Document of

The World Bank

Report No. 13591-VE

STAFF APPRAISAL REPORT

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MARCH 7, 1995

Natural Resources Management and Rural Poverty DivisionCountry Department IILatin America and the Caribbean Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS(as of March 2, 1995)

Currency Unit = Bolivar (Bs)US$1.00 = Bs 170.00Bs 1.00 = US$0.006

GOVERNMENT FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

The metric system is usedthroughout the report.

GLOSSARY OF ACRONYMS

ACE Asociaci6n Civil de Extensi6n (Civil Association for Extension)

AMA Agencia Municipal Agrfcola (Municipal Agricultural Agency)

ASIP Agricultural Sector Investment Project (Loan 3420-VE)

BID Banco Interamericano de Desarrollo (Interamerican Development Bank - IDB)

CIARA Fundaci6n para la Capacitaci6n e Investigaci6n Aplicada a la Reforma Agraria (Foundation forTraining and Applied Research for Agrarian Reform)

FAO Food and Agriculture Organization of the United Nations

FONAIAP Fondo Nacional de Investigaciones Agropecuarias (National Fund for Agricultural andLivestock Research)

FONCACAO Fondo Nacional de Cacao (National Cacao Fund)

FONCAFE Fondo Nacional de Cafe (National Coffee Fund)

FUSAGRI Fundaci6n Servicio para el Agricultor (Foundation for Service to Farmers)

GDP Gross Domestic Product

IAN Instituto Agrario Nacional (National Agrarian Institute)

ICAP Instituto de Cr6dito Agropecuario (Agricultural Credit Institute)

ICB International Competitive Bidding

IDB Inter-American Development Bank

LCB Local Competitive Bidding

LIB Limited International Bidding

MAC Ministerio de Agricultura y Cria (Ministry of Agriculture and Livestock)

MTU Methodology and Training Units

NGO Non-governmental Organization

PCU Project Coordinating Unit

PRODETEC Programa de Desarrollo Agropecuario y Tecnol6gico (Agricultural and TechnologicalDevelopment Program)

SMS Subject Matter Specialist

SOE Statement of Expense

UEDA Unidad Estatal de Desarrollo Agropecuario (State Unit for Agricultural Development)

VENEZUELA

AGRICULTURAL EXTENSION PROJECTSTAFF APPRAISAL REPORT

Table of Contents

Page Number

LOAN AND PROJECT SUMMARY ......................... i

BACKGROUND ..................... 1........... I

A. Country Overview ............................. IB. Small Farmers and the Agricultural Sector ....... . . 2C. Agricultural Extension ........................... 4D. Previous Bank Involvement in Venezuela .5............. SE. Lessons Learned from Similar Projects ................ 6

II. THE PROJECT ...... .. .. ..................... 7

A. Origin and Rationale for World Bank Involvement ... ...... 7B. Project Objective ............. 7C. Project Description ............. 8

Municipal Level .................. ......... 8State Level ... .. .......................... 8National Level ............................. 9Training of Extensionists ................ . . 10Linkages Between Agricultural Research and Extension . .. 10Extension and Environmentally Responsible Agriculture . .. 10Project Participation . ..... .................. 11Table 2.1: Scheduled Participation in the Project .13Project Components ... .. ........... ...... 13

D. Component 1: Institutional Development ...... ., 13National Agricultural Extension Office ............. 13National Level Subject Matter Specialists .... 15Financeable Expenditures at the National Level . 16State Agricultural Extension Offices ............... . 17State Level Subject Matter Specialists .... .......... 18Financeable Expenditures at the State Level .... ....... 18

E. Component 2: Municipal Extension ..... ............ 19Asociaciones Civiles de Extensi6n ..... ............ 19Municipal Agricultural Extension Offices .... ........ 20

This report is based on the findings of a Bank appraisal mission which visited Venezuela in July 1994.The mission was comprised of the following members: Messrs./Mmes. David Nielson (MissionLeader), Matthew McMahon (Senior Agriculturalist), Robert Feliciano (Financial Analyst), RobertoLaver (Lawyer), and Nohelia Mejia (Public Agricultural Institutions Specialist, Consultant). Messrs.Edilberto Segura, Michael Baxter, and Theodore Nkodo are, respectively, Department Director,Division Chief, and Projects Advisor for the operation. Messrs. and Mme. Rainer B. Steckhan,Kreszentia Duer, and Orville Grimes held those positions at the time of project appraisal.

Table of Contents (Cont.)

Page Number

Table 2.2: Proposed Co-financing Matrix for eachMunicipal Project ....... ................. 20

Extension Methodologies ...... ................ 21Financeable Expenditures at the Municipal Level .... ... 21

F. Component 3: Training for Extensionists .... .......... 22Training Programs .......................... 23Individual Training Plans ...................... 24Implementation of the Training Program .24Financeable Expenditures and Training Budgets .25

G. Component 4: Technical Assistance and Studies .26Studies ............. ................... . 26Technical Assistance ......... . . ....... . .. . . . 27

111. PROJECT COSTS and FINANCING PLAN ....... . . . . . . . . 29

A. Cost of the Project ............... ... ... ... .. . 29Base Costs and Contingency Allowance ...... . . . . . . . 29

B. Financing Plan ... . ........................... 29Table 3.1: Share of Total Project Cost Paid by EachParticipating Group ............ . 30Table 3.2: Summary of Project Costs by Components and

Financing by Agency . ..... . ... 31

IV. PROJECT IMPLEMENTATION, PROCUREMENT, ANDDISBURSEMENTS .32

A. The Implementing Agency . .32B. Procurement .............................. 32

Table 4. 1: Procurement Arrangements ..... ....... 33Civil Works ............ ............. 34Goods and Equipment . . 34Supplies and Consumables . . ................... 34Consultancies/Technical Assistance and Studies .34

C. Disbursements .......... 35D. Accounts and Auditing .. ... ................ .. 35E. Supervision by the Bank ........ ............. 36F. Project Reporting and Mid-term Review ..... ......... 36

Project Reporting .......................... 36Mid-term Review .......................... 36

V. EXPECTED BENEFITS AND RISKS ...... ............. 38

A. Project Benefits .............................. 38Poverty Focus . ............................ 38Environmental Impact ......... ............... 39

B. Project Risks ........ 39

Table of Contents (Cont.)

Page Number

VI. AGREEMENTS AND RECOMMENDATION ..... ........ 41

A. Recommendation ............... 43

ANNEXES

Annex A. Technology Generation and Transfer ....... . .......... 44Annex B. The Transition Period: The Creation of Asociaciones

Civiles de Extensi6n .......................... 50Annex C. Flow of Funds .............................. 53Annex D. Cost Tables ............................... 56Annex E. Project Implementation Schedule ...... ............. 65Annex F. Disbursement Schedule ......... ............... 72Annex G. Project Monitoring, Evaluation, and Reporting .... ...... 74Annex H. Project Supervision Plan .. ........... ......... 91Annex I. Documents in the Project Files ..... .......... 94

MAP: IBRD No. 25559

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

LOAN AND PROJECT SUMMARY

Borrower: The Republic of Venezuela

Implementing Agency: Foundation for Training and Applied Research for Agrarian Reform(Fundaci6n para la Capacitaci6n e Investigaci6n Aplicada a laReforma Agraria - CIARA)

Beneficiary: Not Applicable

Poverty Category: The project would be in the Program of Targeted Interventionsbecause: (a) the selection criteria for project beneficiaries wouldspecifically target poor farmers; and (b) the proportion of projectbeneficiaries who are poor will far exceed the poor's share of thetotal population,

Amount: US$39.0 million equivalent

Terms: The loan would be repayable over 15 years (including a five-yeargrace period) at the Bank's standard variable rate.

Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days aftersigning, less any waiver.

Financing Plan: See Chapter III, paragraphs 3.3 through 3.5

Net Present Value: Not Applicable

Map: IBRD NO. 25559

- Hi -

Loan and Project Summary Table

PROJECT COST Local Foreign Total

Institutional Development (US$ Million)

* Central Project Unit 5.9 0.0 5.9

* Establishment of State-level 6.4 0.0 6.4Monitoring Units

Subtotal 12.3 0.0 12.3

Municipal Extension

* Municipal-level Extension Nuclei 42.6 2.0 44.6

Training

* Agricultural Extension TrainingSystem:

-National Level 1.1 0.1 1.2

- State Level 0.1 0.0 0.1

- Municipal Level 3.5 1.0 4.5

Subtotal 4.7 1.1 5.8

Studies & Technical Assistance 1.0 4.5 5.5

Physical Contingencies 3.1 0.2 3.3

Price Contingencies 7.0 0.5 7.5

FINANCING PLAN

Government of Venezuela

* National Level 20.8 20.8a/

* State Level 11.0 11.0

* MuniciPal Level 6.0 6.0

Subtotal 37.8 37.8

Farmers 2.2 2.2

World Bank 30.7 8.3 39.0

TOTAL ] 70.7 8.3 | 79.0 ]

IBRD Fiscal Year

Estimated Disbursements 1996 1997 1998 1999 2000 2001||

Annual 2.9b/ 2.7 5.5 7.5 10.0 10.4

Note: Some totals may not add up duc to rounding.

a/ Includes US$6.7 million in local taxes.b/ Includes retroactive financing for eligible expenditures incurred after July 1, 1994 (up to

an upper limit of US$3.9 million).

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

I. BACKGROUND

A. Country Overview

1.1 Venezuela, situated on the north coast of South America and bordered byColombia, Brazil, and Guyana, is the continent's sixth largest country with an estimated areaof 916,442 km2 (see Map IBRD No. 25559). In addition to its mainland, Venezuelapossesses 72 islands and a maritime area of 362,000 kmn (the country's declared exclusiveeconomic zone). The total population is estimated at just under 21 million inhabitants(1991), some 83% of whom live in urban areas located mainly in the northern states.

1.2 Although Venezuela lies entirely in the tropics, there is considerable variation inclimate due principally to differences in elevation and topography. Average rainfall rangesfrom less than 500 mm on the north Caribbean coast to more than 4,000 mm in parts of theOrinoco Delta and the eastern part of the Cordillera de Merida. Humidity is generally highwith average values exceeding 80% in the Amazon, eastern plains (llanos), and theMaracaibo lowlands. Annual average temperatures range from 240 C at elevations below800 m to 0° C at elevations over 3,000 m. The Orinoco river system drains some 80% ofthe national territory.

1.3 Venezuela's per capita GDP of US$2,910 (1992) is the fourth highest in LatinAmerica. Oil and several minerals account for approximately 90% of total exports. Oilproduction, mining, petrochemicals and energy have, in recent years, generated up to 30% ofGDP; other manufacturing activities have accounted for another 12%; while agriculture hasaccounted for approximately 5 % of GDP. Due to its heavy dependence on petroleumexports, the rapid growth rates which Venezuela achieved during the 1974-78 period of highoil prices fell dramatically during the 1980s. In spite of a successful debt reschedulingprogram, economic activity stagnated until about 1985, picking up again in 1986-88 as oilprices recovered. Unsustainable policies led to macroeconomic crisis in 1989.Consequently, a macroeconomic adjustment program was initiated together with an economy-wide set of reforms in sectoral policy and public administration. The program of economicreforms was implemented rapidly and, with several exceptions!', resulted in a substantiallyliberalized economic environment.

1.4 A newly elected Government headed by President Rafael Caldera took power inFebruary 1994. Almost immediately, the new Government was faced with a serious crisis inthe banking sector which served to intensify already re-emerging macroeconomic difficulties.A sharp rise in inflation, depreciation of the Bolivar, rapid losses of foreign exchangereserves, and a huge fiscal deficit (estimated at 16% of GDP for 1994) prompted theimposition in mid-1994 of price controls, restrictions on foreign exchange purchases, and the

1/ Two particularly prominent reforms remain to be completed: internal prices for petroleum products remainhighly subsidized; and the structure of taxes remains inadequate.

establishment of a fixed exchange rate with the U.S. Dollar (Bs. 170 per US$). OnSeptember 12, 1994, a new economic plan2' (often referred to as the "Corrales Plan") wasannounced. This plan calls for a broad spectrum of measures designed to reduce inflation,reduce the public sector deficit, and to promote growth. While the plan has yet to be fullyimplemented, some progress has been made under the 1995 Budget. The most significantsteps taken to date in this regard include the raising of value-added tax rates and the issuanceof new long-term bonds in the domestic market-place.

B. Small Farmers and the Agricultural Sector

1.5 Because of its relatively small contribution to national GDP (roughly 5 percent),agriculture in Venezuela is often considered to be relatively unimportant. This view ismisleading. Agriculture's share of Venezuela's "non-petroleum" economy (roughly 9percent) is only slightly below that found in other Latin American countries (Argentina,Brazil, and Mexico, for example). Further, Venezuelan agriculture has a good deal ofpotential for growth. A favorable tropical climate and geographic diversity would allow it toproduce a diversified set of high quality tropical products for export to temperate-climatemarkets. Its location allows it easy access to North American markets. In many products, itcould service these markets in their "off-season" when prices are high.

1.6 Despite its considerable potential, Venezuelan agriculture has yet to emerge as adynamic and modern industry. It has not been able to attract significant investment (eitherpublic or private) in either physical or human capital. Rather, it has languished in a patternof low productivity in which smallholder agriculture, in particular, has remained largelybackward and poor. This dismal record is due in part to the diversion of resources to thepetroleum sector, to distorted sectoral policy which has encouraged significant misallocationof resources, to lack of public services and infrastructure, and to an overly centralizedgovernmental structure.

1.7 Compared to other developing countries, a relatively small proportion (roughly13%) of the Venezuelan workforce remains in agriculture. Of these, by far the greatestshare can be found operating very small farms or is landless and works as hired labor forvery large farms. Land distribution is extremely skewed, as is the distribution of incomeamong those engaged in agriculture -- a pattern of inequality which has prevailed sincecolonial times.

1.8 As everywhere in the world, farmers in Venezuela without significant land orcapital resources must rely primarily upon the productivity of their labor to generate income.However, productivity among small farmers in Venezuelan agriculture is poor, even by LatinAmerican standards. This is in contrast to the productivity of large-holder agriculture.Further, the low productivity of smallholder agriculture continues despite a documentedinventory of available technologies which have demonstrated their ability to generatesubstantial increases in the productivity of small farms. Poor farmers have few resources of

2/ The plan's formal title was the "Prograna de Estabilizaci6n y Recuperacion Econ6mica.n

their own to invest in productivity-enhancing measures. Despite its efforts, the public sectorhas not been able to assist substantially in the dissemination of existing technologies tosmallholder agriculture.

1.9 Other factors, too, have contributed to the plight of smallholder agriculture.Within the economy as a whole, government intervention in Venezuela has traditionally (withthe exception of the late 1980s) discriminated against agriculture as a sector, reducing thevalue of output for producers, large and small alike. This disincentive to agriculture hasbeen exacerbated by the negative "Dutch Disease" effects of the oil sector on thecompetitiveness of all traded goods sectors, including agriculture. Within the agriculturalsector itself, government intervention has distorted economic incentives considerably in bothinput and output markets. Such intervention has favored large holder agriculture and hasencouraged the production of crops such as feed grains and cereals for which Venezuela doesnot possess a comparative advantage. Other agricultural industries, particularly tropicalfruits and vegetables, crops in which Venezuela (and small-holder agriculture) could have asignificant comparative advantage, have not been developed as they might have been.

1.10 While government interventions have generally worked against smalholderagriculture in the area of economic incentives, neither has the Venezuelan public sectortraditionally served smallholder agriculture well in terms of the provision of productivepublic services and infrastructure. A highly centralized structure together with fiscal crisishas meant that services such as agricultural extension, publicly managed irrigation schemes,land title and registry institutions, and plant and animal health services have been ineffective.Further, the failure of public agrarian reform institutions to transfer full titles of land tosmall-holder beneficiaries has prevented them from having access to credit, and has furtherreduced the incentive for productive investment.

1.11 Some of the problems noted here are being addressed. Economy-wideinstitutional reforms are decentralizing, and reducing the size of, the public sector in general.As noted above, economy-wide policy reforms undertaken since 1989, supported by theBank, the IDB, and the IMF, removed or diminished many of the most important incentivedistorting interventions. Although the recent macroeconomic crisis has resulted in a return toa greater degree of state intervention (see para. 1.4), the general structure of economicincentives more closely reflects the dictates of true economic scarcity than was the case priorto the reforms of 1989-1992.

1.12 In the agricultural sector, an impressive set of market-liberalizing reformsoccurred between 1989 and 1992, supported by the Bank through the Agricultural SectorInvestment Project3' (ASIP). These reforms eliminated most interventions by theGovernment in agricultural markets. However, since June 1994, several new interventionshave been promulgated in the agricultural sector -- these include the re-financing of theexisting agricultural credit portfolio at below-market interest rates and the re-imposition of

3/ This US$900 million project is financed through the US$300 million loan from the Bank, a parallel loan ofUS$300 million from the Inter-American Development Bank, and US$300 million equivalent in counterpartfunds. The World Bank loan (Loan 3420-VE) was signed in March 1992 and was declared effective in July1992.

- 4 -

price controls for selected retail food items. Even so, the basic structure of economicincentives in the agricultural sector remains much more consistent with the dictates of trueeconomic scarcity than was the case prior to the reforms of 1989-1992. The newinterventions of 1994 are counter to the dictates of policy conditionality associated with theASIP and, in that context, a policy dialogue is underway between the Bank and thegovernment to address this issue.

1.13 Beyond liberalizing agricultural markets, the reforms have also resulted in adownsizing and rationalization of the institutional structure of the Ministry of Agriculture(MAC). The ASIP supports a broad program of infrastructure investments in the sector,including irrigation and drainage rehabilitation; upgrading of rural roads; rural electrification;cadastral activities; improvement of animal and plant health services; training for MACemployees; and, a credit line through a second-tier public financial institution to supportagricultural lending by private rural banks.

1.14 These reforms and investments are helping to solve a number of the above-mentioned problems which have confronted the agricultural sector. However, remaining tobe tackled is the task of transforming public agricultural institutions into entities whicheffectively provide those agricultural services for which the public sector is legitimatelyresponsible. This project would undertake the transformation of one of the agriculturalservices which deals most directly with the productivity of smallholder agriculture -- theagricultural extension services targeted to small farms.

C. Agricultural Extension

1.15 Historically, the primary responsibility for the provision of public agriculturalextension in Venezuela has rested with MAC. Over the years, MAC has employed a numberof models for public agricultural extension, all managed from the national level. None hasbeen effective. A number of private agricultural extension services exist. These have beenconsiderably more effective. However, the cost of such services is typically well beyond themeans of smallholder agriculture. Consequently, although they are effective, they serveprimarily a wealthier, large-holder clientele which represents only a small part of the totalfarming community.

1.16 Public agricultural extension has taken several forms. A number of entitiesassociated with MAC have engaged in specialized forms of agricultural extension managedindependently from MAC's principal and more general extension service. These entitiesinclude, among others: the National Agrarian Institute (IAN); the Agriculture and LivestockCredit Institute (ICAP); the National Fund for Agricultural and Livestock Research(FONAIAP); and the commodity development funds, i.e. the National Coffee Fund(FONCAFE) and the National Cacao Fund (FONCACAO).

1.17 MAC's own general public agricultural extension service was headquartered inCaracas within the Ministry itself. MAC also maintained offices at both the state and themunicipal levels which were in charge of the delivery of extension services. It was a top-down organizational structure which proved to be largely ineffective. Extensionists were

- 5 -

generally inadequately trained, poorly motivated, often living far from the communities theyserved, and were without sufficient resources to carry out their responsibilities. The servicenever reached the majority of its intended clientele and had little to offer to those it didreach. Even the most optimistic estimates of actual beneficiary coverage under this systemindicate that no more than 10% of the target population was ever reached by MAC'sextensionists. Over the years the program stagnated, and many of its local offices wereessentially abandoned due to a lack of budgetary resources. In 1993, the program all butdisappeared with the formal discontinuation of its municipal offices (the AgenciasMunicipales Agricolas, or AMAs).

1.18 In dialogue with the Bank with regard to the development of an agriculturalextension project, and in the context of its own general process of reorganization, MAC hasdeclared its support for the concept of establishing a new public agricultural extensionservice. The former structure would be replaced with a new smaller and decentralizedinstitutional system. The new system would be targeted specifically toward poor farmers andsmallholder agriculture. It would institute a co-financing matrix under which states,municipalities, and farmers would all share in financing a gradually increasing percentage ofthe cost of the system, allowing the national government's share to decline. It wouldincorporate a more effective linkage with agricultural research. Finally, it would rely uponthe private sector for the actual provision of services.

1.19 In summary, by 1990, existing public extension and technical assistance effortshad become almost totally ineffective. The somewhat more effective programs that havebeen developed by some public and private institutions are too intensive and too expensive toserve the needs of poor small farmers. The proposed project would establish a newdecentralized public agricultural extension system in place of the old highly centralizedsystem. The new system would be based upon institutional principles which assure moreaccountability and responsiveness to the needs of its intended beneficiaries, poor farmers. Itwould incorporate into the system a cost-sharing mechanism to make the system sustainablebeyond the life of the project. These measures would be taken to establish a new agriculturalextension system particularly geared toward serving the needs of poor farmers. In thisregard it would be focussed upon allowing poor farmers to enhance the economic andenvironmental sustainability of their farming operations. In doing so, the proposed projectwould serve as a vehicle for poor farmers in Venezuela to begin to overcome the traditionalobstacles which have confronted them as participants in the agricultural sector.

D. Previous Bank Involvement in Venezuela

1.20 Since the re-establishment of Bank lending operations to Venezuela in 1989, theBank has approved sixteen loans to Venezuela for a total of US$2,825 million. Of these,four were adjustment loans totalling to US$1,195 million. The remaining eleven lendingoperations financed investment projects in a variety of sectors. Of these, only one loan wasto the agricultural sector: US$300 million for the Agricultural Sector Investment Project(Loan 3420-VE, approved in February 1992). This hybrid lending operation combinessubstantial policy reform measures with financing (together with IDB coftnancing) for abroad array of infrastructure investments in the agricultural sector. Of the above, one loan(Health Sector Reform for US$54 million) has been approved but not yet signed.

- 6-

E. Lessons Learned From Similar Projects

1.21 A review of the Bank's involvement in agricultural extension projects revealsseveral lessons with regard to successful extension projects. As a general principle, projectshave not been successful when they have lacked a clear statement of goals and of the meansto be employed in achieving the goals. The clear objective of this project would be toimprove the productivity and economic welfare of some 90,000 poor farmers throughout thecountry while encouraging environmentally responsible technologies through theestablishment of an effective and sustainable decentralized agricultural extension system.

1.22 The success of most extension programs is particularly tied to the responsivenessof program design to the specific needs of the client. Thus, a single extension model cannotbe designed for global application, and the participation of local professionals andbeneficiaries throughout the project planning and implementation stages is of criticalimportance. The decentralized, demand-driven nature of the proposed project is consistentwith this lesson from experience.

1.23 A further characteristic common to successful extension programs has been theestablishment of a responsive training program for the staff of the extension system. Atraining program is of fundamental importance in providing extension staff with the skillsnecessary for their jobs and in maintaining their awareness of new technologies. Theproposed project explicitly addresses this need through its training component.

1.24 Flexibility to meet the needs of a heterogenous population of clients has oftenbeen difficult to achieve when the delivery of extension services has been limited to onedelivery mechanism. In that this project will make it possible for municipalities andbeneficiaries to contract any qualified institution or entity to deliver extension services it willpermit great flexibility in the types of delivery mechanisms which might be employed.

1.25 Financial sustainability has frequently been a problem in extension projects, ashas governments' ability to cover recurrent costs of extension, even during the life of theprojects. The nature of the cofinancing matrix adopted for the proposed project will addressboth of these issues. First, the financial burden will be shared among beneficiaries,municipalities, states, and the federal government. Secondly, the share of the costs coveredby each will gradually be shifted away from the federal government toward beneficiaries andmunicipalities. This arrangement should improve sustainability of the project.

1.26 In a number of projects, appropriate technologies have not been available fortransfer to beneficiaries. This problem has been closely tied to the lack of systematiclinkages between agricultural extension and the agricultural research community. Theproposed project, through the use of subject matter specialists and the monthly meetingformat, is expected to result in a close linkage and two-way feedback system betweenextension and research which will encourage research on practical technologies which areeconomically and environmentally sustainable. With regard to the lack of availabletechnologies, this is a problem which does not currently exist in Venezuela. In fact, a largebacklog of available but as of yet unadopted technologies already exists. Further, in order toensure the continued development of new agricultural technologies, an IDB-financed projectto strengthen the agricultural research system became effective in December 1993.

II. THE PROJECT

A. Origin and Rationale for World Bank Involvement

2.1 Following the completion of an Agricultural Research, Extension and Educationsubsector review by the Bank in 19914', the Government of Venezuela requested that theBank help to prepare a lending operation to support the reformulation of its publicagricultural extension services. The proposed project was to complement an agriculturalresearch project5' (PRODETEC) which was then being developed by the Inter-AmericanDevelopment Bank and which became effective in December 1993. In response to theGovernment's request, a FAO/World Bank Cooperative Programme (CP) mission was fieldedin October 1991 to assist the Government in the identification of the project. The Bankreceived the FAO/CP Project Preparation Report0' in February 1993, and a pre-appraisalmission visited Venezuela in November 1993. The appraisal mission was completed in July1994.

2.2 The Bank's assistance strategy for Venezuela, discussed at the Board onNovember 4, 1993, is to support increased efficiency and decentralization of public services,private sector development, poverty alleviation, and environmental protection. As iselaborated upon below under Project Description, the proposed project is consistent with theassistance strategy and would address each one of these identified priorities through thedevelopment of the proposed agricultural extension service.

B. Project Objectives

2.3 The objectives of the proposed project would be to assist poor farmers to becomeaware of, and to adopt, improved technology to enhance their productive efficiency and theireconomic welfare, to improve the environmental sustainability of their farming operations,and to accomplish this through supporting the establishment of a new decentralized publicagricultural extension service to serve the needs of poor farmers who are not currently ableto secure adequate extension services. Under the new system, municipal governments andfarmers would together assume responsibility for the management and the delivery of publicextension services. This level of decentralization would help to ensure accountability andresponsiveness to the needs of beneficiaries. The new extension system would incorporate acost-sharing mechanism to make the system sustainable over time and beyond the life of theproject. Under the project, the public agricultural extension system would contract privatefirms or other non-governmental institutions to deliver extension and training services. Thisarrangement would encourage a broad participation in the service and, in that contractswould be awarded on a competitive basis, would also ensure efficiency in the delivery ofservices. The project would ensure that each year extensionists would receive training in the

4/ World Bank Report No. 9631-VE, July 31, 1991.5! The IDB Project (Loan VE-0066) is the Agricultural Technology Development Program - Stage H

(Programa de Desarrollo Tecnologico Agropecuario) or, PRODETEC.6/ FAO/World Bank Cooperative Programme Report No. 16/93 CP-VEN 14; February 5, 1993.

- 8 -

relationship between agricultural production techniques and environmental sustainability.The project would also provide technical assistance in the area of environmental concerns,would institutionalize reviews of the environmental aspects of all extension activities, andwould support studies to examine the broader impact of the project upon the environment.These measures would ensure that the project would improve producers' ability to employenvironmentally sound agricultural practices.

C. Project Description

2.4 The project would support the establishment of the institutional structure of anew decentralized public agricultural system through financing technical assistance,incremental staff costs, minor civil works, ancillary equipment, and other operational costs.A description of the structure and management of the decentralized system are presented hereand are followed by more specific descriptions of the sub-components of the proposedproject. A somewhat more detailed discussion of the technical aspects of the technologygeneration and transfer functions is presented in Annex A.

2.5 Under the newly established system, responsibility for, and decision-making in,the implementation of extension services would be placed at the level of the municipalities.Associations of producers would be established through which beneficiaries themselves wouldparticipate with their municipal governments in the management of the extension services.Financing of the decentralized extension system would be shared on a matching grant basisby the federal government (partially financed through the proposed World Bank loan), thestate governments, municipalities, and the beneficiaries themselves.

2.6 Municipal Level. After an initial period of transition (see Annex B), theimplementing agency at the municipal level would be a Civil Extension Association(Asociaci6n Civil de Extensi6n, here-after referred to as ACE). The ACE is a legal entitywhich would be formed within each participating municipality explicitly for this purpose. Amanaging board governing each ACE would be composed of seven board-members (withmajority representation by beneficiaries and with representation by the state government, andthe municipal government). In municipalities where other organizations might usefullyparticipate in discussions of the agricultural extension activities (NGOs, universities,FONAIAP, etc.), the ACE could invite their participation on the board. In such cases,additional farmers' representatives would also be added so as to ensure that farmers'representatives would collectively maintain a majority of board membership.

2.7 An executing agency would be contracted to deliver extension services totargeted beneficiaries. In order to receive co-financing under the project for its activities, theACE would submit annually a municipal project proposal for approval by the state andnational levels. This annual plan would be developed jointly by the implementing agencyand the ACE.

2.8 State Level. For each participating state, an agricultural extension office of thestate government (in some cases, still to-be-formed) would approve municipal projects forstate co-financing and would submit a state package to the Fundaci6n CIARA (Fundaci6n

- 9 -

para la Capacitaci6n e Investigacion Aplicada a la Reforma Agraria, hereafter referred to asCIARA), the extension system's coordinating office at the national level, for federal co-financing. The approval process would include an evaluation of all aspects of the proposalsincluding: practicality; feasibility; the economic relevance and sustainability of the proposedtechnical packages; the eligibility of participating farmers as beneficiaries in the project; and,the environmental relevance and sustainability of the proposed technical packages. The stateoffice would be responsible for monitoring, auditing, and evaluating on-going municipalprojects.

2.9 The state office would also be responsible for provision and coordination of theactivities of state level subject matter specialists (SMSs). These SMSs would providetechnical support to the municipal level extension offices. These SMSs would be identifiedat the state level to meet local and state level needs as identified through consultationbetween farmers, extensionists, and the staff of the state extension office. Once identified,SMSs would be contracted by CIARA7 ' to operate under the supervision of the state officesin addressing the particular needs and issues in question. In addition, the state offices wouldbe responsible for the coordination of part of the training program (as detailed under theTraining Component) for municipal extensionists. Each state office would hold monthlymeetings between the state's municipal extension coordinators, the state level technical staff,and any subject matter specialists serving the extension service in the state. These meetingswould be used to: communicate new technical messages to the municipal extensionists; allowthe technical issues and concerns of the municipal offices to be discussed and communicatedto state and national level extension offices, to the subject matter specialists, and to theresearch community; provide a forum for the discussion of bureaucratic and methodologicalissues facing the system; and, provide an opportunity for the community of professionalextensionists in each state to interact with each other.

2.10 National Level. At the national level, the project would be coordinated andimplemented by CIARA, an autonomous foundation which reports to MAC. The principalmission for CIARA would be the establishment, regulation, and coordination of thedecentralized public extension system for poor farmers. It would review annual municipalextension plans which have been approved at the state level, and once approved, wouldmanage the flow of funds from the national level to the executing agencies at the municipallevel. As at the state level, this review of annual municipal plans would focus on all aspectsof the proposals including: practicality; feasibility; the economic relevance and sustainabilityof the proposed technical packages; and, the environmental relevance and sustainability of theproposed technical packages. CIARA would also participate in the provision of the trainingof extensionists (see para. 2. 11). CIARA would contract, from research institutions such asFONAIAP, universities, and other private or non-governmental research institutions, a cadreof national level SMSs to provide national perspective and leadership on specified technicaland methodological issues. It would also contract state level SMSs at the request of the stateoffices (see footnote 7, para. 2.9). Finally, CIARA would manage a program of studies and

7/ This arrangement would be reviewed during the project's mid-term review in order to determine thefeasibility of formally transferring from CIARA to the state extension offices the right and responsibility tocontract state level subject matter specialists directly.

- 10 -

technical assistance designed to monitor the impact of the project and to bring in outsideexpertise where needed (as detailed under the Studies and Technical Assistance Component).

2.11 Training of Extensionists. Training activities would be arranged under theproject's training component to provide training for extensionists and other persons employedor otherwise connected to the new decentralized extension system. Annual training programsconsisting of a variety of activities would be prepared for each extensionist. These trainingactivities would present new techniques designed to protect and enhance productivity andenvironmental sustainability and would provide training in participatory extensionmethodologies designed to ensure that all members of the farm family are reached, includingwomen and youth. The primary responsibility for training activities would lie with CIARA'sMethodology and Training Units. State extension offices would share in the responsibilityfor identifying training needs and implementing training activities. The division ofresponsibility for training between the national and state levels would vary by categories oftraining as is specified in further detail below in the presentation of the Training Componentof the project. CIARA would contract the services of other institutions (universities,FONAIAP, NGOs, etc.) as needed to provide specific training activities under the project.

2.12 Linkages Between Agricultural Research and Extension.8' SMSs at both thenational and the state levels would be individuals located professionally within existingagricultural institutions (including research centers, universities, NGOs, and others). Evenwhen contracted to provide services to the extension system, they would maintain their postsand offices within their research institution. This arrangement would foster and facilitate anatural and close linkage between the technology generation activity and the technologytransfer function in Venezuelan agriculture. The participation of these SMSs in the monthlymeetings in each state would ensure a systematic point of contact between research and fieldlevel concerns. SMSs would also interface with extensionists and farmers through a varietyof other activities including: the supervision of field trials; the undertaking of field days,seminars, and workshops; diagnostic field visits; and responding to inquiries.

2.13 The connection between the agricultural research and agricultural extensioncommunities would be further strengthened through interaction in the training component.Technical subjects and practical training events to be offered to extensionists under thetraining program would in many cases be taught or led by staff of research institutions,universities, and other entities through contractual arrangements with the extension system.

2.14 Extension and Environmentally Responsible Agriculture. The project wouldbe expected to have a positive environmental impact in that the activities of extensionistswould improve the awareness of farmers with regard to the environmental impacts of thetechnologies which they employ. Further, extensionists would be in a position to suggestmethods to control negative environmental consequences of farming activities and to promotetechnologies which have positive ecological consequences. Armed with better informationabout, and keener awareness of, environmental issues than they would otherwise have

8/ A more complete presentation of the interface between farmers, extensionists, and agricultural techniciansand researchers under the new agricultural extension system is found in Annex A.

- 11 -

without the extension project, it is anticipated that farmers would make production decisionsin a more environmentally responsible manner than would be possible without the project.

2.15 The project would institute several measures specifically designed to result ingreater awareness among farmers of the environmental consequences and opportunitiesassociated with their farming operations. These measures would include the following:(a) requirements that training activities touching on environmental impact of traditional andemerging agricultural production techniques would be included in each extensionists annualtraining program; (b) requirements that among the topics covered by extensionists' trainingprograms would be integrated pest management and other practices and techniques designedto permit more effective incorporation of ecological factors into overall farm management;(c) the inclusion of a specialist in environmental issues in agriculture among the staff ofCIARA's Technical Unit and the availability of funds to contract SMSs with expertise inenvironmental issues to work with farmers and extensionists as needs arise; (d) therequirement that the review of annual municipal extension plans at each level (municipal,state, and national) would include, among its other elements, an assessment of theenvironmental issues which are raised or which fail to be addressed by the plan; (e) theavailability of funding under the Studies and Technical Assistance Component forinvestigation of the environmental impact of the project and of agricultural activities ingeneral and for contracting expertise from outside of the extension services staff to addressenvironmental concerns as they arise; and (f) the availability of funds under the Studies andTechnical Assistance Component for pilot extension activities, among which could beactivities designed to test and disseminate interesting production or conservation techniqueswhich are expected to be environmentally beneficial.

2.16 These aspects of project design would operationalize the principles of WorldBank Operational Directive 4.03 which deals with the topic of agricultural pest managementin Bank operations. Further, during negotiations assurances were obtained that theGovernment would apply, or have applied, standards and procedures for the utilization ofagricultural chemicals in connection with agricultural extension activities which aresatisfactory to the Bank (para. 6.3 (h)). More generally, the project's design wouldencourage environmental awareness among beneficiaries in that it would provide an attractiveopportunity for environmental interest groups, as well as groups with interest and expertise inparticipatory development, to participate in the dissemination of the techniques which theyfavor through participation in the provision of extension, in the provision of training, asSMSs, and in the provision of technical assistance. These are opportunities which would notexist in the absence of the project.

2.17 Project Participation. It is anticipated that, by the end of the fifth year of thesix year project, a total of 18 of Venezuela's 22 states would participate in the project.2'This would allow the participation of approximately 180 municipalities and an estimated total

9/ The Republic of Venezuela is comprised of 22 states, one federal district, one federal territory, and severalfederal dependencies (which are islands). Several states are not expected to participate in the Project, eitherbecause of very low population density (as in the case of Amazonas, Bolivar, and Delta Amacuro) orbecause of the lack of an agricultural population (as is the case in the Distrito Federal and in the state ofNueva Esparta).

- 12 -

of 90,000 direct beneficiaries.-'" The establishment of state extension offices by at leasttwo states and the signing of State Participation Agreements by these same two states withCIARA would be a condition of Loan effectiveness (para. 6.1 (a)). Likewise, the signing ofMunicipal Participation Agreements and the contracting of executing agencies to provideextension services in at least five municipalities located within the above two states, would bea condition of Loan effectiveness (para. 6.1 (b)). Pilot projects employing the basicmethodology proposed for the project were formally launched in five municipalities (locatedin Barinas and Aragua, two of the five states which would participate in the first year of theproject) in November 1994.

2.18 Within participating municipalities, agricultural extension services would beoffered to a targeted population of beneficiaries. These targeted beneficiaries would be poorfarmers and their families with small, but viable, fanning operations. A specificmethodology for the classification of farmers as members of the targeted population has beenidentifiedL' and is elaborated upon in the project's operational manual."2 ' Beneficiaryeligibility would be restricted to include only those farmers qualifying for inclusion in thepoverty category which is outlined in the operational manual. Qualification for inclusion inthis poverty category depends upon several characteristics including: income, scale offarming operations, level of schooling, and level of nutrition. The determination of theeligibility of farmers would be done at the municipal level by the ACE and the executingagency in each participating municipality employing the methodology from the operationalmanual. The specific criterion and methods employed in determining eligibility would bedocumented in the annual municipal extension plan together with the list of participatingeligible beneficiaries.

2.19 At the time of appraisal, the existing information about the farming populationwas inadequate to permit a careful classification and identification of eligible beneficiaries.For this reason, provision would be made under the project to gather and analyze datacharacterizing the farm population of participating municipalities. This would be done inseveral ways. The initial effort to create a baseline data-base would be accomplished throughcoordination with the Census of Agriculture which is scheduled to be undertaken in 1995.CIARA would participate in the design of the census in order to assure that all necessaryinformation is collected in a form consistent with the needs of the agricultural extensionsystem. Other complementary studies would be funded under the project, as needed.Among the information to be collected would be: size (in hectares) of farming operation;on- and off-farm income; value of crops and livestock produced; and, size of family. Apreliminary study has already been completed in the project's first two states (Barinas andAragua).

10/ According to the most recent Agricultural Census (1985), Venezuela has approximately 380,000 farmenterprises of which some 230,000 are of less than 10 hectares in size.

11/ The adopted methodology is that developed in a recent monograph entitled "Pequefia Producci6n Agricola yPobreza Rural en Venezuela" (by Luis Liambi, Eliecer G. Arias, and Gustavo Bricefio; published inFebruary, 1994 by the Instituto Interamericano de Cooperaci6n para la Agricultura; ISSN0253-4746).

12/ All available studies indicate that conditions of poverty afflict a significantly higher proportion ofVenezuela's rural population than of the urban population. The population of poor farmers and theirfamilies targeted by this project would be from among the population classified as poverty-strickenaccording to the categories outlined in the Liambi report cited in footnote 11.

- 13 -

2.20 Once the baseline data-base has been established, extensionists in eachparticipating municipality would perform annual diagnostic studies to document, for each ofthe beneficiaries, the basic characteristics of the farm family and of their operations.Technical assistance would be made available under the project to ensure methodologicalconsistency between the techniques employed in the census and those employed byextensionists in these annual exercises. Among other uses, the information collected inthese studies would be employed to monitor and update the eligibility of farmers forparticipation in the program.

Table 2.1. Scheduled Participation in the Project

PARTICIPATING YEAR lENTITIES 1995 1l996 1997 1998 J 1999 j 2000

States 5 14 18 18 18 18

Municipalities 14 40 80 130 180 180

Beneficiaries 7,000 20,000 40,000 65,000 90,000 90.000

2.21 It is anticipated that a wide variety of professionals and institutions engaged inthe agricultural sector would participate in the activities to be supported under the project.Universities, NGOs, private firms, and other entities with appropriate capabilities would allbe eligible, on a competitive basis, to participate in the actual provision of extensionservices. They would also be able to participate in the provision of training to extensionists,as providers of subject-matter specialists, and as sources of technical assistance to theproject's activities.

2.22 Project Components. The project would finance four components:(a) Institutional Development; (b) Municipal Extension; (c) Training for Extensionists; and(d) Technical Assistance and Studies. A more detailed description of each of thesecomponents follows.

D. Component 1: Institutional Development (US$12.3 million, 18% of total base costs)

2.23 This component of the project would establish and support the institutionalentities at both the national and the state levels of government which would coordinate andadminister the project and the national decentralized public agricultural extension systemwhich it would establish.

2.24 National Agricultural Extension Office. At the national level, the institutionalentity responsible for the project's implementation would be CIARA. During negotiations,assurances were obtained that CIARA would be the only agency at the national level incharge of public agricultural extension services and their financial support (para. 6.3 (i)).The formal establishment of a Project Coordinating Unit (PCU) within CIARA with at least

- 14 -

seven key professional positions already staffed (including that of its Director) in formsatisfactory to the Bank would also be a condition of Loan effectiveness (para. 6.1 (e)).

2.25 As the entity responsible ior public agricultural extension at the national level,CIARA's responsibilities with respect to the project would be the following:

(a) to establish the national decentralized public agricultural extension service in aform consistent with the Government's priorities as outlined in the country'snational agricultural development plan;

(b) to design and institute the general rules and regulations that would govern thenational decentralized public agricultural extension service at the national, state,and municipal levels. These general regulations would cover the legal,administrative, financial and technical principles of the system;

(c) to coordinate all procurement arrangements to be made in the implementation ofthe project;

(d) to coordinate project matters between the Bank and the Government and tomanage the flow of funds between the Bank and the project;

(e) to approve annual municipal extension plans from each participatingmunicipality. This would include a review of the contents of the proposedtechnical packages from the perspective of economic and environmentalsustainability and would also include a review of the eligibility of participatingfarmers as project beneficiaries;

(f) to manage, coordinate, and supervise the flow of funds between the national, thestate, and the municipal levels;

(g) to audit the system at the national, state, and municipal levels;

(h) to supervise and monitor (partially through the contracting of independentobservers) the activities at each level to verify that funds are being used for theintended purposes;

(i) to convene an advisory committee to: (i) review the environmental impact of theproject and to suggest methods for incorporating environmental considerationsinto all aspects of the extension system, and (ii) review the extent to which theproject is reaching poor farmers;

(j) to plan and administer the training component (see Training Component below);

(k) to plan and administer the studies and technical assistance component (seeStudies and Technical Assistance Component below), including an experimentalmethods fund to test new technologies and extension approaches andmethodologies;

- 15 -

(1) to provide general technical support to states and municipalities in various formsincluding: (i) visits and consultation by national SMSs, (ii) communicationsmaterials prepared by the national SMSs, (iii) contracting state-level SMSs fromlocally based agricultural research institutions to address specific needs at thestate and local levels, and, (iv) contracting, as necessary, technical assistancefrom abroad to address specific technical needs not otherwise covered by nationaltechnicians; and

(m) to strengthen and maintain the institutional link between agricultural research andextension by contracting and incorporating national level subject-matterspecialists from the agricultural research community into the regular activities ofthe national decentralized public agricultural extension service at every level.

2.26 In order to prepare itself for its new role, CIARA would adopt a newinstitutional structure specifically tailored to its new mission. This would involve thecreation of the PCU (see para. 2.24) with a Technical Unit, a Methodology Unit, a TrainingUnit, a Monitoring Unit, and a Supervision Unit (para. 6.3 (i)). CIARA's PCU wouldemploy roughly 25 full-time staff. At the professional level, this would include 13extension specialists to staff the Technical, Methodology, and Training Units, a small auditand legal staff (three people), and a small staff of administrative professionals to managebudgetary, financial, planning, procurement, human resources, and other administrativematters (six people). Positions in CIARA's PCU would be filled through a competitivesearch process and would be salaried according to the civil service scale which applies to allregular MAC staff.

2.27 National-level Subject Matter Specialists. CIARA's Technical Unit wouldhouse a group of technical SMSs. These technical SMSs would be individuals with technicalexpertise in the agricultural sciences, with experience in the research community, but with apractical "extension" orientation. This group of technical SMSs would include specialists insubject areas such as the following:

(a) crop protection;(b) irrigation and fertilization;(c) farm management;(d) farm machinery;(e) methodology of field trials and surveys;(f) institutional development for participatory groups of poor farmers, and(g) environmental sustainability of agricultural techniques.

2.28 A group of three SMSs who are specialists in extension methodology would becontracted to complement the staff of the CIARA's Methodology Unit. The group ofextension methodology SMSs would include specialists for each one of the following areas ofexpertise:

(a) monitoring and evaluation;(b) programming and planning of national activities; and(c) communication and publications.

- 16 -

2.29 Extension methodology SMSs would be responsible for the production ofmaterials and activities at the national level which would lead to the diffusion and adoption ofagricultural technologies from the national level. This would include the production ofcommunications materials for radio, TV, and newspapers, as well as the production anddistribution within the extension system of technical recommendations for use byextensionists and farmers. They would also be responsible for providing guidance withregard to the monitoring and evaluation of the public agricultural extension system.

2.30 To complement the staff of the CIARA's Technical and Methodology Units, theproject would establish a fund to finance short-term technical consultancies to addressproblems and issues which are national and strategic in scope. This national fund would besufficient to contract up to 60 man-years of consultant services over the life of the project.Consultants contracted in this way would be neither housed nor employed within the CIARA.Nor would any other national level "implementation agency" be formed within which tohouse the group of national SMSs. Rather, as needed, these consultants would be contractedon a fixed-term basis from existing research and service institutions (such as FONAIAP,universities, FUSAGRI (Fundaci6n Servicio para el Agricultor), and others) and wouldremain situated within their original institutions.

2.31 Financeable Expenditures at the National Level. All relevant expendituresrelated to CIARA's PCU would be considered project costs and would be financed by theBank or by the Government. Although many of these costs would be recurrent costs, theywould be incremental recurrent costs in that the offices to be established, and their staff,would be new. Thus, the loan would help to finance recurrent costs, but on a decliningbasis.

2.32 At the national level, the project would finance minor office rehabilitation andupgrading, office maintenance, purchase of office equipment (computers, software, furniture,etc.), day-to-day operational office expenses, work-related travel expenses, staff salaries, thecosts of contracting outside SMSs, the operational and travel expenses for SMSs, expensesincurred in the provision of selected training activities, and expenses related to thepublication and distribution of extension materials prepared by the CIARA and national levelSMSs.

2.33 CIARA itself is located away from the Ministry on a campus in the San Martinneighborhood of Caracas. Its facilities have deteriorated over time and the project wouldfinance minor renovations of CIARA's office facilities. While it would retain its owncampus at its current location, CIARA would also be provided with modest space within thesame building which houses the Ministry itself, the Torre Este in the Parque Central districtof Caracas. The project would finance any costs associated with adapting existing facilitiesfor the establishment of CIARA's offices.

2.34 The project would not finance the acquisition of vehicles at the national level.Staff undertaking field trips would be required to supply their own vehicles. They would befully reimbursed for all of the expenses incurred in the use of their vehicle for this purpose,including allowances for depreciation, operation, and maintenance.

- 17 -

2.35 State Agricultural Extension Offices. This component would also finance theestablishment of agricultural extension offices within the state governments. In each state,establishment of such an office would be a condition of Loan disbursement againstexpenditures in that state (para. 6.2 (a) and (b)). Extension activities and responsibilitieswhich until now have been housed within MAC's state-level offices (Unidades Estatales deDesarrollo Agropecuario, or UEDAs) would be discontinued on a step-by-step basis. Theextension role of the UEDAs would be discontinued in each state at the time in which anoffice for agricultural extension under the new decentralized agricultural extension service isformally established within the state's secretariat of agriculture. As this occurs, the extensionstaff of the UEDAs would be released or transferred to other duties within the MACstructure. Participation in the public extension service at the state level would beaccomplished through the state's entering into a State Participation Agreement with CLARA.Model participation agreements are contained in the project's operational manual. Thesigning by a state of the respective State Participation Agreement would be a condition ofLoan disbursements against expenditures in that state (para. 6.2 (a) and (b)).

2.36 The responsibilities of these state extension offices with respect to the projectwould be to:

(a) establish a state decentralized agricultural extension system;

(b) assist municipalities in preparing annual municipal project proposals;

(c) analyze and approve the annual municipal project proposals. This would includea review of the contents of the proposed technical packages from the perspectiveof economic and environmental sustainability and would also include a review ofthe eligibility of the participating farmers;

(d) coordinate the respective state's contribution to the financing of the project (seeTable 2.2 and para. 2.45);

(e) assist municipalities and ACEs in the collection of farmers' contributions to thefinancing of the municipal extension project;

(f) assist municipalities to select and to contract executing agencies for the deliveryof extension services;

(g) monitor, evaluate, and audit the agricultural extension projects undertaken byparticipating municipalities in the state, and to prepare summary reports of theirfindings for submission to the CIARA;

(h) work together with the executing agencies in each municipality to identify needsfor technical assistance and to submit requests to CIARA (see para. 2.9 andfootnote 7) to contract the services of state subject-matter specialists (see para.2.38 for a description of the duties of these SMSs) to meet these needs;

(i) coordinate the activities of contracted SMSs to the extension system in the state;

- 18 -

(j) assist CIARA's Methodology and Training Units in the design and coordinationof all training activities to be offered within the state;

(k) support and supervise the implementation of the extension plans at the municipallevel. This would require frequent visits to the extension offices of theparticipating municipalities and would also entail joining municipal extensionistsperiodically on their visits to the field;

(1) help municipal offices prepare and organize field trials and field days;

(m) design, host, and organize the monthly meetings between municipal extensionistsand the state subject-matter specialists, incorporating the participation of SMSsinto the design of the agenda and program; and,

(n) be available to assist municipal extensionists and farmers with technical questionsand concerns as they arise, and to assist them in finding technical advice fromsubject-matter specialists when additional expertise is required.

2.37 The institutional structure at the state extension offices would be modest. Stateextension offices would be staffed by three professional extensionists, one of whom would bethe State Project Coordinator. It is anticipated that the state-level staff would spend abouthalf of their time away from the office, visiting municipal extensionists and their offices,farmers, and SMSs in their state.

2.38 State-level Subject Matter Specialists. In addition to the technical assistance tobe provided by the technical staff of the state level extension offices, a need also exists forthe availability of a more specialized form of assistance to address specific problems andquestions as they arise. In order to meet such needs, a second type of SMS would beestablished within the system at the state level. These state-level SMSs would be individualscurrently working as agricultural scientists and professionals within the existing agriculturalresearch and technical expertise institutions (such as FONAIAP, universities, andFUSAGRI). Like their counterparts at the national level, they would remain housed andemployed within their original institutions. Responding to requests from the state extensionoffices and from municipal level extensionists, it would be the responsibility of the technicalstaff of CIARA to contract state-level SMSs as needed to perform specific fixed-length termsof service to the extension system'3".

2.39 Financeable Expenditures at the State Level. State governments would berequired to provide office facilities for a state extension office. This would require at leastthree separate rooms complete with basic office furniture. The project would finance aportion of all other expenditures of the state agricultural extension office, including:operating office expenses; purchase and maintenance of office equipment such as computers,printers, typewriters, video equipment, overhead projectors, etc.; business-related travel

13/ During the mid-term review, this contracting arrangement for state-level SMSs would be examined todetermine if state-level SMSs could, from that time on, be contracted directly by the state extension offices.

- 19 -

expenses for technical staff; and, salaries. The project would not finance the provision ofvehicles but would fully reimburse staff for project-related use of personal vehicles. Thiswould cover costs associated with depreciation, operation, and maintenance of vehicles usedfor project-related purposes. It would be a requirement of employment that technical staff ofstate offices provide their own vehicles in good working order.

2.40 It is anticipated that by the third year of the project, 18 states would participatein the project (see Table 2.1). This would imply the need to finance 18 state agriculturalextension offices, 18 state coordinators, and 36 additional technicians, and the contracting ofthe services of up to 132 state-level outside SMSs. The majority of these fmanceableexpenditures are incremental recurrent costs and would be financed through the Loan underthe project's Institutional Development component on a declining percentage basis over thelife of the project. The remaining percentage of these expenditures would be paid by thestate government. Conditions of disbursement against financeable expenditures at the statelevel would include the requirement that the respective State has established, in form andsubstance satisfactory to the Bank, the state extension office (paras. 2.35 and 6.2 (a) and (b))and that the respective state has entered into a State Participation Agreement under theproject, and at least one of the state's municipalities has entered into a MunicipalParticipation Agreement under the project (paras. 2.17 and 6.2 (a) and (b)).

E. Component 2: Municipal Extension (US$44.6 million, 65% of total base costs)

2.41 This component would support the establishment of the institutional structure forthe agricultural extension system at the municipal level. This would involve the formation ofAsociaciones Civiles de Extensi6n (ACEs) in each participating municipality. In eachparticipating municipality, the component would also support the cost of contractingexecuting agencies to establish municipal extension offices and to provide extension services.In order to participate in the project, each municipality would enter into a MunicipalParticipation Agreement with the respective state and with CIARA (para. 6.2 (b)).

2.42 Asociaciones Civiles de Extensi6n. During the first year of their participation inthe project, participating municipalities would each establish an ACE which would eventuallygovern the public extension service at the municipal level (para. 6.3 (g)).4' Once formed,ACEs would gradually be granted an increasing level of responsibility over the managementof the extension service in their own municipalities (para. 6.3 (c) and Annex B). The ACEwould be constituted of representatives of the municipal government and beneficiaries of theextension service. A governing board would be composed of seven members (with at leastfour representatives elected from among the beneficiaries and with at least one representativeeach from the municipal government and from the state government). Other interestedorganizations (such as NGOs, universities, or farm organizations) could, at the invitation of

14/ The Asociaci6n Civil is a legal entity commonly used in Venezuela to constitute and administer aparticipatory form of public service. Under this project, ACEs would be established in each participatingmunicipality during the first year of participation in the project. Annex B provides additional detail withregard to the establishment of the ACE and the transition period during which the authority to manage themunicipal extension service is gradually transferred to the ACE (para. 6.3 (c) (iv)).

- 20 -

the board, place representatives on the board as long as the number of farmers'representatives would be increased sufficiently to maintain their majority.

2.43 Municipal Agricultural Extension Ofrices. Municipal agricultural extensionservices would be established in each participating municipality through contracting theservices of executing agencies (a private extension firm, a university, an NGO, etc.) toestablish and deliver the extension services. The staff of each municipal agriculturalextension office would consist of a basic nucleus of four extensionists (one of whom wouldserve as the office coordinator) and one office assistant/secretary. It would be a requirementof employment for municipal extensionists that they live in the municipality in which theywork.

2.44 Each municipal agricultural extension office would prepare an annual municipalproject outlining the objectives and the proposed plan of activities which would be employedin order to achieve the objectives. The plan would also indicate, in the form of a detailedbudget, the resources which would be required in order to fulfill the elements of the plan.This plan would be submitted to the Board of the ACE for approval. Once approved at themunicipal level, participating municipalities would submit these plans to the state extensionoffice for approval in order to obtain matching grant co-financing for the costs of the projectfrom both the state and the national level.

Table 2.2 Proposed Co-financing Matrix for Each Municipal Project

PROJECT YEAR l

I__l_T 2 1 3 4[ 51 6

Farners 5% 5% 10% 10% 20% 20%

Municipality 10% 10% 20% 20% 30% 30%

State Govt. 10% 15% 20% 20% 25% 25%

| National Govt. 75% 70% 50% 50% 25% 25%

2.45 The costs of the municipal project would be shared between four contributors:participating farmers; the municipal government; the state government; and the nationalgovernment (where part of the financial commitment at the national level would be financedthrough the World Bank Loan) (para. 6.3 (f)). In the initial years of the project, the weightof the financing burden would be concentrated more heavily at the national level. It isanticipated that in the first years of the project, the farmers' share of the cost of municipalprojects would be very limited (about 5 % of the total cost). Over time, the share of financescoming from the national level would decline and be shifted to each of the other threeparticipants. The proposed co-financing matrix (demonstrating the way in which the cost ofthe budget for each municipal extension project would be shared by farmers, municipalities,states, and the federal government) is presented above as Table 2.2. A schemata of themanner in which funds would be transferred between co-financiers and of the supporting

- 21 -

documentation which would be required for funds to be released at each level of governmentis presented in Annex C.

2.46 Extension Methodologies. Extensionists would employ a wide variety ofextension methodologies to disseminate both know-how and information to farmers. Amongthese methods would be the following: visits to individuals and groups, model farmsdemonstrating integrated technologies, demonstration plots and field trials, applied courses,and field days. These direct diffusion methods would be supported with mass media aids:publications, television and radio programs, videotapes, and audio-visual material.Extensionists would assist farmers not only in the technical elements of agriculturalproduction processes themselves, but also in the economic aspects of farm management andmarketing decisions.

2.47 The extension methodologies to be employed by extensionists in eachmunicipality would not be imposed from above. Farmers, through their participation in theACEs, would be able to transmit to the extensionists their preferences and concerns withregard to the methodologies employed in their own municipality. In addition to respondingto the demands of beneficiaries, extensionists would utilize the results of an annual diagnosticsurvey to guide them in their choice of methodologies. These diagnostics wouldcharacterize, in a detailed and standardized statistical format, the beneficiaries of themunicipality's agricultural extension service and their activities.

2.48 Technical assistance in the design of appropriate extension methodologies wouldbe available from SMSs on a demand-driven basis. The monthly meetings in each statewould also serve as a natural forum for discussion of the methods to be employed as well asof the content of the messages to be disseminated. The methods to be employed would beincluded in the annual work plan for the nucleus which would have to be submitted forapproval to the ACE prior to being sent to the state office as the municipalities' proposedmunicipal project. Annual municipal work plans would specify the methodologies to beemployed and would include monitorable parameters which could be used to evaluate theeffectiveness of each of the proposed extension activities. These monitorable activities wouldinclude the following: individual and group visits to farms; adaptive field trials; appliedclasses for farmers; and, auxiliary services such as soil testing, disease diagnosis, and fielddays. An experimental methods fund to test new technologies and extension approaches andmethodologies would be administered by the CIARA under the studies and technicalassistance component.

2.49 Financeable Expenditures at the Municipal Level. Under this component, theproject would finance the services of executing agencies in approximately 180 municipalities.For each municipality, conditions of disbursement against such expenditures would includethat the respective state has entered into a State Participation Agreement under the projectand that the municipality has entered into a Municipal Participation Agreement (paras. 2.35,2.40, and 6.2 (a)), and, that no other general agricultural extension services would beprovided in the jurisdiction of that municipality by any state or local office of MAC or ofany other ministry, department, agency or entity of the national government unless suchservices are complementary to those provided under the project (para. 6.2 (a) and Annex C).

- 22 -

2.50 The project would finance the cost of contracting executing agencies to establishmunicipal extension offices and provide extension services. The costs would include thesalaries of each municipal extension office's staff (one coordinator/extensionist, threeextensionists, and one staff assistant/secretary per municipal nucleus or an eventual total of180 coordinators, 540 extensionists, and 180 secretaries). In addition to these salaries, eachcoordinator and extensionist would receive a monthly housing allowance, also financeableunder the project. For each municipal office, the project would finance the cost of rentingan office space capable of housing the five staff members and their desks. The project wouldalso finance the purchase and maintenance of a basic set of office equipment and furniture(including computers, software, an air conditioner, and other minor items of officeequipment and furniture as needed) for each municipal extension office. Durable itemsfinanced under the project for these offices, including durable field equipment, would beconsidered to be the permanent property of the municipality.

2.51 The project would also finance the operating expenses of the offices of each ofthe executing agencies. These would include day-to-day expenses of running the officemachines, telephones, electricity, and other office supplies. They would also include thecosts of operating vehicles for field visits. The project would not finance the purchase ofvehicles, but would fully finance the operation of vehicles for extension purposes (includingfuel, maintenance, and depreciation) for each of the extensionists and the coordinator. Eachextensionist and the coordinator would be required to own, or have access to the permanentuse of, an appropriate vehicle capable of reliably making field visits.

2.52 The project would finance field equipment to enable extension teams to undertaketechnology demonstration or validation trials. This would include such equipment andsupplies as seeds, vaccines, fertilizers, pesticides, hiring of custom field work as necessary,and other supplies needed for field demonstrations. The project would also finance officeexpenses associated with training and communication functions of the extensionists such aspreparation of pamphlets, field manuals, and other reference materials, as well as the costs ofdemonstration and promotion events such as field days. Finally, the project would financeany travel, lodging, and minor supplies expenses incurred by "volunteer" extensionists inassisting the municipal extension office in offering extension services within its municipality(as outlined in the Operational Manual).

F. Component 3: Training for Extensionists (US$5.8 million, 9% of total base costs)

2.53 This component would establish and support a training program for theemployees of the agricultural extension system. The training program would introduceextension personnel to the extension system, and would strengthen and maintain theirprofessional competencies in technical and methodological areas related to theirresponsibilities in the extension system. The program would consist of training courses andevents designed and organized by the Methodology and Training Unit of CIARA and by thestaff of the state extension offices. Where particular types of expertise are required, expertsand professors from the research institutions, from universities, and from other agriculturalinstitutions, would be contracted to assist in the planning and the delivery of training events.Persons eligible to attend training courses and events and to participate in the ContinuingEducation Program would include: (a) employees of CIARA; (b) employees of state

- 23 -

agricultural extension offices in participating states; and (c) in participating municipalities,the board members of municipal agricultural extension ACEs, and in some cases farmersthemselves. Extensionists employed by executing agencies would be eligible, and in factwould be required, to attend the Induction Training Program and an agreed upon set ofevents under the In-service Training Program. While they would also be eligible forparticipation in the Continuing Education Program, the cost of their participation would notbe financed through the project; rather they would be required to pay for the costs of suchparticipation.

2.54 Training Programs. The training component under the agricultural extensionsystem would be composed of three categories of programs:

(a) An Induction Training Program would introduce each entering staff member tothe public agricultural extension system and the way in which it functions.Every person entering employment in the extension system, whether at themunicipal, state, or national level, including office support personnel,extensionists, state coordinators, the staff of CIARA, and subject matterspecialists, would be required to complete the Induction Training Program. Theprogram would cover administrative, technical, methodological, conceptual,sociocultural, and legal aspects of the extension system.

(b) An In-service Training Program would provide intensive training forextensionists in: (i) technical subjects related to the agricultural productionsystems of their states and municipalities; (ii) environmental impact ofagricultural activities and conservation methods; and (iii) participative methods inprogramming and planning extension for poor farmers, and in monitoring andevaluation. This type of training would generally be provided in short coursesranging from a day to two weeks in length. These training events could takeplace in a variety of locations: on site at field trials, at agricultural researchfacilities (for example at FONAIAP facilities), at universities or othereducational facilities, in the offices of CIARA, or state extension offices, or inother appropriate locations.

(c) A Continuing Education Program would support educational experiencesundertaken by extension personnel at the municipal, state and national levels tofurther their competencies in fields relevant to their work responsibilities in theagricultural extension system. This program, for example, would allow amunicipal extensionist to attend courses at a local university in plant bio-chemistry, or in computer spreadsheet applications for farm management; or itwould allow an office coordinator at one of the state extension offices to attend acourse in public sector management or in agricultural marketing; or it wouldallow a secretary at CIARA to study accounting. The program would cover thecosts of staff who attend such courses while they would continue to work full-time in their positions in the extension system.

2.55 The director of each executing agency would be in charge of diagnosing thetraining needs of the extensionists in that office and communicating these needs to the state-level coordinators. A technical committee at the state level, composed of the directors of

- 24 -

each of the state's implementing agencies, the state coordinator and a representative from theCIARA's Methodology and Training Units would review the training needs of the state'sextensionists. Based upon this review, the committee would construct a list of prioritytraining activities for the next year, and with the help of CIARA's Methodology and TrainingUnits would arrange for training events and classes to be offered to meet the identifiedneeds. Where enough demand exists in a particular state or group of states, an event couldbe scheduled by the state coordinators to be held in that state. In other cases, whereeconomies of scale, and the level of demand, suggest that a course be held nation-wide, theMethodology and Training Units of CIARA would arrange for the event to be held. Onceagreed upon, a schedule of the arranged training events and classes would be circulated tothe municipal offices prior to the annual submission of municipal extension projects so thatextensionists could plan to attend the events and could include these plans in the submittedbudgets.

2.56 Individual Training Plans. Each professional employee of the nationalagricultural extension system, at CIARA, in state extension offices, and the contractedextensionists in participating municipalities, would be assigned an annual training plan. Formunicipal extensionists and their office staff, these training plans would be formulated by theexecuting agencies and would be submitted as part of the annual municipal extension projectto the state extension office for approval. Among other things, each extensionist's annualtraining plan would include training in environmental impact of agricultural productionactivities. This environmentally oriented training would include training in integrated pestmanagement and other practices and techniques designed to permit incorporation ofecological factors into overall farm management decisions. Training would also includemethodology for working individually with poor farmers and for developing participatorygroups of poor farmers. State offices would submit training plans for their professionals toCIARA's Methodology and Training Units along with the annual submission of the state'sextension project. At the national level, the director of CIARA's PCU would submit annualtraining plans for each of the PCU's employees to the Methodology and Training Units.Specific guidelines for formulating and evaluating these annual training plans for eachcategory of professional would be included in the Operational Manual.

2.57 Implementation of the Training Program. Implementation of the trainingcomponent under the agricultural extension system would be the responsibility of theMethodology and Training Units (MTUs) of CIARA's PCU. State level extension officecoordinators would participate in the process of determining annual training plans forextensionists contracted in their state and in some cases would assist the MTUs in organizingevents in their state. Once the annual program of training activities and events has beendecided upon, the CIARA's MTUs would contract qualified entities to provide the trainingevents which make up the annual program of activities. In some cases, the MTUs wouldparticipate in the organization and carrying out of training events at the national level and,likewise, state extension office coordinators would in some cases help to organize theseevents in their own states.

2.58 The Induction Training Program would be conducted by CIARA. Trainingunder the Continuing Education Program would generally involve attendance of coursesalready being offered within existing educational institutions across the country. Wherefeasible, an SMS (or group of SMSs) might lead and conduct a training event. However, for

- 25 -

the most part the execution of training events for the In-service Training Program would becontracted out to existing institutions or individuals with demonstrated competencies in therelevant area of expertise.

2.59 Financeable Expenditures and Training Budgets. Under the TrainingComponent, the project would support the preparation of the training programs and theparticipation in the training program of the staff of the CIARA and of the state extensionoffices as well as the employees of the executing agencies in each participating municipality(para. 6.2 (b)). This would include financing the establishment of training facilities atCIARA for the Induction Training Program. It would also include the purchase andmaintenance of training equipment such as overhead projectors, audio-visual equipment, andfurniture which would be required in the execution of the Induction Training Program and inthe execution of any events to be held at CIARA or at state offices under the In-serviceTraining Program. The renovation of CIARA's training facilities would include completingthe already-begun process of renovating the national agricultural extension library which islocated within CIARA's office complex. The project would fund an operational budgetwhich would allow CIARA's library to update and maintain itself by renewing subscriptionsto appropriate agriculture journals, and to re-establish the process of building its collection ofbooks and other materials related to agriculture, extension, the rural poor and ruraldevelopment. It would also fund the acquisition of computer and filing equipment to upgradethe library's capacity in the areas of information storage, processing, and retrieval. Finally,it would fund the acquisition of new furniture and a new air conditioning/environment controlsystem for the library facility itself.

2.60 The project would also finance the contracting of the services of outsideinstitutions to prepare and deliver the majority of the events under the In-service TrainingProgram. The project would finance tuition expenses and related fees of staff membersenrolled in courses at outside institutions under the Continuing Education Training Program.Travel, lodging, and meal expenses incurred by staff members in the course of theirparticipation at training events held away from their home municipalities would also befinanced under this component. Recurrent costs of these training programs, such as officeexpenses, would also be financed.

2.61 All travel-related expenses incurred in the attendance at training events by staffat the municipal, state, or national level would be submitted to CIARA MTUs for review andreimbursement. Travel-related expenses incurred by municipal extension office coordinatorsand by state extension office coordinators in the preparation of training plans and activitieswould also be submitted to CIARA MTUs for review and reimbursement. The costs ofstaging training events within CIARA would be included in the budget for CIARA MTUs, aswould expenditures made toward contracting outside institutions to provide training events.Tuition and fee expenditures under the Continuing Education Program would also besubmitted to CIARA MTUs for review and reimbursement.

- 26 -

G. Component 4: Technical Assistance and Studies(US$5.5 million, 8% of total base costs)

2.62 This component would be implemented at the national level by CIARA'sTechnical Unit. It would fund studies and technical assistance designed to enable on-goingplanning, monitoring, and evaluation of project implementation. The component would alsofund studies and technical assistance, as agreed upon from time to time by between the Bankand the Borrower, which would improve the effectiveness of implementation.

2.63 Studies. The component would fund studies in several areas. Consultants wouldbe contracted by CIARA to undertake such studies. Terms-of-reference for the consultantswould be prepared by the technical staff of CIARA and would be subject to the approval ofthe Bank. Studies would be undertaken in areas to include the following:

(a) the preparation of a database to provide an initial characterization of the targetpopulation of poor farmers in each municipality of each of the 18 states to beincluded in the project. This work would be closely coordinated with the 1995Census of Agriculture to ensure that data collection by the census would beconsistent with that needed for project purposes and to avoid duplication ofeffort. Information gathered through the census and through othercomplementary studies, as needed, would include: updated data on the farmingpopulation of each municipality by several characteristic categories such as age,gender, family size, extent of participation of family members in farmingactivities and in off-farm employment activities, size of holdings, the financialsituation, earnings from non-farm sources, earnings from agriculture, level ofeducation, crops produced, existence of and participation in municipal institutionsand organizations of relevance (cooperatives, associations, advisory and researchorganizations), and, the availability and use of inputs including labor and credit.Additional baseline information, to the extent it is not covered by the census,would also be collected for the use of the monitoring and evaluation program.This would include at least the following: yields per unit of land and per animal;techniques and technologies currently employed for the primary agriculturalproduction processes; existing sources of practical information about productiontechniques and the extent to which small holder farmers are making use of them;and, any existing gender-based differences in access to extension and otheragricultural services. Census of Agriculture information is scheduled to becomeavailable in 1996;

(b) the preparation of a framework and practical field methodology for thesystematic (annual) gathering, compiling, and analysis of data characterizing theproject beneficiaries (including at least the same types of information to becollected in para. 2.63 (a) above) throughout the life of the project. This wouldinclude the design of survey forms and suggested survey techniques forextensionists to use when gathering information from their beneficiaries. Thegathering and compiling of this information would be done by the extensioniststhemselves at the municipal level. Municipal data would be sent to state andthen national level for further compilation and analysis. As needed, consultantswould also be contracted to assist in the analysis of the compiled data;

- 27 -

(c) an independent assessment, carried out by private consultants prior to theproject's mid-term review (see para. 4.15), of the effectiveness of theimplementation of the project;

(d) an independent assessment, carried out by private consultants prior to theproject's mid-term review, of the environmental impact which project relatedactivities have had;

(e) a set of public finance studies to provide more detailed information about the useof state and municipal budgets for agricultural purposes, including agriculturalextension. The proposed co-financing matrix (Table 2.2) has been devised basedupon the results of field surveys carried out by the Government's projectpreparation team together with members of Bank project preparation missions.The information gathered in this set of public finance studies would be used todetermine more precisely the shares of total municipal project cost which each ofthe participating entities (farmers, municipalities, and state governments) wouldbe asked to pay. These studies are already underway for those states which areexpected to participate in the first year of the project. Completion of these initialstudies would be a condition of Loan effectiveness (para. 6.1 (c)). During thefirst year of the project, the results of the initial studies would be reviewed andterms-of-reference for follow-up studies would be developed. Similar studieswould be planned for each state scheduled to enter the system. Prior to the mid-term review, follow-up studies would be carried out in each of the states andmunicipalities which would have participated in the first two years of the project.A second set of follow-up studies would be carried out in each participating stateand municipality in the sixth year of the project; and

(f) other studies, as agreed upon from time to time between Bank and the Borrower,which would improve the effectiveness of agricultural extension and other ruraldevelopment activities or which would assist in the monitoring and evaluation ofproject effectiveness.

2.64 Technical Assistance. From time to time over the course of the project,individuals or institutions with the specific types of professional expertise not already presentin the staff of the agricultural extensions system would be contracted to meet special needsand to assist in particular aspects of project implementation. These consultants would becontracted by CIARA for fixed-length assignments of up to one year in duration. Terms-of-reference for such assignments would be prepared by the technical staff of CIARA and wouldbe subject to the approval of the Bank. The types of technical assistance to be contractedwould include the following:

(a) agriculturalists with specific technical knowledge to assist with special urgenttechnical issues as they arise (for example, should an outbreak of a particularcorn fungus occur, a specialist in the treatment of that fungus would becontracted to advise extensionists on ways to control damage);

(b) agriculturalists with specific technical knowledge to assist with dissemination ofnew techniques through seminars for extensionists and/or farmers (for example,

- 28 -

an international specialist in topics such as integrated pest management intropical areas or minimum tillage agriculture might be contracted to provideseminars for extensionists in these techniques);

(c) institutional specialists to assist with the formation and successful operation ofnew ACEs and to help to establish effective farmer participation in them;

(d) extension specialists to assist municipal extensionists, SMSs, and coordinators inthe state and national offices with the development and adoption ofmethodological techniques and innovations and participatory approaches toextension;

(e) specialists in gender and agriculture to assist institutions at all levels to developthe capacity to design, plan, and implement agricultural extension and technologytransfer so as to meet the needs of all members of the farm family;

(f) "twinning" arrangements with agricultural extension institutions in othercountries (universities, public extension agencies, non-governmental agencies,and private extension firms) in order to take advantage of their expertise and thelessons which they have learned from experience. Institutions which have beenidentified as candidates and which have expressed interest in establishing such"twinning" arrangements include: New Mexico State University, the publicextension system of the Ministry of Agriculture in Colombia, and the UnitedStates Department of Agriculture; and

(g) other assistance, as agreed upon from time to time between Bank and theBorrower, which would improve the effectiveness of agricultural extension orother rural development activities or which would assist in the monitoring andevaluation of project effectiveness.

2.65 A separate "experimental methods fund" (US$500,000) would be establishedunder this component to support the field testing of experimental methods and newapproaches to extension. The fund would finance the expenses incurred by competitivelychosen implementing agencies in carrying out small (each costing no more than US$20,000per year and renewable for up to a maximum of three years) "pilot extension programs" withgroups of poor farmers in selected municipalities on a grant basis. These pilot programswould be used to test alternative extension methods (for example, new ideas for working withfann women could be considered for funding under this program) or alternative technologicalpackages (for example, a proposal for teaching chemical-free non-till farming methods topoor farmers could be considered for funding under this program). Proposals for pilotextension projects to be funded under this fund would be accepted from entities outside ofCLARA and would be reviewed on a competitive basis. This program and review processwould be coordinated by the Technical Unit of CIARA. Selection criteria and operationalprocedures for this subcomponent are spelled out in the project's operational manual.

- 29 -

III. PROJECT COST AND FINANCING PLAN

A. Cost of the Project

3.1 The total project cost, including physical and price contingencies, is estimated atUS$79.0 million, with a foreign exchange component of US$8.3 million.

3.2 Base Costs and Contingency Allowance. The project base cost, which amountsto US$68.2 million, is estimated in terms of constant 1994 U.S. dollars. Physicalcontingencies of US$3.3 million represent about 5% of the base costs. Price contingenciesof US$7.5 million represent about 12% of the base costs, and were estimated based on alocal projected inflation rate of 65% for 1994, 60% for 1995, 50% for 1996, 40% for 1997,30% for 1998, and 10% for 1999 and 2000; and a projected international inflation rate of2.7 % for 1994, 3.4 % for 1995, 3.6 % for 1996, and 3.2 % for the years 1997 through 2000.Furniture costs and most equipment costs were based on lists of standard locally availableitems. Training and costs of local and foreign consultancies were based on prevailingstandard rates for such services.

B. Financing Plan

3.3 The total project cost of US$79.0 million would be financed by a Bank loan ofUS$39.0 million and by counterpart funding totalling US$40.0 million. The Republic ofVenezuela would be the Borrower. The Loan would be repayable over 15 years, including afive-year grace period. Local cost financing would be allocated to the national, state, andmunicipal levels of Government. Just over 43 % of project costs would be incurred forincremental recurrent costs of the new extension system. This is due to the fact that theproject would establish a service-oriented institution for which recurrent costs represent theprincipal share of the budget. The Bank would finance a portion (43%) of these incrementalrecurrent costs on a declining basis.

3.4 The sources of revenue for financing this project would be the FederalGovernment, State Governments, Municipal Governments, and the participating farmersthemselves. The Bank would finance just under 54 percent of the cost of the project, net oftaxes. Based upon the co-financing matrix for municipal projects as presented in Table 2.2,the anticipated relative contributions of each level of government and of farmers to theannual costs of the total project are presented in Table 3.1. The flow of funds mechanismwhich would govern the implementation of the co-financing scheme is presented in Annex C.Evidence would be submitted to the Bank by no later than May 31 of each year that adequatebudget requests would have been submitted to Congress (para. 6.4 (d)). Evidence would alsobe submitted to the Bank by not later than December 15 of each year that adequate resourcesfor project implementation would have been included in the approved budget.

- 30 -

Table 3.1 Share of Total Project Cost Paid by Local Participants 15'

BeforeIIl_____________ ||Project 1995 1996 1997 1998 1999 2000 TOTAL

Farmers 0% 2.5% 2.6% 3.5% 4.4% 5.9%| 9.7% 5%

Municipality 0% 3.0% 5.1% 7.0% 9.0% 11.2% 17.6% 9%

State Govt. 0% 7.4% 10.1% 11.7% 13.5% 15.2% 20.5% 13%

Total |100% 112.9% 1 17.8% | 22.2% 1 26.9% 1 32.3% | 47.8% 27%

3.5 As seen in Table 3. 1, the combined share of total project costsfinanced by states, municipalities, and beneficiaries would rise over timefrom roughly 13% in Year 1 (1995) to 48% in the final year of the project(2000). Beyond the life of the project, their combined share would continueto rise if co-financing shares for the municipal extension projects were to beheld constant at the levels indicated for Year 6 of the Project as reported inTable 2.2. Under this scenario, the shares of each of these participantswould continue to rise until, by the third year after the end of the project,farmers would cover 18 %, while municipalities would cover 27%, and stateswould cover 24%. Together they would finance 69 % of the total cost of theagricultural extension system by the third year after the end of the project.This shift in the burden of financing the costs of the system would contributeto the sustainability of the project following the end of Bank involvement inthe project in that the national government's share of the cost would declineover time.

15/ Note that Table 3.1 contrasts with Table 2.2 in that Table 3.1 reports annual shares of the total base costof the project, while Table 2.2 reflects shares of the annual cost of individual municipal projects (which donot include the costs incurred by extension offices at the state and national level nor those incurred in eitherthe training component or the studies and technical assistance component).

Table 3.2 Summary of Project Costs by Components and Financing by Agency(US$ Million)

l 11 _ 11 _1

ESTIMATED PROJECT Total

COSTS % Federal % State % Municipal % Farmers IBRD TotSM Base

Institutional Development

r Establishment of 6.0CIARA__ _ ___ ___ _ _ _ _ _ _

* Establishment of State 6.4Extension offices

Subtotal 0.40 4.9 0.17 2.1 0.43 5.3 12.3 0.18

Extension

* Municipal-level 0.15 6.5 0.20 8.9 0.13 6.0 0.05 2.2 0.47 21.0 44.6 0.66Extension Nuclei _ _ ________

Training

* Agricultural ExtensionTraining System: ___________

- National Level 1.2

- State Level 0.1

- Municipal Level 4.5

Subtotal 0.50 2.9 0.50 2.9 5.8 0.09

Studies and Technical 1.00 5.5 5.5 0.07A ssistance__ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _

Total Base Costs 68.2 1.00

Physical Contingencies 5% 0.55 2.0 0.45 1.4 3.4

Price Contingencies 12% 0.60 4.5 0.40 2.9 7.4

TOTAL Project Costs US$M 0.26 20.8 0.14 J 11.0 0.08 6.0 0.03 2.2 0.49 39.0 79.0

Bs.M | t _ _ 1 1 -1

Note: Italicized numbers represent percentages of the respective component costs. Figures may vary slightly due to rounding. Exchange Rate: Bs. 170/US$1

- 32 -

IV. PROJECT IMPLEMENTATION, PROCUREMENT,AND DISBURSEMIENTS

A. The Implementing Agency

4.1 The Fundaci6n para la Capacitaci6n e Investigaci6n Aplicada a la ReformaAgrania (CIARA) would be the implementing agency for the project. This will require thatCIARA be restructured to include a Project Coordinating Unit (PCU) (see paras. 2.24 and6.1 (e)) for its new role as the entity responsible for the coordination of all publicagricultural extension related activities which are undertaken at the national level. A detaileddescription of the management of each of the project's components and sub-components isfound in the relevant sections of the Chapter II. A detailed project implementation scheduleis found in Annex E (para. 6.3 (e)).

4.2 Unless otherwise agreed between the Bank and the Government, the projectimplementation schedule presented in Annex E would indicate the sequence of events forproject implementation. CIARA would submit to the Bank by no later than January 15 ofeach year progress reports, and annual implementation plans. These reports and plans wouldfollow the format presented in Annex G of this report. CIARA would prepare anOperational Manual which would detail all practical aspects of project implementation. ThisManual would be used as a practical guide for the staff of CIARA, the state extensionoffices, the ACEs, and the executing agencies in each municipality. Formal approval byCIARA of a final operational manual satisfactory to the Bank would be a condition ofEffectiveness (para. 6.1 (d)).

4.3 In addition to CIARA, agencies involved in the implementation of the projectwould include the participating states, participating municipalities, and ACEs. Contractualarrangements which would guide the transfer of funds and the assignation of projectresponsibilities would include: (a) a State Participation Agreement between CIARA and eachparticipating state (paras. 2.17 and 6.2 (a)); (b) a Municipal Participation Agreement betweenCIARA, a participating state, and a participating municipality (paras. 2.17 and 6.2 (b)); and(c) after the mid-term review in selected municipalities (footnote 14, para. 2.42, and AnnexB), a participation agreement between CIARA, a participating state, a participatingmunicipality, and the corresponding ACE for those ACEs selected to assume theresponsibility for contracting of executing agencies in their respective municipalities. Modelsof each of these participation agreements are included in the operational manual.

B. Procurement

4.4 A Country Procurement Assessment Report for Venezuela was issued in August1990. During the same month, the Government of Venezuela issued a Procurement Lawwhich states that all contracts for goods, works and services which will be totally or partiallyfinanced by international organizations will be undertaken in accordance with theprocurement procedures of such institutions. Table 4.1 summarizes the proposedprocurement arrangements for this project. The project's operational manual would provide

- 33 -

a detailed description of all procurement procedures to be used by any of the project entitieswith purchasing/contracting responsibilities and would include a procurement implementationplan. The following paragraphs indicate those procurement activities which would requireprior review by the Bank of all procurement documentation. Where prior review would notbe required, ex-post review of contract documentation would be carried out duringsupervision. The proposed review methods are expected to provide a prior review coverageof 80% in value of all Bank-financed contracts.

Table 4.1: Procurement Arrangements(US$'000)

PROCUREMENT METHODPROJECT ELEMENTS TOTAL

ICB LCB Other NBF

Civil Works

* Infrastructure l 1 T 200 1 200

l____________________________ l_ _ I _(100) _ (100)

Goods and Equipment and

* Computers, Accessories, 1,500 (a) 1,500 (a)other Imported Items (1,500) (1,500)

* Furniture, Field 700 700equipment (300) (300)

Consultancies

* Studies and Technical 5,000 5,000Assistance (5,000) (5,000)

* Municipal Extension 28,800 28,800Services (13,500) (13,500)

Training 2,400 2,400(1,200) (1,200)

Grants

* "Experimental Methods 500 500Fund" (500) (500)

Recurrent Costs 35,200 35,200(14,900) (14,900)

Supplies and Consumables 4,700 4,700_ (2,100) (2,100)

TOTAL 0 1 0 79,000 1 0 1 79,000_ _ _ __ (0) J (0) (39,000) J (0) J (39,000)

(a) Of this figure, US$700,000 would be procured through LIB and the remainder through international shoppingprocedures.

Note: Figures in parenthesis indicate Bank financed amounts.

- 34 -

4.5 Civil Works. Civil works are small and would consist of the rehabilitation ofCIARA's existing building in Caracas. Because of the small size of the contract, which isestimated at US$200,000, it is unlikely that foreign contractors would be interested or thatLCB procedures would be justified. Accordingly, local shopping procedures satisfactory tothe Bank would be used.

4.6 Goods and Equipment. The total cost of equipment which includes officeequipment, audio-visual training equipment, computers and peripherals, field equipment, andfurniture is estimated at about US$2.2 million including contingencies. Informatic equipmentwould, where possible, be grouped into lots of between US$50,000 and US$150,000 andwhich do not exceed an aggregate of US$1.5 million will be procured under limitedinternational bidding ([JB) procedures from suppliers with established maintenance andservices facilities in Venezuela. These contracts would require prior review by the Bank.When such goods could not be grouped in lots valued at US$50,000 or more, they would beprocured under shopping procedures. Other equipment and furnishings for the extensionoffices and demonstration centers of the 180 municipalities may be location and/or cropspecific and may not lend themselves to aggregation into larger lots. For such goods, localshopping procedures would be employed for contracts below US$50,000 in value and notexceeding US$700,000 in aggregate. For these goods, local competitive bidding (LCB)procedures would be employed for contracts between US$50,000 and US$150,000. Thesecontracts would require prior review by the Bank. For contracts valued at more thanUS$150,000, international competitive bidding (ICB) procedures would be employed andwould also require prior review by the Bank. World Bank Standard Bidding Documents(SBD) would be used for all procurement under ICB and LIB.

4.7 Supplies and Consumables. Items in this category would consist primarily ofmaterials to demonstrate and evaluate the applicability of extension technologies and activitiesin the field such as vaccines, fuel, fertilizer, or seeds and training document sets,publications, and supplies. These are estimated at just under US$4.7 million in theaggregate and are expected to amount to a maximum of US$23,000 per contract. Theseitems would be acquired through shopping procedures acceptable to the Bank.

4.8 Consultancies/Technical Assistance and Studies. Consultancies would becontracted primarily under the Extension and the Studies and Technical Assistancecomponents and would be procured according to Bank guidelines for the use of consultants.Entities selected to receive grants under the experimental methods fund of the Studies andTechnical Assistance component would also be considered as consultants and would also becontracted according to the Bank guidelines for the use of consultants. Contracts awardedunder this experimental methods fund would be for a maximum of US$20,000 per year (withthe possibility of two annual renewals). Contracts with firms or individuals for consultingservices (not including contracts with executing agencies to form municipal extension teams,but including contracts with executing agencies under the experimental methods fund),technical assistance, and studies which are valued at US$50,000 or less in the case of firms,and valued at US$25,000 or less in the case of individuals would not require prior review bythe Bank. The Bank would review ex-ante all procurement documentation for consultingassignments valued at US$25,000 or more for individuals and valued at US$50,000 or morefor firms. Under the Extension component, contracts with executing agencies to form

- 35 -

municipal extension teams will be considered consultant or professional services contracts.These contracts would require prior review by the Bank, regardless of their amount. Inorder to facilitate the processing of these contracts, standard model contracts and terms-of-reference would be prepared for the contracting of municipal extension teams and would beincluded as part of the Operational Manual.

C. Disbursements

4.9 The Bank loan of US$39.0 million would be disbursed over six years. Roughly44% of these disbursements would be against incremental recurrent costs (including primarilythe costs of establishing, staffing, and operating new extension offices at the national andstate levels) which would be financed on a declining basis (see Annex F). The proceeds ofthe Bank loan would be disbursed against eligible project expenditures at the following rates:(a) 50% for civil works; (b) 100% of foreign expenditures and 45% of local expenditures forequipment, supplies, and furniture; (c) 50% for training; (d) 100% for consultancies tosupport technical assistance, grants under the municipal extension fund program, and studies;(e) 46% for other consultancies, including the contracting of executing agencies at themunicipal level under the Extension component; and, (f) 43 % for incremental recurrent costs(on a declining basis, as indicated above and in Annex F). Except for contracts requiringprior review, disbursements would be made against certified statements of expenditures(SOEs) for which detailed documentation to provide evidence of expenditures would be madeavailable for the required audit and for Bank supervision missions. Disbursements forcontracts for goods and equipment not exceeding US$50,000 and for consultancies andservices under the studies and technical assistance component not exceeding US$50,000 forfirms and US$25,000 for individuals would be made against SOEs prepared by theimplementing agency. Retroactive financing would be provided for up to a maximum ofUS$3.9 million) for eligible expenditures incurred between the end of project appraisal (July1, 1994) and Loan signing (but not more than 12 months before Loan signing) for technicalassistance and other expenditures related to pilot activities. Reimbursement requests wouldbe sent to the Bank on a monthly basis. The project is expected to be completed by June 30,2001. The Closing Date would be December 31, 2001.

D. Accounts and Auditing

4.10 CIARA would have overall responsibility for the auditing of the project.Executing agencies would maintain separate accounts to record their expenditures under theproject. State offices would maintain separate accounts to record their expenditures underthe Institutional Development component. CIARA would consolidate these into one set ofproject accounts. CIARA would prepare Statements of Expenditures (SOEs). These SOEswould be presented to the Bank for reimbursement. Supporting documentation would bemaintained by the CIARA and be available to the Bank and independent auditors as required.

4.11 CIARA would require all participating agencies to use a standard set ofoperating, administrative and accounting procedures. These standard procedures would bepresented in project's operational manual. Project accounts and SOEs would be auditedannually in accordance with appropriate auditing principles applied by independent auditorsacceptable to the Bank. The cost of hiring auditors would be an eligible expenditure for

- 36 -

financing under the loan. Audit reports would be furnished to the Bank no later than sixmonths after the close of the Govemment's fiscal year, i.e., no later than June 30 of eachyear (para. 6.3 (b)).

E. Supervision by the Bank

4.12 This project would require a heavy supervision commitment by the Bank becausethe project would implement the Ministry of Agriculture's first experience with thedecentralization of its programs and services. CIARA's PCU would be a new institutionalstructure and would have an almost entirely new staff. The same is true of the extensionoffices to be established at state and municipal levels. They would require substantialassistance to establish themselves as effective extension institutions. These needs would belargely dealt with through technical assistance and training. However, close supervision bythe Bank would be required to complement these efforts.

4.13 Bank missions would supervise the project every three months at least until themid-term review is finalized at the end of the third year of the project. At least twomunicipios, in two different states, should be visited frequently by the same staff so as to beable to physically monitor progress and problems on a continuous basis. To ensurecontinuity, core supervision activities should be undertaken by a permanent core team. Thelatter should consist of the Bank's task manager and at least one specialist in the developmentof participatory institutions at local levels. A Bank specialist in agricultural technologygeneration and transfer should also join the core supervision team at least once per year. Asupervision plan is provided in Annex H.

F. Project Reporting and Mid-Tern Review

4.14 Project Reporting. CIARA would prepare, and submit to the Bank no laterthan January 15 of each year, a satisfactory report on project implementation over the pastyear employing the project implementation and project impact indicators which are outlinedin Annex G (para. 6.3 (a)). These reports would identify any obstacles to successful projectimplementation which may have arisen and would suggest solutions to the identifiedproblems. CIARA would also present to the Bank, by no later than February 15 of eachyear, an acceptable project implementation and investment plan and budget for the followingyear (para. 6.3 (a)). On the basis of these reports, CIARA would, not later than March 1 ofeach year beginning in 1996, hold project reviews with the Bank (para. 6.3 (a)). Finally,the Government would agree to submit to the Bank, by not later than May 31 of each year,evidence that the final budget submitted to the Congress includes adequate resources to carryout the agreed annual work plan (para. 6.3 (d)), and would also submit evidence to the Bank,by not later than December 15 of each year, that adequate resources for projectimplementation would have been included in the approved budget. For 1995, the LeyParaguas 1995 has been approved and provides for the full cost of the project as well as forUS$1 million of disbursements for the fiscal year 1995.

4.15 Mid-term Review. It would be the responsibility of CIARA to prepare andorganize a mid-term review. The review would be structured to include a one week fieldtrip to visit participating beneficiaries, ACEs, municipal governments, and state

- 37 -

governments. The field trip would be followed by a complete review of the status of theproject. To provide input into the review, a detailed independent assessment of each of theitems outlined below (in para. 4.16) would be undertaken by an independent consulting finn(which would be contracted by December 15, 1997) and would be completed and submittedto the Bank by April 15, 1998. A second independent consulting firm would also becontracted by December 15, 1997 to undertake an assessment of the extent of the impactwhich the extension service has had upon the environmental sustainability of beneficiaries'farming operations including an inventory of environmentally sustainable techniquespromoted by the extension service and the extent to which they are being adopted byfarmers. The consultancy would also indicate any environmental problems or opportunitiesassociated with the project and would suggest ways in which they might be addressed. Thefinal report would be submitted to the Bank no later than April 15, 1998. These twoconsulting firms would be contracted by CIARA under the project's Studies and TechnicalAssistance component. CIARA itself would make all other necessary preparations for themid-term review.

4.16 The mid-term review would be conducted with the Bank by not later than June15, 1998. The purpose of the review would be to assess implementation progress and toidentify needed adjustments to the project's design. Specifically the review would focus on:(a) effectiveness of project implementation; (b) the realized demand for extension servicesunder the project; (c) the supply and quality of extension services under the project; (d) acomparative analysis of the quality of services contracted from NGOs, universities, privatefirms, and other types of organizations; (e) the extent to which, in practice, the project isreaching poor beneficiaries; (f) the impact the project is having on farm incomes and on ruralcommunities; (g) a review of the role of CIARA, of the States, of the municipalities, of theACEs, and of the implementing agencies in the provision of extension services; (h) a reviewof the audits of project accounts and of project reporting procedures; (i) a review of themechanisms employed for the flow of funds and paperwork within the system; (j) a review ofthe effectiveness of the training program; (k) a review of the extension methodologiesemployed; (1) a review of the environmental impact of the project; and (m) a review of theeffectiveness of the implemented policy for making vehicles available to staff at each level ofthe system. By not later than July 15, 1998, CIARA would submit to the Bank a time boundplan satisfactory to the Bank providing for the transfer of full responsibilities to selectedACEs for the execution of extension activities under the Project in their respectivemunicipalities (para. 6.3 (c)).

- 38 -

V. EXPECTED BENEFITS AND RISKS

A. Project Benefits

5.1 The proposed project would provide benefits of several types. First, it wouldprovide technical assistance to some 90,000 poor farmers in eighteen (18) states who wouldnot otherwise have access to such services. This would help them to enhance their ownincomes by improving their own productivity. It would also enable them to improve theenvironmental sustainability of their farming operations.

5.2 Secondly, the project would decentralize financial and managerial responsibilityfor the public extension service to the beneficiaries of the services. This would not onlyimprove accountability and enhance the efficiency of resource use in the service itself, butwould also provide an experience of democratic empowerment to the beneficiaries and tostate and municipal governments. The establishment of this decentralized structure for thepublic agricultural extension system would complement the more general process ofdecentralization currently being implemented in other areas of the public sector.

5.3 A third type of benefit expected to stem from the project is the support which theproject would provide toward the privatization of the provision of extension services at themunicipal level. This, too, should enhance the efficiency of resource use in the provision ofthe public extension system.

5.4 An indirect benefit of the project would be obtained through the impact whichthe project is expected to have upon universities and research institutions (such asFONAIAP) which are active in the various fields of agriculture. The participation of thestaff of these institutions in the activities of the agricultural extension system willsystematically bring them into contact with the participants and the practical matters of theday in the agricultural sector. This should stimulate improvement in both the research andthe teaching programs of their institutions.

5.5 Finally, the project would establish and systematically strengthen, at each levelof government, the public institutions which are required to implement the proposedextension service. This would include: making available and maintaining the physicalfacilities required by the system; the establishment of the appropriate institutionalarrangements and structures; and the recruitment and continual development of the staff andstock of human capital which will operate the system.

5.6 A matrix of project performance and project impact indicators is contained inAnnex A. These indicators are observable and monitorable statistics which can be used toevaluate the anticipated project benefits have been achieved.

5.7 Poverty Focus. The project would be included in the Bank's Program ofTargeted Interventions. Poverty in Venezuela is disproportionately a rural phenomenon as isconfirmed in the findings of a recent Bank report - "The Venezuela Poverty Study: FromGeneralized Subsidies to Targeted Programs" (Report No. 9114-VE; 1991). That studyfound, for example, that although 49 % of urban dwellers are estimated to be poor, 75 % of

- 39 -

rural people are in the target poverty group. The targeted beneficiaries of this project wouldbe poor farmers selected according to targeting mechanisms described in the ProjectOperational Manual (para. 2.18). Studies would be carried out during projectimplementation to monitor the impact of the project on the rural poor (paras. 2.19 and 2.63).About two-thirds of total project costs would go directly to the provision of farm-levelextension services for project beneficiaries, with the remainder going to training, studies,monitoring and evaluation and institutional development of national and state agencies.

5.8 Environmental Impact. The project has been assigned an environmentalclassification of "C" and one of its Program Objective Categories is EnvironmentallySustainable Development. An important objective of the project would be to transfertechnology for environmentally sustainable agriculture (para. 2.3 and paras. 2.14-2.16). Theproject design provides for extensive review of the environmental opportunities or problemswhich might be associated with project activities. In this regard, proposals for all municipalagricultural extension programs would be evaluated annually at the local, the state, and thenational levels with respect to environmental as well as economic and technical guidelines(paras. 2.25 and 2.36). The project would finance: (a) training of farmers, extension agentsand national and state level government staff on environmental aspects of agriculturalproduction and development (para. 2.54); and (b) a study at the time of the mid-term reviewof the project's environmental impact (paras. 2.63, 4.15, and 4.16).

B. Project Risks

5.9 An important set of risks confronting this project has to do with limitedinstitutional capacity at the state and municipal levels of government. The weakness ofgovernments at these levels presents a managerial challenge to a project which woulddecentralize a public service. Further, the lack of experience of the project's beneficiaries ininstitutions with participatory decision making responsibilities also poses a significantchallenge to a project which endeavors to place the primary responsibility for the newextension service in participating civil associations of beneficiaries at the municipal level.Through offering a source of co-financing to hire qualified managers for the implementingoffices at the municipal level, and through offering training and technical assistance, theproposed project would address directly the need to build institutional capacity at state andlocal levels.

5.10 Related to the above is the risk of inadequate counterpart funding, particularly atthe state and municipal levels. Inadequate counterpart funding has been a problem which hasthreatened the sustainability of the majority of Bank agricultural extension projects. The co-financing matrix proposed for this project would gradually shift the burden of the financingof the system in the direction of the beneficiaries. This finance structure would help toensure that project costs are sustainable at the national level. It would also ensure the fundedactivities are generating economic returns since local contributors (particularly beneficiaries)would only be willing to contribute if they observe tangible results.

5.11 Another general project risk has to do with the possible imposition of economicpolicies which distort relative price relationships and thus distort economic incentives. Suchdistortions can lead to problematic results for investment projects by altering the financialreturns and the behavior of beneficiaries in ways which diminish overall economic returns.

- 40 -

The nature of the economic policy regime would not be expected to significantly impact uponthe anticipated economic returns to this project. Neither the benefits nor the costs of theproject are significantly related to any of the policy issues in question. Improvements in theefficiency and the effectiveness of the agricultural extension institution will be valuableregardless of the policy regime. Likewise, improvements in the productivity of poor farmerswith small operations will also be valuable regardless of the policy regime. Nevertheless, asustained period of macroeconomic crisis and inappropriate sectoral policy could jeopardizethe achievement of these project objectives. With regard to sectoral issues and the impact ofmacroeconomic problems on the agricultural sector, a continuous policy dialogue between theBank and the government is being held in the context of the Agricultural Sector InvestmentProject (Loan 3420-VE).

5.12 A final risk which has affected a number of Bank-supported agriculturalextension projects has to do with the possible lack of appropriate technologies to betransferred to farmers. It was determined during the preparation of this project that a largeinventory of as-of-yet unadopted technologies are currently available for transfer. However,the perceived weakness of the agricultural research institutions raises the question as towhether, in the future, the lack of output by the agricultural research institutions couldrepresent a constraint to the extension system. An IDB-financed project to strengthen theagricultural research system in Venezuela became effective in December 1993. As activitiesunder this project get under way, they will help to overcome this problem.

- 41 -

VI. AGREEMENTS AND RECOMMENDATION

6.1 As conditions of Loan Effectiveness, evidence would be provided to the Bankthat:

(a) at least two states shall have established state extension offices in form andsubstance satisfactory to the Bank and shall have entered into State ParticipationAgreements with CIARA (paras. 2.17 and 4.3);

(b) at least five municipalities from within the two states from condition 6.1 (a) shallhave entered into Municipal Participation Agreements with their respective statesand executing agencies shall have been retained to provide extension services ineach of such municipalities (paras. 2.17 and 4.43);

(c) completion and submission to the Bank of public finance studies satisfactory tothe Bank which examine in further detail the fiscal capacity of at least five stategovernments (including each of the two states in para. 6.1 (a)) and each of theirmunicipal governments (para. 2.63 (e));

(d) CIARA shall have formally approved the final operational manual agreed withthe Bank (para. 4.2); and

(e) within the organizational structure of CIARA, a Project Coordinating Unit (PCU)shall have been formally established with a structure, functions, and staffingsatisfactory to the Bank (paras. 2.24 and 4.1).

6.2 As Conditions of Disbursement, evidence would be provided to the Bank that:

(a) in respect of expenditures incurred under the extension component and thetraining component: (i) the respective State has established, in form andsubstance satisfactory to the Bank, the state extension office (paras. 2.35j 2.40,and 2.49); (ii) the respective state has entered into a State ParticipationAgreement under the project and the municipality has entered into a MunicipalParticipation Agreement (paras. 2.40, and 2.49); and (iii) no other agriculturalextension services are being provided in the respective municipality except thosewhich, in the opinion of the Bank are complementary to the service offeredunder the project (para. 2.49 and Annex C); and

(b) in respect of expenditures incurred at the state level under the institutionaldevelopment component: (i) the respective State has established, in form andsubstance satisfactory to the Bank, the state extension office (paras. 2.35, 2.40,and 2.49); (ii) the respective state has entered into a State ParticipationAgreement under the project and the municipality has entered into a MunicipalParticipation Agreement (paras. 2.35, 2.40, and 2.49).

- 42 -

6.3 During negotiations, the following assurances were obtained:

(a) Annual Report and Implementation Plan CIARA would: (i) submit to theBank, by no later than January 15 of each year, a satisfactory report (in theformat outlined in Annex G) on project implementation over the past yearemploying the project implementation and project impact indicators which areoutlined in Annex G and identifying any obstacles to successful projectimplementation which may have arisen and suggesting solutions to the identifiedproblems (para. 4.14); (ii) present to the Bank, by no later than February 15 ofeach year, an acceptable project implementation plan and annual budget for thefollowing year (para. 4.14); and (iii) hold, not later than March 1 of each yearbeginning in 1996, project reviews with the Bank (para. 4.14).

(b) Project Accounts and Auditing. CIARA would have the project accounts auditedin accordance with procedures acceptable to the Bank and to submit the results ofthe audit for each year to the Bank by no later than June 30 of the following year(para. 4.11) .

(c) Midterm Review. CIARA would: (i) hold with the Bank a midterm review ofthe project to be held no later than June 15, 1998 (para. 4.16) to assess projectimplementation and impact based upon the indicators presented in Annex G;(ii) contract, by no later than December 15, 1997, an independent consultingfirm to undertake an assessment of project implementation over the initial yearsof implementation, including an evaluation of the extent to which thebeneficiaries of the project are in fact the targeted group of poor farmers, and tosubmit its final report to CIARA and to the Bank no later than April 15, 1998(para. 4.15); (iii) contract, by no later than December 15, 1997, an independentconsulting firm to undertake an assessment of the extent of the impact which theextension service has had upon the environmental sustainability of beneficiaries'farming operations including an inventory of environmentally sustainabletechniques promoted by the extension service and the extent to which they arebeing adopted by farmers. The consultancy would also indicate anyenvironmental problems or opportunities associated with the project and wouldsuggest ways in which they might be addressed. The final report would besubmitted to the Bank no later than April 15, 1998 (para. 4.15); and (iv) submitto the Bank, by not later than July 15, 1998, a time bound plan satisfactory tothe Bank providing for the transfer to selected ACEs of full responsibilities,financial and otherwise, for the execution of extension activities under theProject in their respective municipalities (paras. 2.42, 4.16, and Annex B).

(d) Project Budget. CIARA would submit evidence to the Bank, not later than May31 in each year, that the final budget for that year submitted to the Congressincludes adequate resources to carry out the agreed annual work plan (paras. 3.4and 4.14).

(e) Implementation Schedule. CIARA would carry out the steps as indicated in theproject implementation schedule (see Annex E) in accordance with thatschedule's timetable (para. 4.1).

- 43 -

(f) Co-financing Matrix. CIARA agreed that, for each participating municipality,the national government would contribute as its share of the total costs of themunicipal extension service a maximum of the percentages which are reported inTable 2.2 while each of the other co-financing entities (states, municipalities, andfarmers) would contribute no less than their share of the total costs as reported inTable 2.2 (para. 2.45).

(g) Asociaciones Civiles de Extensi6n (ACEs). CIARA agreed that municipalitieswhich have not formally established ACEs during their first year of projectparticipation would not be eligible for continued participation in the project untilsuch time as the ACE had been established (para. 2.42 and Annex B).

(h) Agricultural Chemical Use. The Government would agree to apply, or haveapplied, standards and procedures for the utilization of agricultural chemicals inconnection with extension activities which in accordance with those establishedby the Food and Agriculture Organization of the United Nations and with theWorld Health Organization (para. 2.16).

(i) The Fundaci6n CIARA4 (CIARA). CIARA would maintain an adequateorganizational structure, functions, and staff. This would include a ProjectCoordination Unit (PCU) which, among other things, would be responsible forcoordination, monitoring, and supervision of project-related activities. The PCUwould have separate sub-units for each of the following functions: (i) technicalagricultural expertise (with at least one environmental specialist on its staff);(ii) training; (iii) extension methodology; (iv) monitoring; and (v) supervision(para. 2.26). In addition, the Government would agree to maintain CIARA asthe only agency at the national level in charge of public agricultural extensionservices and their financial support (para. 2.24).

6.4 Recommendation. Subject to the above agreements and conditions, theproposed project would be suitable for a Bank loan of US$39.0 million equivalent with aterm of fifteen years, including a five-year grace period.

- 4 -Annex APage 1 of 6

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

Technology Generation and Transfer

1. The activities supported by the agricultural extension-advisory system developedunder this project would be concentrated upon the generation, diffusion, and adoption ofagricultural technologies relevant to farmers' needs and specific conditions. The projectwould improve the capability of farmers to understand their options and to make gooddecisions about how to manage their productive resources under changing environmental andmarket conditions. Roughly 90,000 beneficiaries would share the costs of the system. Theywould be approached with a wide range of knowledge and information diffusion methods tobe designed with their active participation. The technologies disseminated by the systemwould be sustainable, environment-friendly, and would generate the development of aneducational process which would lead to better-educated, better-trained, and more successfulfarmers, farm families, and rural agriculturally-based communities in general.

2. This technological process would be performed in close collaboration with theleading public and private, research and technical institutions of the country. Technicalcommittees at national and state level bringing together researchers and extension workerswould provide the right framework for matching the opportunities offered by research anddevelopment and the needs of farmers and the variables limiting their production. Theproject would establish a close collaboration between its technical staff and researchinstitutions (FONAIAP), as well as technical staff of existing private agricultural advisoryenterprises (FUSAGRI, OLEOAGRO, CASA 24, etc.) through the technical dialogue whichwould be built into the extension system.

3. National level. The primary responsibilities of CIARA, the Project'simplementing agency at the national level, would be to provide administrative functions at thenational level, coordinating and directing the flow of funds from the national level to thestate and municipal levels. Its participation in the actual provision of the extension serviceswould be quite limited. Never-the-less, several forms of technical support for the systemmust come from the national level, and CIARA would also be responsible to deliver thesesupport services.

4. The technical support services for which CIARA would be responsible fall intothree categories. The first of these categories addresses the need to make available toextensionists technical advice on the agricultural sciences. This type of advice would beprovided by subject-matter specialists who would be available to extensionists and farmers asneeded and who would be responsible for the preparation of related technical materials (inthe form of written materials, lectures, field visits, videos, radio presentations, etc.). WithinCIARA, this category of services would be the responsibility of the Technical Unit. ThisUnit would be staffed by approximately five (5) in-house Subject-Matter-Specialists (SMSs).The Unit would provide technical agricultural expertise and leadership in developing

45 - Annex APage 2 of 6

recommendations and subsequent packages for cropping and animal husbandry in closecooperation with research.

5. These responsibilities would require this Unit to contract additional subject-matter specialists from outside CIARA as needed from time-to-time to provide technicalleadership in particular areas of expertise such as the following: vegetable crops, fruit crops,cereals, livestock, crop protection, farn management and marketing, irrigation and fannmachinery, and environmental protection. These outside SMSs would be contractedprimarily from the research institutions and their participation in the extension system wouldprovide a natural linkage between the agricultural research and extension functions andinstitutions.

6. The staff of the Technical Unit would be responsible to provide a number ofservices to the agricultural extension system. At times this would require the assistance ofoutside SMSs. These services would include the following:

(a) to act as gatherers and conduits of "know-how" between sources of technicalinformation (such as government, R&D institutions, universities, input suppliers,and the international research community) and those who might usefully employthe information (outside SMSs, local extension agents, and the farmersthemselves);

(b) to bring the practical needs and concerns of producers to the attention of theresearch community;

(c) to respond to local demands for SMSs, to identify SMSs required at the state ormunicipal levels, and to operationalize working relationships between these SMSsand the extension system in each state or municipality;

(d) to organize and to participate in National Technical RecommendationCommittees composed of representatives of both research and extensioninstitutions, for the major crop groups and areas of work for which the staffmember is responsible. These committees would formulate basic technicalrecommendations at the national level for dissemination to subject matterspecialists and extensionists at the state and municipal level;

(e) to attend, as time permits, as many of the state-level monthly meetings as ispossible; and

(f) to be available to attend to technical problems faced by extensionists andproducers when these problems cannot be adequately dealt with by SMSs at thestate or municipal levels. Such assistance would sometimes be direct and othertimes would involve making referrals to other specialists who might be able tohelp with the problem at hand.

7. The second and third areas of technical support for which CIARA would beresponsible are the provision of technical leadership in extension methodology and the

46 - Annex APage 3 of 6

coordination of training programs for the system's extensionists and its other staff. CIARA'sMethodology and Training Units would shoulder these responsibilities. These duties wouldrequire an in-house staff of three (3) professionals (SMSs) responsible for monitoring andevaluation (M&E), organization of farmers in groups, extension work with women andyouth, communications, and publications. As in the Technical Unit, the work of these in-house SMSs in the Methodology and Training Units would be supplemented from time-to-time as needed by SMSs from other institutions. These outside SMSs would be contracted towork as needed with the extension system while continuing to be situated physically withintheir own offices in their own institutions.

8. State level. A technical coordinator and two extension specialists would staffeach state extension office. In addition to their administrative responsibilities, they wouldsupport, coordinate, and monitor the work of the municipal extension offices. They wouldbe responsible, with input from state and national level SMSs and from the coordinators ofthe municipal extension offices in their state, to design, organize, and execute monthlymeetings between the state's municipal extensionists and SMSs operating in the state. Thestate office would also be responsible for planning and arranging the training programs forstate and municipal extension staff. SMSs contracted to provide services within the statewould, while remaining within their original institutions, would take on a number ofresponsibilities to the extension system as outlined in the terms of their contracts. Theseresponsibilities would include, among other things, the following:

(a) to be available for consultation when the need arises;

(b) to attend the monthly meetings in their state and, in some cases, to assist thestate extension office SMSs in formulating the program and contents of themonthly meetings;

(c) to monitor and participate in the design of specific field trials and field daysconducted by municipal extensionists and producers within their state; and

(d) to represent the concerns and comments of farmers and municipal extensioniststo the administrators and practitioners of the agricultural research institutions.

9. Monthly Meetings. Monthly Meetings attended by SMSs operating in the state,the state extension office's staff, and the coordinators of municipal extension units(implementing agencies) would constitute one of the cornerstone activities for the proposedextension system. These meetings would provide a systematic point of contact betweenextensionists in the field and those members of the extension system's staff who work incloser contact with the agricultural research institutions, as well as with members of theagiicultural research community themselves. The meeting would provide the opportunity forfield staff to update researchers and state/national technical staff on production and extensionproblems, and to be equipped with relevant recommendations. Correspondingly, themeetings would provide an opportunity for researchers to hear the practical concerns offarners in the field, allowing them to orient their research and development programs to theactual needs of farmers. This could lead to the development of local field research projectsfor funding within the annual budget of specific municipal extension projects. This

- 47 Annex APage 4 of 6

arrangement would help the extension system to establish and maintain a close interactiverelationship with technical and research personnel who are active in the state.

10. The meetings would provide a natural forum for discussion and coordinationbetween state and municipal extension offices. The fine-tuning of the technicalrecommendations to local conditions and a continuous and systematic discussion of problemsand possible solutions between local research and all state and municipal extension workerswould be done in the framework of the monthly meetings. The meetings would also be usedas a forum to generate a discussion of objectives and technical priorities for themunicipalities to consider prior to the preparation of their annual extension plans.

11. The content and agenda for these meetings would be the responsibility of thestate agricultural extension office. In part, this agenda would include presentation andupdating of issues and events internal to the national extension system. The agenda wouldalso be designed to provide exposure to technical topics of interest and importance. Theagenda would include presentations by state level SMSs, and by other invited speakers fromthe industry and from the agricultural research institutions, of current technical and industryissues. It would also include presentation by municipal extensionists of issues stemmingfrom the field. The technical staff of the CIARA and national level SMSs would beresponsible to be available to assist as necessary with the preparation and presentation ofthese meetings, and would also be expected to attend the monthly meetings of several stateseach month. Industry participants from outside of the extension community would alsoperiodically be invited to attend as would municipal extensionists themselves from time totime (particularly in the first years of the project when only a few municipalities from eachstate would be participating in the project).

12. Municipal level. A nucleus consisting of four technicians would staff themunicipal extension office for each participating municipality. These technicians would bethe front-line field extensionists working directly with farmers. One of the four technicianswould also serve as the office coordinator. The coordinator would devote half of his time toadministration and coordination of the office. The remainder of his time would be allocatedto his activities as a part of the staff of extensionists. The initial goal in terms of coveragewould be that each nucleus would reach a population of approximately 500 farmers by theend of its first year of operation.

13. The four technicians forming the nucleus would provide technical assistancedirectly to farmers. They would become acquainted with the participating farm families andwould work with all of the family members who participate in the productive unit. Theywould help farmers to organize themselves in ways which would facilitate their adoption oftechnologies. Municipal extensionists would be responsible to observe continuously thespecific conditions and factors which affect production and productivity in their states andmunicipalities and systematically to record their observations in journal form. They wouldalso be responsible to undertake and maintain local field trials designed to address the issuesraised in their journals.

14. Municipal nuclei would employ a wide variety of extension methodologies todisseminate both know-how and information to farmers. Among these methods would be the

- 48 - Annex APage 5 of 6

following: visits to individuals and groups, model farms demonstrating integratedtechnologies, demonstration plots and field trials, applied courses, and field days. Thesedirect diffusion methods would be supported with mass media aids: publications, televisionand radio programs, videotapes, and audio-visual material. The farmers themselves wouldhave the opportunity to participate in the decision about the extension methodologies to beemployed in their municipality. The methods to be employed would be included in theannual proposed plan of work for the nucleus which must be submitted for approval to theAsociaci6n Civil de Extensi6n, where farmers vote as shareholders, prior to being sent to thestate office as the municipalities proposed municipal project.

VENEZUELA: Agricultural Extension ProjectThe Process of Agricultural Technologies

... ... . . ,, ,,,,, , ,, 0 0 S g i l S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~....... .. ....

TechnologyGeneration Transfer Adoption

2 Directions:

Extension & Training Technical ComnSitee.- Collaboration of ExtensionMethods:

Matehing Providing guidelines, technical Isubiect matter specialists

National oppotnities support, and supervision; + research) = cropping Specialists with resource

1 0-1 5 subject matter specialists recommeandations personnel in5-7 in technical areas such as social/commonunity sciences.

j crops, support services; I Training unit issuing M & E I|

5-7 in training, communications, - guidelines

technoogy transfer, etc.

State level Monitoring Unit 1 Monthly Meetings: Training and Operadonal Activity

St t *~~~~~~~~~~~~~~ ~~ coordinator; To match technical opportunities with farmers nod;Evaluation:

State 2 spocialists inmajorcrops Meetings will be attended by national subject matter specialists andand farming systemns g municipal extension workers under the guidance of state-level

Statt2coorinatr;copsomachtchncal ica et t f s n ; 'and Adoption Ratoes by

[ - X , j ~~~~~~~~~~~~~~~~~~~Farrners

r ,/th Nucleus of 4 Extsnsion workrs: Savoeys: Utilization of Dir-ct Transfer-7

beneficiary ,Mthods:needs at the (generalists) with 1 coordinator Focus on farmers

Munlicipal municipal level limiting factors and Visits, demonsrtrations, group work,Ratio: 1 nucleus / 500 farmers; attempts to resolve

i 1 extensionist / 125 farmers them; Indrect Trensfr Methods:

Capturing existing know radio, television programs,how publications, organization of

f rmrin groups

L-77~~~~~~~~~~~~\;

- 50 - Annex BPage 1 of 3

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

The Transition Period:The Creation of Asociaciones Civiles de Extensi6n

1. The project is designed to place the responsibility for the new AgriculturalExtension System at the municipal level in institutions which incorporate participation by thebeneficiaries themselves. As discussed in the main body of the Report (paragraph 2.6), theparticular form which has been chosen for these participatory institutions is the Asociaci6nCYvil de Extensi6n (ACE). The ACE is a commonly employed legal entity in Venezuela.

2. The ACEs which would be utilized for the implementation of this project do notcurrently exist. Further, most municipalities possess only a limited capacity to undertake theformation of a functioning ACE capable of taking on the full set of responsibilities whichwould be assigned to it under the project. Consequently, technical assistance will berequired in each municipality during the initial establishment of a functioning ACE. Further,for each municipality a transition period would be stipulated during which the ACE would beestablished and would receive gradually its functional rights and responsibilities.

3. In the year in which a municipality first enters the program, the responsibility forthe extension service would be shared between CIARA and the municipality's own localgovernment (the alcald(a). These two parties, CIARA and the alcaldfa, would select andcontract an executing agency to provide the extension services for the municipality.

4. Formation of Asociaciones Civiles de Extensi6n. During the first year of themunicipality's participation in the program, the alcaldfa, the state agricultural secretariat, andthe executing agency would work together to form an ACE for the municipality. Thealcaldfa would assume the lead responsibility for the formation of the ACE, but its decisionswould be subject to the approval of the other two entities. Once formed, the ACE wouldgradually receive rights and responsibilities for the management of the extension services.The schedule according to which the transfer of these functional rights and responsibilities tothe ACE would take place is presented in Table C. 1. As is reflected in that Table, transferto the ACEs of the responsibility and the budgetary resources to contract the executingagency in the respective municipality would be discussed during the project's mid-termreview. Based upon this discussion, a plan would be formulated to transfer suchresponsibilities to the ACEs of selected municipalities.

- 51 - Annex BPage 2 of 3

Thble B.1. Transition of Responsibilities to ACEs

| Year of Participation Rights and Responsibilities of the ACE

Year 1 * Participate in the preparation of themunicipality's annual extensionplan for Year 2

Year 2 * Participate in the preparation of themunicipality's annual extensionplan for Year 3

* Prepare an evaluation of the performance ofthe implementing agency

Year 3 * Participate in the preparation of themunicipality's annual extensionplan for Year 4

* Prepare an evaluation of the performance ofthe implementing agency

* Approve or veto the municipality's annualextension plan for Year 4

Year 4 * Participate in the preparation of theand after municipality's annual extension

plan for following Year* Prepare an evaluation of the performance of

the implementing agency* Approve or veto the municipality's annual

extension plan for following Year* If agreed during mid-term review, selected

municipalities would receive theright to choose and directlycontract the implementing agency(paragraphs 2.42 and 4.16)

5. Until the fourth year of a municipality's participation in the project, the budgetfor contracting an executing agency to provide extension in the municipality would remainwith CIARA and although the ACEs would participate in the selection of executing agencies,the implementing agencies would be contracted directly by CIARA. According to theschedule for the transfer of responsibility to the ACEs as it is laid out in Thble C. 1, inselected municipalities the budget for contracting an executing agency would be transferred tothe ACE when the municipality enters its fourth year of participation in the project. Underthis schedule, from their fourth year on, in ACE would not only select the executing agencybut would also contract them directly with its own budget. This schedule for the finaltransfer of the budget to ACEs, however, would be reviewed and discussed during theproject's mid-term review (paragraphs 2.42 and 4.16).

- 52 - Annex BPage 3 of 3

6. The ACE for each municipality would be established through the formation of aBoard of Directors for the ACE and through the compliance with all legal requirements forits establishment, including the drafting and submission of the required legal documents.Failure to establish the ACE as a legal entity with a functioning Board of Directors withinthe first year of the municipality's participation in the program would result in suspension offinancial support at the end of the first year of operations until such time as the ACE wouldhad have been legally established.

7. The ACE's Board of Directors. The Board of Directors would be comprised ofseven members. At least four of these would be representatives of the beneficiaries. Duringthe first year of the municipality's participation in the program, these representatives of thebeneficiaries would be chosen by agreement between the alcaldia and the executing agency.Three other members would be nominated in order to complete the membership of the seven-person Board. These would include one representative each from the agricultural extensionoffice of the state agricultural secretariat, from the municipality's alcaldta, and one other tobe nominated by the state agricultural secretariat. Both of these representatives to the Boardwould be nominated by his respective institution to serve a term of up to four years. Aseventh member, to be nominated by CLARA, would also serve a term of up to four years.

8. Election of Farmers' Representatives to the ACE. Although the firstrepresentatives of the beneficiaries would be chosen by the alcaldfa and the executingagency, all subsequent representatives of the beneficiaries would be chosen through a two-stage election process. From each community within the municipality, one "pre-candidate"would be chosen by election from among the beneficiaries of the program. The existingBoard of Directors would then elect four of their own successors from among these "pre-candidates.t" The remaining three Board members would, as before, be nominated by theinstitutions which they represent. The first election of this type would take place in the sixthmonth of the second year of the municipalities participation in the program. There-after,these elections would occur every two years. The terms of the farmers' representativeswould be for four years and would be staggered so that in every other year two of the seatson the Board would be up for re-election. Members on the Board of Directors would beeligible to serve a maximum of two terms in succession.

Annex C- 53 - Page 1 of 3

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

Flow of Funds

1. Diagram D. 1 illustrates the flow of funds arrangements for the project. Alsoindicated are the documentation requirements for the release of funds at each level.

2. Flow of Funds between the [BRD and CLARA. CIARA would submitwithdrawal applications directly to the Bank against eligible expenditures incurred.Withdrawal applications submitted to the Bank for goods and works with a contract value ofUS$50,000 or more, and for consultancies and services with a contract value of US$50,000or more, would be supported by full documentation. Contracts below these thresholds andother disbursements against activities not undertaken by contract would be made on the basisof statement of expenditure (SOE). Supporting documentation for all such SOEs would beconsolidated and maintained in CIARA and would be made available for Bank review.

3. The SOEs submitted by the project for reimbursement from the Bank loan will containthe following information:

(a) A description and location of the activity;

(b The total cost of the contract, if applicable;

(c) Expenditures during the reporting period;

(d) The dates of the expenditure; and

(e) Certificate of performance by the Project Manager.

The SOEs would indicate the detailed supporting records, such as job cost records, labor,machinery and equipment, time records, and the basis for cost allocation would bemaintained in a readily available form and cross-referenced to the application. These recordswould be audited by CIARA.

4. At the beginning of each year, each state would submit to CIARA its projectedbudget of expenses eligible for financing under the project for the coming year (i.e.,expenses to be incurred in the operation of the state extension office, primarily under theinstitutional strengthening component as described in paras. 2.39 and 2.40). Each statewould also pass on to CIARA the approved annual extension plans and their accompanyingbudgets from each of its participating municipalities (see para. 7 below).

- 54- Annex CPage 2 of 3

5. Upon the approval of these plans and budgets by CIARA, CIARA would makeits annual allocation of national counterpart funds to the project account. The contributionsof each of the other co-financing participants (the farmers, the municipalities, and the stateagricultural secretariat) toward the financing of the extension component would also bedeposited into the same account. The mechanism for collecting farmers' contributions isoutlined in the operation manual.

6. Flow of Funds between CLARA and States. From CIARA's project account,quarterly allocations to cover expenses incurred at the state level under the institutionaldevelopment component would be transferred to each of the state extension offices in theamounts dictated by their respective approved budgets. The state extension office wouldsend quarterly statements of expense to CIARA to verify that the funds have been used fortheir intended purposes. These arrangements would be governed by the terms of the StateParticipation Agreements which each participating state would enter into with CIARA(paragraph 2.35).

7. Flow of Funds to the Municipal Level. At the beginning of each year, eachparticipating municipality would submit to its state extension office the proposed annualextension plan for the coming year and the accompanying budget which have been developedby the implementing agency and the ACE (paragraph 2.49 to 2.52). Once approved, theseannual municipal plans would be submitted to CIARA (as described above). For eachparticipating municipality, CIARA would, at the instructions of the respective ACE, drawfrom this trust fund to provide allocations to the contracted executing agency in thatmunicipality. In each participating municipality, the contracted extension agency wouldsubmit quarterly statements of expenditures and services offered to the respective ACE toverify that the funds have been used for their intended purposes. Copies of these statementswould be passed along to the respective state extension office where they would beconsolidated and aggregated for submission to CIARA. These arrangements would begoverned by the terms of the Municipal Participation Agreements into which eachparticipating state would enter with its respective state and with CIARA (paragraphs 2.41 and2.49).

8. For selected municipalities at a later stage in the project (as described in AnnexB), these allocations would be transferred to the ACE of the respective municipality ratherthan directly to the contracted implementing agency. The ACEs in these selectedmunicipalities would then manage the contracting of the implementing agency on their own.

VENEZUELA: Agricultural Extension ProjectFlow of Funds

Co-financiers

IBRD 4Lzi CIARA makesCofinancirs submit their quarterly allocations

contributions to the Executingto CIARA Agency

IBRDreceives Municilplitlesprojectaudits E utnAgcyExecutirng

*aEndxecutin Agency Agency atSOEs. municipal level

executes ~States. extension

OARA ~~~~~~~~~~~~~~~~~~~~~~~~~~~projects.

CIARA makes Executing Agency suibmitsquartedry allocations records to ACE & State

to the State Extension OfficeExtension Office

[Fundsflow to CIARA 1

ACE and ExecutingAgency prepare

and submit Annual_____________________________ Extension Plans to

State Extenaion

State Extension Office submits audits, SOEs., and Annual Office for theirClARA submits audits and SOEs to

A sbItadBRD - __s Extension Pans to CIARA for approval, approval.

Legend:

1\ CIARA = Fundacion para Capacitacion. Investigacion Aplicada a la Refomoa Agraria

2\ ACE = Asociacion Civil de Extension

3\ SOE = Statement of Expenditure

VENEZWIEA: Aimdhkd Exwli Pve4at

Proje C_nwennt by Yer - B. Costs

Ns$ 000)

Bae Costs1995 1996 1997 199B 1999 2000 Total

A. IettsalW Dsvshpmet

Cntral Projct Unit - MAC 716 791 913 1065 1194 1242 5,911

State Units 206 406 813 1317 1916 1804 6,364

Subtotal lnstitutional Dsvelopn.nt 922 1,197 1.726 2.372 3,012 3.040 12.276

8. Municipal ExtensIon 1,117 3,029 6,918 9,444 12,864 12,276 44.637

C. Trab*'Natna level 326 174 176 176 176 176 1,202

State level 5 12 17 21 24 25 104

Municpal lvel 18 175 456 957 1,276 1,587 4,489

Subtotal Trbe 348 361 e48 1.164 1.470 1t788 6,775

D. Technmical Aatanow A Studls 2,000 6oo 1,100 600 600 600 5,500

Totai BASEUNE COSTS 4.387 6,187 9.392 13.670 17.942 17,709 68.1187

Physica Contkqgncms 219 259 470 679 897 832 3,356

Price Contngencies 151 301 780 1,406 2,388 2,371 7,454

Total PROJECT COSTS 4,758 6,747 10,641 15,714 21,225 20,912 78.997

Taxes 439 519 939 1,357 1,794 1,771 6,819

Foreign Exchane 761 690 1,277 1,729 2,335 2.091 8,882

OtR

VENZUELA: Agrioultural Extensbn ProjctProje Component. by Yow - ieee Costs

(Us* 000)

Project Yewrs1SS6 1S90 1S97 19S8 1999 2000 Total

1. bialutoa DevelopmntCentralProject ULt 681 791 913 1,055 1,194 1,242 5,876State level Units 200 401 802 1,303 1,804 1,804 6,314

981 1,192 1,716 2,358 2,998 3,046 12,190

M. MunklpM Extension 434 1,192 2,344 3,760 6,142 4,975 17R847

W. TrahhSNational Level 137 174 174 175 176 176 1,012 1State Level 0 8 11 15 17 20 71Municipal Level 0 123 353 794 1146 1587 4,003

137 305 538 984 1,339 1,783 5,086

Total 1.462 2,689 4,597 7.102 9,479 S3R04 35,123

(DO

VENEZUELA: AgrloLdturW Extension Project 3/8/95

Inrtitutonal Strengthening ConWpon.nt - Cntrxl Project Unit (CIARA)US$ '000

QUANTITY BASE COST TOTALYEARS YEARS

INVESTEPNT COSTS UNIT US$ 1 2 3 4 5 6 1 2 3 4 5 6'000

A. Eqdpmnt and Fvnltw Lump sum 34.79 1 0 0 0 0 0 35 0 0 0 0 0 35

Total Investment Cost 35 0 0 0 0 0 35

11. RECURRENT COSTS

A. - m.ntam StuffMam ng Director Year 35.72 1 1 1 1 1 1 36 36 36 36 36 36 214

Aaiatnt Director Year 24.36 1 1 1 1 1 1 24 24 24 24 24 24 146

Division Chielh Year 21.99 3 3 3 3 3 3 66 66 66 66 66 66 396

Line Diretor Year 30.91 1 1 1 1 1 1 31 31 31 31 31 31 185

Accourtrit Y"r 11.50 1 1 1 1 1 1 12 12 12 12 12 12 69

CommTuni,catiora AnIlyst Year 14.82 1 1 1 1 1 1 15 15 15 15 15 15 89Plarwt Year 14.82 1 2 3 4 4 4 15 30 44 59 59 59 267Progranrr Year 11.50 1 1 1 2 2 2 12 12 12 23 23 23 104

Executive Scrotary Year 7.33 1 1 1 1 1 1 7 7 7 7 7 7 44

Secretary Year 5.41 4 4 4 4 4 4 22 22 22 22 22 22 130

Subject Matter Specialist -Tech. Dept. Year 24.00 3 4 5 6 8 8 72 96 120 144 192 192 816 I

Short-Term SubjectMatterSpecialists Year 24.00 5 7 9 11 13 15 120 168 216 264 312 360 1.440Subtotal Incremental Staff 431 517 604 703 799 847 3,900 Uq

B. Supevlsn TripeSubctaMtter Spalist Year 0.08 56 160 320 520 720 720 5 14 27 44 61 61 212 1

C. Sta_ Cowinflee TripeManeging Diretor Year 4.02 1 1 1 1 1 1 4 4 4 4 4 4 24

Aeiet.wnt Drector Year 4.02 1 1 1 1 1 1 4 4 4 4 4 4 24

Lim Director Year 4.02 1 1 1 1 1 1 4 4 4 4 4 4 24

Subtotal State Coorlination Tripe 12 12 12 12 12 12 72

0. Te _ded TdpsSubectr Matte Specai visit to nu.mlpaltia Yer 0.27 28 80 160 260 360 360 7 21 43 70 96 96 334

E. Teebdd & PA wEn misod1 Year 222.22 1 1 1 1 1 1 222 222 222 222 222 222 1,333

F. Eq _ wnto II *u - a Irtsp Yew 2.01 1 1 1 1 1 1 2.01 2.01 2.01 2.01 2.01 2.01 12

0. o0ee S _Ase Y"r 2.12 1 1 1 1 1 1 2.12 2.12 2.12 2.12 2.12 2.12 13

Total Recurren Cosft 681 791 913 1,055 1,194 1.242 5,876

TOTAL COST ('0001 716 791 913 1,056 1,134 1,242 56911

Legend:Exchange RAte: Be. / US1 90.00

S'U

oex

VENEZUELA: AgrioLtural Extension ProJeot 3/8/95Inrdtutional Strengthening: Stat Level

us. '000

QUANTITY BASE COSTYEARS YEARS

TOTAL

INVE8TblENT COTS UNIT US$ 1 2 3 4 5 6 1 2 3 4 5 6

A. Offlo0 EqLpment 1\ humpeum 2.78 2 2 4 5 5 0 6 6 11 14 14 0 50

Total Investment Costs 50

II. RECURMENT COSTS

A. Inormntel StaffState Project Coordinator Year 10.83 2 4 8 13 18 18 22 43 87 141 195 195 683Subject Matter Specialists Year 9.17 4 8 16 26 36 36 37 73 147 238 330 330 1,155 1

Contracted Subject Matter Specialists Year 9.17 8 16 32 52 72 72 73 147 293 477 660 660 2,310Subtotal: Incremental Staff 132 263 527 856 1,185 1.185 4,148

13 VelicloComnpenstion Year 600 6 12 24 39 54 54 36 72 144 234 324 324 1.134

C. Per Diom 120 days/ yerState Project Coordinator Year 5.33 2 4 8 13 18 18 11 21 43 69 96 96 336Agriculturalists -SMS Year 5.33 4 8 16 26 36 36 21 43 85 139 192 192 672

Subtotal: Per diem 32 64 128 208 288 288 1.008

D. Comrnmunlotion Year 0.40 2 4 8 13 18 18 1 2 3 5 7 7 25

Total Recurrent Costs 200 401 802 1.303 1.804 1,804 6,315

TOTAL COST (I000\ 206 406 813 1.317 1.818 1.804 6.365

Exchange Rate: Bo. / US$ 90.00

Legerd:

1 \ These figures correspond to the coordinating and monitoring units which would be set up for each entering state. They reflect the slower rate of entry of the 18 participating statesaccordirig to the scenario discussed during the November 1993 pre-appraisal mission.

m

>

(D

3/8/95

VENEZUELA: Agrloultwv Exteneon Project

Municdpal Extension Component

Us. '00

QUANTITY BASE COST

YEARS YEARS TOTAL

US$

UNIT '000 1 2 3 4 5 6 1 2 3 4 5 6

1. INVESTMENT COSTS

A. Offo.Equwvmet& Fwriture lumpsum 6.46 14 26 40 50 50 0 90 168 258 323 323 0 1,163

B. Fkad Eqsirrmnt lump sum 1.50 14 26 40 50 50 0 21 39 60 75 75 0 271

C. Dlegnoeto R.eeoh lumpsum 0.28 14 26 40 50 50 0 4 7 11 14 14 0 50

D. Profelonsi Swvioe: Extenhion Team

Exteosionist Coordinator (11 Year 9.38 14 40 80 130 180 180 131 375 750 1,219 1,688 1.688 5,851

Administrator Ill Year 6.33 14 40 80 130 180 180 89 253 507 823 1.140 1,140 3,951

Extensionist 12) Year 7.56 28 80 160 260 360 360 212 605 1,209 1.965 2.721 2.721 9,434

Technician (11 Year 6.33 14 40 80 130 180 180 89 253 507 823 1,140 1,140 3.951

Secretary Ill Year 3.40 14 40 80 130 180 180 48 136 272 442 611 611 2,119

568 1,622 3,244 5,272 7,300 7,300 25.306

Total Irvestment Cost 8.24 683 1,836 3.574 5,684 7,712 7.300 26,789

II. RECURRENT COSTS

A. Pw cdemExtensionist Coordinator Year 1.54 14 40 80 130 180 180 22 61 123 200 276 276 958

Extensionist Year 1.54 28 80 160 260 360 360 43 123 246 399 553 553 1,917 oTechnician Year 1.25 14 40 80 130 180 180 17 50 100 162 225 225 780

4.32 82 234 469 761 1,054 1,054 3,655

B. Vehile Comperneatlon (per tewm - 720 total)

4 vehicles/team (US$ 1,913/vehicle/yr.) Year 14.45 14 40 80 130 180 180 202 578 1,156 1,879 2,602 2,602 9,019

C. Promotlon Year 3.33 14 26 40 50 50 0 47 87 133 167 167 0 600

D. Suppies (r munidipality - 180 total)

Office Year 0.98 14 40 80 130 180 180 14 39 78 127 176 176 610

Field Year 4.00 14 40 80 130 180 180 56 160 320 520 720 720 2,496

70 199 398 647 896 896 3,106

E. Equlprnt Melntennco- PpaRr Year 0.33 14 40 80 130 180 180 5 13 27 43 60 60 208

F. UaUdoe Year 1.69 14 40 80 130 180 180 24 67 135 219 304 304 1,052

G. Claesng Mdeeuial Year 0.33 14 40 80 130 180 180 5 13 26 43 60 60 206

Total Recurrent Cost 70.67 434 1,192 2.344 3,760 5,142 4,975 17,847

USt cost of establishing each ext. team 72.45

TOTAL BASE COST ('000) 1,117 3,029 5.918 9,444 12,854 12.275 44,636

Exchange Rate: Be. iUSS 90.00

0 o XE-4.3

3/8/95VENEZUELA: Agricltural Extineion ProjectTraining Component: National Level (CIARA)

US$ '000

QUANTITY BASE COSTSYEARS YEARS TOTAL

US$I. INVESTMENT COSTS UNIT 000 1 2 3 4 5 6 1 2 3 4 5 6

A. Office Equipment and Furniture lump sum 558 1 0 0 0 0 0 6 0 0 0 0 0 6

B. Technical Equipment lump sum 20 00 1 0 0 0 0 0 20 0 0 0 0 0 20

C. Induction Training Courses 0.32 12 2 2 3 1 0 3.84 0.64 0.64 0.96 0.32 0.00 6.40

Total Investment costs 29 0.64 0.64 0 96 0.32 0 32

II. RECURRENT COSTS

A. Salaries

Professional Year 15 00 5 5 5 5 5 5 75 75 75 75 75 75 450Assistant Year 7 50 1 1 1 1 1 1 8 8 8 8 8 8 45Secretary Year 5 41 2 2 2 2 2 2 11 11 11 11 11 11 65

8. Training TravelTickets Year 3 41 5 5 5 5 5 5 17 17 17 17 17 17 102Perdiem Year 3.67 5 5 5 5 5 5 18 18 18 18 18 18 110

C. Office Supplies Year 5 73 1 1 1 1 1 1 6 6 6 6 6 6 34

D. Training Materials Year 0 22 12 3 2 2 1 0 3 1 0 0 0 0 4

E. Training EventsSeminars & Workshops Seminars 17 36 0 2 2 2 2 2 0 35 35 35 35 35 174

F. In-Service Training Year 0 32 0 12 14 16 19 20 0.00 3.84 4.48 5 12 6.08 6.40 25.92

Total Recurrent costs 137 174 174 175 175 176 1,011

TOTAL BASE COST (US4 '000) 167 174 175 176 176 176 1,043

Exchange Rate: Bs./US$ 90 00

o

3/8/95

VENEZUELA: Agricltural Exteneion Project

Training Conmponent: State Level (CIARA)

US$ 000

EXPENDITURE ACCOUNTS QUANTITY BASE COSTS

YEARS YEARS TOTAL

USS

I. INVESTMENT COSTS UNIT '000 1 2 3 4 5 6 1 2 3 4 5 6 _

A. Induction Training Year 0 32 7 3 4 2 2 0 2.27 0 97 1 30 0.65 0.65 0.00 6

B. Induction Tratning Travel & Per Diem Year 0.40 7 3 4 2 2 0 3 1 2 1 1 0 7

C Continuing Education Program Year 0.32 0 7 10 14 16 18 0 2 3 5 5 6 21

Total Investment costs 5 4 6 6 7 6 34

II. RECURRENT COSTS

A. In-Service Training Year 0 32 0 7 10 14 16 18 0 00 2 27 3.24 4 54 5 18 5.83 21

B. In-Service Training Travel & Per Diem Year 0 40 0 7 10 14 16 18 0.00 2 83 4.04 5.66 6.47 7 28 26

C. Training Materials Year 036 0 7 10 14 16 18 0 00 253 3.61 5.06 5 78 6.50 23

Total Recurrent costs 0 8 11 15 17 20 71

TOTAL BASE COST ('000 US$) 5 12 17 21 24 25 105

Exchange Rate. Bs. / US$ 90.00

C>

CD

3/8/95

VENEZUELA: Agrlotturel Extendon ProjectTrainrng Conponent: Municpal Level

US* 000

QUANTITY BASE COSTS

YEARS YEARS TOTAL

US$1. INVESTMENT COSTS UNIT '000 1 2 3 4 5 6 1 2 3 4 5 6 _A. Induction Training Year 0.32 56 104 160 200 200 0 18 34 52 65 65 0 233B. Continuing Education Program Lump Sum 0.32 0 56 160 304 200 0 0 18 52 98 65 0 233Total Inveetment costs

18 52 104 163 130 0 467

11. RECURRENT COSTS

A In-Service Training Courses Year 0 32 0 56 160 360 520 720 0 18 52 117 168 233 5881208. In-Service Training Travel & Per Diem

Tickets Year 0 45 0 56 160 360 520 720 0 25 73 163 236 326 823

Ground Tranrportation Year 0.14 0 56 160 360 520 720 0 8 22 50 73 101 254

Per diem Year 098 0 56 160 360 520 720 0 55 156 351 508 703 1,773

0 88 251 565 816 1,130 2,851C. Trairng Materials Year 0.31 0 56 160 360 520 720 0 17 50 112 162 224 565Total Recurrent costs

0 123 353 794 1,146 1,587 4,004TOTAL BASE COST ('000)

18 175 456 957 1,276 1,587 4,470

Exchange Rate: Bs. / US$ 90.00

to

0oe

VENEZUELA: Agricultural Extension ProjectTechnical Assistance and Studies Component

US* '000

BASE COSTYEARS

1 2 3 4 5 6 Total

Technical Assistance and Studies

Studies

Charactenzation of Target Population 380 100 0 0 0 0 480Framework & Practical Field Methodology 50 20 90 50 170 20 400

Mid-Term Implementation Assessment 0 0 50 50 0 50 150

Mid-Term Environmental Impact Study 0 0 50 50 0 50 150

Public Finance Studies 210 50 0 50 0 50 360 1

Extension Methodologies 175 50 100 50 50 50 475

Technical Assistance

Response to Urgent Technical Issues 250 50 150 40 50 50 590 1New Agricultural Techniques 150 30 150 30 30 30 420

Establishment & Institutional Strengthening of 300 40 100 40 40 40 560New Extension Methodologies 0 50 100 40 50 50 290

Gender & Family Issues 85 10 40 10 10 10 165

'Twinning' Arrangements 300 60 100 50 60 60 630Pilot Extension Programs 0 0 70 40 40 40 190

Experimental Municipal Projects Fund 0 100 100 100 100 100 500Unallocated Assistance 100 40 0 0 0 0 140

2,000 600 1,100 600 600 600 5,500

Total Component Cost

TOTAL BASE COST '000 5,500

0tD

CX

Annme E- 65 - Page 1 of 7

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

STAFF APPRAISAL REPORT

Project Implementation Schedule

l. This Annex contains a series of actions related to the implementation of the projectand indicates the dates by which the actions would have been completed. Unless otherwiseindicated in the schedule, it would be the responsibility of CIARA to ensure that the actionsincluded listed in the schedule are taken. The implementation schedule follows:

Actions to be completed by June 1, 1995

- Completion and submission to the Bank of public finance studiessatisfactory to the Bank which examine in further detail the fiscalcapacity of at least five state governments (including each of the twostates in paragraph 6.1 (a)) and each of their municipal governments(paras. 2.63 (e)). Note that completion and submission to the Bank ofthese studies would be a condition of Loan Effectiveness (para. 6.1(c)).

Actions to be completed by July 15, 1995

* All participating municipalities have submitted approved 1995 AnnualMunicipal Plans to the state extension office and to CIARA.

Actions to be completed by September 1, 1995

* Detailed plan of activities, and a packet of promotional materials(pamphlets, etc.), for a campaign to explain and promote the Project tostate governments have been submitted to the Bank;

* detailed plan of activities, and a packet of promotional materials(pamphlets, etc.), for a campaign to explain and promote the Project tomunicipal governments and potential beneficiaries have been submittedto the Bank; and

* the approved Operating Manual for the project has been distributed toall participant states and municipalities and training events on its use

Annex E- 66 - Page 2 of 7

have been carried out in all states and municipalities participating in thefirst year of the project.

Actions to be completed by November 15, 1995

* Extension agents have collected from each beneficiary (farmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

Actions to be completed by December 15, 1995

* All participating municipalities have submitted approved 1996 AnnualPlans to the state extension office and to CIARA; and

* each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year.

Actions to be completed by January 15, 1996

* Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by February 15, 1996

* CIARA has submitted to the Bank an annual implementation plan for1997.

Actions to be completed by June 30, 1996

* Project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

Actions to be completed by November 15, 1996

* All participating municipalities have submitted approved 1997 AnnualMunicipal Plans to the state extension office and to CIARA;

Annex E- 67 - Page 3 of 7

* extension agents have collected from each beneficiary (firmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

Actions to be completed by December 15, 1996

* Each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year.

Actions to be completed by January 15, 1997

3 Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by February 15, 1997

* CIARA has submitted to the Bank an annual implementation plan for1998.

Actions to be completed by June 30, 1997

* Project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

Actions to be completed by November 15, 1997

* All participating municipalities have submitted approved 1998 AnnualMunicipal Plans to the state extension office and to CLARA;

* extension agents have collected from each beneficiary (farmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

- 68 - Annex EPage 4 of 7

Actions to be completed by December 15, 1997

* Each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year; and

* two independent consulting firm have been contracted to undertakeassessments of the initial years of project implementation - one toreview effectiveness of project implementation, and the other to reviewenvironmental impacts of the project (para. 4.15 and 6.3 (c)).

Actions to be completed by January 15, 1998

* Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by February 15, 1998

* CIARA has submitted to the Bank an annual implementation plan for1999.

Actions to be taken by April 15, 1998

* The report evaluating project implementation has been submitted to theCIARA and to the Bank; and

* consultants' reports on effectiveness of project and on enviromnmentalimpact of project have been submitted to the Bank (para. 4.15 and 6.3(c)) .

Actions to be taken by May 15, 1998

* A detailed plan for the project's mid-term review has been prepared byCIARA and submitted to the Bank.

Actions to be taken by June 15, 1998

* The project's mid-term has taken place (para. 4.16 and 6.3 (c)); and

* project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

- 69 - Annex EPage 5 of 7

Actions to be taken by July 15, 1998

* A plan for selected municipalities has been devised and presented to theBank for transferring additional responsibility for the management ofthe respective municipal projects to their respective ACEs (para. 4.16,6.3 (c), and Annex B).

Actions to be completed by November 15, 1998

* All participating municipalities have submitted approved 1999 AnnualMunicipal Plans to the state extension office and to CIARA;

* extension agents have collected from each beneficiary (farmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

Actions to be completed by December 15, 19'8

* Each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year.

Actions to be completed by January 15, 1999

* Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by February 15, 1999

* CIARA has submitted to the Bank an annual implementation plan for2000.

Actions to be completed by June 30, 1999

* Project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

-70 - Annex EPage 6 of 7

Actions to be completed by November 15, 1999

* All participating municipalities have submitted approved 2000 AnnualMunicipal Plans to the state extension office and to CIARA;

* extension agents have collected from each beneficiary (farmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

Actions to be completed by December 15, 1999

* Each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year.

Actions to be completed by January 15, 2000

* Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by February 15, 2000

* CIARA has submitted to the Bank an annual implementation plan for2001.

Actions to be completed by June 30, 2000

* Project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

Actions to be completed by November 15, 2000

* All participating municipalities have submitted approved 2001 AnnualMunicipal Plans to the state extension office and to CIARA;

* extension agents have collected from each beneficiary (farmer) a recordof the yields achieved for each crop on his/her farm over the course ofthe year; and

~71~ Annex EPage 7 of 7

* a detailed project implementation plan acceptable to the Bank for thecoming year has been submitted to the Bank.

Actions to be completed by December 15, 2000

* Each municipal extension office has submitted to its state extensionoffice a complete record of the yields obtained by each of itsbeneficiaries over the course of the year.

Actions to be completed by January 15, 2001

* Each state office has submitted to CIARA a complete record of theyields obtained by each beneficiary in the state over the course of theprevious year.

Actions to be completed by June 30, 2001

* Project accounts have been audited in accordance with proceduresacceptable to the Bank and the results of the audit have been submittedto the Bank.

I

- 72 - Annex FPage 1 of 2

VENEZUELAAGRICULTURAL EXTENSION PROJECT

DISBURSEMENTS

Schedule of Estimated Bank Disbursements 1\IUS$ million)

Bank Fiscal Semester Disbursements Cumulative Disbursement Loan StandardYear Ending Amount % of Total Balance Disbursement

Profile 2\39.00

1996 Jun-96 2.90 2.90 7% 36.1 0

1997 Dec-96 1.2 4.10 11% 34.9 1.19Jun-97 1.5 5.60 14% 33.4 2.37

1998 Dec-97 2.3 7.90 20% 31.1 5.53Jun-98 3.2 11.10 28% 27.9 7.11

1999 Dec-97 3.6 14.70 38% 24.3 11.85| Jun-98 3.9 18.60 48% 20.4 15.01

2000 Dec-98 4.5 23.10 59% 15.9 19.75________ |Jun-99 5.5 28.60 79% 10.4 30.81

2001 Dec-99 5.1 33.70 86% 5.3 34.76|______ |Jun-00 5.3 39.00 100% 0.00 33.97

1\ Includes deposit of USS 3.0 million available for retroactive financing of expenditures incurred after July 1, 1994.

2\ Based on OPD August 1993 Standard Disbursement Profile for Mexican agriculture projects due to

the absence of an equivalent profile for Venezuela projects.

- 73 -

Annex FPage 2 of 2

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

DISBURSEMENT SCHEDULE

Project Disbursements by Category and IBRD Disbursement Percentages

Category Amount IBRD Disbursement(US$ million) Percentage

Civil Works .1 50%

Goods and Equipment 1.8 100% of foreignexpenditures45 % of localexpenditures

Studies & Technical 5.0 100%Assistance

Consultants' Services 13.2 46%

Training 1.2 50%

Grants .5 100%

Total Recurrent Costs 17.2 70% until aggregatewithdrawals reach$5,000,000;thereafter, 50% untilaggregate aggregatewithdrawals reach$11,000,000;

l ________________________ ___________________ thereafter, 30%

Annex G- 74 - Page 1 of 17

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

Project Monitoring, Evaluation and Reporting

1. The project is based on the concept of a decentralized extension service, whichis new to Venezuela. Therefore, systematic and accurate reporting of project performancewould be essential given the extent of institutional changes, the scope of proposed projectactivities, and number of agencies responsible for implementation. Active monitoring wouldbe crucial in taking into account the innovative nature of the project and the need foradjustment to changing circumstances as they arise during implementation in accordance withoverall project objectives as described and agreed upon during appraisal.

2. The executing agency, CIARA, will be responsible for the preparation ofquarterly reports on their respective components and subcomponents. CIARA will be incharge of coordinating and consolidating them and forwarding the consolidated report to theBank within 30 days of the end of the quarter.

3. The quarterly reports will focus on evaluations of progress against the annualoperating plans, measures of project performance and impact, and other issues related toproject implementation and management. They are designed to be used by the GOV and theBank as an effective tool for project monitoring and would include the following sections:

(a) A Project Implementation Summary would give a general description ofproject implementation during the period under review, by component,including the project's overall status, adherence to the Annual Operating Planand development impact to date. In addition, this section should comment onthe effectiveness of project coordination among project agencies and on projectadministration issues, including fund flows/Government budgeting,disbursements, procurement, accounts and audits and technical assistance. Thesummary status of each component and the program would be covered in aseparate section. The status of actions proposed and issues unresolved fromthe previous quarterly report, and actions proposed for the following period,would also be included.

(b) Project Implementation and Impact Indicators would provide quantitativeindicators of project implementation by component and subcomponent asidentified in Tables 1 and 2.

(c) Financial Indicators would provide a summary of funds released by eachfinancier, including the GOV, during the quarter by project component anddisbursement category (i.e., works, goods, services, and other expenditures).Procurement method and processing status by disbursement category, andestimated future disbursements, would also be identified. The proposed format

Annex G75 _ Page 2 of 17

for the financial indicators section of the quarterly reports is presented inTable 3.

4. Quarterly reports would be prepared according to following outline:

PrtI Project Implementation Summary

A. General status of project

1. Major recent events2. Adherence to Annual Operating Plan3. Development impact to date

B. Project administration

1. Fund flows and Government budgeting2. Disbursements3. Procurement4. Financial reporting (accounts and audits)5. Technical assistance

C. Organization and Management

1. General monitoring and evaluation2. Coordination among project agencies

D. Status of Each ComponentE. ProblemsF. Recommended ActionsG. Status of Recommended Actions from Previous

Report

Part II Table of Implementation and Impact Indicators

Part III Table of Financial Indicators

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONFTORING AND REPORTING - Quarterly ReportTable 1: Key Physical Implementation Indicators

Target 1995 1996 1997 |Component Pwfoormanen Deoription Unit Oridrnl Aotual Orignel Pevised Actua Oriindr Rervied Aotur

Ctorgoyf Targot Target Twrget Target Trget

Estebllshment of ACM. In Cunttittve mrmber of

Muncipe mption l upiti_ pto ACMe to admnisbter 14Extaradon pwatIpon rnuici 0 jt p t mtxiicpsucterwon 1440 s0

tdiion pro prottr

Promotion of the of

Pro,botPromotion iuron vice at Ce te evrerbYthe 5 8 13tat aw muci omotin pn

CuLniative numnbr of

Murdlipi Establishment of murtalpltie which haeyExtlon NuOil oetkoa munuicpa countraced to estabion hr 14 40 80

et nsio leri munadcpa actnenon nucle

Surveyin of fwmer' a

limiting factors andTechnology identflcation of exhting Cumulative number of 8Generation and pproprite survey reports generated 2 4

technologles at the state

Initiation of fild trials atmunkipaiities with the Number of field trials 14 28 40assitance of stae level oonducted

Matching technkicTechrnoogy oppotunities with Number of meetings held 24 24 24

Transfer frmer's needs throughmonthly meetings

Use of direct trantfer Cumulative n52mbe ofmethods ~ visits, deronortrations, 52 76 104

and group work

Undwtake turning for Cumulative number ofTraining aersioniste at the axtenslordett trained and 56 180 320

munbipr lvel depoyed.

Number of induction andIn service courses 5e 1IO 320

completed.

Prep reand hold traiing Number of training even 14 2I 40fonts for itteionidst. held, _C

~~~~~~~Prl~~~~~~~~~~~~~~

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly ReportTable 1: Key Physical Implementation Indicators

(cont.)

Ta get 1998 1999 2000 V

Compon.nt Performance Descnption Unit Origina Revised Actud Orginal Revised Actuel Original Revised Actued

Category Target Target Target Target Target Target

Establishment of ACMs inr Cumulative number ofMunicipal Municipal dl participating ACMe to administerExtension participation municipalite to mncplextenion 130 180 180

administer municipal projects

extension projerts

Promotion of the Cumulative numbe, of

Project Promotion extan"ion ervice at the states covered by the 15 18 0state and municipal promotional campaign.levels.

Cumulative number ofEstablishment of municipalities which have

MuEncipal operational municipal contracted to establish 130 180 180

extension nucd, municipal extension nuclei

Surveying of farmer'slimiting factors and

Technology identification of existing Number of survey reports 13 18 0Generation and appropriate generated

technologies at the statelevel.

Initiation of field trials at

municipalities with the Number of field trials 50 50 50assistance of state levl conductedSMSs co

Matching technical

Technology opportunities with Numbe of meetings held. 24 24 24Transfer farmer's needs through

monthly meetings _

Cumulative number ofUse of direct transfer visits, demonstrations, 124 124 124

and group work

Undertake training for Cumulative number ofTraining extensionists at the extenionists trained and 360 520 720

municipal level, deployed.

Cumulative number ofinduction and in service 360 520 720

course completed-

Prepare and hold training Number of training event 50 50 50events for exteneionists. held. - i

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly ReportTable 1: Key Physical Implementation Indleators

(cont.)

Torget 1996 1996 1997Cormponent Performmrece Deowrpdon Unt Orlplner Aoturi Ori lln Revised Aoturr Oriliil Revised AotuLi

Ctetgory Twrget Target Target Target Target

inrnitutioni Etoblish end staff offk Numix of state ofieestiteupmetnlt Stae Particiption to carry out pro(ect sumbler of and otaffed 2 2 4

activities at the state level

Sign corrvenios with the Number of states whiehfederal goverrnmerit to hv o[ie ovrlo

lmplomaffl the ~ with the federal224dacentralized externion*ystrat government.

Contract core of required Number of sub(ect matersrubect mater specialis sumcdsts 12 14 25at ech sate unilt.

Unrdertake training for Number of coordinators 0Training coordinetors at the trained end deployed at 2 4 8

national nd etate leves the state level.

Undertake trainin tor Number of extenrionestseKteraioniets at the trained end deployed at 2 4 8national and state aleves the national level.

Number of ttertwionritstrained nd deployed at 4 8 16

the ta level.

Prepore nd hold trininng Number of tranina event 0 2 2even for coordinators. hld.

Estblish a profile of theStudi_ end capabilitie of states ard Numbe of profilesTerhrivc Studies muricipaliti end their compe te 14 23 40Assistence r_ident former

populatlon.

Undertake diagnosticstudie to document the Number of studies as

farmeal *nd medium municipalities enter the 14 26 40morme, their rctivitim, sstm

end those of participating Vmunicipaities.

Implementation of Number ofrecommendations derived recommendations 50 50 50

from analysis. implemented.

O %

i-C5

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly Report

Table 1: Key Physical ImplementatIon Indicators

(cont.)

TaC et 1998 1999 2000

Component Performanoe Description Unit Original Revised Actud Original Revise Actual Orneiil Revisd Actual

Category Target Targot Twrgot Target Target Ta,get

Establish and staff offices ubro saeofcIntitutiona i State Participation to carry out project estmblsed an *t ff ad 0

Development activities at the state vale

Sign convenios with the Number of state which

federal government to

implement the hveciwith the f edral 5 5 0

decentralized extensionsystem, ~~~~govervnent.

Contract cra of raquired Number of subict matter 3subjiec matter specialists specialists contracted 35 25 at each state unit.

Undertake training for Number of coordinators

Training coordinators at the trained and deployed at 2 4 8

national and state lveas the state oval.

Undertake training for Number of extentionists

exterwiorsts at the trained end deployed at 2 4 8

national and state evals the nationel lval.

Number of extensioniststrained and deployed at 26 36 36

the state levl.

Prepare and hold training Number of trinng eveant 3 3 3

ovents for coordinators. hold.

Establiah a profile of the

Studil_ end capabilities of states Numbe of profile

Technical Studie municipalities, end thdr combeted 50 50 0

Ausistance resident farmer completpopulations.

Undertake diagnostic

studies to document the Numbe of studin *small and medium municipaitim enter the 50 50 0

farmers. their activitie,and those of participating

municipalitie.

Implementation of Percent ofrecommendations derived recommendstions 60 70 75 tyq

from analysis. implemented.

Ch

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly ReportTable 2: Key Impact Indicatomr

_______ 1995 _ 1996 1997 _ - _

Category Impact Indicator Unit L T e ReLed T-Ygt ActUal C |g Rente-d Target Atu.t OTgineY R-i-ed Te,g.t A.Tuo1 Comment.Te.g.t Terg.t Target__ _ _ _ _ _ _ _ _ _ _ _

n,mbe, ofImproved Reseerc Perticipetion of egricultorel s-ent,.ts from monthly meeting

end Etvenn oniuv.r,ite.s nd wnte FONAIAP offic.. i monthlv netnded by 24 24 24Linke meeting. at the atete level vntete pe,

state.

Cvmulet,oe_

Technology Field dey. eat ech stete nimber of field 2 2 8Dieeminet-o day. held yer2t

Pcnt ofConfrmetion -mong benefiri r.es of the reC-.cc. b .. fecl rl*s pN 20 35 soof demonemeted technologies to the. .ot-lt-es tirget -empl OO

Pecent of _TechnolOgy Benefioi.e. who confirm th. rdoption of et beest befi-.Adoo -one tehobgy re-ommended by the coten.i.n dnptnig 20 35 50

oernice (nationally, by tete. end by municipality) technologjee

P-ront ofProduotinity Percent of bienfioee ch-evig yield geins on benefiCcies ith 0 25 50mice_ese pinip.l o,ope over the previoi- y. Vld g

Com Isbn.Dicoiet-khzatton of A-eumpbon of 4 oct of 7 ACM Boa-d po-ition- by Otm,en ofM-nmgment and pwrttcipautng frmer upon .ni al elction by fmeb i of 42 120 240

Reeponibilbty benefimiof.e. oeiAd

B..d~~~~~~~~~~~~~~~~~

isC

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MLONITORING AND REPORTING - Quarterly ReportTable 2: Key Inpact Indicators

1995 _ 1996 _ 1997Cartagory ImpactIndicator Unit Trt Revhod Tg.9 A.tuel Twd R.vhd Tatj A.t.W egl R.o,aad Tawgt Actuai Con-ste

W,,~,be, of

[.proved Rf a, Parctpmtion of erwuturnl .ntst ho. Numth ret

nd Ete-on versts nd tat FOINAIAP offic. n i o t- y attended by 24 24 24

L.Ate Mtia. t tha sta ana *cl ntt t per

atate.

C.-nnult,n.

T_htnology Fitld de at h numbr of fNid2F..d avra echsttsd.y. hedp 2 2 8

Percent ofConnrt an_on bartfic,re of th. raa-n a ferr po 20 36 bO _of de,-red tchgri_g to thw itrtvite t rg t 2 mp 5

targert erfl

BTrnficnar_f who r onfirm thw idopoon of at lent Perwnact ofrTedoog o'n thnology reomnn d by th. cton dptira 20 35 60

Adoption tirc (natonly, by ate, artd by mtunirnpefty terI

Productiity Pwent of be eiala wh.ao nir yeld ge_t on P rn 0 25 50

1nr _ pmcipl crops over the " yte bwfi.re ith - 25 5_

Deo ln t timn of A_n mptin of 4 out of 7 ACM Board po_or by nomu

M Antgwns pl farers upon rWel letion bY fms m ACM 42 120 240

Raepn_t by Boord

>

VENEZUELA

AORICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quartedy ReportTable 2: Key Irnpact Indceatore

1996 1996 1997

Caegory Inmpact Inlicator Unit Oh*wf R.n.d T1 gt Atua R._n..d T t.t ActuOI R..d T.gRt Actual Commnt.Category T gt~~~_ __ __ _ __ __ Twot _ _ _ _ _ _ _ __ T g. _ __ _ _ _ __ _ _ _

Mn.b.r of)mpr-od Reech Pwobton of .gtouftrl .onti, fom monthly ,.t.V

*nd E o.,nr u ..b- nd ddtnt FONAIAP offic monthy t"nd.d by 24 24 24Lhke mnting et the tt. lev,l. ecentt pt _

Coryolet,.

Tedmiongy o F d" *nch *tv n-b of fi ld 2 2 dey. hed p.

Po. nt ofConf. rdon t rmorg benrf i- of th W-e -. bficww pt 20 35 50of d tr-b.d thrloo_- te th- er nt 0 355

Pero.mt ofT-tv_i -h.o onhrm the dopoon of et slet oTechnoloy - tohrology rcommc-nwed by th. etn bnn 20 35 50Adoption eceriog

Percen ofPorductvty Prownt of bn.fi e whnvmg y.d g. on bfr -i- rth O 25 50Inc... prinrpel cr,oP o. -the pr.veoe ye. id g02

Decoetuloon of A_umpton of 4 out of 7 ACM Bood poerons by Cumu leMblgr_ent rd pticip ting f.rn. upon nnuel .leltron by f rC of 42 120 240

Reeo.rt bnfcrere 'Sord

'9

-S :t-a

O

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterily ReportTabie 2: Key Impact Indicatores

icont.)

1998 i999 2000

Ui TurgetS ReiedT.ai Atie api nol ginal cd060.W Reiaa T.gt A.tslR.oied T t AwlRanled TegelA1 oe Co-ntietCategory Impact Indicator Unit TO Trg.t T.Tgit l ____d_T________l_Com_n

Nuimbe, of

Improred R-wch Petatcpation of grritulr cientrt from Nuthly meeting

and Etenton uon-Meite and tat. FONAIAP office. in monthly tt.ndsd by 24 24 24

Link. meetings at th stts lai. scrnti.te p.

Vtale.

Themrnatoy Field days at p-ticlptng *tat" numb, of fIld 13 18 18

Confrm-tion amnong b nfhicsr r of the revs6nc. Pbrent ofof technoloie. presentd ~ ther ~beneficiaries Par 50 50 50 0

of t chnologb proontpid to ther actwrift. tat p

Tecnnoogy i -.. h contin the. edoptmn of at laeet Percent of

Adoption oJ tchlogy recommended by the eotenainn lbneficiarb 50 50 50

_c rnic inationey, by tete, .nd by mnniphlityl

Percent ofProductivity Percent of beneficiare achieving yield gains on benfi.b with 50 50 50

Incresaea principa1 -p00 over the preoiu ye.. yield gainm

Decentrcztion of Aesumption of 4 wut of 7 ACM Bowrd pot tions by number of

Manegement nd participatng f*mws rpon nnual *iKction by num o 390 540 540

R_ponribaity bfnfici_, r A

ot _

B.wd~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~~~~ I~~~~~~~~f

ivCs

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly Report

Table 2: Key Impact Indicators

FY 99 FY 00 FY 01

A.t.el R-i-ed R-visdComponent Component A|tuOB Budget OriynSl Budget BddU tg Act-1 B.dget Orgina1 Budget Actual.Bdget Atul EApdndittp t-

mtutionO D-Inplr Inattu.b.-I Dev-lopm-nt

Subtotal Subtoti 'nntiot,tone, Development__I

SFunic, al Municipal Enten-on

SubtotS. Munio~pel S 0 rbota MGn pa Eoten-on-

Tr.in-g Tra-mng

S.utotel: Training Soorel Trainng

Technical Tachwicel Aeet.nc.lStudie_

AeaetanuatStudte

S,l-rot,i ThcrnicaS SubtotI. T-ch-ocel A,-t-ience StTiis_

ABSiSteflCe

9;

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly Report

Table 3: Key Financial Indicatom - Budget Provision and Use Quarter:_

_______________________ _____1996 - 1996 _ 1997

Component 0| inW Bt dg| A.t.W 9.dg.t AOd nisid Butdglt Ral_d Btldget ActuW tudIt AIginel 6udget R|vibsd tdgt A.tual Budget Atu

B.. '000 1_ Ut;$ '000 Us$ '000

A. btttulbnet Dmr topm nt

A. C.onv tnd St. PrOwct Unite

Equ p-nt & F,nft,,. 6.800 (6) (11

I1r-e-nt.1 Steff 95,710 (780) (1.131)

S.p-rvi-on Tr,p 850 (14) (27)

St.t Coordt.on Tr.p. 2,040 (12) (12)

Technis.c Tr,p. 1.190 (21) (431

P.r de. 5,440 (64) (128)

T-ohStcel & P-omot-cne) Mtr-le 37,740 (222) (222)

Equipm.nt Meintmnn. & Repoo 342 (2) (2.)

Ofice Suppl_ 360 (2) (2)

Ve.hi. Comnpe.t-on 6,120 (72) (144)

C- o n-tro-one 170 (2) _ (3)

Subtotl Intitution.l D-.o.p-nt 156,762 (1 197) (1.725)

S. Illtun Et.n.on System

3.1 E deblb,nt of Extrnolon T-m 0s

Office Equipm.nt & Frnio-r 15,300 (168) (2581

Faild Equ,pment 3.570 (391 (60)

Uiagno-tot R-_sch 680 (7) (11)

Prof(eaenel S -vicee 96,560 (1822) (3,244)

P. din, 13,540 (234) (489)

V.hil. Compaton 34,340 (578) (1.1561

Sy.tem Promoton 7.990 (871 (133)

SupPa 11 .900 (199) (398)

Equipment Mint n.nc. & R.p.r 850 (131 (27)

Utitie 4.080 (87) (135)

Cisene M.dWb 890 (13) (26)

Subtottl: Municiipl Exteo 190060_ (3.0291 (5,917)

C. T.Mdng

C. 1 Extano Training Syetm

Offie Equipment A Furnht.. 1.020 (0) (0)

To.hnical Equipmwnt 3.400 (0) (0)

Inductbn Tranino 4.107 (38) (54)

Inducoon Traeng Tr-e) A P. diem 8,460 (36) (37)

Cintooteig Eduction Progum 0 (20) (55)

Librwy r n Tr rne Merbil 9,010 (0) (01

CIARA R.hebitttion 17,850 (0) (0)

S tw_ 15.810 (931 (93)

Offi Supple. 1,020 (6) (8) t

Tren.V MtetrmM 510 (21) (54) WA

Trening E,ante 0 (35) (35)

In-Sice Tr-n 0 (24) (60) O

In-5o Trer Trenel & P. dim 0 (91) (255)

SubtotW: Training 59,187 (381) (549) 1 C_

1\ Th_ mounte m- ciutd usinG th cthu nt -h.nge rate of 6.. 1 70/US. USS 1ol.l a. ud for the wccn ding Y.s. becue o- - -f e schrn. rt in et0biity durng Proe-ct *Pi-le)

VENEZUELAAGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quartefy ReportTable 3: Key Financial Indicators: Budget Provision and Use

Icont.) Quarter: /

1998 1999 2000 'i

Component 0.1in.I t d Utlt AcOrrn Bdgt R.dd Bet |_n Budget A WR Budged BdOt| A.tud B |dg.t

B.. 000 1) Us $000 U,s 000A. ke4tudt D.Wmro nt

A.1 Ceunit nd StBs Pr*.t Unrt

Equp-n,nt a Furr.t.r 6,8100 (l6) (11)

tnc,r,td St.fl 95,710 (780) (1131)

Superrionr Trirp 850 (14) (27)

St.? Coordi(r.on Trip. 2,040 (121 (12)

Techr-iccl Trip. 1,190 (21) (431

P. die. 5,440 Ib4) (1281

Tovhni.l & Promworil Meteribt 37,740 (222) (2221

Equip-ns Met.n & Rpoir 342 (2.01) (2)

Offt Suppw. 380 (2.12) (2)

V.l*cb Coponwr. 6,120 (72) (1441

Comrmunicaborle 170 (2) (3)

&,Subtutd Iretn ond O 1Devepmnt 156,702 (1,197) (1,725)

B. Mtntt_d bftnWt Sywrn 0

B.1 Etebleunet of Extedan T.emi,

Off c Equitpntnt A Fwnt9x. 54,910 (323) (0)

Fitd Eqiupn.tn 12,750 (75) (0)

Dagno.ti Re..h 2,380 (14) (0)

Protfesgord Ser ic_e 896,240 (7300) (7,300)

Per dam 129,370 (1054) (1,054)

V.hid. Corrnpieuton 319,430 (2t02) (2,b02)

System Provotin 28,390 (167) (0)

Supp_e. 109,990 (896) (896)

Equipne,nt Mergtere B R.pfr 7,310 (b0) (80)

UtWe 37,230 (304) (304)

C.a*ti Mdtride 7,310 (t0)I (80)

Subt.tMl Mur%it:ipl Extreton 1,b05,310 (12,855) (12,276)

C. Treinh

C.1 E.lwt1n Tre,ft 8ystem

Offie Equipnm Bl Fh t ur. 0 (0) (0)

Tohnr*dl Equipm.-t 0 (0) (0)

Induction Tr.pww 11,325 (66) (0)

lrnckton Trentn Tr"oel & P, dam 6,120 (36) (35)

Ctonm.un7 Edxucfn Progrem 17,510 (70) (6)

Librhy dn Trinirq Mtrial 0 (0) (0)

CIARA Rehbttion 0 (0) (0)

S tra_ 15,810 (93) (93) I

Offi Supple. 1,020 (6) (6)

Trawtg Mtruile 19,890 (168) (231)

Traini Evetr 5,950 (35) (35)

In-Ser,i- Tr_ntg 21,590 (179) (235)

In-Sic Tr.erw Tra-l h P.r dim 97,070 1 1 1822)1 1,137)

SubtDtt Trq ui51 196,239 (1,475)1 (1,788) _ Q

1\ The_. rno,unte mem calculated uv ith xrerrt mxchange rt of Be. 1701US$. US$ Do0... used fkr the -ce -ding Ve.. b c- -u of the .ch.ng, rote inet.bility du,r.g procct ppracal.

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quaterly Report

Table 3: Key Financial Indicator. - Budget Provision end Use

(cont. Quarter: /_

_____ _1996los 1996 _ 1997

Component O 9.d"i A.%.e L|dgat OrIonW |.4a.1 A-.-d ttdi | A.tw Bndgel 040 .l I.teet Re-led b.dgt A.. LA-L

.. 000 U.S16 000 U114, 000

O 61.di.cwT..hni-n A-1-sc.

D 1 Sdo..

Chwccvs 7ten ch T=gt PTop . 64S600 t1001 t0O

F-kro worA P . F &..d M.,tood oy 86 500 t20i (S9I

M,ed Tcm IT- m.07.7,on A..men- 0 10t ISO)

MAd T-m E--or-t.l,l m,p-' St,i 0 10) (60)

P.bl, F,-n-- S.d,.. 35,700 1601 10t

Eole,o,oo Mwthodomoy S 29.750 1501 t1001

138.550 (220) f2901

D 2 T.c.nh.i. A-.-.nc. X

R.po.. 70 Urgwnl Te-h-. I.-.. 42,500 1501 11501

N-m AU-cunII-1 T-chnq,.. 25,500 (30) 11501

E.l.W.h-fment A Insyvtonal n S-lTh.,N 51.000 401 t1001

of P.tc-p.-ttY F.m-. GOlop. (ACE.I

N-m E.-t.n. M.thodok,u,.. 0 150) 1100)

Ge-d.i & F.n-y I-...* 14,450 t10) 1401

T--g'n A,-gr-n-y. 51 000 160) 11001

Pyiot Eo.--pn PIog.Qn . 0 t0 170)

UOyIloc*7*d A-l-n_e11Z 000 (401 10)

207,400 12801 (710_

Suboot.l T.chn-c. A...,.n. /Snd. 340 000 15 I1 110001

TOTAL PROJECT 80,8860 156381 i10.5281

6

VENEZUELAAGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quartedy ReportTable 3: Key Financial Indlcators: Budget PmovIsion and Una

(cont. )

Qluarter: I

________ ~~1998 __ _ _ _ _ _ _ _19 BB2000__ ~OO_ __ _ _

CompAonent 0r(0-i Bi dg.: A.tuW Budge: .f 'gi dgmt R -d t dvt A. t Ebte Id do R | Ab W |t | Aclt- | A .WtComponent E,~~~~~~~~~~~~~~.dI,-. ___ ___ __

S. 0000 00 000 L* '000

D S:.oieeTeohm i A_ltnce

D I S'".i*.

Cht, =toteDon of T.g.t POpUIet- 0 t0) 101

ER.--.work & P-.fo.-) F.e M.fodo.o 8 V 11,900 (170) (20)

Md Tem Impi--wn-..n A...e-men 8,500 (01 (501

M.d 7-rm En--onm-nt1 Impect Swady 8 500 (0) (50)

P,bi.n F,ooce S,dA.. 8 500 (0) (60)

E.,.r.emo M fOodotogv S.d,e. C (501 (50)

37, 400 (2.20) 220i -_

D 2 T.hnAi.J A-..n-.

Rep--- to Ur,gnt T-h.c..l le-u 8,500 t50I (501

N.m Agr.colto*1 Technh.ou 5,100 (301 (30)

Ev.bIh-hmeot & i-beWWhl.o1 Stegofh-n,rg 8,800 1401 1401

of P.t.C,p.ly F.-e Gr-pU (ACE.)

N.e. Ea-feo. Methodolkq 8,500 (50) (50)

G-ndee & F-olry I.-ee 1,700 (101 (10(

'T--ooo' Arr-Noe.-. 10,200 60) (1i0)

Poet Eot-o- P-og,-m 8, b00 140) (40)

Un.l.oceted Aee.el.oce 0 (0) (0)

47, 600 (2t)

Subolelr Tt h-el A....e.-. )St.d. 85,000 (Ej_ _ (5040

TOTAL PROJECT 2,651,660 (21.10711 121.209i

1\ Thee. mo-n w J, celoulrAi <eng he c-rrent -ocf.r rt. of 8. 170/USE US$ Doll.. . u-d br dOe tuccdng y.ee bMct.* of th. elchoge ret. .htrhi ty dIsr.Q p D pt pp5e

t1C

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly ReportTable 4: Disbursement

(US$ Million)

Pl-nned Actual Planned Actual

Bank Fil Semeter Di-bworment par Semmete Diebuwrent per Seester Cumulative Dsbursement CLwnLative Di*bweermnt

Year Ending Amount % of Total Amount % of Total Am ount % of Total Amount % of Total

1996 Jun-96 2.9 7% 2.9 7%

1997 Dec-96 1.2 3% 4.1 11 %Jun-97 1.5 4% 5.6 14%

co

1998 Dec-97 2.3 6% 7.9 20%Jun-98 3.2 8% 11.1 28%

1999 Dec-97 3.6 9% 14.7 38%Jun-98 3.9 10% 18.6 48%

2000 Dec-98 4.5 11 % 23.1 59%Jun-99 5.5 14% 28.6 73%

2001 Dec-99 5.1 13% 33.7 86%Jun-00 5.3 13% 39.00 100%

_>

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

MONITORING AND REPORTING - Quarterly ReportTable 5: Status of World Bank Loan Legal Covenants

Loan Agreement Summary Description Covenant Type Compliance Level Comments

0

Covenant Type Compliance Level

ADT Audit 1. Fully complied

FIN Financial 2. Partly complied

MAN Management and Staffing 3. Not complied

ORG Organizational 4. Not yet due

RPT Reporting 5 Covenant no longer applicable.

ST Studies 6. Compliance date requires revision.

TCH Technical

_ ->

-m X

Q C

- 91 - Annex HPage 1 of 3

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

Project Supervision Plan

1. The proposed operation would establish a decentralized agricultural extensionsystem. New institutions would be established at each level of government - - national, state,and municipal - - and it is anticipated that institutional strengthening would be required ateach level. These institutions would be required to interact with each other on a regularbasis if the project is to succeed. Venezuela has very little experience with decentralizedsystems of this nature and the establishment of such a system represents an implementationchallenge. Consequently, it is expected that the project would require extensive and closesupervision, especially during the initial two years.

2. The supervision calendar for the first two years of the project should include ata minimum three Bank missions per year. A project launch workshop would be heldimmediately after effectiveness, including participation from project agency staff fromCIARA, from state offices, and from municipal implementing agencies. Annual reviewworkshops, attended by the Task Manager from the Bank, would be held to assist the projectagencies to develop a common understanding of the project's overall development objectives,operational procedures, coordination needs and potential implementation problems. AnnualTask Manager input, including supervision missions and work at headquarters, is estimatedto be 13 staff-weeks (SW) per year. Input from other Bank staff and/or consultants wouldtotal to roughly 30 SW over the course of the first two years, the majority from anInstitutional Development Specialist. A list of the supervision missions and annual reviewswhich are anticipated for the first two years of the project (including the number of SWsestimated per mission) follows:

(a) Project Launch Workshop, second quarter 1995. The focus of the activities of thisevent would be upon project concept and implementation, procurement and disburse-ment procedures, the preparation of annual municipal extension plans, and theexperience of the pilot projects. The preparation of a 1995 Annual Operations Plansfor CIARA and for each of the state offices would also be addressed. World Bankparticipants would be:

Task ManagerInstitutional Development SpecialistFlow of Funds Specialist

Total Bank SWs - 9 SW

(b) First Supervision Mission, third quarter 1995. The mission would be a relativelybrief follow-up by the Task Manager, accompanied by accompanied by theinstitutional development specialist, to review project start-up activities and the budget

- 92 - Annex HPage 2 of 3

and work program for 1996. A field trip would be utilized to select twomunicipalities to be visited twice per year by Bank missions.

Thsk ManagerInstitutional Development Specialist

Total Bank SWs - 4 SW

(c) Second Supervision Mission, fourth quarter 1995. A brief follow-up by the ThskManager to identify and address any start-up problems early-on.

Thsk Manager

Total Bank SWs - 2 SW

(d) Third Supervision Mission, first quarter 1996. A full supervision mission wouldfocus on the process of project start-up and any implementation problems which havesurfaced, especially with respect to institution building, the flow of funds, and projectand financial reporting. Mission participants would include:

Thsk ManagerInstitutional Development SpecialistFlow of Funds SpecialistAgriculturalist

Total Bank SWs - 13 SW

(e) Fourth Supervision Mission and first Annual Review, 3rd quarter 1996. Thefocus of the mission would be on undertaking a complete review of projectimplementation, the budget, and work program for 1997.

Thsk ManagerInstitutional Development Specialist

Total Bank SWs - 7 SW

(f) Fifth Supervision Mission, fourth quarter 1996. The mission would be a briefreview of progress under the project, especially current implementation issues, andfinancial reporting for 1996.

Thsk ManagerInstitutional Development Specialist

Total Bank SWs - 4 SW

(g) Sixth Supervision Mission, second quarter 1997. A full supervision mission wouldreview all aspects of project implementation. A field trip would included visits

- 93 - Anniex HPage 3 of 3

entering municipalities as well as to municipalities which participated from thebeginning of the project. A review of the monitoring and evaluation aspect of projectmanagement would be undertaken.

Task ManagerInstitutional Development SpecialistFlow of Funds SpecialistAgriculturalist

Total Bank SWs - 13

3. Based on the above plan, World Bank staff requirements for project supervision forthe first two years of the project would total to 56 Staffweeks.

- 94 - Annex I

VENEZUELA

AGRICULTURAL EXTENSION PROJECT

Documents in the Project File

Selected Bank Reports and Studies

World Bank Report No. 9259-VE. Staff Appraisal Report: Venezuela Agriculture SectorInvestment Project. Loan 3420-VE. November 6, 1991.

World Bank Report No. 9631-VE. Venezuela: Agricultural Research, Extension andEducation. Subsector Review. July 31, 1991.

World Bank Report No. 13000. Agricultural Extension: Lessons Learned from CompletedProjects. OED Special Study, February 1994.

World Bank Discussion Paper; Public and Private Agricultural Extension: Beyond TraditionalFrontiers. No. 236. April 1994.

2. Selected Reports and Studies Related to the Project

FAO/World Bank Cooperative Programme Report No. 16/93 CP-VEN 14. VenezuelaAgricultural Extension and Education Project Preparation Report. February 5, 1993.

Instituto Interamericano de Cooperaci6n para la Agricultura; ISSNO253-4746; PequeflaProducci6n Agrfcola y Pobreza Rural en Venezuela. Luis Llambi, Eliecer G. Arias, andGustavo Bricedo. February 1994.

Fundaci6n para la Capacitaci6n e Investigaci6n Aplicada a la Reforma Agraria(CIARA)/Banco Mundial: Proyecto de Extensi6n Agrfcola; Borrador para Discusi6n, January1994.

3. Working Papers and Tables Prepared by Bank Staff

Project Costs:

a. Cost Tables.b. Project cofinancing matrices.c. Detailed cost assumptions by component provided by local consultants:

(i) municipal extension;(ii) institutional development;(iii) training.

d. List of states and corresponding number of municipalities.

T ,2 1rt1 I.J ~~~~~~~~~~~~~~~V E N E Z U E L A1 2~~~~~

' N$i>\>X NITHERLAMT,NTItLLE v(i3E AGRICULTURAL EXTENSION PROJECTS\0, N< cuev Esparta Irgr(TKILO

LA Tkl~~~~~~~~~~~~1< I DAL)

4@ E on^~~~~~~~~~~~~~~~~~~~~~Sce @MR

@Fg> B~~~~~ar in 15;tl)I

SANSTCT Ay > SAN FERNANt<;A

guesa edes IL IIPH

1 1{ l\

,s, ; D . , T;;.,., ,. ,.'ANA

DE A,PURE15T

I ~f-l I(NEZUEbLA Amazonas

! 7 (! ~~~~~~~~~~~~~~~~~~~~~~0) .. 1 i)' ) \Iw' ')l11t'8, t ilwSt su

; - ~~~~Co)LOl\lRIA

,,' ,,. .d ( BRAZ.