Report No. 1204-IVC FILE COPYAppraisal of a FourthOil Palm and Coconut Project Ivory Coast

March 2, 1977

Regional Projects DepartmentWestern Africa Regional Office

FOR OFFICIAL USE ONLY

Document of the Worid Bank

This document has a restricted distribution and may be 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

US$1 - CFAF 245CFAF 1 - US$o.004CFAF 1 million - US$4,444

WEIGHTS AND MEASURES

1 hectare (ha) = 2.47 acres1 kilogram (kg) = 2.2 lbs1 metric ton 2,204.6 lbs

ABBREVIATIONS

ARSO Autorite pour l'Amenagement de la Region du Sud-Ouest

BNDA Banque Nationale pour le Developpement de l'Agriculture(National Bank for Agricultural Development)

BSIE Budget Special d'Investissement et d'Equipement (TheDevelopment Budget)

CAA Caisse Autonome d'Amortissement (an Ivorian public insti-tution in charge of the servicing and amortization of IvoryCoast public debt)

CFAF Communaute Financiere Africaine Franc (the common currencyof the monetary union)

CSSPPA Caisse de Stabilisation et de Soutien des Prix des ProductionsAgricoles (Agricultural Price Stabilization Agency)

FER Fonds d'Extension et de Renouvellement pour le Developpementde la Culture du Palmier a Huile (an investment fund for therenovation and development of oil palms)

IRHO Institut de Recherches pour les Huiles et Oleagineux (FrenchAgricultural Oils Research Institute)

RMWA World Bank Regional Mission, West Africa

SODEPALM Societe Pour le Developpement et l'Exploitation du Palmier aHuile (Ivory Coast Government-owned Company specialized inoil palm and coconut development)

FISCAL YEAR

October 1 to September 30

FOR OFFICIAL USE ONLY

IVORY COAST

APPRAISAL OF FOURTH OIL PALM AND COCONUT PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ............................. i - vi

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

II. BACKGROUND .......................................... 2

A. General ........................................ 2

B. The Agricultural Sector ........................ 2

C. Institutions ................................... 3

D. Development Strategy ........................... 4

E. The Oil Palm and Coconut Sector .... ............ 5

F. Achievements under the previous Oil Palm andCoconut Projects ............................. 8

G. The Southwest Region ........................... 9

III. THE PROJECT ......................................... 9

A. The Project Area ............................... 9

B. Summary Project Description .................... 10

C. Detailed Features .............................. il

IV. ORGANIZATION AND MANAGEMENT ........... .. ............ 14

A. Project Directorate ............................ 14

B. Project Organization ........................... 15

C. Outgrower Selection, Size of Holdings and

Credit Arrangements .......................... 15

D. SODEPALM Finances .............................. 16

V. COST ESTIMATES AND FINANCING ........................ 17

A. Cost Estimates ................................. 17

B. Proposed Financing ............................. 19

C. Retroactive Financing .......................... 20

D. Procurement .................................... 20

E. Disbursement ................................... 21

F. Accounts and Audit ............................. 21

This staff report is based on the findings of a Bank mission, comprising

Messrs. G. Losson, R. Simsolo and T. Winston, which visited the Ivory

Coast in January 1976.

This document hs a restricted distribution nd may be used by rmcipients only in the performanceof their omcial duties. Its contents may not otherwise be disclosed without Worid Bank authorization.

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Page No.

VI. YIELDS AND OUTPUT, MARKETS AND PRICES ............... 22

A. Yields and Output ...... ........................ 22B. Processing .............. 22C. Markets and Prices ............................. 23

VII. FINANCIAL BENEFITS AND OUTLOOK ................... ... 23

A. Project Cash Flow .............................. 23B. Outgrowers Benefits ............................ 24

VIII. ECONOMIC BENEFITS AND JUSTIFICATION .... ............. 25

IX. AGREEMENTS REACHED AND RECOMMENDATION ............... 26

ANNEXES

I. Progress of Agricultural Projects Financed by the Bank

II. Evolution of the SODEPALM Croup Finances

Table 1. SODEPALM Group Balance Sheet at September 30, 1975Table 2. SODEPALM - Cash Flow of the Oil Palm and Coconut Sectors

III. Technical Features

Fourth Oil Palm and Coconut Project:

Appendix 1. Development of the Southwest RegionAppendix 2. Kaincope DiseaseAttachment 1. IRHO Note On Kaincope DiseaseAppendix 3. Problems of Land Tenure in West-AfricaTable 1. Project Phasing and Personnel RequirementsTable 2. Projected YieldsTable 3. Projections for Oil Palm ffb and KernelsTable 4. Projected Yields and Yearly Production of Coconuts,

Copra and Coconut CharcoalTable 5. Ivory Coast Palm Oil and Kernels Production - 1970/1985Table 6. Southwest Plantations: Structure and Management Chart

IV. The Outgrowers Program

Part 1. Oil Palm OutgrowersPart 2. Coconut OutgrowersTable 1. Oil Palm Outgrowers - Cash Flow and Income ProjectionTable 2. Coconut Outgrowers - Cash Flow and Income Projection

V. Industrial Investments and Processing Costs

Table 1. Total Processing Costs of Palm Oil and Copra - 1976to 1980

Table 2. Breakdown of Unit Processing Costs of Copra andCoconut Charcoal

VI. Project Costs

Table 1. Recapitulation of Project costsTable 2. Land Preparation Costs - Coconut EstatesTable 3. Land Preparation Costs - Oil Palm EstatesTable 4. Estates Operating Costs - SummaryTable 5. Estates Operating Costs - Staff Costs GLIKETable 6. Estates Operating Costs - Staff Costs NEROTable 7. Estates Operating Costs - Staff Costs IBOKETable 8. Estates Operating Costs - Staff Costs DEWAKETable 9. Investments - SummaryTable 10. Investments - VehiclesTable 11. Investments - Building Program and Construction CostsTable 12. Number of Field Workers and Housing Units - Coconut

EstatesTable 13. Number of Field Workers and Housing Units - Oil Palm

EstatesTable 14. Investments - Equipment and InstallationsTable 15. Outgrowers Program - Detailed CostsTable 16. Outgrowers Program - Extension Service and InvestmentsTable 17. Southwest Regional Management Operating Costs

VII. Project Cash Flow

Table 1. Cash FlowTable 2. Project Costs, Maintenance, and Additional InvestmentsTable 3. Value of Palm Oil in Current PricesTable 4. Value of Palm Oil Kernels in Current PricesTable 5. Value of Copra in Current PricesTable 6. Projected Price of Coconut Charcoal: BreakdownTable 7. Projected Value of Coconut Charcoal Exports in Current

Terms

VIII. Estimated Schedule of Disbursements

IX. Market Outlook and Prices

Table 1. Prices for Selected Fats and OilsTable 2. World Production of Selected Oilseeds, Fats and OilsTable 3. World Exports of Selected Oilseeds, Fats and Oils

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X. Economic Rate of Return Calculation

Table 1. Projected Annual ProductionTable 2. Projected Palm Oil Prices in 1976

Constant TermsTable 3. Projected Oil Palm Kernel Prices in 1976 Constant Terms

Table 4. Projected Copra Prices in 1976 Constant TermsTable 5. Coconut Estates - Economic Benefits and Costs Streams

Table 6. Oil Palm Estates - Economic Benefits and Costs Streams

Table 7. Oil Palm Outgrowers - Economic Benefits and Cost StreamsTable 8. Coconut Outgrowers - Economic Benefits and Cost StreamsTable 9. Overall Economic Benefits and Cost Streams for Project

XI. Monitoring Requirements

Table 1. Reporting requirements - Coconut SectorTable 2. Reporting requirements - Oil Palm Sector

MAPS

IBRD 12157 Southwest Project AreaIBRD 12185 SODEPALM Oil Palm East of Sassandra

IVORi COAST

FOURTH OIL PALM AMD COCONUT PROJECT

SUMMARY AND CONCLUSIONS

Background

i. The Government of the Ivory Coast has asked the Bank to helpfinance an oil palm and coconut develcpment program in the Southwest Regionof the country. The development of this largely unpopulated area beganwith the construction of basic infrastructure, exploitation of the tropicalforest, and now agricultural plantations. Rubber, Oil Palm and Coconut arethe only possible opportunities to develop agriculture in that region, withthe advantage of diversifying agriculture. Through investments in palmplantations the Government expects to replicate the sector's success in thesoutheast and to make a valuable contribution to the economic progress of theregion. The proposed project was prepared by SODEPALM, which from its opera-tion in the southeast of the country has gained large experience in the oilpalm and coconut sector.

The Project Area and Summary Description

ii. The Southwest Region, where the proposed project would be located,lies between the Sassandra River and the border with Liberia, with a northernlimit along the axis Guiglo/Assia. The region consists mostly of forest andconditions are suitable for perennial tree crops. The project is part of afour-year planting program begun in late 1975 and would cover a three-yearslice beginning with land preparation undertaken in 1975 for plantings com-pleted after mid-1976. It would consist of the:

(a) preparation of about 18,500 ha for the creation of oil palmand coconut estates;

(b) establishing of about 8,000 ha of oil palm and 7,500 ha ofcoconut estates;

(c) providing infrastructure for both estates, includingfeeder roads, housing, social, medical and administrativebuildings, store sheds, vehicles and equipment;

(d) establishment of an outgrowers program covering about 2,000 hacoconut and 500 ha of oil palm plantations on land cleared bythe farmers;

(e) provision to farmers of loans, extension services and infra-structure; and

(f) provisions for a Project Directorate, including offices,housing vehicles, equipment and operating funds.

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The project would exclude the processing facilities, which will be constructedduring the four-year program and are expected to be financed by the Government.

iii. The initial estate plantations would provide the necessary physicaland social infrastructure to facilitate the establishment of outgrowers plant-ings. Estate planting targets would be flexible to allow a further expansionof the outgrower component if feasible. This would affect mainly the coconutplantings under which outgorwers are expected to plant a minimum of 2,000 ha,but possibly as much as 3,000 ha during the project period. During thefour-year program the aim would be an outgrower component of 30% of the entireprogram. In the long run the program is expected to be comparable with thatin the Southeast, where small farmers plantings represent about 40% of thetotal.

Project Execution

iv. The project would be executed by SODEPALM. The civil works depart-ment of SODEPALM would carry out the clearing and land preparation for theestate plantations, since it owns the necessary equipment and has demonstratedits effectiveness in this field. The Project Directorate, currently locatedin Abidjan, would be established in the Southwest Region as soon as requiredin consultation with the Bank. The incumbent Project Manager is qualified tohold this important post.

Institutions

v. SODEPALM was created in 1963 as a state enterprise to carry out theGovernment's programs for the development of the oil palm and coconut sector.When the first plantings were near maturity and substantial processing invest-ments were required, the Government decided on a corporate change involvingprivate investors. Thus two new companies emerged in 1969, Palmindustrie,responsible for the industrial complex, and Palmivoire, a management company,both of which had foreign and Ivorian interests. The three companies werelinked by a contract of "Association de participation" and became known asthe SODEPALM Group.

vi. Government decided in 1974 to make SODEPALM again responsible forall operations and to buy out private interests in Palmindustrie and Palmivoire,representing about 15% of the total SODEPALM group equity. A satisfactorycompensation formula was agreed to in 1976. Palmivoire recently was dissolved,while Palmindustrie continues as a company owning industrial, transport, andprocessing facilities, all rented to SODEPALM. Legal arrangements are nowcompleted and are satisfactory.

vii. By a recent decree, the Government has transferred SODEPALM's mar-keting responsibilities to the country's agricultural price stabilization fund(CSSPPA). The new arrangements are satisfactory and should insure adequatefinancing of SODEPALM/Palmindustrie activites: CSSPPAA would finance thefunctioning and the development of the oil palm and coconut sectors with the

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revenues from these sectors. Government, through the BSIE, would interveneonly if the resources from the palm sectors were not sufficient to finance newinvestments. The prices for SODEPALM's produce will be established in advanceof a crop year on the basis of SODEPALM/Palmindustrie budgets approved bytheir respective Boards and the responsible ministries. They would includeoperating costs, provisions for current replacement of assets, and debt serv-ice. In addition, CSSPPA ahould also provide the balance of oil palm and coco-nut sector resources necessary to finance SODEPALM/Palmindustrie investmentprograms also approved by their respective Boards and responsible ministries.The basis and initial level of payment decided by Government for palm oil forthe 1976/77 agricultural campaign have been analysed and found satisfactory.Under the same decree, CSSPPA has to deposit funds into an account kept by CAAfor replacement of SODEPALM's assets with a life of more than five years.Amounts paid into this account will be available to SODEPALM upon decision byits Board and the responsible Ministries that such replacements are required.The Government would ensure to make available to SODEPALM, either throughCSSPPA or other resources, any funds necessary to carry out ongoing and futureinvestment programs of auxiliary activities entrusted to SODEPALM.

viii. These changes in the corporate structure and marketing arrangementswere exhaustively discussed with the various co-lenders, including the Bank,over the past two years. The co-lenders principle concern was to ensurethat the operational efficiency of SODEPALM, which had traditionally reacheda high standard, was not impaired. They also sought to ensure that the fi-nancial integrity of the enterprise would remain sound, thereby enablingSODEPALM both to continue to meet its outstanding debt servicing obligationsand continue to be considered a suitable borrower for future loans. Althoughthe Bank and the other co-lenders had initial reservations about the newarrangements, they now feel that the new measures, as finalized by a recentPresidential decree, will allow SODEPALM to meet the criteria of a viableborrower. The necessary changes in the legal documents governing the Bank'sexisting relationship with SODEPALM have been incorporated in the proposedAgreement Amending Previous Agreements which was agreed upon in substancewith the other co-lenders.

Labor

ix. The project labor requirements would be relatively modest, reachinga peak of about 1,600 field workers in Year 3. The initial recruitment oflabor from within the area has exceeded expectations and about 500 workerswere already employed early in 1976; this bodes well for the project.However, since the region is thinly populated, and since the project would becompeting for labor with other plantations in the region, it may not bepossible to meet all requirements locally. As in the case of most estatedevelopments in the Ivory Coast, field workers may have to be attracted fromneighboring countries. Recruiting and holding workers have become moredifficult in recent years, and the estates would therefore have housing andsocial facilities of a standard that has been adopted for the more recentlybuilt estates elsewhere in the country. The Government would take appropriatemeasures to ensure that an adequate number of field workers are available tothe project in time.

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Cost Estimates and Financing

x. Project costs during the three-year investment period are estimatedat US$36.2 million equivalent net of taxes (US$40.6 million including taxes).The foreign exchange component would be US$25.3 million or 62% of total costs.Cost estimates are based on January 1976 prices. Contingencies amount to 22%of the total net project costs. It is proposed that a Bank loan ofUS$20 million be made to SODEPALM for a term of 20 years, including a four-and-a-half year grace period. The loan would finance 55% of net project costsand would cover about 88% of the foreign exchange costs incurred during thethree year project period. However, for disbursement purposes, the Bank Loanwould finance 100% of the foreign exchange cost during the last two projectyears (see para xii below). The Government intends to authorize the BanqueNationale pour le Developpement de l'Agriculture (BNDA) to assist in financ-ing part of the project through a loan of US$2.0 million equivalent toSODEPALM. The balance of project costs (US$18.6 million) would be financedby the Government through the Special Budget for Investments and Equipment(BSIE).

xi. Farmer loans to outgrowers would be disbursed by SODEPALM. As underthe three previous Oil Palm Projects, outgrowers would receive nominallyinterest-free credits from SODEPALM. However, production prices would befixed so as to enable Government to earn a reasonable financial return on itscontribution. On the basis of the price assumptions used in the project cashflow, the return to Government from the proposed investment in the outgrowerprogram is estimated at about 18%.

Retroactive Financing

xii. Government would finance SODEPALM's costs incurred in 1976 (aboutUS$10 million), mainly land-clearing for the first plantation year. However,the Government has asked that expenditures incurred on the project prior tothe signature of the Bank loan and after January 1, 1977 be financed retro-actively. Therefore, retroactive financing of up to US$500,000 for expendi-tures incurred after January 1, 1977, covering costs for buildings, equip-ment, vehicles, extension services and farmers credits would be included inthe project.

Procurement

xiii. All contracts of US$100,000 equivalent or more for the procurementof vehicles and equipment (totalling about US$3.1 million) would be madethrough international competitive bidding in accordance with Bank guidelines.Contracts for goods and services costing less than $100,000 equivalent maybe procured under local competitive bidding procedures acceptable to theBank, provided however that the aggregate of the cost of all goods and ser-vices so procured shall not exceed US$1.0 million equivalent. Contractsfor buildings with a total value of US$5.2 million, involving several opera-tions scattered across the project area, are not large enough to attractforeign interest and would be awarded on the basis of competitive biddingadvertised locally and in accordance with local procedures which are accept-able to the Bank. Civil works consisting of land clearing and estate feeder

v

roads (totaling US$19.1 million), and land development of US$7.8 million wouldbe carried out by SODEPALIM under force account and reimbursed against comple-tion certificates; SODEPALM has the equipment needed for this work and hasdemonstrated that it can conduct it more efficiently and at lower cost thanother contractors. The remaining project costs (US$5.4 million) would bemainly for staff, labor, farmers' loans and operating expenses.

xiv. The proposal that SODEPALM carry out land clearing by force accountstems from excessively high tenders received from international bidders in1971 for the first SODEPALM project (Ln. 611-IVC). Under the second andthird projects (Lns. 760 and 1036-IVC), when force account was recommended,SODEPALM cleared about 15,000 ha at about US$500 per ha, close to halfthe international bids received in 1971. For the proposed project, SODEPALM1anticipates that their costs will be below those offered in 1971. SODEPALM has

an inherent advantage compared with international bidders inasmuch as it hasspecialized equipment available on location, clears land under other Governmentmandates, and has extensive experience in this field. Furthermore, landclearing for rubber estates managed by private enterprise continues to beexecuted under force account.

Disbursements

xv. The Bank loan would be disbursed over two years and cover 75% of thecosts for land clearing including construction of access roads (US$7.5 million).The land clearing cost would not exceed fixed maxima per ha (CFAF 203,000 foroil palm and CFAF 192,000 for coconut estates, in constant 1976 prices). Theloan would also cover 60% of agricultural costs, i.e., labor and plantingmaterials, of oil palm, and coconut estates in years two and three (US$3.0million) 65% of total expenditures or 100% of the foreign exchange costs ofvehicles, buildings and related equipment of the oil palm and coconut estates(US$3.5 million); 80% of costs of the outgrower program including loans inkind and in cash (US$1.1 million) and of the Project Directorate (US$0.4million); and US$4.5 million would be unallocated.

14arketing and Prices

xvi. It is expected that 60% of the palm oil (about 20,000 tons), allthe palm kernels (about 7,500 tons), and the bulk of the copra and coconutcharcoal produced under the project, would be exported. Palm oil, when proj-ect plantings reach full maturity, would represent less than 1% of antici-pated world trade. Copra production would represent about 1.6% of the ex-pected world trade at that time. Ivory Coast palm oil enjoys an excellent.reputation for its low acid content and is sold at a premium above worldprices.

Economic Benefits and Justification

xvii. Primary benefits from the project plantings would be the productionof palm oil and kernels, copra and coconut charcoal. Net annual foreignexchange earnings from the project are expected to reach about US$40.0million by 1986.

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xi ii. In addition, the project would create social and physical infra-structure for the settlement of new farmers in the virtually undevelopedEiuthwest Region. It would also create about 1,600 fulltime additional jobsf r estate-laborers, and considerably increase the incomes of about 600 localf armers.

Yix. In the economic analysis, output values are based on expected worldFrices, labor cost at estimated efficiency wages and non-labor costs havetaen valued at market cost net of taxes (in 1975 terms). The resultingEconomic rates of return are 17% fore the whole project, 16.5% for boththe oil palm and coconut estates and 30% and 23% for the oil palm and coconutcutgrowers respectively. If costs and benefits had been adjusted for tariffand trade distortions with a conversion factor, the "efficiency" economic ratecf return would have been 20% for the whole project. All rates of return havelow sensitivities to changes in costs or benefits. The higher rates of returnEstimated for the outgrowers are substantially the result of attributing thecost of certain central infrastructure and services entirely to the estates.Efforts would be made during project implementation to maximize the size ofthe outgrower components if outgrower achievements are satisfactory. The areaxatios of the four project components have, however, been determined onIroject administration and labor availabilities, on the basis of experienceeained from other tree crop projects in the Ivory Coast.

Eisks

>x. IRHO, which would provide estates and outgrowers with oil palm andcoconut hybrid seeds, has studied the Kaincope disease, a lethal "yellowing.ilt", that attacks coconut varieties throughout West African producer coun-tries and could potentially spread into the project area. Although the dangercannot be ignored, IRHO researchers feel the disease resistance in hybrid'arieties is sufficient to minimize the risk so as to be far outweighed bythe potential project benefits.

2xi. It is possible that the project could face a manpower constraint.Iowever, its labor requirements are modest and the Government would take.ppropriate measures to ensure adequate availability of field workers. If<espite these assurances the Borrower were unable to recruit enough workers,lhe planting program would have to be adjusted accordingly.

::xii. Deforestation in the Southwest Region where other developmentt;chemes are going on or are planned, could have a negative ecological impactif not phased properly. The Government therefore agreed to submit to the',ank within one year of loan signature a land-use planning scheme.

P'ecommendation

::xiii. Subject to the assurances and conditions outlined in Chapter IX,-:he project is suitable for a Bank loan of US$20.0 million, for a term of"0 years including 4 1/2 years of grace.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

I. INTRODUCTION

1.01 The Government of the Ivory Coast has asked the Bank to help fi-nance an oil palm and coconut development prograia in the southwest region.The objective is to continue the phased development of this largely unpopu-lated region, namely: Phase 1 - large infrastructural investments in portsand roads; Phase 2 - exploitation and the forestry resource; and now thelogical Phase 3 - agricultural development. Through investment in palm plant-ations, the Government hopes to replicate the very successful development ofthis sector in the southeast, and thus create a pole of development necessaryto carry forward the economic progression of the region.

1.02 The Bank appraised a four-year planting program covering 22,000 haof oil palm/coconuts over four years. This is a "Programme d'Urgence" sanction-ed by the Planning Ministry and authorized by a "Loi Programme" decree ofDecember 1974. The fourth year of plantings was excluded to achieve a balancebetween available funds and a meaningful participation by the Bank in theproject. Thus, the project would be limited to three years of planting,covering 15,500 ha of estates and 2,500 ha of outgrower plots. In additionGovernment plans to carry out the fourth year of plantation, and establishprocessing facilities both for oil palm and coconut products when trees cometo maturity. Government would undertake the obligation to maintain the areaplanted tnder this project and to provide for processing facilities.

1.03 The Bank has made three previous lending operations for an oil palm/coconut development program east of the Sassandra River, under the responsib-ility of the SODEPALM group of companies. This involves some 100,000 ha ofpalm trees and substantial processing and commercial activity, and Governmenthas agreed that the southwest program should have a separate Project Director-ate. However, to take advantage of SODEPALM's expertise and available re-sources, Government instructed this company to prepare and begin executingthe Southwest Program with its own prefinance. This appraisal report is basedon the findings of a Bank mission which visited the Ivory Coast in January,1976, composed of Messrs. G. Losson, R. Simsolo, and T. Winston.

1.04 The Bank has made 10 loans for agricultural development in the IvoryCoast: three totalling US$17.1 million in 1969 for oil palm and coconut devel-opment (Loans 611, 612 and 613-IVC); a loan of US$7.5 million in 1970 forsmallholder cocoa production (Loan 686-IVC); two loans totalling US$7 mil-lion in 1971 for oil palm and coconut (Loans 759 and 760; IVC); a loan ofUS$8.4 million ui 1973 for a rubber project (Loan 938-IVC); and a loan ofUS$2.6 million in 1974 for oil palm smallholder and estate development (Loan1036-IVC). A second cocoa smallholder project of US$20.0 million (Loan1069-IVC) and a cotton areas rural development project of US$31.0 million(Loan 1077-IVC) were made in 1974 and 1975, respectively. Notwithstandingsome initial difficulties, all these projects have been completed or are

progressing satisfactorily - with one exception, that of the Grand-Bereby

Rubber Project (Loan 938-IVC), where progress has been seriously hamperedby labor shortages and increasing costs (see President's Memo to Board

R.76-240 of September 29, 1976).

II. BACKGROUND

A. General

22.01 The Ivory Coast covers about 324,000 km . Tropical rain foreststretches across the southern half of the country, in a belt reaching about200 km inland from the Atlantic Ocean. Further north, the forest is grad-ually replaced by savannah, which covers the other half of the country.

2.02 Population, estimated at 6.7 million (mid-1975), has been growingat about 3.8% annually, including 1.3% from immigration. GDP growth hasbeen high, averaging 7% a year in real terms over the past decade. Thecountry's economy, and its rapid progress, have been based on the productionof coffee and cocoa, palm oil, bananas and pineapples, on the exploitation

of the forest resources, and an expanding industry (which now accounts for12% of GDP). All these activities are mainly in the south, where the capitaland industrial center, Abidjan, is located. The northern savannah, with half

of the country's area and 35% of its population, has a less favorable resourceendowment, and livelihoods there depend on cotton, food production, and some

livestock. Overall, per capita income is currently about US$500.

2.03 Rural per capita incomes average about US$130, but regional dis-parities are large. Average income exceeds US$220 in the southeast; dropsto about US$110 in the center, where production patterns of the forest andsavannah regions overlap; falls below US$70 in the north; and, in the south-west it is estimated to be about US$80-90. These income disparities accountin part for rural-urban migration and migration within the rural areas, fromthe savannah to the forest zone. Over the next decade, population is proj-

ected to grow in cities at around 8.5% per annum, in the forest zone at about4%, and to decline in the savannah by about 0.5% per year.

B. The Agricultural Sector

2.04 Agriculture and forestry account for about 90% of the country'sexports and 25% of its GDP. They are the mainspring of the country's growthand will remain so for many years to come. Abundant land, good labor supplyand generally favorable world markets for its products have assured rapid

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agricultural growth in the Ivory Coast. About 70% of the population dependson agriculture and forestry. The per capita income in the sector, in 1975,was US$150. The estimated value of agricultural production in 1974/75 wasUS$500 million, of which industrial crops accounted for about US$278 million,food crops US$191 million, and livestock US$31 million. From 1970 through1974, annual exports averaged US$90 million of which the three main commodi-ties -- coffee (27%) timber (26%) and cocoa (22%) -- accounted for about 75%.

2.05 Until recently, efforts to improve agricultural productivity havebeen focused on individual export crops. Promotion of these crops by special-ized, autonomous public companies has been quite successful. Food crop pro-duction did not generally benefit from this intensive promotional effort but,responding to market indicators, made substantial progress. In the early1970's, the Government turned its attention to the interrelated problems ofrural poverty and regional income disparities. It has undertaken majorprograms for cotton, rice, and sugar, and additional programs of oil palmas part of its plan for regional development. Many of these programs aredesigned to include food crops in the same areas where cash crops are devel-oped. An example is the important program in cotton intermingled with foodcrops designed for the Savannah region which was started in 1974 with Bankassistance.

C. Institutions

2.06 Overall development planning is in the hands of the PlanningMinistry while detailed agricultural development programs are the responsi-bility of the Ministries of Agriculture and of Livestock. Execution ofthese programs is generally entrusted to autonomous agencies set up by theGovernment to promote one or several crops. The principal agencies areSATMACI (cocoa and coffee), SOCAICI (rubber), SODEFEL (fruit and vegetables),SODERIZ (rice, mainly swamp and irrigated), CIDT (cotton and food crops), andSODEPALM (oil palm and coconut). For a more detailed description of SODEPALM,see Section E (Oil Palm and Coconut Sector).

2.07 The Caisse de Stabilisation et de Soutien des Prix des ProductionsAgricoles (CSSPPA) is responsible for carrying out Government agriculturalprice support policies. It supports producer prices for cotton, cocoaand coffee in a conventional manner, paying a guaranteed minimum price fixedannually, selling the commodities on the world market, and absorbing profitsor losses on its operations. CSSPPA surpluses have partly been used for newinvestments, mainly in the agricultural sector. For CSSPPA involvement inthe oil palm and coconut sector, see Section E.

2.08 Fonds d'Extension et de Renouvellement (FER) was set up in conjunc-tion with the oil palm development program at the request of the EuropeanDevelopment Fund (FED). Its initial objective was to finance modern housingfor oil palm estate workers and to assist in financing the development of

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outgrowers' oil palm production. Its main source of revenue consists oftransfers from SODEPALM, per fresh fruit bunches produced on the oil palmestate, as a form of repayment of a FED grant to Government. FER will con-tinue to play an important role in the financing of future outgrowers' plant-ations.

2.09 Agricultural Research. Research on individual crops is carried outby specialized institutes under Government supervision. The institutes deal-ing with coffee and cocoa (IFCC), oil crops (IRHO) and cotton (IRCT) haveachieved excellent results, in close coordination with the correspondingdevelopment agencies.

2.10 The Banque Nationale pour le Developpement Agricole (BNDA), themain source of agricultural credit, has so far operated through the auto-nomous development agencies (para 2.06), which handle credit distribution andrecovery. BNDA has used for these purposes its own equity and a line ofrediscount with the Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO).BNDA is active in establishing branches in the rural areas with the purpose ofdealing directly with farmers and farmers' groups. The Bank is examining thefeasibility of helping BNDA achieve this goal, possibly through an RDF project.

2.11 Two autonomous regional organizations, the "Autorite pour l'Amenage-ment de la Valle du Bandama" (AVB) and the "Autorite pour l'Amenagement de laRegion du Sud-Ouest" (ARSO), have been created mainly to resettle farmers dis-placed by the Kossou Lake and to develop the southwest, respectively. Bothagencies are expected to have an important impact on development planning intheir respective regions.

D. Development Strategy

2.12 The Government's objective is to maintain the high real rate ofgrowth in the economy which has averaged about 7% per annum in the lastdecade (para 2.02). Agriculture is given high priority because the economyis very dependent on foreign exchange, as well as on a few major export com-modities (para 2.02), and food production has not kept pace with the growingdemands resulting from urbanization. Within agriculture, Government'sdevelopment objectives are to: (a) increase both the productivity and theacreage of export crops so as to increase foreign exchange earnings andmaintain their competitive position in export markets; (b) diversify outputof export crops; (c) increase production of food crops, particularly of thosefor which demand for imports have risen rapidly; and (d) scatter its differentprograms along regional lines so as to raise incomes and living standards inthe poorer parts of the country and reduce regional income disparities. Toattain these objectives, Government strategy consists of: (a) implementingprojects to increase cocoa and coffee output and productivity, such as thesecond cocoa project approved by the Bank in 1975 (para 2.05); (b) adoptingmeasures to improve forest reserves management; (c) implementing regionwiderural development projects in the poorer parts of the country; and (d) execu-ting diversification projects such as oil palm, rubber, sugar, and rice.

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E. The Oil Palm and Coconut Sector

Oil Palm Development

2.13 In the early 1960's, Government initiated an oil palm developmentprogram concentrated in the southeast of the country. The SODEPALM Group wascreated in 1963 to carry it out. The program was supported by the EuropeanDevelopment Fund (FED), the European Investment Bank (BEI), the Caisse Centralede Cooperation Economique (CCCE) and the Bank (Loans 611, 612, 613, 759, 760,and 1036-IVC). The country presently has about 81,000 ha of oil palm planta-tions of which about 71,000 ha have been planted under the program. Annualproduction of palm oil increased from 52,000 tons in 1969 to 162,000 tons in1975; exports grew from 2,000 tons te 108,200 tons in the same period. By1985 the Ivory Coast is expected to produce about 325,000 tons of palm oil peryear, exporting about two-thirds which would account for about 4% of totalworld trade in palm oil.

2.14 For both its oil palm and coconut programs, the Government has useda system whereby industrial estates, including processing facilities, were setup and then were supplemented by outgrower plantings. The industrial estatesprovided the outgrowers with the necessary infrastructure and services essen-tial for efficient production. Under this concept, nine development districtshave been established east of the Sassandra River, each containing a clusterof estate plantings, accounting for about 60% of the total, with outgrowersaccounting for the balance, and a palm oil mill. The Government plans ulti-mately to achieve the same mix with its development scheme in the Southwestregion.

Coconut Development

2.15 Since 1969, coconut development has been carried out simultaneouslywith the oil palm program, and with financial assistance from external sources(para 2.13). SODEPALM is carrying out a 20,000 ha coconut program in linewith the schedule envisaged during Bank appraisals in 1969 and 1971. Projectplantings would substantially exhaust the coconut potential of the zone eastof the Sassandra River. In the beginning, difficulties were met in implement-ing the outgrower program; but they have been largely overcome through pro-viding more incentives to farmers. Establishment of the coconut estates issatisfactory, with investment costs generally close to appraisal estimates.Production began on a small scale in 1974 (660 ha), and 130,000 tons of copraequivalent are expected for 1985, a negligible percentage of world coconuttrade.

Institutions Involved in the Sector

2.16 SODEPALM (Societe pour le Developpement et l'Exploitation du Palmiera Huile) was created in 1963 as a statutory corporation (Societe d'Etat)to carry out Government's plans for development of the oil palm and coconutsector. It was wholly-owned by Government and its original capital was CFAF

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50 million. During its first three years, SODEPALM4 was solely engaged in thedevelopment of oil palm and coconut plantations, of both its own estates andthe related outgrower components.

2.17 In 1966, when the first plantings were near maturity and substan-tial processing investments were required, Government decided on a corporatechange which had three goals: (i) to involve private investors in theventure; (ii) to set up a separate entity responsible for processing and foracquiring expertise in that field; and, (iii) to make the operation moreprofit conscious. Thus in 1969 two new companies were created and joined toSODEPALM: PALMINDUSTRIE, an industrial component, and PALMIVOIRE, a managementcomponent. Private investment was brought in by the sale of shares in thetwo new companies, both to foreign and Ivorian companies, and to individuals.

2.18 SODEPALM remained sole owner of all estate plantations, but en-trusted PALMIVOIRE with their management; PALMINDUSTRIE became the sole ownerof all the oil palm mills and other industrial installations, but entrustedPALMIVOIRE with their management; PALMIVOIRE was responsible for providingthe personnel to satisfactorily carry out its mandates. The interconnectiontook the form of a contract, called an "Association in Participation".SODEPALM's outgrower component, both coconut and oil palm, remained outsidethe Participation as a responsibility of SODEPALM alone. A formula wasdevised for the allocation of profits. PALMIVOIRE received a fixed manage-ment fee from the two other companies, prior to any distribution, as wellas a small percentage of such profits.

2.19 The capital structure of the companies was as follows in 1976:

PALMIVOIRE PALMINDUSTRIE SODEPALMCFAF million

I. Ivory Coast Government 26.8 (40%) 2,430 (72.4%) 400 (100%)

II. Private Companies andPrivate BankingInterests 26.8 (40%) 620 (18.4%) -

III. Ivorian Private Groups(mainly SONAFI) 13.6 (20%) 310 (9.2%) -

Total in CFAF million 67.2 (100%) 3,360 (100%) 400 (100%)

2.20 At the same time Government involved CSSPPA (Caisse de Stabilisationet de Soutien des Prix des Productions Agricoles) in the oil palm sector.CSSPPA applied a unique "Revenue - Stabilization" formula that was in forceuntil 1975 and had the purpose of levelling-off price fluctuations from oneyear to another, without guaranteeing any minimum price.

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2.21 The group of companies was quite successful. By September 1975,the date of their latest audited balance sheet, achieved investments totalledCFAF 46.4 billion (US$189 million). Finance came from equity (includinggrants and subsidies); 15%; self-generated funds (profits and amortizationfunds): 32%; and, long- and medium-term loans: 53%. Since the organizationof the Group, it is estimated that Government received from this group ofcompanies, through profit, taxes and dividends, approximately CFAF 10 billion(US$40.8 million); and through CSSPPA (para 2.20), another CFAF 10 billion.

2.22 In its purview of this experience, Government arrived at the viewthat the role of private interests -- both their capital and technologicalparticipation -- had been negligible. Rather, the achievements in the oilpalm sector were judged to be due to SODEPALM's efficient operation, aidedby the research work done by IRHO before and after the creation of SODEPALMand high level of world prices.

2.23 To strengthen its control over the sector, the Government decided,in 1974, to make SODEPALI again responsible for all the group's operations.PA2IIVOIRE has been dissolved and private shares bought out by the Govern-ment on negotiated terms which were considered satisfactory by the variousco-lenders involved in SODEPALM's operations. Private interests in PALMINDUSTRIEwere also bought out but the company now 100% Government-owned will continueowning industrial and processing facilities which will be rented to SODEPALM.

2.24 In parallel with the corporate changes, the Government decidedto transfer SODEPALM's marketing responsibilities to the stabilization fund(CSSPPA). Under the new arrangement all revenues accruing to CSSPPA fromthe oil palm and coconut sectors, will be earmarked for the operating andexpansion of these subsectors, including any ancillary activities thatSODEPALM may carry out. The CSSPPA will maintain a special account whichwill be credited with the proceeds from the oil palm and coconut sector.The price paid by CSSPPA for SODEPALM's produce will be established in advanceof a crop year and will cover the operating costs including depreciation forthe replacement of assets of less than five years' life, and the debt servicewhich would be guaranteed by the Government, regardless of production andworld market prices. These latter amounts would be paid by CSSPPA to SODEPALMtwice per year so as to allow SODEPALM to meet its annual debt service obli-gation operating cost would be paid at the time of the delivery of oil toCSSPPA. The price will also include a quality incentive component based onthe difference between the actual and the price of standard quality. Depre-ciation of assets of more than five years' life will be credited by CSSPA toan amortization account held by the CAA and placed at the disposal of SODEPALM/Palmindustrie upon decisions taken by their respective Boards and responsibleMinistries that such funds are required for capital expenditures.

2.25 These changes in the corporate structure and marketing arrange-ments were exhaustively discussed with the various co-lenders, includingthe Bank, over the past two years. The co-lenders principle concern was toensure that the operational efficiency of SODEPALI, which had traditionallyreached a high standard, was not impaired. They also sought to ensure thatthe financial integrity of the enterprise would remain sound, thereby enabl-ing SODEPALM both to continue to meet its outstanding debt servicing obliga-tions and continue to be considered a suitable borrower for future loans.

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Although the Bank and the other co-lenders had initial reservations aboutthe new arrangements, they now feel that the new measures, as finalized bya recent Presidential decree, will allow SODEPALM to meet the criteria of aviable borrower. The necessary changes in the legal documents governing theBank's existing relationship with SODEPALM have been incorporated in a pro-posed Agreement Amending Previous Agreements which was agreed upon in sub-stance with the other co-lenders. Conditions of effectiveness would bethat (i) the decree is published and entered into effect; and (ii) Govern-ment, SODEPALM and Palmindustrie have ratified the agreement amending pre-vious loan agreements.

2.26 The prices set for the 1976/77 campaign are expected to be adequateto maintain the SODEPALM group financing: they are set at CFAF 70,723 (US$289)FOB for palm oil and CFAF 82,555 (US$337) for copra. Total cost to thestabilization fund, including debt service and amortization provision, wouldbe equivalent per ton to US$400 for palm oil and US$1,317 for copra. On thebasis of current world market prices, the loss on the small production ofcopra (8,200 t) be largely compensated by a surplus from palm oil marketingoperations (160,000 t).

F. Achievements under the Previous Oil Palm andCoconut Projects

2.27 The Bank has financed three projects with SODEPALM since 1969, withsix loans (611, 612, 613, 759, 760 and 1036) in total amounting to US$26.7 mil-lion. Investments carried out under Loans 611, 612 and 759 are now completedand have been evaluated by O.E.D. recently. Four of these loans providefinance for 9,520 ha of oil palm estates, 11,500 ha of coconut estates, 21,500ha of outgrower oil palm and 7,500 ha of outgrower coconut; two loans (612,759) financed two new oil mills at Ehenia and Dabou, with respective capacitiesof 50 and 40 tons of palm fruit per hour.

2.28 Project implementation has been highly satisfactory and all originalphysical targets have been achieved or exceeded. Planting programs underthese projects would be completed as scheduled in 1977; the two oil mills havebeen commissioned, in 1971 and 1972, and are operating satisfactorily. Con-servative yield projections have generally been exceeded and, despite costoverruns due to inflation factors and some necessary social investment, theexpected rates of return are higher than anticipated at appraisal (about 13%for oil palm estate and 17/20% for oil palm outgrowers).

2.29 These satisfactory results are due to various reasons, such as:availability of free land; solid back-up by an outstanding research organi-zation; and excellent management within the SODEPALM Group. Another impor-tant cause of project success was the commercial basis on which Governmentallowed the company to be run. Although this has recently been changed (seepara. 2.25), the results achieved to date were not affected. This successconfirms the soundness of Government's policy choice to promote the develop-ment of nucleus estates to support surrounding small growers and this pol-icy is to be continued under the project.

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2.30 Managed only since 1975 by an Ivorian General Manager, SODEPALMcontinues to use the services of a large number of expatriate staff. Earlyin 1974, SODEPALM adopted a training program with a view to promote pro-gressive ivorization of its staff. Since then, the proportion of expatriatesin managerial and technical positions has been decreasing regularly withoutaffecting the overall success of the operation and training efforts are stillin progress.

G. The Southwest Region

2.31 Government's development strategy for the region derives from plan-ning done by ARSO (para 2.11). The development of this largely unpopulatedarea began with the construction of port-related infrastructure to create analternative to the Abidjan facilities. Development plans include schemes toimprove the exploitation of the tropical forest and establish agriculturalplantations together with the development of social infrastructure to attractfarm families, in particular those from the Savannah Region displaced afterthe construction of the Kossou dam. Rubber, oil palm and coconut are theonly immediate opportunities to develop agriculture in that region until theseprojects have attracted enough population to be supported with future ruraldevelopment projects. Characteristics of the region and an outline of in-cipient land-using projects are given at Annex III, Appendix I.

III. THE PROJECT

A. The Project Area

Ecological Conditions in the Project Area

3.01 The project covers an area about 30 km wide and 50 km long directlynorthward of the city of Tabou, in the Southwest Region (Annex III, Appendix1). Vegetation varies from scrubland and light forest areas, mostly nearthe coast, to dense rain forests inland. The area has been selectivelylogged in the past, and there is no evidence that commercial quantities oftimber still exist. The land is mostly rolling and, in terms of plantableareas, is divided into a large number of fingerlike parcels defined by slopes,ravines, marshy areas, and unsuitable soil textures. Soils proposed for coco-nut planting, which are closer to the coast, contain a proportion of sandyleached soils which are suitable only for coconuts, while the plantable soilsin the areas allocated for oil palm tend to be more clayey. Fertility defi-ciencies would be corrected by fertilizer applications (hybrid coconuts, inparticular, require heavy doses). The project area was reserved for coconutsand oil palm because rainfall, averaging about 2,000 mm/year, is favorableand well distributed; the dry season usually lasts only one month (January),and sunshine is adequate.

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Transport and Communications

3.02 The project area is situated astride existing dirt roads in the

public network which connect Tabou with the northern part of the country,

and which, if improved, could give a convenient passageway for vehicles and

equipment to the vicinity of project work sites. Assurances was obtained

from Government that funds would be made available to improve the access

to plantation sites before June 30, 1978. Central services such as heavy

maintenance facilities would be located on the Glike coconut plantation (para

3.10), the first plantation to be planted because of its proximity to Tabou

and the existing communication system. Tabou does not have a usable harbor,

though light craft provide some service via the beach. The San Pedro port,

some 90 km up the coast, already has facilities for handling oil palm produce

from the SODEPALM operations to the north, and Government intends to expand

these to handle the project output. The public roads would serve project

needs, including the transport of products to San Pedro. The processing

facilities will be located in the vicinity of the existing network of roads.

An adequate public airstrip exists at Tabou and would serve the project;

considerable use of aircraft is foreseen for transport of personnel and light

material. Under the project, radio equipment would be installed on all four

plantations to interconnect them with the SODEPALM radio network.

Agricultural Development Planning

3.03 The project area is within the Southwest Region where other develop-

ment schemes are ongoing or planned (Annex III, Appendix 1). The necessity

for an appropriate rate of deforestation has been brought to the attention

of Government, specifically taking into consideration land-use planning and

ecological imperatives; an assurance obtained during negotiations stipulates

that such a scheme be submitted within one year of loan signature.

B. Summary Project Description

3.04 The project is part of a four-year planting program begun inlate 1975 and would cover a three-year slice beginning with land prepara-

tion undertaken in 1975 for plantings completed after June 1976. It would

consist of:

(a) preparation of about 18,500 ha for the creation of oil palmand coconut estates;

(b) establishment of about 8,000 ha of oil palm and 7,500 ha of

coconut estates;

(c) provision of infrastructure for both estates, including feederroads, housing, social, medical and administrative buildings,

store sheds, vehicles and equipment;

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(d) establishment of an outgrowers program covering about 2,000 hacoconut and 500 ha of oil palm plantations on land cleared bythe farmers;

(e) provision to farmers of loans, extension services andinfrastructure; and

(f) provisions for a Project Directorate, including offices,housing, vehicles, equipment and operating funds.

The project would exclude the processing facilities, which will be constructed

during the four-year program. Assurance has been obtained from Governmentthat it would provide for processing facilities when the plantations underthe project come to maturity.

3.05 Planting targets would be flexible under the Government's programto allow transfers to or from the outgrower program, depending on the rateof participation by outgrowers. During the project period, this provisionwould affect only the coconut plantings; in terms of this component, the bestestimate is a minimum of 1,000 ha over three years, expandable to 3,000 ha atthe expense of the industrial plantings. Overall, the larger program over thefour years aims at an outgrower component of 30%.

3.06 Due to the cut-up nature of the project area (para 3.01), theestate and outgrower plantings would be more intermingled than is usuallythe case with such projects. Taken together, the plantings would be oncontiguous blocks along the Cavally River, on the Tabou-Ologuio axis. Theindustrial plantings would be on four estate blocks.

C. Detailed Features

Estates

3.07 Planting Programs. Oil palm and coconuts would be planted on fourplantation estates. Oil palm estates would be inland at Iboke and Dewake;coconut estates would be at Glike and Nero, nearer to the coast, where eco-logical conditions are more favorable for this tree:

Oil Palm CoconutIboke Dewake Glike Nero

PY 1 --- --- 2,000 --PY 2 3,000 --- 1,500 1,750PY 3 2,500 2,500 --- 2,250

The coconut targets assume an average rate of outgrowers development outlinedin para 3.12, and adjustments would be made in the light of the success withoutgrower plantings (para 3.05).

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3.08 Land. The land to be planted by industrial estates would be ob-tained from the Government and made available for purposes of the project.There would be no encroachment by estate plantings on land presently beingcultivated. An assurance were obtained that facilities and title to orrights in respect of land required for the carrying out and operation ofthe project would be provided within one year of loan effectiveness.

3.09 Investment and Maintenance. These would be essentially the samefor coconut and oil palm. Land would be cleared mechanically; then treesand debris would be windrowed and burned to prevent a build-up of beetleswhich could seriously damage the young palms. SODEPALM would carry out theland clearing by force account, using procedures that have been proved onSODEPALM's east-of-Sassandra estates. SODEPALM's civil works unit alreadyowns suitable equipment and has developed appropriate technology, in partic-ular to avoid top soil removal. Experience indicates that land clearing byforce account is cheaper than by contractors, most of them being specializedin road construction rather than land clearing. In addition this ensures abetter coordination of work in the field (land clearing with access roads,first, planting and road improvement thereafter). Seeds would be producedat IRHO seed gardens and germinated either there or at the project nursery.Seedlings would be transferred to plastic sacks for ease of handling, andplanted one to each hole; each plant would be surrounded by a wire meshshield to protect the young plants from rodents. A cover crop of pueraria,with seeds grown by SODEPALM, would be planted to control erosion.

3.10 Maintenance of each year's estate plantings goes on for three years.Funds for this purpose would be provided for only during the years of Bankdisbursements. The maintenance requirements of the crop are small but impor-tant: circle weeding of the cover crop; replacement of dead plants; fertil-izer applications and pest control. Fertilizer would be applied annually inaccordance with the results of foliar analysis.

3.11 Planting Material. For oil palm, both estates and outgrowers wouldplant improved seeds developed by IRHO, which are giving excellent resultsin the southeast. For coconut, both estate and outgrower plantings would usehybrid varieties selected and grown by IRHO at its Port Bouet station. Thebasic cross is between the Dwarf palm and the Tall palm, giving a hybrid palmwith very desirable characteristics. Recently, there has arisen a questionas to the resistance of these hybrid varieties to Kaincope disease, a lethal"yellowing wilt" that attacks Tall coconut varieties, and which is a problemin West Africa producer countries such as Ghana, i.e., a relatively long dis-tance from the proposed project. A judgment as to the risks involved dependson the opinion of IRHO researchers, who have closely followed all evidence onthe disease resistance of the hybrids; the risk cannot be ignored or avoidedbut it is minimal and well worth taking, considering the potential benefits.Supporting information is at Annex III, Appendix 2.

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Outgrowers

3.12 Planting Program and Location of Plantings. The planting programwould be divided between oil palm and coconut outgrowers as follows:

PY 1 PY 2 PY 3 Total----------------ha------------

Oil Palm - 200 300 500Coconut 200 550 1,250 2,000

Project phasing favors the enlistment of coconut outgrowers in the three-yearperiod. The figures for coconut plantings represent "average" expectations asto the rate that farmers would become participants in the outgrower program.To allow flexibility for uncertainties entailed in attracting farmers to a newprogram in an out-of-the way region, certain areas would be "optional" eitherfor outgrowers or estates. Plantings would be made in conjunction with allfour of the industrial plantations, i.e. oil palm in the vicinity of Dewakeand Iboke, and coconut in the vicinity of Glike and Nero. Assuming theinitial plantings of 1 ha per family, the three-year project would involvesome 500-1,000 families, who would eventually increase their holdings to anaverage of about 4 ha.

3.13 Land. Most of the land would be provided by the state and wouldbe included under the arrangements described in para. 3.08; the balance, bycommunities whose usufruct rights to particular parcels of land would berecognized. This tenure system, described at Appendix 3 of Annex III, hasproved successful under the previous Bank-financed oil palm and coconutproject in the Ivory Coast.

3.14 Communications, Infrastructure and Equipment. Since the outgrowerplantings would be geographically intermingled with the industrial planta-tions, there would be no necessity for constructing new roads specially forthe outgrower plantings. The project would have to provide for the housingand equipment of SODEPALM's outgrower service staff.

3.15 Development and Maintenance. Only suitable terrain would beaccepted for outgrower plantings. Both for oil palm and coconut plantings,land would be cleared by its holder. Planting material and maintenance wouldbe the same as for the estates (para 3.09). Labor requirements (Annex IV)would not be excessive in terms of family labor, though farmers would havethe option of hiring casual labor. Seedlings, cover crop seed, wire mesh,fertilizer and cash equal to the value of the labor required prior to thefirst crop (valued at CFAF 265 or US$1.10 per manday) would be supplied oncredit to the outgrower by SODEPALM (Annex IV), and SODEPALM would superviseall operations.

Labor

3.16 The project labor requirements would be relatively modest, reachinga peak of about 1,600 field workers in Year 3. The initial recruitment of

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labor from within the area has exceeded expectations and about 500 workerswere already employed early in 1976; this bodes well for the project. How-ever, since the region is thinly populated, and since the project would becompeting for labor with other plantations in the region, it may not bepossible to meet all requirements locally. As in the case of most estatedevelopments in the Ivory Coast, field workers may have to be attracted fromneighboring countries such as Upper Volta. Recruiting and holding workershave become more difficult in recent years, and the estates would thereforehave housing and social facilities of a standard that has been adopted forthe more recently built estates elsewhere in the country. Generally workersarrive without families, returning after a year or so to fetch their familiesor to marry. Consequently, a high labor turnover is normal during the firstfew years, but the situation usually stabilizes as the ratio of families tobachelors increases. There would, however, remain some uncertainty about thelabor supply. The estates would need field workers as follows:

1976 1977 1978 1979

500 1,500 1,600 2,000

Assurances were obtained from the Government that it would take measures toensure that an adequate number of field workers would be available to theproject without impairing other projects in the region.

IV. ORGANIZATION AND MANAGEMENT

A. Project Directorate

4.01 The project would be executed by SODEPALM (para 2.16) under themanagement of a Project Directorate consisting of a Project Manager, a SeniorAdministrative Officer and adequate Plantation and Technical Administrativestaff. The Project Manager, an expatriate already on duty, is qualified forthis important position. Provisions for construction of permanent officesin the project area are included in the project cost.

4.02 The organizational arrangements of the project management and theirrelationship to the SODEPALM general management are defined in a Chart inAnnex III, Table 6. The project management would make full use of SODEPALM'ssupply organization to achieve savings by bulk buying. It would also usethe services of the civil work department of SODEPALM which would carry outthe clearing and land preparation of the areas to be planted under theproject.

4.03 The Project Directorate, currently located in Abidjan, would beestablished in the Southwest region as soon as required. During negotia-tions, assurances were obtained that SODEPALM would consult the Bank beforeMarch 31, 1978, to discuss the timing of the Directorate's transfer to theproject areas.

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B. Project Organization

4.04 Each of the four estate plantations would have an Estate Manageracting under the direct orders of the Project Manager. In the initialphase, the first plantation would be provided with two available managers -one with responsibility and the other preparing to shift to another planta-tion.

4.05 The smallholders program would have two Ivorian Division Chiefs,also under the direct orders of the Project Manager. With the developmentof the outgrower program, Ivorian Section Chiefs would be appointed tooperate under the orders and supervision of the Division Chiefs.

4.06 Adequate nurseries have already been created, and are the responsi-bility of the Project Manager, who would also supervise whatever research andexperimentation that would be required.

4.07 A Senior Administrative Officer, whose terms of employment and qual-ifications would be acceptable to the Bank, would be appointed. Any changesin the incumbents of the posts of Project Manager and/or AdministrativeOfficer would be made only with Bank's approval. Assurances to this effecthave been obtained from the Government.

4.08 A mechanical workshop, set up by the Civil Works Department ofSODEPALM for purposes of the land clearing operations, will be transformedinto a central workshop serving the whole project area. Adequate provisionsfor this workshop have been provided in the project cost.

4.09 Each of the four estates would have a central village and twosatellite villages with all housing provided under the project. In each ofthe central villages, a supermarket, a social and medical center would beerected and each satellite village would have a social and medical outpost.A school would be built in each of the four villages. Provision has been madefor the buildings of the main medical centers, outposts, and schools, includ-ing housing for the teachers and doctors who would be made available by Gov-ernment. Nurses, assistant nurses, and social assistants salaries (andtheir housing) are included in project costs.

4.10 All the medical and social facilities provided under the projectwould also serve the outgrowers and their families, and, as is customary inthe Ivory Coast, the local population within the project area.

C. Outgrower Selection, Size of Holdings and Credit Arrangements

4.11 Participation in the grower scheme would be conditional on thefarmer's agreement to follow, throughout the development period, the tech-nical advice provided by SODEPALM. The agreement between the two partieswould be essentially the same as the ones approved previously by the Bank.

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4.12 Members of existing villages would be encouraged to become out-growers, and it is expected that established residents of the area wouldform a nucleus program. Selection of participants would be done by thelocal SODEPALM agent in consultation with the village chief. Participationwould not preclude a village from other economic pursuits such as growingfood crops (e.g., rice) for subsistence and sale to the plantations, supplyof labor for plantations and other outlets. Some village leaders have al-ready indicated interest in the program. Details of selection arrangements,such as maximum size of individual holding, would be worked out on the basisof conditions, including the nature of village participation, and SODEPALM'sconsiderable experience east of the Sassandra River.

4.13 As under the Third Oil Palm Project, outgrowers would receivenominally interest-free credits from SODEPALM. Details of the outgrowerfinancing scheme are included in Annex IV. The guiding principle would becontinued that producer prices be fixed so that Government would earn areasonable financial return on its investment in the outgrower program. Onthe basis of the price assumptions used in the project cash flows, the returnto Government from this investment is estimated at about 18%.

D. SODEPALM Finances

4.14 Until September 1975, SODEPALM's financial situation had been satis-factory (see Annex 2, Tables 1 and 2). Up to that time, the SODEPALM Grouphad generated surpluses amounting to US$51 million, which was used to financepart of its investment program (US$48.1 million) and to increase its workingcapital from US$15.4 million to US$18.3 million. Since then, the new market-ing and payment procedures introduced by Government (paras 2.25 and 2.26) havechanged SODEPALM's financial position. While these measures are acceptable inprinciple, they had not been entirely implemented at the end of FY76, when theStabilization Fund still owed SODEPALM about US$10 million for 1975/76 andUS$8 million for the prepayment of the 1976/77 fiscal year expenditures.These arrears, together with delays in the signing of BEI and IBRD loans forthe copra/kernel oil mill and the Southwest oil palm and coconut development,respectively, resulted in financial constraints. According to a provisionalbalance sheet at the end of September 1976, SODEPALM used short-term overdraftfacilities (US$24.7 million) to finance operational activities, includingprefinance for the above-mentioned investments (US$7.6 million).

4.15 However, the Stabilization Fund has now paid SODEPALM all of itsoutstanding debts and Government has committed itself to finance retroactivelyproject expenditures incurred in CY 1975 and 1976, of CFAF 4.2 billion (aboutUS$17.1 million) including finance for the proposed project (US$10 million)(para 5.09). These payments together with the proceeds of the proposed IBRDloan would be sufficient to insure SODEPALM's ability to carry out its invest-ment program until 1980. The Oilpalm and Coconut Sectors would begin only in1978 to generate enough funds to finance investments programmed on the basisof world market prices in line with Economics Department projections.

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4.16 In the light of this information, Government has given an assurancesto make such funds available, or seek adequate financing, for the purpose of

providing SODEPALM with the required funds to complete its investment programs,

including non-oil palm activities. This investment plan for SODEPALM, coveringthe next four years, with an indication of sources of financing, was submittedby Government to the Bank and found acceptable (Annex II, Table 2).

4.17 Government has published its 1976/77 buying price for oil palm prod-

ucts and for coconut products. The prices have been found satisfactory by

the Bank. An assurance was obtained that Government would ensure that pro-ceeds of sales of oil palm and coconut products would be adequate to cover

all operating expenses and debt services of these two respective sectors,and would be used solely for these purposes. Furthermore, the Bank wouldbe informed of these prices before they become effective.

V. COST ESTIMATES AND FINANCING

A. Cost Estimates

5.01 Project costs during the three-year investment period are estimated

at CFAF 10.0 billion (US$40.6 million), of which the foreign exchange componentwould be CFAF 6.2 billion (US$25.3 million) or 62%.

5.02 Government has indicated its intention to continue to exempt all

imports needed for the project from import duties during the developmentperiod. Cost estimates, based on January 1976 prices, include indirect taxesamounting to CFAF 1,076 million (US$4.4 million) or 11% of total projectcosts, and contain the following contingencies:

(a) physical contingencies of 10% on land clearing and buildingcosts and 5% on all other costs, except labor;

(b) price contingencies compounded as follows: for civilworks, construction and mechanical land clearing,13% in 1976 and 12% in 1977 and 1978; for vehicles andequipment, 9% in 1976 and 8% in 1977 and 1978; and forall remaining costs, including loans to outgrowers, 10%for each year; these contingencies have been calculatedon base cost estimates plus physical contingencies inany year, compounding estimated price-increase factorsin prior years and one-half of the price increasefactor in the year concerned.

Total contingencies calculated on the foregoing basis amount to 22% of the

total project costs or 28% of base line cost estimates. Price contingenciesamount to 19% of base line cost estimates and physical contingencies. De-tailed cost estimates are in Annex 6, and are summarized in the table next

page.

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Fourth Oil Palm and Coconut Project

Project Cost Estimates

CFAF million US$ million ForeignLocal Foreign Total Local Foreign Total Exchange

I. COCONUT ESTATESLand preparation

Land clearing andaccess roads 352 1,056 1,408 1.4 4.4 5.8 75

Land developmentcosts /1 476 317 793 1.9 1.3 3.2 40

Estate Operating Costs 123 133 256 0.5 0.5 1.0 52Investments

Vehicles 8 76 84 0.1 0.3 0.4 90Buildings 108 163 271 0.4 0.7 1.1 60Installationsand Equipment 47 111 158 0.2 0.4 0.6 70

TOTAL 1,114 1,856 2,970 4.5 7.6 12.1 63

II. OIL PALM ESTATESLand Preparation

Land clearing andaccess roads 559 1,674 2,233 2.3 6.8 9.1 75Land developmentcosts /1 477 205 682 1.9 0.9 2.8 30

Estate Operating Costs 128 154 282 0.5 0.6 1.1 54

InvestmentsVehicles 23 212 235 0.1 0.9 1.0 90Buildings 269 403 672 1.1 1.6 2.7 60Installationsand Equipment 45 104 149 0.2 0.4 0.6 70

TOTAL 1,501 2,752 4,253 6.1 11.2 17.3 65

III. OUTGROWERS PROGRAMExtension: Staff 22 - 22 0.1 - 0.1 -

Investments 21 21 42 0.1 0.1 0.2 50Loans: Inputs 116 77 193 0.5 0.3 0.8 40

Cash Credit 97 - 97 0.3 - 0.3 -

TOTAL 256 98 354 1.0 0.4 1.4 29

IV. PROJECT DIRECTORATEStaff 25 47 72 0.1 0.2 0.3 65Investments 35 54 89 0.2 0.2 0.4 61Operational expenses il 10 21 - 0.1 0.1 48

TOTAL 71 111 182 0.3 0.5 0.8 63

V. TOTAL PROJECT COSTSProject Base Costs 2,942 4,817 7,759 11.9 19.7 31.6 62Physical Contin-gencies 203 397 600 0.9 1.6 2.5 64Expected priceincreases 594 998 1,592 2.5 4.0 6.5 62

TOTAL EXPECTED COST OF PROJECT 3,739 6,212 9,951 15.3 25.3 40.6 62

/1 Cost of planting, including labor, and maintenance during project period.

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5.03 Government intends to authorize BNDA (Banque Nationale pour leDeveloppement de l'Agriculture) to assist in financing part of the projectthrough a loan of CFAF 500 million (US$2.0 million) to SODEPALM (Annex 7).Satisfactory assurances from the Government regarding this arangement wouldbe a condition of effectiveness.

B. Proposed Financing

5.04 The project would, therefore, be financed jointly by Government,BNDA, and the Bank, and the proposed financing would be as follows (net oftaxes):

IBRD BNDA Government Tota_US$ m US$ m US$ m US$ m

Coconut Estates

Land Clearing and Roads 1.9 - 3.2 5.1Agricultural Costs 1.5 0.8 0.6 2.9Estates Operating Costs - - 0.9 0.9Buildings, Equipment and Vehicles 1.1 - 0.7 1.8

Oil Palm Estates

Land Clearing and Access Roads 5.6 - 2.4 8.0Agricultural Costs 1.5 0.8 0.3 2.6Estates Operating Costs - - 1.0 1.0Buildings, Equipment and Vehicles 2.4 - 1.4 3.8

Outgrowers Program 1.1 - 0.2 1.3

Project Directorate 0.4 - 0.3 0.7

Total Base Costs 15.5 1.6 11.0 28.1Unallocated 4.5 0.4 3.2 8.1

Total 20.0 2.0 14.2 36.2

Percentage of Total Net of Taxes 55% 6% 39% 100%

5.05 The Bank Loan of US$20 million would be made to SODEPALM for a termof 20 years, including a four-and-one-half year grace period, at the prevailinginterest rate estimated to be 8.5%. The loan would finance 55% of project

costs excluding taxes, or 49% of total project costs, and would cover about80% of foreign exchange costs.

5.06 The Bank Loan is estimated to be disbursed over a two-year period.The balance of project costs would be financed by Government on a yearly basisand an assurance to this effect was received; a condition of loan effective-ness would be that adequate financing for the first year had been provided.

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5.07 All the amounts disbursed under the project and for plantationmaintenance and production after the project period (para. 5.06) would bepassed on as grants to SODEPALM, except for the loan component of theseamounts which would be reimbursed to the lenders by SODEPALM under the newfinancial arrangements introduced in 1976 (para. 4.17).

5.08 Farmer loans would be disbursed by SODEPALM according to arrange-ments for outgrowers, detailed in Annex IV. This Annex shows the repaymentschedules for each group of outgrowers. SODEPALM would deduct the amountsdue from the proceeds of its purchase of oil palm fruit and coconuts.

C. Retroactive Financing

5.09 Government would finance SODEPALM's costs incurred in 1976 (aboutUS$10 million), mainly of land-clearing for the first plantation year. How-ever, the Government has asked that expenditures incurred on the projectprior to the signature of the Bank loan and after January 1, 1977 be financedretroactively. Therefore, retroactive financing of up to US$500,000 for ex-penditures incurred after January 1, 1977, covering costs for buildings,equipment, vehicles, extension services and farmers credits, would be in-cluded in the project.

D. Procurement

5.10 All contracts of US$100,000 equivalent or more for the procurementof vehicles and equipment (totaling about US$3.1 million) would be madethrough international competitive bidding in accordance with Bank guidelines.Contracts for goods and services costing less than $100,000 equivalent maybe procured under local competitive bidding procedures acceptable to theBank, provided however that the aggregate of the cost of all goods and ser-vices so procured shall not exceed US$1.0 million equivalent. Contractsfor buildings with a total value of US$5.2 million, involving several opera-tions scattered across the project area, are not large enough to attract for-eign interest and would be awarded on the basis of competitive biddingadvertised locally and in accordance with local procedures which are accept-able to the Bank. Civil works consisting of land clearing and estate feederroads (totaling US$19.1 million), and land development of US$7.8 millionwould be carried out by SODEPALM under force account and reimbursed againstcompletion certificates; SODEPALM has the equipment needed for this workand has demonstrated that it can conduct it more efficiently and at lowercost than other contractors. The remaining project costs (US$5.4 million)would be mainly for staff, labor, farmer's loans and operating expenses.

5.11 The proposal that SODEPALM carry out land clearing by force accountstems from excessively high tenders received from international bidders in1971 for the first SODEPALM project (Ln. 611-IVC). Under the second andthird projects (Lns. 759, 760 and 1036-IVC), when force account was recom-mended, SODEPALM cleared about 15,000 ha at about US$500 per ha, close tohalf the international bids received in 1971. For the proposed project,

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SODEPALM anticipates that their costs will be below those offered in 1971.SODEPALM has an inherent advantage compared with international biddersinasmuch as it has specialized equipment available on location, clears landunder other Government mandates, and has extensive experience in this field.Furthermore, land clearing for rubber estates managed by private enterprisescontinue to be executed under force account.

E. Disbursement

5.12 The Bank loan would be disbursed to cover:

(a) 75% of land clearing and access road costs of oil palm and coconutestates for Years 2 and 3 on the basis of maximum cost per ha ofCFAF 192,000 and CFAF 203,000 for coconut and oilpalm estate re-spectively in 1976 terms (US$7.5 million);

(b) 60% of planting and maintenance cost of oil palm and coconut estatesin Years 2 and 3 (US$3.0 million);

(c) 65% of total expenditures or 100% of foreign exchange costs ofbuildings, equipment, and vehicles of the oil palm and coconutestates (US$3.5 million);

(d) 80% of all costs of the outgrowers program including loans in kindand in cash (US$1.1 million);

(e) 80% of all costs of the Project Directorate (US$0.4 million); and

(f) US$4.5 million would be unallocated.

A schedule of estimated disbursements is at Annex VIII. Disbursement for(a), (b), (d) and operating cost in (e) woud be against certificates ofexpenditures, the documentation for which is not submitted for review butwould be retained by SODEPALM for inspection by Bank project supervisionmissions. Disbursement for (c) would be fully documented.

F. Accounts and Audit

5.13 SODEPALM would keep records consistent with sound accountingpractices and adequate to reflect its operations and financial situation.These records would also show the accounts of the respective project com-

ponents separately and the position of outgrowers' loans and repayments.Government would appoint independent auditors acceptable to the Bank and theirreports would be of such scope and in such detail as the Bank may reasonablyrequest. These would be sent to the Bank, not later than four months afterthe closing of the financial year. Assurances to this effect were obtainedduring negotiations.

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VI. YIELDS, OUTPUT, MARKETS AND PRICES

A. Yields and Output

6.01 011 palm outgrowers are expected to obtain an average yield of 16tons ffb/ha when their oil palm plantings are mature, nine years after plant-ing. Actual results from existing oil palm outgrowers confirm the validityof this estimate. For estates, as evidenced by extensive trials carried outby IRHO, average yields of at least 18 tons/ha are expected at maturity.Both yields would produce 22% oil and 4.4% kernel contents. These yields,high by world standards, are made possible by the success of IRHO in pro-ducing and testing a high yielding hybrid. When project plantings reachfull production in about 1984, their production would average 31,600 tonsof oil and 6,360 tons of kernels annually, or less than 1% of the antici-pated world trade in these commodities at that time (Annex IX).

6.02 Coconut outgrowers are estimated to obtain, at full maturity, anaverage yield of 20,500 nuts/ha. At full maturity, coconut estates wouldyield 23,000 nuts/ha. These yields, high by world standards, are made possibleby the success of IRHO in producing and testing a high yielding hybrid. Themaintenance of high yields will depend on sustained fertilizer use; this wouldbe standard practice on the estate and outgrower plantings. Copra productionis one metric ton for 5,000 nuts and a further 250 kg of charcoal from theshells. When project plantings reach full production in about 1987, theirproduction would average about 42,700 tons of copra and 10,675 tons of char-coal annually; the copra production represents about 1.6% of the expectedworld trade by that year, or 27,500 tons coconut oil equivalent.

B. Processing

6.03 The bulk of processing facilities required for project plantingswould not be needed during the Bank-loan disbursement period. Coconut plant-ings financed under previous projects were scheduled to mature in 1976. Anadequate processing and marketing plan has recently been submitted to the Bank.

6.04 For the purposes of determining the net value of the final product(copra and coconut charcoal), the processing costs have been estimated on thebasis of artisan methods for which figures are available (Annex V). Industrialinvestments for the processing of the oil palm production would not be carriedout until 1980 and costs of such facilities are included in the financial andeconomic calculations. Processing costs have been estimated on the basis ofactual operational costs of existing mills with the addition of amortizationcosts based on the investments needed for the southwest. Details are atAnnex V.

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C. Markets and Prices

6.04 Oil Palm and Kernels. About 60% of the palm oil and all kernelsproduced by project plantings would be absorbed by the growing export mar-ket. Total world production of palm oil is estimated to be expanding atabout 9.5% annually between 1975-80 (7.1% - 1975-85), and world productionby 1985 is expected to reach about 5.9 million tons and exports 4.7 milliontons. 0f the total, the Ivory Coast would export about 200,000 tons or 4.3%.The Bank's commodity analysts expect palm oil prices to rise from US$380/ton,the current average price, to US$737/ton CIF Europe in 1985 - a price equiv-alent to US$390/ton CIF Europe, in constant 1976 prices, which has beenassumed for the project production (Annex IX).

6.05 The price of palm kernel oil, which has chemical characteristicssimilar to coconut oil, is projected to rise in 1976 terms from US$360/ton,in 1976, to US$564/ton CIF Europe in 1985. It is estimated therefore thatpalm kernel prices will rise from US$170/ton to US$281/ton CIF Europe by1985, in 1976 terms. This latter price has been used for the purpose ofthis project.

6.06 Copra and Coconut Oil. While a small amount of project-producedcopra would be consumed domestically, the bulk would be exported, mostly toEurope, either as coconut oil or unprocessed copra. Coconut oil and copra(in tons of oil equivalent) comprised about 6.4% of total world fats and oilproduction in 1971-1973. Production has expanded slowly (1.3% from 1954-57to 1971-73, as compared with 2.6% per year for all fats and oils production).Generally, coconuts are a poorly organized smallholder crop with a high pro-portion of over-aged trees, and there has not been much development, withthe exception of the Philippines and the ongoing modest Bank-financed proj-ects in Ivory Coast. The Bank forecasts that by 1980 world exports of copraand coconut (oil equivalent) will rise from a current 1.5 million tons toabout 1.6 - 1.7 million tons, principally from increased Philippine produc-tion. For the economic analysis of the project, a copra price of US$397/ton CIF Europe in constant 1976 prices has been used. This is equivalentto US$580/ton (in 1976 terms) of coconut oil, which is slightly below theaverage price (8.6%) over the last three years for this commodity.

VII. FINANCIAL BENEFITS AND OUTLOOK

A. Project Cash Flow

7.01 The cash flow for the southwest program, considered as a separateentity, has been assessed independently from SODEPALM's operations east ofthe Sassandra River. The Cash Flow (Annex VII) shows a positive balance asearly as Year 8. All project costs would have been completely recovered byYear 11, the third year after all plantings reach full maturity with a sur-plus of CFAF 1.0 billion (US$4.0 million). From the following year on, and

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over the next 18 years, revenues from project operation would be about CFAF4.3 billion (US$17.5 million) yearly in terms of expected current prices.Government would receive additional income from indirect taxes and from ex-port duties on exported products. The total yearly revenues generated bythe project would be as follows, in current terms:

CFAF million US$ million

From project operation 4,282 17.5From taxes 638 2.6From export duties 366 1.5

Total 5,386 21.6

The Cash Flow, over a period of 30 years, shows a financial rate of returnof 16%.

B. Outgrowers Benefits

7.02 Expected benefits for outgrowers under the project have been esti-mated from separate models for oil palm and coconut farmers (Annex IV).

7.03 Oil Palm Outgrowers. In its outgrower operation, SODEPALM hasuntil recently paid outgrowers a fixed basic price of CFAF 4/kg ffb (freshfruit bunch), with a bonus system that enabled growers to attain, in 1975,an average price of CFAF 8/kg ffb. An Average price of CFAF 8/kg ffb has beenassumed for the project. Production on an outgrower's holding would beginin the fourth year after planting, when 32 working days would be required tomaintain and harvest one hectare of oil palm; the return per manday would beCFAF 852 (US$3.5). This would increase to CFAF 1,845 (US$7.5) per manday for46 work days, after debt service by Year 5, and reach a maximum of CFAF 2,339(US$9.5) per manday, for 52 workdays, when debt service is completed in Year13. The return to labor employed is satisfactory compared with the officialagricultural wage of CFAF 315/day (US$1.3), including fringe benefits. Manyoutgrowers would probably combine oil palms with cocoa, coffee and food crops.The return to labor also compares favorably with the return from cocoa culti-vation, a tree crop grown over most of the country's oil palm zone, of aboutCFAF 940 (US$3.8) per manday from traditional plantings and CFAF 1,200(US$4.9) from improved plantings. An average outgrower holding of 4 hawould generate a total annual income after debt service of approximatelyCFAF 486,600 (US$1,980), as from Year 13 after full repayment of debt. Inaddition, a typical six-member family with 2-1/2 adult equivalents would beearning about CFAF 106,000 (US$430) from the traditional farm.

7.04 Coconut Outgrowers. In its current program east of Sassandra,SODEPALM assures outgrowers a price of CFAF 7 per coconut, and this pricehas been assumed in the southwest project. Production on an outgrower'sholding would begin in the fifth year after planting, when nine working

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days would be required to maintain and harvest one hectare of coconut, andwhen the return per manday would be CFAF 333 (US$1.40). The return per man-

day would increase to CFAF 1,619 (US$6.6) for 32 workdays, after debt serviceby Year 7, and to CFAF 2,406 (US$9.8), for 50 workdays, when debt serviceis completed in Year 17. The return to labor employed is satisfactory forthe reasons detailed in 7.03. Few established outgrowers in SODEPALM's pro-gram cultivate coconut only, as most combine it with cocoa, coffee and food

crops; and this would be expected in the southwest. An average outgrowerholding of about 4 ha would generate a total annual income after debt serviceof about CFAF 480,000 (US$1,960) as from Year 17 after full repayment of debt.

7.05 Conclusion. In both cases the returns are considered satisfactoryfrom the viewpoints of inducing farmers to participate in the outgrower pro-gram and of improving their standard of living.

VIII. ECONOMIC BENEFITS AND JUSTIFICATION

8.01 Primary benefits from the project would be the increased productionfor export of palm oil and kernels, copra and coconut charcoal, with resultantincremental net annual foreign exchange earnings of about US$40 million by1986 (current terms). The project would further the Government's programof agricultural diversification and of regional development of the Southwest.About 1,600 full-time estate laborer jobs would be created and about 600 localfarmers would have their incomes considerably augmented.

8.02 In the economic analysis (Annex X), output values are based on ex-pected world prices, labor cost at estimated efficiency wages and non-laborcosts have been valued at market cost net of taxes (in 1976 terms). Theresulting economic rates of return are 17% for the whole project, 16.5% forboth the oil palm and coconut estates and 30% and 23% for the oil palm andcoconut outgrowers, respectively. If costs and benefits had been adjustedfor tariff and trade distortions with a conversion factor, the "efficiency"economic rate of return would have been 20% for the whole project. Allrates of return have low sensitivities to changes in costs or benefits --for instance, the whole project rate of return of 21.1% falls to 17.2% or17.9%, respectively, with a 20% fall in benefits or a 20% rise in costs.

8.03 The higher rates of return estimated for the outgrowers are substan-tially a result of the costing of certain central infrastructure and servicesentirely to the estates. As discussed in Annex X, an increase in the sizeof the outgrower programs, and in particular of outgrower oil palm, would bejustified. The area ratios of the four project components have, however, beendetermined on project administration and labor availabilities, constraints andexperience gained from other tree crop projects in Ivory Coast. Efforts wouldbe made during project implementation to maximize the size of the outgrowercomponents providing that outgrower achievements are satisfactory.

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IX. AGREEMENTS REACHED AND RECOMMENDATION

9.01 During loan negotiations, assurances were obtained on the followingpoints:

(a) Funds will be made available to improve the access roads toplantation sites so as to allow all-weather access to theproject area before June 30, 1978 (para 3.02).

(b) The Project Directorate currently located in Abidjan would beestablished in the Southwest region as soon as required inconsultation with the Bank (para 4.03).

(c) Government would make available to SODEPALM any funds necessaryto carry out ongoing and future investment programs of auxiliaryactivities entrusted to it (para 4.16).

(d) The yearly price at which oil palm and coconut products andby-products would be bought from SODEPALM by CSSPPA would beadequate and would be used only to cover operating expensesand debt-service of these sectors. Furthermore, the Bank wouldbe informed of these prices before they become effective (para4.17).

(e) Financing of this project would be adequately provided for byGovernment on a yearly basis (para 5.06).

9.02 Conditions of effectiveness would be that:

(a) The presidential decree has been published and is in full forceand effect (para 2.25).

(b) Government, SODEPALM and PALMINDUSTRIE have ratified the AgreementAmending Previous Loan Agreements (para 2.25).

(c) The Bank has received satisfactory assurances with respect tothe BNDA-SODEPALM loan (para 5.03).

(d) Government financing of the project had been adequately providedfor the first year by the development budget (para 5.06).

9.04 Under these assurances and conditions, this project would be suit-able for a Bank loan of US$20 million with a repayment period of 20 years,including a grace period of four and one-half years.

ANNEX IPage 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Progress of Agricultural Projects Financed by the Bank

A. Loan 611-IVC - Palmivoire US$3.3 Million Equivalent (June 13, 1969)

1. The project consisted of establishing and bringing into production4,000 ha of oil palms at Ehania estate to bring the estate to 10,000 ha ofoil palms. The loan became effective on December 30, 1969. Planting wascompleted in 1972 and plantation maintenance has been satisfactory. Plantingcosts were slightly lower than etimated at the time of appraisal, and theproject is now completed.

B. Loan 612-IVC - Palmindustrie US$4.8 Million Equivalent (June 13, 1969)

2. The project financed the construction of a palm oil mill to servicethe 10,000 ha Ehania estate and some outgrowers. The loan became effectiveon December 30, 1969. The mill was constructed with an initial capacity of40 tons/hour ffb, in two processing lines, and these are functioning satis-factorily at full capacity. Costs were within appraisal estimates. Anaddition of a 20-ton/hour processing line was provided for in the project,but Palmindustrie requested the Bank to approve a change in plans involvingtwo satellite mills of 20-ton/hr each with expanded central mill service,instead of the addition. The change in plans was approved but, becauseincreased revenues had become available to Palmivoire, the Bank limitedits participation to the residual funds (US$700,000). The project is nowcompleted.

C. Loan 613-IVC - Sodepalm US$9.0 Million Equivalent (June 13, 1969)

3. The project consisted of the establishment and bringing into pro-duction of 12,000 ha of outgrower oil palms, the establishment and maintenanceuntil 1974 of 3,500 ha of estate coconuts and 3,000 ha of outgrower coconuts,the provision of credit and supervisory services for oil palm and coconutoutgrowers and the necessary infrastructure associated with the 3,500 ha ofestate coconuts. The loan became effective on December 30, 1969. Projectcoconut estate plantings were due to be completed in 1971. Due to shortageof planting material (because of disease), the Bank agreed to extend theplanting period to 1972. All estate plantings have now been completed.To permit more rigorous selection of outgrowers, the Bank also agreed, atthe request of the Borrower, to the extension of the oil palm outgrowerprogram planting period, initially scheduled to be completed in 1970, to1972. All plantings have now been completed.

4. The above three loans were the first Bank operations in supportof the oil palm sector in the Ivory Coast. After a relatively slow start,

ANNEX IPage 2

disbursements of the Bank loans have accelerated and are now all disbursed.On the other hand, physical progress has been very good. The production ofoil palms, now increasing steadily, has reached about 70% of the potential,

and yields of both estates and outgrowers are well in line with appraisalestimates.

D. Loan 686-IVC - Cocoa Project US$7.5 Million Equivalent (June 5, 1970)

5. The project originally consisted of the planting of 18,800 ha ofcocoa and the rehabilitation of about 38,000 ha of existing cocoa plantations

and became effective in November 1970. The project was amended in July 1973

to reduce the rehabilitation component to 15,500 ha; this revised programhas been completed. Approximately 10,000 ha had been established underthe new planting program by the end of 1973 and about 6,000 ha in 1974. Theproject had proceeded satisfactorily except for administrative problems whichhave delayed the submission of requests for reimbursement. However, the

administration of this and the recently approved second cocoa project wouldbe combined and an estimated 3,200 ha of cocoa will be planted under thesecond project. Savings of US$2.2 million resulting from the amendment and

the merging of the two projects have been cancelled at the date of signing ofthe second project.

E. Loans 759-IVC and 760-IVC - Sodepalm and Palmindustrie US$7.0 MillionEquivalent (June 22, 1971)

6. The project consists of (a) planting 4,500 ha outgrower oil palms,(b) 4,500 ha of outgrower coconut palms, (c) 8,000 ha of coconut palms onGovernment-owned estates, and (d) construction of a palm oil mill. TheIoans became effective on November 15, 1972. The oil mill was commissionedin December 1972, and is operating satisfactorily. The planting programsare proceeding satisfactorily and on schedule.

F. Loan 938-IVC - SOCATCI Rubber Estate US$8.4 Million Equivalent(October 23, 1973)

7. The purpose of the loan is to finance, pari passu with CCCE and FED,the planting of 13,500 ha of modern rubber estates and the establishment ofauxiliary services under the management of "Etablissement Michelin", a Frenchtire manufacturer. The project ran into infrastructure problems immediatelyon inception and was also slowed by inefficient management. When these twoconstraints had been taken care of, severe shortage of field labor reduced

its planting rhythm and the project objectives had to be reduced so as tobring them within the original cost estimates. Plantings are now expected

to cover about 7,000 ha and to be completed by 1978.

ANNEX IPage 3

G. Loan 1036-IVC - Sodepalm and Palmivoire US$2.6 Million Equivalent(July 31, 1974)

8. This loan became effective in August 1975. The loan is a follow-up to previous Bank loans for oil palm. The project, which will also receivefinancing from CCCE, provides for the planting of 5,000 ha of oil palm byoutgrowers and 5,500 on SODEPALM estates. Implementation of the project isproceeding satisfactorily.

H. Loan 1069-IVC - Ivory Coast Government Second Cocoa Project US$20.0Million Equivalent (January 10, 1975)

9. This loan, which became effective in September 1975, is afollow-up to the first Cocoa Project (Loan 686-IVC). Implementation isproceeding satisfactorily and on schedule.

I. Loan 1077-IVC - Ivory Coast Government Cotton Areas Rural DevelopmentProject US$31.0 Million Equivalent (January 17, 1975).

10. This loan became effective in June 1975. Its main purpose is toincrease cotton-growing areas from 57,000 ha to 80,000 ha and to expand theareas of food crops grown in rotation with cotton from about 9,000 ha to71,000 ha.

ANNEX IITable 1Page 1

SODEPALM GROUP BALANCE SHEETat September 30, 1975

1. Assets

An analysis of SODEPALM's balance sheets for the last three years hasshown that the Group had accumulated assets which totalled, as at September 30,1975, CFAF 52,780 million (uS$ 234.58 million)

The breakdown of these assets is as follows:CFAF million US$ million CFAF million US$ million

A. INCORPORATION COSTS, PATENTS ETC 1,055 4.69

3. FIXED ASSETS: Land 157 0.70Agricultural Estates 10,835 48.16Processing installations 8,586 38.16Housing and buildings 5,328 23.68Equipment and Machinery 689 3.o6Rolling stock 3,532 15.70Furniture 466 2.07Installations, sewerage, 2,188 9.72and water adductions, etc.

ONGOING INVESTMENTSAgricultural 3,459 15.37Others 2,507 11.14 37,747 167.76

C. PORTFOLIO ASSETSLoans to Farmers: Oil Palm 1,558 6.92

Coconut 1,468 6.52FER subsidies to Oil Palmoutgrowers 1,215 5.40Others 139 o.62

4,380 l9.-7FNI certificates 509 2.26Other certificates 35 0.16 4,924 21.88

D. INVENTORIESRaw materials and spare parts 1,427 6.34Civil works 236 1.05Stocks of palm oil and kernels 997 4.43 2,660 11.82

E. CASH AND OTHER RECEIVABLESDebtors: Suppliers 9 0.01

Clients 2,362 10.50Others 1,312 5.84

Transit accounts 179 o.80Time deposits 1,232 5.50Bills receivable 563 2.50Cash in Banks 684 3.05Cash at hand 52 0.23 6,393 28.43

Total CFAF 52,780 234.58

i)iNEX l.ITable I.`age 2

SODEPALM GROUP BALANCE SHEETat September 30, 1975

2. Liabilities

The above-mentioned assets have been financed from the following sources:

CFA? million US$ million CF.A? mllion US$ million

A. CAPITAL AND RESERVESCapital 3,539 15. 72Reserves 636 '2.83Accumulnted profits 1,835 8.16 6,cLo 26.71

B. GRANTS AND SUBSIDIESGrant from Republic ofIvory Coast 2,878 12.79Subsidies from Governmentto Oil Palm outgrowers 109 o.48Subsidies from FeederRoads equipment 138 O.61Subsidies from FER 136 0.60 3,261 i4.48

C. DEBTS AND LOANSLoan from Government tobe reimbursed to FER 7,228 32.13FER subsidy for Oil Palmoutgrowers 308 1.36Guaranteed dividend toGovernment 554 2.46Long- and short-term loans 16,310 72.49 24,401 1o8.44

D. OTHER CREDITORSSuppliers 583 2.59Others 700 3.12CSSPPA 4,o86 18.17Governmnent (Income Tax) 417 1.86Expenses due and othertransit accounts 1,039 4.62 6,826 30.36

E. AMORTIZATION FUND (accumulated) 12,282 54.59

TOTAL CFAF 52,780 234.58

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

CASH FLOW OF OIL PALM AND COCONUT SECTORS(CFAF million)

1976 1977 1978 1979 1980

STABILIZATION FUND:

EST IMATED CASH FLOW

Revenue of the Oil Palm and Coconut Sector

Total Revenues 14,275 20,126 22,838 24,615 26,946

Production Cost 8,263 11,609 13,304 14,402 15,912Debt service 1,909 2,226 2,979 3,230 2,167Depreciation allowances 2,168 2,936 3,264 3,467 3,563Research 1,076 40 91 264Purchase of private shares 1,172FER 306 375 384 388 390

Total 13,818 18,222 19,971 21,578 23,296

Surplus to CSSPPA 457 1,904 2,867 3,037 3,650

CONSOLIDATED CASH FLOW

A. SODEPALM GROUPSODEPALM (2,931) 1,106 1,949 (320) (696)PALMINDUSTRIE 1,475 185 898 940 635PALMIVOIRE 117SODEPALM CROUP (1,339) 1,291 2,847 620 (61)

B. SODEPALM GROUP + STABILIZATION FUND (SECTOR) (882) 3,195 5,714 3,657 3,789of which Government Contribution 3,415 925

C. SECTOR NET CUMULATIVE CASH FLOW '<S85) 4,0S4 7,751 11,540

II PALMINDUSTRIE: (1,202) 3,687 7,344 11,133

ResoureesEquity increase 140Accumulated surpluses 1,843Amortization Fund 1,614 1,717 1,920 1,995 2,030Government contribution 500External Financing

Kernel oil mill 2,422 742Extension oil mill(s.W) 510Ongoing loans 744

Total 4,201 4,779 2,662 1,995 2,540

ExpenditureS.E. expansion 1,934 815 905 905Kernel oil mill 1,631 2,660 349 (D Storage facilities 600 150 150(S.W.)oil mills 850

Total 2,726 4,594 1,764 1,055 1,905

Surplus (deficit) 1,475 185 898 940 635

TVORY CO2ST

FOURTH OIL PALM AND COCOU: PROJECT

CASH FLOW OF OIL PALM éND COCONUT SECTORS(CFAF million)

1976 1977 1978 1979 1980

III SODEPALM:

Resourcesa) oil Palm and Coconut Estates

i) Income: quality bonus (574) 1 404 356 410 441ii) Amortization Fund S.E. 1,496 2/ l,105 1,140 1,211 1,239

mortization Fund S W. 192 459 557 560 566Pnortlzation Fund (Coprah) 57 111 148

iii) Government Contribution 2,775 925iv) External Financing

Ongoing loans (east) 1,089 323Southwest negotiated loans

IBRD 1,751 2,508 741CDC/BNDA 480 700 120Local Bank 1,450

Additional Loans 392 367 262

Subtotal 2,203 8,747 6,635 3,520 2,656

b) Diversification Activitiesij) Income 129 276 324 391

ii) External Financing __ 1249 284 122 1151,378 550 446 506

Total Resources 220J 10.125 7.185 3 966 3,162

Expenditurea) Oil Palm and Coconut Estates

i)Investments Southeast 2,055 1,887 1,450 1,197 1,035ii)Investments Southwest 2,086 5,052 3,Z14 2,180 1,883

Subtotal 4,141 6,939 4,66' S,377 2,918

Debt service (civil works equipment) 83 i66 456 423

b) DiversificationLivestock 317 218 172 189 164(grated coconut) SICOR 35 557 86 15(engineering) DERI 6411 I,9j. -

993 1,866 258 204 164Debt service 131 148 249 353

Total Expenditure 5,134 9,019 5,236 4,286 3,858

Surplus (deficit) (2,931) 1,106 1,949 (320) _ 696)of which

i) oil Palm and Coconut SectorsSouthwest 148 1,780 1,310 (1,215) (1,740)Southeast (2,086) (55) 485 902 1,055

ii) Diversification (993) (619) 154 (7) (11)

1/ Loss of CFAF 574 million in 1976 is due to deficit on the coconut sector2/ Includes amortization of civil works equipment not paid by the Stabilization Fund

(5 H oD >C

ANrNEX IIIAppendix 1Page 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Development of the Southwest Region

1. The region's economic importance has grown in recent years thanks tothe implementation of rubber plantations at Grand Bereby, and the fact thatthree SODEPALII plantations (Soubre, Okrouyo and Bolo) are dependent on theregion's one harbor for ocean-going vessels, at San Pedro. This harbor hasbeen expanded to handle export of products from these projects; Governmentplans to further develop the port to relieve Abidjan of freight from the land-locked countries to the north (the distance from Bamako is 100 km shorter toSan Pedro than Abidjan). The proposed project would be further west in thehereto undeveloped Bas Cavally prefecture, which has its administrative centerat Tabou, a small coastal town of 8,000 population.

2. Technical surveys of the Southwest Region have been carried out byIRHO over some years, and the general location and size of future tree cropplantations have been identified to a reasonable accuracy. Plantings of oilpalm and coconut would cover about 50,000 ha in more or less contiguous blocks.Around these plantings would be an equal quantity of rubber, in four sepa-rate blocks. Finally, starting after 1980, there would be large blockscleared for pulp-industry plantations. While such a development schemeis technically feasible and, subject to further study, could be recommended,it appears that uncoordinated development could lead within a few yearsto dismantling of forest cover at an excessive pace. There could be a dangerof changing the rainfall regime (evapotranspiration, cloud movement, etc.)in ways that could be to the serious disadvantage of some plantations and/orlocal food crops. Thus, measures would have to be taken to limit the blocksof space cleared in any one year, and to stagger the locations ("dominoclearing"). The rhythm of development probably should not exceed the pacethat is being planned under the proposed project, some 7,000/8,000 ha planted,requiring some 20,000 ha of forest being dismantled per year. A conditionof the proposed loan would be that, within one year of loan signing, Govern-ment would cause an agricultural development scheme to be prepared, withthe various projects programmed to take into account the ecological risk.Further, the terms of reference of the planning effort should cover land-useplanning for forestry (e.g., delimitation of the forest reserves) and thewelfare of existing wild life. In this connection, it is noted that a land-use study of the northwest region, to the north of the project area, isexpected to be launched soon, under the aegis of a proposed Interminis-terial Land Use Committee, with particular regard to a large wood pro-cessing industry.

ANNEX IIIAppendix 1Page 2

3. The benefits to the region from the Government's development pro-gram, including the proposed project, are expected to be social as well aseconomic. Under current conditions, the outlook for improved standards ofliving in the Bas Cavally district is dim unless new sources of steady incomecan be created. Thus, the creation of a "pole of development" is of greatimportance. Coconut and oil palm plantations have the advantage of combininga need for salaried employment on estates, mostly to be filled from thedestitute nations to the north, with the development of outgrowers. Thesetwo components are inter-dependent, in that estates are essential to supportoutgrower production, but outgrowers raise the profitability of the centralestates and mills investments. The opportunity is also created for villages,and estate workers eventually, to take up food production to supply theestates. Further, exploitation of the coastal fisheries would be given asound basis for development. It was feared initially there would be seriousopposition to the state's "intrusion" into a region with no previous restric-tions on the use of land. The executing agency, therefore, is taking carethat village consultation meetings are held. The reactions, so far, havebeen particularly positive toward the establishment of dispensaries and betterschools.

ANNEX IIIAppendix 2Page 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Kaincope Disease

1. Kaincope disease first appeared in West Africa in the early 1930's(Togo and Ghana). The causal agent has not been identified but seems to berelated to the presence of mycoplasms. It seems to be related to lethalyellowing disease in Jamaica and Florida and the Kribi disease in Cameroon.The diseased trees are characterized by a dropping of the nuts, and a pro-gressive yellowing followed by drying out of the foliage, starting withthe external leaves. The trees eventually die and the disease spreads toneighboring trees in oil-slick fashion. New plantings on infected soil aresoon attacked. In Togo, out of some 5,000 ha, the disease has affected about4,000 ha, over 40 years.

2. The disease has been reported along the Ghana-Ivorian border, some500 miles from the southwest project area. The planting material to be usedwould be a hybrid whose mother is a dwarf variety that is known to have veryhigh resistance to Kaincope disease, and it is a reasonable hope that thisresistance is inherited by the hybrid to a significant degree. To assessthe possible threat to the project, a meeting was convened at IRHO's PortBouet station and attended by representatives of interested agencies, in-cluding the Bank. A note prepared by IRHO on the disease is attached atpages 2-4. The risk is considered small enough to be acceptable. At thePort Bouet meeting, it was recommended that an international research pro-gram be mounted as soon as possible, to include plantings in the variousWest African coastal countries where the disease occurs, aimed at deter-mining more precisely the hybrid's resistance. This research program isbeing designed by IRHO, and funds for inception of this program in Togo areto be provided by a Development Credit approved by IDA.

ANNEX IllAttachment 1Page 1

Note on Kaincope Disease

Issued in Connection with the

World Bank - Sodepalm - IRHO

Meeting of January 9, 1976

(unofficial translation of a Note issued by IRHO, Port-Bouet Station)

I. General

Kaincope disease was first observed in Togo in 1932. The diseasespreads in an oil-slick fashion. It traveled from West to East and has nowreached the border of Benin without, however, penetrating this country.

Rapid periods of extension are followed by periods of inactivity.All the coconut groves of the Togolese littoral have been ravaged by thisdisease. In 1974, no more disease centers were recorded among the old sur-viving coconut trees; instead the existing centers are isolated and locatedsome 20 kilometers in the interior.

In Ghana, the Cape Saint-Paul disease has reached the Togolesefrontier at Three Points Cape. This disease, known since 1932 in the Cape St.Paul, appeared at the Three Points Cape in 1968.

In Cameroon, a similar decay is known in the Kribi region. In Benin,contrary to what has been written by Johnson and Harries, the disease does notexist. Outside Africa, the disease that resembles it the most is the lethalyellowing wilt found among the coconut trees in Jamaica and Florida.

Currently, it seems well established that the lethal yellowing wiltand Kaincope disease are related through the presence of mycoplasms. Theremission of symptoms obtained by injecting Tetracycline into the coconuttree confirms the mycoplasmic nature of the disease. The vectoral agent ofthe mycoplasms is not known. The disease has never been reproduced. Theidentity of the different diseases in West Africa and Jamaica has not beendefinitely established.

II. Varietal Resistance

In Togo, 42 coconut trees of the "Malaysia Tall" type, planted in1959 at Baguida, are free from the disease, while the "West Africa Tall"coconuts are dying in the same area. Similarly in Togo, dwarfs plantedbetween 1961 and 1963 (Malaysia Yellow Dwarfs, Cameroon Red Dwarfs, BrasilGreen Dwarfs) in areas devastated by the disease show only two cases ofdeath after 12 years, which seems to demonstrate a better resistance ofthese types.

ANNEX IIIAttachment 1Page 2

A trial with dwarf coconuts vas carried out near Cape Saint Paulin Ghana, including Malaysia Dwarfs in 1957, and Malaysia Dwarfs and CameroonDwarfs imported from Ivory Coast and from Jamaica in 1966-67. Nearly allhave died and their death was said to have resulted from the disease. Theirdeath, however, could be attributed to the unfavorable environment in the CapeSt. Paul area (poor soil, inadequate rainfall, some 850 mm which means adeficit of 800-1,000 mm); these conditions are detrimental to the developmentof Dwarf coconut, which is more sensitive to drought than Tall. Under suchconditions, and keeping in mind the limited number of trees (8 to 14 in the1966-67 trial) , it is difficult to assess the resistance to the disease fromthese results. In Cameroon an outbreak of the disease was observed in 1975 onRed Dwarfs, about 10 years old, at Ebome. In Jamaica, the Malaysia Dwarf isresistant to the disease (4% mortality) in contrast to Jamaica Tall (85%mortality). Malaysia, Thailand, and Cambodia Talls are less resistant(20% to 30% mortality), and the Ceylon and Panama Dwarfs are susceptible.The hybrid Panama Tall x Malaysia Dwarf is tolerant (13%) and the MalaysiaDwarf x Jamaica Tall is somewhat less tolerant (22%). These results wereobtained in an environment that is very favorable to the disease and wherethe Jamaica Tall "factor" (high susceptibility) is a determining cause ofthe high susceptibility.

Ihe tolerance of the last two hybrids, for which one of the parentsis susceptible to the disease, shows that it is possible to develop a toleranthybrid from susceptible types crossed with resistant types. Even though nosystematic trial has been conducted in Togo on the Yellow Dwarf x West AfricanTall hybrid, there is reason to speculate that this hybrid is tolerant tothe Kaincope disease.

III. Discussions - Conclusions

In West Africa, the centers of coconut disease are always veryisolated. They extend some 60 km in Togo and about 70 km in Ghana (rainfall:850 x 1,200 mm). In Cameroon, in the Kribi region, the disease extends some100 km to the north of the border with Equatorial Guinea.

The limits between the healthy zones and the disease zones arealways very clear-cut. In the case where an agent-vector is involved, itis a signal that an imperceptible modification of the biotope (microclima-tic conditions, wind direction and force, forest screen, proximity of anurban site, etc.) can be an obstacle to the development of the insect andthe establishment of the disease.

The distance that separates the West front of the Kaincope-disease's advance in Ghana and the large coconut groves situated to theEast of the Ivory Coast is about 150 km, that is to say a distance com-parable to that which had been traveled by the disease from Cape St. Paulto Cape Three Points in 40 years. Unless there is a prompt appearance ofthe disease, the risks of the disease appearing in the Southwest of theIvory Coast, 600 km distant from the Ghanian border, by progression from

ANNEX IIIAttachment 1Page 3

pocket to pocket, are tiny and certainly very slight within the next 50years; a period that, in terms of selection, is sufficient for finding aresistant material. Moreover, the next reconversion of the coconut grovesalong the eastern littoral of the Ivory Coast in hybrids of NS x GOA whichare more resistant than the GOA would contribute an obstacle to the progressof the disease.

It is therefore reasonable to believe that Kaincope disease wouldnot hinder the realization, nor compromise the development of the coconutproject in the southwest of the Ivory Coast and that field tests pursueddiligently in Ghana, Togo and Cameroon will bring within the next 10 to15 years a solution to the problem.

ANNEX IIIAppendix 3Page 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Note on the Problemn of Land Tenure in West Africa

1. Traditionally, in West Africa, land does not belong to individuals,but to the chiefdom. The chief himself owns the people's land as trustee.If for some reason he ceases to be chief, he may no longer regulate the localland occupancy. He may also own part of the land as "Ilouse Land," which hasbeen conquered by his ancestors through means of war.

2. Traditionally, the land is given for occupancy to the one whocultivates it. Generally, an heir may count on acquiring the family farmwhen the family head disappears; in any case, there is almost always a closerelative who would wish to continue being a farmer. However, if the heirgoes away to town and there is pressure for land in his village, the landmay be given to someone else, sometimes an immigrant who has elected tostay in this village because he is an active and successful farmer (generally,this occurs after the "stranger" has resided several years in the particularvillage). But this type of alienation is very rare. Additionally, whena forest plot is cleared by a peasant for planting a tree crop, the treesare considered the planter's property. In urban areas, of course, modern lawsgovern land ownership.

3. This general theme is true for the whole of West Africa with someregional variations.

4. A particular Governmental power exists in the territories whichwere ruled by France prior to independence. In the 1920's, the vast forestareas which were practically unoccupied or not cultivated were declared"State Owned," or "Domaniales." This occurred with the agreement of thenearby chiefs who did not, or could not, claim occupancy on these forests.The result of this is as follows:

5. When in an ex-French territory, such as Ivory Coast, the Statewants to devote an area of State-owned land to a tree crop estate, theCovernment may alientate this part of land and issue a property title to acompany (State-owned or not) created for so doing through the law governingconcessions. (The property agreement generally requires that a certain per-centage of the devoted land be developped.

6. In the case of blocks on State lands to be devoted to outgrowerdevelopment, as in the proposed project, the Government may also issueproperty titles to individual peasants.

ANNEX IIIAppendix 3Page 2

7. In the case of smallholders who, using bank credit, plant trees on

part of their farm whose soil is governed by common law, the Government may

guarantee the ownership of the trees. This implies that the land cannot be

taken from the owner of the trees as long as they exist; but the Government

cannot deliver ownership titles, which would cause an alienation from the

peoples' land.

8. The best guaranty for money recovery that the Bank may obtain is the

joint responsibility of a group of no less than five peasants grouped together

and equally responsible for their loans and respective crops.

IVORY COAST ANNEX IIITable 1

FOURTH OIL PALM AND COCONUT PROJECT

Phasing of Proje=t and Personnel =equirements

PYl PY2 PY3 TotalPlanting Program(a) Coconut Estates ha 2,000 3,250 2,250 7,500

(b) Oil Palm Estates ha 3,000 5,000 8,000(c) Coconut Outgrowers ha 200 550 1,250 2,000(d) Oil Palm Outgrowers ha 200 300 500

Total2 7,000 8,800 18,000

Southwest ManagementRegional Manager * 1 1 1 1Financial Manager * - 1 1 1Accountant 1 1 1 1Secretary 1 1 1 1Clerks 5 7 7 7Drivers 2 2 2 2Guards 2 2 2 2

Total 12 15 15 i15

Coconut EstatesHead of Plantation * 2 2 2 2Assistants 2 4 4 4Foremen 2 3 5 5Gang Leaders 8 18 22 22Administrative Asst. 1 2 2 2Head Mechanic 1 1 1Clerks, Storekeepers 4 8 8 8Nurses, Social Assistants 8 16 16 16Mechanics and Drivers 12 27 27 27Cooks, Houseboys, Guards 12 21 21 21Field Workers 204 449 54o 540

Total 255 551 648

Oil Palm EstatesHead of Plantation * - 2 2 2Assistants 2 6 6Foremen 2 8 il ilGang Leaders 12 41 55 55Administrative Assts. 1 2 2Workshop Head 1 2 2Clerks, Storekeepers 5 10 10Nurses, Social Assistants - 8 16 16Mechanics and Drivers 13 53 81 81Cooks, Houseboys, Guards - 12 24 24Field Workers 300 1 011 1 074 1,074

Total 327 1283 1283

Outgrowers ProgramGroup Leaders 2 4 10 10Sector Chiefs 1 2 2Drivers, Mechanics 4 6 6Guards 1 2 2

Total 2 10. 20 20

* Indicates expatriate staff

ANNEX IIITable 2

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Projected Yields 1/

I. OIL PALM

A. Estates B. Outgrowers

Year afterPlanting M tons/ha ffb

4 4.o 3.55 10.0 96 12.0 127 16.0 14b 18.0 16Q onward 18.0 16

II. COCONUT

'000 nuts/ha

5 0.750 0.5006 5.0 4.5007 14.0 12.500

18.500 17.0q 21.0 18.500

10 onward 23 20.500

1/ It has been assumed that eventual yields achieved by smallholderswill be about 10% lower than estates due to a less rigorous standard ofmaintenance and harvesting.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Yieids and Yearly Production

Projections for Oil Palm ffb and Kernels

Yearly TotalProduction Total Yearly Total

Cumulative Yield according Yearly Yield of Yield of KernelYear number of ha ffb tons to years Production kernels Kernels ProductionPlanted in production per ha of planting ffT tons t/ha t/ha in tonsI. ESTATES

1980: 3,000 ha 1977 3,000 4 12,.Dn 12,000 0.150 150 4501961: 3,000 ha 1977 10 30,000 0.410 1,230

5,000 ha 1978 8,000 4 20,00 50,000 0.150 7.Q 1,9801982: 3,000 ha 1977 12 36,o0o 0.515 1,545

5,000 ha 1978 8,000 10 50.000 86,ooo 0.410 2.050 3,5951983: 3,000 ha 1977 16 48,ooo o.69o 2,070

5,000 ha 1978 8,o0o 12 60,000 108,000 0.515 2,575 4,6451984: 3,000 ha 1977 18 54,ooo 0,795 2,385

5,000 ha 1978 8,o0o 16 80o000 134,000 o.69o 3.45D 5,8351985: 3,000 ha 1977

5,000 ha 1978 8,000 18 144,000 0.795 6,360and on until 2005

II. OUTGROWERS1970-~ 200 3.5 700 700 0.130 2 261981: 200 ha 1977 9 1,800 0.370 74

300 ha 1978 500 3.5 1.050 2,850 0.130 1131982: 200 ha 1977 12 2,400 o.49o 98

300 ha 1978 500 9 2-70 5,100 0.370 lu 2091983: 200 ha 1977 14 2,800 0.625 135

300 ha 1978 500 9 2.0 5,500 o.49o 0 2821984: 200 ha 1977 16 3,200 0.710 142

300 ha 1978 500 14 h 7,400 0.625 187 3291985: 200 ha 1977

300 ha 1978 500 16 8,o0o 8,000 0.710 355and on until 2005

t-HX

1- H

ANNEX IIITable 4

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Yields and Yearly Production

Projections for Coconuts, Copra and Coconut Charcoal

Cumulative Yield Yearly production Total yearly Copra

number of ha '000 according to year production in produc- Charcoal

in production nuts per of planting in thousands nuts tion at at 250kg

ha thousand nuts 1 ton per per

______________ _________ ________________l_t_ 5000 nuts

I. Estates

1980: 2000 ha 1976 2000 0.750 1500 1500 300 75

1981: 2000 ha 1976 5 100003250 ha 1977 5250 0.750 2438 12438 2487 622

1982: 2000 ha 1976 14 28000

3250 ha 1977 5 16250

2250 ha 1978 7500 0.750 1688 45938 9188 2297

1983: 2000 ha 1976 18.500 370003250 ha 1977 14 455002250 ha 1978 7500 5 11250 93750 18750 4688

1984: 2000 ha 1976 21 42000

3250 ha 1977 18.500 601252250 ha 1978 7500 14 31500 133625 26725 6681

1985: 2000 ha 1976 23 46000

3250 ha 1977 21 68250

2250 ha 1978 7500 18.500 41625 155875 31175 7794

1986: 2000 ha 1976 23 46000

3250 ha 1977 23 747502250 ha 1978 7500 21 47250 168000 33600 8400

1987: full maturity 7500 23 172500 34500 8625

II. Outgrowers

1980: 200 ha 1976 200 0.500 100 100 20 5

1981: 200 ha 1976 4.500 900

550 ha 1977 750 0.500 275 1175 235 59

1982: 200 ha 1976 12.500 2500

550 ha 1977 4.500 2475

1250 ha 1978 2000 0.500 625 5600 1120 280

1983: 200 ha 1976 17 3>400

550 ha 1977 12.500 6875

1250 ha 1978 2000 4.500 5625 15900 3180 795

1984: 200 ha 1976 18.500 3700550 ha 1977 17 9350

1250 ha 1978 2000 12.500 15625 28675 5735 1434

1985: 200 ha 1976 20.500 4100

550 ha 1977 18.500 101751250 ha 1978 2000 17 21250 35525 7105 1776

1986: 200 ha 1976 20.500 4100

550 ha 1977 20.500 11275

1250 ha 1978 2000 18.500 23125 38500 7700 1925

1987: full maturity 2000 20.500 41000 8200 2050

Annex IIITable 5

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Ivory Coast Palm Oil and Kernels Production

1970 to 1985

Production of ffb-----'000 tons----

1/1970 1975 1980- 1985

SODEPALM plantations 95 473 613 901

Outgrowers' plantations 4o 161 288 441

Total SODEPALM 135 634 901 1,342

Private plantations 100 120 130 140

Total ffb 235 754 1,031 1,482

Industrial oil 2/ 43 162 227 326

Industrial kernels 3/ 10.6 33.2 45.4 65.2

Note: the production from wild palms has not been taken into account as noreliable figures could be obtained.

1/ Including present project.2/ At a yield of 21.5% in 1975, 22% in 1980, 1985.3/ At a yield of 4.4%.

IVORY COASTFOURTHi OIL PALM AND COCONUT PROJECT

SOLITHWEST PLANTATIONS STRUCTURES ANDMANAGEMENT SETUP AND SODEPALM CONNECTION

| 'iltPO F MANAGERI J ~~~~~~~~~~~~~~~~~~~~~FOJR SOUIRWVEST CONSULTANrSL (.tNtl1IAL MANAGER L FUR ID OPMENT

JUtER~~~ l~~ ll lA Ml ul A i FdL-AMOJGO'[R

1 L ANI)F{:-S'-l---0 C)H iS NF6LH C A i A ITARN RO

m(Li rIE i3 MEIA Ng @

ORGANI tZATIO r . r X C lFICR

ACCOUN r INGESTAT ESSIKA OUTGROVSERSMIANAGERS WORKSHOPS ATTENDANTS SECTOR

PERSONNEL DIVSON GARAGEASSISTAT MECHANICS

CNTRUCTION

W-lrd 8-t. 16l441

ANNEX IVPage 1(a)

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

The Outgrowers Program

1. A system of financing outgrower development through nominally

interest-free credits was introduced in the oil palm sector in the early

1970s. In the appraisal report of the Third Oil Palm Project, it was pointed

out that this system was not intended to replace or compete with a convention-

al credit system, was not establishing undesirable precedents, because of its

specialized nature, and was simply,a financing method chosen by Government to

attain the dual objectives of: (a) providing adequate incentives to farmers to

diversify into oil palm, and (b) assuring Government a satisfactory return onits investment in the outgrower program. Both these objectives have been

satisfactorily met; a small grant element, previously considered necessary,has been eliminated in the southwest project. Under the project, outgrowers

must sell their produce to SODEPALM, and the producer price is fixed at a

level that will leave a reasonable margin after the produce is sold on the

export market. As it is considered desirable to have similar terms for alloutgrowers under the project, the same system would be extended to coconut

outgrowers.

2. The credit supplied by SODEPALM would cover the full direct costsof establishing an outgrower's plantings, including cash advances to com-

pensate the farmer for his work during years PYI to PY3 as below:

Oil Palm Outgrower Coconut Outgrower----------------…CFAF ha… ---------------

Total Credit: 141,000 208,000

of which cash advances 60,000 50,000

3. The repayment period would be eight years for the oil palm outgrower,

with four years of grace; and Il years for the coconut outgrower, with five

years of grace. These terms reflect the different cash flows of the two types

of outgrower (See Tables 1 and 2), and in particular the slower productioncurve for the coconut grower.

ANNEX IVPage 1(b)

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

CREDIT ARRANGEMENTS

I. OIL PALM OUTGROWERS

The Credit Component

1. The following table shows the cost of land development and the

distribution of credit in kind and in cash over the four-year period re-

quired to bring outgrower oil palm into production:

(CFAF/ha)Development Cost Year 1 Year 2 Year 3 Year 4 Total

(a) Credit in Kind

Cover Crop 2,400 2,400

Wirenetting 14,875 14,875

Fertilizers 1,925 5,530 2,800 4,200 14,455

Seedlings 39,182 1,918 - - 41,100

Transport 5,200 240 240 240 5,920

Labor 1,250 250 250 250 2,000

Miscellaneous 250 - - - 250

Total 65,082 7,938 3,290 4,690 81,000

(b) Cash Credit 38,000 14,000 8,000 - 60,000

Total Cost: 103,082 21,938 11,290 4,690 141,000

Repayment Schedule

CFAF per Year Subtotal Total CFAF

Year 6 4,800 4,800

Year 7 17,400 22,200

Year 8 to 13 19,800 118,800 141,000

ANNEX IVPage 2

2. The total estimated development costs of CFAF 141,000/hacompare to CFAF 76,710/ha for the Third Oil Palm Project (Loan No. 1036)and CFAF 117,220 and CFAF 102,050 for the first two preceding projects.The increase reflects the difficult nature of the terrain which requiresmore mandays of work for land preparation (i.e., the Cash Credit Component)and rising costs of inputs.

3. Outgrowers would clear the land, supply necessary tools at anestimated cost of CFAF 3,000 in PY 1, CFAF 1,500 in PY 2 and then CFAF 750for each following year of maintenance. They will also supply labor forupkeep and harvest.

4. In Year 5 outgrowers will buy with their own funds CFAF 4,200worth of fertilizers and from Year 6 CFAF 5,600 worth of fertilizers foreach following year. These payments together with the cost of tools(para 3) will come out of yielded income (see Cash Flow and Income Pro-jection for Oil Palm Outgrowers Table No. 1).

5. Farmers would now repay CFAF 141,000 from Year 6 to 13. Thereis no longer a subsidy to outgrowers as there was in previous projects.

Allocation of Proceeds

6. From 1973 until recently, SODEPALM had been giving outgrowersa bonus of CFAF 4 per kg of fresh fruit bunch which, together with theguaranteed price of CFAF 4/kg, assured farmers a total income of CFAF8/kg. Under this project the assumed price is CFAF 8/kg.

7. The following table shows the estimated annual average alloca-tion of the value of one kilo of ffb, using the IBRD Forecast of palmproduce prices:

ANNEX IVPage 3

Palm Produce Content (per Kg/ffb) (k) (CFAF) (CFAF)

Oil content 0.220 16.28Kernel 0.043 2.12

Gross revenue 18.40Export taxes 0.87

Net revenue to SODEPALM 17.53

SODEPALM Costs

Investments and Supervision 2.13Collection 1.21Processing and transport 3.41Financial charges 0.77

7.52

Net available 10.01

Price to Outgrowers 8.00

Surplus CFAF 2.01

ANNEX IVPage 4

II. COCONUT OUTGROWERS

The Credit Component

9. The following table shows the cost of land development and thedistribution of credit in kind and in cash over the five-year periodrequired to bring outgrower coconut trees into production:

(CFAF/ha)Development Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total

(a) Credit in Kind

Cover Crop 3,000 3,000

Wirenetting 17,000 17,000

Fertilizers 4,748 8,544 16,480 22,656 18,272 70,700

Seedlings 41,600 2,080 - - 43,680

Transport 4,295 2,678 2,678 2,678 2,678 15,007

Labor 2,500 500 500 500 500 4,500

Small tools andMisc. 1,000 1,000 1,000 800 500 4,300

Total 74,143 14,802 20,658 26,634 21,950 158,187

(b) Cash Credit 34,000 7,000 5,500 3,000 - 50,000

108.643 21,800 26,158 29,634 21,950 208,187

Repayment Schedule

CFAF per Year Subtotal Total CFAF

Year 7 12,500 12,500Year 8 17,000 29,500Year 9 18,500 48,000Year 10 20,500 68,500Year Il to 16 21,500 129,000 197,500Year 17 10,500 208,000

ANNEX IVPage 5

10. The total estimated development costs of CFAF 208,000/ha compareto CFAF 188,100/ha for the Second Oil Palm Project (Loan No. 759) appraisedin 1971. The increase reflects the difficult nature of the terrain whichrequires more mandays of work for land preparation (i.e., the Cash CreditComponent) and rising costs of inputs.

11. Outgrowers would clear the land, supply necessary tools at anestimated cost of CFAF 1,000 from PY 1 to PY 3, CFAF 800 in PY 4, and thenCFAF 500 for each following year of maintenance. They will also supplylabor for upkeep and harvest.

12. From Year 6 outgrowers will buy with their own funds CFAF 22,628of fertilizers for each following year. These payments together with thecost of tools (para 3) will come out of yielded income. (See Cash Flowand Income Projection for Coconut Outgrowers, Table 2).

13. Farmers would now repay CFAF 208,000 from year 7 to 17. Thereis no longer a subsidy to outgrowers as there was in the previous project.

Allocation of Proceeds

14. In the Second Coconut Project SODEPALM had forecast paying out-growers CFAF 5 per coconut. The price has progressed since to CFAF 7/kg;under this project the price of CFAF 7/nut has been retained.

15. The following table shows the estimated annual average allocationof the value of 1,000 coconuts based on IBRD Forecast of copra prices:

CFAF

Economic Value of 1,000 Coconuts FCF 10,943 1/(including collection and transformation)

Sodepalm Costs:

Investments and Supervision 1,662

Financial Charges 585 2,247

8,696

Guaranteed Price to Outgrowers 7,000

Surplus 1,696

1/ See Table No. 4 Annex X (Net value ton of copra CFAF 54,715 divided by5,000 nuts).

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Oil Palm Outgrowers

Cash Flow and Income Projiection 1ha.)

(in CFAF)

Years YearsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 8 to 13 14 to2B

A. Income(a) Cash Credit 38,000 14,000 8,000

(b) Sales to Sodepalm (tons of ffb) 3.5 9.5 12 14.5 16 16Value at CFAF 8/kg ffb 28,000 766,Ô000 9 ~620 116,000 128,000 128,000

Total Income 38,000 1400 8000 28000 7,000 96 11,0 300 28120

B. Disbursements(a) Small Tools 3,000 1,500 750 750 750 750 750 750 750

(b) Fertilizers 4,200 5,600 5,600 5,600 5,600

(c) Repay,ment af Credit 4,800 17,400 19,800

Total Disbursementb 3,000 1,500 750 750 4,950 11,150 23,750 26,150 6,350

C. NET CASH INCOME 35.000 12.500 27,250 84 850 92.250 101,850 121.650

D. Workdays Required

(a) Land-clearing 100(b) Pla.ntiig 21 3(c) Maintenance 24 48 30 25 22 22 21 21 21(d) Harvest - 7 19 24 29 31 31

Total Workdays 145 51 30 32 41 46 50 52 52=' =--I--~ == = C= == m~

E. Income per Manday 241 245 242 852 1,733 1,845 1,845 1,959 2,339

(D

IVORY COAST

FOURTH OIL PALII A1L COCONUT PROJECT

Coconut Outgrowers

Cash Flow and Income Projection (I ha.)

(in CFAF)

Years Yeer YearsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 il to 16 17 14 to 29

A. Income(a) Cash Credit 34,500 7,000 5,500 3,000

(b) Sales to Sodepalm (,000 nuts) 500 4.500 12,500 17,000 18.500 20,500 20o500 20.500 20.500Value at CFAF 7 per nut 3,500 31,500 87,500 119,000 129,500 143,500 143,500 143,500 143,500

Total Income 34 500 7.000 5 50O 3 000 83500 319500 8119000 129,500 143.500 _3500 1 500

B. Disbursements(a) Small Tools 1,000 1,000 1,000 800 500 500 500 500 500 500 500 500 500

(b) Fertilizers 22,688 22,688 22,688 22,688 22,688 22,688 22,688 22,688

(c) Repayment of Credit __ __12.500 17,000 18.500 20.500 21,500 10.500 -

Total Disbursements 1, 000 1 ,000 800 500 231 5.1644&688 33.688 23_188

C. NET CASH INCOME 33, 500 000 4 500 2200 3,000 S,312 51,812 . 2 1

D. Workdays Required

(a) Land-clearing 100(b) Planting 20 10 5(c) Maintenance 12 15 12 8 8 8 7 7 7 7 7 7 7(d) Harvest and Transport 1 9 25 35 38 41 43 43 43

Total Workdays 132 25 17 8 9 17 32 42 45 48 50 50 50

E. Income per Manday 254 240 265 275 333 489 1,619 1,876 1.996 2.079 66.96 2,196 2.406

-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r 1-4

ANNEX VPage 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Oil Palm Sector

Industrial Investments and Processing Costs

A. Production

1. The following table shows the quantity in tons of fresh fruitbunches that have to be processed yearly:

Estates Outgrowers Total

1980 12,000 700 12,700

1981 50,000 2,850 52,850

1982 86,000 5,100 91,000

1983 108,000 5,500 113,500

1984 134,000 7,400 141,400

1985 and on 144,000 8,000 152,000

2. The production of 1980 (12,700 tons) will not be processed sinceit does not justify advancing the considerable industrial investment byone year for such a small quantity. Since transporting it to anotherSODEPALMI mill is not feasible (ffbs must be processed within 24 hours ofharvest) and would not, in any case, warrant the transport costs, it willbe sold on the local market. Its value, or revenue from sales, has notbeen taken into account.

B. Industrial Investments

Two mills are scheduled, one in Iboke and the second one in Dewake.The first mill, which will be operational in 1981, will start with one proces-sing line of 20 tons/hour (i.e. 66,000 tons of ffb per year). An additionalprocessing line of 20 t/hr will be added in 1982. The year and costs forthese two lines are as follows:

Ist line: 1980, at cost of CFAF 1,000 millioir-

2nd line: 1981, at cost of CFAF 600 million

1/ In 1980 current terms.

ANNEX VPage 2

The second mill at Dewake will be operating in 1983 with only one pro-

cessing line of 20 t/h. The total processing capacity will therefore be

198,000 tons/year at full production and cover the overall production of

the project area. When, and if, Government carries-out its additional

development of 4,500 ha in 1979 (3,000 ha estates and 1,500 ha outgrowers),

then a second processing line of 20 t/h will be added to the Dewake mill.

The investment of CFAF 1,000 million for the Dewake mill is scheduled in

1982.

4. These two mills have a life-span of 12.5 years, but this period

has been conservatively reduced to 10 years. Processing costs have been

increased, as from the loth year of operation to include a provision for

renewal.

C. Processing Costs

5. The average cost per ton of ffb processed in various SODEPALM

mills has been CFAF 2,000, reaching CFAF 2,500 in the older mills, and

falling to CFAF 1,737 at Dabou and CFAF 1,722 at the newest Ehania mill.

The average cost of CFAF 2,000 has been retained for the new southwest

mills, giving CFAF 9,000 per ton of oil processed.

6. In the economic rate of return, from 1989 on, CFAF 6,500 per

ton of oil processed has been added to cover a provision for mill renewal,

bringing total processing costs to CFAF 15,500 per ton of oil. 1/

1/ Investment of CFAF 2,600 million and processing of 45,000 tons

of oil per year during 10 years, plus interest charges.

ANNEX VTable 1

IVORY COAST

FOURTH OIL PALM MND COCONUT PROJECT

PROCESSING COSTS

TotalTotal Cost at proces-

Total tons Cost at CFAF tons of CFAF 13,750 sing Price 1/Palm Oil 9000 per ton of copra per ton costs contin-

Year processed (in CFAF m) processed (in CFAF m) CFAF m gencies TOTAL

198C - - 320 4 4 2 6

1981 11,627 105 2,722 37 142 91 213

1982 20,o42 180 10,308 142 322 195 527

1983 24,970 225 21,930 302 527 264 791

1984 31,108 280 32,460 446 726 609 1,335

1985 33,440 301 38,280 526 827 8oo 1,627

1986 33,440 301 41,300 567 868 959 1,827

Local Taxes: 10%

1/ Compounded at 7% per year starting in 1976

ANNEX VTable 2

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

COCONUT SECTOR

Processing Costs

I. Copra

A kiln processes 11,000 nuts per day, during 300 days per year,making a total of 3,300,000 nuts and producing 660 tons of copra.

Investments are as follow:CFAF

Cost of Kiln 5,750,000

Storage Shed 2,000,000

Supervisor's housing 815,000

8,565,000

Life = 15 years giving a production of 9,900 tons of copra

Cost per ton of copra produced: CFAF 865

Labor 1 Supervisor, per year CFAF 550,000

30 workers at CFAF 180,000/year 5,400,000

TOTAL 5,950,000 = per ton 9,015

Transport per ton 2,000

Tools machetes, bicycles, etc. per ton 350

Operating expenses including maintenance CFAF 330,000/year 500

Packing 18 bags per ton at 50 CFAF = 900

TOTAL per ton CFAF 13,630

ANNEX VTable 2 (Cont'd)

Rounded at CFAF 13,750 per ton

II. Charcoal

An oven processes about 2500 shells each day, which produces about120 kg of charcoal, i.e. 35 tons per year.

Cost of one oven is CFAF 300,000 and its life is 3 years.The investment cost per ton of charcoal is therefore CFAF 3,000

Transport and small tools are estimated per ton at CFAF 1,500

Labor estimated at 10 mandays per ton at CFAF 600 CFAF 6,000

Packing in bags of 50 kg at CFAF 240 per bag, per ton CFAF 4,800

Storage and other miscellaneous expenses CFAF 1,134

Total cost per ton CFAF 16,434

IVORY COAST

Fourth Oil Palm and Coconut Project

Project Cost Estimates('000 CFAF)

1976 1977 1978 Total Foreign Exchange TaxesPYl PY2 PY3 Cost Amount

T. COCONUT ESTATESLand Preparation and Access Roads 775,630 480,890 151,620 1,408,140 75 1,056,105 12 168,977Land Development Costs 166,506 313,710 312,269 792,485 40 316,994 9 71,324Estates Operating Costs 53,694 98,314 104,482 256,490 52 132,720 8 19,509Investments

(a) Buildings - 233,438 37,438 270,876 60 162,526 15 40,631(b) Vehicles 33,800 42,500 8,100 84,400 90 75,960 -(c) Equipment B3.800 74600 - 158,400 70 110.880 15 23.760

Sub-Total 1.113,430 14243 452 2 970 791 63 5 11 324,201

II. OIL PALM ESTATESLand Preparation and Access Roads 405,900 879,450 947,100 2,232,450 75 1,674,338 12 267,894Land Development Costs 88,863 292,429 300,447 681,739 30 204,522 7 47,722Estates Operating Costs 10,270 104,065 167,340 281,675 54 153,591 8 21,917Investments

(a) Buildings 77,563 357,375 237,500 672,438 60 403,463 15 100,866(b) Vehicles 42,300 113,500 79,400 235,200 90 211,680 - _(c) Equipment 74.600 74.600 149.200 70 104 440 15 22 380

Sub-Total 624,896 1,821.419 1,197.537 422 707 65 2.752 034 Il_

III. OUTGROWERS PROGRAMExtension - Staff 1,200 6,745 14,170 22, 115 - - 5 1, 106

- Investments - 19,000 17,625 36,625 50 18,313 12 4,395Loans to Farmers - Inputs 14,929 56,755 126,065 197,749 40 79,559 9

- Cash advances 680 27,975 62,27 97.05 - -Sub-Total 22.929 110.475 220 135 353 539 97 872 723 440

IV. SOUTHWEST MANAGEMENTStaff 20,930 25,500 25,500 71,930 65 46,750 5 3,597Operating Expenses 5,000 7,000 9,000 21,000 50 10,500 15 3,150Investments

(a) Buildings 21,750 41,750 6,000 69,500 60 41,700 15 10,425(b) Vehicles & Equipment 7.900 9.900 2.000 19.800 60 11i820 15 2,970

Sub-Total 55.580 84,150 42.500 182.230 61 110,770 h1 20,142

TOTAL BASE COSTS 1,816,835 3,259,496 2,682,931 7,759,262 61 4,815,861 il 828,567Physical Contingencies 1/ 151,637 254,920 192,964 599,521 66 396,586 12 71,943Estimated Price Increases 2/ 118,181 636,322 837.973 1,592.476 63 998 033 il 175 172

TOTAL ESTIMATED COST OF PROJECT 2.086,653 4.150,738 âZL1368 9.951.259 62 1 1,075 682

1/ Physical contingencies of 10% on Land Preparation,access roads and buildings; 5% on all other costs,salaries excluded.

2/ Price contingencies compounded as follows:(a) Land Preparation, roads and buildings 13% in 1976 and 12% thereafter;(b) Vehicles and equipment 9% in 1976 and 8% thereafter;(c) All remaining costs 10% for each year.

These contingencies have been calculated on base cost estimates plus physical contingencies in any year,compounding price-increase factor in prior years and one-half of the price-increase factor in the yearconcerned.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Land Preparation and Development Costs

I. COCONUT ESTATES

Foreign Currency Tazeslst Year 2nd Year 3rd Year TOTAL % Cost % Cost

A - Land Clearing 141.690B - Access Roads h44,46o 6,ooo

Sub-total 186.150 6,ooo 192,150 75 144,113 12 23,o6o

Yearly Land Preparation Costs (in CFAF PY 1 PY 2 PY 3 TOTALmillion)

1976: 2000 ha 372.300 12.000 384.3001977: 3250 ha 403.330 201.658 604.9881978: 2250 ha 279.232 139.620 418.852

Total Land Preparation Costs 775 630 .480.890 151.620 1,4o8.14o 75 1,056.105 12 168.977

C - Development Costs per ha (in CFAF) lst Year 2nd Year 3rd Year TOTAL

(a) Field Labor 13,750 8,ooo 8,000 29,750 - 5 1,488(b) Transport costs 1,070 945 945 2,960 80 2,368 10 296(c) Seedlings 41,600 2,080 - 43,680 15 6,552 10 4,368(d) Fertilizers 4,748 8,544 16,480 29,772 85 25,306 10 2,977(e) Wire netting 17,000 17,000 85 14,450 10 1,700(f) Cover plant 3,000 3,000 - - -(g) Small equipment, etc. 2,085 2,000 2,000 6,085 75 4,565 15 913

Sub-total 83,253 21,569 27,425 132,247 40 53,241 9 11,742

Yearly Development Costs(in CFAF million) PY 1 PY 2 PY 3 TOTAL

1976: 2000 ha 166.506 43.138 54.850 264.494 31977: 3250 ha 270.572 70.099 340.6711978: 2250 ha 187.320 187.320 CD

roT Total Development Costs 166.5o6 313.710 312.279 792.1485 40 316.9914 9 71.3214

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Land Preparation and Development Costs

II. OIL PALM ESTATES

Foreign Exchange Taxeslst Year 2nd Year 3rd Year TOTAL % Cost % Cost

Cost per hectare (in CFAF)

A - Land Clearing 102,400 51,200 153,600B - Access Roads 32,900 16,450 49,350

Sub-total 135,300 67,650 - 202,950 75 152,213 12 24,354

Yearly Land Preparation Costs PY 1 PY 2 PY 3 TOTAL

(in CFAF million)1977: 3000 ha 405.900 202.950 608.8501978: 5000 ha 676.500 338.250 1,014.7501979: 3000 ha - - 608.850 608.850

Total Costs 405.900 879.450 947100 2 232 45 75 1,674.338 12 267.894

C - Development Costs per ha lst Year 2nd Year 3rd Year TOTAL(in CFAF)

(a) Field Labor 13,500 23,000 10,000 46,500 - 5 2,325(b) Transport costs 1,156 5,638 2,291 9,085 80 7,268 10 909(c) Seedlings 14,505 1,918 16,423 15 2,463 10 1,642(d) Wire netting 14,875 14,875 85 12,644 10 1,488(e) Fertilizers 1,925 5,530 7,455 85 6,337 10 746(f) Cover plant 2,400 2,400 - - - -(g) Small equipment 460 270 230 960 75 720 15 144

Sub-total 29,621 48,lo8 19,969 97,698 30 29,432 7 7,254

Yearly Development Costs

1977: 3000 ha 88.863 144.324 59.907 293.094 (D

1978: 5000 ha 148.105 240.540 388.645 _ c

Total Costs 88.863 292.429 300.457 681.739 30 204,522 7 47.722

ANNEX VlIVORY COAST Table 4

Fourth Oil-Palm and Coconut Project

Estates Operating Costs

(in '000 CFAF)

Foreign Exchange TaxesPY 1 PY 2 PY 3 Total % Cost % Cost

COCONUT ESTATES

(a) Staff Salaries(i) GLIKE 1/ 36,810 30,600 30,195 97,605 4o 39,042 5 4,880(ii)NERO 2/ - 32,055 34,100 66,155 4o 26,462 5 3,308

(b) Transport 9,522 21,128 21,128 51,778 8o 41,422 b0 5,178(c) Sundry supplies 7,362 12,531 12,859 32,752 75 24,564 15 4,913(d) Buildings maintenance 5/ - 2,000 6,200 8,200 15 1,230 15 1,230

Total Costs 53,694 98,314 104,482 256,490 52 132,720 8 19,509

OIL-PALM ESTATES

(a) Staff Salaries(i) IBOKE 3/ 6,100 53,540 49,835 109,475 40 43,790 5 5,474(ii) DEWAKE V 5,570 49,490 55,o60 o4 22,024 5 2,753

(b) Transport 2,950 32,235 42,450 77,635 80 62,108 10 7,764(c) Sundry supplies 1,220 11,820 19,865 32,905 75 24,679 15 4,936(d) Buildings maintenance 5/ goo 5,700 6,600 15 990 15 990

Total Costs 10C270 1 167,340 281,675 54 153,591 8 21,917

See Table 5 for detailed staff costs of GLIKE EstateSee Table 6 for detailed staff costs of NERO EstateSee Table 7 for detailed staff costs of IBOKE EstateSee Table 8 for detailed staff costs of DEWAKE EstateEstimated at 1% of building costs for the first year,2% for the second year and 3% for each of the following years.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Estate Operating Expenditure - GLIKE

Staff Costs (in '000 CFAF)

GLIKE Coconut Estate

Type of AnnualDescription Housing Salary PY1 Cost PY2 Cost PY3 Cost Total

'000

Head of Plantation A 6,500 2 13,000 1 6,500. 1 6,500 26,00oAssistant B 3,500 2 7,000 2 7,000 2 7,000 21,000Foreman E 550 2 1,100 2 1,100 2 1,100 3,300Gang leaders F 135 8 1,080 il 1,485 8 1,080 3,645Adm. assistant B 3,500 1 3,500 1 3,500 1 3,500 10,500

Clerk F 41o 3 1,230 3 1,230 3 1,230 3,690Storekeeper E 320 1 320 1 320 1 320 960Nurse D 84o 1 84o 1 840 1 840 2,520Assistant nurse E 600 3 1,800 3 1,800 3 1,800 5,4ooSocial assistants D 240 4 960 4 960 4 960 2,880

Mechanics and drivers F 260 12 3,120 14 3,640 14 3,640 10,400Cooks F 330 2 660 1 330 1 330 1,320Houseboys G 305 5 1,525 4 1,220 4 1,220 3,965Guards G 135 5 675 5 675 5 675 2,025

Total cost (CFAF '000) 36,810 30,600 30,195 97,605

rH

ANNEX VITable 6

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Estate Operating Expenditures - NERO

Staff Costs (in '000 CFAF)

NERO Coconut Estate

Type of AnnualDescription Housing Salary PY2 Cost PY3 Cost Total

'000

Head of Plantation A 6,500 1 6,500 1 6,500 13,000Assistant B 3,500 2 7,000 2 7,000 14,000Foreman E 550 1 550 3 1,650 2,200Gang leaders F 135 7 945 14 1,890 2,835Adm. assistant B 3,500 1 3,500 1 3,500 7,000

Head Mechanic C 2,500 1 2,500 1 2,500 5,000Clerk F 41o 3 1,230 3 1,230 2,460Storekeeper E 320 1 320 1 320 640Nurse D 840 l 840 1 84o 1,680Assistant nurse E 600 3 1,800 3 1,800 3,600Social assistants D 240 4 960 4 960 1,920

.Iechanics and drivers F 260 13 3,380 13 3,380 6,760Cooks F 330 1 330 l 330 660-3ouseboys G 305 5 1,525 5 1,525 3,050Guards G 135 5 = 675 5 675 1,350

Total cost (in '000 CFAF) _2055 34,100 66,155

IVORY COAST

Fourth Oil Palm and Coconut Project

Estate Operating Expenditure - IEJOKE

Staff Costs (in '000 CFAF)

IBOKE Oil Palm Estate

Type of Annual

Description Housing Salary Pyl Cost PY2 Cost PY3 Cost Total

'000

Head of Plantation A 6,500 2 13,000 1 6,500 19,500

Assistant B 3,500 2 7,000 3 10,500 17,500

Foreman E 550 2 1,100 6 3,300 5 2,750 7,150

Gang leaders F 135 12 1,620 31 4,185 26 3,510 9,315

Adm. assistant B 3,500 1 3,500 1 3,500 7,000

Workshop head B 3,500 1 3,500 1 3,500 7,000

Clerk F 410 4 1,640 4 1,640 3,280

Storekeeper E 320 1 320 1 320 64o

Nurse D 840 1 84o 1 840 1,680

Assistant nurse E 600 3 1,800 3 1,800 3,600

Social assistants D 240 4 960 4 960 1,920

Mechanics and drivers F 260 13 3,380 41 lo,66o 43 11,180 25,220

Cooks F 330 1 330 1 330 660

Houseboys G 305 6 1,830 6 1,830 3,660

Guards G 135 5 675 5 675 1,350

Total cost (in '000 CFAF) 6,100 53,540 49,835 109,475

Ht 1i-3

ANNEX VITable

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Estate Operating Expenditures - DEWAKE

Staff Costs (in '000 CFAF)

DEWAKE Oil Palm Estate

Type of AnnualDescription Housing Salary PY2 Cost PY3 Cost Total

'000

Head of Plantation A 6,500 1 6,500 6,500Assistant B 3,500 3 10,500 10,500Foreman E 550 2 1,100 6 3,300 4,40oGang leaders F 135 10 1,350 29 3,915 5,265Adm. assistant B 3,500 1 3,500 3,500Workshop head B 3,500 1 3,500 3,500Clerk F 410 4 1,640 1,640Storekeeper E 320 1 320 320Nurse D 840 1 84o 840Assistant nurse E 600 3 1,800 1,800Social assistants D 240 4 960 960

Mechanics and drivers F 260 12 3,120 38 9,880 13,000Cooks F 330 1 330 330Houseboys G 305 6 1,830 1,830Guards G 135 5 675 675

Total ('000 CnAF) 5,570 49,490 55 060

IVORY COAST

MMVREH OIL PALM AND cOCOrIT PROJECT

INVESTMENTS - Summary

(in '000 CFAF)

Foreign Exchange TaxesPY 1 PY 2 PY 3 Total % Cost % Cost

I COCONUT ESTATES

(a) Vehicles 33,800 42,500 8,100 84,400 90 75,960 - -

(b) Buildings 233,438 37,438 270,876 60 162,526 15 40,631(c) Installations and Equipment 83.800 74.600 - 158.400 _7 110.88o 15 23.760

TOTAL 117,600 350,538 45,538 513,676 68 349,366 12 64,391

II OIL PALM ESTATES

(a) Vehicles 42,300 113,500 79,400 235,200 90 211,680 -(b) Buildings 77,563 357,375 237,500 672,438 60 403,463 15 100,866(c) Installations and Equipment 74,600 74,6oo 149,200 70 104,44o 15 22,380

TOTAL 119,863 545,475 391,500 68 719,583 12 123,246

I- 3 =

IVORY COAST'r

Fourth Oil Palm and Coconut Project

INVE S '1.E N\rS

Il. Velhicles

(in '000 CFAF)

Lorries 6/7t Tr4ctors 6511P Station Wagons Ambulance Passenger Cars Total CostCFAF 4,100 CFAF 2.700 CFAF 1,800 CFAF 2,500 CFAF 800 1976 1977 1978

A. Coconut Estates(a) GLIKE 1976 4 3 2 1 4 33,800

1977 2 5,400

(b) NERO 1977 5 3 2 1 3 37,1001978 3 _ _ _ 8,100Sub-total 9 il 4 2 7 33800 42500 8100

B. Cil Palm Estates(a) IBOKE 1976 9 2 42,300

1977 8 12 2 1 5 75,3001978 1 1 6,800

(b) DEWAKE 1977 8 2 38,2001978 -8 il 2 1 5 __72.600Sub-total 34 28 4 2 10 113500 79.400

TOTAL 43 39 8 4 17 877500

FID X

H c

IJORI1 (:OAST

FOUIITH OIL FJLM ANI) COCONUT PROJECT

Buildinig Program and Construction Costs

(in '000 CFAF)

COCONUT ESTATES OILPALM ESTATES

Unit Cost CLIKE ESTATE NERO ESTATE IBOKE ESTATE DEWAKE ESTATE

DESCRIPTION '000 FCAF py 1 1976 PY 2 1977 PY 2 1977 PY 3 1978 PY I 19/b PY 2 1977 PY2 1977 PY 3 1978

A. Estate Buildings

Offices 6,000 1 6,000 1 6,000 1 6,000 1 6,000

Storage Shed 15,000 1 15,000 1 15,000 1 15,000 1 15,000

B. Ilouslng

lloutses Type A 13,000 1 13,000 1 13,000 1 13,000 1 13,000

Houses Type B 11,500 3 34,500 4 46,000 4 46,000 5 57,500

Houses Type C 8,750 - I 8,750 - _

Ilouses Type D 1,875 7 13,125 7 13,125 7 13,125 7 13,125

Houses Type E 812.5 6 4,875 5 4,063 2 1,625 2 1,625 8 6,500 2 1,625 8 6,500

Ilouses Type F 562.5 25 14,063 4 2,250 24 13,500 7 3,938 25 14,063 52 29,250 22 12,375 50 28,125

llouses Type G 375 123 46,125 36 13,500 108 40,500 85 31,875 165 61,875 280 105,000 138 51,750 108 40,500

C. Social Buildings

Socio-Medical Ceniters 12,500 1 12,500 1 12,500 1 12,500 1 12,500

Socio-Medical outposts 6,000 2 12,000 2 12,000 2 12,000 2 12,000

Schools (6 classes) 17,500 1 17,500 1 17,500

Schools (3 classes) 7,000 2 14,000

Village Sanitary Installations 1,500 8 12,000 8 12,000 8 12,000 8 12,000

D. Supermarkets 3,750 1 3.750 1 3,750 1 3,750 1 3,750

Total ('000 CFAF) 200,938 - 15,750 217.688 37438 77.563 291,625 65,750 237,500

233.438 357,375

1/ 1976 Bulilding costs for GLIKE are giveni here for informatîn puirposes only. They have not been incluoded in the

Total Project Costs since contracts had been awarded, and construction well advanced, by the time of Appraisal.

H 1ù

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Number of Field Workers Requiredand Housing Units to be Constructed

Coconut Estates

Mandays Total mandays required Total housin_junits requiredper ha PYl PY2 1Y3 EYl PY2 PY3

I. Coconut Estates1. GLIKE 2,000 ha 1976 27.5 55,000

2,000 ha 1977 16 32,0002,000 ha 1978 16 32,000

1,500 ha 1977 27.5 41,2501,500 ha 1978 16 _24,OÔ

Total 55,000 73,250 56 000

Number of workers required @ 270 days 204 271 207

Number of units for married (407e) 82 108 83Number of units for singles (4 per unit) 31 41 31 1/

Total 113 149 114 113 36

2. NERO 1,750 ha 1977 27.5 48,1251,750 ha 1978 16 28,000

2,250 ha 1978 27.5 61,875Total 48,125 89,875

Number of workers required @ 270 days 178 333

Number of units for married (40%) 71 133Nutber of units for singles (4 per unit) 27 50 1/

Total 98 183 98 85 '-3

1/ Incremental

IVORY COAST

FOURTH OIL PALM AND COCONUM PROJECT

Number of Field Workers Requiredand Housing Units to be Constructed

Oil Palm Estates

Mandays Total mandays recîuLred Total housing units required

per ha Fil PY2 En3 PY] PY2 PI-'

II. Oil Palm Estates1. IBOKE 3,000 ha 1977 27 81,000

3,000 ha 1977 46 138,0003,000 ha 1977 20 60,000

2,500 ha 1978 27 67,5002,500 ha 1978 46 115,000

Total 81 000 205,500 175,000

Number of workers required @ 270 days 300 761 648

Number of units for married (40%) 120 304 259

Number of units for singles (4 per unit) 45 115 98

Total 165 419 357 165 254

2. DEWAKE 2,500 ha 1978 27 67,500

2,500 ha 1978 46 _ 115,000

Total 67 500 115,000

Number of workers required @ 270 days ____250 426

Number of units for married (40%) 100 171

Number of units for singles (4 per unit) _ 38 64 1/

Total 138 235 138 97 -

lt Incremental

ANNEX VITable 14

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

INVESTMENT COSTS - Estates

Installations and Equipment

COCONUT ESTATES OIL PALM ESTATESGLIKE PY2 NERO PY3 IBOKE PY2 DEWAKE PY3

A. Installations

Power, water, sewage connections )and access roads for Estate center) 10,500 10,500 10,500 10,500As above, for each village 1/ 22,000 22,000 22,000 22,000Water well 15/20 m3 h 5,000 - - -Water wells for Estate centers 1,000 1,000 1,000Water-towers 5Om3 6,000 - - -Water-towers 20m3 - 3,000 3,000 3,000Sheds for generator sets 3,100 2,400 2,400 2,4008 wells for villages 8,000 8,000 8,000 8,000

Subtotal 54,600 46,900 46,900 46,900

B. Equipment

Generator set 200 Kva 7,0002 generator sets 90 Kva 6,0003 generator sets 90 Kva 9,000 9,000 9,0008 water-pumps 2,000 2,000 2,000 2,000Electric-pump and pipes 1,000 1,000 1,000Workshop equipment 2,500 2,500 2,500 2,500Radio network L 43 1,200 1,200 1,200 1,200

Subtotal 18,700 15,700 15,700 15,700

C. Furniture

Office furniture 2,500 2,500 2,500 2,500House furniture 6,000 7,500 7,500 7,500Storeroom furniture 2,000 2,000 2,000 2,000

Subtotal 10,500 12,000 12,000 12,000

TOTAL 83,800 74,600 74,600 74,600

1/ Each Estate will have 3 villages, a central one and two secondary ones.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Outgrowers Program

Detailed Costs in '000 CFAF

Fore n Exchan TaxesPY 1 PY 2 PY 3 Total if COst Cost

I COCONUT OUTGROWERS

(a) Cost of Inputs 200 ha 1976 14,929 2,960 4,132550 ha 1977 40,779 8}141

1,250 ha 1978 _779 9286790Subtotal 14,929 3 9 104,952 163 40 6 5 9 14,717

(b) Extension Work 1,200 4JQ 11.425 17.575 - - 5 872/

(c) Investments 151O0 14.100 29100 50 14,550 12 3,492

(d) Loans 200 ha 1976 6,800 1,400 1,000 9,300550 ha 1977 18,975 3,850 22,825

1,250 ha 1978 43,125 4___ 125Subtotal 6 800 20,375 48,075 75,250 - _ _

TOTAL COCONUT OUTGROWERS 22,929 84.o64 178.552 285.54S 28 79,o8 7

II OIL PALM OUTGROWERS3/

(a) Cost of Inputs 200 ha 1977 13,016 1,588 14,604300 ha 1978 19,525 19,525

Subtotal 13,016 21.113 34 129 40 5 9 3,2222/ _______ 21__L12____77 9 3,2

(b) Extension Work 1,795 2,7h45 540 5 2272/ 1

(c) Investments 4032 7,525 50 12 903

(d) Loans 200 ha 1977 7,600 2,800 10,400300 ha 1978 1_1_ 400 11,4oo00 Xx

Subtotal 7,600 14 21800 - - - - H C

TOTAL OIL PALM OUTGROWERS 26,411 41,583 67,994 25 17,914 6 4,352

GRAND TOTAL 22,929 110,475 220,135 353,539 28 97,872 7 23,439

Footnotes: 1/ See page 4 of Annex IV; 2/ See Table 16; and 3/ See page 1(b) of Annex IV.

ANNEX VI

IVORY COAST Table 36

FOURTH OIL PALM AND COCONUT PROJECT

Outgrowers Program

Extension Services and Investment Costs

(in '000 CFAF)

AnnualSalary

'000 CFAF PY 1 PY 2 PY 3

1. Extension Work:Coconut Planting Program (ha) 200 550 1,250Oil Palm Planting Program (ha) 200 300

Total Program (in ha) 200 750 1,550Cumulated Program in hectares 200 950 2,500Number of hectares supervised

by group leader 100 240 250

No. Cost No. Cost No. Cost

Group leaders 600 2 1,200 4 2,400 10 6,o0oSector Chief 3,000 1 3,000 2 6,000Drivers/Mechanics 260 4 1,040 6 1,560Guards 305 ___Q _ 1 305 2 610

Total cost of Extension work: 14170To be applied to:

Coconut Sector 1,200 4,950 11,425Oil-Palm Sector 1,795 2,745

Total 1,200 6,745 14,170

Unit Cost2. Investments

(a) Buildings: Sector Offices 4,500 4,500 4,500Housing - Sector Chiefs 6,750 6,750 6,750Housing - Type F 562.5 2,250 1,125

" G 375 750

Subtotal 13,500 13,125

(b) Installations: Water Wells 1,000 1,000 1,000I Towers 1,000 1,000 1,000

Subtotal 2,000 2,000

(c) Equipment - Furniture: Pumps 500 500Office furniture 1,000 1,000Housing furniture 2,000 1,000

Subtotal 3,500 2,500

Total Cost of Investments: 21,000 17,625To be applied to:

Coconut Sector 15,000 14,looOil Palm Sector 4,oÔo 3,525

Total 19.000 17,625

j,iii;Y COM7.r

FOURTJI OIL PAIM AND COCONUT PROJECT

Southwest Regional Management

Operating Costs ('000 CFAF)

AnnualSalary Foreign Exchange Taxes

'000 PYI PY2 PY3 Total _ Cost, _ o

A. Management Staff

Regional Manager 10,000 10,000 10,000 10,000 30,000

Financial Manager 7,500 3,750 7,500 7,500 18,750Accountant 3,500 3,500 3,500 3,500 10,500

Secretary 1,200 1,200 1,200 1,200 3,600Cashier 410 410 410 410 1,230

4 Clerks 320 1,280 1,280 1,280 3,840

2 Accounting Clerks 410 - 820 820 1,6402 Drivers 260 520 520 520 1.560

2 Guards 135 270 270 270 870

Subtotal 20,930 25,500 25,500 71,930 6S 46..7so s Rsg

B. Investments

(i) Buildings: Offices 20,000 20,000 60 12,000

Lousing 21,750 21,750 6,ooo 49,500 60 29,700

ii) Vebicles 2,4Go 2,40o 4,8o0 90 4,320

(iii) Equipment u.<q. r'urn- 5,500 7,500 2,000 15,000 so 7.500

itureSB.total 29,650 51,650 8,000 89,300 60 53,520 ?21

C. Oîàerational Erpenses 5,000 7.000 9,000 21,000 50 10,500 15 3,1-;0

TOTAL 55.580 84,150 42,500 182.230 61 110,770 1i 20 142

.0 D C?

-s l

ANNEX VIIPage 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Project Cash Flow

Table 1 shows the project's cash flow in current terms. Followingare the notes that will describe the model used and the way the differentfigures have been arrived at.

I. RESOURCES

A. Financing

BNDA loan: at 9% interest, capital to be disbursed over twoyears during which only interest is due, principal being reimbursed duringfive-yearly installments of CFAF 100 million starting on the fourth year.

IBRD loan: commitment charge 3/4 of 1%, interest 8.50% or at therate prevailing at the time of loan approval. Four and one-half year graceperiod during which only the interest is payable, and the commitment chargeon all undisbursed amounts. Repayment over a 15-year period, starting im-mediately after the grace period.

B. Income from Sales

All revenues are in current terms. Tables 3 to 6 show currentCFAF value for each one of the commodities. The basis for this calculationis the latest, November 1976, IBRD forecast for commodity prices.

II. APPLICATION OF FUNDS

All costs have been computed in current terms. For the years1976 - 1978 physical and price contingencies are those applied to projectcost; from 1979 on they have been inflated at 7% compounded annually.Table 2 shows the details of these costs for the agricultural developmentand maintenance costs. Industrial investments and pricing costs havebeen taken from Annex V.

III. RESULTS

Project cash flow will become positive in 1983, two years after thefirst trees have become fruit bearing. All project costs will have beencompletely recovered by 1986, the second year when all plantings will havereached their maturity. From that date on, over the following 19 years,revenues from the project would be CFAF 4.3 billion per year in 1986 currentterms (US$17 million approximately).

ANNEX VIIPage 2

These results do not take into consideration the additional

Government revenues in indirect taxes and export taxes averaging CFAF one

billion per year from 1985 on (US$ 4.1 million).

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Project Cash Flow

(in CFAF million)

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

RESOURCES

(a) Outside FinancingBNDA Loan 250 250IBRD Loan 1,750 2,500 650

Subtotal 2,000 2 750 650

(b) Repayment of farmers' loans 1 10 26 52 61 65Subtotal 1 10 26 52 61 65

(c) Income from sales-(i) Palm Oil 1,247 2,327 3,173 4,160 4,757 4,757(ii) Kernels 135 273. 390 533 700 700(iii) Copra 23 218 921 2,156 3,489 4,466 4,818(iv) Coconut Charcoal 2 18 74 169 266 333 359

Subtotal 25 1.618 3,595 5,888 10,256 l0a634

Total Resources 2000 2.7-50 650 25 1.619 3.605 5.914 8.500 10,317 10.99

APPLICATION OF FUNDS

(a) Coconut Estates l/ 1,486 1,597 846 489 612 773 838 919 1,017 1,192 1,233(b) Oil Palm Estates 1/ 726 2,365 2,557 469 599 986 1,256 993 1,092 1,357 1,547(c) Southwest Management 62 106 57 104 111 135 127 136 155 155 166(d) Outgrowers' Program 2/ 26 135 293 470 52 108 188 273 639 881 1,027(e) Industrial Investments 1,000 650 1,150(f) Processing Costs ____ ___ 6 213 517 791 .1335 1,627 1,827

2.300 4,203 3, 753 1532 4.076 4238 5.212 5.800

Repayment of Loans and InterestBNDA 23 45 45 136 127 118 109 100 - - 1-3IBRD 142 325 404 417 417 720 695 669 635 610

Total Debt Service 165 370 449 553 544 838 804 769 635 610 t

Total application of funds 2,300 4,368 4,123 1,981 2,933 3,409 4,914 3,916 5,007 5,847 6,410 H

SURPLUS (DEFICIT) (2,300) (2,368) (1,373) (1,331) (2,908) (1,790) (1,309) 1,998 3,493 4,470 4,289Cumulative Cash Flow (4,668) (6,041) (7,372) (10,280) (12,070) (13,379) (11,381) (7,888) (3,418) 871

1/ Including total project costs for 1976 entirely born by Government. 2/ Including cost of buying production from Outgrowers.

IVùPY COAST

FOURTI1 OIf1 PALM AND COCONUT Pll(JE C'

Project Costs, Additional In--estreullt;

and Muiûtenanoc CnaIges

(inJ D,illion ClFâ} )

1;976 ~27~ 8 1 197-80 3981 !j2 1 19834 ]98 1986I. COCONUT ESTIVES

Land Qearing and Acc,ss Boads 776 481 152 32 45 )45 45 l2 36 32 32Agricultural Costa 167 314 312 201 219 222 224 231 228 228 228Estate Expenses 54 98 104 115 118 124 130 139 144 148 150Ilarves Ling 1 12 31 48 58 66 72Investnierits a 319 351 46 25 53 112 92 75 87 132 1D4

Buse Costs 1/ 1,3 1,2>I4 >73 136 5]5 522 535 553Physical and Price bntingencies3 232 116 l76 B 31 6 R 586 61

Total Cost 8 6 1.597 146 12 7à _z8 919 1>811 19i1 -a

II . OIL PALM ESTAIES

Land Oearing and Access lioads 406 879 947 21 56 56 6 56 56 35 45Agricultural Costa 89 292 300 151 141 137 123 125 116 115 113Estate Expenses 10 104 167 167 167 167 167 167 167 167 167l1arvesting and Transport 29 120 184i 183 196 198 188InvestnLents 120 545 392 19 34 177 252 131 59 175 222

Base Coats 1 W 2 358 1- 625 1257 _82 66 0 90591 735Physical end Price Lbntingencies-l 1oî _à 751 111 172 *329 fl 33, __;4q8 1.667 8 2

Total Costs 726 365 2,557 4±9 599 986 1 _2'6 29 1,(QP I3 1-! M7

III. SOIJflflllS'' MAN4AŒEMENT1 56 84 143 79 79 90 (9 79 90 79 79

6 22 1>) 25 32 45 _l8 7 1î6 176 ..Physicul and Price c6r tingericies 2.1 -, o1 135 127 36 li 215- )6fi

IV. O11TCROWERS PROGtM 23 110 220 359 37 72 117 159 372 448 488

Physical aund Price oCntingenciea 3 25 73 111 15 36 71 114 Ž4 1433 539 3-9

cil m 6293 Tab 152 aT 7 3 u yr 1.027ly.

j/ AEi calcul-ated ron project costs until 197(8 (,Annex 6, Table 1); afterval-ds at 7S coinpç,unded yearly.

ANNEX VIITable 3

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Value of Palm Oil in Current Prices

Basis - November 1976 IBRD Forecasts

1/1980: $ 509/ton 1985: $ 737/ton

2/1981 $ 554 eq. CFAF/ton 107,2271982 $ 600 116,1301983 $ 645 124,8401984 $ 691 " 133,7431985 $ 735 142,259

Current Value of Oil Palm Production

Year Tons of ffb Tons of Oil (at 22%) Value in CFAF m.

1981 52,850 11,627 1,2471982 91,100 20,042 2,3271983 113,500 24,970 3,173198L 141,400 31,108 4,1601985 and 152,000 33,440 4,757

on

1/ Cif Europe.2/ Calculated at CFAF 245=US$ 1., less 21% for export expenses:

insurance and brokerage 3.6%;freight and handling 12.8%; and,export taxes 4.6%.

(See Annex X, Table 2).

ANNEX VIITable 4

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Value of Palm Kernel in Current Prices

Basis - November 1976 IBRD Forecasts

1/1960: $ 323/ton 1985 Q 531/ton

2/1981 $ 365 eq. to CFAF/ton 64,3861982 $ 407 71,7951983 $ 449 " 79,2041984 $ 490 " 36,4361985 $591 104,252

Current Value of Palm Kernels Production

Year Tons of Kernels Value in CFAF M.

1981 2,093 1351982 3,804 2731983 4,927 3901984 6,164 5331985 and on 6,715 100

1/ Cif Europe

2/ Calculated at CFAF 245/US$ 1, less 28% for exportexpenses: insurance and brokerage 3.6%, freightand handling 18.8%, and export taxes 5.6%. (SeeAnnex 10, Table 3).

ANNEX VIITable 5

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Value of Copra in Current Prices

Basis - November 1976 IBRD Forecasts 1

1980: $ 457/ton 1985: $ 751/ton

2/1980 $ 457 eq. to CFAF/ton 70,9861981 $ 516 80,1501982 $ 575 89,3151983 $ 633 98,3241984 $ 692 107,4881985 $ 751 1l6,653and on

Current Value of~ Cop2ra Production

Year Coconuts Production Copra Content Value of Coprain thousands of nuts at 20D in CFAF M.

1980 1,600 320 231981 13,613 2,722 2181982 51,538 10,308 9211983 109,650 21,930 2,1561984 162,300 32,460 3,4891985 191,400 38,280 4,4661986 206,500 41,300 1.,8181987 and on 213,500 42,700 4,981

1/ Cif Europe

2/ Calculated at CFAF 245/US45 1, less 36.6% processing and exportexpenses:

insurance and brokerage 3.6%,;freight and handling 12.0%;processing i5.4k, and,export taxes 5.6o.

(See Annex X, Table 4).

ANNEX VIITable 6

IVORY COAST

FOURTH OIL PALMI AND COCONUT PROJECT

Projected Price of Coconut Charcoal

1. The price of coconut charcoal stabilized in 1975 at around L 110.00per ton CIF European Port. Imports originated from Ceylon which provided90% of world imports of coconut charcoal. 1/

2. Since there is no world-wide trading in this commodity, thisprice, equivalent to approximately US$200/tor- has been kept as referenceprice.

3. The value of a ton of coconut charcoal is broken as follows:

$/MT CIF Europe 200.-Eq. in CFAF/Ton 2/ 49,000.-

Variable Costs:

Insurance 1.25%Brokerage 2.35% 3.6% = 1,701

Fixed Costs

Freight 8,800Transit 550Loading/Unloading 300Bank Charges 80 9,730

Internal Transport 1,620 13,051

Value ex-estate 35,949

Less Processing Costs 3/ 16,434

Value ex-estate 4/ 19,515

Value ex-estate (Efficiency) 5/ 22,881 CFAF/ton

1/ Source: SODEPALM Study of the coconut charcoal market.2/ At CFAF 245 = US$1.00.3/ See Table 2, Annex V.4/ Figure used in Annex X, Tables 4, 7 and 8.5/ With adjustments of domestic handling and processing costs by Standard

Conversion Factors. Value used in the Economic Rate of Return.

ANNEX VIITable 7

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Value of Coconut Charcoal in Current Terms

Basis: 1976 Estimated Value

1976 - CFAF i8j4pp/ton FOB 12/

1980: CFAF 24,81- 1985: CFAF 3D4,799

1980 = CFAF 24,8141981 26,8111982 28,8081983 30,8051984 32,8021985 34,799

Current Value of Coconut Charcoal Exports

Tons Exported Value in CFAF Million1980 80 21981 681 181982 2,577 741983 5,483 1691984 8,115 2661985 9,570 3331986 10,325 3591987 10,675 3751

1/ From Table 6, CFAF 19,515 less export taxes 5.6e.2/ Cif Europe.

AT`INE X ,T Tl T

Table I

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Estimated Schedule of Disbursements

zI,S$ 'OCc)

Disbursements Undisbursed Amount

Fiscal Year Quarter During Quarter Cumulative at end of quarter

1977 Fourth 500 19,500

1978 First 3,000 3,500 16,500

Second 3,000 6,500 13,500

Third 3,000 9,500 10,500

Fourth 3,000 12,500 7,500

1979 First 3,000 15,500 4,500

Second 3,000 18,500 1,500

Third 1,500 20,000

ANNEX IXPage 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Market and Price

Outlook for Palm and Coconut Oil

1. In terms of their origin, fats and oils can be grouped intovegetable oils and animal fats (including marine oils). Vegetable oilscan be subdivided further into oils from annual oilseed crops, such as soy-beans, groundnuts or sunflower seeds, and into oils from perennial tree cropssuch as coconut oil, palm oil, and palm kernel oil. Oils of the first groupare liquid at room temperature (in temperate climates) and are thereforereferred to as soft oils. Oils of the second group, called hard oils, havea higher melting point and are usually solid. Hard oils contain a higherpercentage of saturated fatty acids than soft oils.

2. During the past decade there has been a significant shift inthe consumption of fats and oils, away from animal fats to vegetable oils,and within vegetable oils from hard oils to soft oils. This shift reflectspartly the increased supplies of vegetable oils and partly the growingconsumer awareness of potential health risks associated with the consumptionof highly saturated fats and oils.

3. Technically, most fats and oils are broadly similar. However,costs of refining and specific end-use requirements limit the range withinwhich individual fats and oils can be interchanged. Additional quantitiesbeyond this range can be marketed only at increasing price discounts vis-a-vis other fats and oils. This will affect relative prices of hard and softoils. According to Bank staff projections, the demand for soft vegetableoils (soybean oil, cottonseed oil, corn oil, etc.) is expected to expandfaster than the demand for hard oils. While increasing supplies of soybeanoil can be marketed without significant downward pressure on soybean oilprices relative to other fats and ails, increasing quantities of palm oilwill find a market only at growing price discounts.

4. Because of their chemical composition or physical properties,some fats and oils have a competitive advantage in certain end uses.Coconut oil, for example, prolongs the shelf life of bakery productsand gives soaps their lathering quality. Because these end uses requirea specific oil, it faces a highly inelastic demand in this market. Inend uses where it competes with other fats and oils its demand is highlyelastic. Since the total demand for any given oil represents the sum ofthe individual demands for its various end uses, the total demand curveconsists of two parts: an inelastic segment (representing the market forwhich exist no or only few substitutes) and a highly elastic part, inwhich the oil competes with other fats and oils. This "kinked demandcurve" explains the frequently observed sudden increase in price differen-tials between fats and oils, a phenomenon which occurs whenever supplies

ANNEX IXPage 2

fall below the quantities corresponding to the more elastic part of thedemand curve. Regional consumption patterns of fats and oils generallyreflect regional production patterns and natural storage conditions.Economic protection and lower transport costs play an important role inthe preference of locally produced fats and oils. Most of the fats(margarine, shortening) consumed in temperate zone developed countriesare manufactured from soybean, cottonseed and sunflower oils. Coconutoil and palm oil dormiinate the vegetable oil consumption in tropicaland semi-tropical countries.

5. Demand for fats and oils largely depends on per capita incomelevels. The income elasticity of demand is high at low income levels,and almost zero at the present per capita income levels of the developedcountries. Annual per capita consumption of fats and oils in most devel-oped countries has reached a level of about 25-30 kilograms; in manydeveloping countries it is below 5 kilos. Considering the population ofthese countries, even a small increase in their per capita fats and oilsconsumption will absorb a sizeable share of world fats and oils supplies.

6. Between 1974 and 1980 world demand for fats and oils is pro-jected to grow at an average annual rate of 2.3%. Demand will expand ata slightly slower rate between 1980 and 1985, for two reasons. First,because per capita demand for fats and oils in industrialized countrieswill approach the saturation level. Second, because it was assumed thatmajor new importing (developing) countries will face a foreign exchangeconstraint; thus, per capita consumption in these countries will increaseonly slightly. During this period, total demand will grow from 3.2 to 4.7million tons, at an annual average rate slightly above that of its popu-lation growth.

High-Protein Meals

7. Because of their high protein content, oilcakes are used in-creasingly in livestock feeding. Demand for livestock and animal productsis closely related to per capita incomes. As incomes rise the demand foroilcakes continues to grow long after per capita consumption of fats andoils has reached its saturation level. The long-term market outlook thusappears to be brighter for oilseeds with a high meal (protein) contentthan for those with a high oil content. Copra and palm oilcakes are atthe lower end of the protein-content scale, at 22-23% versus 40% or morefor oils such as soybean, cottonseed and groundnuts.

8. Demand for oilcakes is expected to grow during the decade ahead,reflecting economic recovery in the OECD countries. These countries areexpected to account for the bulk of demand for meal, but their share willdecline as the portion of high protein concentrates in feed rationsapproaches optimum levels. Additional markets mav open up in EasternEurope, the Soviet Union and some developing countries.

ANNEX IXPage 3

9. A potential threat to the markets for high protein meals issingle cell protein (SCP), manufactured mainly from natural gas orpetroleum products, and thus unaffected by seasonal factors. The highnutritional value of SCP is expected to outweigh any risk of toxicityin animal feeding. The market share SCP will capture depends mainlyon its price relative to the prices of proteins from existing sources.Although several plants are now in operation, it is not yet possible toproject how SCP will affect the markets for fats and oils.

Supply

10. The supply of fats and oils is highly price inelastic, for tworeasons. First, because the supply of oils from tree crops, such aspalm oil, coconut oil and palm kernel oil, is highly inelastic. Second,because many fats and oils are recovered as by-products in the processingof oilbearing materials. Marine oils are extracted jointly with fishmealfrom marine animals. Animal fats are a by-product of meat and milk pro-duction. Although the demands for each of these products is independentand affected by different market forces, their supply reflects the demandfor both products. Thus the rapidly growing demand for one product, forexample high-protein meals, leads to increasing supplies of the otherproduct, vegetable oil.

11. World production of fats and oils has increased on the averageby 2.6% per year since 1955-57, from 28.04 to 42.27 million metric tonsin 1971-73. The supply of oils from annual field crops has increasedmost rapidly, mainly because of the expansion of soybean production (UnitedStates, Brazil), the production of sunflower seed oil (USSR, Eastern Europe)and the increased output of rapeseed oil (Canada, France). Hard oils,particularly palm oil, showed the second largest increase.

12. In the decade ahead (1976-85), production of fats and oils isexpected to grow at an average annual rate of 2.6%. The strong demandfor livestock products will lead to a continued strong demand for highprotein meals. aost of the oil supply will come therefore from oilseedscrushed for meal. Soybeans, because of the high protein content of theirmeal, are expected to face the strongest demand. Brazil has recentlybecome a major producer and exporter of soybeans, and is expected tocontinue expanding production in the decade ahead. The supply of fatsand oils will be further increased by the expansion in the productionof palm oil, as extensive plantings reach their productive stage. Theprojected expansion in livestock production will, in turn, increase theoutput of animal fats. Marine oils output is expected to grow at 1.7%.

Projections

13. The demand for fats and oils was projected by the Bank's analystsindividually for 145 countries on the basis of projected (real) per capitaincomes, population, and a price index for fats and oils. Prices forindividual fats and oils were determined simultaneously by the supplies ofall fats and oils and the ratio between stocks and demand. Projects GNP

ANNEX IXPage 4

determined the demand for high protein meals. Because oil and mealare recovered in nearly fixed proportions, the price of the raw material(oilseed) is determined by the combined value of the extracted oil andmeal minus the crushing margin.

14. Prices for fats and oils (in real terms) displayed no cleartrend between 1960 and 1972. In 1973 prices began to increase sharply,mainly in response to a shortfall in supplies of lauric oils. Pricesadvanced further in 1974, due to a 20.4% decline in the US production

of soybeans, which was only partially offset by increased output inBrazil. Prices for oilcakes displayed a similar pattern. In 1974, pricesfor high protein meals dropped because of the worldwide recession and adecline in livestock production. A 17% increase in world soybean pro-duction conbined with good harvests of other oilseed crops during 1975caused prices of fats and oils to fall to about their level during thesixties. Prices for most oilcakes declined only slightly.

15. Barring any major reductions in projected supplies, prices (inreal terms) for fats and oils are expected to decline in the first halfof the projection period (1976-80) from their extremely high levels in1974. In the second half of the projection period, population growthand rising per capita incomes in developing countries are expected toraise their domestic consumption of fats and oils. Hence, prices forvegetable oils and fats are expected to drift upwards again between 1980and 1985. Projections as to their exact level vary with assumptions asto the relative strength of supply and demand factors.

16. Projections of prices, production, and exports are given inTables 1, 2, and 3.

A Il]EX :XTable I

Table 6: PRUCES FOR SELECTED FATS A'!OD OILS,

ACTUAL 1975, PROJECTED 1976-85

(in terms of 1974 constant Ute$)

Fat/Oil 1975 2976 )977 1979 1979 ]98o 2'qn

Soybean current 619 376 l17 462 507 556 93h

constant 5hi 300 307 315 322 330 395

Sunflover current 739 600 616 630 6h5 654 1,041constant 6h5 IJ79 b54 h3° 410 388 ! Lo

Groundnut current 857 675 712 719 788 815 1, 355constant 7118 539 525 511 500 485 573

Cottonseed current 726 6 5 647 6L8 645 6bl 1,159

constant 63h 515 477 h42 hio 380 L9o

Rapeseed current 551 390 19 UJB8 l47 506 856

constant 481 312 309 306 303 300 362

Olive current 2,436 2,350 2,171 1,998 1,831 1,669 2,866constant 2,128 1,877 1,600 1,363 1,162 990 1,212

Palri current 433 370 399 429 459 489 757

constant 378 206 29h 293 291 290 320

Ccconut current 393 340 4°7 476 567 666 1,123constant 313 271 300 325 360 395 L75

PaJm Kernél current 139 360 L21 491 567 6,8 1,08.constant 383 288 310 3j5 360 390 L60

Sourco: IBRD

EPD/CE harch 1976

WORID PRODUCTION OF SELECTED OILSEEDS, FATS AND CILS (FAT OR CIL EQUIVALENT),ACTUAL 1960, AVERAGE 1967-69, 1975, PROJECTED 1980 AND 1985

(In 1000 Metric Tons)

1960 1967-69 1975 19d0 19b5Fat/Oil 1000 MT 4 Share 1000 HT % Share 1000 MT % Share 1000 MT % Share 1000 HT % Share

Soybean Oil 3,295 12.3 5,358 15.5 8,550 19.2 11,900 22.4 13,500 23.2Sunflowerseed Oil 1,665 6.2 3,652 10.5 4,070 9.2 5,200 9.u 5,Loo 9.3Cottor,seed Oil 2,165 8.1 2,310 6.7 3,005 6.8 3,400 6.1 3,700 6.4Gra-ar.dnut Cil 2,555' 9.6 3,248 9.4 3,245 7.3 3,600 6.8 3,800 6.5Rapeseed Cil 1,105 4.1 1,655 4.8 2,495 5.6 2,800 5.3 3,000 5.2Olive Cil .,180 4.4 1,307 3.8 1,500 3.4 1,600 3.0 1,700 2.9Palr Oil 1,250 4.7 1,382 4.0 2,925 6.6 4,600 8.7 5,900 10.1Coconut Oil 1,955 7.3 2,072 5.9 2,515 5.7 3,000 5.6 3,200 5.5palm Xernel Oil 440 1.7 383 1.1 695 1.6 900 1.7 1,000 1.7Pish Cil 462 1.7 1,058 3.0 1,250 2.8 1,300 2.4 1,LOO 2.4Butter 3,855 14.4 4,017 11.6 5,135 11.5 5,300 10.0 5,500 9.4Tallow 3,050 î1.k 4,228 12.2 5,085 11.4 5,500 10.2 5,900 10.1Lard 3,733 14.1 3,988 11.5 3,950 8.9 4,100 7.7 4,300 7.3

TTAL 26,710 100.0 34,658 100.0 44,420 100.0 53,200 100.0 58,300 100.0

Sources: USDA: 1960-69IBRD: 1975-85

Commodities and Export Projections DivisionEconomic Analysis and Projectious DepartmentDevelopment Policy Staff

March 5, 1976 x

I-D

Table 2: W!YOP?LD EXPORTS OF SELfCTED OILSFEDS, FATS AMD OILS (FAT OR OIL EQUIVALENT),ACTUAL 1960, AVElAUG 1967-69, 1975 PROJECTED 1980 Al`I,D 1985

(In 1000 metric tons)

1960 1967-69 1975 1980 1985rat/Cil 1000 MT « Share 1000 IM5 % Share 1000 MT % Share l000 MIT Share 1000 MIT Share

SCÇTèca&. C-1 1,0Lo 19.8 1,991 19.8 3,565 27.1 14,900 28.0 5,700 27.8'.nfl, c;erseed Oil 2145 3.3 1,138 11.3 765 5.8 1,250 7.2 1,300 6.3Ccttcrns»ed Cil 29h 14.1 226 2.3 k25 3.2 1460 2.6 510 2.59sr c;<r-. t 011 826 11.4 1,037 10.3 7145 5.7 9140 5.1 950 L .6?.~&ssed Oil 92 1.3 1439 14.14 7145 5.7 920 5.3 1,020 5.0C2ive C 69 1.0 82 0.8 63 0.5 100 0.6 110 0.6P.alr. Cil 587 8.1 607 6.0 1,800 13.7 3,050 17.5 L,690 22.9Coconut- cil 1,152 15.9 1,182 11.8 1,1425 10.8 1,650 9.14 1,750 8.5Pa"r K:ernel 0il 107 5.6 299 3.0 396 3.0 1420 2.4 135 2.1FLsh 011 222 3.1 672 7.7 600 h.6 7140 1.2 790 3.9nutter 1426 5.9 5114 5.1 717 5.5 790 14.5 830 L.1

à lsw 1,076 14.9 1,1 147 114.4 1,U100 10.7 1,820 10.1 1,950 9.51407 5.6 4o09 4.1 1490 3.7 14L0 2.5 VOC 2.2

TOTAL 7,243 100.0 10,0h3, 100.0 13,136 100.0 17,1480 100.0 20,1495 100.0

Sour-es: USDA: 1900-69imD: 197y-85

EPDC EAtril 9, 1976PPollak

ANNEX XPage 1

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Economic Rate of Return Calculation and Results

1. Rates of return have been calculated using "efficiency analysis." 1/This technique shadow prices labor to reflect the opportunity cost of

employment on project activities; and adjusts costs and benefits fortariff and trade distortions by the use of conversion factors. It isanalogous in principle to the current Bank practice of shadow pricing laborand using a shadow exchange rate.

A. Methodology and Assumptions

2. Brief notes on the calculation methodology are given below.

1) Project Life - 30 years

2) Valuation base - 1976 constant terms at border pricesadjusted as appropriate by a standard conversion factor(SCF) of 0.83.

3) Yields - As in Annex III Table 2. These yields reflectthe experience in Ivory Coast with similar plantations.

4) Output unit values - Output values for palm oil, palmkernels and copra are based on Bank forecast world prices(EPD memo November 23, 1976) with calculations as given inTables 2, 3 and 4. Market outlooks are discussed inAnnex IX. The value of coconut charcoal is taken fromAnnex VII, Table 6. Output values are presented atborder prices with domestic handling and processingcosts adjusted by the SCF. For each project component,output prices are calculated at the level of handlingand processing that is entered in the costs stream.

1/ For background theory refer to "Economic Analysis of Projects" byL. Squire and H. van der Tak; World Bank Research Publication 1975.Full details of the methodology and data assumptions used in theefficiency analysis for this project are contained in the FourthOil Palm and Coconut Project Efficiency and Social Economie AnalysisCase Study; K. Oblitas, June 1976. The case study also calculates"social" rates of return which, in addition to the efficiency analysisadjustments, also allow for the net social costs or benefits of the

consumption changes of project participants estimated in relation tocountry objectives concerning growth and income distribution and theincome levels of the participants. Social analysis results are confinedto the case study report.

ANNEX XPage 2

3. Costs - Costs take into consideration on-farm development costsand additional investments in processing and transport facilities as wellas recurrent expenditures related to processing and transporting of projectoutput over the life of the project. Input prices are based on observedprices updated to 1976 terms and include allowances for transport to theproject. Costs are expressed net of identifiable taxes. The domesticcomponent of non labor costs are adjusted by the SCF.

4. Social infrastructure (schooling and medical facilities) andhousing have been fully costed net of tax. This procedure reflects themission's judgement that these items are necessary elements of the project,being needed to attract project participants to the area.

5. Full details of the assumptions and data used in the efficiencycosting of labor are given in the case study. Expatriates and projectstaff are costed at the wage net af tax (the latter adjusted by the SCF).Ivorian manual estate labor and outgrower labor is costed at their estimatedopportunity costs adjusted by the SCF. Non Ivorian manual estate laboris costed in terms of income transmittals abroad and SCF adjusted localconsumption. The resultant annual efficiency costs of US$83 and US$33 forIvorian estate labor and outgrower labor are 14% and 8% respectively of thecosts imputed at market wage rates, and reflect the estimated low opportunitycosts of these labor categories. 1/

Presentation of Analysis

6. Calculations of unit output values are found in Tables 2, 3 and 4 inAnnex VII, Table 6. Cost Benefit streams are found in Tables 5 to 9 and econo-mic rate of return results are on page 7. In the cost-benefit streams, benefitand cost figures are first presented net of tax and without adjustments fortariff distortions, and labor is costed at the net of tax market wage rate.Underneath each total line is an "adjusted total" which is the cost or benefitstream calculated using efficiency analysis. The adjusted totals have beenused for calculating the economic rates of return. This presentation has beenused so that a more complete breakdown of cost categories can be illustratedthan were available from the case study analysis.

B. Costs Allocation and Decision Criteria

7. In addition to the whole project rate of return, separate ratesof return were calculated for each project component; estate oil palm, estatecoconut, outgrower oil palm and outgrower coconut.

1/ See Note 1 on preceding page.

ANNEX XPage 3

8. A number of different assumptions can be made regarding the alloca-

tion of costs between the project components, each useful in its particulardecision context. The cost allocation procedure used here was based on

a "marginal change" decision framework - that is, the analysis was gearedto answering the question: "Given the existence of the estates, what addi-tional costs and benefits accrue due to the addition of a relatively smallsized outgrower program or a small change in the size of an existing out-grower program and what are their rates of return?" (Referred to hereafteras "decision criterion one"). This decision framework reflects the mission'sjudgement that a large scale plantation in this area could not be run entirelyon outgrower lines due to labor availability constraints and that it would benecessary to have a plantation program based, at least initially, on estates.

In the mission's judgement the relative size of the outgrower program inrelation to the estates, and the manner in which outgrower plots are inter-mingled with estate plots, provides a situation where the costs of centralmanagement, infrastructure and access roads would be little affected even ifthe outgrower components did not exist. All central management, access roadsand some central infrastructure have therefore been costed to the estatesand the outgrower programs have only been allocated direct costs such asextension services, fertilizers, tools, and identified outgrower specificproject costs and investments.

9. An alternative approach which will be called "decision criteriontwo" would analyze to answer the question: "Given no administration, labor

availability, country policy and other constraints on the decision process,what balance between outgrower and estate components should the initialproject design reflect?" (The resulting decision might of course onlychoose one of the four project components and the real situation is likelyin fact to be further complicated by complementarities existing betweenproject components.) For this calculation all costs would need to beallocated so that each component could stand independently. A fullefficiency analysis calculation to answer this question has not been donehere but an indication of the effect that the different decision criteriacost allocations have upon the rates of return is provided in the tablebelow. The costs of the Southwest Management and access road elementsare for decision criterion one allocated entirely to the estates. Fordecision criterion two these elements are allocated to all four projectcomponents in proportion to planted area. The rates of return in thetable are calculated using what will be termed for designative convenience"tax-adjusted market analysis": Labor has been costed at the market wage netof tax (outgrower labor on a per diem basis at the net of tax daily wage ofestate laborers), non labor costs are expressed net of tax without SCF adjust-ment and benefits are calculated as for efficiency analysis but without SCFadjustment on domestie processing and handling.

10. Using decision criterion one, the presence of the outgrowercomponents in the project and a marginal expansion in the size of theoutgrower components appears justified. Rates of return calculated fordecision criterion two are more closely in line with each other. This

ANNEX XPage 4

result has been achieved by the simple reallocation of the access roads andSouthwest Management costs and may still be incomplete as certain centralinfrastructure costs are still retained entirely by the estates. Takingoutgrower costs up by 10% makes the rates of return between project compo-nents fairly similar though oil palm outgrowers still emerge favorably.

"Tax-Adjusted Market Analysis" Rates of Return under Different /1Decision Criteria

Oil Palm Coconut Oil Palm Coconut WholeEstates Estates Outgrowers Outgrowers Project

Decision Criterion One

Estates already present ordecided upon. Decisionconcerns the desirabilityof small outgrower componentsand/or marginal changes in sizeof outgrowers components.

(Costs of access roads,S.W. Mlanagement and somecentral infrastructureallocated entirely tothe estates.)

Point Estimates 16.0 16.9 30.5 22.6 17.1

Decision Criterion Two

Decision at initial projectdesign stage or concerninga major change in the sizesof project components. Noconstraints on choice ofoil palm versus coconutand estate versus outgrower.

(Costs of access roads andS.W. M4anagement allocatedin proportion to land area.)

Point Estimates 16.4 17.1 25.0 19.4 17.1Outgrower Costs+10% - - 23.3 17.9 -

Outgrower Costs+20% - - 21.7 16.7

/1 Costs and benefits expressed net of tax but without adjustments for foreignexchange distortions. Labor costed at net of tax market wage rates.

ANNEX XPage 5

C. Results

11. Efficiency rates of return and sensitivity tests analyzed underdecision criterion one are presented in the table below. All rates ofreturn are at acceptable levels and are characterized by low sensitivi-ties to changes in costs or benefits. The outgrower components have sub-stantially higher rates of return than the estates indicating the desideratumfor retaining a flexible approach to the project component ratios and perhapsincreasing the size of the outgrower programs during project implementation.

12. The mission decision on project component ratios has been deter-mined by labor and administration constraints and by experience gainedfrom other tree crop projects in Ivory Coast. The mission recognizes thepotential advantages of increasing the size of the outgrower projectcomponents and recommends that such considerations be borne in mind duringproject implementation and the planning of any further development of oilpalm and coconut in the area (para 3.05). Further insights upon projectcomponent ratios and also on pricing policy for outgrowers are providedby the social analysis in the case study of this project.

1/RATES OF RETURN

Oil Palm Coconut Oil Palm Coconut WholeEstates Estates Outgrowers Outgrowers Project

Point Estimate /2 19.4 21.0 42.6 28.3 21.1

Sensitivity:

Benefits down 10% 17.3 17.3 40.0 26.5 19.2Costs up 10% 17.5 17.5 40.0 26.7 19.4Benefits down 20% 15.0 15.0 37.2 24.5 17.2Costs up 20% 15.8 15.8 38.2 25.2 17.9

Benefits up 10% 21.3 21.3 45.1 30.0 22.7Costs down 10% 21.5 21.5 45.3 30.2 22.9Benefits up 20% 23.1 23.1 47.3 31.5 24.3Costs down 20% 23.9 23.9 48.4 32.3 25.0

1/ Efficiency analysis, decision criterion one. (Access roads, S.W.Management and certain central infrastructure costed entirely tothe estate.)

2/ The whole project rate of return calculated using market wage ratesand without adjusting costs and benefits by conversion factors wouldbe 17.1%. Rates of return for each project component using this methodof analysis are presented on page 4.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Projected Annual Production (tons)

PALM OIL KERNELS COPRA CHARCOAL

A. Estates

1980 - - 300 751981 11,000 1980 2487 6221982 18,920 3595 9188 22971983 23,760 4645 18750 46881984 29,480 5835 26725 66811985 31,680 6360 31175 77941986 31,680 6360 33600 84001987 on(maturity) 31,680 6360 34500 8625

B. 0utgrowers

1980 - - 20 51981 627 113 235 591982 1122 209 1120 2801983 1210 282 3180 7951984 1628 329 5735 14341985 1760 355 7105 17761986 1760 355 7700 19251987 on (maturity) 1760 355 8200 2050

C. TOTAL

1980 - - 320 801981 11,627 2093 2722 6811982 20,042 3804 10308 25771983 24,970 4927 21930 54831984 31,108 6164 32460 81151985 33,440 6715 38280 95701986 33,440 6715 41300 10325 F-3

1987 on (maturity) 33,440 6715 42700 10675(D >

p >X

ANNEX X

IVORY COAST Table 2

FOURTH OIL PALM AND COCONUT PROJECT

Projected Palm Oil

Prices in Constant 1976 terms

(in CFAF/ton)

1980 1981 1982 1983 1984 1985 on

A. PALM OILPrice forecast in 1976 1/

Constant Terms

$/MT Cif Europe 378 380 383 385 388 390

CFAF/ton 2/ 92,610 93,100 93,835 94,325 95,0bU 95,550

Variable Costs in

% of Cif ValueInsurance 1.25%Brokerage 2.35% 3.6%o 3,334 3,352 3,378 3,396 3,422 3,440

Fixed Costs per TonFreight 8,00QTransit 550Loading 100Unloading 200Bank Charges 80 8,930 8,930 8,930 8,930 8,930 8,930

Internal Transport 1,620 1,620 1,620 1,620 1,620 1620

Total Costs 13,612 13,628 13,652 13,668 13,693 13,71.0

Value ex-mill 3/ 73726 70,10A 7°,°07 QO 29 (12- O 2=o

Value ex-mill (Efficiency) 79,126 79,598 80,307 80,779 81,488 81,960

B. PALM OIL (OUTGROWERS)Value ex-mill ton Palm Oil 78,7?8 79,198 79,907 80,379 81.088 8î, AoLess Processing Costs 5/ 6/ 15,500 15,500 15,500 15,500 15,500 15,500

Net value of Palm Oil before Mill- _ = '4,4r '4 a t6 oao

Net value of Palm Oil before Mill

(Efficiency) 7/ 66,261 66,733 67,442 67,914 6 8 ,6 23 69 095

1/ Source EDP Commodity Forecast Tables, November, 1976.2/ At the rate of US$l=CFAF 245.3/ This figure is used for the Benefits and Cost Tables 6 and 9.

4/ With adjustments of domestic handIling and transport costs by Standard Conversion Factor.

Value used in Economie Rate of Return Calculations.

5/ See Table 1, Annex V.6/ This figure is used in the outgrowers' Benefits and Costs Tables 7,8 and 9.

7/ With adjustments of domestic,handling and processing costs by SCF. Value used in Economic

Rate of Return Calculations.

ANIC EX P

Table 3

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Projected Palm Cil Kernel

in constant 1976 terms

(in CFAF/ton)

1980 1981 1982 1983 1984 1985 on

OIL PAL'IM KERNELSPrice forecast in 1976 î/Constant Prices

$/MT Cif Europe 240 248 256 264 272 281CFAF/ton 2/

-58800_ 6 Q,7 6 0_ 6 27 6 0 64_680 6684o 68,845

Variable Costs in %of Cif Value

Insurance 1.25% 2,117 2,187 2,259 2,328 2,399 2,478Brokerage 2.35% 3.6%

Fixed Costs per TonFreight 8,oooTransit 1,100Unloading 800Bank Charges 80 9,980 9,980 9,980 9,980 9,980 9,980

Internal Transport 1, 620 1,620 1,620 1,620 1,620 1,620

Total Costs 13,717 13,787 13,859 13,928 13._q,. 14,078

Value ex-mill 45,083 46,973 48,901 50,752 52,641 54,767

Value ex-mill (Efficiency)i/ 45,555 47,445 4n,377 51,22R 53,117 55,2)J3

1/ Source EPD Comnodity Forecast Tables, November 1976.2/ At the rate of US$ 1 = 245 CFAF.3/ Value used in the ?eûefits aiuj Costs Tables 6, 7 and 9t] With adjustments of domestic hanUiing and trajisport costs by Stan.dard

Conversion Factor. Value used in Eccnoric Rate of Return Calculations.

IVORY COAST Table 4

FOURTH OIL PALM AND COCONUT PROJECT

Projected Copra Prices in 1976 Terms

(in CFAF/ton)

1980 1981 1982 1983 1984 1985 on

Price Forecast in 1976 -/Constant Terms

$/MT Cif Europe 339 351 362 374 385 397CFAF/ton 2/ 83-055 8s,9Q5 0RqQo 91 63n 94h325 907,65

Variable Costs in ,c'f Cif Value

Insurance 1.25%Brokerage 2.35% 3.6/o 2,990 3,096 3,193 3,297 3,396 3,502

Fixed Costs Der TonFreight 8,000Transit 1,100Unloading 800Bank Charge _ 80 9,980 9,980 9,980 9,980 9,980 9,980

Internal Transport f1,620 1,620 1,620 1,620 1_,620 1,620

Total Costs 14,590 14,696 14,793 14,897 14,996 15,102Value ex-Quay 68,465 71,299 73,897 76,733 79,329 82.163

Less Processing Costs 3 13,750 13,750 13,750 13,750 13,750 13,7504/

Value ex-Estate, CFAF/ton 54,715 57,549 60,147 62,983 65.579 68,413

Value ex-Estate (Efficiency)5/ 57,529 6o.M3 62i961 65,797 68,393 71,227

1/ Source EPD Commodity Forecast Tables, November, 1976.2/ At the rate of US$ 1 = 245 CFAF.3/ See Table I, Annex V.4/ Value used in Benefits and Costs, Tables 5, 8 and 95/ With adjustments of domestic handling and processing costs by Stanctarc

Conversion Factors. Value used in Economic Rate of Return calculations.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Coconut Estates

Economic Benefits and Costs Streams

(in million CFA)

19901976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 2005

BENEFITS 1/

Value of Copra 16 143 553 1181 1753 2133 2299 2380 2380 2380 2380Value of Coconut Char-

coal n 12 45 92 130 152 164 168 168 168 168Total 17 155 598 1273 1883 2285 2463 2548 2548 2548 2548

Adjusted Total 2/ 18 162 626 1330 1972 2394 2579 2668 2668 2668 2668

COSTS

Land Clearing and AccessRoads 683 423 133 28 4h 40 4o 37 32 28 28 28 28 28 28

Agricultural Costs 152 285 284 183 199 202 204 211 209 207 207 207 207 207 207Estates Expenses 49 90 96 1o6 108 114 120 128 132 136 138 140 ih0 140 140Harvest 1 il 28 45 54 62 67 70 71 71 71Investments 280 308 4o 22 46 99 81 66 77 116 91 75 136 136 136Southwest Management 25 37 19 35 35 4o 35 35 4o 35 35 4o 35 35 35

Total 1,189 1,1143 572 -3Y7 1429 506 508 522 -W - 585 -5 5- -5-2- - 711 -

Adjusted Totar 1095 1,032 492 314 367 439 438 449 468 505 477 480 533 533 533

1/ Processing costs have been deducted

2/ Used for Economie Rate of retura. See Annex x,para 6. (Dx

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Oil Palm Estates (Project Area only)

Ecoaomic Benefits and Costs Streams

(in million CFA)

1990 -

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 2005

BENEFITSValue of Palm Oil 871 1512 1910 2390 2584 2584 2584 2584 2584 2584

Value of Kernels 93 176 236 307 348 348 348 348 348 34R

Total 964 1686 2146 2697 2932 2932 2932 2932 2932 2932

Adjusted Total 1/ 970 1696 2157 2711 2947 2947 2947 2947 2947 2 947

COSTSLand C±earing and Access Roads 357 774 833 18 49 49 49 49 31 4o 4o 4o 40 4o 4o

Agriculture Costs 83 272 279 140 131 127 114 116 108 107 105 105 105 105 105

Estate Expenses 9 96 154 154 154 154 154 154 154 154 154 154 154 154 154

Harvest and Collection 27 111 171 170 182 184 175 175 187 195 194

Investments 105 480 345 17 30 155 222 116 50 154 195 86 150 150 150

Southwest Management 25 37 19 35 35 4o 35 35 40 35 35 4o 35 35 35

Industrial Investments 720 450 720

Processing Costs 89 32 153 192 239 257 257 257 257 442 442

Tot a l :3a6 L......46 1 5 618 _3_ 822 922 91 57 928 1,121 1,120

&dJueted cotal 1/ 541 1,526 1,404 255 1,D17 1,032 1,445 715 70 902 81O 74P RM 9 987- - = - - - _=_

1/ Used for Economic rate of return. See Annex X, para 6.

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Oil Palm Outgrowers Program

Ecoinomic Benefits and Costs Stràaans(in million CFAF)

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 to

_____ 2005

BENEFITS 1/

Value of Palm Oil 40 72 78 107 116 116

Value of Kernels 5 10 14 17 19 1945 82 92 124 135 135

Total

Adjusted total 2/ 47 86 96 130 142 142

COSTS

Project Cests and Cther Investments 23 36 36 2 2 2 3 3

Extension W'brk during Yaintenance 6 6 6 6 6 6 6

Farm Labor 6 il 4 4 4 5 5 5 5 5 5

Small tools 1 2 1 1 1 1 1

Fertilizers 1 2 2 2 2 2 2

Total | 36 4o 41 il 15 15 14 15 17 17

&djusted Total 4 1 23 34 34 10 10 9 10 12 12

1/ Processing costs have been deducted.

2/ Used for Economic rate of Return. See Annex X, para 6.

019

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

Coeonut Outgrowers Program

Economic Benefits and Costs Streams

(in million CFAF)

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987-2005

BENEFITS 1/

Value of CDpra 1 14 67 200 376 486 527 561Value of Coconut Charcoal _ 1 5 16 28 35 38 40

Total 1 15 72 216 404 521 565 601

Adjusted Ubtal 2/ 1 16 77 228 426 550 5a7 634

COSTS

Project Costs and other Investments 21 80 168 173 82 61 31 2 4 4 4 4Extension Work during Mu&ntenance 19 19 20 20 21 21 21 21 21Farm Labor 5 16 24 7 4 3 4 8 il 15 16 16Small Tools 1 1 1 1 1 1 1 1 1 1 1 1

Fertilizers - - 39 39 39 39 39 39 39 39

Total 27 97 193 200 145 124 71 76 80 81 81

AdJusted Total 2/ 21 76 159 178 131 113 86 61 62 63 63 63

S/ Processing costs have been deducted

2/ Tjsed for economic rate oa return. See Annex X, para 6.

CO

IVORY COAST

Fourth Oil Palm and Coconut ProJect

Feonomic Benefits and Costs Streams

(in million CFAF)

1990to

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 2005Benefits _ _ __ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _

Value of Palm Oil 911 1584 1988 2497 2700 2700 2700 2700 2700 2700

Value of Kernels 98 186 250 324 367 367 367 367 367 367

Value of Copra 17 157 620 1381 2129 2619 2826 2941 2941 2941 2941

Value of Coconut Charcoal 1 13 50 108 158 187 202 208 2C,F 20e 208

Total 18 1179 2440 3727 5108 5873 6095 6216 6216 6216 6216

Adjusted Total 1/ 19 1195 2485 3811 5239 6033 6265 6391 6391 6391 6391Costs ----se-Toal-

Oil Palm Estates 579 1,659 1,630 364 1,146 1,175 1,618 832 822 922 961 857 928 1,121 1,120

Coconut Estates 1,189 1,143 572 374 429 506 508 522 544 585 556 560 617 617 617

Oil Palm Outgrowers 7 36 40 41 il 15 14 15 17 17 17 17 17 17 17

Coconut Outgrowers 27 97 193 200 145 124 95 71 76 80 81 81 81 81 81

Total .802 -2935 2 979 1,731 1,820 2 1,439 1,457 1, 0 1,615 1,515 1,6 1,835

Adjusted Total 1/ 1,657 a,b>o 2,089 782 1,523 1,594 1,98o 1,234 1,,o4 1,3o2 1,390 1, 296 1,416 1,59o 1,595

1/ Tlsed for economie rate of return. See -nnex Y, para 6.

(D X

\D X

ANNEX XI

IVORY COAST

FOURTH OIL PALM AND COCONUT PROJECT

blonitoring Requirements

1. The Southwest Management will keep annual report of performance

and measure accomplishments against appraisal estimates. These data would

serve both as an essential management tool during the life of the project

and as a major input for the eventual preparation of any follow-up project.

2. Indicative tables have been proposed (Table 1 for the coconut

sector and Table 2 for the oil palm) and would be finalized with the ex-

ecuting agency during the first supervision mission.

3. For each item, for each component, and for each project year, the

tables provide for the actual performance (A), the estimate made at appraisal

(E) and a third column for A as a percentage of E. Performance would be com-

pared with the addition of inflation factors, applied to base costs plus

physical contingencies as indicated in Table 1 of Annex 6.

4. The Southwest M4anagement would, in addition, prepare quarterly

reports on physical progress and expenditures for submission to the Bank.

The format of this report would be prepared and discussed with the executing

agency during the first supervision mission.

IVORY COASTFOURTH OIL PALM AND COCONUT PROJECT

Reporting Requirements

Pé 1 PY 2 PY 3

Actual Appraisal A Actual Appraisal A Actual Appraisal AUnit Performance (A) Estimate (E) -*- Performance (A) Estimate (E) - Performance (A) Estimate (E) T

A. COCONUT SECTOR

(a) EstatesLand clearing for PY 1 ha 2000Land clearing for PY 2 ha 2000 1250Land clearing for PY 3 ha 1500 750Plantings ha 2000 3250 2250

Land Preparation Costs I/ CFAFm 776 481 152Land Development Costs CFAFm 167 314 312

Estates ExpensesSalaries CFAFm 37 63 64Transport expenses CFAFm 10 21 21Others CFAFm 7 15 19

Subtotal 54 99 104

Housing and Buildings CFAFm 201 233 37

Vehicles CFAFm 34 42 8

Installations and Equipment CFAFm 84 75 _

StaffTotal personnel needed 255 551 648of whom, field workers 204 449 540

(b) Outgrowers programClearing and planting ha 200 550 1250Loans: Inputs CFAFm 15 44 105

Cash CFAFm 7 20 48

1/ All costs are base costs; performance will be compared with the addition of contingencies as indicated in Table 1 of Annex VI

IVORY COASTFOURTH OIL PALM AND COCONUT PROJECT

Reporting Requirements

PY 1 PY 2 pY 3

Unit Actual Appraisal A Actual Appraisal A Actual Appraisal APerformance (A) Estimate (E) -E- Performance (A) Estimate (E) -r- Performance (A) Estimate (E) -

A. OIL PALM SECTOR

(a) EstatesLand clearing for PY 2 ha 2000 1000Land clearing for PY 3 ha 3500 1500Plantings ha 3000 5000

Land Preparation Costs 1/ CFAFm 406 879 338Land Development Costs CFAFm 89 292 300

Estates ExpensesSalaries CFAFm 6 59 99Transport expenses CFAFm 3 32 42Others CFAFm 1 13 26

Subtotal 10 104 167

H Housing and Buildings CFAFm 78 357 238

Vehicles CFAFm 42 114 79

Installations and Equipment CFAFm _ 75 75

StaffTotal personnel needed 327 1144 1283of whom, field workers 300 1011 1074

(b) Outgrowers roegramClearing and planting ha - 200 300Loans: Inputs CFAFmi 13 21

Cash CFAFm 38 14

i/ All costs are base costs; performance will be compared with the addition of contingencies as indicated in Table 1 of Annex VI

taSMx

BRID125APRIL 197

IVORY COAST

FOURTH CIL PALM AND COCONUT13 ~~~~~~~~~~~~~PROJ ECT

SOUTHW EST

OUTGAOWEH PLANTINGS

OPT ONAL PANCELS

I978~~~~~~~~~~~ 2.500h. ~~~~~~~~~~~~~~~~~~AREAS ANDEA INAESTG.ITION

1979 31300W 8~~~~~~~~~~~~~~~~~~~~~~~~ SECTOR NMEl

- SCONDARY EARTA RO-05

9 --- RACES

INTERNATIONAL BOLND3AEIEA

4 ~ ~ ~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

NERO COCCNUT

LÂJ TOTAL- 4,00 1a <fj{4 6 GL'KE COCONUT ESTATE

1AcboA,,nç2 o, tt.m.hd n1977 1d,50.n o.eptoh b

1 VC c'o A s T

o,,.

1< p\Ž<'t»~~~~~~~~~~ï> oeStù2'<2 ~~~~~~~~~~~~.>r' yA V

<MALI~~

-~ r ^7 _ r t > >, ,{ UPPER VOLTA

t LTA ~ s 9 IVORY COAST

.0M oOD Ne KORHOO; ( < '9SODEPALM OIL PALMR Y 0 2 g } A EAST OF SASSANDRA

u-i I \VOUO OUR OUY

r S SEGUELA / ° KeLA < .OUNDDUKOUp SODEPALM PLANTATIONS

Esisting or in the Coorse of Establishment

j (DALOAo gn,oon0o CEN ' t iOTHERS

,DIc O O AD ma°KORO<tf +tS Stafe and Prlivate Estates

's- 000GAGNOA < O 0 I OIL PALM OUTGROWERS

A~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ i O41 R.di-LL f. Mi , l 2 q

LIBERIA , IDAN Q KILOMETERS

-_ Man Roads

- Secondary Roads

oIcnSfJYo ~ ~ ~ A L"«I

OS. SASSANOR ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OS

r I X /////--s/ I i XJ'-a 0\~~~~~~~~~~~~~tOnt d45J 4E(a\MRl>\\W8O8 . 3 4 W h a Vj REPLANTlNGS 9EDaI k f9

IB ,BO E, 0.0h. L»oiJ_YA N 'L -

IHH0 GRAND DREWIN ;70 ASSANORA A T Z A iv F/ C O C f A N

BOLO & 3600~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0

aS,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4.

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