhet 28 0.3 28.3 21 16 15 13Chittagong 0.6 0.2 0.8 1 1 1 1Bakerganj 20 10 30 33 30 19 9Khulna 14 28 42 33 35 28 15Jessore 20 146 166 147 159 106 68Faridpur 93 144 237 239 217 155 113Pabna 56 32 88 93 67 36 46Patuakhali 1 1 2 1 1 1 1Kushtia 3 72 75 91 83 44 31

Area Total 205 433 698 680 626 417 308

GRAND TOTAL 1509 691 2200 2214 1978 1416 1278

March 25, 1977

ANNEX 2Page 1

BANGLADESH

JUTE PROJECT

Intensive Jute Cultivation Scheme

A. INTRODUCTION

1. Based on recommendations from the Jute Research Institute forimproving yields, the then Pakistan Jute Association, now the Bangladesh JuteAssociation (BJA) (an Association of jute traders and exporters) in 1967launched an intensive jute cultivation pilot scheme. The Association with somefinancial assistance from the Government continued the scheme for five years,expanding slowly from 65 acres in 1967 to 1,067 acres in 1970 and to 7,600acres in 1971. The scheme provided extension and inputs and succeeded indoubling jute yields from 15 mds/acre to 30 mds/acre. However, it was veryexpensive -- BJA in 1971 estimated the cost of the scheme at Tk 10,000 per100 acre unit and in 1972 GOB took over the scheme.

2. GOB's objectives remained the same, but its plan was to expand thescheme rapidly, for instance to cover 250,000 acres in the first year. Forthis purpose a special section was established in the Ministry of Agriculture.Extension agents were selected among farmers who were paid a special stipend.One agent was provided per 100 acre jute. They were supervised by Jute Exten-sion Officers who looked after one to two thanas. These officers were respon-sible to an Assistant Director of Agriculture (Jute) at district level whoreported to the Officer on Special Duty (Jute) in the Ministry of Agriculturein Dacca. These first attempts at large scale expansion of the Intensive JuteCultivation Scheme (IJCS) were not successful. On the whole, staff trainingwas inadequate and the organization of inputs and credit supplies to farmersdid not function effectively. The use of "model farmers" as extension agentswas not satisfactory. However, the feasibility of the scheme to increaseyields and to reduce production costs had been proved and encouraged GOB topersist in its efforts to extend improved jute cultivation on a large scale.

B. INTENSIVE JUTE CULTIVATION SCHEME

Objectives

4. IJCS started to work effectively from the 1973/74 season. Theobjectives were to double yields, reduce production costs and to improve fibermarketing. The main strategies used were:

ANNEX 2Page 2

(a) To concentrate on about 1.7 million acres land judged to beideal jute land for the production of 8 million bales jute;

(b) To organise an adequate and timely supply of credit, implementsand inputs to farmers;

(c) To provide effective extension; and

(d) To organize jute marketing through Government controlledcorporations.

Organization

5. The Directorate of Agriculture (Jute) (DAJ) was established to imple-ment IJCS. It was headed by an Additional Director of Agriculture reportingdirectly to the Secretary of Agriculture. At the field level IJCS wasorganized into zones of about 30,000 acres jute, units of 2,000 acres juteand blocks of 200 acres jute. Each zone was headed by an Assistant Directorof Agriculture (ADA), each unit by a Jute Extension Officer (JEO) equal inrank to a Subidivision Agricultural Officer of the general extension service,and each block was serviced by a Jute Extension Assistant (JEA). Each blockhad about 200-300 jute growers, thus a unit would deal with 2,000-3,000farmers and a zone with 30,000-45,000. Zones, units and blocks in manycases did not coincide with district, subdivision or thana boundaries, andseveral zones extended across district boundaries.

Jute Farmers Associations

6. Early in its operations DAJ realized the need for farmer groupingto allow effective provision of extension, credit and inputs. Authorizedby the Ministry of Agriculture in 1974, DAJ started to establish Jute FarmersAssociations (JFA). Membership is voluntary but IJCS deals exclusively withJFA members. Each Association coincides with a jute block and on average has200-300 members. JFA have no legal status which would enable them to borrowor to trade.

7. The objectives of JFA are:

(a) To plan the jute production of members;

(b) To provide the basis for effective extension, inputs andcredit services and to use group action to encourageprompt credit repayment;

(c) To foster cooperation in jute production;.

(d) To undertake jute marketing;

ANNEX 2Page 3

(e) To develop local leadership; and

(f) To uplift social and economic conditions generally.

8. Only one member of a jute growing family may belong to an Associa-tion. Each Association has an executive committee of a president, vice pres-ident and five members elected by members. To date there are no membershipfees. JFA have unit, zonal and a national committees which coincide withDAJ's organization pattern. The unit committee consists of one member of eachblock, the zonal committee of one member of each unit in its jurisdiction andthe National Committee consists of one member of each zone. These committeesare discussion groups where jute ifarmers from different areas can exchangetheir experiences, and serve as a link between farmers and the Ministry ofAgriculture at all levels.

Extension

9. The extension service of IJCS have proved the most effective of suchservices in Bangladesh to date. Ihe elements believed to have led to itssuccess are:

(a) High density of extension workers and close supervision;

(b) Definition of area to be covered by each worker;

(c) Definition of task to be performed by each worker;

(d) Constant training;

(e) Direct contact with farmers;

(f) Effective linkage of credit and inputs supplies withextension; 1/ and

(g) Participation of farmers in planning and executing theproduction program through JFA.

10. At the beginning of 1976, field staff included 9 ADAs, 230 JEOs and1,500 JEAs. ADAs were all transferred and mostly promoted from the generalextension service. JEOs on the other hand were largely newly recruited agri-cultural graduates. JEAs are practically all newly recruited. Their quali-fication is a pass in the Higher School Certificate (12 years schooling)though a few School Certificate holders (10 years schooling) may also havebeen appointed. JEAs had no preservice agricultural qualifications and sincejoining IJCS have had constant in service training. This is twofold - longercourses - such as two to three weeks induction training and annually two tothree weeks pre service training and in addition one day training regularlyevery two weeks on the subject to be taught to farmers in the succeeding twoweeks.

1/ See Annex 4.

ANNEX 2Page 4

11. The extension system adopted is on the lines of the "Training andVisit" system which is proving successful in several IDA assisted projects inother countries. JEAs live at the block. Farmers of the block are dividedinto eight groups and the JEAs visits each group on the same day once everytwo weeks and spends the whole day with the group, teaching the farmers as agroup and then visiting them individually. All farmers are members of theblock's JFA and one of the conditions of membership is to attend every biweeklytraining meeting held by the JEA. Each group has a contact farmer but unlikeother T and V systems he is not expected to undertake extension functions, butis mainly responsible for his group's attendance at training days and to helpthe JEA prepare jute cultivation plans and to work out inputs and credit re-quirements. One day in every two weeks, all JEAs in a unit are given trainingby the JEO (para. 61). On the remaining three working days out of twelve ineach two week period the JEA pays additional farm visits and maintains blockrecords.

12. The JEO is considered the key person to the success of IJCS. Hisduties apart from administering the Unit and ensuring the timely and regularsupply of credit, inputs and implements, are to back up the JEA by frequentand regular visits to blocks. He deals with about 2,000-3,000 farmers and isexpected to become personally acquainted with most of them. It is largelydue to the ability and enthusiasm of JEO, that despite lack of preservicetraining, JEA have performed well. The Bangladesh Ministry of Agriculturealso considers that frequent personal contact of JEOs with farmers is a pre-requisite to the success of IJCS and that the staffing rate of I JEO per2,000-3,000 farmers should not be decreased. Zonal officers, because of lackof transport have performed mainly administrative functions. As a consequenceof the success of IJCS (paragraph 23) morale of its staff is high and itenjoys jute farmers' confidence. This is in marked contrast to the situationat the start of the scheme when few farmers had had contact with agriculturalextension staff and farmers in general lacked confidence in such staff.

Implements

13. Three implements not normally owned by farmers are important forimproving jute yields. These are seed drills for line sowing, hand hoes (awheeled hoe pushed manually) for speeding up and reducing cost of weeding andpesticide sprayers for plant protection. Hand hoes are used in conjunctionwith seed drills. DAJ estimates that one drill is needed for 25 acres juteand I hoe to 20 acres. About 7,000 drills and 4,600 hoes have been purchasedto date. Both drills and hoes have been distributed to blocks. They are DAJproperty and are provided free of charge to farmers.

14. Until July 1976 pesticide sprayers were lent to farmers free ofcharge by the Plant Protection Directorate of the Ministry of Agriculture(the Plant Protection Directorate has now been merged with the Directorateof Agriculture (Extension and Management) also of the Ministry of Agriculture- see para. 18). DAJ staff were responsible to ensure that enough sprayerswere lent to JFA. Now the Ministry has stopped lending sprayers and expectsfarmers to buy them, at about half price. A few jute farmers have done so.The Directorate of Agriculture (Extension and Management) has a stock of120,000 hand sprayers in good condition which are available for sale tofarmers at district or thana centers.

ANNEX 2Page 5

Credit and Inputs

15. IJCS credit and fertilizer supply systems have worked well and aredescribed in Annex 4 and the main text. Seed and pesticide supplies have notbeen so satisfactory and are described below.

Seeds

16. Seed production is the responsibility of the Directorate of Seedof the Bangladesh Jute Research Institute (BJRI). The entire productionis reserved for IJCS. So far, seed production has not met the demands ofIJCS but a project financed by the Asian Development Bank is strengtheningand expanding jute seed production. When complete, in two to three yearstime, seed production should be more than adequate. While not yet able tomeet its target of supplying new seed to every acre of jute at least onceevery three years, each participating block has had some improved seedannually and farmers have grown their own seed from the improved stock. Alljute in the block is therefore grown from improved seed. Seed quality used tobe very variable but as a result of monitoring by IJCS the Seed Directoratehas been able to improve quality which is now satisfactory.

17. The Seeds Directorate grows, tests and packs the seed and dispatchesit to district or thana level according to DAJ instructions. JEAS sell itto farmers, taking JFA advice into account. The Seed Directorate estimatescost of seed at Tk 300 per maund for Capsularis and Tk 400 per maund forOlitorius against which growers pay Tk 120 per maund. Since the value of thisseed is now fully recognized by all jute farmers, there is some leakage onto ablack market. This is not serious however and should be overcome when seedproduction expands. Until 1976 DAJ was reasonably satisfied with the seedssupply but in that season deliveries fell seriously short of orders. Sinceimproved seed is a key component of the IJCS package, the Ministry of Agricul-ture now feels that seed production should come under its own control. Theimplementation of the Asian Developmtent Bank seeds project complicates thisissue and the transfer proposal which was made after project appraisal, needsfurther careful consideration. The 1976 supply shortfall may have been duemore to unfavorable harvesting weathLer than to organizational failings andsuch shortfalls are likely to continue until processing equipment, to besupplied by the Asian Development Bank Project has been installed.

Pesticides

18. Pesticide distribution and extension in plant protection is theresponsibility of the Plant Protection Directorate (PPD). GOB has nowamalgamated PPD with the Directorate of Agriculture (Extension and Man-agement) - DEM (however the actual merger of staff is reportedly not com-plete yet) DEM, which is in charge of general extension service throughoutthe country, is also being reorganized to better utilize the Training andVisit system. 1/ UNDP is providing assistance to PPD to improve the training

1/ This reorganization will be supported in the North-West of thecountry by the IDA Extension and Research Project.

ANNEX 2Page 6

of its staff. Finally, GOB is considering handling over to the private sectorthe pesticide trade. When this happens, PPD staff (and, after amalgamation iscomplete, DEM) staff will have more time to devote to extension in plant pro-tection. Following these changes, plant protection services will presumablyimprove. In the meantime, it is proposed that IJCS extension services guidefarmers in what material to purchase and how to use them.

19. At appraisal, the Plant Protection Directorate had more than oneyear's supply of pesticides in stock including all materials used for jute.Prices paid by farmers are about half of the cost of materials.

Targets and Achievements

20. The original target called for coverage of 0.3 million acres juteby IJCS in 1973/74 to expand to 0.9 million acres by 1975/76 and 1.7 millionacres by 1977/78. However, the scheme was only approved by the NationalEconomic Council in mid 1976. Prior to that date funding had to be foundfrom savings in GOB's annual budgets and was not adequate for expandingbeyond 0.3 million acres. At times funds, for instance for the credit com-ponent of the scheme, were authorized too late to allow full utilization.Nevertheless the scheme gave staff experience, established operating proce-dures for providing extension, credit and inputs. Some key indicators ofprogress achieved are shown in Table 1.

21. In view of the importance of the jute crop GOB paid special atten-tion to IJCS and arranged annual high level evaluation by a committee whichincluded representatives of the Planning Commission, Ministry of Agriculture,Ministry of Jute, Parliament and the Jute Research Institute. The resultantreports pointed out marLy procedural shortcomings, principally late allocationof funds, lack of transport for DAJ staff and problems with seed drills.Based on its own small crop cutting program and DAJ's crop cutting records thecommittee found that IJCS farmers had increased jute yields. The committeealso found that JFA were playinrg a key role in the scheme and recommendedthat they should be given the legal status to borrow and trade. Howeverthere had been no progress in improving jute marketing. The government cor-porations had not been able to purchase JFA fiber directly and farmers hadhad to sell to middlemen as in the past. The 1976 evaluation committeerecommended provision of fiber storage and marketing credit for JFA.

22. To supplement GOB's evaluation DAJ in April/May 1976, with tech-nical support from the World Bank Resident mission in Dacca conducted anevaluation survey. The sample consisted of 266 IJCS farmers and of 249non IJCS farmers, spread over five major jute growing districts. Table 2shows classification of surveyed farmers by land holding size and Table 3summarizes the main data collected during the survey.

23. Over 90% of farmers in the sample owned 3 acres land or less andabout one third of these rented about I acre of land to supplement theirown land. The IJCS sample shows rather less very small farmers (owning

ANNEX 2Page 7

less than 1 acre land) than the non IJCS sample. The survey shows the highpercentage of IJCS farmers who adopted improved practices including linesowing, fertilizer and pesticide use resulting in a 50% yield increase, from2.9 bales per acre to 4.4 bales per acre. Farm budgets calculated on thebasis of survey data (Annex 10, Tables 1 and 2) show the following productioncosts and returns

nonIJcs IJcs-------- Tk --- ___

production cost per bale 310 250net return per acre /a 330 765

/a Taking fiber price at Tk 75/md.

24. These survey results confirm that IJCS methods have been successfuland provide a sound argument for supporting and expanding the scheme. Loca-tion of existing IJCS areas and of expansion areas are shown on Table 4.

Shortcomings of IJCS

25. A list of shortcomings of IJCS to date includes lack of: transportfor staff; housing particularly for JEA; subject matter specialists for stafftraining and for conducting field trials; a field plot demonstration program;and materials and equipment for extension and demonstration work. Anotherhandicap in implementing the scheme has been the amount of time field staffhave had to spend on administrative duties connected with supply of implements,inputs and credit. The use of administrative staff for this purpose tried ina few locations during the 1975/76 season improved extension work considerably.The project would help to eliminate these shortcomings.

BANGLADESH

JUTE PROJECT

IJCS Activities 1973/74-1975/76

----1973/74 1974/75 -- -----1975/76--------Target Achievement Target Achievement Target Achievement

Area under IJCS (acres) 300,000 270,000 300,000 280,000 300,000 290,000

Improved Seeds Distribution (MDS) 16,000 12,400 7,000 6,800 10,300 10,300

Fertilizer Distribution (NDS) 300,000 235,000 300,000 254,000 300,000 298,000

Credit Operation (Tk '000) 1/ 2/a. Taccavi 3,832- 822- - I/ - 2/ - 1/ 3/b. Sonali Bank 1- 2/ 3,764- 3,555- 4,672- 3c. B.K.B. 3,305- 1,832- 3,000/- 2,4392/ 3,7621 -

Seed Drills Supplied - Number - 2,772 - 4,000 -

Hand Hoes Supplied - Number - 2,545 - 2,100 - -

Line Sowing (acres) 150,000 29,000 150,000 38,000 150,000 56,0003/

Yield (Bales/acre) - 4.4 - 4.8 _

1/ Amount lent to farmers.2/ Loan repaytient made by farmers.3/ Results not known yet. t z

April 14, 1977

BANGLADESH

JUTE PROJECT

IJCS Survey Classification of Farmers

Size of Numbers of Farmers Percentage of Numbers of Surveyed Percentage of Farmers Average AmountHold-ing Surveyed Sample Farmers Renting Land in Each Size Group Land Rented(ae res) Non-IJCS IJCS Non-IJCS IJCS Non-IJCS IJCS Renting Land Non-IJCS IJCS

Non-IJCS IJCS

Up to 1.00 88 50 35 19 48 27 54 54 0.89 1.10

1.01 - 2.00 112 125 45 47 27 43 24 34 o.86 1.16

2.01 - 3.00 33 66 13 25 4 6 12 9 1.24 0.96

3.01 - 4.oo 4 7 2 3 2 29 - 1.14

4.01 - 10.00 11 15 4 5 3 3 27 20 1.17 1.57

More than 10.00 1 3 1 1 - - - _ - -Acres

TOTAL 24) 266 100 100 82 81 33 30 0.91 1.14

April 14, 1977

HtlI

BANGLADESH

JUTE PROJECT

Summary Results of IJCS Survey

Mymensingh Tangail Dacca Comilla Rangpur Total/AverageNon Non Non Non Non Non

IJCS IJCS IJCS IJCS IJCS IJCS IJCS IJCS IJCS IJCS IJCS IJCS

1) Farmers Surveyed No. 64 67 48 50 45 56 46 45 46 48 249 266

2) Percentage of Holding underJute 27 29 28 34 31 37 20 27 27 27 27 31

3) Farmers Growing Jute onSame Land for Two Yearsa) No. 22 21 13 10 12 16 13 10 9 13 69 70

b) Percentage of Sample 34 31 27 20 27 29 28 22 20 27 28 26

4) Seed and Sowing:a) Farmers Sowing in

Lines No. - 54 - 46 - 51 - 39 - 37 - 227b) Percentage of Sample - 84 - 92 - 91 - 87 - 77 - 85

c) Amount of Seed Used- Seers 5.3 3.7 6.8 4.1 5.7 4.2 4.0 3.5 4.6 3.9 5.2 3.9

d) Farmers Using ImprovedSeed No. 4 55 2 44 2 49 6 39 1 41 15 228

e) Percentage of Sample 6 82 4 88 4 88 13 87 2 85 6 86

5) Fertilizer Usea) Farmers Using Urea No. 22 31 18 50 26 55 32 44 8 4, 106 227b) Percentage of Sample 34 46 38 100 58 98 70 98 17 98 43 85c) Amouat Used - Seers 18 28 24 37 42 34 28 35 16 27 26 33

d) Farmers Using TSP No. 3 57 4 50 20 55 22 43 1 47 50 252

e) Percentage of Sample 5 85 8 100 4 98 48 96 2 98 20 95

f) Amount Used - Seers 9 7 9 9 31 16 30 15 10 8 27 11

g) Farmers Using MP No. 3 55 3 50 15 54 19 43 1 47 41 249h) Percentage of Sample 5 82 6 100 33 94 41 96 2 98 16 94

i) Amount Used - Seers 16 12 6 13 14 13 19 14 12 11 16 13

6)' Pest Controla) Farmers Reporting

Damage No. 20 30 30 26 26 34 23 24 18 21 117 135b) Percentage of Sample 31 45 63 52 58 61 50 53 39 44 47 51

c) Farmers Using Pesti-cides No. 4 21 12 25 14 27 9 20 3 14 42 107

d) Farmers Using Pesti-cides as Percentageof those ReportingDamage 20 70 40 96 54 79 39 83 17 67 36 79 MXx

7) Labor Use Mandays/Acre 98 107 128 119 131 136 143 98 137 113 127 115

8) Yields Maunds/Acre 14.5 21.5 14.0 20.5 14.0 23.5 15.5 23.0 14.0 20.5 14.5 22.0

April 14, 1977

ANNEX 2Table 4

BANGLADESH

JUTE PROJECT

Intensive Jute Cultivation SchemeLocation of Existing Scheme and of New Schemes

Existing NewDistrict Schemes Schemes Total

…--------------------…Acres----

Mymensingh 84,000 166,000 250,000Tangail 32,000 18,000 50,000Dacca 1/ 54,000 46,000 100,000Comilla -1/ 46,000 36,000 82,000Noakhali - 6,000 8,000 14,000Sylhet l/ ,2,000 2,000 4,000Dinajpur 2/ 18,000 6,000 24,000Rangpur 2/ 76,000 100,000 176,000Bogra 2/ 14,000 6,000 20,000Rajshahi 3/ 22,000 12,000 34,000Pabna 3/ 32,000 14,000 46,000Faridpur 4/ 50,000 46,000 96,000Barisal 4/ 4,000 - 4,000Jessore 5/ 38,000 26,000 64,000Kushtia 5/ 18,000 8,000 26,000Khulna 5/ 4,000 6,000 10,000

Total 500,000 500,000 1,000,000

1/ Noakhali and Sylhet administered from Comilla.2/ Dinajpur and Bogra administered jointly with Rangpur.3/ Rajshahi and Pabna jointly administered.4/ Barisal administered from Faridpur.5/ Kushtia and Khulna administered from Jessore.

November 3, 1977

ANNEX 3Page 1

BANGLADESH

JUTE PROJECT

Jute Research

A. Background

1. Responsibility for jute production research rests with theDirectorate of Jute in the Ministry of Jute. The organization of the re-search Department of this Directorate is given in Table 1. The BangladeshJute Research Institute (BJRI) is located in Dacca and has only a few acresof land nearby on which to do experimental work. The Institute also has sixsubstations at Chandina, Faridpur, Jessore, Kishoreganj, Rangpur and Taraboand 24 smaller demonstration sites referred to as subvention centers. Thework of the substations has recently been extended to cover some trials infarmers' fields.

2. At the Institute's headquarters in Dacca there are about 40 profes-sional grade staff in seven divisions; agronomy, botany, entomology, micro-biology, plant pathology, soil science and statistics while at each substationthere is at least one research officer with supporting staff. The substantiallaboratory buildings in Dacca are not fully used and research activity is ata very low level.

3. It has already been recognized by the GOB that the importance ofthe crop to the national economy merits vigorous research and seed productionprograms and that the present Jute Research Institute needs major supportand redevelopment to enable it adequately to service the industry. To thisend GOB has negotiated an agreement with the Asian Development Bank for aloan of about US$8.5 million under the name of the Bangladesh Jute SeedProject. This project has a large research component, details of which aresummarized in Appendix 1.

4. In addition to the ADB loan, major technical assistance supportwill be provided by a UNDP-supported project 1/ at a total cost of US$2.0million of which about 50 percent will be from external sources. The maincomponents of this project are 118 m/m of international consulting servicesand 180 m/m of fellowships together with a small amount of equipment(US$45,000) mainly transport. The terms of reference of the consultants tobe provided quoted from the Project Document, are given in Appendix 2.

1/ Jute Seed, Research and Production Project:UNDP/FAO project BGD/74/018/A/01/45.

ANNEX 3Page 2

5. At the Jute Research Institute level, the funds and resourcesavailable for development of facilities and research activities are amplehaving regard to the present low level of research activity and, as a con-sequence, the limited capacity of the Institute usefully to absorb the assis-tance which is available. There if; scope, however, for a broader view to betaken of jute production research than that presented in both the ADB and UNDPdocuments, notwithstanding the comment 1/ about jute as one crop in a rotationmade in the ADB document.

6. Since there will be a delay of many years before new researchfindings emerge in a form in which they can be applied in the field, there isa need to adapt present knowledge to fit more closely the different situationsunder which the two main varieties of jute are grown. While this programshould be generated by the Jute Research Institute it could only be carriedout by the SMSs at zonal level assisted by the JEO and JEA, all of which staffare located within the Directorate of Agriculture (Jute) within the Ministryof Agriculture. This could form the essential active link between juteresearch and jute extension which so far appears to have been lacking. Itwould reinforce the link which is to be developed by the training of SMS atthe Jute Research Institute.

7. Since the UNDP-supported project has a Senior Research Planner asthe project leader and adequate funds are available at BJRI level (para 5),any provisions to be made in the IDA financed project should be designed toprovide additional resources to the GOB to allow a modest program to becarried out at zonal or block level in farmers' fields. The Extension com-ponent provides for a complement of 40 SMSs at zonal level (two per zone) sothat useful information could be obtained if each of these could supervisethe carrying out of a few trials in their respective zones. These trialsshould not be confused with the demonstrations of the increases in yield thatcan be obtained using known practices as done in the Intensive Jute Cultiva-tion Scheme in which average yields were increased from 2.9 to 4.4 bales peracre. The main difference between the two activities would be that, whereasthe IJCS package seeks to improve jute crops per se, the more experimentalapproach proposed as an additional program would place more emphasis onexamining the place of jute in the cropping patterns possible in each of themain jute growing areas. This topic seems likely to increase in importanceas the main objective of the project (higher yields per acre but a reducedacreage nationally, thus releasing land for other purposes) is achieved.

1/ Bangladesh Jute Seed Project (ADB document) para 55.

ANNEX 3Page 3

Project Research Support

8. The research component would be confined to support for a simpleapplied research program 1/ and for the costs of training the staff whowould be involved in it. Since the incremental costs of all the staff areincluded in the extension component, the extra costs involved under theresearch heading would be essentially those connected directly with thecarrying out of the field trials, and provision for this cost has been madeon the basis of one trial or demonstration per block at a cost of Tk 150each - for inputs and labor.

Organization and Management

9. The senior SMS at headquarters would be responsible for assistingthe project Director in technical matters. Within these duties they wouldhave the responsibility of identifying field problems and passing theseto BJRI for investigation and, equally, they would take the results of re-search done at BJRI and, in cooperation with BJRI, work out a program fortesting these findings in farmers' fields. This program would be supervisedby the zonal SMS with the JEO and JEA closely involved in doing the trials.Until such time as new research results are forthcoming, a work programwould be devised to test some of the possibilities given in Appendix 3.Hopefully this would be done in cooperation with BJRI and would engage theattention of the Senior Research Planner (under the UNDP project) as anarea deserving perhaps more attention than is proposed in the ADB and UNDPproject documents.

1/ A few topics which could form the start of such a program are givenin Appendix 3.

ANNEX 3Table 1

BANGLADESH

JUTE PROJECT

Organization Chart of Bangladesh Jute Research Institute

Ministry of Jute, Directorate of Jute

Director (Seed) Director (Research) Director(Fiber technology)

Central Jute Research Station Regional sub-stations (6)-/at

Agronomy Chandina-/Botany Faridpur

Divisions' Entomology JessoreMicrobiology KishoreganjPlant Pathology RangpurSoil Science TabadoStatistics

Subvention centers (24)(attached to some degree to thestations)

1/ The officers-in-charge of these stations report directly to theDirector (Research).

2/ Trials in farmers' fields have been started recently and are underthe control of the officer-in-charge of the appropriate sub-station.

April 14, 1977

ANNEX 3Appendix IPage 1

BANGLADESH

JUTE PROJECT

Summary of Provisions for Strengthening Jute Research under the ADB Loan

Jute Research

1. GOB and the ADB mission consider that it is essential to strengthenall aspects of jute research .... '. The general objective of the researchprogram will be to develop a higher yield, good quality jute variety withpest and disease resistance and a short growing season. The latter characterbeing of particular importance as it will facilitate multiple cropping withjute as one crop in the rotation.

1. Agricultural Research Facilities

2. The facilities of the Agricultural Research Division (ARD) of theJute Research Institute located at Dacca will be strengthened by _ equipmentfor laboratories, books and transport. Greenhouses would be added to existingfacilities for use in plant breeding, entomology and pathology research pro-grams. Air conditioned seed stores would be added to facilitate the main-tenance of seed stocks.

3. The Central Research Station will be located at Manikganj (4o milesfrom Dacca) and will be used to support the ARD of BJRI in Dacca. The newstation will be designed by the expatriate farm planner under the guidance ofa consultant on farm development; necessary buildings 1/ and equipment willbe provided.

2. Jute Research Sub-stations

4. The research facilities under paras 56 and 57 will be supported byfour regional research substations at Chandina, Kishoreganj, Faridpur andNasipur (new-to be used also as a training center).

5. Farm planning and development .. under the guidance of expatriateconsultants as for the Central Research Station.

6. Field preparation at the substations would not be mechanized butwould be carried out by bullock drawn equipment. Necessary buildings wouldbe provided and each substation would have up to six subvention centersthrough which the final testing of recommendations before general releaseto farmers would be done.

1/ Housing for research staff NOT included.

ANNEX 3

Appendix IPage 2

3. Breeder Seed Farms

7. Production of 1.3 tons per annum of breeders'seed would be theresponsibility of the ARD and farms would be equipped to allow this seedto be produced.

4. Consultants for Agricultural Research

8. The GOB and the ADB mission agree .... a large input of consultantservices (details of these services, to be provided through a UNDP project,are given in Appendix 2).

9. the Project will provide a pilot rettery to facilitatestudies on fibre quality.

5. Research Fellowships

10. Provision is made for fellowships in agronomy, plant breeding andgenetics, entomology, pathology, microbiology, soil science, and seed tech-nology to a total of 180 man-months.

A complete breadown of Project Costs between agricultural researchand seed farm development was not available at appraisal. There is no reasonto suppose however, that adequate provision has not been made for the devel-opments outlined above to be carried through successfully since the totalproject costs excluding technical consultants amount to US$10.8 m. of which$6.8 m. are for farm development and buildings and $2.15 are for equipment andtransport.

ANNEX 3Appendix 2Page 1

BANGLADESH

JUTE PROJECT

Terms of Reference of Consultants to be Provided underUNDP-Assisted Project BGD/74/018/A/01/15

Personnel Costs. A total of 118 man/months of international con-sulting services will be provided.

Senior Agricultural Research Planner. He will be located at Daccafor a period of six months, commencing 1 October 1976. He will examine thepast performance of the Agricultural Research Division of the Jute ResearchInstitute, evaluate existing research programs and research departments,make recommendations on the reorganization of jute research in Bangladesh,provide the overall framework for short- and long-term research programsand identify the fields in which fellowships should be awarded. He willcoordinate the work of the consulting team.

Plant Pathologist. He will be located in Dacca for a period oftwenty-four months, commencing 1 January 1977. He will assist in implementingthe proposals made by the Senior Research Planner and, in addition, willassist in setting up a research division in plant physiology and he will payparticular attention towards assisting in the full utilization of green-housefacilities.

Plant Breeder. He will be located in Dacca for a period of thirty-six months, commencing 1 January 1977. He will be primarily concerned withassisting in the introduction and building up of a comprehensive collectionof jute germ plasm and the evaluation of the introduced and currentlyavailable varieties. He will also assist in making selections, initiatingbreeding programs and coordinating varietal improvement work being carriedout by other research organizations in Bangladesh. He will coordinate thework of the consulting team after the departure of the Senior AgriculturalResearch Planner.

Design Engineer. He will be located in Dacca for a period of 24months, commencing 1 January 1977. He will examine equipment presentlyutilized for sowing and weeding of jute crops, identify shortcomings andascertain the reaction of farmers. He will develop one or more designs ofsuitable equipment for sowing and row-weeding of jute on the different soiltypes found in the predominantly jute growing areas in Bangladesh, takinginto account both animal drawn and hand-operated designs.

Seed Technologist. He will be located in Dacca for periods ofthree months, commencing in October in each of three years, commencing 1978.He will assist in the jute research institute in all matters relating to

ANNEX 3Appendix 2Page 2

the technical aspects of the seed production program. This will includethe evaluation of seed production techniques, procedures adopted for seedtreatment and storage and the identification of studies in seed physiologyrequired in order to promote the viability of seeds retained in bufferstocks.

Experts in Entomology, Plant Pathology and Agricultural Economics.These consultants will be recruited as and when required with provision fora total of 18 man-months of service. The experts in entomology and plantpathology will work closely in the evaluation of research work being carriedout at the laboratory, green-house and field level in the agriculturalresearch division. They will assist in developing research techniques andhelp draw up specific research programs. The expert in agriculturaleconomics will assist in setting up a section of agricultural economics inthe Jute Research Institute and he will advise on the nature and scope ofthe long-term research programme related to Jute with an assessment of thestaff requirements for such a progravm.

Farm Development Specialist. He will be located at various sitesin Bangladesh over a period of 36 months, commencing in October 1977. Hewill help prepare a blueprint for the development of those farms which willbe modernized during the course of the Project.

Farm Management Expert. Ile will be located at various sites overa period of 27 months, commencing in October 1979. Once the farm developmentprogram is completed, the consultant in farm management will assist localcounterparts in running the farms, naking farm management decisions, drawingup work plans, assigning the work fcrce and machinery, preparing a recordingsystem of consummable stores. He will also assist in drawing up crop culti-vation sheets and train local counterpart staff in modern farm managementtechniques.

Training Fellowships. One of the responsibilities of the agricul-tural research planner will be to determine the fields of study in whichfellowships should be awarded to local scientists based upon the actualneeds of the BJRI. The longer term consultant to plant physiology willassist the Government cooperating agency in drawing up detailed proposalsfor such fellowships regarding duration, selection of the appropraite in-stitutions and the procedures and arrangements for funding. The detailedproposals will be subsequently submitted by the Government authorities tothe Executing Agency and the UNDP for approval. It is provisionally esti-mated that short-term fellowships for the training of local staff in thegeneral fields of agronomy, plant breeding and genetics, entomology, pathology,microbiology, soil science and seed technology, making a total of 15 man-years of fellowships, will be requir,d.

ANNEX 3Appendix 3Page 1

BANGLADESH

JUTE PROJECT

Some Topics for Consideration within an Applied Research Programme

The main difference between the points made herein and the packageapproach of the IJCS is one of concept rather than technical content. Inthese proposals (and questions) the place of jute as a cash crop in a rota-tion of crops is given prominence, while for the crop itself a greater flexi-bility of approach to increasing output and improving quality is indicated.

A. Present Practices

1. It is almost impossible to believe that one standard rateof fertilizer application can be optimal under the rangeof soils and moisture conditions under which the two mainvarieties of jute are grown. Simple trials with a largenumber (200) of dispersed replicates on farmers' fieldscould identify differences in responses and possibly leadto economies in fertilizer use.

2. Have all the possibilities of plant density and spatialdistribution of the crop been explored from the produc-tion economics angle rather than from the purely yieldangle? Several factors are involved in this of whichseeding rate, weeding costs, ease of access for pestcontrol may be important.

3. What is the effect on subsequent crops of using seed grownoutside of the normal growing season?

4. What is the precise range of possible sowing dates for thetwo varieties to ensure an economic yield i.e. how early/latecan the crops be sown and equally what is the optimum economicbalance between early harvest (high quality/low yield) andharvest at full maturity (lower quality/higher yield).

5. Why is C. olitorius grown in some low lying areas e.g.Faridpur (where C. capsularis might be expected to be moresuitable) and vice versa e.g. Rangpur area?

ANNEX 3Appendix 3Page 2

B. Jute in the Rotation

1. Early maturing varieties are being sought to try to avoiddamage from flooding late in the season; these varietiesmight also allow a T. Aman crop to follow in non-floodprone areas. What is the earliest possible harvest datecompatible with a reasonabLe return and having regard tothe added return from the iollowing paddy crop?

2. Is it possible to obtain a reasonable yield of jute fromlate sowing after a short cluration irrigated boro paddy?If so, how do the returns c:ompare with early Jute followedby T.aman or wheat or a pulse crop?

3. Where climatic and soil conditions permit of multiplecropping does the rate of fertilizer application to juteneed to be amended to take account of residues from fer-tilizers applied to other crops in the rotation?

ANNEX 4Page 1

BANGLADESH

JUTE PROJECT

Credit for Production and Marketing

A. Background

1. In October 1973 an IDA mission visited Bangladesh to examine theagricultural credit system. The mission identified the problems as mainlyinstitutional and recommended an overhaul of the principal rural credit in-stitutions, the Bangladesh Cooperative Bank (Bangladesh Jatiya Samabaya Bank,BJSB) and the Bangladesh Agricultural Bank (Bangladesh Krishi Bank, BKB). Afollow-up mission in September 1974 concurred with these findings and singledout the problem of delinquent debts as the central issue. This missionsuggested that, as an interim strategy, commercial banks should be utilizedas alternative agricultural credit channels. Since then, commercial bankshave played an increasingly important part in providing agricultural creditand IDA has agreed to support a subproject to review and help rehabilitatethe agricultural credit system under second the Technical Assistance Credit(Cr. 622-BD).

2. BKB and a commercial, the Sonali Bank (SB), have both participatedin the IJCS credit operation as channels for GOB funds. GOB allocated Tk 9 Mto each bank for this purpose in 1976. As the funds were received late,disbursement last season amounted to only about 50%. IJCS has reportedrecoveries of 90% in 1976 for jute loans. Since BKB continues to have aserious problem of overdues for its normal, non-jute lending - 37.9% as atJune 30, 1975 - GOB has decided that SB should serve as the sole creditinstitution for this project.

B. Sonali Bank

Structure Organization and Management

3. Sonali Bank is a successor in Bangladesh of the National Bank ofPakistan and is one of the leading commercial banks, all of which have beennationalized. The Chairman and Managing Director of the six-member Board isK.A. Rashid, originally from the staff of the State Bank of India and laterDeputy Governor of the Bangladesh Bank. Two General Managers, eight DeputyGeneral Managers and twelve Assistant General Managers each heading one ofthe twelve functional departments, make up the rest of the head office admin-istration.

ANNEX 4Page 2

Regions/Districts

4. The country is divided by SB into ten administrative regions.Each regional office is headed by an Assistant General Manager assisted bya staff of about 30 on an annual budget of about Takas 0.3 M. The regionaloffice takes responsibility for general policy implementation, liaising withMinistries/Government departments, overall administration, supervision,inspection and financial control of two to three District Branches and of25 to 50 subdivisional and Thana level branches per District. DistrictBranches are responsible for actual operations carried out directly by themas well as by the subdivisional branches and by the Thana/Village levelbranches. District Branches are well staffed (with about 70 persons) onan annual budget, each, of about Takas 0.5 M with subdivisional offices andThana/Village level offices directly attached to them and carrying staff ofabout 40 and 10 respectively (Table 4).

Staff Training

5. SB has established a staff training institute, headed by a seniorDeputy General Manager. Experienced, well qualified staff are selected andgiven courses of teacher training. Twenty-one training camps have alreadybeen established in the Districts -- in Regional/District branch premises.Hostel accommodation is provided in some camps. Trainees are posted toDistrict branches and required to report to appropriately located camps.Clerical staff undergo seven weeks of intensive training. 395 traineesparticipated in the course which w£ts conducted in 17 centers from November26, 1976. A further batch of 400 had been scheduled for the session in the21 centers from February 2, 1977. In between these sessions the instituteprovides training for experienced executive and clerical staff, and advancedcourse of training in foreign exchange, as well as periodical training, andreorientation sessions for trainers. These trainers are regularly broughtback to Dacca for these special sessions. Meanwhile, the Bangladesh Insti-tute of Bank Management, Dacca, an independent institute jointly financed bycommercial banks, has been reorganized and strengthened. SB has used theseimproved facilities too and has had 75 members of its staff trained in theInstitute every year since 1975.

Branch Expansion Program

6. The opening of commercial bank branches has to be authorized byBangladesh Bank, which gives every year each commercial bank a quota oflicenses. SB's network of 438 branches covers all except 61 Thanas withinthe 0.5 M acres within IJCS (See Table 5). Most of these 61 would be accom-modated within the 54 licenses given to SB for opening branches this year andthe remainder would have to be specially authorized by Bangladesh Bank.Recruitment and training staff for these new branches would be within SB'scapacity.

ANNEX 4Page 3

Performance

7. SB has made good progress increasing total income annually, by 87%in 1973, 46% in 1974 and 59% in 1975, as against holding down increase inexpenditure to 56% in 1973, 42% in 1974 and 32% in 1975 (Table 1). The pro-portion of total expenditure to total income has therefore been decliningannually from 96% in 1972 to 66% in 1975.

8. Deposits have grown in 1975 by 50% resulting in advances to depositsfalling from 75% in 1974 to 64% in 1975. The growth of advances - in a poten-tially delinquent situation - is under effective control and amounted to 51%in 1973, 30% in 1974, and 28% in 1975.

9. SB continues to be the leading commercial bank in providing agri-cultural credit. It has been steadily increasing its commitment from Takas36.6 M in 1974 through Takas 114.7 M in 1975 to Takas 216.1 M in 1976 (at an88% increase in 1976 against 213% in 1975). Recoveries of production loansfrom 1973 have been over 85% except for Boro under Thana Irrigation Program in1975 - 66%, and T. Aman-Aus in 1976 - 50% (this last is reported to be delayedbut not in default, with recoveries still coming in)(see Table 6).

C. Present System of Credit Under IntensiveJute Cultivation Scheme (IJCS)

10. The procedure for granting production credit to jute farmers underthe existing Intensive Jute Cultivation Scheme is as follows. The JuteExtension Assistant (JEA) and the Secretary of the Jute Farmers' Association(JFA) draw up lists of farmers' fertilizer requirements. The Jute ExtensionOfficer (JEO) checks these lists, calculates the total requirements and con-veys it to the Bangladesh Agricultural Development Corporation (BADC). BADCmoves the fertilizer to the nearest authorized dealer. The dealer, assistedby JEA and JFA secretary issues fertilizer to farmers against completion ofloan bonds. He collects these bonds and forwards them to the District Officeof BADC which in turn passes them on to the District Office of SB. SB, whichmaintains an IJCS account for the district, makes payments from this accountdirect to the dealer. The Ministry of Finance funds this account, at thebeginning of the season, on the basis of estimates made by DAJ of the creditnecessary for the total fertilizer requirements. When jute farmers repay theloans, the repayments are credited to this account. Any shortfall arising inthe account is borne by GOB. Thus, the role of the banks in IJCS is only toact as agents for GOB.

D. Proposed Comprehensive Credit Scheme

11. Under the project credit, operations would be expanded in line withthe proposed physical expansion of IJCS. Operational changes would include:

ANNEX 4Page 4

(a) Making use of the Thana Central Cooperative Association/Village Cooperative Society - Krishi Samabaya Samity(TCCA/KSS) mandatory for jute growers in:

(i) the seven Thanas covered by the IDA-supportedRural Development Project - Kotwali, Sherpur,Gabtali, Sariakandi (all in Bogra district) andMuktagacha, Trisal, Gaffargaon (all in Mymensinghdistrict); and

(ii) the four Thanas covered by the ADB-supportedSerajganj Rural DeveLopment Project - Raiganj,Kazipur, Serajgonj, llllapara (all in Pabnadistrict).

The purpose of this would be to conform with the conceptsof the two Rural Development Projects under which all agri-cultural credit is to be issue through IRDP/TCCA.

(b) The introduction of marketing credit on a pilot scale.

Production Credit

12. The following production credit would be provided under the project:

Kind Component. Fertilizer, costing about Tk 100 per acre.

Cash Component. About Tk 150 per acre. Jute production hashigh labor requirements, particularly for weeding to ensuregood yields, and for speedy harvesting to facilitate timelytransplanting of the aman paddy crop.

13. Procedures. JEA assisted by ISO and JFA Secretary would listfarmers' kind and cash requirements. They would calculate farmers' totalrequirements, as at present, and pass on the information as appropriate;individual loan bonds would be prepared as at present, but they would beexpanded to accommodate the cash component. In all other respects presentprocedures would be followed (para 10).

14. After the completion of fertilizer delivery, JEA assisted by ISOand JFA Secretary would carry out a 10% sample survey of borrowers' jute plotsto verify fertilizer application and progress of cultivation. The JEA wouldbe required to maintain a log book which would contain his observations andthe comments of other DAJ staff, as well as of SB staff; the latter wouldtransfer the comments to the loan bonds for subsequent reference, if neces-sary. Adverse comments would be acted upon, even to the extent of terminatingcredit after joint consultation between DAJ and SB.

ANNEX 4Page 5

15. DAJ (in the person of the ADA for the district) in consultationwith SB, would decide on the timing for the payment of the first installmentof cash - for weeding. SB staff would prepare and packet the individual cashrequirements and make payment direct to jute farmers at premises selected byDAJ. Payments would be made on a well advertised day and time. Farmerswould sign a receipt incorporated in the loan bond and the receipt would beconfirmed by JEA, ISO and JFA Secretary all of whom would assist in theoperation. After the first payment, and well before the final installmentis paid out, JEA assisted by ISO and JFA Secretary would carry out a further10% sample survey, the sample to exclude holdings which were the subject ofthe previous sample. Again the JEA would enter his comments into his log bookand convey his comments to SB as necessary. The second and final installmentof the cash component would be paid in an identical operation, just prior toharvesting, followed by a further and final 10% "fresh" sample survey.

16. Farmers would continue to be allowed to repay their loans throughthe nearest branch of any commercial bank. Loan bonds, properly discharged,would be released to borrowers who settle their outstanding. Main collectionssupported by JEA, ISO and SB staff would start in October and should be com-pleted before the end of December. SB staff would be available at suitablecenters on well advertised days and times. Farmers who fail to repay theirloans would be debarred from future credit and would be subject to legalaction, and JFA, whose total membership recovery falls below 75% of demand,would be similarly debarred.

TCCA/KSS

17. Background. In 1970 the Government adopted a national rural de-velopment plan which provided for the phased establishment, throughout thecountry, of the TCCA/KSS type of cooperatives. These are based on a modeldeveloped at the Bangladesh Academy for Rural Development in Comilla andare administered by the Director-General of the Integrated Rural DevelopmentProgram (IRDP), a department of the Ministry of Local Government Rural Devel-opment and Cooperatives. The Department of Cooperatives of the same Ministryis responsible for all other five cooperatives - the so-called traditionalcooperatives. At present, there are TCCA/KSS in about 200 thanas, and thecoverage is being expanded as new staff are trained. IRDP is administered byRegional and District Officers and at the Thana level by a Project Officer, aDeputy and an Accountant.

18. Organization. TCCA/KSS is organized on a two-tier system. TCCA islocated at the main administrative center for the Thana along with the Thanaoffices of the principal Government Departments. TCCA are managed by electedManagement Committees, of which the IRDP Project Officers are Secretaries.Other members of TCCA are the elected representatives of the lower tier, theKSS, the Village Primary Societies. KSS are also managed by elected Manage-ment Committees which include a Chairman and an Accountant. The Chairman andthe Accountant are trained by the IRDP Project Officer. Capital formation anddeposit mobilization are achieved by a simple share capital contribution fromeach member (Tk 10) and by compulsory thrift savings deposits which confirmcredit eligibility on the borrower (Tk I for each Tk 10 borrowed). Thesesavings provide a means of security for the loans. While TCCA/KSS operate in

ANNEX 4Page 6

200 Thanas, they are the only source of cooperative credit in the 11 Thanassubject to IDA and ADB-financed Rural Development Projects. It is believedthat eventually they will take over from the traditional cooperatives through-out Bangladesh.

19. Credit for Jute Through TCCA/KSS. In accordance with GOB'sintention that in the "rural development Thanas" TCCA/KSS should have amonopoly of agricultural credit, TCCA/KSS system would provide productionand marketing credit for IJCS in the eleven Thanas. Directorate of Agri-culture (Jute) staff would provide the same services as in other projectareas and would assist TCCA/KSSs in their Jute credit operations, includingpreparation of loan applications and checking of loan utilization. SomeJute farmers in these Thanas are already members of TCCA/KSS and thus wouldbe automatically eligible for crezdit. Others who do not belong to TCCA/KSSand have no outstanding debts to other cooperatives in the RD Thanas wouldalso be eligible for credit provided they met admission and membership re-quirements and joined TCCA/KSSs. A condition of membership of the TCCA/KSSsis that members of former cooperattive organizations have settled any overduedebts in full or have had them rescheduled under fresh loan agreements withTCCA/KSS. TCCA/KSS have laid dovn standard rescheduling terms. New TCCA/KSSmembers would have to comply to this credit discipline.

20. If IJCS is to meet its targets in the rural development thanas,KSS would have to attract a high percentage of jute farmers, up to 90% incertain localities. For this reason, IRDP headquarters have agreed thatfor a two-year transition period temporary modifications would be made inTCCA/KSS membership interim aid procedures:

(a) new jute farmer members to KSSs would not need to payin their Tk 10 share to qualify for membership but wouldbe permitted to borrow it as part of their productionloan; and

(b) the loan ceiling of new KSS members would not be deter-mined by his shareholdiag or the savings amount inhis thrift account.

21. During the two-year traisition period, individual loan appraisalwould continue to be conducted by DAJ which would be assisted by TCCA/KSSand SB staff. Loan applications laeeting DAJ requirements would be endorsedby the TCCA and sent to SB for payment. SB would channel credit to farmersdirectly through KSS with notification to TCCA, which would be the primaryborrower and which would enter the loan into its books against the accountsof its constituent KSS sub-borrowers. Since TCCA would not need to use itsown village accountants and inspectors for processing jute loans, its shareof loan interest spread would be below that for its agricultural lending.

ANNEX 4Page 7

Marketing Credit

22. The project would include a pilot jute marketing component. TCCA/KSSs would be selected to participate on the basis of general performance,satisfactory loan recovery ratios and satisfactory management capacity.Godowns equipped with baling facilities would be constructed by DAJ in thesame area of these associations and would be available for lease by theparticipating TCCA/KSS. Farmer members of participating associations wouldbe able to have their produce graded, baled and stored at these centers andreceive immediate payment equal to the government minimum farm gate priceless production credit, against hypothecation of stock. The stock would beheld in storage under the joint custody of SB and the TCCA/KSS or DAJ untilsold to licensed dealers and jute mills. The timing of such sales would bedetermined by SB on the basis of market information and would be intended toachieve the best possible price for the grower. Sale proceeds would bereleased to DAJ and in time would be passed on to borrowers, less advancesand storage and service charges. IRDP Cooperatives as well as DAJ lack expe-rience in financing jute marketing. Therefore, this activity is regarded asa pilot venture and the credit category is restricted to about Tk 30 million.Terms and conditions of credit to jute farmers and source of credit aredescribed in the main text.

ANNEX 4Table 1

BANGLADESH

JU_E PROJECT

Sonali Bank

Growt:h from 1972(In million Takas)

December 31

1972 1973 Increase 1974 Increase 1975 Increase

Total Income 5.52 10.30 87 14.84 44 23.62 59

Total Expenditure 5.28 8.22 56 11.72 42 15.53 32

Total Expenditure/Total Income (%) 96 80 80 66

Net Profit 0.24 2.08 - 3.12 50 8.09 159

Net Profit/Total Income (%) - 20 21 34

Capital 2.00 3.00 50 3.00 0 3.00 0

Reserves - 0.09 - 0.88 870 3.39 285

Deposits 173.13 210.26 21 223.92 6 332.93 49

A'vanosi t,u d ingBilii) E 85.37 128.98 51 167.70 30 215.05 28

Advances/Deposits (%) 49 61 75 64

Total ForeignExchange Business 42.40 130.71 208 155.74 19 397.59 155

Total Pretax Profit 0.52 2.49 379 3.98 60 9.70 144

Total Number of Offices 274 306 12 359 17 400 11

Number of Employees 4,708 5,460 16 6,294 15 6,989 11

March 4, 1977

ANNEX 4Table 2

BANGLADESH

JUTE PROJECT

Sonali Bank

Condensed Balance Sheets as at December 31(In million Takas)

9 Months1972 1973 1974 1975

Assets

Cash on hand and with Bangladeshbank 158.70 188.97 187.04 348.42

Balances with other banks 2.61 7.53 4.51 66.64Money at call 25.00 - 4.44 108.55Investments at cost 466.91 394.11 505.39 636.24Advances 853.72 1,289.75 1,676.97 2,150.54Bills receivable being billed

for collection 5.53 208.59 538.78 738.79Constituents' liabilities for

acceptances 506.15 484.69 1,358.84 2,615.95Premises 19.79 19.14 18.77 18.21Furniture 3.67 4.47 5.47 9.46Other assets- 338.65 332.36 340.53 578.41Profit and loss account (Dr.) 16.05

2,396.78 2,929.61 4,640.74 7,271.21

Capital and Liabilities

Capital 20.00 30.00 30.00 30.00Reserves - 0.96 8.75 33.87Deposits and other accounts 1,745.01 2,102.57 2,239.23 3,329.31Borrowings from other banking

companies, agents 0.11 50.00 421.04 423.67Bills for collection/receivable 5.55 208.59 538.77 738.79Other liabilities 119.98 52.79 44.00 99.60Acceptances, endowments, etc. 506.14 484.69 1,358.85 2,615.95Profit and loss after providing

taxes, reserves - 0.04 0.10 0.02

2,396.78 2,929.64 4,640.74 7,271.21

a/ Includes balances held with banks in Pakistan.

March 4, 1977

ANNEX 4Table 3

BANGLADESH

JUTE PROJECT

Sonali Bank

Condensed Statements of Net Income for Years Indicated(In million Takas)

9 Months1972 1973 1974 1975

Income

Interest and discount 46.96 84.99 123.11 181.39

Commission, exchange andbrokerage 8.29 18.04 25.23 54.41

Net profit on sales ofinvestments, etc. - - - 0.40

Other receipts - 0.00 0.08 0.03

55.25 103.03 148.42 236.23

% of % of % of % ofIncome Income Income Income

Expenditures

Interest paid on borrowers'deposit 27.29 49.4 41.74 40.5 57.07 38.4 84.87 35.9

Salaries, allowances,providence funds 19.68 35.6 30.08 29.1 45.39 30.5 49.62 21.0

Directors' fees andallowances - - - 0.02 )

Rent, taxes, insurance, )lighting and telephone 1.97 ) 3.52 ) 5.62 ) 7.52 )

Law charges 0.02 ) 0.19 ) 0.20 ) 0.34 )Postage and telegraph stamps 0.45 ) 0.52 ) 1.05 ) 1.97 )Auditors' fees 0.02 ) 0.02 ) 0.02 ) 0.02 )Depreciation on and repairs ) 10.6 )10 10.1 ) 1011.

to bank properties 0.90 ) 1.06 ) 1.44 ) 1.89 )Stationery, printing and ) ) ) )advertisement 1.09 ) 1.58 ) 1.76 ) 3.10 )

Other expenditure 1.42 ) 3.54 ) 4.69 ) 5.95 )Net profit prior to taxation

carried to balance sheet 2.40 20.79 31.18 80.93

55.24 103.03- 148.42 236.23

July 15, 1977

ANNEX 4

Table 4

BANGLADESH

JUTE PROJECT.

Sonali Bank

Staffing Pattern of Regional Offices, District Branches,

Subdivisional Branches and Thana/Village Branches

Name of Post Number of Staff Monthly Salaries,Approximate(In Taka)

Regional Office - Dacca-l

Assistant General Manager 1 3,500Chief Accountant 1 2,500Accountant 2 3,400

Assistant Accountant 4 4,000

Supervising Official 5 4,000Head Cashier (Reserved) 2 1,600

Godown Inspector 1 800

Clerks 5 3,000Typist 2 1,200

Messenger 4 1,200

Guard 2 800

Car Driver 1 500

Total 30 26,500 ($0.3 M)

District Branch - Comilla

Manager 1 2,500Accountant 3 5,100

Assietant Accountant 6 6,000Supervising Official 3 2,100

Head Cashier 3 2,400

Clerks 15 9,000

Typist 2 1,000

Assistant Cashier 21 10,500

Messenger 10 3,000Guard 3 1,200

Car Driver I 500

Total 68 43,300 ($0.5 M)

Subdivisional Branch - Chandpur

Manager 1 1,700

Accountant 1 1,500

Assistant Accountant 2 2,000Supervising Official 3 2,100

Head Cashier 1 800Clerks 10 5,000

Typist 2 1,000

Assistant Cashier 10 5,000Messenger 4 1,200

Guard 3 1,200

Godown Keeper 1 400Godown Chowkider 2 600

Total 40 22,500 ($0.25 M)

Thana/Village Branch - Debidwar

Manager 1 1,200Head Cashier 1 800

Clerks 2 1,000Assistant Cashier 1 500

Messenger 1 300

Bank Guard 3 1,200

Total 9 5,000 ($0.06 M)

March 2, 1977

ANNEX 4Table 5Page 1

BANGLADESH

JUTE PROJECT

Sonali Bank

Existing Branch Network Vi-A-Vis 0.5 M AcresUnder Intensive Jute Cultivation Scheme

Area Under The NumberName of Zone Ninme of Thana/Unit Project (In Acres) of Units

Dacca (27 Units)

Dacca Nowabganj 2,000 1Kapasia 2,000 1Kaligaj 4,000 2Dohara7 2,000 1Savar 2,000 1Dhamrai 4,000 2MurLshigan1/ 4,000 2Lauhaj ang- 2,000 1Serajdikhan 2,000 1Tongibari 2,000 1Man ikganj 2,000 1Singair 2,000 1Narayanganj 2,000 1Baidyer Bazar 2,000 1Narsingdi 2,000 1Raipuraa/ 4,000 2Shibpuraa 2,000 1monohard a 2,000 1Saturia-f 2,000 1Rupganj 2,000 1Kaliakoir 2,000 1Shi'balaya 2,000 1Keraniganj (Zinzira) 2,000 1

Total 54,000 27

Mymensingh and Kishoreganj '31 Units)

Mymensingh Kotwali 4,000 2Muktagacha 4,000 2Fulbaria 2,000 1Trishal 4,000 2Gaff'argaon 4,000 2Bhalukaa/ 2,000 1Phulpur- a/ 4,000 2Halu.aghat- 2,000 1Iswarganj 4,000 2Grouripur 2,000 1Nandail 4,000 2Kendua 2,000 1Netrokona 2,000 1Purbadhala-/ 2,000 1

Kishoregani Kishoregan 4,000 2Karimgan - 4,000 2Barhataa4! 2,000 1Hossainpu a/ 2,000 1Pakundia/- 2,000 1Katiadi-a 2,000 1Bajetpur 2,000 1Kuliarchar 2,000 1

Total 62,000 31

March 2, 1977

ANNEX 4

Table 5Page 2

Area Under The Number

Name of Zone Name of ThanafUnit Project (In Acres) of Units

Tangail and Jamalpur (27 Units)

TTangail 6,000 3Bhuapur-a 2,000 1Mirzapur 4,000 2Ghatai2a/ 4,000 2Kalihatia/ 4,000 2Gopalpura, 4,000 2Nagorpura 2,000 1

Basail.! 2,000 1Modhupur 4,000 2

Jamalpur Jamalpur 4,000 2SarishabaFi 2,000 1MelandhaaP 4,000 2Sherpur 2,000 1Sreebardi 2,000 1Dewanganj 2,000 1Islampur!/ 4,000 2Nandina 2,000 1

Total 54,000 27

Faridpur and Barisal (27 Units)

Faridpur Kotwali 4,000 2Bhanga 4,000 2Boalmari 4,000 2Rajbari 2,000 1Pangsha 4,000 2Nagar-kanda 4,000 2Baliakandaa-/ 4,000 2MuksedpurA/ 4,000 2Gopalgani 2,000 1

Rajoir Y 4,000 2Kalkini- 2,000 1

Madaripur a/4,000 2

Shibohar-Jaqnjiraa 2,000 1Palang a/ 2,000 1Sadarpur- 2,000 1Naria/ 2,000 1

Barisal Gournadi 2,000 1Wazirpur 2,000 1

Total 54,000 27

Rangpur and Dinajpur (27 Units)

Rangpur Kotwali 4,000 2Kauniaa/ a 2,000 1Gangachara- 2,000 1

Badargang 4,000 2Kaliganj./ 2,000 1Nilphamari 4,000 2Domar a/ 2,000 1

Jaldhaka- a/ 2,000 1Kishoregani- 2,000 1

Kurigram 4,000 2Ulipur 4,000 2Lalmonirhat 4,000 2

Dinajpur Kotwali / 2,000 1

Chirirbandar- 2,000 1Birgang 2,000 1Debigani 2,000 1Khansama 4,000 2Thakurgaon 2,000 1AtwarO/ 2,000 1Boda 2,000 1

Total 54,000 27

ANNEX 4Table 5Page 3

Area Under The NumberName of Zone Name cf Thana/Unit Project (In Acres) of Units

Rangpur and Bogra (27 Units)

Rangpur Gaibandha 6,000 3Palashbari 4,000 2Gobindaganj 6,000 3Saghataa/ 2,000 1Sundarg nja 4,000 2Sadulla,urA/ 4,000 2FulcharLa/ 2,000 1Pirganj 2,000 1Pirgach-i 4,000 2Mithapu<ur 6,000 3

Bogra Gabtali / 2,000 1Shibganj a 2,000 1Jaipurh.it 2,000 1Sariakaiidi 4,000 2Bogra (') 2,000 1Dhunot 2,000 1

Total 54,000 27

Rajshahi and Pabna (27 Units)

Rajshahi Paba ZI 2,000 1Bagmara- 4,000 2Natore 2,000 1Mohadevrur 2,000 1Naogaot 2,000 1Mandae/ 2,000 1Badalgachi 2,000 1

Nawabgania/ 2,000 1Baraigram- 2,000 1Bagtiparaa/ 2,000 1

Pabna Pabna Sadar 2,000 1Chatmohqr 2,000 1Sathia/ 2,000 1Sujlanagar- 2,000 ISerajganj 4,000 2Raiganja- a/ 4,000 2Kamarkho rnd- 2,000 1Shahjadpir 4,000 2Kazipur / 4,000 2Atghoria- 2,000 1Ullapara 4,000 2

Total 54,000 27

Jessore, Kusthia and Khulna (30 llnits)

Jessore Kotwali 2,000 1Jhikarga.ha 2,000 1Monirampi.rA/ 4,000 2Keshabpula/ 2,000 1Bagerpar! 2,000 1Kaligaij 2,000 1Sarsaa/ 2,000 1Jhenaidal 2,000 1Sailkupaa/ 2,000 1Narial 2,000 1Lohaga a 4,000 2Kalia_a 2,000 1Magura a/ 4,000 2Mohammadpair- 4,000 2Salika 2,000 1

ANNEX 4Table 5Page 4

Area Under The NumberName of Zone Name of Thana/Unit Project (In Acres) of Units

Jessore, Kusthia and Khulna (30 Units) (Cont'd.)

Kushtia Kotwali 2,000 1Kumarkhali 2,000 1Daulatpura 2,000 1Chuadangra 2,000 1Damurhuda- 2,000 1Jiban-nagar 2,000 1Almdanga 2,000 1Maherpur 2,000 1Gangni 2,000 1

Khulna Satkhira 2,000 1Kalaroa 2,000 1

Total 60,000 30

Comilla, Noakhali and Sylhet (27 Units)

Comilla Chandina 2,000 1Debidawar 2,000 1Muradnagar 2,000 1Daudkaydi 4,000 2Homna- a2,000 1Burichang-/ 4,000 2Barura 2,000 1Chandpur 2,000 1Faridganj 2,000 1Motlab 2,000 1Laksham 2,000 1Hajigan} 2,000 1Kachua- 2,000 1

Brahmanbaria 6,000 3Sarial 2,000 1Nabinapr 4,000 2Kashba- 2,000 1Bancharampur 2,000 1

Noakhali Laxmipur 2,000 1Raipur 2,000 1Ramganj 2,000 1

Sylhet Madhabpur 2,0001

Total 54,000 27

Grand Total 500,000 250

a/ 61 Thanas are not covered directly by existing Sonali Bank branchnetwork.

March 2, 1977

ANNEX 4

BANGLADESH Table 6

JUTE PROJECT

SB's Production Loans Through TCCA in 162 Thanas(As on Decemaber 30, 1976)

Credit Head Year Amount of Credit Recovery Position(in million Takas) (In percent)

T. Aman 1973 5,880 100

TIP Boro 1973 12,460 99

B. Aman - Aus 1974 2,990 100

T. Aman 1974 12,235 98

Potato 1974 400 100

TIP Boro 1974 21,000 95

B. Aman - Aus 1975 3,114 94

T. Aman 1975 16,955 100

Potato - Wheat 1975 1,753 88

TIP Boro 1975 30,720 66

B. Aman - Aus 1976 9,590 50

T. Aman 1976 25,390 Recovery timenot due yet.

Potato 1976 3,515 "

Wheat 1976 3,000 "

TIP Boro 1976 34,275

March 2, 1977

ANNEX 5Page 1

BANGLADESH

JUTE PROJECT

Internal Jute Marketing

I. PRESENT SYSTEM

Introduction

1. Internal jute marketing is complex, since small lots of jute fromlarge numbers of growers have to be assembled into large batches for exportand use by local mills. While the present system performs this task, it ishandicapped by monopolistic practices and ineffective government policies.Marketing costs are high and farmers often do not receive fair prices. Theproject would explore ways of improving the marketing system, in particularto channel more of the profits of the marketing process to farmers toincrease production incentives.

Institutions

2. The government purchasing corporations, private sector (middlemen)and jute mills are involved in internal marketing; the former two are thoseprincipally concerned.

Government Corporations

3. After Liberation (1971), Government assumed control of virtuallyall aspects of the jute trade - internal marketing and exports. The aimwas to channel profits to the economy and to the farmers. This led to thecreation of four government purchasing corporations and one corporationresponsible for managing exports of raw jute. All these corporations werecontrolled by the Ministry of Jute. The main objective of the purchasingcorporations was to procure raw jute directly from farmers, thereby avoidingthe cost of middlemen and providing higher prices to farmers, while reducingexport prices and raw material cost to mills. Each corporation was headedby a Managing Director, had its own technical staff (purchaser, supervisor,accountant, etc.) and had designated areas of the country under its juris-diction, with purchasing centers and its own godowns and baling facilities.There was no competition between the corporations in procuring raw jute.Consequently the set-up merely increased overhead costs.

4. In early 1976 the four corporations were merged into two; theexisting corporations are the Jute Trading Corporation and the Jute MarketingCorporation. In spite of this reorganization, these corporations have re-mained ineffective. Reasons are that the corporations are run along non-commercial lines by civil servants. Profit and loss is not their major

ANNEX 5Page 2

concern. Their financial structure is weak, working capital is restrictedand hence the corporations are unable to procure jute early in the seasonwhen jute prices are low. In addition, the corporations are unable topurchase directly from farmers, since they have neither the staff nor thefacilities to collect small amounts of jute from individual, scatteredfarmers. Thus they continue to rely for procurement on middlemen, whocollect from farmers at the village level. Supervision of corporations,field staff and quality control is weak; their accounts are neither pub-lished, nor audited.

5. Although conceptually government purchasing corporations areessential to enforce the Government's minimum raw jute price and to providecompetition to the private sector, their present organization, financialstructure and management is so ineffective that they are, at present, unableto achieve their objectives. It Ls anticipated that under UK bilateralassistance a consulting firm would be employed to review the present organ-ization and assist the Government in restructuring the corporations to renderthem more effective.

6. Private Sector. In early 1976 the jute trade was liberalized.The private sector was permitted t:o purchase and export jute directly withoutchanneling exports through the Bangladesh Jute Export Corporation, which hadpreviously been solely responsible for handling exports. However privatetraders are still required to register their exports with the Bangladesh Bankand export at prices fixed by the Government. This liberalization did infusemore vigor into the jute export trade in Bangladesh. However in the absenceof any effective competition, the private sector acquired a monopolisticposition. In the current season (1976/77) since the private sector managedto acquire a substantial portion of the crop, they have been able to manipulateinternal raw jute prices. There is a danger that if such an unhealthy trendcontinues, the Government might revert to nationalization of the trade, analternative which proved ineffective in the past. It is apparent that asystem should be developed whereby both the government corporations and theprivate sector work side by side, providing competition to each other toensure a fair market mechanism. Legislation alone will not achieve this.The government corporations should be revitalized to provide effectivecompetition to a healthy private sector.

7. Jute Mills. All mills are nationalized and are the major internalconsumer of raw jute. The government corporations and the private sectorprovide the majority of the mills' raw jute requirements. Some of the largermills have their own purchasing centers to purchase directly from the farmersto obtain price benefits. However due to the lack of working capital andorganizational problems, the mills generally have to resort to middlemen fortheir supplies. If a system could be developed whereby farmers could collec-tively offer jute in sizeable quantities, this would be welcomed by the millsand the government corporations and beneficial to both farmers and the pur-chasers, who would share in price benefits and reduce costs.

ANNEX 5Page 3

Marketing Channels

8. Jute is channeled through three marketing levels: village (primary),

secondary and terminal. At the village markets, the sole outlet for themajority of farmers, only middlemen purchase the jute. No storage or baling

facilities are available. After collecting their purchases of jute, middle-

men forward it to the secondary market, without any processing or grading,where they sell it to either exporters, mills or to government corporations.

The government corporations grade and bale the jute in katcha form. Theprivate exporters generally ship the raw jute to the terminal market where

it is graded and baled in pucca or katcha form. From terminal markets juteis either sold to the jute mills in katcha bales or is exported in pucca bales.

9. The village market is held once a week. Jute growers are smallscale (average holding size is 0.5 ac.) and the average amount sold by eachfarmer is between 10-12 maunds. Their financial position is very weak; their

bargaining and holding capacity is small, in the absence of any credit or

storage facilities. Middlemen, recognizing these limitations, take advantage

of the situation in determining the price, quality and measurement of jute.

10. The farmers market their jute shortly after harvest and virtually

all jute is sold by the farmers between July and mid-December, the peak month

being October. On the weekly village market day, farmers from within a

radius of six miles, bring their jute to be sold. Since farmers rely on thesale of their jute for their purchases of basic necessities (salt, oil, etc.)

and no storage facilities are available, farmers accept any price prevailingthat day. On an average village market day 8-10 middlemen are present andbetween them determine the selling price for that day, irrespective of the

Government minimum price (see para 12). The middlemen do not start purchasing

until the later afternoon hours, their scales are defective and measurementsare in English. Thus farmers, on average, lose about Tk 4-5/maund. In

addition, the middlemen usually do not pay adequately for grade differences,thus causing farmers a further loss. Seasonal price rises, averaging Tk 6-7/

maund, are not reaped by many of the farmers particularly small farmers whohave to sell early in season. Thus, at present, farmers often do not receive

fair market prices and have little incentive to improve the quality of theirjute. The present system unnecessarily increases the cost of raw materialsto domestic mills, as well as to exporters. Between the village and secondary

markets, the jute remains ungraded and unbaled. The physical movement of

voluminous quantities of jute overburdens the limited transportation facili-ties and increases the cost. In addition, middlemen frequently adulteratejute by adding water and sand to increase the weight, with adverse effects

on quality. While the jute is being forwarded to secondarv markets itremains in the open air or in poor storage facilities, resulting in additionallosses of about 6%. All these increases in cost could be reduced or saved,with an effective marketing system.

ANNEX 5Page 4

11. Estimated total marketing cost between farmer and the export portis as follows:

Marketing CostTk/Maund

Village Market At Present /a With the Project

Collection & Handling Cost 3.52Middlemen's Profit 1.88Middlemen Grade Differential Profit 2.00Middlemen's Holding Profit 4.10

Sub-Total 11.50

Secondary Market

Katcha Baling 16.00Katcha Balers' Profit 4.00 26.50 /b

Sub-Total 20.00

Terminal Market

Pucca Balers' Cost 13.00 10.00Pucca Balers' Profit 4.50 4.00

Sub-Total 17.50 14.00

Export Handling Charges 4.00 3.00Quality Control, Insurance, etc. 0.50 0.50

Grand Total 53.50 44.00

Export Price 160.00 160.00

Market Cost as % Export Price 33% 28%

/a Based on Annex 5.Tb See para 18.

It can readily be seen that market costs constitute a very high percentageof total export cost and efforts at cutting market costs would be an importantcontribution to increasing jute's competitiveness in international markets.Based on past experience, it is nolt feasible for government corporations topurchase directly from farmers, thus effectively ensuring fair market orminimum government prices to farmers. Thus to reduce the farmers' present

ANNEX 5Page 5

complete dependence on middlemen for sale of their production, and to letthem share marketing profits, the project would, on a trial basis provide50 groups of farmers with credit, storage and baling facilities (Section II).

Pricing Policy

12. The Government sets a minimum raw jute purchase price to ensure afair return to growers. Export prices are also determined by the Government.Minimum raw jute price is, in principle, announced before commencement of thegrowing season. However, only in 1976, in fact, was the minimum price actuallyannounced before sowing commenced. Since the Government is unable to ensurethe effective implementation of the minimum price, its practical value tothe farmers is very limited. Moreover, prices are determined on an ad hocbasis. Although there is a Price Advisory Committee, chaired by the Secretary,Jute Division of the Ministry of Jute, no systematic analysis of demand andsupply or production and marketing costs are taken into consideration. Sim-ilarly, export prices reflect neither the international nor domestic demand/supply pattern. A permanent centralized Price Commission or body should alsobe created to review jute agricultural pricing problems on a regular basis,and their decisions need to be based on demand supply balance, productioncost and marketing cost, etc., scientifically gathered. The jute/paddy pricerelationship should also be carefully analyzed and taken into consideration.The export pricing policy should also be formulated on a 3-5 year basis,so that potential importers are reassured and persuaded to retain their juteproduction lines, rather than switch to synthetics. In the absence of aneffective pricing policy, the benefit of an effective marketing system willnot be fully reaped. The GOB has recognized this limitation and is reviewingthis issue. An IDA Foodgrain Price Policy Review Mission visited Bangladeshin March 1977. Its prelimnary recommendations for establishing an effectivefoodgrain and jute price mechanism are described in the main text.

II. PROPOSED PILOT MARKETING SCHEME

Loose Jute Storage at Village Level

13. Two models were evaluated for the trial marketing scheme. The firstwas based on constructing a godown at the block with capacity to store 2,000maunds loose jute. The capacity was estimated by assuming that only part ofthe block jute production would flow through the godown while a substantialamount would continue to be marketed by traditional channels. Coercion ofjute farmers to market jute through the scheme was ruled out. Total pro-duction per block is estimated at 10,000 maunds per year and it was assumedthat about 40% of it would be marketed through the scheme.

14. The store could either be operated by the Directorate of Agricul-ture (Jute) (DAJ) which would charge fees to recover operating expensesincluding amortization of the cost of the godown or, in IRDP areas, could be

ANNEX 5Page 6

rented from DAJ and operated by KSSs. Farmers would deliver jute and receivethe Government minimum farmgate price for jute delivered. However, estimates(Table 1) show that costs of this svstem would not be less than Tk 12.50 permaund which compares with Tk 11.50 per maund present marketing costs. Thehigh cost of marketing under the sclheme is due to large storage capacityneeded for loose jute fiber and consequent high capital cost of the godown.

15. Loose jute storage at vilJage level would hold advantages forfarmers who would have a store practically at the farmgate and, since itwould involve not too large a group of farmers (400-500) the system wouldbe simple to manage. However, apart from high costs, advantages from reducingtransportation costs would be lost and it would be difficult to stack differentfiber grades separately so that some benefits from grading jute may also belost.

Storage and Katcha Baling at Unit Level

16. The other system examined proposes a 2,000 katcha bale (8,000 maunds)store at unit level (grouping of 5 blocks) and has been used for project costestimating purposes. Such operation would achieve storage economies by balingand would aim to deliver jute to exporters or jute mills taking full advan-tage of markups at various stages of marketing. In non-IRDP areas DAJ wouldown and operate the stores and baling presses and would charge fees to recovercosts. In IRDP areas, TCCA would organize marketing. They could either allowDAJ to operate the stores or lease them and undertake the operation themselves.Where DAJ operates the store it wouldl employ store management and staff forpurchasing, grading, stacking and selling the jute. The fiber would begraded, baled and stored to take advantage of seasonal price rises. It wouldthen be sold to exporters (including government corporations) and mills.

17. Cost of the traditional syEtem for similar operations is estimatedat Tk 31.50 per maund (para. 11). EEtimates for the proposed system (Table 2)shows costs at Tk 24.25 per maund (at a throughoutput of 16,000 maunds peryear) for DAJ operation. These costE include a Tk 5 per maund profit elementfor farmers judged to be adequate incentive for farmers to participate, andbeing the increase in net revenue received over Tk 85.50 per maund assumed asaverage payment by middlemen.

18. An income and cash flow estimate for a cooperative renting theshed and baling presses and operating them is shown in Table 3. Costs permaund is Tk 26.50 based on a buying price of Tk 85.50 paid by middlemenand the coop sales price of Tk 112. Higher costs than departmental opera-tions have been assumed to give the cooperative some surplus to build upreserves.

19. With this new scheme, initial farmers' participation is not assured.Consequently, the scheme should be as attractive as possible in the earlystages. It is, therefore, proposed thiat fees for sheds operated by DAJshould be based on ultimate projected throughput. In the case of the 2000katcha bale model, this would be 16,000 maunds jute per year. Consequently,

ANNEX 5Page 7

in early years fee revenue may not fully cover costs. For instance, withan 8,000 maunds throughput and using Table 3 the subsidy would be Tk 2 permaund. If all 50 project stores were to operate at 8,000 maunds jute peryear, total subsidy would be Tk 800,000 per year. Design of sheds, needsrefining and organization of operations, management and record keeping areyet to be devised. This would be the responsibility of the jute marketingunit in DAJ headquarters. For each unit, a management committee would beestablished, comprising representatives of DAJ, the local branch(es) ofSonali Bank and the local JFAs. These committees would guide and supervisethe management of these units by DAJ or TCCA. Sonali Bank which would pro-vide marketing credit has much experience in jute marketing and would assistparticularly with grading and market intelligence. In addition, Ministry ofJute staff would help to train DAJ field staff in jute grading. Finally, theproject monitoring system (Annex 7) would pay particular attention to thisoperation and would suggest modifications as needed.

20. Because of its experimental nature the size of the scheme would besmall - a total of 50 sheds. The first ten of these would not be ready untilthe 1979 jute marketing season and designs for the next construction batchwould have to be commissioned before the experience of the first marketingseason can be evaluated. Consequently the second batch would also be con-fined to 10 sheds for 1980 construction, with the balance of 30 sheds tobe constructed in 1981.

21. The outline of the trial marketing scheme given in the precedingparagraphs should serve as a guideline only and project management inconsultation with IDA should feel free to modify these proposals as may befound to be necessary. Closer field investigations by the project marketingunit may even find loose jute marketing at village level worth trying.

ANNEX 5-Tablel

BANGLADESH

_'UTE PROJECT

Jute Marketing CostsLoose Jute Storage at Village Level

Storage Capacity 2,000 Maunds

A. Jute Store Operating Costs

1. Annual Fixed Costs Tk- 1/

Amortization of Godowa 12,000Building Insurance 4,500Building Maintenance 1,000Management Cost 6,000Establishment Cost 3,500

Total 27,000

2. Variable Cost2/

Marketing Expenses Tk 3.50 per maund

3. Cost Per Maund at Various Throughputs

MaundsThroughput Total Cost Tk Cost per Maund Tk

2,000 34,000 17.003,000 37,500 12.504,000 41,000 10.25

B. Farmer's Cost

Tk per Maund

Interest on Marketing Credit 2.35Miscellaneous 0.15

Total 2.50

C. Total Cost per 1!ai.rd _at Various Throughputs

Storage and Farmer'sThroughput Baling Cost Cost Total CostMaunds ----------------Tk----------------------

2,000 17.00 2.50 19.503,000 12.50 2.50 14.504,000 1C.25 2.50 12.75

1/ Based on capital cost of Tk 120,000 repaid over 15 years at 5.5%interest.

2/ Same as Faria's costs - Appendix 1, Table 1.

April 1, 1977

ANNEX 5Table 2

BANGLADESH

JUTE PROJECT

Jute Marketing CostsStoring with Katcha Baling

Storage Capacity 8.000 Maunds

A. Jute Store and Baling Press Operating Cost

1. Annual Fixed Costs a

Amortization of Godown and Bailing Press 24,0001'Building Insurance 10,000

Building Maintenance 2,000

Management Cost 24,000Establishment Cost 16,000

Total 76,000

2. Variable Cost

Baling-/ - Tk 11 per maund

3. Cost per Maund at Various Throughputs

MaundsThroughput Total Cost Tk Cost per Maund Tk

8,000 164,000 20.50

12,000 208,000 17.33

16,000 252,000 15.75

B. Farmer's Cost

Tk per Maund

Transport / 1.00Interest on Marketing Credit- 2.35

Miscellaneous 0.15Profit- 5.00

8.50

C. Total Cost per Maund at Various Throughputs

Storage and Farmer'sThroughput Bailing Cost Cost Total Cost

Maunds - -------- - -- --- --- ------

8,000 20.50 8.50 29.00

12,000 17.33 8.50 25.83

16,000 15.75 8.50 24.25

1/ Based on capital cost of Tk 240,000 repaid over 15 years at 5.5%

interest.

2/ Appendix 1 para 5.

3/ Based on 13% interest over 3 months on Tk 72 per maund (80% advance

on Tk 90 per maund, the projected minimum farmgate price).

4/ The amount over and above Tk 85.50 per maund assumed as middleman's

payment to farmers.

March 24, 1977

BANGLADESH

JUTE PROJECT

Income and Cash Flow for Farmers GroupJute Marketing Activity

(Tk'000)

Year l 2 3 4 5 6 7 8 9 10 11 12 13 14 15

INCOME

Sales 1/ 896 1,344 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792 1,792Interest payable by farmers forjute purchasing credit 2/ 18 28 37 37 37 37 37 37 37 37 37 37 37 37 37Interest from surplus 3/ - - 1 2 3 5 6 9 12 15 18 21 25 28 32

(1) Total Income 914 1,372 1,830 1,831 1,832 1,834 1,835 1,838 1,841 1,844 1,847 1,850 1.854 1,857 1,861

EXPENDITURE

Management 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24Establishment 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16Rent 4/ 22 28 37 37 37 37 37 37 37 37 37 37 37 37 37Baling 5/ RR 132 176 176 176 176 176 176 176 176 176 176 17b 176 176Interest on credit for jutepurchase 6/ 11 16 22 22 22 22 22 22 22 22 22 22 22 22 22Credit for working capital 7/ 5 6 7 5 3 2 - - - - - - - - -

(2) Subtotal 166 222 282 280 278 277 275 275 275 275 275 275 275 275 275

(3) Payment to Farmers 8/ 736 1,116 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504 1,504

Total Expenditure [(2)+(3)] 902 1,338 1,786 1,784 1,782 1,781 1,779 1,779 1,779 1,779 1,779 1,779 1.779 1.779 1.779(4) Surplus [(1)-(3)] 12 34 44 47 50 53 56 59 62 65 68 71 75 78 82

Cumulative surplus 12 46 90 137 187 240 296 355 1X17 482 550 621 696 77T 856

1/ Sales income based on average price of Tk 112 per maund and 8,000 maunds throughput in year 1, 12,000 in year 2 and 16,000 from year 3 onwards.2/ Interest rates payable by farmers for jute credit based on an 80% advance of the minimum price (assumed to be Tk 90 per maund) for 3 months at

13% interest.3/ Interest on surplus revenue - 5% for 6 months each year up to Tk 220,000 being seasonal working capital requirements and 5% per annum for the

balance.4/ Rent based on: a. Repayment of construction cost of Tk 240,000 over 15 years at 5.5% interest with Tk 12,000 payable

in year 1, Tk 18,000 in year 2 and Tk 25,000 from year 3 onwards.b. Building insurance Tk 10,000 a year.c. Repairs at Tk 2,000 a year from year 3 onwards.

5/ Baling cost - Tk 11 per maund (Appendix 1).6/ Interest payable on jute purchasing credit based on 80% advance of Tk 90 per maund at 7.5% over 3 months.7/ Credit for working capital based on half management, establishment and rent costs and full baling costs at 7.5% interest for 6 months. Cost >

amount to: year 1 - Tk 120,000, year 2 - Tk 165,000, year 3 onwards - Tk 215,000.8/ Payment to farmers based on the following price per maund: year 1 - Tk 92.00, year 2 - Tk 93.00, year 3 onwards - Tk 94.00.

July 15, 1977

ANNEX 6Page 1

BANGLADESH

JUTE PROJECT

Organization

Project Agencies

1. Project agencies, their main activities and controlling ministriesare listed in Appendix I. Coordination at national level would be by theproject coordination committee and at zonal level by zonal committees, asdescribed in the main report paras 4.01 and 4.02. The organization structureis illustrated on Charts 2 and 3; WB 17096 and WB 17337. The first of thecharts shows the organizational pattern with the Directorate of Agriculture(Jute) (DAJ) channeling credit directly from Sonali Bank, to farmers and thesecond chart applies when village cooperatives become the credit channel.

Directorate of Agriculture (Jute)

2. This Directorate would be the main project executing agency andwould be concerned with every project activity. DAJ would be responsiblefor a large staff recruitment (about 2350 total new staff including about830 technical and senior administrative staff) and training program, theconstruction program, the purchase of vehicles and equipment and at the sametime for improving its services to jute farmers and doubling the area underthe Intensive Jute Cultivation Scheme (IJCS). The following paragraphs willdescribe DAJ's proposed headquarters and field staffing plans and organi-zation.

DAJ Headquarters (Chart No. 4, WB 17095)

3. The chief officer of DAJ would be the Director of Agriculture(Jute) who could report directly to the Secretary of Agriculture. TheDirector would be responsible for policy matters, overall supervision ofall DAJ activities and would be the officer entitled to incur expenditureon behalf of the project. He would be assisted by an Additional Director,two internationally recruited advisors and the following headquarters unitsor staff: Administration and Finance Unit, Technical Unit, Marketing Unitand a Building Engineer. All other units and staff would report to theAdditional Director. The latter would be the chief project executing officerinter alia responsible for planning project operations (by drawing up annualplans with quarterly targets), ensuring plan implementation, preparing annualand quarterly expenditure estimates, ensuring release of funds and liaisonwith other ministries. He would be supported by an internationally recruitedproject management advisor who would assist with all aspects of project

ANNEX 6Page 2

management. He should be appointed as soon as possible for a two yearperiod and should start work not later than 9 - 10 months after creditsignature. The marketing advisor should also be selected as soon as pos-sible to start work not later than July, 1978; he would also be requiredfor two years. Suggested qualifications and terms of reference for thetwo advisors are shown in Appendix 2.

4. New headquarters staff should be appointed as early as possibleand should all be operational within 9 - 10 months of credit signature.However special efforts must be made to appoint the following key staffon a priority basis, to ensure early and effective execution of projectrecruitment, procurement and construction programs: the Director, theAdditional Director of Agriculture, the Senior Administration Officer, theSenior Finance Officer and the Building Engineer. They should all be intheir posts within 3 months of credit signature and preferably earlier. Theadministrative/finance unit would be controlled by the Senior AdministrationOfficer and would deal with all staff finance, procurement, tenders, contracts,etc. matters. This unit would also prepare expenditure estimates, would beresponsible for regular and adequate replenishment of the project revolvingfund and would prepare withdrawal applications. Terms of reference for seniorstaff for this and other headquarters units and for technical field staff aregiven in Appendix 3.

5. The most senior of the technical specialists would be in charge ofthe technical unit. This would provide technical guidance to DAJ staff,participate in staff training, lia:Lse with research services and design thefield trial/demonstration programs. The training officer of this unit wouldbe responsible for designing, arranging and monitoring the various trainingprograms.

6. The building engineer would not have permanent career prospectswith DAJ and would therefore be deputed from a GOB engineering department -for instance the Public Works Department. He should be a senior executiveengineer--and would be responsible for guiding the Additional Director andthe Administrative Officer on all construction matters (designs, drawings,tender proposals, and evaluation, awarding contracts, purchasing land,supervising construction and payment of suppliers and contracts).

7. The senior marketing officer would be in charge of the marketingunit and together with the marketing advisor (para 3) would be responsiblefor designing the trial marketing scheme. This would involve deciding onoptimal size of each unit, feasibility of loose jute versus baled jutemarketing, (Annex 5, Part II), design and construction of marketing facil-ities, and establishment of marketing procedures. The unit would need toemploy staff for managing and operating jute stores and with help from theAdministration/Finance unit, the institution expert and Sonali Bank woulddesign recording and accounting systems and train operating staff in theiruse.

ANNEX 6Page 3

Field Services

8. Initially the field services would continue to operate as in thepast (Annex 2 B). The area covered by IJCS would be expanded from 0.5 mil-lion acres to I million acres over four years and the existing 9 zones and250 units would be increased to 20 zones and 500 units covering 50,000 and2,000 acres jute respectively as at present. The number of jute blocks wouldremain at 2,500, but the area of each block would be doubled from 200 acresbefore project start to 400 acres. This would be a gradual process to bephased in line with expansion of the project area and would in many instancesinvolve amalgamation of two existing blocks or Jute Farmers Associations.

9. New posts for field services to be established for the project wouldbe those of a Deputy Assistant Director of Agriculture (DADA) and two subjectmatter specialists (SMS) at each zonal office and of an Input Supply Officer(ISO) at each unit office. DADA would share with ADA the task of managing 25jute units and would be mainly concerned with field supervision by touring ona fixed monthly schedule. SMS would improve staff training, provide technicalbackup to field staff and initiate a field trials/demonstration prggram.

10. ISO would relieve JEO and to some extent JEA of administrativework arising from supplying farmers with credit, inputs and implements andthe need to keep unit records and prepare unit reports. This would be anentirely new post in the Department of Agriculture and training and worksprocedures would have to be established. Consequently, initial recruit-ment would be modest (confined to 100) in the first project year. Priorityfor posting would be given to areas where jute block size had been increasedto 400 acres and where the initial jute marketing trials are planned. Inareas where there would be no ISO initially, JEO and JEA would continue tocarry out administrative work as in the past, but by early 1979 there wouldbe an ISO for each unit.

ANNEX 6Appendix IPage 1

BAIGLADESH

JUTB PROJECT

Prolect Agencies and their Project Related Activities

Agency Ministry Project Activity

Directorate of Agriculture a. Employment, training management ofAgriculture staff;(Jute) (DAJ)

b. Employment of project advisors;

c. Hiring of evaluation unit;

d. Purchase of transport, implementsand equipment;

e. Construction of houses and Jutegodowns;

f . Arranging overseas training;

g. Onlending production and marketingcredit to farmers;

IL. Arranging supply of fertilizers andpesticides;

i. Organizing Jute Farmers Associations;

Providing extension services tofarmers;

k~. Conducting jute marketing for farm-ers; and

1. Preparing credit withdrawal applica-tions.

Sonali Bank - a. Lending short term production and mar-keting credit to DAJ and to villagecooperatives;

b. Paying BADC for fertilizer suppliedon credit;

c. Packaging and delivering cash creditto farmers;

ANNEX 6Appendix 1Page z

Agency Ministry Project Activity

d. Training DAJ staff;

e. Assisting with loan appraisal, moni-toring and recovery;

f. Assisting with supervision and manage-ment of marketing credit; and

g. Preparing credit withdrawal applica-tions.

Thana Central Co- Local govern- a. Onlending production and marketingoperative Associa- ment, Rural credit to jute farmers in selectedtions (TCCAs) and development thanas;Village Coopera- and Coopera-tive (KSS) Jute tives b. Organizing inputs supply for juteBlocks farmers in the same thanas; and

c. Conducting trial jute marketing inselected thanas.

Ministry of Jute Jute a. Assisting in training DAJ staffin jute marketing, particularlygrading.

Bangladesh Jute Jute Producing, processing jute seed andResearch Insti- supplying it to DAJ at district ortute (BJRI) thana level.

Seeds Directorate

BJRI Jute a. Providing technical information basedAgricultural on research results;ResearchDirectorate b. Participating in planning and eval-

uating DAJ's field trials and demon-strations; and

c. Participating in DAJ's staff trainingprogram.

Bangladesh Agriculture Supplying fertilizers to jute farmers.AgriculturalDevelopmentCorporation

ANNEX 6Appendix IPage 3

Agency Ministry Project Activity

Plant Protection Agriculture Supplying of pesticides and sprayersDirectorate to jute farmers at thana level.

Jute Farmers - a. Fostering cooperation of members forAssociation jute production;

b. Assist DAJ to:

i. Plan jute production;

ii. Assess credit and inputs require-ments;

iii. Distribute, monitor and recovercredit;

iv. Organize extension activities;

v. Organize sharing of implements; and

vi. Organize jute marketing.

April 2, 1977

ANNEX 6Appendix 2Page 1

BANGLADESH

JUTE PROJECT

Draft Terms of Reference for Advisors

Project Management Advisor

1. Duties

The advisor would assist the Additional Director of the Directorateof Agriculture (Jute) with all aspects of the Jute Project. Specifically, hewould assist with the following:

(a) Preparation of an annual work plan;

(b) Recruitment and training of staff;

(c) Preparation of tender documents and bid evaluation;

(d) Supervision of the construction program and implemen-tation of other project components, with particularemphasis on credit aspects and trial jute marketing;

(e) Development of reporting systems and preparationof progress reports; and

(f) Development of management policies and organizationalstructure necessary for effective project implemen-tation.

2. Qualifications

The advisor should have a master's degree in agriculture or agri-cultural economics or other relevant subjects with at least five years'experience of the management of integrated crop production and marketingschemes involving smallholding cooperative systems in a developing country.

3. Period of Assignment

The assignment would be for 24 months. The advisor to be appointedby January 1, 1978, should take up his post by May 1978.

ANNEX 6Appendix 2Page 2

Marketing Advisor

To assist the Additional Director of Agriculture and the marketingunit with all aspects of the trial jute marketing scheme, in particular withthe following:

(a) Determining the type of marketing operation (loosejute or katcha baled) and level of operation (blockor unit);

(b) Selecting sites for facilities;

(c) Designing suitable structures;

(d) Devising the marketing organization and marketingprocedures;

(e) Training of staff and farmers;

(f) Designing reporting accounting and market intelligencesystems;

(g) Helping in preparing progress reports;

(h) Supervising construction of facilities and of themarketing; and

(i) Redesign of structures, policies or procedures inlight of operating experience.

5. Qualifications

University degree in agriculture, agricultural economics or rele-vant commercial subject with at least ten years' experience of successfullyorganizing and managing smallholder marketing operations by cooperatives orfarmers' associations in developing countries. Must speak and write Englishfluently.

6. Period of Assignment

The appointment would be for 24 months starting in July 1978 toallow the advisor to monitor operations over the first year (the appointmentshould be made by May 1, 1978). The next twelve months would then be dis-tributed over the following two or three years, enabling the advisor to testmodifications during successive marketing seasons.

ANNEX 6Appendix 3Page 1

BANGLADESH

JUTE PROJECT

Guidelines for Duties and Qualifications of DAJ Staff

Chief Administrative Officer

1. Duties

(a) Managing administrative unit by supervising financeand establishment sections and administrative workof field offices;

(b) Preparing and evaluating tenders, preparing contracts,supervising deliveries and services, ensuring promptpayment;

(c) Opening promptly letters of credit for overseas pur-chases and preparing project withdrawal documentationfor prompt submission to the Director of Agriculture(Jute);

(d) Preparing project financing plan, expenditure fore-casts and ensuring replenishment of project revolvingfund;

(e) Designing accounting and financial reporting of allsections of the Directorate of Agriculture (Jute) withparticular reference to recording credit and jute mar-keting transactions;

(f) Maintaining project accounts;

(g) Through the audit unit carrying out continuous moni-toring of accounts of field offices, particularlytheir credit and marketing records;

(h) Dealing with policy and administrative aspects ofall staff matters including recruiting, training,posting, promoting, etc. and assisting with thoseactivities as required by the Director DAJ; and

(i) Preparing reports on administrative and financialaspects of the project.

ANNEX 6Appendix 3Page 2

2. Qualifications

Senior administration officer (with rank at least equal to Assis-tant Director of Agriculture) with considerable experience of finance, pro-curement and staff management. Either he or the finance officer shouldhave considerable experience in overseas procurement procedures and indealing with letters of credit.

Senior Accountant

3. Duties

Would manage and supervise the finance section of the administra-tive unit. Duties would be the same as financial duties of Chief Adminis-trative Officer.

4. Qualifications

Senior financial officer (equivalent to Assistant Director ofAgriculture level) with considerable experience in designing departmentalaccounting, supervising audit work and preferably experienced in handlingletters of credit.

Technical Specialists (Agronomy, Plant Protection)

5. Duties

(a) Planning work for field services;

(b) Liaising with BJRI staff;

(c) In conjunction with BJRI staff planning fieldtrials and demonstration program. Supervisingthese programs;

(d) Participating in planning staff and farmer train-ing programs and participa,ting in training ADA,SMS and JEO;

(e) Formulating technical recommendations for fieldstaff; and

(f) Paying frequent field visits to assist zonal SMSconduct their programs.

ANNEX 6Appendix 3Page 3

6. Qualifications

Minimum qualification is master's degree in the requisite spe-cialty and at least five years' field experience.

Extension Specialist

7. Duties

(a) Determining extension materials for use by field staff;

(b) Preparing of literature, charts, posters and radio pro-grams;

(c) Participating in training senior staff and in preparingtraining manuals and course material for training JEA.

8. Qualifications

At least a master's degree in agricultural extension with at leastfive years' field experience.

Training Specialist

9. Duties

(a) Determining training requirements of all staff uponfirst appointment and for subsequent continuous in-service training;

(b) Arranging necessary training including longer termtraining for JEA and special basic training forISO;

(c) Participating in training headquarters technicalspecialists, ADA, SMS and JEO to conduct trainingof JEA; and

(d) Collaborating with extension specialist to provideteaching aids.

10. Qualifications

University degree in agricultural education and at least fiveyears' experience of conducting agricultural training programs.

ANNEX 6Appendix 3Page 4

Marketing Officer

11. Duties

He would have the same duties as those described for the MarketingAdvisor (Appendix 2, para. 4).

12. Qualifications

Preferably a university degree in economics or commerce or relatedsubject. Must have at least ten years' experience of managing a jute mar-keting organization.

Zonal Assistant Director of AgricuLture

13. Responsible for planning, administering and supervising all activ-ities of DAJ in his zone, normally comprising about 50,000 acres jute culti-vation. With assistance from Headqjuarters staff and his subject matter spe-cialists (SMS) planning and organizing staff and farmers training programs.Would be the executive chairman of the zonal coordinating committee respon-sible for liaising with and coordinating the services of supporting agenciesin particular those responsible for credit and inputs supplies. Also respon-sible for coordinating zonal records and submitting regular monthly and quar-terly progress reports. His office would have charts showing the plannedwork program and location of each JEO, ISO and JEA for each day of themonth.

Deputy Assistant Director of AgricuLlture (Deputy ADA)

14. Would be responsible for assisting his ADA in all duties, butwould be particularly concerned with field supervision. Would tour on afixed schedule to ensure that either he or his ADA visit each Jute ExtensionOfficer (JEO) at least once a month. The Deputy ADA should be given minimaladministration duties.

Sublect Matter Specialist (SMS)

15. Duties

(a) Training JEO and participating in training JEA;

(b) Liaising with local staff of BJRI;

(c) Conducting through JEA field demonstrations andfield trials, recording and evaluating resultsand proposing modifications in technical recom-mendations if necessary. Visiting each trial/demonstration regularly;

ANNEX 6Appendix 3Page 5

(d) Training extension staff in advising the farmers onproper and safe use of insecticides and pesticides;

(e) Assisting JEO and JEA in holding field days attrial/demonstration sites;

(f) Organizing pest monitoring services, training JEAand farmers for the purpose; and

(g) Checking availability of adequate and suitable pesti-cides in thana stores of the Plant ProtectionDirectorate.

16. Qualifications

Master's degree in agronomy or plant protection.

Jute Extension Officer (JEO)

17. Would supervise DAJ activities in a Jute Unit (5 blocks) includingorganizing (or reorganizing) Jute Farmers' Associations round a 400-acrejute block. Appointment of ISO would relieve him of administrative dutiesso that he can spend most of his time visiting jute blocks on a fixed sched-ule of visits. Would supervise and support JEA and would be expected to knowmost Jute farmers personally. Would be responsible for organizing trainingand work plan for his JEA and his office would have copies of each JEA'straining and visit schedule. The JEO would be responsible for checkingrecords maintained by ISO particularly with regard to progress of opera-tions, achievement of targets and those relating to credit and marketingactivities. He would also be responsible for submitting fortnightly reports,for which ISO would prepare data.

Input Supply Officer (ISO)

18. Duties

(a) Carrying out administrative duties of unit;

(b) Ensuring fertilizer and pesticides supplies tofarmers;

(c) Collecting applications for credit prepared byfarmers and JEA;

(d) Organizing distribution of fertilizer, pesticides,sprayers, farm equipment and credit;

(e) Organizing credit recovery;

ANNEX 6Appendix 3Page 6

(f) Maintaining credit and interest records;

(g) Ensuring the recording, storing and proper main-taining of equipment;

(h) Assisting in the trial marketing operation, incase of possible marketing operations at blocklevel assisting with management, record keepingand accounting for the operation; and

(i) Preparing all unit reports.

19. Qualifications

Should hold commerce degree or could be recruited from outstandingJEA.

Jute Extension Assistants

20. Duties

(a) Organizing farmers block into eight groups;

(b) Choosing contact farmers;

(c) Visiting and training each group once every twoweeks and training farmers according to prescribedprogram and maintaining visits diary;

(d) Attending training once every two weeks and report-ing farmers' problems, and other problems encoun-tered;

(e) Monitoring pest incidence;

(f) Conducting at least one field trial or demonstra-tion each year;

(g) Maintaining block records with respect to improvedseed use, line sowing, fertilizer use, pest con-trol, etc.;

(h) Conducting crop cutting - supervised by JEO;

(i) With assistance from Jute Farmers' Associations(JFA) Committee compiling inputs and credit require-ment lists and assisting ISO as necessary with com-pletion by farmers of loan application and withdistribution of inputs and cash credits;

ANNEX 6Appendix 3Page 7

(j) Maintaining and repairing implements; and

(k) Attending meetings of JFA and providing it withconstant help and encouragement.

ANNEX 7Page 1

BINGLADESH

JU_E PROJECT

Monitorirg and Evaluation

General

1. It is, important that project implementation be closely monitoredand that the impact on production and farm incomes be thoroughly evaluated.The lessons derived from this project should also prove very valuable for afuture repeater project.

2. Given the project's fundainental objectives, monitoring should con-sist of a process of timely data gathering and analysis on the gradual build-ing up of the organization and on tIie quality of the performance of theproject's staff. Its purpose is to ensure that the entire IJCS apparatusis fulfilling the functions for which it was established. The project'sevolution through the execution and operation phases, i.e. project's inputsand project's activities and outputs, should be monitored against theschedules, targets and expectations defined at the start.

3. Evaluation of the project, to be carried out during project imple-mentation, should assess the overall impact of the project on crop yieldlevels and on the beneficiaries welfare. The evaluation should also deter-mine the degree to which the project is reaching the economic, technicaland social targets set for agriculttral development. It has to assess thecomparative effectiveness of the technological practices recommended forextension and the changes in farmers' production behavior. It should beconducive to improvements of the program and, if necessary, should includerecommendations for modifications to the project.

A. Monitoring

4. The UNDP Extension Project has already started discussions withthe Ministry of Agriculture in redesigning the reporting forms for extensionactivities, and the IDA supported Rural Development Project (Cr. 631) hasinitiated an intensive monitoring and evaluation exercise in the seven projectthanas in Bogra and Mymensingh districts.

Project Activities

5. If records and books are kf:pt accurately and up-to-date by exten-sion staff or statistical agents, Jute Extension Officers (JEOs) need onlymonitor key elements of the various project components. The monitoring

ANNEX 7Page 2

system would, therefore, be built into the regular progress reports of theJEOs and other project officers. These reports would in turn be used forthe quarterly and annual reports to IDA. Monitoring will pay particularattention to two aspects of project implementation. The first is GOBappropriation of funds to the project agencies, including conformity of theamounts to the approved PP and timeliness with regard to project needs;this aspect would be monitored by the Senior Accountant of DAJ. The secondis the execution of project works and its conformity with proposed criteriaand procedures; this aspect would be the responsibility of JEAs, ISOs andJEOs.

6. The monitoring and evaluation system should use a limited numberof selected indicators, which would reflect the essential agronomic, economicand sociological dimensions of the project. The indicators should revolvearound three key concentration points: (a) the visits (quantitative andqualitative aspects); (b) the adoption of recommendations; and (c) the yields.For the institution building objectives of the projects, the main monitoringindicators suggested are: staffing of the extension organizations; selectionof contact farmers; training; and physical equipment. For monitoring extensionperformance, the suggested indicators are: degree of exposure to extension;visit performance; farmers' evaluation of IJCS; adoption rates of new prac-tices; and quality of training sessions. Formats would be simplified topresent only monthly targets and achievements to minimize time spent onreport preparation. A final list of items to be monitored for each projectcomponent would be prepared by DAJ as a part of the IDA project reportingrequirements.

7. Since zonal and district coordination committees would review thereports of all the project participants, they would be directly informed ofthe problems or delays and would propose actions to overcome them. DAJwould compile quarterly reports of the various project components. Thisinformation, along with data on procurement, expenditure and disbursementwould be included in the quarterly progress report sent to IDA.

B. Evaluation

8. While project monitoring would follow the implementation of theproject, the evaluation would assess the impact of the various project com-ponents on farm level production, the rural population, and agriculturalservices.

9. Overall project evaluation would be the responsibility of the Plan-ning Cell of the Ministry of Agriculture. Since this will require variedexpertise, it would be difficult in the short term to assemble in the Plan-ning Cell an independent group with such broad competence. The evaluationexercise would, therefore, be contracted to a local socio-economic researchorganization or a university under the supervision of the Planning Cell.Detailed terms of reference will be prepared by Planning Cell for IDA'sreview. Draft TORs are given in the Appendix.

ANNEX 7AppendixPage 1

BANGLADESH

JUTE PROJECT

Draft Terms of Reference for Project Evaluation

Introduction

1. The Project, on a pilot basis, aims to integrate production andmarketing at the growers' level, for the first time in Bangladesh. A closeand continuous evaluation of this operation is essential to ensure the Proj-ect's successful implementation. The objective of such a service will beto collect, scientifically, basic data to assess the implementation of theProject and make recommendations, if necessary, to improve its effectiveness.Major areas to be covered are outlined below:

Survey

2. Three surveys will be conducted. Their main components are:

Survey I - to be conducted between end-February/end-March and will provide analyzed information on suchmajor aspects as the number of Jute Farmers' Associa-tions and KSS Jute Blocks in existence and their mem-bership; size of holdings of member-farmers, KSS JuteBlocks management aspects, total land area plantedunder jute and projected total production, creditdemand and arrangements for supply of credit andother inputs.

Survey II - to be conducted shortly after harvest(early July to mid-August) and will provide analyzedinformation on such aspects as jute yield/acre, re-vised total estimated production, price forecast,production cost, number of farmers applying line-sowing, fertilizer, etc., problems in obtaininginputs and credit, including machinery, assessmentof effectiveness of the Extension Service and IJCSpersonnel, review of Farmers' Associations' role,review of KSS Jute Blocks management, in particulartheir accounts and records, etc.

Survey III - to be conducted end-December to end-January and will concentrate on the marketing aspectsof the Project. Specifical]y it will evaluate theeffectiveness of the marketing facilities in obtain-ing higher prices and reducing marketing costs for

ANNEX 7AppendixPage 2

the national economy, management and operation ofproject jute marketing, records and accounts main-tained for the operation, marketing procedures,suitability of facilities, farmers' participation,prices received by farmers who use project facili-ties and by those who use other channels. It willalso include a complete evaluation of the Project'soperations and make recommendations for any modi-fications or improvements. Project marketing maynot start until the second year of project imple-mentation. Until then the survey should investi-gate prices received by jute growers.

Survey Methodology

3. After the contract has been signed between the Ministry of Agricul-ture and the Consulting Organization and before commencing work, the consult-ants will outline detailed methodology, including questionnaires to be usedfor collecting data, the sample size, etc. This will be reviewed by IDA.

4. In Survey I, it might be useful to include at least 20% of theexisting Farmers' Associations of which 20%, again, should be selected forfield interview. The remainder would be analyzed on the basis of the recordsmaintained for each block. Of the Farmers' Associations (including KSS JuteBlocks) selected for field interview, only 20% of the members would be inter-viewed.

5. In Survey III, since the number of marketing facilities providedto the Farmers' Associations will be limited, at least in the initial stages,100% coverage would be desirable, but a reasonable sample for investigatingprice received by farmers using other channels would have to be determined.

6. These are, of course, merely guidelines. Actual details shouldbe worked out by the consulting organization. The objective of the Surveysshould be to collect data to reflect the actual situation.

Reports and Review

7. After the completion of each Survey, an evaluation report shouldbe presented to the Planning Cell of the Ministry of Agriculture to be sub-mitted to the Project Coordination Committee. A copy of the report, togetherwith the Minutes of the Decision taken at the meeting, should be forwardedto IDA for review.

ANNEX 7AppendixPage 3

Consultants' Staff Requirements

8. To undertake the monitoring and evaluation, the consulting_teamshould consist of the following:

Description No.

(i) Senior Statistician 1

(ii) Senior Economist 1

(iii) Junior Economists 2

(iv) Financial Analysts 2

Description - No.

(v) Credit Specialists 2

(vi) Accountants 2

(vii) lIarketing Experts 2

(viii) Agriculturalist 1

(ix) Interviewers 100

Cost

9. It is estimated that the cost of such monitoring and evaluationservice will be about US$35,000 per year. The consultants will provide suchservice for each of the five years of the Project's implementation.

ANNEX 8Page 1

BANGLADESH

JUTE PROJECT

Implementation Schedule

1. The Government of Bangladesh (GOB) had prepared implementationschedules which aimed at project completion in three years; GOB is in facthopeful that they would be able to achieve their target in an even shortertime. However, because of the long time which, experience has shown, isneeded to appoint staff and advisers in the first year and to initiate abuilding program, and initial unfamiliarity of project officials with pro-curement procedures, a five year implementation period was considered safer.

2. The rate of expanding the Intensive Jute Cultivation Scheme (IJCS)would govern the speed of most project activities such as staff recruitment,purchase of equipment and provision of farmers' credit. In addition, theproject would provide additional staff, housing and vehicles for the ongoingscheme and this represents a major recruitment, construction and procurementprogram during the first project year. Consequently, only modest expansion ofIJCS areas is projected during 1977/78. The total project area of 1 millionacres jute has been scheduled to be covered by IJCS over four years as follows:

YEAR: 1977 1978 1979 1980 1981 1982

Acres JuteCovered by IJCS: 500,000 550,000 650,000 800,000 1,000,000 1,000,000

However, this schedule should not be taken to rule out faster implementation.

3. Staff recruitment and all project expenditure would be completedover four years, except for financing construction of housing for Jute Ex-tension Assistants, which would require a further year. The project would,in addition, continue to finance monitoring services and extension staff inthe fifth year.

4. Identification of house sites and subsequent land purchases wouldbe the main constraint to the JEA houses construction program. Each timethe area under IJCS expands, new jute blocks are established - one per 400acres jute. This process usually takes place in October, in readiness for

jute sowing in the following March. One JEA is attached to each block andhis house would be situated in a village of the block. The site of a JEAhouse can only be determined after the block has been formed. Based on theIJCS expansion program (para. 2) and allowing a year to select and purchasehouse sites and place contracts and five months construction time, construc-

tion would not be completed until early 1982.

ANNEX 8Page 2

5. Cost estimates (Annex 9) show phasing of expenditure. The sameinformation giving mainly physical implementation projections is given inTable 1 and a bar graph schedule; Chart 1. Some of the more important proj-ect activities are shown in greater detail in the following schedules:

Schedule 1 - Recruitment of Headquarters Staff.

Schedule 2 - Recruitment of ADA, Deputy ADA, SMS.

Schedule 3 - Recruitment of JEO and ISO.

Schedule 4 - Recruitment of Consultants.

Schedule 5 - Transport Equlipment Procurement.

Schedule 6 - Implements Procurement.

Schedule 7 - Construction.

ANNEX 8Table 1

BANGLADESH

JUTE PROJECT

Implementation Schedule

Project Financial YearActivity Total 1978 1979 1980 1981 1982

1. Coverage of Intensive Jute CultivationScheme (acres) 1,000,000 550,000 650,000 800,000 1,000,000 1,000,000

2. Staff Recruitment (number)

a. Head OfficeProfessional staff 14 14 - -

Supporting staff 28 28 - _ _ _42 42 - ---

b. Zonal OfficesADA 11 4 3 4 - -

DADA 20 13 3 4 - -

SMS 40 26 6 8 - -

Supporting staff 236 103 57 76 - _307 146 69 92 - -

c. Unit OfficesJEO 250 100 - 150 - -

ISO 500 100 200 200 - -Supporting Staff 1,250 125 250 315 500 -

2,000 325 450 725 500 -

3. Transport (number)

Motor vehicles 34 27 3 4 - -

Motor cycles 1,060 489 209 362Bicycles 1/ 2,500 2,500 - - - -

4. JEA Houses (number) 2,500 - 600 700 700 500

5. Office Furniture (sets) 250 25 50 75 100 -

6. Research and Extension Supplies (TkV/ 800,000 120,000 128,000 158,000 197,000 197,000

7. Equipment (number)

Seed drills 25,000 1,000 6,000 8,000 10,000 -

Hand hoes 20,000 1,000 5,000 6,000 8,000 -

8. Consultants (manmonths)

Directorate of Agriculture (jute) 78 6 24 12 6 _

9. Overseas Training (manweeks) 48 - 24 24 - -

10. Monitoring Cost (Tk)2/ 2,362,500 262,500 525,000 525,000 525,000 525,000

11. Jute Marketing Sheds Construction (number) 50 - 10 10 30 -

12. Short-term Credit (Tk)2/

Production 125,000,000 20,000,000 30,000,000 40,000,000 35,000,000Marketing 30.000,000 - 6,000,000 6,000,000 18.000,000 -

155,000,000 20,000,000 36,000,000 46,000,000 53,000,000 -

1/ For 2,500 JEA who have already been recruited.2/ Without contingencies.

April 2, 1977

BANGLADESH

JUTE PROJECT

Recruitment Schedule for Headquarters Staff

Agencies 1977 1978Activities Responsible J A S 0 N D J F M A M J

11 2/ 3/

a) Submission of proposals x

b) Government Sanction x

c) Advertisement by PSC/Ministry x x

d) Appointment of Selection Committee x x

ej Lnter.vLews x x x

f) Appointment x x

g) Training x

h) Posting x

Type of Staff Members:

Director of Agriculture 1 Engineer 1Additional Director of Agriculture 1 Technical Specialists 3ADA (Supervision) 2 Marketing Officer 1Administrative Officer 1 Auditor 1Financial Officer 1 Draftsman 1

Agencies Responsible

1/ Directorate of Agriculture (Jute) S

2/ Ministry of Agriculture c 3/ Public Service Commission o

BANGLADESH

JUTE PROJECT

Recruitment Schedule for ADA, DADA. SMS

Agencies ------ 1977----------- ------------------ 1978----------------------- ___________________-1979---------------___

Activities Responsible J F M A M J J A S 0 N D J F M A M J J A S 0 N D

a) Submissionof Proposals x

b) GovernmentSanction x

c) Advertisingby PSC/Ministry x x

d) Appointmentof SelectionCommittee x

e) Interviews x x x

f) Appointment x x

g) Training x

h) Posting x

NUMBERS: ADA 4 3 4DADA 13 3 4SMS 26 6 8

AGENCIES RESPONSIBLE:

1/ Directorate of Agriculture (Jute)2/ Ministry of Agriculture3/ Public Service Commission

0NNovember 14, 1977 (

BANGLADESH{

JUTE PROJECT

Recruitment Schedule for JEO and ISO

Agencies------------1977 ----------- ----------- 1978…1---------- ----------- 979…----------- ----------- 19-80------

Activities R 2 pible J A S 0 N D J F M5 A Ml J S N 5 4 3 0 2 F 9 A 5 I A S 0 S

of Proposal m

b) OuvrssetSanction

c) Advertise-ment sO PSC/

d) AppointmetOf SLelettonCumsittee byPSC m

e) Interviews c

f) Appointoeotm o

g) Training

h) Posting m

N5IMERmS: 10

.250 155 -- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-- 150

ISO -- 100 200 200

AGENC IES RESPONSIBLE!

1/ Djr.retsrte sf Agricuture (lots)2/ Ministry of Agriculture3/ public Service Cueriusion

No-b-r 14, 1977

BANGLADESH

JUTE PROJECT

Recruitment and Service Schedule for Project and Marketing Advisors

Agencies ---- 1978_________ ______- ------------------ ___1979 … ------ 1980------- ---------------- 1981---------------

Activities Responsible J F M A M J J A S 0 N D (Jan. 1979 througnhe-b. 1981) H A M J J _ S 0 N D

1/ 2/ 3/ - - - - -

TOR Preparation x

Ministry Revifw x

IDA Review x

Advertisement x

Selection x

Ministry Review x

IDA Review x

Appointment x

Service Period

Project Advisor

Marketing Advisor

AGENCIES RESPONSIBLE:

1. Directorate of Agriculture (Jute)2. Ministry of Agriculture3. IDA

November 14, 1977

F-fD

BANGLADESH

JUTE PROJECT

Transport Prorureneot Scbedule

Activities -=----Resuibe … INITIATION _-A __ 0____ -- -- A F 2 A M 3 I A S C N 0 5 F N A 1 . A S N F A 141'2// 4/

a) Tender Prepara-tion x x

b) IDADRview

c) Advertising x

d) Tender Evalu-tton xC x

e) IDA Review x

f) Flctong Orders/Opening L/C x

g) Delivery x

h) Distribution x

TYPE & NUMBERS: Motor CarMi ni Bus Four-Wheel Drive 15 3 4Motor Cycle 489 709 362Bycycle 2,500Speed Bead 10

Ageeries Responsible:

1/ Directorate of Agriculture (Jute)2/ Ministry of Agriculturs3/ IDA4/ Supplier

Nove-ehr 14,1977

BANGLADESH

JUTE PROJECT

Implement Procurement Schedule

Agencies ------1977------ --------------1978--------------1- --------------1979---------------- 1980-------1980----------------- ------------1981Activities Responsible INITIATION --------- - J A S O N D J F M A M J J A S O N D J F M A M J J A S N D J F M A M J

I/ 2/ 3/ 4/

a) TenderPreparation x x

b) IDA Review x

c) Advertis-ing x

d) TenderEvaluation x

f) Ordering x_

g) Delivery x

h) Distribu-tion x.

EQUIPMENT TYPE & NUMBERS: Seed Drills 1,000 6,000 8,000 10,000Hand Hoes 1,000 5,000 6,000 8,000

AGENCIES RESPONSIBLE:

1/ Directorate of Agriculture2/ Ministry of Agriculture3/ IDA4/ Supplier n

N),e1ber 14, 1977

BANGILADESR

JUTE PROJECT

Conatrs,tlo. Schedule

Agenc.iesAi.iiAg.Role ounible---- 19 77----……-------0979 ------- -- -------- 1979…1--------------- 980 ……1------ ------- 98-1------ -1-- ---- 9812…----

E/ 2 /b 4 /6- -------- NITIATION A-S-0----------A -A WS 0 N D J F NM A M 3 3 A S 0 N D 3DPJN AAMJJ -SO -J-MA J-A S 0N D 3 F MASS 3

1. Consultant

Preparation of

IDA Review .vrti.Sig e

Evaluat ion n sIDA Review Appoiete,et o n

Prep:rat ionMinistry Review SEA Review AppreVal o s

3. Lend P.rchsee

Loc.elities Spe-

Site Identifi-

Site.ucas

4. Materials Pro-curemet

Qu..ntities Pro-peration

Lender~ Prepara-

IDA ReviewAdvertising xnTender Evelua-

Ministry Review DIA ReviewnPlacement of

Orders al s a/Delivery n _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _

5. Cnotruction

Prequalificaticc .Tender Prepara-tion

MInis-try Review nIDA Reve,

Evaluation c cMinistry Review SEA ReviewAward of Cont-

ract el 5Construction el~ r ______

SEA HOUSES 600 700 700) 5(0JUTE STORES 1 10 30

AGENCIES RESPONSIBLE:

1j/ Directorate of Agriculture (Jute)2/ Ministry of Agricult-r

4/Consultant I5/Othere 6/Contractor

!Supervision

Novob-r 14, 0977

ANNEX 9.

BANGLADESH

JUE_ PROJECT

Summary of Proiect Cost Estimates

(Tk '000)

Year Year Year Year Year Total Foreign Exchange1 2 3 4 5 (Year 1-5) X. Tk'000 US$'000

1. Short Term Credit (see Table 2)

Total without contingencies 20,600.0 36,o0o.0 46,000.0 53,000.0 - 155,600.0 32 50,240.0 3,349.33Physical contingenciesPrice contingencies l,SO0.0 4,660.0 13,220.0 24,020.0 15,500 58.900.0 32 18,S50.0 1,256,67

Total with contingencies 22,100.0 40,660.0 59,220.0 77,020.0 15,500 214,500.0 32 69,090.0 4,606.00

II. Market Infrastructure (see Table 3)

Total without contingencies - 2,202.0 2,202.0 6,606.0 - 11,010.0 28 3,065.0 204.33Physical contingencies - 205.0 205.0 615.0 - 1,025.0 25 256.0 17.06Price contingencies - 393.2 641.2 2,600.1 - 3,634.5 30 1,060.0 70.67

Total with contingencies - 2,800.2 3,048.2 9,821.1 - 15,669.5 28 4,381.0 292.06

III. Implements (see Table 4)

Total without contingencies 600.0 4,500.0 5,800.0 7,400.0 - 18,500.0 - - -Physical contingencies - -Price contingencies 60.0 495.0 1,102.0 2,072.0 - 3,729.0 - - -

Total with contingencies 860.0 4,995.0 6,902.0 9,472.0 - 22,229.0 -

IV. Extension Services

A. Staffing Proposed (see Table 5)

Total including allowances 4,347.78 8,150.82 14,263.14 15,895.14 15,895.14 58,552.02 -Physical contingencies - - -Price contingencies 264.64 741.13 2,152.07 3,515.41 4,633.95 11,307.20

Total with contingencies 4,612.42 8,891.95 16,415,21 19.410.55 20,529.09 69,d59.22 -

B. Buildings and Office Eouinent(see Table 7)

Total without contingencies 1,194.5 22,698.0 26,806.5 26,440.0 17,850.0 94,989.0 26 24,432.0 1,628.8Physical contingencies 59.72 2,266.9 2,663.32 2,645.0 1,837.5 9,474.44 26 2,463.0 164.20Price contingencies 94.06 4.420.35 8,484.66 11,419.8 10,307.25 34.726.12 26 8,985.0 599.0

Total with contingencies 1,348.28 29,387.25 37,954.48 40,504.80 29,994.75 139,189.56 26 35,880.0 2,392.0

C. Transport (see Table 8)

Total without contingencies 13,969.0 2,899.0 4,782.0 - - 21 .650.0 50 10,825.00 721.67Physical contingencies 698.5 144.9 239.1 - - 1,082.5 50 541,25 36.10Price contingencies 986.7 334.8 954.0 - - 2,275.5 50 1,137.75 75.85

Total with contingencies 15,654.2 3,378.7 5,975.1 - - 25,008.0 50 12,504.00 833,62

D. Materials and Equipment (see Table 9)

Total without contingencies 345.00 371.75 458.00 572.00 572.00 2,318.75 37 856.0 57.07Physical contingencies 17.25 18.58 22.90 28.60 28.60 115.93 40 46.0 3.07Price contingencies 27.16 42.93 91.37 168.16 228.22 557.84 40 223.0 14.86

Total with contingencies 389.41 433.26 572.27 768.76 828.82 2,992.52 38 1,125.0 75.00

Total (A+Bt 4C+D)- Without contingencies 19,d56.28 34,119.57 46,309.64 42,907.14 34,317.14 177,509.77 20, 36,113.0 2,407.53- Physical contingencies 775.47 2,432.33 2,925.32 2,673.60 1,866.10 10,672.87 2d 3,050.25 203.35- Price contingencies 1,372L.5 4.239,21 11,602,10 16,103,37 15,19,.42 40,^66.66 21 10,345.75 680.72- With contingencies 22,004.31 42,091,16 60,917.06 60,684.11 51,352.66 237,049.30 21 49,509.00 ?,300.60

7. Technical Assistance (see Table 10)

A. For Directorate of Agriculture 450.OO 1,800.00 900.00 45n,On - 3,60n.00 1lo 31,6r,ron 24,O.nB. Overseas Trainig - 1,008.75 1,O08.75 - - 2,017.50 80 1,614.o 107.60C. Monitoring Saroi.oa 262.50 525.o0 525.00 525.O0 525.00 2,362.50 - - -

Total vithout contirgencies 712.50 3,333.75 2,433.75 975.00 525.00 7,980,00 65 5,214.00 347.6OPhysical oontirgencies 35.63 166.68 121.69 48.75 26.25 399,00 65 261.00 17,40Price contirpencies 56.10 444.92 465.08 351.25 189.02 156.37 71 1,069.00 71.27

Total with wu±tingenieu 804.23 3,945.35 3,020.52 1,375.00 74O.27 9,885.37 66 6,544.0o 436.27

GRAND 'N1WrL (I throaph V)

- Without contingencies 41,968.78 80,155.32 102,745.39 110,888.14 34,842.14 370,599.77 26 94,632.00 6,308.79- Physical contingencies 811.10 2,804.06 3,252.01 3,337.35 1,892.35 12,096.87 32 3,567.25 237.81.- Price contingencies 2,9d8.66 3.,532.33 10.8 l 4.14, .77 M.M- 1lA.636,53 27 n.34 74. 7,088 33

- With contingencies 45.768_$4 94.491,71 _ l4807.o a 67.402,03 - °.3 17 26 2 .

November 4, 1977

BANGLADESH

Jute Project

Short - Term Credit

Cost Estimates(TK'000)

… ----- …Schedule of Expenditure ------Total Foreign

------------------Years------------------ Cost Exchange1 2 3 4 5 Year(l'-5) % TK'000

Production 1/ 20,000 30,000 40,000 35,000 - 125,000 40 50,000Marketing V - 6,000 6,000 18,000 - 30,000 - -Sprayers 3/ 600 - - - - 600 40 240Total (without contingencies) 20,600 36,000 46,000 53,000 - 155,600 3 50,240Contingencies: Physical 4/ - - - - - - -Price 5/ 1,500 4,660 13,220 24,020 15,500 58,900 32 18,850Total (including contingencies) 22,100 40,660 59,220 77,020 15,500 214,500 32 69,090

1/ At TK 250 per acre for 500,000 acres.Based on:(a) Data from 1 JCS survey which shlowed that half the jute farmers take production credit.(b) Financing of total fertilizer requirements as per standard recommendations:

45 Seers of Urea @ TK 1.50 = 67.50 x11 Seers of TSP @ TK 1.20 = 13.20 X = 96.70 (Say 100)16 Seers of MP @ TK 1.00 = 16.00 X

(c) TK 150 of a total hired labor requirement of TK 900 per acre.2/ Based on total storage capacity of 800,000 maunds to be financed by the project (See Table ) a forecastGovernment guaranteed jute price of TK 90/maund and a level of marketing credit equal to about 45% of theGovernment guaranteed price/maund (800,000 x 90 x 45 about 30,00000)

103/ Based on: (a) Unit cost of Tk 300 per sprayer, (b) Assumption that half of the farmers will requirea credit to purchase one of the total of 20,000 units and that pruchases will be spread equally overthe five year period. (Only the incremental values of credit are given here.)4/- Physical contingencies not applicable.5/ Based on commulative total credit.

November 4, 1977

BANQLADESH

Jute Project

Marketing Infrastructure

Cost Estimates(TKIC000)

-- Year 1-- --Year 2-- -- Year' 3-- -- Year 4-- TotalUnit C Cost Foreign ExchangeUnits Cost Units Cost Units Cost Units Cost Units Cost (Year 1-4) % (TK000)

Marketing Facilities 1/Jute Storage Sheds 50 205.0- - - 10 2,050.0 10 2,050.0 30 6,150.0 10,250.0 25 2,560.0Baling Presses 50 25.0- - - 10 250.0 10 250.0 30 750.0 1,250.0 50 625.0Misc. Equipment3/ - - - - - 2.0 2.0 6.0 10.0 - -

Total (without contingencies) 2,302.0 2,302.0 6,906.0 11,510.0 28 3,185.0

Contingencies: Physical (10%)-4 205.0 205.0 615.0 1,025.0 25 256.0Price 293.2 541.2 2,300.1 3,134.5 30 940.0

Total (with contingencies) 2,800.2 3,048.2 9,821.1 15,669.5 28 4,381.0

1/ Includes 10% Supervision Cost. Estimated unit cost covers afloor area of 5,940 Sq.ft @ TK 34.20/Sq. ft.

2/ Includes 100% customs duty and taxes.

3/ Includes tools, weighing scales, dunnage, etc. |%

4/ Physical contingencies applicable to Jute Storage Sheds only. m x

3/27/77

BANGLADESH

Jute Project

Implements

Cost Estimates(TK'000)

Estimated---------------Schedule of Expenditure------------------- otal

Cost/ Year 1 Year 2 Year 3 Year 4 Cost Foreign Exchange

Equipment for JFA Units Unit Units Cost Units Cost Units Cost Units Cost (Year 1-4) X (TK'000)Seed Drills 25,000 0.5 1,000 500 6,000 3,000 8,000 4,000 10,000 5,000 12,500 _ _Handhoes 20,000 0.3 1,000 300 5,000 1,500 6,000 1,800 8,000 2,400 6,000 - -

Total (without 800 4,500 5,800 7,400 18,500 - -contingencies)

Contingencies: Physical - - - -Price 60. 495 1,102 2,072 3,729 - -

Total (including 860 TTs7T 60772 2 - -contingencies)

1/ Physical Contingencies do not apply

3/27/77 Z

M x

41'I

BANGLADESH

Jute Project

Extension Services - staffing Proposed

Cost Estissates(lIt 0-00)

------------------- Schedule lot ecritment cud Mxoe-diture------------------------------------MonthlySalary ---- Year 1---- --- Year 2---- --- Year 3---- --- Year 4---- --- Year 5--- Total (Year 1-5) Foreign ExchangeI. At Headqurtera No c No Coat NO Cokt No Cost No COst N o Coat oNo Cost % 2kS '000Additional Director 1 2100 1 18.90 1 25.20 1 25.20 1 25.20 1 25.20 1 119.70Administrative Officer 1 2000 1 08.00 I 24.00 1 24.00 1 24.00 1 24.20 1 114.00 - -Fisntal Aduteer 1 2000 1 18.00 1 24.00 1 24.00 1 24.00 1 24.00 1 114.00 - -*itet ing Specialist 1 1dul 1 lo.20 1 21.60 1 21.bO 1 21.6 I .60 I 02.60 - -Subject Matter Specialist 3 2400 3 37.80 3 50.40 3 50.40 3 50.40 3 50,.40 3 239.40

Audit Officer 1 11100 1 i2.6O 1 16.60 I 1o 1 10.80 1 16.80 1 790o -Conetruction Engineer 1 1200 1 10.80 1 14.40 1 14.40 1 14.40 1 14.40 1 68.40Draftsman 1 500 1 4.50 1 6.00 1 6.00 1 6.00 1 6.00 1 28.50Stenographer 3 500 3 13.50 3 18.00 3 18.0O 3 18.00 3 18.00 3 85.50Steno-typist 3 500 3 13.50 3 18.O0 3 18.00 3 18.00 3 18.00 3 85.50 - _Driver 4 350 4 12.60 4 16.80 4 16.80 4 16.80 4 16.80 4 79.80Cleaner 3 200 3 5.40 3 7.20 3 7.20 3 7.20 3 7.20 3 34.20Peon er 230 10 18.00 10 24.00 10 24.20 10 24.00 10 24.00 10 114.00Darwan 2 200 2 3.60 2 4.80 2 4.80 2 4.80 2 4.80 2 22.80Nightguard 2 200 2 3.60 2 4.80 2 4.80 2 4.80 2 4.80 2 22.80 - -Total (Hqrs) 37 37 207.0WA" 37 276.00 37 276.00 37 276.00 37 276.00 37 1,311.00 - -

II, At Zoual offices 2Asstt. Director of Agriculture 11 1400 4 50.40& 7 117.60 11 184.80 11 194.80 11 184.80 11 722.40Subject Matter Specialist 40 1000 264// 312.00 32 384.00 40 480.00 40 480.00 40 480.00 40 2136.00 - -Dy. Metst. Director of Agric. 20 1000 13- 156.00 16 192.00 20 240.00 20 240.00 20 240,00 20 1069.00 - -IDeadrterk 11 300 4 16.80 7 29.40 11 46.20 11 46.20 11 46.20 11 184.80 - -Stenographer 11 450 4 21.60 7 37.80 11 59.40 11 59.40 11 59.40 11 237.60 -Accountant 11 350 4 16.80 7 29.40 11 46.20 11 46.20 11 46.20 11 184.80Typist 11 320 4 15.36 7 26.88 11 42.24 11 42.24 11 42.24 11 168.96 - _

pead Cashier 11 320 4 13.36 7 26.88 11 42.24 11 42.24 11 42.24 11 168.96 -L/D Assistant 22 320 8 30.72 14 53.74 22 04.48 22 84.48 23 84.48 22 337.92 - _Accounts Clerk 22 320 85, 30.72 14 53.76 22 84.48 22 84.48 22 84.48 22 337.92Driver 20 320 13- 49.92 16 61.44 20 76.80 20 76.80 20 76.80 20 341.76 -Dri3eo-rcChanic Operaor 11 200 4 9.60 7 16.80 11 26.40 11 26.40 11 26.40 11 105.60 -Cash Guard 11 200 4 9.60 7 16.80 11 26.40 11 26.40 11 26.40 11 105-60 - -Cleaner 22 200 86/ 19.20 14 33.60 22 52.80 22 52.80 22 52.80 22 211.20Penn 51 200 30 72.00 39 93.60 51 122.40 51 122.40 51 122.40 51 532.80 - -Nightguard 11 2D0 4 9.60 7 16.80 11 26.40 11 26.40 11 26.40 11 105.60Dar.en 11 200 4 9.60 7 16.80 11 26.40 11 26.40 11 28.40 11 105.60Total (Zonal Offices) 307 246 845.28 215 1207.32 307 1667.64 307 166764 307 1667.64 307 7055.52 - _

III. At Unit OfficesJute Extension Officer 250 630 1 00 123 00 00 250 1300.00 250 1800.00 250 1800.00 250 6840.00 Input Supply Officer 500 450 100 405,00 / 300 1620.00 500 2700.00 500 2700.00 500 2700.00 500 10123.00i-/S Assistant 250 320 25 96.00 75 288.00 150 576.00 250 960.00 250 960.00 250 2880.00 - _TyDist 250 320 25 96.00 75 288.00 150 576.00 250 960.00 250 960.00 250 2880.00 - -Peon 250 200 25 60.00 75 180.00 150 360.00 250 600.00 250 600.00 250 1800.00Nightgusard 250 200 25 60.00 75 180.00 150 360.00 250 600.00 250 600.00 250 1800.00Storekeeper 250 3Z0 25 96.00 75 268.00 150 576.00 250 960.00 250 960.00 250 2880.00 - _

Total (Unit officers) 2000 325 1533.00 775 3564.00 1500 6948.00 2000 8580.00 2000 8580.00 2000 29205.00 - -

Total (All Staff) 2344 gOO 2585.28 1027 5047.32 2344 8891.6k 23444 10523.64 234444 10523.64 2344 3757152

Daily and Travel Allowasces 1762,50 3103.50 5371.50 5371.50 5371.50 20980.50

Total (with allowances) 4347.78 8150.82 14263.14 15895. 15895.14

Price Contingencies 264.64 741.13 2152.07 3515.41 4633.95 11307.20

Total (witb allowances and 129L95 16415.21 19410.55 2096 9.22Co,atD.emscits)

_/ A llsw{sg for 8 ecubis sakey in the first year for all staff2/. AlIstis for 9 scathe sala-1 in tbe firat ye_r5f lelSe IS3 Subject utter Spcialists for the etiug 9 ZionS Diftees

3/ IsaleudssJ DaMerr for the existing 9 ZOne1

Oific_s6/ Inclodes 18 Peons for the existing 9 Zonal Oiffied7/ Sle Teb197

.UIn. 15, 1977 -

BANGLADESH

Jute Project

Extension Services - Daily and Travel Allowances for Staffing Proposed

Cost Estimates(Tk '000)

------------------Years------------------------ Total Foreign Exchange

Daily Allowance 1 2 3 4 5 (Year 1-5) % Tk'000

Headquarters Staff 31.50 42.00 42.00 42.00 42.00 199.50 - -

Zonal Office Staff 189.00 247.50 319.50 319.50 319.50 1,395.00 - -

Unit Office Staff 720.00 1,440.,00 2,700.00 2,700.00 2,700.00 10,260.00 -

Sub-total 940.50 1,729.50 3,061.50 3,061.50 3,061.50 11,854.50 - -

Travel Allowance LIHeadquarters Staff-' 84.00 84.00 84.00 84.00 84.00 420.00

Zonal Office Staff A" 258.00 330.00 426.00 426.00 426.00 1,866.00Unit Office Staff - 480.00 960.00 1,800.00 1,800.00 1,800.00 6,840.00

Sub-total 822.00 1,374.00 2,310.00 2,310.00 2,310.00 9,126.00

Total (Daily andTravel Allowances) 1,762.50 3,103.50 5,371.50 5,371.50 5,371.50 20,980.50

1/ @ TK 30/day for 100 days travel in a year,

2/ @ TK 30/day for 150 days'travel in a year-

3/ @ TK 20/day for 180 days'travel in a year.

4/ TK 1.00/mile upto 500 miles in a month,

5/ TK k.00/mile upto 200 miles in a month.

3/26/77

BANGLADESH

JUTE PROJECT

Extension Services - Buildings and office Equipment

Cost Estimates(Tk '000)

'Year 1 Year 2 Year 3 Year 4 Year 5 Total Cost Foreign ExchangeUnits Cost Units Cost Units Cost Units Cost Units Cost Units Cost (Yeir 1-5) Z Tk '000

A. BuildingsIniput Supply Officer's I/

houses 2,500 29.5 600 17,700.0 700 20,650.0 700 20,650.0 500 14,750.0 73,750.0 25 18,440.0Extension CentersVl 2,500 47 600 2,820.0 700 3,290.0 700 3.290.0 500 2.350.0 11 750.0 25 2.935.0

20,520.0 23,940.0 23,940.0 17,100.0 85,500.0 25 21,375.0

B. Office EquipmentOffice furniture 250 4.5 25 112.5 50 225.0 75 337.5 100 450.0 - - 1,125.0 - -Stationary 250 3.0 25 75.0 75 225.0 150 450.0 250 750.0 250 750.0 2,225.0 - -Typewriters 278 13.0 39 507.0 56 728.0 83 1,079.0 100 1,300.0 - - 3,614.0 50 1,807.0Calculators (manual) 500 5.0 100 500.0 200 1.000,0 200 1.000.0 - 2,500.0 50 1.250.0

1,194.5 2,178.0 2,866.5 2,500.0 750.0 9,489.0 32 3,057.0

Total (A+B)without contingencies 1,194.5 22,698.0 26,806.5 26,440.0 17,850.0 94,989.0 26 24,432.03/

Contingencies - rhysical 59.72 2,268.9 2,663.32 2,645.0 1,837.5 9,474.44 26 2,463.0- Price 94.06 4 420.35 8 484.66 11.419.8 107.30.Z5 34.726.12 - 8.985.0

Total with contingencies 1,348.28 29,387.25 37,954.48 40,504.80 29,994.75 139,189.56 26 35,880.0

I/ Includes 57. supervision costs, estimated unit cost covers a floor area of 308 sq.ft. i.e.,Tk 100.64/sq.ft.

2/ 200 sq. ft. corrugated iron roof and pole structure. 1

3/ Applying 10% physical contingencies on buildings and 5% on office equipment.

June 24, 1977

BANGLADESH

JUTE PROJECT

Extension Serivees - TransportCost Estimates

(TK 000)

Schedule of ExpendituresEstimate Total

Cost/Unit Year l Year 2 Year 3 Year 4 Cost For. ExchangeDescription Units CIF Taxes Total Units Cost Units Cost Units Cost Units Cost (Years 1-4) X TK 000

At Headquarters

4-Uheel Drive Vehicle 2 84.0 116.0 200.4/ 2 400.0 - - - - - - 400.0 50 200.0Sedan (car) 1 84.0 116.0 200.0:-/ 1 200.0 - - - - - - 200.0 50 100.0Minibus 1 84.0 116.0 200.0- 1 200.0 _ - - - _ - 200.0 50 100.0

Subtotal 800.0 - - - - - - 800.0 50 400.0At, Zonal Office 1/

Speed boats 1O 60.0 64.0 144C 10 1,440.0 - - 1,440.0 50 720.04-Wheel Drive Vehicle 20 84.0 116.0 200.02- 13 2,600.0 3 600.0 4 800.0 - - 4,000.0 50 2,000.0Motorcycles 60 4.5 6.5 11,0-1 39 429.0 9 99.0 12 132.0 _ _ 660.0 50 330.0

Subtotal 4,469.u 699.0 932.0 - - 6,100.0 50 3,050.0

At Unit Offices

Motorcycles 1,000 4.5 6.5 11.0k' 450 4,950.0 200 2,200.0 350 3,850.0 - - 11,000.0 50 5,500.0

Subtotal 4,950.0 2,200.0 3,850.0 - 11,000.0 50 5,500.0

At Block Level

Bicycles 2,500 0.75 0.75 1.53/ 2,500 3,750.0 - - 3,750.0 50 1,875.0

Subtotal 3,750.J - - - 3,750.0 50 1,875.0

Total 13,969.0 2,899.0 4,782.0 - 21,650.0 50 10,825.0

Contingencies - Physical (5%) 698.5 144.9 239.1 - 1,082.5 50 541.3- Price 976.7 344.8 954.0 _ 2,275.5 50 1,137.7

Total (including contingencies) 15,6244.2 3,388.7 5,975.1 _ 25,008.0 50 12,504.0

1/ Including customs duty and taxes at 140%. |2/ Including customs duty and taxes at 140%. -

3/ Including customs duty and taxes at 100%

11/4/77

BANGLADESH

Jute Project

Extension Services - Materials and Equipment

Cost Estimates(TK'000)

---------------------------Schedule of Expenditure------------------------------- ForeignExchange

Unit ---Year 1----- ---Year 2---- ---Year 3---- ---Year 4----- ---Year 5---- Cost a TK'000

Units Cost Units Cost Units Cost Units Cost Units Cost Units Cost (Year 1-5)

I/1. Trials/Demonstrations 2,500 150 1,500 225.00 1625 243.75 2,000 300.00 2,500 375.00 2,500 375.00 1,518.75 30 456.0

2. Extension Materials 120.00 128.00 158.00 197.00. 197.00 800.00 50 Anf.o

Total (1+2) 345.00 371.75 458.00 572.00 572.00 2,318.75 37- 856.0

Contingencies: Physical(5%) 17.25 18.58 22.90 28.60 28.60 115.93 40 46.0

Price 27.16 42.93 91.37 168.16 228.22 557.84 40 223.0

Total (with contingencies) 389.41 433.26 572.27 768.76 828.82 2,992.52 38 1125.0

1/ Estimated on the basis of use of a recommended dose of following inputs: seeds, fertilizers, X

pestices and hired labor.

3/27/77

BANGL'ADESH

JUTE PROJECT

Technical AssistanceCost Estimates

(TK 000)

Period Estimated Schedule of Expenditures Total Fee Foreign Exchange(months) Fee/Month Year 1 Year 2 Year 3 Year 4 Year 5 (Years 1-5) _ TK 000

A. Directorate of Agriculture (Jute)

1. Project Adviser 1/ 24 75.0 450.0 900.0 450.0 ^ - 1,800.00 100 1,800.002. Marketing Specialist 2/ 24 75.0 900.0 450.0 450.00 - 1,800.00 100 1.800O.

Subtotal 450.0 1,800.0 900.00 450.00 - 3,600.00 100 3,600.00

B. Overseas Training

1. Market Officers (2) 3/ 3 97.75 75 957.50 80 1578.02. Project Director (1) 3/ 3 4978.7U5 48.7 95 80 156.03. Bank Staff (2) 3/ 1 67.5 97. 5 125.0 80 1520.04. Farmers (20) 3/ 1.5 637.5 637.5 1275.0 80 1,204.05. Project Officers (4) 3/ 1.5 122.5 17..5 80 204.0

Subtotal 1,008.75 1,008.75 2,017.5 80 1,614.0

C. Monitoring

Services 4/ 262.5 525.0 525.0 525.0 525.0 2,362.5 _Subtotal 262.5 525.0 525.0 525.0 525.0 _,362.5

Total 712.50 3,333.75 2,433.25 975.0 525.0 7,980.0 65 5,214.0

Contingencies - Physical (5%) 35.63 166.68 121.69 48.75 26.25 399.0 65 261.0- Price 561 44.9 -50 35.2 189o2 1.o.71 1,o69.o

Total (including contingencies) 804.23 J.92k35 3,o20.52 1.375.00 740.27 9,855.37 66a_ 6.-41-h -

1/ Allowing half of the annual costs in the years 1 and 4.2/ Allowing full annual costs in the years 2, 3 and 4 and half in year 5.

3/ Allowing daily subsistence costs at US$50.00 plus a sum of US$2,000.00 towards air travel f or each.Allowing a lump sum eiaal to US$35,000/year.

Nwovber 4, 1977

July 15, 1977

ANNEX 9Table 11

BANGLADESH

Jute Project

Percentages Used in Calculating Price Contingencies

Year Civil Works Equipment Staff Salaries

1977 9.0 7.5 6.0

1978 9.0 7.5 6.0

1979 9.0 7.5 6.0

1980 8.0 7.0 6.0

1981 8.0 7.0 6.0

March 30, 1977

BANGLADESH

JUTE PROJECT

Crop Production Costs and Returns

Jute Production Costs (Per Acre)

Non-IJCS--- IJCS at Present- IJCS Future with Project2/Yield - 14.5 Maunds/Acre Yield - 22 Maunds/Acre Yields 25 Maunds/Acre

Item Amount Unit Price Total Cost Amount Unit Price Total Cost Amount Total CostTk Tk Tk Tk Tk

Seeds 5 seers 8.00 (7.00) 40.00 (35.00) 4 seers 3.50 (7.00) 14.00 (28.00) 4 seers 14.00 (28.00)

Urea 11 " 1.50 (2.75) 16.50 (30.25) 28 " 1.50 (2.75) 42.00 (77.00) 45 " 67.50 (123.75)

TSP 5 1.20 (3.10) 6.00 (15.50) 10 1.20 (3.10) 12.00 (31.00) 11 " 13.20 (34.10)

MP 3 " 1.00 (2.10) 3.00 (6.30) 12 " 1.00 (2.10) 12.00 (25.20) 16 " 16.00 (33.60)Pesticide - 3/ - _ - 1 lb 3/16.00 (35.00) 16.00 (35.00) 2 lb 32.00 (70.00)

Hired Labor 76 (127) days- 8.00 (6.00) 608.00 (762.00) 90(115)daYs 8.00 (6.00) 720.00 (690.00) 95(121)days 760.00 (726.00)

Bullock Cost 19 pair days 12.00 (12.00) 228.00 (228.00) 22 pair 12.00 (12.00) 264.00 (264.00) 22 pair days 264.00 (264.00)

Loan Interest - - - - - days - _ 25.00 - - 25.00

Total 901.50 (1077.05) 1105.00 (1150.20) 1191.70 (1279.45)

Production Cost Per Maund Jute 62.17 (74.28) 50.23 (52.27) 47.66 (51.12)

it Per Bale (5 Maunds) 310.85 (371.40) 251.14 (261.35) 238.30 (255.60)

( ) Economic Values

1/ Source - IJCS/World Bank Survey2/ Mission estimate.3/ Labor requirement per acre for non-IJCS and IJCS farms is 127 and 115 man days respectively (used for economic analysis), while

proportion of hired labor is 60% and 78% of total requirement respectively (used for financial analysis).

March 24, 1977 | ttbx

BANGLADESH

JUTE PROJECT

Crop Production Costs and Returns

Financial Returns from Jute Production at Various Fiber Prices

A. Traditional Technology

Prices Yields -- Gross Returns --- Production NetTk/Md Md/Acre Fiber By Product Total Cost Return

Fiber By Product Fiber By Product Tk Tk Tk Tk Tk

90.00 5.00 14.5 29 1,305.00 145.00 1,450.00 901.50 548.50

75.00 5.00 14.5 29 1,087.50 145.00 1,232.50 901.50 331.00

60.00 5.00 14.5 29 870.00 145.00 1,015.00 901.50 113.50

B. IJCS at Present

90.00 5.00 22.0 44 1,980.00 220.00 2,200.00 1,105.00 1,095.00

75.00 5.00 22.0 44 1,650.00 220.00 1,870.00 1,105.00 765.00

60.00 5.00 22.0 44 1,320.00 220.00 1,540.00 1,105.00 435.00

C. IJCS Future with Project

90.00 5.00 25.0 50 2,250.00 250.00 2,500.00 1,191.70 1,308.30

75.00 5.00 25.0 50 1,875.00 250.00 2,125.00 1,191.70 933.30

60.00 5.00 25.0 50 1,500.00 250.00 1,750.00 1,191.70 558.30 H

c m

March 24, 1977 C)

ANNEX 10Table 3

BANGLADESH

JUTE PROJECT

Crop Production Costs and Returns

Costs and Returns Local Aus (Per Acre)

COSTSCost or

Item Amount Unit Price ReturnTk Tk

Seeds 30 Seers 2.00 (3.00) 60.00 (90.00)

Fertilizer Small Amount - 15.00 (30.00)

Pesticide " I - 8.00 (16.00)

Hired Labor-/ 36 (60) Man clays 8.00 (6.00) 288.00 (360.00)

Bullocks 27 Pair days 12.00 (12.00) 324.00 (324.00)

Total 695.00 (820.00)

YIELD

2/ 3/Paddy 12 Maunds 74,00 (100.00>=- 888.00 (1200.00)

Straw 20 " 3.00 ( 3.00) 60.00 ( 60.00)

RETURNS (GROSS) 948.00 (1260.00)

RETURNS (NET) 253.00 (440.00)

( ) Economic Values

1/ Labor requirement per acre is 60 man days (used for economic analysis).Proportion of hired labor is about 60% (used for financial analysis).

2/ Current GOB floor price.

3/ See Annex 10 Table 1.

Source Agro Economic Research Section, Ministry of Agriculture, GOB(modified in light of new trends).

March 24, 1977

ANNEX 10Table 4

BANGLADESH

JUTE PROJECT

Crop Production Costs and ReturnsImproved Aus (per acre)

COSTSCost or

Item Amount Unit Price ReturnTk Tk

Seed 30 Seers 3.00 (4.00) 90.00 (120.00)Urea 20 Seers 1.50 (2.75) 30.00 (55.00)TSP 15 Seers 1.20 (3.10) 18.00 (46.50)MP 4 Seers 1.00 (2.10) 4.00 (8.50)Pestic±9e - - 20.00 (40.00)Labor - 42 (70) Man days 8.00 (6.00) 336.00 (420.00)Bullocks 30 Pair days 12.00 (12.00) 360.00 (360.00)

Total 858.00 (1050.00)

YIELD

2/ 1/Paddy 20 Maunds- 74.00 (100.00- 1480.00 (2000.00)Straw 25 Maunds 3.00 (3.00) 75.00 (75.00)

Returns (Gross) 1555.00 (2075.00)

Returns (Net) 697.00 (1025.00)

( ) Economic Values

1/ Labor requirement per acre is 70 mandays (used for economic analysis)Proportion of hired labor is about 60% (used for financial analysis).

2/ Current GOB floor price.3/ See Annex 10, Table 1.

ANNEX 11Page 1

BANGLADESH

JUTE PROJECT

Reporting Requirements

1. A Progress report should be submitted every quarter and an annualsummary at the end of the year. The objective of the reports would be toprovide information on progress with implementing project components, com-parison of targets and achievements, and to describe the impact of the projecton jute production and marketing. Reports should reach Washington within 60days of the close of the reporting period. The annual report should beaccompanied by:

(a) A copy of budgets and financial estimates; and

(b) The operations plan (with quarterly targets) for thecoming year.

2. While information and statistics would have to be provided by SonaliBank, Jute Ministry, IRDP and other project agencies, the Directorate ofAgriculture (Jute) would coordinate all data and would prepare the reports.

3. The quarterly report would consist of brief written notes and a setof tables. Suggested guidelines for these are shown in Appendix 1. Informa-tion need not be confined to that suggested in the guidelines and anythingconsidered worth reporting should be included. The reporting format may bemodified as necessary at any time by mutual agreement between GOB and IDA.The same format should be used for the annual report.

4. Written notes should be brief and should deal with progress made,problems encountered, and action taken to overcome the problems.

5. Tables are designed to give progresive information on meeting bothphysical and financial targets. Where physical information has not beenrequested in tables (e.g. for technical assistance, extension and researchmaterials and equipment), it should be described in written notes.

6. The key indicators listed in the tables will also be used by thesupervision missions to assess the progress in implementation.

ANNEX 11Appendix IPage 1

BANGLADESH

JUTE PROJECT

Guideline for Headings and Contentsfor the Quarterly Report

1. General. Give brief summary of physical and financial progresswith implementing the project during the quarter and progress with im-proving jute production and marketing. (Tables 1-4). Highlight majorproblems encountered, action taken or planned to overcome them, and progresswith solving major problems previously reported.

2. Progress with Project Components. Compare actual progress withoriginal targets and comment on changes made or planned. Where appropriate,point out changes in costs and proposals for dealing with such changes.

(a) Credit - Comment on demand distribution, utilizationand recovery (Tables 4-6) and changes in loan conditionsproposed.

(b) Incremental Extension Staff - Vacancies, recruitment,training, posting, delays and difficulties, if any.(Table 7)

(c) Construction

(i) JEA Houses

(ii) Jute Stores (including baling presses)

Describe appointment of consultants, status ofdesigns, site selection and purchase, prequali-fications, tenders for procuring materials andconstruction progress. Explain delays and changesif any. (Tables 2, and 8 to 10)

(d) Vehicles

(e) Implements

(f) Office Furniture and Equipment

(g) Extension Equipment

Describe status of procurement, including opening ofLetters of Credit where appropriate. (Tables 2 and 11)

ANNEX 11Appendix 1Page 2

(h) Field Demonstrations cnd Trials

Comment on number established, cost and give briefsummary of results.

(i) Technical Assistance

(i) Consultants to DAJ (Recruitment appointment,problems if any);

(ii) Consultants to Milistry of Jute (as 9 (i));

(iii) Overseas Training (Planning, arrangements made,training completed, evaluation); and

(iv) Monitoring (Appointment of consultants, progress).

3. Financing, Disbursement, and Credit Withdrawals. Comment onexpenditure for past quarter, give budget for coming quarter and approx-imate forecast for 12 months expenditure. Comment on status of revolvingfunds and progress with IDA credit withdrawals.

4. Organization and Management

(a) Coordination

(i) National

(ii) Zonal

Comment on effectiveness, number of meetings andimportant decisions made.

(b) Project Agencies. (Project Executing Agencies - DAJ,Sonali Bank, Jute Ministry, JFA, and IRDP). (SupportingAgencies - BJRI, Jute Seeds Directorate, BADC, PlantProtection Directorate).

Describe organization ard management problems encounteredif any and steps taken cr planned to solve them. Describedevelopment (e.g., opening new DAJ offices, Sonali Bankbranches), staff performance and effectiveness, reorgan-ization planned or carried out and results).

5. Project Performance

(a) Jute Production (Table 3)

Briefly describe progress in implementing the annual planand comment on effectiveiiss of extension, inputs and credit

ANNEX I 1Appendix IPage 3

services; (if not already covered by earlier section.);farmers' participation and adoption of improved practices;new technology; impact of climate, pests, diseases andprices on production; and compare yields and production(or forecasts) with non project conditions.

(b) Jute Marketing (Table 4,4a and 4b)

Describe status of design and construction of marketingfacilities (if not described before), and organizationof jute marketing under the project. Comment on farmers'participation, quantity of jute marketed, marketing costs,share of costs paid by farmers, organization of jute sales,prices receive by DAJ or IRDP and by participating farmerscompared to those of traders and farmers using traditionalchannels; describe problems overcome and remaining andactions and changes planned.

(c) Government Jute Corporations

Forward Consultants reports and describe progress in re-structuring the Corporations.

(d) Monitoring

Forward copies of monitoring reports. Comment on findings.

(e) Jute and Paddy Pricing Mechanism

Describe progress in establishing pricing mechanism.

BANGLADESH

JUTE PROJECT

Report for Quarter Ending_ _

Credit Withdrawals

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - -T K ' 0 0 0…-- - - - - - - - - - - - - - - - -

Expenditure Withdrawal Claims Estimated ProjectDisburse- Incurred Submitted Expenditure for

,ategory ment (%) a c a b c Next 12 Months

a - Total at end of last quarter;b - This quarter;c -Total to date.

r. r

ANNEX 11

BANGLADESH Appendix 1BANGLADESH ~~~Table 2

JUTE PROJECT

Report for Quarter Ending_

Project Implementation Summary

Target AchievementEnd LastQuarterDuring Total

Project This To This This This ToItem Total Year Date Year Total Quarter Year Date

A. Physical Information

No. Seed DrillsITo. Eand HoesNo. SprayersNo. JEA HousesSets Office FurnitureNo. TypewritersNo. CalculatorsNo. JeepsNo. BicyclesNo. Jute StoresNo. Baling PressesOthers:_

B..Disbursement (TKs'OOO)

Seed DrillsHand HoesExtension EquipmentExtension MaterialsOffice FurnitureExtension Staff 1/TypewritersCalculatorsJeepsMotor CyclesBicyclesBaling PressesJute StoresLoans for Production 2/Loans for Marketing 2/Overseas TrainingConsultantsMonitoringOthers:_

1/ Incremental since July 19771/ Incremental to July 1977 level

ANNEX 11Appendix 1

BANGLADESH Table 3

JlU'E PROJECT

Report for Quarter Ending_

Jute Production Information

1977 1978 1979 1980 1981 1982

Farmers (No.)

Jute Farmers Associations (No.)Participating Farmers (No.)

Area Covered (Acres)

Olitorius sown (Acres)Capsularis sown (Acres)Total jute sown

Line sowing (Acres)Fertilized (Acres)Plant protection (Acres)

Quantities (Tons)

Fertilizer used (Tons)Insecticide used (Tons)Improved seed used (Tons)

Production Olitorius (Tons)Production Capsularis (Tons)Total jute (Tons)

Yield (Mds/Acre):

OlitoriusCapsularisAll jute

Equipment (No.):

Drills in stockHand hoes in stockSpray pumps in stock

Drills usedHand hoes usedSpray pumps used

ANNEX 1Appendix 1

BANGLADESH Table 4Page 1

JUTE PROJECT

Report for Quarter Ending _

Jute Marketing

1978 1979 1980 1981 1982

A. Physical Information

No. Stores Operated

By IJCSBy IRDP

Total

No. Baling Presses Operated

By IJCSBy IRDP

Total

No. Associations

JFAKSS/JFATotal

No. Farmers Participants

Through IJCSThrough IRDPTotal

Jute Delivered Mds

To IJCS StoresTo IRDP StoresTotal

Loose Jute Sold Mds

By IJCS StoresBy IRDP Stores

Total

Baled Jute Sold Mds

By IJCS StoresBy IRDP Stores

Total

ANNEX 114Appendix 1Table 4Page 2

1978 1979 1980 1981 1982

Total Jute Sold Mds

By IJCSBy IRDPTotal

Financial Information

Price of Loose Jute TR/Md

Sold by IJCSSold by IRDPAverage

Price of Baled Jute TK/Md

Sold by IJCSSold by IRDPAverage

Average Price of Jute TK/Md

3u1d by 13CISold by IRDPOverall Average

Price Paid to Farmers TK/Md

By IJCSBy IRDPAverage

Revenue Received by IJCS TK'000

Fees from FarmersRent from IRDPTotal

Expenditure by IJCS TK'000

For Operating StoresOn Rented StoresTotal

Operational Surplus/Deficit TK'000

ANNEX 11Appendix 1Table 4a

BANGLADESH

JUTE PROJECT

Report for Quarter Ending_

Consolidated Jute Marketing Income and Expenditure(IJCS)

1978 1979 1980 1981 1982

Jute Sold (Mds)

Revenue (TKs'000):

FeesOtherTotal

Expenditure (TKs'000):

Rent/AmortizationStaff and EstablishmentContract or Casual LaborSpares and RepairsMaterialsTransportInsuranceInterest ChargesOther ExpenditureTotal

Surplus/ (Deficit)

ANNEX 11BANGLADESH Appendix 1

Table 4bJUTE PROJECT

Report for Quarter Ending

Consolidated Jute Marketing Income and Expenditure(IRDP)

1978 1979 1980 1981 1982

Jute Sold (Mds)

Revenue (TKs'000):

FeesOtherTotal

Expenditure (TKs'000):

Rent/AmortizationStaff and EstablishmentContract or Casual LaborSpares and RepairsMaterialsTransportInsuranceInterest ChargesOther ExpenditureTotal

Surp].us/(Deficit)

ANNEX 11Appendix 1Table 5

BANGLADESH

JUTE PROJECT

Report for Quarter Ending

Short Term Credit - Physical Information

Target Achievement This Year IncreaseOriginal Revised End Total Total overLast This Last This Last Last This To Since 1977Year Year Year Year 1977 Year Quarter Quarter Date 1977 Level

A. Loans Through Directorateof Agriculture

1. Fertilizer Loans

No. AssociationsNo. FarmersTons Fertilizer distri-buted

Acres benefitted

2. Cash Loans

No. AssociationsNo. FarmersAcres benefitted

3. Marketing Loans

No. AssociationsNo. FarmersTons Jute Financed

B. Loans Through IRDP

4. Fertilizer Loans

No. KSS/JFANo. FarmersTons Fertilizer distri-buted

Acres benefitted

5. Cash Loans

No. KSS/JFANo. FarmersAcres benefitted

6. Marketing Loans

No. KSS/JFANo. FarmersTons Jute Financed

C. Total Loans

7. Fertilizer Loans

No. FarmersTons Fertilizer distri-buted

Acres benefitted

8. Cash Loans

No. FarmersAcres benefitted

9. Marketing Loans

No. FarmersTons Jute Financed

ANNEX 11BANGLADESH Appendix 1

JUTE PROJECT Table 6a

Report for Quarter Ending_

Short Term Credit - Financial Information

Credit Through Directorate of Agriculture

TK'000Target Achievement

Original Revised This YearLast This Last This Last End Last This Total To Date IncrementalYear Year Year Year 1977 Year Quarter Quarter To Date Since 1977

Loan Commitment For:

FertilizerLaborMarketingTotal

Loan Disbursement For:

FertilizerLaborMarketingTotal

Loan Disbursements IncrementalTo 1977 Level:

FertilizerLaborMarketingTotal

Principal and Interest Outstanding:

Beginning of YearDuring YearTotal

Principal & Interest Recovered:Overdues:Less Than 6 months6-12 monthsMore Than 12 monthsTotal

Loan Recdvery Percent of Total:Outstanding:

BANGLADESH ANNEX 11

JUTE PROJECT Appendix 1

Report for Quarter Ending Table 6b

Short Term Credit - Financial Information

Credit Through IBPF

TK'000Target Achievement

Original Revised This YearLast This Last This Last End Last This Total To Date IncrementalYear Year Year Year 1977 Year Quarter Quarter To Date Since 1.977

Loan Commitment For:

FertilizerLaborMarketingTotal

Loan Disbursement For:

FertilizerLaborMarketingTotal

Loan Disbursements IncrementalTo 1977 Level:

FertilizerLaborMarketingTotal

Principal and Interest Outstanding:

Beginning of YearDuring YearTotal

Principal & Interest Recovered:Overdues:Less Than 6 months6-12 monthsMore Than 12 monthsTotal j

Loan Recovery Percent of Total:

Otitstanding:

BANGLADESH

JUTE PROJECT ANNEX 11.Appendix 1

Report for Ouarter Fnding Table 6c

Short Term Credit - Financial Information

Total Credit

~~~~~~~~~TK' 000Target Achievement

Original Revisec This YearLast This Last Tlie Last End Last This Total To Date IndrementalYear Year Year Year 1977 Year Quarter Quarter To Date Since 1977

Loan Commitment For:

FertilizerLaborMarketingTotal

Loan Disbursement For:

FertilizerLaborMarketingTotal

Loan Disbursements IncrementalTo 1977 Level:

FertilizerLaborMarketingTotal

Principal and Interest Outstanding:

Beginning of YearDuring YearTotal

Principal & Interest Recovered:Overdues:Less Than 6 months6-12 monthsMore Than 12 monthsTotal

Loan Recovery Percent of Total:Outstanding:

BANGLADESH

JUTE PROJECT

Report for Quarter Ending

I.J.C.S. Staff Information

TKs'000Monthly Pay Rolf Project Disbursement

Number of Staff EligibleEnd Employed Total Employed Pay Allowances for End Total

July Last This To Since Scale Per Staff July Project Last This ToStaff Category 1977 Quarter Quarter Date July 1977 TK Member TK 1977 Latest Finance Quarter Quarter Date

Head Office

Zone

Unit

Total

e>WI

BANGLADESH

JUTE PROJECT

Report for Quarter Ending-

Progress of Construction

TARGET ACHIEVEMENTEnd LastQuarter

Total During Total TotalProject This To This To This This ToTotal Year Date Year Date Quarter Year Date

A. JEA Houses

No. Houses to be builtNo. Sites selectedNo. Contracts letNo. Contracts completedNo. Houses covered by con-

tracts letNo. Houses under constructionNo. Houses completed

B. Jute Stores

No. Stores to be builtNo. Sites selectedNo. Contracts letNo. Contracts completedNo. Stores covered by con-tracts let

No. Stores under constructionNo. Stores completedNo. Baling presses installed

0.

00 rs

BANGLADESH

JUTE PROJECT

Report of Quarter Ending

Progress of Construction Tenders and Contracts

DATEDescription Tenders Construction

Tender of Tender Invitations Contracts To be CompletedNumber Item Type Prepared Issued Opened Evaluated Issued To Start Started Original Revised Completed Comments

e10x

BANGLADESH

JUTE PROJECT

Report for Quarter Ending

Progress of Tenders and Orders for Building Materials

DATEDescription Tenders Delivery

Tender of Tender Invitations Orders DueNumber Item Type Prepared Issued Opened Evaluated Placed Original Revised Completed Comments

F3 >

t- m M0. >x

CDm. F1-*

BANGLADESH

JUTE PROJECT

Report for Quarter Ending_

Progress of Tenders and Orders for Vehicles,Implements, Equipment, Furniture and Materials other than Building Materials

DATEDescription Tenders Delivery

Tender of Tender Invitations Orders DueNumber Item Iype Prepared Issued Opened Evaluated Placed Original Revised Completed Comments

H x

z1

ANNEX 12Page 1

BANGLADESH

JUTE PROJECT

Economic Analysis

1. The impact of this project on the jute production of Bangladeshwould be determined by the changes of yield and acreages in the IJCS andthe non-IJCS areas. The changes in IJCS areas are easy to forecast; overthe one million acre area the jute production would increase from 2.5 Mbales to 5 M in some six years. In non-IJCS areas, however, the changesin jute production are more difficult to foresee. In the absence of thesupport to jute production provided by IJCS, change-over from jute topaddy is more likely in these areas.

2. Traditionally, Bangladesh farmers are responsive to price incen-tives; in particular, the acreage put under jute depends on the jute/paddyprice ratio and the production costs expected for these two crops. Produc-tion budgets show that the net benefits obtained from jute and improved ausare comparable. With price fluctuations of the order of those experiencedin the past, each crop in turn could become more profitable, thus enticingthe farmers to change their cropping patterns. Prices of jute and paddy have,in the past, widely fluctuated making it difficult for GOB to carry out aneffective production policy for eithe,r paddy or jute.

3. A price policy for jute and paddy production will have to be basedon the market prospects for these two commodities. GOB will hire consultantsto carry out inter alia a survey of market prospects for raw jute and manufac-tured goods. When the market prospects are assessed, GOB will be able todefine its policy for jute, in particular, to establish targets for juteacreage and production, bearing in mind the traditional competition betweenjute and paddy. It will then be the responsibility of the Food Policy Com-mission to define a production policy, including pricing, permitting theachievement of the targets selected, for foodgrain and also for jute. Untilthis policy is defined and carried out in an effective way, prices and produc-tion of foodgrain and jute are likely to remain subject to fluctuations and,consequently, future acreages and production will be difficult to forecast.

4. The overall impact of this project will presumably be to increaseBangladesh's jute production. Because of the difficulties mentioned above,however, it is not possible to quantify this increase with any certainty.The future situation will presumably lie somewhere between two extremealternatives:

ANNEX 12Page 2

Alternative I: Bangladesh jute production remaining constantat the present level. Because of the project-related increases of yields in the IJCS areas,this would imply that some non-IJCS acreaswould switch to paddy production. About400,000 acreas would be thus turned to aus.

Alternative II: Acreage presently under jute remaining constantat the present level. This would then implyan increase of Bangladesh jute production ofsome 1.2 M bales above the first alternative.

5. Alternatives (I) and (II), though extreme, do not appear impossible.Since the future actual situation is likely to be somewhere between these twopossibilities, the economic impact of these two basic alternatives has beenassessed.

6. Economic benefits have been computed using the economic prices forpaddy (Table 1) and jute forecast by the Economic Analysis and ProjectionsDepartment. In the "without project" case, to be conservative, it wasassumed that a slight yield increase (from 2.9 to 3 bales per acre) wouldtake place, eventhough no such improvement in yields has happened in thepast. In the "without project" case and the "With project - Alternative I"case, where Bangladesh production remains constant at about 6 M bales, farm-gate jute prices have been derived from the forecast of the Economic Analysisand Projections Department (Table 2). In the "with project - Alternative II",the eventual production comes to 7.2 M bales; the corresponding increase ofjute supply on the world market will then presumably have a negative effecton jute prices. Conservatively it has been assumed that the FOB Chittagongprice would be as much as 10% lower than the level corresponding to a pro-duction of 6 M bales.

7. Apart from changes in jute yields and production, the project wouldalso improve jute quality. This would be caused by the marketing componentin two ways. Firstly, with no storage in primary markets and, at peak salestime, inadequate storage even at secondary markets, much of the raw jute fiberis stocked in the open. This results in quality deterioration which would beprevented by project storage. Secondly, at present, farmers receive littlereward for grade differentials (Annex 5). With project marketing facilities,farmers would have incentive to improve grades and thus increase the value ofthe product. The combined value of reduced spoilage and improved quality hasbeen estimated at 4% of the FOB price of jute.

8. Investment costs are taken from Annex 9 but exclude taxes and du-ties and production and marketing credit. A five-year life has been assumedfor vehicles and equipment, but replacement costs have been averaged into anannual expenditure. (The difference in analysis results between this andactual but varying costs each year is insignificant.) Operating costs repre-sent incremental jute extension services costs and building maintenance. Thelife of jute sheds has been assumed to be 15 years.

ANNEX 12Page 3

9. Crop production costs based on current prices have been taken asshown in Annex 10, Tables 1 and 3 but farm labor, seeds and fertilizer havebeen shadow-priced. Because of the existing underemployment of farm labor,especially outside the peak periods of sowing and harvest, family and hiredlabor have been given a shadow price of Tk 6 per day - as opposed to anaverage actual price of Tk 8 for hired labor. Seeds and fertilizers havebeen given shadow prices related to world market prices.

10. For both Alternative I and Alternative II, the economic rate ofreturn (ERR) is above 50%. This incLicates that, whatever the actual situ-ation resulting from the project, the rate of return will be very high,presumably above 50%.

11. The most critical variable in this economic analysis is the pricelevel for both jute and paddy. As mentioned in para 6, an excessive increaseof jute production due to the project woud have an adverse effect on prices.To assess the effect of a fall in prices (jute and paddy) on the ERR, a sen-sitivity test has been performed. It shows that, if the prices of jute wereto fall by 15% (for both the "with" and "without" project situation), the rateof return would remain above 50% in the case of Alternative I; in the case ofAlternative II it would fall to 20%. This indicates that the ERR would besensitive to price assumption if the project were to cause an increase ofjute production. This result, in turn, emphasizes the necessity for GOB tocarefully implement a production policy for jute to avoid any excessiveproduction that could have negative effects on the economy.

12. The economic rate of return of the marketing component has alsobeen computed. It is also high - about 50% - and remains above 20% undermore pessimistic assumptions of cost increases or benefit decreases.

13. Sensitivity tests for the whole project and the marketing componentare given in Tables 9 and 10.

ANNEX 12.Table 1

BANGLADESH

JUTE PROJECT

Economic Price for Paddy

US$per ton

Price 1985 Milled 5%, brokenF.O.B. Bangkok 1/ 389.8less 30% for price of 25-35% broken 116.9plus transportation to Chittagong 25.0

Price C.I.F. Chittagor.g - 297.9plus 16% of above for handling and distributionto urban consumption centers 2/ 47.7

Price in urban markets 345.6less 21% of above for cost of marketing,milling and transportation from farm tourban market 2/ 70.7

Price of rice equivalent at farmgate 274.9

Price of paddy at farmgate 3/ 178.6

Price of paddy at farmgate (Taka/maund) 100.0

1/ IDA Commodity Price Forecast, November 23, 1976, modified to expressin 1977 constant dollars.

2/ Percentages established from a GOB study of these costs3/ Assuming rate of conversion for paddy to rice of 65%.

March 1, 1977

ANNEX 12Table 2

BANGLADESH

JUTE PROJECT

Economic Price for Jute

US$ Takaper M ton per Maund

Price 1985 export grade jute fiberF.O.B. Chittagong 1/ 344.0 192.5

Price 1985 cuttingsF.O.B. Chittagong 172.0 96.3

Weighted average price 2/ 295.0 165.1

Less: Marketing Costs 3/ 44.0

Farmgate Jute fiber price 121.1

Add value of by-products 10.0

Economic price for juteat farmgate 131.1

1/ Economic Analysis and Projections Department forecast(1977 constant dollars).

2/ 1 ton fiber at farmgate contains 71.5% export gradefiber and 28.5% cutting.

3/ Excludes 9.50 takas of prof:Lt from financial cost andthe traditional system, considered to be an internaltransfer.

July 12, 1977

ANNEX 12Table 3

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative I - Sown Area, Yields and Production

-- - - - - -_-_-_-_-_- --YEAR - - - - - -1 2 3 4 5 6 onwards

A. Cultivated Area(thousands of acres)

I. With ProjectIJCS (new) 50 150 300 500 500 500IJCS (old) 500 500 500 500 500 500Non-IJCS 1,185 1,010 735 425 365 350Paddy (Aus) 15 90 215 325 385 400

Total 1,750 1,750 1,750 1,750 1,750 1,750

-l. Without Project[JCS (old) 500 500 500 500 500 500Non-IJCS 1,250 1,250 1,250 1,250 1,250 1,250

Total 1,750 1,750 1,750 1,750 1,750 1,750

B. Yields(btaunds per acre)

f. With ProjectIJCS (new) 20.0 20.8 21.7 22.3 24.0 25.0IJCS (old) 22.5 23.5 25.0 25.0 25.0 25.0Non-IJCS 15.0 15.0 15.0 15.0 15.0 15.0Paddy (Aus) 20.0 20.0 20.0 20.0 20.0 20.0

II. Without ProjectIJCS (old) 22.5 22.5 22.5 22.5 22.5 22.5Non-IJCS 15.0 15.0 15.0 15.0 15.0 15.0

C. Production(millions of maunds)

I. With ProjectIJCS (new) 1.0 3.1 6.5 11.2 12.0 12.5IJCS (old) 11.3 11.7 12.5 12.5 12.5 12.5Non-IJCS 17.7 15.2 11.0 6.3 5.5 5.0

Total Jute-/ 30.0 30.0 30.0 30.0 30.0 30.0Paddy (Aus) 0.3 1.8 4.3 6.5 7.7 8.0

II. Without ProjectIJCS (old) 11.25 11.25 11.25 11.25 11.25 11.25Non-IJCS 18.75 18.75 18.75 18.75 18.75 18.75

Total Jute 30.00 30.00 30.00 30.00 30.00 30.00

1/ Rounded to the nearest million maunds.

July 11, 1977

ANNEX 12

Table 4

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative I - Prices and Benefits

- - - - - - - - - - - - - - YEAR - - - - - - - - - - - - - - - -1 2 3 4 5 6 onwards

A. Prices(takas/maund)

I. With ProjectJute 131.1 1/ '31.1 131.1 131.1 131.1 131.1Paddy 103.8 - 103.8 103.8 103.8 103.8 103.8

II. Without ProjectJute 131.1 131.1 131.1 131.1 131.1 131.1

B. Benefit 2/(millions of takas) -

I. With ProjectIJCS (new 131 406 852 1,468 1,573 1,639IJCS (old) 1,481- 1,534 1,639 1,639 1,639 1,639Non-IJCS 2,321 1,993 1,442 826 721 655

Total Jute 3,933 3,933 3,933 3,933 3,933 3,933Paddy (Aus) 31 187 446 675 799 830

II. Without ProjectIJCS (old) 1,475 1,475 1,475 1,475 1,475 1,475Non-IJCS 2,458 2,458 2,458 2,458 2,458 2,458

Total 3,933 3,933 3,933 3,933 3,933 3,933

1/ Includes value of by-products estimated at 3.8 kyats per maund of paddy.

2/ Rounded to nearest million.

July 11, 1977

ANNEX 12Table 5

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative I - Production Cost and Incremental Working Capital

- - - - - - - - - - - - - - - - - YEAR - - - - - - - - - - - - - - - - - -1 2 3 4 5 6 7 onwards

A. Unit Production Costs(takas per acre)

I. With ProjectIJCS (new) 1,279 1,279 1,279 1,279 1,279 1,279 1,279IJCS (old) 1,150 1,279 1,279 1,279 1,279 1,279 1,279Non-IJCS 1,077 1,077 1,077 1,077 1,077 1,077 1,077Paddy (Aus) 1,050 1,050 1,050 1,050 1,050 1,050 1,050

II. Without ProjectIJCS (old) 1,150 1,150 1,150 1,150 1,150 1,150 1,150Non-IJCS 1,077 1,077 1,077 1,077 1,077 1,077 1,077

B. Production Costs(millions of takas)

I. With ProjectIJCS (new) 64 192 384 640 640 640 640IJCS (old) 575 640 640 640 640 640 640Non-IJCS 1,276 1,088 792 458 393 377 377

Total Jute 1,915 1,920 1,816 1,738 1,673 1,657 1,657Paddy (Aus) 16 95 226 341 404 420 420

II. Without ProjectIJCS (old) 575 575 575 575 575 575 575Non-IJCS 1,346 1,346 1,346 1,346 1,346 1,346 1,346

Total Jute 1,921 1,921 1,921 1,921 1,921 1,921 1,921

C. Normalized Working Capital 1(millions of takas)

I. With Project 2/Jute 787 789 746 714 688 681 681Aus Paddy 4 23 56 84 100 104 104

II. Without Project 2/Jute 789 789 789 789 789 789 789

III. IncrementalJute 2 2 43 32 26 7 0Paddy 4 19 33 28 16 4 0

1/ Based on average value outstanding each year. Average is estimated using production costs andtime lag between incurring of costs and realization of revenues (150 days for jute, 90 daysfor Aus paddy).

2/ Cumulative investment in working capital.

July 11, 1977

ANNEX 12Table 6

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative II - Sown Area, Yields and Production

-- - - - - - - - - - - - - YEAR - - - - - - - - - - - - - - - -1 2 3 4 5 6 onwards

A. Cultivated Area(thousands of acres)

I. With ProjectIJCS (new) 50 150 300 500 500 500IJCS (old) 500 500 500 500 500 500Non-IJCS 1,200 1,100 950 750 750 750Paddy (Aus) 0 0 0 0 0 0

Total 1,750 1,750 1,750 1,750 1,750 1,750

II. Without ProjectIJCS (old) 500 500 500 500 500 500Non-IJCS 1,250 1,250 1,250 1,250 1,250 1,250

Total 1,750 1,750 1,750 1,750 1,750 1,750

B. Yields(maunds per acre)

I. With ProjectIJCS (new) 20.0 20.8 21.7 22.3 24.0 25.0IJCS (old) 22.5 23.5 25.0 25.0 25.0 25.0Non-IJCS 15.0 15.0 15.0 15.0 15.0 15.0Paddy (Aus) 20.0 20.0 20.0 20.0 20.0 20.0

II. Without ProjectIJCS (old) 22.5 22.5 22.5 22.5 22.5 22.5Non-IJCS 15.0 15.0 15.0 15.0 15.0 15.0

C. Production

(millions of maunds)

I. With ProlectIJCS (new) 1.0 3.1 6.5 11.2 12.0 12.5IJCS (old) 11.3 11.7 12.5 12.5 12.5 12.5Non-IJCS 18 16.5 14.3 11.3 11.3 11.3

Total Jute -/ 30.3 31.3 33.3 35.0 35.8 36.3Paddy (Aus) 0 0 0 0 0 0

II. Without ProjectIJCS (old) 11.25 11.25 11.25 11.25 11.25 11.25Non-IJCS 18.75 18.75 18.75 18.75 18.75 18.75

Total Jute 30.00 30.00 30.00 30.00 30.00 30.00

1/ Rounded to the nearest million maunds.

July 11, 1977

ANNEX 12Table 7

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative II - Prices and Benefits

-- - - - - - - - - - - - - YEAR - - - - - - - - - - - - - - - -1 2 3 4 5 6 onwards

A. Prices(takas/maund)

I. With ProjectJute 130.5 127.4 122.2 117.7 115.2 114.6Paddy 103.8 - 103.8 103.8 103.8 103.8 103.8

II. Without ProjectJute 131.1 131.1 131.1 131.1 131.1 131.1

B. Benefit 2/(millions of takas) -

I. With ProjectIJCS (new) 131 395 794 1,319 1,382 1,433IJCS (old) 1,475 1,491 1,528 1,471 1,440 1,432Non-IJCS 2,349 1,747 1,330 1,302 12295

Total Jute 3,955 3,988 4,069 4,120 4,124 4,160Paddy (Aus) 0 0 0 0 0 0

II. Without ProjectIJCS (old) 1,475 1,475 1,475 1,475 1,475 1,475Non-IJCS 2,458 2,458 2,458 2,458 2,458 2,458

Total 3,933 3,933 3,933 3,933 3,933 3,933

1/ Includes value of by-products estimated at 3.8 kyats per maund of paddy.

2/ Rounded to nearest million.

July 12, 1977

ANNEX 12Table 8

BANGLADESH

JUTE PROJECT

Economic Analysis Alternative II - Production Cost and Incremental Working Capital

- - - - - - - - - - - - - - YEAR - - - - - - - - - - - - - - - -

1 2 3 4 5 6 onwards

A. Unit Production Costs(takas per acre)

I. With ProjectIJCS (new) 1,279 1,279 1,279 1,279 1,279 1,279IJCS (old) 1,150 1,279 1,279 1,279 1,279 1,279Non-IJCS 1,077 1,077 1,077 1,077 1,077 1,077Paddy (Aus) 1,050 1,050 1,050 1,050 1,050 1,050

II. Without ProjectIJCS (old) 1,150 1,150 1,150 1,150 1,150 1,150Non-IJCS 1,077 1,077 1,077 1,077 1,077 1,077

B. Production Costs(millions of takas)

I. With ProjectIJCS (new) 64 192 384 640 640 640IJCS (old) 575 640 640 640 640 640Non-IJCS 1,292 1.l85 1,023 808 808 808

Total Jute 1,931 2,017 2,047 2,088 2,088 2,088Paddy (Aus) 0 0 0 0 0 0

II. Without ProjectIJCS (old) 575 575 575 575 575 575Non-IJCS 1,346 1,346 1,346 1,346 1,346 1,346

Total Jute 1,921 1,921 1,921 1,921 1,921 1,921

C. Normalized Working Capital -/(mllions of takas)

I. With Project 2/Jute 794 829 841 858 858 858Aus Paddy 0 0 0 0 0 0

II. Without Project-/Jute 789 789 789 789 789 789

III. IncrementalJute 5 35 12 17 0 0Paddy 0 0 0 0 0 0

1/ Based on average value outstanding each year. Average is estimated using productioncosts and time lag between incurring of costs and realization of revenues (150 daysfor jute, 90 days for Aus paddy).

2/ Cumulative investment in working capital.

July 12, 1977

ANNEX 12Table 9

BANGLADESH

JUTE PROJECT

Sensitivity Analysis of Economic Rate of Return

Jute Extension Component

Alternative I Alternative II

Base case above 50% above 50%

- No benefit from the land released notfrom jute cultivation above 50% applicable (na)

- Reduction in incrementalyield of jute by: 15% above 50% 20%

35% 1/ 50% 0%54% 20% 0%

- Reduction in yield of paddy by: 40% 2/ above 50% na49% 3/ above 50% na

- Paddy price reduced by 49% 3/ above 50% na

- Paddy production cost increased by 98% 3/ above 50% na

- Jute price decline of 15% above 50% 20%

- Fertilizer price increased by 50% above 50% 42%

- Labor shadow price increased by 50% above 50% 14%

1/ A decline in incremental yield by 35% would bring the yield on all IJCS areato 4.5 bales/acre -- a level which has already been achieved on 0.5 millionacres.

2/ A decline in yield of HYV Aus paddy by 40% would equate the yield to that fromtraditional Aus paddy.

3/ A decline in price by 49% or increase in costs by 98% is equivalent to noprofit margin on paddy production.

July 12, 1977

ANNEX 12Table 10

BANGLADESH

J_rE PROJECT

Sensitivity Analysis of Economic Rate of Return

Jute Marketing Component

EconomicRate of Return

Base Case 50

Benefit decline by: 37% 3055% 20

Costs increased by: 58% 30122% 20

ANNEX 13

BANGLADESH

JUTE PROJECT

Schedule of Estimated Disbursements

IDA Fiscal Year Disbursement Cumulative Disbursemenand Quarter During Quarter at End of Quarter

1978

September 30December 31March 31June 30 0.1 0.1

1979

September 30 1.0 1.1December 31 1.0 2.1March 31 0.4 2.5June 30 1.0 3.5

1980

September 30 1.0 4.5December 31 1.0 5.5March 31 0.5 6.0June 30 1.5 7.5

1981

September 30 2.0 9.5December 31 2.0 11.5March 31 1.0 12.5June 30 1.5 14.0

1982

September 30 2.0 16.0December 31 2.0 18.0March 31 1.5 19.5June 30 1.5 21.0

July 15, 1977

ANNEX 14Page I

BANGLADESH

JUTE PROJECT

List of Documents and Tables Included in the Project File

Document 1 - Jute Production Trends

Table 1 - Raw Jute Production in BangladeshTable 2 - Relative Share in World Production of Raw JuteTable 3 - Relative Share in Production of Raw Jute from

Developing CountriesTable 4 - Jute and Rice Prices and Jute Acreage in Bangladesh

Chart WB 17098 Jute and Rice Prices and Jute Acreage in Bangladesh

Document 2 - IJCS Training and Inputs Services

Table 1 - Directorate of Agriculture (Jute) Training Program

Document 3 - Jute Marketing Costs

Table 1 - Farias and Bepari's Marketing CostsTable 2 - Monthly Average Prices of Raw Jute at Grower's LevelTable 3 - Cost of Marketing Jute by Katcha BalersTable 4 - Pucca Baling Cost

Document 4

Table 1 - Jute: Summary of Production Consumption and TradeTable 2 - Jute: Growth Rates of Production Consumption and Trade

Document 5 - Construction

Chart WB 17091 Plan for Jute Assistant House C.1 Sheet Wall and RoofChart WB 17094 Plan for Jute Extension Assistant House - Brick Wall

and Concrete RoofChart WB 17092 Attachment to Jute Extension Assistant HouseChart WB 17093 Plan of Typical Jute Store

Appendix 1 Terms of Reference of Consulting Firm for the BuildingProgram

BANGLADESHJUTE PROJECT

IMPLEMENTATION-SCHEDULE OF MAIN PROJECT ACTIVITIES

FY 1978 FY 1979 FY 1980 FY 1981 FY 1982

ITEM ACTIVITY PROJECT 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Project PreparationProf orma

Approval

Coordination EstablishmentCommittees

Revolving Fund Initial payment .

Head Quarters Recruitment_ _ ____ __Staff APpointment _ _ _ . .. _onutn

SelectionProject Advisors Appointment_

Zonal Staff Appointment_

Appointment

Unit Staff Recruintment - = _ __ __ _ _

TransportDesgn

and Office Ten uercha

Equipment D~Pequlifv ctr o

Implements Tendering

ConsultantioConstruction Selection

Designs___. __ _ _

| ~~~~~~~F or Materials l l X

1/ Recruitment of 100 Jute Extension Officers started in January 1977. World Bank-17424

BANGLADESH: JUTE PROJECT ORGANIZATION CHARTDirectorate of Agriculture to Channel Credit to Farmers and to

Conduct Marketing

SECRETARY FOR AGRICULTURE -_ _ PROJECT COORDINATION - SONALI BANK

COMMITTEE l HEADQUARTERS

SUPPORTING SERVICES

Directorate of Agriculture (Jute) Bangladesh Agricultural

Jute FarmDretoatersAriulur'Iut)Development CorporationJute Farmers l t - - - - - - - - - Headquarters Plant Protection Directorate

National Committee See Chart-WB No 17095 / Ministry of Jute

_____________________________________ ~~~~~~~~~~~~~~~~~Jute Purchasing Corporation

___________ _ / Jute Research Institute:~~/ I, Research Directoratel OA lIC 0 | Seed Directorate

0~~~~~~~~~~~~~~OA OFIC 20Jute Farmers' Asst. Director of Agriculture / I f

Zonal Committee Deputy Asst. Director of Agriculture F C - - - - - - - - - REGIONAL

SMS Plant SMS Cop / ZONAL COORDINATING

i | ~~~~~Jte Copoatlns | Protection production/extension ZONAL_ COOMMINATINGtoCorporations oco - '+* 1COMMITTEEl . | ~~~~~Traders,Mills |l/

UNIT OFFICE (500)

Jute Farmers' Ju e a BAC

Unit Committee Jute Extension Officer BRANCH

........ Jute SuppIY Officer .OFFI

Jute Store l

and Press

l and *ess. . JUTE EXTENSION ASSISTANT (2500)

JUTE I'' - -f / Control Li

JUTE FARMERS'ASSOCIATION (2500) Seice or Liaisond

…___________B Farmer Groups

About 400 Acres Jute

World Bank-17096

BANGLADESH: JUTE PROJECT ORGANIZATION CHART(Integrated Rural Development System to Channel Credit to Farmers Chart 3

Directorate of Agriculture to Conduct Jute Marketing)

SCRETARY PROJECT COORDINATING COMMITTEE AGRICULTUREINCOMTE

--- _------ ---------- n

Jute Farmers' INTEGRATED RURAL SONALI BANK

Nat,onal Committee |' J _ SERVICNG VECP HEN HEADQUARTERS

I /\I~/ \

JuteFarmers' ZONAL INTEGRATED RURAL

Jute Farmers' . _ _-_ . ZONAL OFFICES - -_ COORDINATING . DEVELOPMENT PROJ. EZonal Commttee COMMITTEE ] DISTRICT OFFICE OFFICE

I/ \/ Jute Saeles |

toCoporations/ ~~~~Traders,Mills

Jute FarmersI THANA CENTRALt - - UNIT OFFICE - - - - - - COOPERATIVE BRANCH

Unit Committee t ~~~~~~~~~~~~~~ASSOCIATION OFFICE

village Cooperativesaiud comprise Village Village Village Village

L One Jute Block Cooperative Cooperative Cooperative Cooperative Control

with Farmers Part of Pert of Part of Part of - Service or Liaison

organi.aed into Jute Block Jute Block Jute Block Jute Block ...... Credit8 groups J Sales

6 contact Farmers/Group Jt ae

Total 400-600 FarmersAbout 400 Acres Jute

Note: There would be some Theaes with mome than one Jute Unit. In those cases the Thueu Central Cooperative Associationmould service 5 jute blocks for each unis and may operate more than one Jute storage and baling center. World Bank-t 7337-

BANGLADESH: JUTE PROJECTDIRECTORATE OF AGRICULTURE (JUTE)HEADQUARTERS ORGANIZATION CHART

DIRECTOR

AdvisorsProject Management ADDITIONAL DIRECTORMarketing

Administration/Finance Unit Technical Unit Marketing Unit

Building ~~~~Extension SpecialistEngineer Plant Protection Specialist

Admin istration Agronomy Specialist Marketing OfficerOfficer Training Specialist

Senior EstablishmentAccountant Section

Accounts

Section Audit Section

WOrld Bank-17095

Bv.D 12 61RI

N 1A. LAt - 979

BANGLADESH

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