Report No. 1062a-PAK 1li

Pakistan: Appraisal of the Khairpur TileDrainage and Irrigated Farming DevelopmentProject (Khairpur 11)June 14, 1976

Irrigation and Area Development DivisionSouth Asia Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

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

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CURRENCY EQUIVALENTS

The Pakistani Rupee is officially valuedat 9.9 to the US Dollar. The rate belowis used throughout this report, exceptwhere stated to the contrary:

US$1 - Rs 10.00Rs 1 - US$0.10

WEIGHTS AND MEASURES

English/US Units Metric Units

1 foot (ft) = 30.5 centimeters (cm)

1 yard (yd) ' 0.915 meters (m)

1 mile (mi) ' 1.609 kilometers (km)

1 acre (ac) ' 0.405 hectare (ha)

1 square mile (sq mi) - 259 ha

1 cubic ft (cu ft) - 0.028 cubic meters (m3 )

1 cubic yd (cu yd) - 0.765 m3

1 acre-foot (ac-ft) = 1,233 m3

1 cu ft/sec (cusec) - 0.028 m3/sec

i pound (lb) ' 0.454 kilograms (kg)

1 long ton (lg ton) - 1,016 kg (1.016 metric tons)

Pakistani Units English Units Metric Units

1 maund 82.3 lb (.0367 lg ton) - 37.3 kg (.0373 m tons)

26.8 mds - 2,205 lbs - 1.0 m ton

27.2 mds - 1.0 lg ton (2,240 lbs) = 1,016 kg

FOR OFFICIAL USE ONLYPRINCIPAL ABBREVIATIONS AND ACRONYMS USED

AA - Agricultural AssistantADBP - Agricultural Development Bank of PakistanCs - Commercial BankCCA - Cultivable Commanded AreaEADA - Extra-Assistant Director of AgricultureERTS - Earth Resources Technology SatelliteGOP - Government of PakistanGOSind - Government of SindKEFC - Khairpur East Feeder CanalIRDP - Integrated Rural Development ProgramLIP - Lower Indus ProjectNBP - National Bank of PakistanO&M - Operation and MaintenancePCC - Project Coordinating CommitteePLLP - Precision Land Leveling ProjectPIU - Produce Index Unit (reflects the agricultural value

of the land)SASO - Sind Agricultural Supply OrganizationSBP - State Bank of PakistanSCARP - Salinity Control and Reclamation ProjectSDA - Sind Department of AgricultureSI & PD - Sind Irrigation and Power DepartmentSMS - Subject Matter SpecialistWAPDA(SZ) - Water and Power Development Authority (Southern Zone)

GLOSSARY

Atta - Wholemeal wheat flourBrassicas - Oilseed crops of the Brassica familyChak - Area served by a water course from an irrigation outlet

300 ac (average)Deh - Villages and village areasGhani - Village pestle and mortar crushers that work mainly

on Brassica oilseedsHari - Tenant (sharecropper)Kharif - The hot (summer) season (April to September)Patwari - Local official in charge of the water courses;

employed by the SI & PDMarkhaz - An administrative entity for the IRDP

corresponding in the Sind to a talukaPaddy - Threshed unmilled riceRabi - The cool (winter) season (October to March)Taluka - The first subdivision of an administrative

District in the Sind. There are usuallyfive or six talukas in a District. -

Warabandi - Schedule for each water course farmers' irrigation periods

FISCAL YEAR

July 1 to June 30

T7 his document has a restricted distribution and may be used by recipients only in the performanceof their officiall duties. Its contents may not otherwis, be diaclosed without World Bank authorization.

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Page No.

Water Supply, Demand and Quality .... ............ 14Implementation Schedule .......................... 14Cost Estimates .......... ......................... 15Financing . ........................................ 17Procurement and Contracts ........................ 17Disbursements .......... .......................... 18Accounts and Audits .............................. 19

V. ORGANIZATION AND MiANAGEMENT ........................... 19

Project Management ............................... 19Agricultural Supporting Services .... ............. 20Technical Assistance and Training .... ............ 21Operation and Maintenance ........................ 22Cost Recovery ......... ........................... 23

VI. PRODUCTION, MARKET PROSPECTS, PRICES ANDFARM INCOME . ......................................... 25

General . ......................................... 25Crop Calendars and Cropping Patterns .... ......... 25Expected Yields and Production ................... 26Market Prospects ................................. 27Prices . ........................................... 28Farm Incomes ......... ............................ 28

VII. BENEFITS AND JUSTIFICATION ............................ 29

Anticipated Overall Effects ....... ............... 29Crop Production .................................. 30Employment Opportunities ........ ................. 30Household Incomes Effects ............ I ............ 30Economic Rate of Return ......... ................. 31Environmental Impact ........... .................. 32

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS .... ........... 32

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A&NEXES

1. SCARP Khairpur (Khairpur I Project)2. Climatic Data3. Soils and the Need for Drainage4. Agricultural Labor Supply and Demand5. Agricultural Development6. Pruject Works,. quipr,eiit I.isC.~. Agri-luur.;l Credit for Land Levelingi). Waler Supply, Demnand and Quality10. Construction Schedule11. Detailed COSL Estimates12. Schedule of Expenditures, Proposed Credit Allocation and

Schedule of Disbursements13. Agricultural Supporting Services14. C3snsull ing Services15. 'Net Farm Incomes16. Present and Future Cropping Patterns and Production17. Marketing and Prices

18. Economic Analysis

MAPS

11526 -- Project Location11527 -- Khairpur East West Feeder Canal Commands11528 -- Project Area

PAKISTAN

APPRAISAL OFTHE KHAIRPUR TILE DRAINAGE AND

IRRIGXTED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

SUMMARY AND CONCLUSIONS

i. Irrigated agriculture dominates the economy of Pakistan. Itaccounts for about one-third of the GDP, employs nearly two-thirds of thelabor force and is practiced on some 30 million ac. Although it accountsfor over 90% of total agricultural production, aided in the recent past by(a) the introduction of high yielding crop varieties; (b) rise in fertilizeruse, and (c) increases in the number of private tubewells installed, futuregrowth is threatened by increasing waterlogging and salinity of the soils.

ii. The proposed project would explore modes of development in drainageand irrigated agriculture which have not, as yet, been applied in Pakistan.Within the next three years, the project area expects to receive additionalirrigation supplies from reservoir sources, and could receive a larger partof present kharif season flows in the Indus River; yet less than one-fifthof the area is served by adequate drainage installations. The proposedproject would provide a comprehensive package for 44,000 ac (net) consistingof tile drainage for 36,000 ac; increased capacities of canals and water-courses serving the entire 44,000 ac; road and bridge improvements; technicaland financial support to farmers for land leveling, and development of aneffective agricultural extension service employing contact farmers as part-time extension workers in addition to permanent staff. The project wouldprovide aerial photography (costing about US$1.0 million) of the whole IndusBasin (about 65,000 sq mi) for planning irrigation, reclamation and agricul-tural development. It would also provide earth satellite imagery interpret-ation and mapping of saline areas on an experimental basis (costing US$100,000)which, if successful, could be an important tool for land reclamation andwater resources planning for Pakistan.

iii. The Water and Power Development Authority (WAPDA), Southern Zone, a Federal

Government agency, would be responsible for construction of the civil works,

procurement of construction equipment and the preparation of aerial photographsand use of the earth satellite inagery, project implementation other than

land leveling, farm planning and agricultural supporting services. The SCARP

Khiairour Agriculture Wing of the Sind Irrigation and Power Department would

provide improved agricultural supportinig services including technical assist-

ance for land leveling and farm planning. The GOP would provide funds

through the State Bank of Pakistan for on-lending through commercial banks

to farmers for land leveling work and to farmer-contractors for purchasing

land leveling tractors and equipment. A Project Coordinating Committee (PCC)

would include representatives from all the agencies responsible for the

various aspects of project implementation, provision of agricultural

supporting services and farm credit and subsequent operation of project

works. The WAPDA would engage consultants to assist in engineering design,

procurement, construction supervision, and agricultural extension services.

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iv. Tne project cost, net of taxes and duties and including the costsoL air photography and ERTS surveys, would be about US$28 million equivalent,including US$14 million in foreign exchange and US$14 million equivalent inlocal currency. Contracts for supply of vehicles, equipment, and importedmaterials amounting to about US$9.0 million (including contingency) would beawarded after international competitive bidding in accordance with the Bank'sGuidelines. Civil works with an estimated total cost of about US$10.0 mil-lion (including contingencies) would be carried out by WAPDA force accountbecause tne drain construction would pass through farmers' fields and must bephased with the farmers' cropping schedules; alternative construction methodswould be tested, and tile design spacings and depths would be subject tocnange during construction. Project implementation would take five yearsincluding one year of final design, mobilization and equipment procurement.

v. The main project benefit would come from threefold increases inannual production of grain, cotton, and dates, and a six-fold increase inannual sugar production over the ensuing ten-year development period. Of the7,400 families in the project area, about 6,300 would benefit. Taking accountof projected improvements in relative prices of agricultural products andinputs, the incomes of the 5,000 farm and tenant families would increase fiveto six times and employment opportunities, largely for the 1,300 landlessfamilies in the area, would double. About 70% of the projected increase infarm incomes would result from production increases due to the project. AtIBRD World Market price projections, GOP would eventually realize additionalcombined net annual foreign exchange earnings and savings of about US$5.8million; the project's economic rate of return would be about 17%. Moreover,the technical advances gained in this effort would have a far reaching impactin that they could be replicated over one million ac in Sind and over severalmillion ac in the whole of Pakistan where drainage by tubewells is notpractical.

vi. The proposed project is suitable for an IDA credit of US$14 million;wnich would contribute about 50% of the total project costs. The creditwould finance all foreign exchange costs. The Borrower would be the IslamicRepublic of Pakistan.

PAKISTAN

APPRAISAL OFIAHE KsAIRPUR TilE DiAINAGE AND

IRRIGATED FARMING DEVELOPMENiT PROJECT (KHAIRPUR II)

I. I&'TRODUCTION

I.J1 ine Government of Pakistan (COP) has requested an IDA credit ofUS$16 million to assist financing the construction of the Khairpur TileDrainage aad Irrigated Farming Development Project (Khairpur II), in theProvince of bind (.ap 11526). Tihis would be the second IDA credit assist-in, tne GOP's program for control of waterlogging and salinity in irrigatedareas and tne first IDA credit in Pakistan for norizontal sub-surface drain-ale. In addition to the Indus Basin and Tarbela projects, the bank Groupinas previously assisted in financin6 two irrigation, drainage and floodprotection projects in Pakistan, as well as four other agricultural sectorprojects.

1.02 Thiis project forms part of plans presented in the 1966 Lower IndusReport and in the 1967 Indus Special Study Report. The project planningreport was prepared in 1971 for the Pakistan Water and Power DevelopmentAuthority (WAPDA) by a joint venture of consulting engineers -- HuntingTechnical Services and Sir M. MacDonald and Partners of the United Kingdom.

1.03 This report is based on the findings of an appraisal mission com-prising ivMessrs. C.M. Bolt, L.D. Hunting, A. Seager, M. Fireman and C.P.R.Nottidge (IDA), and J.C. Cavelaars (Consultant), who visited Pakistan inNovember 1974, and R. Floto and H. Vieilhescaze (Consultants) who visitedPakistan in August, 1975.

[I. BACKGROUND

General

2.1 Pakistan covers about 197 million ac, of which about 47 millionac (24%) are cultivated. Of tne cultivated area, about 30 million ac (64%)are irrigated annually. The population, which was about 70 million in 1974,is expanding at the rate of 3.3%' a year. National income, after averagingmore than 6b annual growth between 1960 and 1970, increased by only 3.3%annually auring the past four years. As a result, growth in per capitaincome is almost static at the current level of about US$120.

The _ conomy

2.02 The GOP's program for development over the next five years aimsto acriieve an ambitious rate of economic growth by increasing crop production

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and exports and mobilizing domestic resources. 1/ The targeted growth inagricultural production would furnish about half of the requisite increasein exports and eliminate the need for wheat imports. In the past few years,regulated agricultural procurement and support prices provided low producerincentives, limited purchases of crop inputs such as fertilizers, and dis-torted commodity supply/demand relationships. Projected growth would requirea significant increase in producer prices and improvements in crop-inputprice ratios as well as increases in water supply and drainage investments.During the past year, the Government has already taken steps to reduce sub-sidies and pass higher commodity prices on to the consumer. Nevertheless,in view of the current economic and political circumstances, the developmenttargets for 1981 appear ambitious.

2.03 In 1973/74, the agriculture sector accounted for 36% of thenational income, 58% of the population employment, and 56,' of the nation'sforeign exchange earnings. Cotton and cotton manufactures account for about35% of exports; rice for about 20%. The country is nearly self-sufficientin sugar, and is aiming to become self-sufficient in wheat. In recentyears, however, Pakistan has imported annually close to half a million tonsof foodgrain net of rice exports, or between 4% and 8% of total annualconsumption.

Agriculture in the Indus Basin

2.04 Beginning in the 1870s, barrages were constructed on the major Industributaries in the Punjab, and more recently on the Indus itself, enablingdiversion of water throughout the year. The Indus Basin now is irrigated bya canal system with one of the largest culturable commanded areas (CCA) inthe world. In 1973/74 the cropped areas, yields, and production of majorcrops in the Basin were as follows:

wheat rice (milled) cotton (lint) sugarcane

cropped area (M ac) 15.1 3.7 4.6 1.5

production (M lg tons) 7.5 2.4 .63 22.7

yield (lg tons/ac) .50 .65 .14 14.3

2.05 With the commissioning of Tarbela Dam, 9.3 M ac-ft of water storagecapacity will be available to augment the roughly 28 M ac-ft already divertedin the rabi season into the canal system. Moreover, additional portions ofthe Indus flows during the kharif season which are now discharged wastefullyinto the sea can be utilized by means of canal capacity enlargement.

2.06 The construction of the barrages and canal distribution systems wasnot accompanied by the installation of adequate drainage systems. Over the

1/ IBRD. Economic Report for Pakistan, Recent Trends and DevelopmentProspects, Februarv 28, 1976. Report No. 1023-PAK.

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last 100 years of irrigation, the groundwater table has persistently risencausing waterlogging. Where it has risen within six feet of the groundlevel, saline moisture is being drawn by capillary action into the topsoil,evaporating and depositing soluble salts in the crop root zone. Since withpresent supplies only about half the land can be irrigated in aseason, salinity has become pronounced in fields where farmers have appliedinsufficient water for leaching to increase their irrigated area. Salinityhas also increased in adjacent fields, left fallow for prolonged periods.Based on groundwater surveys, the extent of waterlogging and salinity inthe canal irrigated areas in the Indus Basin are estimated as follows:

Puijab SindM ac % of CCA M ac % of CCA

WaterloggingSevere (Water Table 0 to 5 ft) 2.6 10 3.9 30Moderate (Water Table 5 to 10 ft) 5.2 20 5.2 40

Total affected by water-logging7.8 30 9.1 70

SalinitvSevere 2.6 10 6.5 50Slight to moderate 7.8 30 2.6 20

Total affected by salinity 10.4 40 9.1 70

2.07 Under GOP's large-scale Salinity Control and Reclamation Projects(SCARPs), WAPDA has installed 7,500 tubewells in over three million acres.Individual farmers have installed over 100,000 smaller irrigation tubewellswhich also contribute to controlling the water table. This method of watertable control serves a dual purpose in exploiting the fresh groundwaterresource for reclamation of saline soils and as a supplement to surfacewater irrigation. In saline groundwater areas, however, where the wellsmust discharge into disposal drains, benefits are limited to the stabilizationof soil productivity unless additional canal water is provided for reclamationof tLie salinized soils and to increase the supply for cultivation. Moreover,tubewell drainage is limited to areas where the subsurface soil formationspermit installation and efficient operation of the wells.

Project Formulation

2.08 Over large areas in Pakistan, including more than one millionacres in Sind, the groundwater aquifers Aave poor discharge or otheradverse characteristics which make then~ unsuitable for tubewell opera-tion. The Khairpur II project is located in such an area, where theaquifer is underlain by bedrock at such a shallow depth that no tube-wells could be installed. The most appropriate method of drainage avail-able for these areas is with buried tile drains. The alternative-of deepopen drains would be less appropriate because they would take up large

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acrea6es of farm land ana would cut across establishied road and tertiarycanal systems.

dn 1`)bS, tne Kilairpur 11 project, adjacent to the SCARP KhairpurtA~ir.x 1 au Mip ~1 527), was selec.ei by *%PDA as a prototype Lo assess theconstruction tecnniques, installation and operatinig costs and effectivenlessof tile drainage. In 1969/70, the Bank's Indus Basin Review Mllission recom-mendad that the project should have aigh priority. Thle project was also:ecomniended in tie Federal Plannin6 Commission's "Proposals for an Accelera-Led Program of v4aterlo6ging and Salinity Control" published in 1973. Part

0 f t,ie project area is already severely waterlogged and critically in needof draina 6 e. In audition, within the next three years the area expects toreceive additional irrigation supplies from Tarbela and Chasma reservoirsources which would accelerate waterlogging in the remaining area and preventfull utilization of t.1e irri6ation supplies. In view of the importance intae uevelopment Plan GOP rightly accords to tne SCARP program, this projectdeserves high priority.

2.10 Canal capacities in the project area were designed to serveund:ained areas. If they are remodeled, they could usefully convey a greater

proportion of the kharif flows from the Indus, which are now wasted. There-fore.canal capacity enlargement, along with drainage, would enable the poten-tial of the project area to be more fully exploited. The portion of the

SCARP Khairpur Tubewell area served by the distributary to be remodeled forthe tile drained area would be included in the project.

II. THE PROJECT AREA

GCeneral

3.01 The project area is about 44,000 ac, about 2S mi in length, andabout 3 mi wide. It extends from Rohri town to Kot Diji, and from theboundary of SCARP Khairpur eastward to the limit of the canal command areanear the limestone Rohri Hills (Map 11528). Of the total area, 36,000 ac(Area A) are currently not drained. The remaining 8,000 ac (Area B) aredrained by tubewells of SCARP Khairpur (Annex 1), and are irrigated by minorcanals supplied by the Patni Distributary which would be remodeled. OfArea A to be drained, about 10,000 ac are already severely waterlogged andare critically in need of drainage, and 26,000 ac would require drainageto be installed within three years after canal supplies to the project areaare increased. The project area is divided into two administrative Districts,3 sub-districts (talukas) and 23 village areas (dehs).

Climate

3.02 The extremely arid, hot, continental desert climate of the projectarea is characterized by two main seasons, rabi and kharif (Annex 2). The

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cool rabi season between October and March, is characterized by light north-east winds, cloudless skies, low humidity (average 54%), low evaporation (3to 6 inches per month), and no rain. The average monthly temperatures rangefrom about 75°F in October to 68°F in December through January, when nighttemperatures may drop below the freezing point. Wheat, the season's main crop,must be sown by the end of November to prevent yields from being depressedby the high April temperatures. The hot kharif season, between April andSeptember, is characterized by an average humidity of 77%, evaporation from8 to 10 inches per month, and rainfall averaging 2.5 inches (falling mainlyin July and August). Average temperatures range between 90°F and 110°F. Thehighest shade temperature in an inhabited area of the subcontinent, 1270F,has been recorded within 60 mi of the project area. The high temperaturescause the delay in flowering of cotton until September which in turn delaysthe completion of picking until early December, making it too late in mostcases to follow with wheat.

Topography and Soils

3.03 The land surface is gently undulating with average slopes to thewest and south of about 1:5,000 (Annex 3). Since the land has been underirrigation for over 40 years, a considerable amount of coarse leveling hasbeen done. However, fine leveling is needed in much of the area to enableefficient use of water and to control salinity. Soils are mainly derivedfrom river alluvium and are suitable for growing almost any crop. In some4,500 ac adjacent to the limestone hills, the soils are mostly shallow,and consist of gravelly colluvium. All the soils are calcareous, and areslightly-to-moderately alkaline, and some contain gypsum. Organic matterand nitrogen contents are low, phosphate is moderate and potash is adequate.Infiltration and permeability rates are generally satisfactory for bothirrigation and drainage.

Existing Irrigation Facilities

3.04 The project area is supplied with water from the Sukkur Barrageby the perennial Khairpur East Feeder Canal (KEFC) and its distributarycanals 1/ (Maps 11527 and 11528). The northern part of the project area(34,000 ac) is served by the Patni Distributary Canal which originates about2 mi from the KEFC headworks. The southern part (10,000 ac) is suppliedby the lower reaches of the Sathio Wah and the Mir Wah distributarieswhich are extensions of the KEFC. The designed discharge of the KEFC wasoriginally 2,000 cusecs, but now carries about 3,400 cusecs for shortperiods. 2/ The Patni Distributary, which is nominally non-perennial, has

1/ A perennial canal has priority for year-round supplies and is usuallyclosed for maintenance only.

2/ Canals in the Khairpur area were originally designed for a water dutyof about 3 cusecs per 1,000 ac Cultivable Commanded Area (CCA). TheKEFC carrying capacity has been increased by scouring of the canal bed.The canal can now carry 3,400 cusecs but only for short periods inorder not to cause more scouring.

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a capacity of 200 cusecs. 1/ This canal has nevertheless been receivingsupplies fairly regularly into December, which has encouraged rabi plantings,but supplies in the Indus River are not adequate throughout the season toachieve normal yield levels. The Mir Wah and Sathio W1ah are fully perennial.All the canals are unlined.

3.05 Watercourses distribute water from canal offtakes to groups ofholdings totalling on the average about 300 ac (about 30 farmers). TheIrrigation Department manages the fixed discharge outlet which suppliesthe watercourse. The Department is responsible for the annual water alloca-tion and employs a local official, the patwari, at each watercourse, tooversee individual allocations. Each holding has a water right based onacreage, and every year individual landholders apply for water allocation,giving their cultivation plans for authorized crops. The farmers on eachwatercourse, usually led by the largest or most senior landholder, provideadequate maintenance by periodic clearing of siltation and choking by weeds.

Waterlogging and Salinity

3.06 In the project area, the saline groundwater table has been risingabout six inches per year since the Sukkur Barrage was completed in 1932(Annex 3). In much of the southern part of the project area, where wateris supplied throughout the year, the water table is already within aboutfour feet of tne surface and soil salinity is visible in many fields. Inthe northern part, in the Patni Canal command which is usually short ofwater in rabi, the rise has been less rapid. Nevertheless, salinizationhas also been severe as a result of continuous under-irrigation (para 2.06).Fortunately, complete reclamation of most of the salinized soil is possible,simply by an initial water application sufficient to leach down the salts,given leveled land, adequate water supply, and the means to remove thesaline effluent. However, signficant increases in crop yields can besustained only if water is regularly available for adequate, timely irrigationand periodic leaching of incoming salts. Provision of additional suppliesunder the project would include an allowance for periodic leaching (para 4.17).

Population

3.07 The rural population of the project area is about 45,000 (Annex 4).Since towns are adjacent but exterior to the project area, 85% of this popu-lation comprise farm owners (49%), tenants (19%) and landless farm workers(17%), as shown below:

1/ A non-perennial canal usually receives supplies only in the kharifseason; it is closed in rabi except when occasional rises in riverflow enable deliveries of water to be made.

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Agricultural Population 38,400

No. of FamiliesLandowners 3,600Tenants 1,400Landless 1,300

Total 6,300

Average Family Size 6.1

Farm Size and Land Tenure

3.08 The average size holding in the project area is about 10 ac, butfarms range from under 5 ac to over 500 ac. Records show the followingdistribution of landholdings:

Number of Area ofdoldings Holdings

(As % of Total)-------

Less than 7 ac 45 187 to 25 ac 49 52Over 25 ac 6 30

Nearly half are less than 7 ac which is generally the smallest unit capableof supporting a family without substantial additional earnings from off-farmemployment.

3.09 The greater parts of the large farms are sharecropped by tenants(haris), usually in units of 10 to 15 ac each, determined by the number ofbullocks owned. The land reforms of 1958 and 1972 have achieved only limitedland redistribution, since land titles were often simply redistributedamong members of the same family. Nevertheless, legislation formalizinglandlord and tenant arrangements and preserving some tenant rights between 1948and 1972 have introduced a degree of balance into the relationship. At present,the tenant's share is one-half to two-thirds of the crop, for which he providesall production labor and seed, pays half the cost of fertilizers, pays anytractor rental charges, and contributes his labor to the upkeep of watercourses.The landlord pays taxes and water charges, pays half the costs of fertilizers,and provides housing. He often finances his tenants until harvest, marketstheir cash crops, and may also provide the tenants' children with basic edu-cation. The landlord's leadership role is considered to have been an importantfactor in the rapid spread of the "green revolution". He provided credit whereinstitutional credit was not available because of tenants' lack of fixed assetsand he frequently instructed tenants in the use of inputs and technologyand choice of crops. However, by controlling the marketing of tenants' cashcrops by purchasing at harvest or on advance pledge and selling in a morefavorable market, he has usually retained a large part of the margin on histenants' produce and many tenants have remained in a state of indebtedness.

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Agricultural Development

3.10 The project lies within one of Pakistan's important areas for cotton

and grain production. 1/ In addition, Khairpur is rapidly overtaking theMekhran Coast as Pakistan's most important area for producing high qualitydates. Since 1962, five sugar mills have begun operations in Sind and two

more are planned, one near the project area where there is none at present.Production of Brassica oilseeds, a traditional crop of potential importanceto Pakistan, has, however, not grown in relation to demand because in years

of pest attack yields go down dramatically due to the lack of a good pest

control service (Annex 5).

3.11 During kharif, cotton, rice, sorghum, fodder and pulses cover about19,900 ac or 45% of the project area, while in rabi, wheat, fodder, oilseedsand pulses are grown on about 15,600 ac or about 35% of the project area.Perennial date orchards (1,540 ac) and sugarcane (126 ac) cover about 4%. The

rice area which in 1930 was only 4% has increased to 12% at present because

where the soil has become salinized farmers have replaced cotton with paddywhich is more adaptable to the soil conditions.

Agricultural Supporting Services

3.12 The SCARP Khairpur area (about 410,000 ac) has 69 cooperativecredit societies, with a total membership of about 6,000 farmers. Thesocieties are short of capital as the central cooperative bank no longerexists, and credit from the Agricultural Development Bank of Pakistan (ADBP)is limited by repayments and internal capital generation. Only aboutRs 200,000 in short-term, and less than Rs 100,000 in long-term credit were

available to project area farmers in 1973/74. Nevertheless, fertilizer saleshave been increasing until that year at above average rates for the lastseveral years, indicating that seasonal financing is available from otherthan institutional sources.

3.13 Project area production is being marketed in the adjoining townsof Kot Diji (population 10,000), Khairpur (15,000), Rohri (30,000) and Sukkur(150,000). Sukkur is an important road and rail junction for trade betweenBaluchistan, northern Sind and southern Punjab and, therefore is an active

center for wholesale and commission agents for all regional market commodities.Commercial storage facilities would be able to handle the future increasein production from the project area. Cotton gins in Khairpur and Sukkur serve

a large area and are able to take in the extra production from the project

area. At present, textile mills in Sukkur and Khairpur import lint from

other area3. There are many village flour mills and in Sukkur one largeroller mill.

3.14 Since 1972, extension support for the northern part of the projectarea (in Rohri Taluka) has been administered by the Extra-Assistant Director

1/ In 1973/74, out of national production the Sind contributed 50% of therice, 18% of the cotton, 15% of the wheat and 13% of the sugarcane.

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of Agriculture (EADA) in Sukkur and for the southern part by SCARP KhairpurAgricultural Wing. Research support and the demonstration of good crophusbandry practices are more evident in the southern part of the area. Staffhave the necessary knowledge to increase yields in areas not affected bywaterlogging and salinity. Lack of effective methods and work schedules andshortage of reliable transport, however, limit their effectiveness.

IV. THE PROJECT

Project Description

4.01 The proposed project would install tile drainage as a means ofwater table and soil salinity control in Area A (para 3.01 and Map 11528).Canals supplying both Areas A and B would be enlarged to provide water forpeak kharif irrigation requirements and for reclamation by leaching. Localroads would be improved and credit facilities for land leveling would beprovided. The agricultural extension service in the project area would beimproved. The project also would provide earth satellite imagery inter-pretation and mapping on an experimental basis for possible application to asalinity survey of the Indus Basin.

Project Works

4.02 The main components of the project would be as follows:

(a) Installation of a subsurface tile drainage system andsurface disposal drains throughout 36,000 ac of Area A;this would include about 1,600 mi of buried tile andcollector drains, 130 small pump stations and 45 mi ofsurface drains;

(b) The enlargement and remodeling of irrigation canalsand structures, and the reconstruction of irrigationoutlets serving 44,000 ac; this would include about 9 miof distributary canals, 50 mi of minor canals, and170 irrigation outlets;

(c) The construction of about 200 mi of new watercoursesand the rehabilitation of some 70 mi of existing water-courses and associated structures;

(d) The construction of wider and improved carriagewaysurfaces, and the strengthening of bridges on 20 miof minor roads in Area A;

(e) On-farm development work comprising provision of long-termagricultural credit to farmers for land leveling and tocontractors for purchase of land leveling equipment foruse in the project area;

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(f) Reorganized and intensified agricultural extensionservices;

(g) The provision of equipment, vehicles, materials andsupplies necessary for the construction and O&M ofproject works, for land leveling, and for agriculturesupporting services, and spare parts for tubewellinstallations in Area B and in the remainder ofSCARP Khairpur;

(h) The engagement of consultants to assist WAPDA in detaileddesign of project works, supervising construction, andpreparing 0 & M manuals; and to assist the IrrigationDepartment's SCARP Khairpur Agriculture Wing indeveloping extension services and in monitoringbenefits in the project area;

(i) The preparation of aerial photographs for thewhole Indus Basin (about 65,000 sq mi) for usein planning water resources development in thebasin and specialized maps based on data transmit-ted from Earth Resources Technology Satellites(ERTS) of certain areas within the Indus Basin,as a pilot study for assessing and measuring areasaffected by varying degrees of soil salinizationand waterlogging.

Details of the major works are outlined below and described in Annex 6.

4.03 Tile Drainage System. Subsurface drainage for the 36,000 ac ofarea A would comprise buried pipes discharging into collector drains andsumps from where the effluent would be pumped into open disposal channels. The

system would be designed so that within 2 to 3 days after each irrigationthe water table would be drawn down below the crop root zone. Parallellateral drains spaced 150 to 300 ft apart and laid at depths of 5 to 6.5feet would discharge into collector drains laid 7 to 9.5 feet deep. Thecollector drains would discharge into 10 ft deep sumps, each serving adrainage unit of about 270 ac. About 130 drainage units, each with a smallpump station, about 1,450 mi of lateral drains and 130 mi of collectors wouldbe installed. A total of about 60 mi of power transmission lines would sup-ply the pump station. The open disposal channels, in total about 45 mi,would discharge into a major drain of the adjacent SCARP Khairpur system,which has ample capacity to carry the additional effluent from the projectinto the Rohri canal for dilution and re-use downstream.

4.04 Preliminary designs for such a system were prepared in 1971 byWAPDA's consultants in sufficient detail to estimate the quantities of work.Tne preliminary layout was based, however, on a reconnaissance soil survey.Further field work and mapping to detailed grade (one boring in 40 ac or less)would be needed before final designs could be made. It has been agreed that

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a condition of credit effectiveness would be the appointment of consultantswith experience in tile drainage, irrigation, agricultural extension, andsatellite imagery interpretation, on terms and conditions satisfactory toIDA (paras 5.13-5.14).

4.05 Various methods of construction would be used to determine theireffectiveness, cost and speed under local conditions. Disturbance of farm-ing activities would be minimized. Where site conditions permit, labor-intensive methods and costs would be compared with much faster machine-intensive alternatives on an appropriate scale. Preliminary field surveysindicate that most of the drains would have to be laid below the existingwater table and that, in much of the area, the saturated soil tends toslough severely when excavated. Where these adverse conditions occur, theinstallation of lateral and collector drains by manual labor would requirethat the water table be lowered temporarily along the drain alignment, usingwellpoint equipment, before excavating the trench and laying the pipes.This procedure would be slow and, because of the simultaneous operation ofwell-point equipment, would be relatively costly and without advantage overa fully mechanical method. For the most part, therefore, the subsurfacedrainage works would be constructed without dewatering by machines whichhave been developed for this purpose and successfully used under similarconditions in Europe and the USA. Laterals installed by this method wouldconsist of continuous 4-inch corrugated, perforated plastic pipe, locallymade, providing advantages in reduced transportation,weight, breakages and installation time. Other lateral drains could beconstructed with 4-inch diameter concrete pipes using entirely local ma-terials, and which would be used under the project for the first time inPakistan. The collector drains would consist of 12-inch and larger concretepipe, installed in sections manually using a heavy-duty machine excavatingthe trench below water table, with a protective steel box attached and loweredto drain depth for the pipe layer.

4.06 The project would procure all necessary equipment and vehicles forinstalling the drainage system (Annex 7). Large quantities of fine aggregatefor filter material and concrete pipes would be produced by WAPDA (SZ) fromlocal gravel and limestone deposits. Suitable plastic and concrete pipes areproduced in existing Pakistani plants. Sulfate-resistant cement is producedlocally in Government-controlled plants at Rohri. It has been agreed by GOP thatsulfate-resistant cement, to improve durability of concrete pipes in gypsiferoussoils, would be made available to WAPDA in sufficient quantities, as and whenrequired, to meet project requirements.

4.07 The construction of drainage works and power transmission lines,and the procurement of pumps would be phased so that the disposal channelsand pump station serving each drainage catchment unit would be operationalbefore starting construction of the unit's collector drains and laterals.It has been agreed by GOP that the power supply for each pump station wouldbe supplied in phase with project construction schedule and requirements.

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4.08 Canal Remodeling. The canal capacities within the project areawould be raised to about 10 cusecs per 1,000 ac CCA to deliver peak kharifwater requirements. The capacity of the Patni Distributary would beincreased from 200 cusecs to 380 cusecs. About 50 mi of minor canals wouldbe enlarged, and the size and location of many of the irrigation outletswould be resurveyed and modified to improve the distribution of supplies.

4.09 In 1971, WAPDA's consultants prepared preliminary designs forincreasing the capacity and efficiency of the canal system, and these areadequate for cost estimation purposes. After updating the field surveydata, the final designs would be made by WAPDA (SZ) in collaboration withSind Irrigation and Power Department (SI&PD) assisted by consultants.

-4.l0 The canal systems would be remodeled and control structuresrebuilt so that the range of flows required by seasonal variations in waterdemnand could be carried without causing scour or siltation. The reraodelingof the Patni Distributary to a dual canal system would require a combinationof manual labor and mechanical earth-moving and compaction equipment. Theconstruction of new minor canals and the enlargement of existing minorswould be carried out by manual labor and small, imported equipment. Existingirrigation supplies would be maintained during the construction period.

4.11 Simultaneously with canal remodeling, the layout and capacity ofwatercourses would be modified where necessary, to provide water at a ratetnat farmers can control efficiently: no more than about 1.5 cusecs. Toachieve this, WAPDA (SZ) would adjust the area commanded by each watercourse.This would entail relocating irrigation outlets and constructing about 200new watercourses. Minor adjustments in some field boundaries would be desirableto enable construction or realignment of watercourses to minimum length, soas to reduce seepage losses and maintenance costs. The WAPDA (SZ) wouldprovide improved field outlets to each holding. Construction would be bymanual labor under WAPDA (SZ) force account.

Other Project Components

4.12 On-Farm Development. Leveling has been shown to increase yieldsunder normal soil conditions and to improve the conditions for leaching ofsalts and prevention of partial salinization due to uneven irrigation.Farmers have been gradually working towards creating level fields. Progress,however, has been slow; much time and energy have been lost by working ona trial-and-error basis, and field layout planning has been minimal. Tomaximize early benefits from this project, farmers would be encouraged to

level their holdings during the implementation period by hiring equipmentfrom local contractors and the SDA and obtaining technical assistance fromSCARP Khairpur Agricultural Wing staff. In addition to land leveling,farmers where necessary would reclaim land with special leaching applicationsand adjust field boundaries. Most of the farm land in the project area needsfine leveling and about 8,000 ac of culturable waste needs considerableearth moving requiring relatively heavy equipment (Annex 8). At presentprices, the total cost of this work, excluding farmers' own work, isestimated to be Rs 34 million, including about Rs 6 million for leveling

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equipment for contractors and Rs 3 million for the heavier equipment to beoperated by the SDA Engineering Wing at Khairpur. The project would providefunds for importing the heavy equipment (US$0.3 million) and for assistingprovision of agricultural loans to local contractors and to farmers (para4.14).

4.13 The GOP recently introduced a Precision Land Leveling Project (PLLP),operated by a special section of the Sind Department of Agriculture (SDA),under which the GOSind provides farmers with technical assistance and a grantof 50X0 of the standard cost of leveling for up to 10 ac of an individual'saolding. Authorized technicians assist farmers in field layout, set levelingstakes, and certify completion of the work, enabling farmers to apply for thegrant. At present, PLLP is training technicians for assignment in Sind andthis training would be available for agricultural extension staff in theproject area. In the near future, PLLP is expected to provide primarilytechnical service and the subsidy component may become negligible.

4.14 Credit for Land Leveling. To assist farmers in financing levelingwork for which PLLP grants are not available (para 4.13), the project wouldprovide funds through the State Bank of Pakistan (SBP) for on-lending throughcommercial banks (CBs) (Annex 8). Farmers holding up to 64 ac would be ex-pected to make a downpayment contribution in cash or kind of 10% of the totalcosts of land leveling as estimated by qualified PLLP staff. Larger farmerswould be required to provide a minimum downpayment of 15%. Farmers wouldneed loans amounting to about Rs 20 million. Of this, the IDA credit wouldcontribute half, covering most of the farmers' hired labor and operatingcosts. Where fine leveling only is required, loans would be for a maximumof five years with a one-year grace period. In cases where heavy earthmovingand reclamation are required, loans would be for a maximum of eight yearswith a two year grace period. The CBs would also provide adequate seasonalcredit to maximize the return on farm investment. In addition, the projectwould encourage the development of small contracting firms by providing fundsthrough the SBP for CB credits to large farmers experienced with farmnachinery and to other private contractors in the locality for purchase ofadditional farm tractors now in extremely short supply in the area. Long-term loans to contractors would cover the costs of leveling equipment andwould amount to Rs 6 million. Credit terms and conditions, covering on-lending from GOP through SBP and CBs to farmers and contractors are set outin Annex 8. Any of the CBs approved by SBP for these purposes would beacceptable to IDA.

4.15 Miscellaneous Works and Equipment. The WAPDA (SZ) would strengthencanal bridges and culverts and improve some roads to provide for projectconstruction traffic and later for farm traffic, and would build offices,stores and housing for the project's agricultural and engineering 0 & Mstaff. The SCARP Khairpur Agricultural Wing under SI & PD would importvehicles and equipment for extension activities and tubewell spare partscosting about US$0.2 million to fill a backlog accumulated over the pastfew years due to a shortage of foreign exchange. This shortage has resultedin a reduction in routine well maintenance and failure of about 25 wells,some in the project area (Annex 1).

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4.16 Air Photography and ERTS Imagery. The UNDP has provided financialassistance for the master planning and revised action program for waterresources development in the Indus Basin. To provide a reliable data basefor this work, GOP has requested assistance in providing air photo coverageof the whole basin and Baluchistan (about 65,000 sq mi). The aerial photo-graphs would also be of great use for planning other future Bank Groupprojects such as highways, transmission lines, gas lines and rural developmentas well as for the preparation of topographic maps. The project would alsoprovide for the analysis and interpretation of imageries taken from EarthResources Technology Satellite (ERTS) of an area of 10,000 sq mi to identifyand assess the varying degrees of soil salinity.

Water Supply, Demand and Quality

4.17 The project area would continue to be served by the KEFC, the pre-sent maximum discharge of which would be increased for short periods by about200 cusecs to 3,600 cusecs sufficient to meet the kharif cropping requirementsincluding allowance for annual leaching. The volume of water suppliedannually in the project area would rise from the present 140,000 ac-ft toabout 270,000 ac-ft at full development. Of the 130,000 ac-ft annual in-crease, 60,000 ac-ft would be required in the kharif, when plentiful suppliesare available in the Indus. Most of the incremental rabi demand of 70,000ac-ft would have to be supplied from Sind's share of releases from Chasmaand Tarbela. An assurance has been obtained from GOSind that the above mentioned

water supply increases for the project area would be allotted upon completion of canalremodelling and that the Patni Distributary would be redesignated as a perennial canalso as to carry water supplies in the rabi as well as in the kharif (Annex 9).

4.18 At Sukkur, Indus water quality is good throughout the year. Riverwater can be used for continuous irrigation without detriment to the soil ifdrainage is provided. The quality of tile drainage effluent would graduallyimprove and would be monitored to determine wnen it can be reused for irri-gation.

Implementation Schedule

4.19 Project implementation would be completed in five years. Drainageconstruction and canal remodeling would take four years (Annex 10). Water-course improvement and land leveling would be substantially completed in thatperiod. The drain-laying machines and project equipment would be deliveredabout 12 months after the start of the project. During this time, consultantswould be appointed, surveys and detailed designs carried out, roads improved,lands and rights-of-way acquired. An agreement has been obtained from GOSindthat it would undertake to complete in phase with the implementation schedulethe acquisition of the construction rights-of-way for the drainage systemand canal remodeling.

4.20 Remodeling of the Kalhori minor canal serving most of Area B whichis already drained would be given priority and phased so that enhanced sup-plies would be delivered to new or improved watercourses in its command assoon as possible. In Area A increased irrigation deliveries in each drainagecatchment unit would follow as soon as possible after the installation of

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lateral drains and completion of the new or improved watercourses. In eacharea, after additional irrigation supplies are delivered the agriculturalextension service would begin intensive activity.

4.21 Comprehensive schedules for construction, implementation activities,and budget requirements would need to be prepared annually by all concernedagencies for review and coordination by WAPDA (SZ). Assurances have beenobtained from GOP that the WAPDA (SZ) General Manager would prepare an annualimplementation schedule for the project, supported by maps and descriptionsof activities, together with budgetary estimates required for the upcomingfinancial year, for dispatch to IDA by December 31 of each year.

Cost Estimates

4.22 Total project costs (including aerial photography and ERTS surveys)are about US$28 million equivalent (net of duties and taxes), of which theforeign exchange component would be US$14 million or 50% of the total. Theaerial photography and ERTS surveys would cost US$1.0 million, all in foreignexchange. The tile drainage machinery and installation cost estimates arebased on recent costs for similar works in Egypt, Europe and North America,since there is no local precedent. Physical contingencies amount to 11% ofthe basic project cost. These allow for design changes, delays and logisticaldifficulties which may occur before completion but which cannot be moreaccurately assessed until field experience has been obtained under the actualconditions found in Pakistan. The costs are estimated using price levelsprevailing in December 1975. They are detailed in Annex 11. Expectedprice increases for equipment and consultants costs fall from 9% in thefirst year to 7% in the fifth year and for civil works and local costs from13% in the first year to 10% in the fifth year (Annex 12, Table 4). Theestimates are summarized below:

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Cost Estimates

Item Local Foreign Total Local Foreign Total % of… Rs million ---- ------US$ million---- Total

I. Land Aguisition 2.0 0.0 2.0 0.2 0.0 0.2II. Civil Works:

Drainage system 33.0 11.0 44.0 3.3 1.1 4.4Canal remodeling 4.1 1.4 5.5 0.4 0.1 0.5Watercourse re-construction 5.4 1.8 7.2 0.5 0.2 0.7Road improvement 2.6 0.9 3.5 0.3 0.1 0.4

Subtotal* 45.1 15.1 60.2 4.5 1.5 6.0 21III. On-farm Works:

Land leveling* 25.0 0.0 25.0 2.5 0.0 2.5 9IV. Equipment, Vehicles

and Materials to beimported:For drainage system 1.5 48.9 50.4 0.2 4.9 5.1For canals andwatercourses 0.1 6.6 6.7 0.0 0.7 0.7For road improve-ments 0.1 1.8 1.9 0.0 0.2 0.2For 0&M and SCARP

Khairpur Spare Parts 0.1 4.0 4.1 0.0 0.4 0.4Subtotal 1.8 61.3 63.1 0.2 6.2 6.4 23

V. Agricultural Equip-ment and Vehiclesto be imported:For land leveling 0.2 8.9 9.1 0.0 0.9 0.9For extensionservice 0.1 1.3 1.4 0.0 0.1 0.1Subtotal 0.3 10.2 10.5 0.0 1.0 1.0 4

VI. Consultants andTraining: 2.0 13.0 15.0 0.2 1.3 1.5 5

VII. Engineering and

Administration:Staffing and housing 7.5 0.0 7.5 0.7 0.0 0.7Crop compensation 1.5 0.0 1.5 0.2 0.0 0.2Buildings 1.4 0.0 1.4 0.1 0.0 0.1

Subtotal 10.4 0.0 10.4 1.0 0.0 1.0 4Basic Project Cost 86.6 99.6 186.2 8.6 10.0 18.6

VIII. Physical Con-tingencies: 15.0 5.0 20.0 1.5 0.5 2.0 7

IX. Expected PriceIncreases: 42.0 25.0 67.0 4.2 2.5 6.7 24

X. Aerial Photographyand ERTS Surveys: 0.2 10.0 10.2 0.0 1.0 1.0 3

Total 143.8 139.6 283.4 14.3 14.0 28.3 100XI. Customs Duties

and Taxes: 8.0 0.0 8.0 0.8 0.0 0.8Total 151.8 139.6 291.4 15.1 14.0 29.1

*Excluding equipment costs.

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Financing

4.23 The proposed IDA Credit of US$14 million (covering 50% of thetotal project cost net of customs duties and taxes) would contribute thefull foreign exchange cost. The balance of US$14 million equivalent wouldbe contributed by GOP and GOSind through their annual budgetary appropriationsand by the SBP and participating commercial banks. Assurances have beenobtained that GOP and GOSind would make adequate and timely budgetary pro-visions in amounts in line with the project implementation estimates to be preparedby WAPDA (SZ) and transmitted annually to IDA to cover their shares of theproject construction, land leveling and agriculture implementation costs(para 4.21).

4.24 The IDA Credit would be on standard terms to GOP, and US$0.6 millionwould be made available to GOSind and US$1.4 million equivalent to participatinglocal banks through the SBP (Annex 6). The unallocated portion (US$2.2 mil-lion) would be for contingencies. The funds would finance WAPDA's foreignexchange costs for equipment, civil works, consultants' services, aerialphotography and ERTS surveys; SI&PD's (SCARP Khairpur's) foreign costs forextension equipment and tubewell spare parts; SDA's foreign costs for heavyleveling equipment; and portions of disbursements by participating localbanks for agricultural loans for project land leveling. Assurances have beenobtained from GOP that the goods and services to be imported out of the pro-ceeds of the credit would be used exclusively for this project during theconstruction phase and that after construction is completed WAPDA (SZ) wouldgive to SI & PD such equipment as needed and agreed by IDA for the 0 & M ofproject works.

Procurement and Contracts

4.25 Vehicles, equipment and materials with an estimated total cost ofUS$9.0 million (including contingencies, Annex 7) would be procured by WAPDA(SZ) and the Sind Department of Agriculture after international competitivebidding in accordance with Bank Guidelines. A 15% preference margin, or pre-vailing customs duty if lower, would be extended to local manufacturers inevaluation of bids. Land leveling equipment for local contractors with anestimated total cost of US$0.6 million would be procured from local stock im-ported on the basis of farmers' preferences from suppliers prequalified by theTractor Review Committee which is responsible for all tractor procurement anddistribution in Pakistan. Small off-the-shelf items costing less than US$10,000each, which are not practical for international tendering, would be purchasedthrough normal Government procurement procedures which are satisfactory toIDA. Such purchases would be limited to a total of US$300,000.

4.26 Civil works with an estimated total cost of US$10.0 million equivalent(including contingencies) and land leveling (US$3.5 million equivalent includingcontingencies) would not be suitable for international competitive bidding andwould be carried out by WAPDA (SZ) force account and by local contractorsrespectively. These works would have to be phased with seasonal agriculturalactivities so as to minimize crop damage. Although GOP would have to acquireaccess for tile and collector drains from farmers ahead of time so as to avoid

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delay, there would be cases where such delays would be unavoidable. Also,there may be changes in design of tile spacing and depth to suit fieldconditions and to achieve economies. The WAPDA forces would adjust to thesesituations with more flexibility and at lower cost than contractors, who wouldeither have to raise their prices to cover risks for these uncertainties orcould be expected to file many contractual claims against WAPDA.

Disbursements

4.27 Disbursements from the proposed credit would cover the followingportions of the project expenditures:

(a) 100% of the foreign costs of directly imported projectequipment (other than land leveling equipment to besold to contractors with local bank financing), vehicles,materials, and spare parts, procured in accordance withthe Bank's Guidelines;

(b) either 100% of the foreign exchange costs, or 70% of thetotal costs of approved consultant services and overseasstaff training;

(c) 100% of the ex-factory costs of goods manufactured locallyand procured according to the Bank's Guidelines;

(d) 70% of the off-the-shelf cost of imported goods procuredlocally;

(e) 100% of the foreign exchange cost of aerial photographsand ERTS surveys;

(f) 25% of civil works;

(g) 50% of disbursements under sub-loans to project farmersby approved participating banks for land leveling laborand operating costs; and

(h) 70% of disbursements under sub-loans to contractorsby approved participating banks for land leveling equipmentpurchases.

Disbursements for civil works carried out by force account and for sub-loansto farmers and farmer contractors by approved participating banks for landleveling and equipment would be made against certified statements of expend-itures, the documentation for which would be retained by the Borrower forreview by supervision missions. All other disbursements would be made againstfull documentation. It is expected that disbursements would be completed byDecember 31, 1982. A schedule of estimated disbursements and proposed creditallocation are given in Annex 12. Any amounts not used for the project wouldbe cancelled.

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Accounts and Audits

4.28 Assurances have been obtained from GOP that: (i) separate accounts

would be established and maintained for the project expenditures by the ProjectDirectorate; (ii) these accounts would be audited annually by an independentauditor; (iii) accounts of commercial bank loans to farmers and farmer-con-tractors in the project area would be identifiable and audited annually and(iv) copies of both the audit reports would be sent to IDA within six months

of the close of each fiscal year.

4.29 Part of the monitoring process of the project would be the deter-mination of relevant unit costs of constructing the works under alternativemethods to provide reference for estimating costs of future projects. As-surances have been obtained that an appropriate cost accounting system accept-able to IDA for this purpose would be established within six months afterthe credit is signed.

V. ORGANIZATION AND MANAGEMENT

Project Management

5.01 Implementation. In this project,as in the other SCARPs, WAPDAwould be the agency responsible for project implementation. The GeneralManager of WAPDA (SZ) would have executive responsibility for constructionof all project civil works.

5.02 The Director (Planning), WAPDA (SZ), in Hyderabad, would beresponsible for detailed investigations, planning, final design and speci-fications for the drainage and canal remodeling works and road improvements.The Director (Construction) of WAPDA (SZ), based in Sukkur, has been appointedto be responsible for the force account construction by WAPDA field divisions.

5.03 Agricultural extension services in the project area would be broughtunder one administration. The SCARP Khairpur Agricultural Wing staffed byofficers seconded from GOSind Department of Agriculture but forming partof the Sind Irrigation and Power Department has extensive experience indeveloping agriculture in drained areas (Annex 1). Assurances have beenobtained from GOSind that agricultural extension activities and existingestablishment, transport, and equipment in Rohri taluka would come underthe authority of the SCARP Khairpur Agricultural Wing before March 31, 1977.The service would advise farmers on reclamation of saline lands, farm watermanagement and planning, land leveling, improved plant protection, crophusbandry and effective use of inputs under changing crop conditions.

5.04 Coordination. The project management would be considerablystrengthened by the formation of a Project Coordinating Committee (PCC) onwhich all the agencies responsible for the different aspects of project

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implementation would be represented. The General Manager, WAPDA (SZ), wouldbe Chairman and members would include but not be confined to the ProjectDirector Planning and Project Director Khairpur II (member/secretary) ofWAPDA (SZ); the Superintending Engineer, Khairpur Irrigation Circle, of theSind Irrigation and Power Department (SI & PD); the Project Director of SCARPKhairpur; and representatives from the Department of Agriculture (includingPLLP), and the National Bank of Pakistan. It would meet regularly and dealwith problems and difficulties arising from project coordination and implement-ation. It has been agreed that a condition of credit effectiveness would bethat the PCC had been formed and was operating under terms of referenceacceptable to IDA.

Agricultural Supporting Services

5.05 Extension service would work through selected contact farmers oneach watercourse, to be visited by a Field Assistant at regular, pre-determinedintervals (Annex 13). Improved agricultural techniques and practices would bedemonstrated on the contact farmers' lands. The project area services wouldbe organized into three extension circles under the control of the Extra-Assistant Director of Agriculture, SCARP Khairpur, and they would providetechnical support through three Subject Matter Specialists (SMSs).

5.06 Land Leveling and Leaching. The PLLP, which trains the techniciansfor certification of land leveling work eligible for a grant, would alsoprovide training to the SCARP Khairpur agricultural extension staff in fieldlayout, setting leveling stakes and leveling techniques. The extension staffwould assist the farmers in planning and carrying out leveling and fieldboundary adjustment and in certifying completion of work for obtainingfinancial assistance. Reclamation by leaching would be supervised by SCARP'sagricultural chemist who would receive regular soil samples as the operationproceeds.

5.07 The SDA Agricultural Engineering Wing at Khairpur would hire outbulldozers and equipment, of which some would be purchased under the project,for the heavy land leveling work (para 4.12). For the medium and light level-ing, big farmers experienced with farm machinery and local contractors wouldhire out to other farmers their own tractors and implements. With com-mercial bank loans financed in part with project funds, they could purchasethe necessary additional equipment through local dealers with the expressunderstanding that each would give priority to work on project area farms atno more than prevailing rates (paras 4.12 and 4.14). Since IDA would reimburseGOP for the foreign exchange costs of this equipment, the Tractor ReviewCommittee could authorize special priority for purchases by contractors inthe area so that they would not face a lengthy wait. Assurances have beenobtained from GOP that up to forty 60 to 65 hp tractors with suitable landleveling implements would be made available within the shortest practicabletime and special priority for their purchase would be given to local applicantscertified by the Project Director for work primarily in the project area.

5.08 Fertilizer supplies have been adequate in meeting the demand inthe area for many years. Urea is at present manufactured by Esso PakistanFertilizer Co., Ltd. (EPFCL) some 80 mi from the project area and is sold

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through their dealers. Two, much larger plants are planned for the samegeneral areas. Potash and phosphates are available from Sind AgriculturalSupply Organizations (SASO) who sell them through dealers.

1J.U9 Pesticides are available through the Department of Agriculture. IntY'e past, supplies have been adequate but the demand has been low because ofinadequate application technology and consequent limited effectiveness. Theextension service would gradually increase the demand. Assurances have beenobtained from GOSind that pesticide supplies in suitable formulations would bemade available to project area farmers to meet future increases in demand inthe project area.

5.10 Plant protection would be intensified by the addition of 110 motor-ized knapsack sprayers and an assured supply of pesticides. The manufacturerof the sprayers would be required to provide a mechanic to train local staffin the operation, maintenance and repair of equipment. Enthomological supportwould be provided by the SMS.

5.11 Seed is traditionally retained by the farmers. They normally purchaseseed supplies only when a variety change is involved. This habit may changeonly when the proposed IDA-financed Seed ?roject becomes popular.

5.12 Farmers have had access to short-term institutional credit fromprivate commercial banks, some of which were set up especially for thatpurpose. Cooperative societies have also provided some such credit. Priorto 1972, the sole source of medium-term institutional credit was the ADBP.It has received three IDA credits, totalling US$67 million. A fourth, how-ever, has been held up pending financial, managerial and organizational im-provements. Therefore, for the time being, ADBP is not an acceptable channelfor providing farm credit in which IDA would participate. Since 1972 however,the nationalized commercial banks (CBs), lead by the National Bank of Pakistan(NBP) have entered the field and by mid-1974 have been responsible for about40% of the total credit provided for agriculture. The terms and conditionsproposed for CB loans to farmers and land leveling contractors are given inAnnex 8. Farmers eligible for land leveling loans would also qualify, and begranted, production, i.e. short-term loans, to enable them to exploit thebenefits of fine land leveling rapidly. Agreement has been reached that GOPwill ensure that the participating commercial banks would provide land levelingcredit to project area farmers, under terms and conditions satisfactory to IDA,which would include a satisfactory administrative support organization.

Technical Assistance and Training

5.13 Drainage Works -- The WAPDA in consultation with the SDA wouldappoint consultants, acceptable to IDA, to advise and assist in trainingproject staff in the areas of engineering and agricultural extension. TheWAPDA (SZ) would require technical assistance in the overall planning, finaldesign, and construction of the drainage system, and in the procurement of

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tile drain laying equipment. The consultants would also assist and advisein the logistic planning for the supply of drainage pipes and filter materialsand in field management of construction works. The credit would provide forthe full requirement, including agricultural consultant (below), of about170 man-months (Annex 14). In addition, provisions have been made for over-seas training for project staff (US$0.3 million). The equipment supplierswould provide about 20 man-months of suppliers' technicians' time fortraining WAPDA personnel in operation and maintenance of the drain-layingmachines and other project excavation equipment.

5.14 Extension and Farm Planning -- The consultants appointed by WAPDAwould include an agricultural consultant, acceptable to IDA, to help theSCARP Khairpur Agricultural Wing in devising appropriate training courses andin preparing detailed work programs and schedules for extension service fieldstaff. In consultation with the Sind Agricultural Research Institute, theconsultant would assist in identifying production constraints as focal pointsof enhanced ongoing training programs for field staff. Approximately one yearafter his arrival, he would be primarily concerned with assisting the SCARPstaff in building up an intensive farm management advisory service aimed atimproving farm use of the increased water supplies. His assignment isexpected to last for about 36 months. The successful tenderer for the 110motorized knapsack sprayers would be required to provide a mechanic for aboutthree months to train in repair, maintenance and operation of sprayers(Annex 13).

Operation and Maintenance

5.15 For two years following the completion of the entire projectdrainage system, WAPDA (SZ) would be responsible for its operation andmaintenance (O & M) and for correction of any construction defects. Theworks would then be taken over by SI & PD which would have a drainagesubdivision under the Project Director, SCARP Khairpur, responsible forsubsequent 0 & M. Vehicles and drain flushing equipment would be providedunder the project. The annual cost of drainage 0 & M has been estimatedat Rs 25/ac.

5.16 The SI & PD would be responsible for 0 & M of the existing canalsystem throughout the remodeling period, and would have full responsibilityfor remodeled canals on completion of the works. Maintenance of watercourseswould continue to be the responsibility of all farmers in each watercoursecommand under the direction of SI & PD. The cost of adequate maintenanceof canals is estimated at Rs 25/ac, making a total of Rs 50/ac for 0 & M ofproject drainage and irrigation works. Assurances have been obtained thatthe GOSind would make adequate and timely 0 & M budgetary provisions to keepthe project irrigation and drainage facilities in good working order and thatit would furnish to IDA each year an annual report giving the current andprojected 0 & M costs and budgetary provisions.

5.17 Although some data on the agricultural status of farming areas arecollected by the Sind Revenue Department and SI & PD, there is a dearth ofreliable basic information required for agricultural planning. Benchmark

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data required for subsequent monitoring of benefits are not available insufficient detail to differentiate benefits from areas with different soiland water conditions. Therefore, assurances have been obtained from GOPthat WAPDA through its Central Project Monitoring Organization, would carryout benchmark and subsequent follow-up surveys with the assistance of theSCARP khairpur Agricultural Wing to monitor agricultural, social and economicchanges to be brought about by this project. The group would record, interalia, changes in cropping patterns and yields, and progress in reclamationof salinized areas.

Cost Recovery

5.18 Following the principle of the SCARP Khairpur Agreement, a majorportion of capital repayment for the Khairpur II project drainage installationswould be spread over all irrigation users. A portion of capital repayment forirrigation improvements and the full payment of 0 & M costs, however, shouldbe borne by the project beneficiaries.

5.19 The capital costs of the Khairpur II project investments, excludingthe costs of land leveling and equipment to be financed directly by farmersthemselves, would amount to, for irrigation, about Rs 430 per ac of theproject and, for drainage, about Rs t.0 per ac spread over the entire irri-gated area of the Indus Basin (about 30 million ac). Annual charges torecover the irrigation component over 30 years with 10% interest per annumwould be about Rs 45 per ac of the project area while the charges torecover the drainage component would be Rs 0.32 per ac over the Indus Basin.Annual 0 & M costs for all proposed facilities and services would averageabout Rs 50 per ac.

5.20 In the Sind, since 1973, landowners pay water rharges together withland revenue as a "flat rate" per acre. The water and land revenue componentsare calculated as the product of farm area and a Produce Index Unit (PIU) andlocal rates per ac, one for water and one for land revenue. One PIU appliesthroughout each administrative unit (taluka); it reflects the general land

- 24 -

production capability and the type of irrigation (flow, lift or combined).The water and land revenue rates vary from village (deh) to village. 1/ Atpresent the water charge component in the project area averages Rs 10.50 perac per year. After reclamation and after irrigation supplies would have in-creased by about 50%, project farm lands would have a production potentialequal to the best in Sind. By providing additional water supplies in thearea, GOSind would have an appropriate occasion to reclassify project landand adjust water charges within the present rate structure. Accordingly,GOP could reasonably increase the water component in the project area by amaximum of 140% to an average of Rs 26 per ac (Annex 15), equivalent to aboutone-half the estimated annual cost of 0 & M. The introduction of yet higherwater charges could be accomplished only through the reassessment of thePIlUs and/or revision of the water rate structure throughout the Sind so thatimposition of additional water charges in the project area would not beunfairly discriminatory.

5.21 Pakistan has not changed the PIU assessments since they wereintroduced in 1948. In 1969, for the first time since 1947, it increasedwater rates by about 30% throughout the then West Pakistan. In 1972, GOSindintroduced the flat rates. By existing law, GOSind may not change eitherthe PIUs or the water rates until 1978.

5.22 An increase in Pakistan's water rate structure for cost recoverypurposes is further complicated by the circumstances that the existing fiscalstructure, including regulated procurement prices and subsidization of urbanconsumer prices, have placed a severe burden on farmers (para 2.02), and thatactual water use is not directly related to water charges, as supplies arenot individually metered. The recovery of project costs is the subject fordiscussions between the Bank and Pakistan in the context of GOP's agri-cultural pricing policies and the need for a substantial increase in domesticresource mobilization.

5.23 The first supplies of additional water and reclamation of projectland would be completed after 1978 when new productivity assessments andwater rates can first be introduced. Subsequent increases in water charges,which should occur gradually on the basis of recorded increases in farmproduction and consequent net incomes at prevailing prices (para 5.17), couldbe achieved in stages by periodic changes in land productivity classifications.Water rates should be adjusted periodically in line with changes in wateravailability and with prevailing agricultural prices. Assurances have beenobtained from GOSind that within one year after the project area receivesadditional water supplies and, where necessary, is reclaimed, it would beplaced in the category carrying the highest permissible level of water chargestaking into account the increase in water availability (at present estimated

1/ Before the flat rate system, rates were fixed according to the cropsgrown, the water rate reflecting the crop water requirement and theland revenue rate reflecting the land value. The cturrent rates arebased on the average rates over the 5 years prior to the conversionto flat rate system in 1972/73.

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to be Rs 26 per ac). It was further agreed that in 1978, 1983 and 1988 whenpresent legislation permits changes to be made in the rate schedules, thelevel of water charges throughout Sind would be raised so that by 1988 thewater charges would cover in full the annual costs of 0 & M of the irrigationdrainage system and in the project area, a reasonable portion of the pro-ject irrigation works investment (at present estimated at Rs 45 per ac).

VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOME

General

6.01 The main effect of adequate drainage would be on the amount of landcultivated under profitable crops rather than on the yield levels. Withinthe next few years, cropped areas and yields will increase to some extentwhen additional water supplies reach the project area from Tarbela andChasma storage releases. Beyond 1980, however, without drainage, additionalland would become waterlogged or saline, eventually causing the croppedarea (and in some cases yields) to decline below the present levels (Annex18). Provision of drainage, on the other hand, would permit farmers torealize the full potential under irrigation.

Crop Calendars and Cropping Patterns

6.02 The overall cropping intensity would reach an estimated 145% comparedwith 86% at present, while crop calendars, crop rotations, and the proportionateareas under major crops would remain essentially as at present, except forrice, sugarcane and dates (Annex 16). The growing of rice on land that istile drained is impracticable because of high infiltration losses. Therefore,after reclamation by leaching, rice would be replaced by cotton, sugarcaneand grain sorghum. A sugar mill will soon be built at Kot Diji with a capacityof 1,500 lg tons of cane per day. Based on results elsewhere in the Sind,this would have the effect of increasing the area under sugarcane in theproject area to 1,350 ac without the project, and to about 5,300 ac underproject conditions with more effective extension support. With respect todates, experience in SCARP Khairpur suggests that where drainage is provided,the area under date orchards increases, and this trend has been assumed forthe project area.

6.03 Without the project, in the undrained areas an increasing proportionof the land would not be cultivated, the area double cropped would increase,and the proportion of less profitable crops such as pulses, sorghum andfodders would iacrease in relation to cotton, wheat and sugarcane. In 10,000ac which at present receives nearly full rabi water supplies, a substantialincrease in the waterlogged and saline land area and consequent reductionin wheat and cotton acreages would occur before 1990. In the remaining26,000 ac at present undrained, where the first rabi water supplies will beavailable after commissioning of Tarbela Dam, the main reduction in wheat

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and cotton acreage would occur after 1990. Changes in cropped area in thethree different parts of the project area, up through 1990, are estimated asfollows (Annex 16):

Area Under Crops ('000 ac)

Land Not Yet Drained Land Already Drained

(10,000 ac) (26,000 ac) (8,000 ac)Rabi Water Rabi Water Rabi WaterSupplied to be Supplied to be SuppliedAt Present in Near Future in Near Future

P W W P W W P WW

Cotton 1.9 1.1 2.6 5.5 1.9 7.8 2.8 2.6 2.8Wheat 2.2 1.5 4.3 4.0 6.0 11.5 1.4 1.7 2.3Sugarcane 0.0 0.3 1.2 0.0 0.1 3.1 0.0 1.0 1.0Pulses 1.2 1.7 0.3 0.1 2.8 0.7 0.3 0.3 0.3Others 5.4 5.0 4.2 8.0 11.0 9.5 3.8 2.6 2.9

Total 10.7 9.6 12.6 17.6 21.8 32.6 8.3 8.2 9.3As % of CCA /a 115% 106% 147% 69% 86% 146% 108% 121% 138%

Note: P - Present; W - 1990 without the project; W - 1990 with the project.

/a Perennial crop areas are counted twice in computing the croppingintensity (%).

Expected Yields and Production

6.04 Modern technologies are already being adopted by the better farmers,asnd suitable new varieties have been established in the area. Higher yield-ing grain sorghum, however, would probably replace the present dual-purposegrain-fodder variety. The projected yields of various crops (averaged forthe project area) are estimated as follows:

Crop Yields (md/ac)

IncrementPresent Without Project With Project ("with"-"without")

Cotton 12 21 25 4Wheat 15 22 35 13Sorghum 6 21 35 14Paddy 15 15 15 0Sugarcane 200 700 700 0Dates 90 175 175 0Oilseeds 6 14 20 6Pulses 6 6 8 2

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6.05 Past experience in Pakistan suggests that the attainment of thefull yield increase would take about ten years, with one-third attainedfive years after project completion. In view of the proposed change inthe approach to agricultural extension, this is probably conservative. Onthis basis, it is estimated that fertilizer use in the project area wouldincrease from 535 nutrient lg tons to about 3,860 nutrient lg tons per yearat full development. Use of pesticides is projected to increase to about400 lg tons per year.

6.06 Annual production of major crops under the project would increaseas follows:

Crop Production ('000 lg tons)

IncrementPresent Without Project With Project ("with"-"without")

Cotton 4.5 4.4 12.1 7.7Wheat 4.3 7.5 23.3 15.8Sorghum 0.9 2.7 3.1 0.4Paddy 2.8 3.3 0 -3.3Sugarcane 0.7 34.7 136.4 101.7Dates 5.2 10.9 22.2 11.3Oilseeds 0.1 0.4 2.5 2.1Pulses 0.3 1.1 0.4 -0.7

Production at full development would yield a surplus of cereals and oilseeds.The additional cotton produced would be ginned locally, yielding about 2,500lg tons additional lint. Roughly 30% of the future sugarcane production inthe project area is expected to be sold at the mill and would yield about2,700 lg tons of refined sugar.

Market Prospects

6.07 Prospects for the major commodities are linked to internationalmarkets. Cotton lint, yarn, and cloth, in part, would be exported, and sur-plus grains, refined sugar, oilseeds and dates would help offset imports.Pakistan is expected to increase domestic fertilizer production. By the timethis project is completed, it is expected to be about self sufficienct innitrogenous fertilizers, however, some 55% of its requirements for phosphorus,

and the entire requirement for potassium fertilizers will continue to be

imported. The analyses of future markets and prices for these and domestically

traded commodities are given in Annex 17.

6.08 The marketing system in the area is well developed. The annual

volume of grain sales in nearby markets exceeds 500,000 lg tons. The ten existing

ginneries in Khairpur have sufficient capacity to handle the increase from

the project area without difficulty. Road and rail communications are ade-quate.

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Prices

b.09 For internationally traded items (cotton, cereals, sugar, vegetableoils, and crop chemicals), future price trends are based on the Bank's 1985world market projections. For other crops future prices are based on presentlevels and historic trends of local prices. All are expressed in terms ofconstant currency, using December 1975 prices as the base. Prices for thefarm budget analyses take into account prevailing taxes, subsidies, andother Government controls discussed below. Prices for the economic analysisreflect the opportunities for potential export earnings and import savingswhich could be realized at projected world market prices using the shadowexchange rate of US$1 = Rs 11 (Annex 17).

6.10 The Government currently regulates domestic prices of major com-modities through import/export restrictions, procurement and fixed releaseprices which insulate the domestic market from international price increasesand in some cases stimulate shifts in farm output. In 1974, the Governmentmaintained a procurement price for wheat at Rs 25.50 per maund, which wasabout 70% less than the farmer could have received through the world market.Duty on cotton exports averaged about 35%. Sugar mills purchased cane at anaverage of about Rs 4.40 per maund, 65% less than the farm gate equivalentof the current world market price. At the same time, the Government subsidizedcrop inputs by about 30% and regulated retail prices of flour, sugar andvegetable oils.

6.11 The anticipated declines in World Market prices and further relax-ation of some Government controls before 1980 would bring international anddomestic price levels closer. In view of the Government's development ob-jectives and recent price changes needed to stimulate farm production increases(para 2.02), in the financial analysis future regulated prices for wheat andvegetable oils are about 30% below the levels derived from projected WorldMarket prices. For cotton and refined sugar, future financial prices areat levels derived from World Market prices using future export tax rates whichare somewhat lower than at present.

Farm Incomes

6.12 Most farms in the project area are subsistence oriented, consumingmost of their own grain, pulse and vegetable produce, and marketing for casha little cotton, wheat, oilseeds, and, in some cases, livestock products.Generally, only owners of more than 15 ac have date orchards, which aregrown under contract for cash. A few big land owners have tractors whichthey hire out to others. Livestock is raised primarily for farm work.Present average net farm income in the project area is about Rs 350 per ac,well below the national average.

6.13 Net income from subsistence and cash crops would increase at aboutthe same rate under the project, and small and large farms, therefore, wouldbenefit in roughly the same proportion (Annex 15). For three farm models,one (sub-marginal) oriented towards subsistence crops (5 ac), the average

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farm (10 ac), and one oriented towards cash crops (25 ac), annual net farmincomes, including the value of produce consumed on the farm, would increaseas follows:

Annual ,let I.ncome(In Constant Currency, December 1975)

Farm Size Present Future Increase(ac) (Rs) (Rs) (%)

5 2,200 9,600 44010 3,400 19,300 57025 12,900 73,600 570

Anout 70% of the increase in each case results from production increasesdue to the project and about 30% from the projected changes in prices(paras 2.02 and 6.11). Cash payments for hired labor and inputs and averageannual 0 & M and capital recovery costs for irrigation and drainage arededucted.

6.14 Off-farm wage earnings are usually small since landless laborersin the area are plentiful and the area labor supply exceeds the demand. Afamily of six persons usually can provide the peak November cultivation re-quirements for a farm as large as 12 ac. At full development, farm laborrequirements would be twice as great (Annex 4). The 5 ac farm householdwould no longer have as much labor to spare for wage labor outside the farmand would incur a net loss in yearly off-farm wage earnings of about Rs 500,after taking into account the overall under-employment in the area. House-holds with 10 ac or more would have to hire additional labor and net wagecosts would increase by about Rs 2,400 for the 10 ac farm and by aboutRs 6,000 for the 25 ac farm.

6.15 Excluding increases due to inflation and to relative price changes,net incomes from farm production and field wages would increase about threetimes for small, subsistence-oriented farms and about four times for large,cash-oriented farms. Tenants' incomes would increase by the same factorsbut remain at levels estimated at about 40% of land holders' incomes. Futurenet farm income per ac, including GOP price policy effects and net of proj-ect recovery costs, would be about Rs Rs 1,900, about 40% greater than the na-tional average assuming overall growth in the agriculture sector at about5% per year and therefore the proposed increase in water charges is wellwithin the farmers' capability to pay.

VII. BENEFITS AND JUSTIFICATION

Anticipated Overall Effects

7.01 The proposed project would increase farm production and doubleemployment opportunities for landless families in the area. Moreover, theexperience and information gained from this project could be directly

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transfered to other areas, covering several million acres in the IndusBasin, where similar constraints on development exist.

Crop Production

7.02 Future incremental production would represent the following grossannual foreign exchange savings and earnings (in constant dollars, December1975):

Net Incremental Projected Foreign ExchangeProduction 1985 Price Savings/Earnings

('000 lg tons) (cif/fob) (US$ million)

Cereals 12.3 $200/lg ton 2.5Cotton lint 2.5 $0.47/lb 2.6Refined sugar 2.7 $0.16/lb 1.0Vegetable oil 1.4 $230/lg ton .3

Total 6.4

After deducting the annual foreign exchange costs of fertilizers, pesticides,equipment spares and replacements, the net annual foreign exchange savings/earnings attributable to the project would amount to about US$5.8 M. Thetotal value added to Pakistan's economy, taking into account the annualproduction of dates and other crops, less the costs of production inputs,would amount to about Rs 110 M net equivalent annually.

Employment Opportunities

7.03 Under the project, annual field labor requirements would doublefrom about 1.1 million man-days at present to about 2.4 million man-daysat full development. This would mean an increase from 37% to 47% ofexpected labor availability in the area (Annex 4). Without the project, thelevel of employment would remain about the same but because of the popula-tion growth the overall employment rate would fall gradually to about 22%.The project, therefore, would result directly in a 100% increment in ruralemployment opportunities. Landless families would be the prime beneficiaries,since excess farm family labor would be largely taken up with the increasedfarm work loads. Furthermore, production increases under the project wouldstimulate additional wage-earning opportunities in the local cotton gins,processing industries, mills, and market centers.

household Income Effects

7.04 Within the project area, farmer families earning enough to coversubsistence requirements (at present about 30% of national average per capitaincome) would increase from about 40% to about 65% of the total. Otherfamilies would remain largely dependent on wage earnings from work in theginneries, mills and nearby towns. Although the number of landless residentswill increase along with the population growth, by full development owners

- 31 -

and tenants will still comprise over 60% of project area families. Con-sequently, the majority of the families would realize the anticipatedincreases in farm income and taking into account the increase in landless wageopportunities, the project would directly improve the earning capacities ofmore than 85% of all project households.

Economic Rate of Return

7.05 The project's economic rate of return is estimated to be about 17%(Annex 18) based on the following assumptions:

(a) a construction period of five years;

(b) full agricultural development reached ten yearsafter completion of construction;

(c) excluding the cost of technical assistance, whichwould contribute also to long-term development inother areas, and the residual value of constructionequipment;

(d) all farm labor (including family labor) costed at anaverage rate of Rs 7 per man-day, 50% of the peakmarket wage; construction labor valued at the marketwage (Annex 4);

(e) foreign exchange valued at the rate of US$1 = Rs 11(para 6.09), and

(f) all costs and prices expressed in terms of constantcurrency, excluding price increases due solely toinflation.

Other important benefits, such as increases in trade and induced employmentin nearby cotton gins and mills due to production increases in the projectarea, are not included in the analysis.

7.06 The sensitivity of the estimated rate of return to construction andcultivation risks and to changes in prices and other assumptions is as fol-lows:

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EstimatedRate of Return

(a) that a sugar mill is not built at Kot Diji; 15%

(b) increase in construcLion costs of 15%o; 15%0r

(c) decrease in future prices of farm crops of 15%; 15%/.

(d) increaste in costs of crop inputs of 15%; 17%

se) combination of (a) and (c); 13%

(f) combination of (a), (c), and (d); 11%

(g) farm labor valued at the peak wage forhired labor (Rs 10 per man-day -- Rs 14 in1975 terms) 16%

Environmental Impact

7.07 The proposed project would alleviate soil salinity in the area,and would reduce waterlogged areas which are breeding grounds for mosquitoes.Use of agricultural chemicals, and, in particular, pesticides at present lev-els does not present a pollution hazard. The materials are distributed byagents and used by farmers who are aware of the toxic risks. In the future,suitable pesticides would be applied under close supervision of sprayingoperations to eliminate hazards to operators. Under the guidance of theextension services, the frequency and location of pest control operationswould be limited to areas that require it.

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS

6.01 Agreement has been reached with GOP and GOSind on the followingpoinuts:

(a) they would make adequate and timely budgetary provisionsin amounts in line with the project implementationestimates, which are to be prepared by WAPDA (SZ) andtransmitted annually to IDA, to cover their sharesof the project construction, land leveling, andagriculture implementation costs (paras 4.21 & 4.23);

,Q . n ^ __ reemenet has 're.n .bt incd from GOP that:

(a) sulfate-resistant cement would be made available toWAPDA in sufficient quantities as and when requiredto meet project requirements (para 4.06);

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(b) the power to operate each new pump station would besupplied upon completion of each station in phasewith the project construction schedule and require-ments (para 4.07);

(c) the General Manager, WAPDA (SZ), would prepare anannual implementation schedule for the project, sup-ported by maps and descriptions of activities, togetherwith budgetary estimates required for the upcomingfinancial year for dispatch to IDA by December 31 ofeach year (para 4.21);

(d) the goods and services to be imported out of the proceedsof the credit would be used exclusively for this projectduring the construction phase and that after constructionis completed WAPDA (SZ) would give to SI & PD such equipmentas needed and agreed by IDA for the 0 & M of project works(para 4.24);

(e) separate accounts would be established and maintainedfor the project by the Project Directorate; these accountswould be audited annually by an independent auditor;accounts of commercial bank loans to fanrers and to farmercontractors in the project area would be identifiable andaudited annually; and copies of both the audit reportswould be sent to IDA within six months of the closeof each fiscal year (para 4.28);

(f) an appropriate cost accounting system acceptable toIDA for monitoring unit costs of alternative con-struction methods would be established within sixmonths after the credit is signed (para 4.29);

(g) up to forty 60 to 65 hp tractors with suitable land levelingimplements would be made available within the shortestpracticable time and special priority for their purchaseswould be given to local applicants certified by the ProjectDirector for work primarily in the project area (para 5.07);

(h) participating commercial banks would provide land levelingcredit to farmers under terms and conditions satisfactoryto IDA (para 5.12);

(i) the WAPDA through its central project monitoring organizationwould carry out benchmark surveys, starting with the projectarea, and, with the assistance of the SCARP KhairpurAgricultural Wing, to monitor agricultural, social andeconomic changes brought about by this project (para 5.17).

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8.03 Agreement has been obtained from GOSind that:

(a) upon completion of canal remodelling, annual watersupply increases expected to be about 130,000 ac-ftwould be allotted for the project area and the PatniDistributary would be redesignated as a perennial canalso as to carry water supplies in the rabi as well as inthe kharif (para 4.17);

(b) in phase with the implementation schedule, the GOSindwould undertake to complete the acquisition of theconstruction rights of way for the drainage systemand canal remodeling (para 4.19);

(c) agricultural extension activities and associated existingestablishment, transport, and equipment in Rohri talukawould come under the authority of the SCARP Khairpur Agricul-tural Wing before March 31, 1977 (para 5.03);

(d) pesticide supplies in suitable formulations would bemade available to project area farmers to meet futureincreases in demand in the project area (para 5.09);

(e) the GOSind would make adequate and timely 0 & M budgetaryprovisions to keep the project irrigation and drainagefacilities in good working order and that it would furnishto IDA each year an annual report giving the current andprojected 0 & M costs and budgetary provisions (para 5.16);

(f) within one year after completion of the project, landin the project area would be placed in the categorycarrying the highest permissible level of water chargesunder the prevailing conditions (para 5.23);

(g) in 1978, 1983 and 1988 the level of water charges in Sindwill be raised so that by 1988 the water charges wouldcover the full annual costs of 0 & M for the irrigationand drainage system and, in addition, would recover, inthe project area, a reasonable portion of project irrigationworks investment, at present estimated at Rs 45per acre (para 5.23).

8.04 Conditions of credit effectiveness would be that:

(a) a consulting firm with experience in tile drainage,irrigation, and agricultural extension had beenappointed on terms and conditionssatisfactory to IDA(para 4.04);

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(b) a Project Coordinating Committee composed of representativesfrom all the agencies responsible for the different aspectsof project implementation had been formed and was operatingunder terms of reference acceptable to IDA (para 5.04).

8.05 With the above agreements and conditions of effectiveness, theproposed project is suitable for an IDA credit of US$14 million understandard IDA terms. The Borrower would be the Islamic Republic of Pakistan.

June 14, 1976

ANNEX 1Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUTR II)

SCARP - Khairpur (Khairpur I Project)

Location

1. The first attempt in the Sind to lower the water table and to con-trol the increase in soil salinization was carried out in parts of the twoKhairpur Feeder Canal Commands. The project, begun in 1965, comprised some380,000 ac of cultivable command area (CCA), cost Rs 157 million (US$33 mil-lion equivalent), and was assisted by IDA Credit No. 22-PAK for US$18 mil-lion. The physical works were completed in 1970. The area of the projectand surrounding areas is shown on Map No. 11527.

2. The site was chosen because of its need for drainage and the factthat it could be done by tubewells. Thus, a strip of land approximately3 mi wide and 20 mi long, along the Rohri Hills, had to be excluded becauseaquifer conditions were unsuitable for tubewells. (This is now included inthe present proposed Khairpur Tile Drainage and Irrigated Farming Developmentproject (Khairpur II).)

Project Components

3. The physical works of the completed project consist of:

-- 540 tubewells, of which 217 pump fresh water fitfor reuse;

-- 342 mi of drains and disposal channels;

-- bridges, culverts, syphons, diversion structures,etc.;

an electrical distribution system to service thetubewells and the pumping stations,

three major pumping stations to dispose of salineeffluents into the Rohri canal.

1/ Salinity Control and Reclamation Project. 36

ANNEX 1Page 2

The project included no component to improve water conveyance and fieldirrigation efficiencies. In contrast to the proposed Khairpur II project,the 217 sweet-water wells provide the only irrigation supplies in additionto the Indus River water supplies already conveyed into the area by theFeeder Canals. The project has lowered the water table from an averageof less than 4 ft to around 10 ft, where it is now being maintained.

Agricultural Progress

4. Cropped Area, Yields and Production. Table 1 shows the area, yieldand production of the major crops in 1960-61, the situation expected by theAppraisal Mission on project completion and the actual achievement in 1973/74.The table shows that yield and cropped area expectations at Appraisal wereexceeded in most cases. Had the tubewells not lowered the water table(para 3), the area would have lagged behind the rest of the country in in-creasing yields. With drainage installations, on the other hand, the "greenrevolution' and the general advance in crop husbandry technology enabled thisarea to advance above the average. Although the cropping intensity, whichwas expected to rise from 89% to 121%, only rose to 94%, overall productionexceeded the appraisal estimates.

5. Reclamation. Some 90,000 ac, of which about 50,000 ac previouslywere cultivated were identified as being so waterlogged and saline that cul-tivation was impossible; project implementation has confirmed that loweringthe water table and simple leaching enabled complete reclamation in aboutthree years, a relatively short time. This area needed special leachingdue to salts having accumulated in the crop root zones where it was affectingyields. The part previously cultivated is now fully suitable for croppingunder irrigation with small annual allowance for periodic leaching. Of theland previously uncultivated, by 1974 only about 2,000 ac had been reclaimed.The total land area now cultivated is about 340,000 ac.

Economic Benefits

6. Based on an appraised cost of Rs 149 million and the projectedyields and cropped areas shown in Table 1, the appraisal estimated an eco-nomic benefit/cost ratio of 34% based on a three-year construction periodand a five-year development period. The project works were completed overa four-year period at a cost about 5% over the appraisal estimates. Thefirst group of wells started operating in April 1967 and all 540 wells werein operation from 1970. By 1974, production in the area had reached thelevels also shown in Table 1. For the major crops (wheat, cotton andsorghum) the levels are from 65% to 90% over the appraisal estimates. Forrice and dates, the levels are as appraised, and only for sugarcane and oil-seeds are production levels below expectations. In terms of constant cur-rency, the economic rate of return of the completed project, taking intoaccount the cost overrun and delayed implementation as well as the increasein agricultural production, is over 25%.

37

ANNEX 1Page 3

Project Execution and Management

7. The executing authority of the project was WAPDA (then workingas a single unit in the whole of West Pakistan) assisted by consultants whohad the function of Resident Engineers. On completion, management passed tothe Land and Water Development Board until the breaking up of One Unit 1/and then to the Sind Irrigation and Power Department who are in charge of itat present. The Resident Engineers maintained a small team of consultantsuntil 1971 which assisted in preparing an Operation Manual; the successorteam produced a supplement to this manual that incorporated experiencesand desirable modifications to operating procedures suggested by about twoyears of actual operation. The manuals contain complete job descriptionsof all cadres of staff. They form the basis of the present project operationand are being followed as closely as budgetary restraints allow. Civil,mechanical, and electrical engineers and reclamation and crop husbandryspecialists worked closely with SI&PD counterparts providing training toensure the passing on of design, operating and maintenance know how for smoothoperation in the future.

8. As part of the project, a housing, office and working complexthat supplies all the needs of the operating and administrative staff hasbeen built south of Khairpur Mir's town.

Staffing

9. The day-to-day management of the project is the task of a ProjectDirector who reports to the Chief Engineer, Development Planning, in theSind Irrigation Department. His management organization is as follows:

1. Project Director

2. Executive Engineer -- Operations Division

3. Four Sub-Divisional Officers

2. Executive Engineer - Distribution Division

3. Four Sub-Divisional Officers

2. Executive Engineer -- Workshop Division

3. Three Sub-Divisional Officers

1/ The name given to the unitary government of West Pakistan, abolishedin 1970.

38

ANNEX 1Page 4

2. Deputy Director of Agriculture

3. Extra -- Assistant Director of Agriculture

4. Two Sector Officers

5. Eighteen Agricultural Assistants

3. Agricultural Chemist

3. Agronomist

3. Assistant Information Officer

10. Matters concerning canal operations within the SCARP area are inthe hands of the Superintendent Engineer, Khairpur Canals Division. TheSCARP management are consulted on operational matters but do not have execu-tive authority. The agricultural staff at present carry out all normal ex-tension service functions in parts of Kot Diji and Khairpur talukas east ofSCARP boundaries, within the proposed Khairpur II project.

11. Khairpur II Coverage. As the proposed project is barely one tenththe size of SCARP Khairpur and because the SCARP organization contains everydiscipline needed by the proposed project, it would be adequate to strengthenthe SCARP organization at the middle management level to enable it to copewith the increased task devolving on it.

Operation and Maintenance

12. The SCARP's 1973/74 annual budget amounted to about Rs 8 million,or approximately Rs 24 per ac (net cultivated). This did not provide forimported spare parts for tubewells and other facilities nor did it provideadequately for the routine maintenance and inspection that was considerednecessary when the operation manuals were compiled (para 7). Followingproject completion in 1971, during a period of serious foreign exchangeshortages in Pakistan, SCARP management was not able to replenish itsstock of essential tubewell spares. This resulted in having to graduallyabandon routine inspection and preventive maintenance of the wells. As ofNovember 1974, some 25 of them had been out of action for some time. Al-though at present, partly assisted by 1974/75 being an exceptionally dryyear, the water table is under control, there is fear that it will soonrise again unless the full complement of wells become operable. The pro-posed project would provide US$200,000 to make up the foreign exchangebacklog and to provide the SCARP authorities with a working inventory ofspares.

13. Some eight 60-hp agricultural tractors were purchased for SCARPKhairpur in 1971, to be available on rent for farmers to do mainly landdevelopment work. Through lack of local funds, these machines have neverbeen commissioned. Therefore, GOP has been requested to sell them tofarmers or contractors within SCARP Khairpur or Khairpur II area, so

39

ANNEX 1Page 5

that, through them, they would make them available to small farmers onhire for tillage and land leveling work.

14. The cost of adequate operation and maintenance is roughly esti-mated at Rs 10 million (Rs 30 per ac). This includes the annual costs ofimported spare parts used in repairing tubewells and for staff and oper-ating costs for the full routine maintenance and inspection envisaged inthe operating manual.

Cost Recovery

15. The Appraisal Report noted that GOP intended to undertake reclama-tion of all saline-affected lands in the Indus Basin and that the costs ofsuch works would be spread uniformly over all irrigated lands. The GOPregards drainage not as an improvement but simply as a measure to restoreland to its former productivity and, therefore, has never changed directlybenefitting farmers for drainage investments. In its view, unsuitable sub-soil conditions causing high groundwater and salinity in any particular areaare beyond the farmers' control. Under the circumstances, such an arrange-ment is in line with the Bank Group's policy that benefit taxes aim atachieving a balance between encouraging efficient water use, securing adegree of income redistribution and promoting public savings.

16. Under Section 2.04 of the 1962 Project Agreement the Governmentis committed to the following:

(a) making arrangements providing for all irrigation usersin Pakistan to repay the monies invested in the projecttogether with reasonable interest thereon; and

(b) after the reclamation period, setting up and maintainingrates at levels which would provide revenues sufficientto cover all project operating and maintenance costs.

17. In 1969, just prior to completion of the project works, Pakistanincreased water rates by about 30% throughout the then West Pakistan, morethan sufficient to recover the project costs within a 30 year period. In1972, before project land reclamation was completed, GOSind changed thebasis for water rate payments from a variable rate related to crops grownto a flat rate related to water allocation. By existing law, GOSind maynot change either the water rates or the land productivity classifications(the Produce Index Units - PIUs), both of which determine the amount ofwater charges for each holding, for another five years, i.e. until 1978.The Produce Index Units for project lands have not been changed since theywere introduced in 1948, even thoug,h subsequent waterlogging and salinityhave caused their productivity tc decline. Under the present structure,therefore, reclamation of project land would not change its classification.

18. By 1978, when GOSind can next revise the rate structure, pro,ectreclamation would be fully completed. The Project Agreement is not clear

40

ANNEX 1Page 6

whether rates throughout the Province or only in the project area shouldbe set at levels sufficient to cover operation and maintenance (O & M)costs or how soon after the reclamation period new rates should be set.In 1978, however, GOSind could arrange to increase water charges to coverthe 0 & M costs (presently estimated at Rs 30 per ac over the projectarea), which would be within the capacity of project farmers alone to pay.The GOSind could accomplish the increase in water charges in the project areain a non-discriminatory way by introducing new land classifications withinthe structure, so that project lands could be appropriately reclassified,and adjusting the PIUs and water rates throughout the Sind. Similararrangements would be required for the proposed Khairpur II project.

June 1976

41

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DE OPMENT PROJECT (KHAItPUR II)

Fbrecasts and Achievemn.ts SCARP Kh a ur project

Forecast byActual., 1960-61 Appraisal Mission Actual 1973-74

Area Yield Production Area Yield Production Area Yield Production(,000 ac)(md/ac) (,OOO tons)(,000 ac)(md/ac) (,OOO tons)(,000 ac)(md/ac) (,000 tons)

Rice 15.3 12 6.8 15.3 20 11.3 15.1 20.5 11.4

Cotton 40.7 6 9.0 63.3 12 27.9 93.4 14.0 48.o

Sorghum 35.4 9 11.7 31.5 12 13.9 44.7 13.8 22.7

Thtal kharif area 122.6 - - 171.8 - - 204.4 -

Oilseeds 14.7 6 3.2 50.7 9 16.8 7.0 9.5 2.4

Wheat 75.7 12 33.4 76.1 20 56.o 13.9 20.5 10.5

Total rabi area 171.5 233.1 227.8

Total cropped area 282.6 384.3 400.5

Project area CCA 318.0 318.0 376.0

Intensity of cultivation 89.0 121.0 94.0

1/ Double counting orchards and sugarcane t -

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVELOPMENT PROJECT

(Khairpur II)

Project Area Climatic Data

1. Temperature (°F) 4. Cloud Cover (in tenth)

Mean Maximum 96 in June Maximum 2.1 in July

Mean Minimum 58 in January Minimum 0.2 in January

Annual Mean 80 Mean 1.3

Extreme Ranges 82-120 in June27-62 in January

2. Relative Humidity (%) 5. Sunshine (hours)

Maximum 77 in July-September Maximum 10.5 (May)

Minimum 54 in April Minimum 8.6 (December)

Mean 65 Mean 9.4

3. Dewpoint ( 0F) 6. Rainfall (inches)

July 85 Average 1897-1964 2.56

January 45 Maximum recorded 11.93

Below 1" 13 years

Months of rainfall August, July

7. Wind Speed

Maximum 191 miles/day in JuneMinimum 55 " " in DecemberMean 103.6 " "i

( p.

ANNEX 2Table 2

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATION

FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Project Area Evaporation Data in Inches

1/ 1/Rabi Evaporation Kharif Evaporation

Monthly Daily Rate Monthly Daily Rate

October 6.3 .203 April 8.2 .273

November 3.6 .120 May 9.5 .306

December 2.7 .087 June 9.9 .330

January 2.8 .090 July 10.0 .323

February 3.7 .132 August 9.6 .310

March 6.9 .223 September 7.9 .263

Total Rabi 26.0 (33%) Total Kharif 55.1 (67%)

ANNUAL TOTAL, 81.1 inches

1/ Observation from U.S. Weather Bureau Class A Pan.

44

ANNEX 3Page 1

PAKI STAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Soils and the Need for Drainage

Soils and Soil Surveys

1. Soil characteristics and crop yields in the portions of theproject area not affected by waterlogging and salinity compared with soilsand yields elsewhere in the Sind indicate that the project area has anequally high development potential. The soils range from sands and loamysands to clay loams and light clays. Medium textured soils predominateand are suitable for a wide range of crops.

2. Most of the soils are slightly-to-moderately calcareous and slightlyalkaline. The clays consist mainly of illitic (i.e. non-swelling) complexesand amorphous material intermixed in places with some montmorrilonitic(swelling) clays. The water holding capacities are moderate to high forthe textural class and water erosion is minimal. The finer soils have aweak subangular structure; the coarser soils are structureless. Organicmatter and nitrogen contents are low, phosphate is moderate and potashgenerally high. Cation exchange capacities are moderate. Calcium sulfate(gypsum) occurs in some of the soils. Infiltration and permeability ratesare moderate-to-high, but the soils are poorly drained because of lack ofoutlets for the groundwater. The proximity of the groundwater to thesoil surface and inadequate irrigation supplies have resulted in widespreadsalinization. However, the soils are highly resistant to alkali hazards,and an estimated 95% of the salt-affected lands are readily reclaimed bysimple leaching techniques, without additives.

3. The soils have formed mostly from relatively homogeneous alluviumdeposited by the Indus River system. Changes in the course of the river,floods and wind have created mixed patterns of deposition. About 10% of thesoils of the project area, namely those adjacent to limestone hills to theeast of the project, consist of shallow gravelly soils formed of piedmontalluvium. As the soil forming factors -- temperature, rainfall, vegetation,micro-organisms, relief, erosion and human activity -- have modified thesealluviums only slightly, most of the soils are immature and lack well-defined profile characteristics.

4. No detailed soil survey has been carried out. The reconnaissancesurvey of the Khairpur area, made in 1961, covered the project area. Itwas mainly concerned with textural characteristics based on mode of deposi-tion. However, these are not necessarily associated with productivecapacity, constraints such as salinity or waterlogging, or cost and benefit

45

ANNEX 3Page 2

of development and/or reclamation. Hence, the available information needsto be augmented. Information is needed on the location, extent and severityof waterlogging, Boil salinity and sand layers or other anomalies whichmight affect drainage, reclamation or productivity. Soil borings should bemade on a grid at one-quarter mile intervals (16 per sq mi, one per 40 ac)to a depth of at least 2 meters (6.6 ft) with one sample per square mileto a depth of 3 meters (10 ft). Samples should be analyzed for salinity.One profile per square mile (preferably those bored to 3 m depth) shouldbe completely analyzed for: pH; salinity; cation exchange capacity; ex-changeable sodium content, and any other important characteristics. Dueto the variable nature of the water table, note should be made of the dateswhen groundwater observations were taken. Detailed notes of topography,crop growth, management factors and other aspects which might affect cropproduction or project development are essential.

Soil Salinity

5. Salinity is everywhere in the project area, and is apparent inlocalized irregular patches of a few square yards to several acres. The LIP,on the basis of only 62 bore holes dug in 1961 on approximately 40,000ac, (one per square mile) divided the soils into two broad groups: (1)non-saline to modertately salt-affected (ECe less than 16), (2) severelysalt-affected (ECe is 16 or more), as follows:

Salinity Class Surface Meter Subsoil(ECe in mmhos/cm) (No) (%) (No) (%)

0-4 17 27 26 42

4-8 24 39 18 29

8-16 14 23 11 18

16+ 7 11 7 11

6. On the basis of these data, they put 89% of the soils in Group 1and 11% in Group 2. According to independent mission estimates made inNovember 1974, no less than 30% of the project area is sufficiently salineto affect crop growth and, of this, about half is so saline as to precludeprofitable crop production.

7. A saline soil contains sufficient soluble salts on the soilsurface and in the root zone to affect germination and suppress plantgrowth. According to the US Salinity Laboratory, a saline soil has anECe value of more than 4 millimhos. Their classification was derived fromfield trials in a highly developed agricultural technology and in sampleareas where, as far as could be ascertained, only salinity was a constraintto production. At existing levels of crop management practices in Sind,an ECe of 8 to 10 would seem to be a better dividing line between non-saline and salt-affected soils.

46

ANNEX 3Page 3

8. No useful data are available regarding the extent and severity ofalkali soils in the project area. Mission estimates are that less than 5%of the area would be classified as alkali, and that the problem is notserious.

9. The saline soils can be reclaimed relatively easily by leaching(i.e., bunding and flooding) with from one to perhaps three feet of water,once drainage facilities are provided to collect and dispose of the salineeffluent. The alkali soils probably would require chemical amendment forreclamation such as gypsum, in addition to leaching.

Topography and Land Use

10. The land surface is gently undulating with average slopes to thewest and south of about 1:5,000; however the field grades vary appreciably.Since the land has been under irrigation for over 40 years, a considerableamount of coarse leveling has been done. However, fine leveling is neededin much of the area to enable reasonably efficient use of water and controlof salinity. In some 4,500 ac adjacent to the limestone hills, the soilsare mostly shallow, and consist of gravelly colluvium. Soils of the majorityof the area are derived from river alluvium. Organic matter and nitrogencontents are low, phosphate is moderate and potash is adequate. All thesoils are calcareous, and are slightly to moderately alkaline, and somecontain gypsum. Infiltration and permeability rates are generally satis-factory for both irrigation and drainage.

11. Land use in the project area is estimated to be as follows:

Cultivable Commanded Area (CCA); 44,000 ac (approx.)Cropped area; 37,090 ac, 86% of CCA.Single cropped area; 25,840 ac, 56% of CCA.Double cropped area; 11,250 ac, 30% of CCA.Culturable waste;. 17,350 ac, 40% of CCA.

Culturable waste, i.e. land which has not been cropped for three seasons ormore, is either too undulating or too severely salinized to be cultivated atpresent. Before the cropped area can be increased significantly, theculturable waste will either have to be leveled, or desalinized, or both.Medium-scale mechanized earthmoving by heavy duty equipment, followed byfine leveling, would be required for some 15% to 20% of the CCA.

47

ANNEX 3Page 4

Waterlogging

12. Despite the inadequacy of irrigation supplies, 65% to 70% is lostfrom the distribution system and in fields. A large part of this seepsinto the underlying aquifer. Since irrigation was introduced, seepagehas caused the water table to rise to the crop root zone, thereby adverselyaffecting yields. In other places it has risen almost to the soil surface,with the result that the land has to be abandoned. With the water tableclose to the soil surface, capillary rise of groundwater is rapid (1 to 4 ft/year) and upon its evaporation, the salts it contains are deposited in thesurface soil, giving rise to the salinity problem (paras 5-9).

June 1976

48

ANNEX 4Page 1

PAKISTAiN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Labor Supply and Demand

Area Occupations

1. Farms in the project area are all within a few hours walk or ridefrom cotton gins, rice mills, major towns and trade centers, so the locallabor force is widely employed. An estimated 15% of the rural families areinvolved entirely in non-farm occupations and more than 40% in addition,primarily landless and small farm families, rely on non-farm employment fora significant part of their annual incomes. Average wage rates for semi-skilled and unskilled labor, therefore, are somewhat higher than wage ratesin most other rural areas, and seasonal wage fluctuations are at a minimum.

2. The employment impact of this project on landless workers andsmall farm wage earners can only be roughly assessed. Because of the proxi-mity of transport routes and commercial centers, the rural and urban laborforces are mobile and highly integrated. Employment levels in non-agricul-tural activities and participation by landless and farm workers have notbeen surveyed. In the absence of such information, the size of the agri-cultural labor force is estimated from census figures for this area andadjusted according to information from farm surveys in adjacent regions.Prevailing wages paid to unskilled laborers in the local ginneries and millsare taken into consideration in determining the marginal economic cost ofagricultural labor for the project because of the variety and number ofemployment alternatives available to the agricultural population.

Agricultural Labor Supply

3. Project Area Population. According to the 1972 census preliminaryresults, the project area population was about 42,300 persons, comprising7,070 families with an average of 6.0 members each. The growth rate thenwas an estimated 2.3% annually based on the national average growth rateof 3.2% and an estimated urban growth rate of close to 6%. 1/ Present andfuture population in the area is estimated using an average annual growth

1/ Census figures indicate the following population growth rates in the past.

Total Urban

1931-41 1.8 3.41941-51 1.8 3.81951-61 2.3 4.7

In 1961, urban population amounted to about 23% of the total.

49

ANNEX 4Page 2

rate of 2.1% based on projected nation wide growth through 1990 averaging3.i% annually. This projection assumes a decline in fertility of about 30%between 1975 and 1985.

4. Labor Force. In 1972, 6,020 families in the project area wereinvolved in farming, including about 3,500 owners, 1,320 tenants, and 1,200landless families. Aggregate statistics on the size of the agriculturallabor force in the area are not reliable, so estimates for this report arebased on the findings of farm surveys in other parts of the Sind and in thePunjab. Married and single women generally participate in all farm fieldactivities except very heavy work such as cane harvesting. Based on thefarm surveys, about 2.9 adults (or their equivalent) are field workers outof an average family of 6.0 members (para 12(c), Annex 15). The farm familylabor force in 1972, therefore, was about 14,000 adult workers or equivalentand the landless labor force about 3,500 adult workers.

5. Since the overall employment rate in the area is low and jobsoutside the area are numerous, nonresidents are assumed to participate toa negligible extent in the project area labor force. However, in the rabiseason, nomadic herdsmen settle there temporarily and seek field work,particularly during the wheat harvest. Information on the number of theseworkers in the project area is not available, but for this analysis, it isassumed they amount to an additional 5% of the labor force during peak monthsin the rabi season.

6. Monthly Labor Supply. Monthly labor availability is assumed toaverage about 20 days per adult during peak activity, based on the averageseven hour field day which is used in estimating the crop labor requirements.The future size of the labor force and peak monthly labor supply are pro-jected as follows:

AgriculturalProject Area Labor Force Peak Field Labor SupplyPopulation (Permanent) Rabi Kharif(persons) (adults) ('000 man-days/month)

1972 42,300 17,500 370 350

1975 45,000 18,600 390 3701980 49,900 20,600 430 4101985 55,400 22,900 480 4601990 61,500 25,400 530 510

Agricultural Labor Demand

7. Field Requirements. Peak field activity occurs in the months ofOctober and November during cotton picking and land preparation for rabicultivation and again in April and May during the rabi wheat harvest. Under

50

ANNEX 4Page 3

the project, field requirements in all months would about double. Estimatesof average monthly requirements over the project area are given in Table 1.Annual demand with and without the project would be as follows:

Annual Field Labor Demand('000 man-days)

Total Family Hired

Present 1,100 840 260Future without project 1,130 920 210Future with project 2,400 1,470 930

Increment due to project 1,270 550 720

8. Farmers and tenants in many cases exchange labor during periodsof peak activity. Only seldom is it on a cash basis. In addition, somemembers of the farm labor force take non-farm employment which earns morethan the average cost of their hired labor replacements. These minor varia-tions are assumed to have a negligible effect on the aggregate net increasein field demand.

9. Employment Alternatives. Other than farm field work, the laborforce is involved in: (a) farm and home maintenance; (b) care of livestockand processing of livestock products; (c) winnowing and processing of grainand oilseeds, and (d) off-farm subsidiary employment in mills, ginneries,transport, commerce and Government service. Of the women and children notcounted in the field labor force above, some are involved in the work incategories (a) to (c). Thus, during the slack agricultural season, part ofthe field labor force has alternative employment. Statistics on the numberand distribution of seasonal and permanent non-field employment opportunities,however, is not available. For the purpose of this analysis, non-farm wagelevels are taken into consideration and the slack season field labor supplyis assumed to be about 25% less than the peak supply.

Project Employment Effects

10. Farm employment opportunities would increase about 50% due tothe project. Without it, field labor demand would remain about the sameas the area becomes further waterlogged or saline, and, due to populationgrowth, future demand would amount to only about 22% of the expected laborsupply compared with 30% at present. After full development, annual fieldlabor demand would reach about 47% of the local supply. A large part ofthe increase would be available to the landless workers as the farm fieldrequirements would double and compete with off-farm wage opportunities forfarm family members.

11. Due to production increases amounting to about 15,000 lg tons ofgrain and 3,000 lg tons of cotton lint under the project, peripheral employ-ment in the processing industries and related marketing and transport would

51

ANNEX 4Page 4

also increase. Fertilizer use in the area would increase from about 700 igtons to about 3,700 lg tons, reflecting greater manpower requirements inthe distribution of farm inputs.

12. The fivefold increase in net farm incomes (Annex 15) would havea significant multiplier effect on the local economy. Since after fulldevelopment most farm incomes would exceed subsistence requirements, muchof this increase would be in the form of disposable income. As a result,employment opportunities in retail commerce and consumer services wouldincrease.

Prevailing Wage Rates

13. Field labor wages in 1974 ranged between Rs 5 and Rs 11 per man-day. Cotton pickers earned Rs 5 per md seed cotton, the equivalent of bet-ween Rs 5 and Rs 8 per man-day, and hired workers at harvest time earnedabout 1/20 of the wheat harvest or between Rs 7 and 11 per man-day. Semi-permanent farm workers were hired for around Rs 300 per month, and permanentworkers at Rs 250 per month. The latter rate, equivalent roughly to Rs 10per man-day (Rs 14 in 1975 terms), is used in valuing hired labor for thefarm budget analysis (Annex 15). Wage rates for unskilled labor in the localcotton gins were less than Rs 10 per man-day, which was the ginnery ratepaid through labor contractors.

Marginal Economic Cost of Project Field Labor

14. Most of the farm labor, particularly in the slack seasons, issupplied without wages by family members. Wage labor at present is lessthan 10% of farm field requirements (Table 3) and only about 60% of the pres-ent total landless agricultural labor supply. Due to this overall under-employment, therefore, the average opportunity cost of family labor is lessthan the prevailing wage paid to workers hired during heavy field activity.Nevertheless, because of the availability of some off-farm employment, theiraverage opportunity costs exceed the marginal value of their subsistence.The overall economic cost of field labor comprises the sum of the labor costsat various wage levels between these extremes. Total costs are estimatedon a monthly basis to reflect the seasonal variation in demand. However,statistics on off-farm employment opportunities are not available, and thescarcity of data on farm income levels and the labor force profile makesthe evaluation of economic shadow farm wage rates extremely subjective.

15. The marginal economic cost of additional field labor required underthe project is determined in this analysis by comparing total labor costswith and without the project on the basis of the hypothetical labor demandcurve, Figure 1, constructed using simplifying assumptions given below. Thecurve is a plot of the estimated marginal economic wage as a function ofthe labor demand/supply ratio and attempts to reflect the variation in wagelevels discussed above.

52

ANNEX 4Page 5

(a) At minimum employment levels, the marginal economic wagewould be Rs 2.5 per man-day (Rs 3.6 in 1975 terms), 15%of the maximum market rate, exceeding by Rs 2.0 the valueof additional consumption needed for a family member withoutalternative employment to undertake field work (Annex 15);

(b) At a monthly employment level equivalent to maximum slackseason family labor requirements (30% of the full localfield labor supply), the marginal wage would be Rs 5 perman-day (Rs 7 in 1975 terms), the minimum average marketrate taking into consideration available non-farm wages.

(c) At a monthly employment level corresponding to the presentpeak employment level, 56% of the full local field laborsupply, the marginal wage would be equal to Rs 11 per man-day (Rs 16 in 1975 terms), the maximum market rate.

16. Based on the monthly demand estimates, sums of monthly labor costsat all wage levels up to the marginal wage for with and without project con-ditions are shown in Table 2. The incremental labor cost due to the project,accordingly, amounts to Rs 4.7 million (Rs 6.7 million in 1975 terms), whichimplies an overall shadow wage rate for additional project field labor ofRs 4.70 per man-day (Rs 6.7 in 1975 terms).

June 1976

53

NMEX 4Table 1

PAKKTSTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT ({ARPp, T)

Agricultural Labor Supply and Demand

Average Field Labor Demand With and Without the Project 1/

llonth Field Demand Demand/Supgly Ratio('000 man-days) --------(%)2/

w _ w _

January 98 23 25 6February 113 23 28 6March 109 25 27 6April 201 94 38 18May 229 116 45 23June 62 49 16 13July 62 18 16 5August 70 25 18 7September 65 14 17 4October 212 139 42 27November 360 185 68 35December 196 60 37 11

Annual Total 1,778 773

Increment in field labor requirements due to project: 1,005,000 man-days

Note: W - After full project development.W - In the future without the proposed project.

1/ On the basis of the cropping pattern with sugarcane.2/ Assumes that supply in slack months (January-March,

June-September) is 75% of the peak supply as a resultof seasonal non-farm employment.

54

ANNEx 4Table 2

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Labor SUpply and Demand

Marginal Economic Cost of Field LaborWith and fLthout the Project

Sum of Labor CostsMonth Marginal Economic Wage Level at all Wage Levels

(Rs/man-day) 1/ ('000 Rs)

w W W W

January 4.0 2.6 235 40February 4.5 2.6 290 40March 4.5 2.6 290 40April 6.5 3.2 660 185May 7.7 3.8 850 250June 3.0 2.9 115 90July 3.0 2.5 115 30August 3.1 2.6 135 40September 2.9 2.5 120 23October 7.4 4.4 775 352November 13.2 5.7 2,270 555December 6.3 2.0 625 100

Total annual labor cost: 6,480 1,745

Annual economic cost of additionalfield labor due to project development: Rs 4,735,000

Implicit average marginal economic wage: Rs 4.70/man-day

Note: W - After full project development.W - In the future without the proposed project.

1/ Expressed in terms of 1974 Rupees.

55

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Labor Supply and Demand

Estimate of Project Wage Labor Demand

Farm Size Per Acre Annual Require- Total Annual RsquiroxaontDistribution ment For Wag e Labor For Wage Labor

No. of Area of (See Annex 15, Table 4) (44,000 ac)Holdings Holdings P W/O W P W/O W

(as % of total) T an-day/acT (000 man-dayi

(1) Under 7 ac(use 5 ac model) 45 18 0 0 10 0 0 79.2

(2) 7 ac - 25 ac(use 10 ac model) 49 52 4 4 20 91.5 91.5 457.6

(3) Over 25 ac(use 1.3x25 ac model) 6 30 13 9 30 171.6 118.8 396.0

Total Annual Demand 263 210 933

Annual Supply 3,700 5,100 5,100

Demand/Supply (%) 7 4 18

ul w rFi

PAKISTANKHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT ANNEX(KHAIRPUR II) Figure 1

Agricultural Labor Supply and DemandMarginal Economic Wage for Field Labor

16

15-

14-

1 3

1 2

1 0

Marginal 9EconomicWage 8(Rs/man-day)

7

6

5

4

3

2

1 l10 20 30 40 50 60 70 80 90 100

Field Labor DemandAs % of the Local Supply

VVordd Bank-9971 (R)

57

ANNEX 5Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Development

Agriculture in Pakistan and in Sind Province

1. Agriculture is the country's major industry, employing, directlyor indirectly, about 75% of its population. Some 46 M ac are cultivated, ofwhich 33.5 M ac are irrigated by canals originating from the five major rivers.Some 13.5 N ac of canal commanded land is in the three barrage commands ofthe Sind Province. Of this, the Sukkur Barrage Command, in which the projectarea is situated, extends to about 7.5 M ac and is the largest singleirrigation unit in the world. Table 1 shows the relevant data pertainingto area and production for Pakistan as a whole and for the Sind Province.

Agricultural Development in the Project Area

2. The project area comprises some 36,000 ac of cultivable commandedarea (CCA) to the east of SCARP Khairpur (Annex 2) plus 8,000 ac of SCARPKhairpur, that had to be included because it is commanded by the tailreaches of canals that will be enlarged under the project. Present crop-ping intensity is about 85% and crop yields are relatively low, due tosalinization, under-irrigation and yield limitations brought about by a highwater table.

The Crops Grown and Their Future Prospects

3. Rabi Fodder. The rabi fodder crop is almost entirely berseem,the Egyptian clover. It is a cash as well as a fodder crop. North of theIndus there is no rabi irrigation. Animals of the nearby towns get theirfresh fodder from the Khairpur canal commands. Berseem varieties are good,the crop is largely disease free and there is no reason to believe thatin the future the area will decrease. Yields will increase in line withbetter water supplies and culturable practices.

4. Dates. The Khairpur area is the main date growing locality ofthe Indus Basin and one of two in Pakistan. Since the functioning of SCARPKhairpur and in view of restriction of imports and consequent high prices,the number of date groves planted in the last four years is impressive.Similar increases are anticipated for the project area because of: theexpected continued profitability of the crop; the greater ease of establish-ment under conditions of lower salinity, and intensified extension advicethat will concentrate on improved nursery and transplanting practices,thereby lessening the risks and difficulties of establishing the groves.

58

ANNEX 5Page 2

Yields are expected to increase considerably by proper plant spacing, andirrigation and fertilization practices that would prevent fruit drop. Whilenot an outstanding need for the present project, the setting-up of moderndate washing, packing and storage facilities should not be delayed too long.

5. Sugarcane. The very small area grown at present suggests thatcane is sold for direct consumption. There are plans to build a sugar millat Kot Diji, just south of the project area. Once this takes place, gurmaking (local, unrefined, domestically-produced sugar) will develop as ameans of combating price fluctuations and inconveniences of deliveryscheduling. The poor crops will find their way to the fodder markets. Thetops will become an important contribution to winter fodder supplies.Several varieties have been developed that are known to give good yieldsin the project area.

6. Rice. Rice at present is grown where the water table is high orwhere reclamation by leaching is required. Yields are low. It is noteconomical to grow rice with tile drainage as it is not feasible to shutoff the laterals under the rice fields and therefore water losses by perco-lation would be very high. It is expected that once reclamation of salinelands is complete, no rice will be grown.

7. Cotton. During the last few years, cotton area and yields haveincreased considerably, the latter being due as much to the low incidence ofthe pink bollworm as to increased fertilizer use. Pest control measuresare inadequate. Aerial spraying, covering the area one or one and a halftimes in August and September, frequently the only spray treatment given,cannot achieve more than, at best, a very marginal decrease of pink bollwormattacks. Jassids are not controlled by it, causing in some years, seriousdamage to the young crop. Resistance is said to be higher on a newlyreleased variety called Qualandri. The yield limit of 25 md per ac isunlikely to be exceeded until new, non-branching cultivars are developed.

8. In the project area, cotton is planted between mid-May and mid-Juneand continues producing worthwhile pickings well into December. Wheatshould be planted by the end of November. Consequently, in the croppingpattern only a very small area of wheat may follow cotton.

9. Wheat. The area of wheat is relatively low because of the rabiwater shortage in the Patni Command and the fact that water availableis more profitably used for berseem. The low yields compared to what ispossible is partly due to chronic rabi water shortages in most of the areaand consequent farmer reluctance to switch to the high yielding dwarfvarieties. With assured, year-round water supplies becoming available underthe project this situation is certain to change.

10. Oilseeds. The small area devoted to Brassicas in the face ofPakistan's acute vegetable oil shortage is not due to the price, but to theconsiderable risk factor of aphis attacks. A variety of brown sarson(mustard), S9, has recently been released which is said to have some re-sistance to aphids. Unfortunately, it occupies the land between October toNovember and February to March. Toria (rape) matures more quickly but can

59

ANNEX 5Page 3

only be grown successfully with adequate pest control. Its advantage oversarson, besides earlier maturing and the possibility of earlier planting(late September) is a much higher degree of cold and frost tolerance. Raya,another species of mustard, is also cold resistant and can be planted untilthe first week in December. The successful extension of the area under thispotentially very profitable crop hinges on adequate pest control and carefulattention to the details of seedbed preparation.

11. Grain Sorghum and Kharif Fodder. It is expected that in the futureit will be possible to separate the two crops. Both are and will continueto be sorghum, but grain supplies will be produced from high yielding dwarfvarieties with a yield potential several times that of the present. Thevarieties now grown will continue to provide fodder.

12. Pulses. There is no indication of a breakthrough in the yield ofthe rabi pulse crops, which are mainly the chick pea. Therefore it is notexpected that the area will increase. The kharif pulse is mainly the clusterbean (guara) which is an industrial raw material for gum production as wellas for a fodder crop. In this case, with good husbandry a modest increasein area and yield is likely.

June 1976

60

ANNEX 5Table 1

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT

(Khairpur II)

Indus Basin, Pakistan and Sind Data

Cultivable Area Pakistan Sind-- Million Ac --

Culturable commanded area (CCA)of canal commands of the majorrivers (including culturable waste) 33.5 13.2

Irrigated from sources ot4er thanthe major rivers i.6 0.1

Rainfed lands 3.0 0.8

Riverine lands (often inundated byfloods in summer) 2.9 1.6

L6.o 15.7

Area and Production of Major Crops

Pakistan SindArea Production Area Production

(M acs, (M tons) (M ac) (M tons)

h'heat 10.9 6.6 1.9 1.0

Rice (milled) 3.,° 2.2 1.7 1.2

Cotton )-9 2.1 1/ 1.0 0.6 1/

Sugarcane 1.3 19.6 0.2 2.9

Grain 2. 0.5 0.5 0.1

Rape and mustard 1.3 0.3 o.4 0.1

1/ Production in terms of seed cotton. 61

ANNEX 6Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Project Works

A. Tile Drainage System

I. Project Drainage Criteria

Drainage Method

1. In general, two alternative methods provide effective control ofthe water table:

(a) horizontal drainage, by means of either open channels orsubsurface tile drains (pipes), pumps, and open disposalchannels, and

(b) vertical drainage, by means of tubewells.

Both methods have been tested in Pakistan, the former on reclamation farmstotaling only about 500 ac and the latter about 1.5 million ac includingabout 350,000 acs in SCARP Khairpur adjacent to the proposed project area.Each method has proved effective in lowering and controlling the water table.Where the subsoil conditions and aquifer are favorable, tubewell drainageusually is somewhat lower in capital cost and easier to install than horizontaldrainage. In addition, where the groundwater remains relatively fresh, tube-wells can be scheduled to operate so as to supplement irrigation. The O&Mcosts are usually higher for tubewells than for horizontal drainage.

2. Aquifer conditions in the proposed project area, however, werefound unsuited to tubewell drainage. The area which lies next to the RohriHills is underlain with bedrock at a depth of only about 50 ft. In thesecircumstances, horizontal drainage would be required to provide adequatecontrol of the groundwater table. In addition, since disposal of the efflu-ent would be into the irrigation system, this type of drainage would havethe advantage that the effluent from horizontal drains over the years becomesless saline and would eventually be suitable for mixing with irrigation waterfor local use. Subsurface tile drains rather than open channels would beinstalled for the laterals and collectors so that the system would not dis-rupt the irrigation distribution system and occupy less land.

62

ANNEX 6Page 2

Groundwater Table Depth Control

3. Of the major crops in the project area, cotton is most susceptibleto damage from waterlogging as its tap root grows to depths up to 3 ft andcannot survive saturation for periods longer than 2 to 3 days. The fibrousroot systems of sugarcane and wheat grow no deeper and can survive somewhatlonger periods of saturation.

4. The tile drains, therefore, would be designed to bring down thegroundwater table within two days to 3 ft below ground level during peakirrigation. Furthermore, to prevent re-salinization of the upper soilprofile from capillary rise from the water table when there is no irrigation,tile depth would be a minimum of 6 ft.

5. After canal remodeling and initial special leaching applications,recurrent irrigation applications would make additional special applicationsfor leaching unnecessary. Drainage at the rate of normal field losses,therefore, will be adequate to maintain the water table at tile depth. Peakirrigation will occur in August when rainfall is less than one inch. Thepeak rate of groundwater recharge from field losses at this time will be anestimated 0.12 inch per ac per day (3.3 cusecs per sq mi).

Lateral Drain Design

6. In view of the range of soil conditions in the area, spacingbetween lateral drains would vary. It would be determined from soilpermeability measurements taken in the pre-construction field survey.Using information in the Project Planning Report and collected in the field,which is sufficiently accurate for use in making the project cost estimates,the spacing between tile drain lines would vary between 150 ft and apractical maximum of 400 ft. The estimated average spacing would be about200 ft. 1/ To enable cleaning and flushing after installation, the lengthof laterals would not exceed 1,000 ft. Thus, the average area drained perlateral would be about 9.2 ac. Based on the peak drainage duty of 3.3 cusecsper sq mi and installation on a 0.10% gradient, 5-inch diameter concretepipe or 4-inch diameter plastic pipe would be suitable and would provide an

adequate safety margin against blockage due to silting. While thesecriteria are suitable for estimating average project requirements, finaldesign would take into account local variations such as greater than averageseepage near canals, and at that time tile diameters would be checked withaccepted design formulas for hydraulic efficiency.

Effluent Disposal System Design

7. Based on a kharif cropping intensity of about 70%, collector (andpump) drainage duty would amount to about 2.5 cusecs per sq mi. Collector

1/ Spacing same as determined in the Project Planning report, but drainageduty is less than assumed in the report.

63

ANNEX 6Page 3

lines would be about 2,500 to 3,000 ft long (5,500 ft per pair) and woulddrain about 125 ac each. Assuming a 0.05 to 0.01% gradient, 10-inch to14-inch diameter concrete pipes would be adequate, including contingencyfor soil deposits. Collectors, laid perpendicularly to the laterals, wouldbe installed at depths from 7 ft to 9.5 ft. Pumping stations would eachserve two collectors or about 250 ac, and would have a discharge capacitytotaling 0.9 cusecs.

Drain Construction and Materials

8. Pipes. Materials which have been used successfully for tile drainsinclude baked clay, concrete, smooth plastic in straight lengths, and con-tinuous corrugated plastic delivered in rolls. Of these, locally manufacturedcorrugated plastic pipe would be the most economical for the lateral drainsthroughout most of this project considering cost of materials, transport andinstallation. Moreover corrugated plastic pipe would provide more reliableinstallations in the part of the project with unstable soil conditions.The main characteristics and considerations in each case are as follows:

(a) Baked Clay. Clay pipes have been satisfactorily used in othercountries for over 100 years. However, manufacturing pipesof this material in sufficient quantity and quality for alarge installation requires a specialized and highly developedindustry which is not available in Pakistan at present.

(b) Concrete. Although manufacturing experience in Pakistan islimited, concrete pipes of adequate quality could bemanufactured for this project without major problems. In viewof relative material prices, concrete is preferable to plasticfor the large collector pipes since the price of plastic piperises sharply with increasing diameters. Labor-intensiveinstallation of concrete pipe is generally more difficult andcostly because dewatering and trench shoring would be requiredto enable joining pipe sections and placing of the gravelfilter. In the project area, installation of concretecollectors would be at depths greater than 7 ft which innearly all cases would require dewatering before installationby labor-intensive methods. Under these circumstances, theirinstallation would be carried out by means of heavy-duty drain-laying machines.

(c) Smooth Plastic. In other countries, smooth plastic pipe gene-rally has been made obsolete by corrugated pipe, since forequal strength, smooth pipes require considerably greater wallthickness and are therefore considerably more expensive.

(d) Corrugated Plastic. This type of pipe offers the best securityfor achieving good quality drain installation in unstable sands.Continuous lengths with pre-wrapped filter would minimize the

64

ANNEX 6Page 4

risk of failure due to improper placing of pipe and offilter materials during installation. Pakistan has anestablished plastic industry. In Pakistan, a largeplastics manufacturer, Pakistan PVC Ltd., has installedthe equipment necessary for making the corrugated plasticpipe and by mid-year will have developed sufficientproduction capacity to undertake the production forthis project at competitive prices and satisfactorystandards. The raw materials are being made in Pakistanfrom calcium carbide. Both polyvinyl chloride (pvc) andpolyethylene (pe) are being used, pvc is used predominantlyin Europe, while pe is preferred in the USA. The possibleeffects of light and heat should be given careful attentionin determining whether pvc or pe would be most appropriate.Perforated plastic pipes would be used for the laterals only.

9. Filters. Because extremely low soil stability is found intermit-tently throughout the project area, drains would require a complete envelopeof filter material to prevent entry of soil particles. The project would usetwo types of filters, as described below:

(a) Gravel. Graded sand and gravel, which provide a reliable anddurable filter under most conditions, would be used with theconcrete pipe collectors and most of the laterals. Installationrequires careful working and close supervision and cannot bedone in unstable soils or below the groundwater table withoutprior dewatering. If suitable deposits of sand and gravel arenot available in sufficient quantities near the project area,they would have to be produced in nearby quarries in theRohri Hills.

(b) Organic Material in Bulk. Materials, such as peat, wheat,barley straw, and brushwood, etc., have been used successfully inEurope and North America in place of gravel for many years, butwould not appear to have a place under Pakistani conditions.The use of rice husks, however, would deserve further study.Also, Pakistan will require an inventory of other locally avail-able materials and long experience in each locale to establishtheir suitability under different soil conditions.

(c) Materials in Sheets or Mats. This type of filter would be usedin trial lengths in the project, in areas with unstable soilswhere corrugated plastic pipe is installed. Organic and in-organic materials in this form, which would have to be imported,are applied in two ways:

65

ANNEX 6Page 5

(1) on a roll placed on the drainage machine, from whichthe sheet is unrolled and applied during pipe instal-lation; and

(2) as a pre-wrapped envelope surrounding corrugated plasticpipes. Installation of pre-wrapped plastic pipe in con-tinuous rolls is nearest to being fail-safe of all possibleinstallation methods, since the filter is mated with thepipe above ground and section joints are not exposedduring installation. Of the possible wrapping materials,peat and copra are believed the most suitable. Model tests,which can be done in a rather simple way but which needexpert supervision, would be required prior to constructionto establish which material is most suitable for use inthe project area.

II. Drainage Works

Tile Drainage System

10. The project drainage works would include:

(a) installation of horizontal subsurface drains throughout36,000 ac of the project area, including about 7.6 millionft of lateral pipes.1/ About 0.3 million ft would be ofconcrete and about 7.3 million would be of perforatedcorrugated plastic pipe; about 700,000 ft of concretecollector pipes would be installed; and

(b) construction of 130 pump stations required to lift thedrainage effluent from the collector outfalls, and about250,000 ft of disposal channels for carrying the effluentinto the existing main drain system of SCARP.

Lateral Tile Drain Installation

11. Based on the preliminary investigations, lateral drain pipeswould be installed on parallel alignments between 150 and 300 ft apart, withan average spacing of about 200 ft and at a depth of about 5 to 6.5 ft, whichwould be adequate to bring down the groundwater table within two days to 3 ftbelow ground level. The length of laterals would not exceed 1,000 ft andthey would be installed on approximately a 0.10% gradient. Concrete pipe

1/ Of the 36,000 ac in Area A, 1,000 ac near the hills would require nodrainage facilities, only additional irrigation supplies.

66

ANNEX 6Page 6

of 4-inch diameter, or plastic with a diameter of 4 inches, would provideadequate capacity for the average drained area of about 5 to 9 ac per lateraL,

12. In at least one quarter of the area, the subsoil is sandy and veryunstable and the depth of lateral drains would be below the existing ground-water table. Under these conditions, corrugated plastic pipes surroundedby a fine gravel filter (or, in trial lengths, pre-wrapped with a syntheticfilter sheet) and laid by machine in continuous lengths would be required toachieve reliable drain installation without dewatering. In this case, drainswould be immediately covered with soil to prevent floatin&. In the remainingarea, both plastic and concrete pipes with gravel filter would be installed.About 20% of the lateral drains would have to be installed below the ground-water table but in stable soils, and another about 20% would be installedabove the existing water table in sandy soils. The remainder would beinstalled in more stable soils. In the interests of rapid progress, ease ofhandling, and lower cost, most of the laterals would be laid with plasticcorrugated pipe manufactured at a plant imported for the purpose and set upat an appropriate central location such as Khairpur Mirs town.

13. To introduce current mechanized methods of rapid, accurate andlower cost drain-laying into Pakistan, and to test their suitability underlocal conditions, two sel -propelled combination trenching and tile layingmachines would be used to install the lateral drains. Each machine wouldbe capable of laying an average of about 4,000 ft of 4-inch plastic pipeor 1,500 ft of 5-inch concrete pipe in an eight-hour day. Theae machineswould be capable of surrounding the pipe with fine gravel filter duringplacement, or laying pre-wrapped corrugated plastic pipe. Trench excavation,10 inches wide and down to 6.5 ft deep, would be by means of either bucketchain or bucket wheel (which will require less maintenance). In addition,a towed mole-type t,enchless drain instaliation machine would be used totest the suitability of this type of machine for laying plastic pipe withgravel filter under project conditions. If the inexpensive towed machineis satisfactory in the sandy sub-soils, a self-propelled mole-type trenchlessmachine would also be used to lay plastic pipe at a reduced depth and spacing,though at the faster average rate of about 6,000 ft per day. Alternatively,a third trenching and tile laying machine would be used, enabling over 7 M ftof mostly plastic lateral pipe to be laid in about three years. In additionto the characteristics of faster completion of work and less disturbance tofarming operations, mechanized installation of drains would have the follow-ing advantages over manual labor:

(a) the grade would be set without deviations;

(b) laying of concrete pipe sections and placing of gravelfilter envelope would be more uniform;

(c) pipes would be laid simultaneously as the trench isexcavated, which would eliminate the need for shoringand dewatering and minimize risk of damage from trenchcollapse, particularly in unstable soils and in highgroundwater conditions; 67

ANNEX 6Page 7

(d) continuation of work would be ensured during periods ofseasonal labor shortage, but sufficient spare parts mustbe on hand to avoid prolonged delays due to breakdowns; and

(e; construction costs would be equal to or less than those forhand labor at the required installation depth of about 6 ft.

Collector Installation

14. Concrete collector drain pipes would be installed at depths ofbetween 7 and 10 ft. Each line would extend about 3,000 ft on a gradientof .01 to .05%. Pipes of 12 to 14 inches diameter would provide adequatecapacity for the average drained area of about 135 ac per collector line.

15. Installation of collector drains would have to be carried outbelow the water table by machines developed specifically for that purposein the USA. It is envisaged that one bucket-wheel machine (with relativelylow maintenance requirements) would be used, capable of trenching down to9 ft, with one chain-bucket machine for deeper work. Both machines wouldcarry a protective steel box about 2 ft wide and 9 to 10 ft high mountedat the rear, which would be lowered into the trench behind the trenchingmechanism. An operator would work inside the box, fitting the concretepipes lowered down to him by derrick, and actuating a hydraulic or rollermechanism which joins each pipe under pressure to the drains already laidon a bed of fine gravel. As the machine advances, it simultaneouslytransfers backfill into the trench. In this way, floatation forces arebalanced and the alignment and grade of the drain are maintained. Themachines would be capable of laying about 400 ft to 800 ft per day, depend-ing on depth and groundwater conditions.

16. Installation of trial lengths of collectors by labor-intensivemethods would require wider trenches than with mechanized construction andwould require dewatering by the well-point system. Excavation of trencheswould be carried out by manual labor (and donkeys) down to about 3 to 4 ftand by mechanical back-hoe for the remainder. Construction would be at therate of about 1,000 ft per day to keep pace with the lateral installation,and would be carried out by two crews of about 600 men each and a back-hoe.

17. Manholes would be constructed at intervals of about 150 to 400 ftat junctions with the laterals to allow inspection and maintenance. Man-holes would be buried to prevent damage. Protruding manholes, because theyare more accessible, are more likely to interfere with local cultivatingpractices and to be abused. Each manhole would have a silt trap of suffi-cient depth. The inside diameter of the manhole would be adequate for a manto work in, and the cover diameter would be considerably larger to preventexcessive soil faliing into the pit.

68

ANNEX 6Page 8

Pump Station and Open Disposal Channel Construction

18. About 130 pumping stations would be constructed at collectoroutlets. Each would serve two collectors, about 270 ac, and would have adischarge capacity of about 0.9 cusecs. These stations would lift thedrainage effluent from the collectors and discharge into open disposalchannels which would empty into the existing SCARP drainage system. Channelsections would average about 10 ft in width and about 2.5 ft in depth.Based on the preliminary estimates, about 250,000 ft of open drainagechannels would be needed.

B. Canal Remodeling

19. The existing discharge capacity of the canal system restricts thedelivery of water to farms at the time Qf highest demand in mid-summer, sothat crops are under-watered by about 40% of their maximum irrigation require-ment. During the kharif season, the river discharge exceeds the canal diver-sion demand of the system, and considerable quantities of water flow to thesea. Thie project canals would be enlarged so as to make more use of avail-able river lows, meet the high kharif crop water requirements and, when pos-sible, provide for leaching supplies to reclaim severely salinized areas.

20. Preliminary designs for increasing the capacity and improvingcanal operations were drawn up by WAPDA's consultants in 1971. These in-cluded outline plans for additional canal capacity and control structuresto enable distribution of a greater range of flows to be carried outeffectively.

21. Operation of minor canals on a rotation basis would be accordingto a planned schedule so as to match crop water requirements and demand forsaline soil reclamation. The capacity of the Patni Distributary would beincreased from 200 cusec at its head to 380 cusec in the first 6 mi by theaddition of a parallel or dual canal, so as to accommodate the lower flowsin either channel and the higher flows in both. The seasonal variation inflow could then be carried without causing either scour in the rabi seasonor siltation in kharif. Discharge and distribution to minor canals wouldbe controlled at a common pond at each cross-regulator. The enlargementof the remainder of the Patni Distributary and other canals would be carriedout by widening on one side only. Additional control structures would beconstructed throughout the area to enable supplies from minor canals and water-courses to be rotated among users efficiently. Final design would be preparedby WAPDA(SZ) in collaboration with Sind Irrigation and Power Department,assisted by consultants.

22. Remodeling of the Kalori minor canal in Area B, serving thetubewell-drainage area of the project, would be carried out first. Workwould be phased so that improved water supplies were delivered to new orimproved watercourses as soon as possible after their completion. Increasedirrigation deliveries would be phased to follow the installation of drainagein other areas. 69

ANNEX 6Page 9

C. Watercourses

23. Watercourse reconstruction under the project would have thefollowing objectives:

(a) to equalize so far as possible the discharge through eachirrigation outlet into watercourses at a level of flow whicheach farmer can control satisfactorily, i.e. about 1.5 cusecs;

(b) to have sufficient distribution capacity per unit of area toprovide for maximum kharif irrigation requirements;

(c) to equalize water distribution to all farm holdings on eachwatercourse by:

(i) improving the hydraulic characteristics (section andslope);

(ii) reducing seepage losses, and

(iii) reducing surface losses

so that the discharge at the tail approximates that at thehead, enabling each farmer to receive his fair share of thesupply, and

(iv) to reduce maintenance requirements.

24. These objectives would be achieved by the following means:

(a) the area served by each watercourse would be equalized asfar as possible, by subdividing large chaks;

(b) new irrigation outlets would be located on minor canals,to serve the revised chak areas;

(c) watercourses to be retained would be reconstructedso as to reduce seepage losses and improve operatingcharacteristics, including straightening of alignmentswhere appropriate, and providing fixed individual farmoutlets;

(d) new watercourses would be constructed where necessary; and

(e) up to 15 of the new watercourses would be lined withdifferent locally available materials to ascertain thedifference in costs and seepage losses,comparing linedand unlined channels as well as lining materials.

70

ANNEX 6Page 10

25. The method of implementation would be on the following lines:

(a) WAPDA(SZ), in collaboration with SDA and with the use ofavailable air photography, would survey and define theoptimum chak areas, in relation to flow, irrigationrequirements and farm boundaries;

(b) The SDA and Revenue Department staff would obtain theagreement of the majority of farmers to the revisedwatercourse arrangements and flows, and acquire thenecessary rights of way;

(c) WAPDA(SZ) would prepare the detailed designs of channelsections and structures, based mainly on earth embankmentsstabilized with lime or cement, compacted to recognizedspecifications, or other tested arrangements for reductionof losses, and individual permanent farm outlets; and

(d) Local contractors, using small-scale soil stabilizingand compaction equipment provided under the credit,would be supervised and paid by WAPDA(SZ) in collaborationwith IRDP authorities.

June 1976

71

ANIEX 7

PAKISTAN Page 1 of 8KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

List of Equipment and Materials to be Imported1/

EstimatedItem Ref. No. Description Quantity Price, ciT Karachi

Unit Total

1. Concrete aggregate and gravel filterproduction equipment:

(a) Air compressors, diesel-engined, approx.100 hp 2-No. 15,000 30,000

(b) Mobile crushing plant, electricallypowered with diesel generators,including receiving screens, crushers,vibrating screens dust extractors,elevators and delivery bins, 30 tonsper hour stone crushing capacity 1-No. 200,000 200,000

(c) Mobile screening plants, electricallypowered with diesel generators, forriver and pit gravel, with elevatorsand delivery bins, 15 tons per hourcapacity 2-No. 40,000 80,ooo

(d) Front-end loaders, tracked, approx.110 hp 2-No. 70,000 140,000

(e) Tipper trucks, 5-ton capacity 8-No. 18,000 144,000

(f) Pneumatic rock drills & bits 10-No. 1,500 15,000

(g) Drill bit sharpening machines 2-No. 2,500 5,000

(h) Miscellaneous equipmelnt & tools Sum 25,000

(i) Spare parts and maintenance supplies (25) Sum 161,000

Subtotal 800,000

2. Concrete pipe production equipment:

(a) Concrete pipe manufacturing plants,electrlxally operated, for 5-inch and12 to 18-inch pipes, including aggregateelevator, weigh batcher, paddle mixer,moulds, packer heads, and pipe rings 2-No. 120,000 240,000

(b) Semi-manual 5-inch pipe packer headmachines, electrically driven 30-No. 2,000 60,000

(c) Small concrete batching and mixingplants for (b) 2-No. 15,000 3 ojoo

1/ This is not a firm list. The list should bereviewed in detail after final design criteria 72and methods of construction have been decided.

ANNEX 7Page 2 of 8

EstimatedItem Ref. No. Description Quantity Price, cif Karachi2. (contd.) Unit Total

US$ UsT(d) Sprinkler equipment and pump for curing

pipes 4 sets 2,500 10,000

(e) Fork-lift pipe-stacking trucks 2-No. 30,000 30,000

(f) Flat-bed trucks, 5-ton 5-No. 14,000 70,000

(g) Tractor (wheeled) 50 hp 5-No. 10,000 50,000

(h) Trailer - 3 ton for use with above tractorsl0-No. 2,000 20,000

(i) Manhole casting machine 2-No. 10,000 20,000

(j) Miscellaneous equipment and tools Sum

(k) Spare parts and maintenance supplies (25%) Sum 178,000

Subtotal 870,000

3. Supporting equipment for corrugated plastic pipe manufacturer (Pakistan

PVC Ltd).2

(a) Fork lift truck 1-No. 30,000 30,000

(b) Flat-top trucks, 5-ton 3-No. 14,000 42,000

(c) Miscellaneous equipment and tools Sum 50,000

(d) Spare parts and maintenance supplies Sum 78,000

Subtotal 200,000

4. Tile Drainage Installation Equipment:

(a) Self-propelled, bucket-wheel type excava-tion and drain-laying machines capableof installing 5-inch dia. concrete pipesand 4-inch dia. continuous corrugatedplastic pipe in shallow watertable con-ditions, at controlled depths down to8 ft. 2-Mo. 180,000 360,000

1/ Pakistan PVC Ltd. is the Government owned company wh-ch will make and supplycorrugated plastic pipe for the project. Equipment required by thecompany will be barter traded with certainl length of pipes to be supplied,calculated at the agreed unit price of pipes.

73

A 72x 7Page 3 of C

EstimatedItem Ref. No. Descriptioon Quantity Price, cif Karachi

Unit Total4. (contd.) US$

(b) Self-propelled, bucket-wheel typeexcavation and drain-laying machirlefor installing concrete collectordrainpipes of 12-in to 18-in dia.on gravel bedding in shallow watertable conditions, at controlled depthsdown to 10-ft in caving soil. 1-No. 200,000 200,000

(c) Self-propelled, bucket chain-typetrenching and drain-laying machine,capable of installing 12-in to 18-in concrete pipes and gravel bed-ding at controlled depths down to10 ft in caving soils with shallowwater tables. 1-No. 180,000 180,000

(d) Side-tipping, wheeled front-endloader,/back-hoes for filling trenchergravel hoppers and miscellaneousshallow excavation. 4-No. 40,000 16o,000

(e) Farm tractor, tracked, 70/80 hp forclearing drain alignment and back-filling with trench backfillerattachment. 3-iio. 25,000 75,000

(f) Back-hoes, M cu yd, for exc'n to 10 ft. 2-No. 75,000 150,000

(g) Mobile craIne 4-5 ton 2-N-o. 50,000 100,000

(h) Mobile workshop 1-No. 30,000 30,000

(i) Trailers for transporting drain-laying machines 2-No. 30,000 6c,ooc

(j) Flat bed truck, 5-ton 6-.No. 14,000 84,000

(k) Tractor, wheeled, 50 hp 6-No. 10,000 60,000

(l) Trailer, 3 ton, for use with abovetractors 12-i,c. 2,000 214,000

(m) Fick-up trucks, with light main-tenarce ecuipmert 2-N%To. 8,000 16,000

74

AIT EX 7Page 4 of 8

Item Ref. No. Description Quantity Price, cif KarachiUnit Total

4. (contd.) 7gT TSX

(n) Well-point equipment 1 set 40,000

(o) Miscellaneous equipment and tools Sum 60,000

(p) Spare parts and maintenance supplies (av.30%) SCum 4h5,oOO

Subtotal 1,900,000

5. Canal Enlargement Equipment:

(a) Back-acting, tracked excavators (backhoes), 5/8 cu yd capacity, orequivalent 1-No. 80,000 80,000

(b) Dragline, 1½! cu yd 2-No. 100,000 200,000

(c) Vibrating compactors, towed, 5-tonor ecuivalent 2-No. 10,000 20,000

(d) Farm tractor, tracked, 70/80 hpfor drawing (c) 2-No. 20,000 40,000

(e) Flat bed truck, 5 ton 2-No. 14,000 28,000

(f) Miscellaneous equipment and tools Sum 22,000

(g) Spare parts and equipment main-tenance supplies Sum 80,000

Subtotal 470,000Watercourse Reconstruction Equipment:

(a) Rotary cultivators, 6 ft-wide, p.t.o.driven for soil stabilization 2-No. 2,500 5,000

(b) Farm tractor, tracked, 70/80 hp withditching attachment 2-No. 25,000 50,000

(c) Rotary cultivators, 2 ft-wide, motorizedhand-drawn, for soil stabilization 10-NIo. 500 5,000

(d) Flat bed truck, 5 ton 2-No. 14,000 28,000

(e) Vibrating plate compactors, for ditto 20-No. 500 10,000

(f) Miscellaneous ecuipment and tools Sum 10,000

(g) Spare parts Sum 20,000

Subtotal 128,000 7

r st.,^:iate(i

* - . Desc-ioit oi Quanti ty Frice. cif iiarachiTTri-t Total

R ,,-~ Ccnstr_cti.on Equi;n.'e-!t:

:, ' act-r rubber-tired, 30-tons loaded -Noo. 20,000 20,000

hta;r';' cultivators, 6 ft-wide,F +.>. dr veh for soil stabilization L-No. 2,500 10,000

X f' ) T-looer-truck - 5-ton 2-No. l8,000 36,000

(d) h.-oed graders, 120 hp 1-No. 80,000 80,000

(e) Snare parts & miscellaneous equipment SunT 3h,000& tools Subtotal 180,000

;ermanent Drainage System Equipment:

a) Sets of twin submersible electric, 130 sets 2,300 300,000pumps, including switchgear, fordrainage surips, 15 ft gross head,2 x 0.75 cusec capacity per sump

-Dj 1i ?."'V transmission line equipment Sum 80,000

(c) Suepdown transforrmers, 11 kv/4bO v Sur. 100,000

o) Vaintenance supplies and spare parts Su-, 70,000

Sl'ubtotal 550,000

Pro.§ect Adr.inistration, Operation and"aintenance Equipment:

[a) Drain desilting trucks, fitted with 2-No. 25,000 50,000hose, flushing equip.,water tank and pump

(b) ick--uo trucks, 1-ton 2-`o. 7,000 l,000

(c) ij-eneral purpose vehicle, Ih-wheel L-lo. 6,000 24,000drive, long wheel base

iKd) e-neral purpose vehicles, .4-wheel 6-'io. i i50 27,000drive, short wheel base

(e) Proj ect monitorinr, equinmeot Sum 20,0C'0includlioi flow meters and recorders

76

ANNEX 7Page 6 of 8

9. (Contd.)Estimated

Item Ref. No. Description Quantity Price, cif KarachiTnit Total

(f) Spare drainage pumps and motors, Sum 65,000vehicle and equipment spare partsand maintenance materials

Subtotal 200,000

10. Equipment and Vehicles for ProjectAgricultural Supporting ServicesStaff: _ _ _

(a) General purpose vehicles, 4-wheel 6-No. 4,500 27,000drive, short wheel base

(b) Pick-up trucks 2-No. 7,000 14,000

(c) Demonstration van 1-No. 8,000 8,000(d) Motor scooters and bicycles (for sale Sum 20,000

to project agricultural extensionstaff)

(e) Pesticide sprayers 20,000

(f) Laboratory equipment and materials Sum 5,000

(g) Audio-visual aid equipment Sum 2,000

(h) Miscellaneous equipment & tools sum 12,000(i) Spare parts and maintenance materials 23,000

Subtotal 131,000

11. Land Leveling and Associated Tractor-drawn equipment for Sind Department ofAgriculture (SDA):

(a) Wheeled tractors, 60/65 hp 5-No. 9,000 45,000

(b) Tracked angle-dozers, 120 hp 2-No. 75,000 150,000

(c) Scrapers, towed, 2/2½ cu yd, hydrau- 3-No. 4,000 12,000lically controlled

(d) Land smoothing planes, 30 ft 3-No. 3,700 11,000

(e) Rear-mounted leveling, blades subsoiling 5 sets 13,000and cultivation equipment

(f) Pick-up trucks 3-No. 7,000 21,000

(g) Survey equipment Sur- 5,000

(i) Special tools and spare parts (25P) sum 63,000

Subtotal 320,00077

ANNEX 7Page? Of 8

EstimatedItem Ref. No. Description Quantity Price-, 7cifarachi

Unit Total

12. Land leveling and associated tractor-drawn equipment: (For purchase by contractors)

(a) Wheeled tractors, 60/65 hp 35-tNo. 9,000 315,000

(b) Scrapers, towed, 2/2½ cu yd,hydraulically controlled 7-No. h,000 28,000

(c) Land smoothing planes, 30 ft. 7-No. 3,700 25,900

(d) Rear-mounted leveling blades forwheeled tractors, 10 ft. 28-No. 1,h00 39,200

(e) Subsoilers, tractor-mounted 14-No. h50 6,300

(f) Field cultivators 7-No. 500 3,500

(g) Ditching/border ploughs 7-No. 800 5,600

(h) Pick-up trucks 7-No. 7,000 44,000

(i) Special tools and spare parts SW0m500

Subtotal 574,000

13. Yaterials and supplies to be imported:

(a) Quarrying materials and suppies:

(i) Special steel drilling rods Smn 7,500

(ii) Tungsten carbide drill bits for (i) Sum 2,500

(iii) Explosives, detonators and fuse Sum 10,000

(iv) Pneumatic and water hose Sum 5,000

(v) Other supplies Sum 5,000Subtotal 30,000

(b) Tile drainage materials:

(i) Synthetic filter materials forpre-wrapped plastic pipe Sum 75,000

(ii) Other supplies 15,000

Subtotal 90,000

78

PANiEX 7

Page 8 of 8

EstimatedItem Ref. No. Description Quantity Price, cif Karachi

Unit TotalUTJ

13. Continued)

(c) Canal enlar ement works:

(i) Structural steel sections andsheet Sum 50,000

(ii) Other supplies Sum 10,000

Subtotal 60,000

(d) Permanent installation materials fordrainage system

(i) Transmission line conductor cable Sum 350,000

(ii) Structural steel sections Sum 50,000

(iii) Other supplies Sum _5o000

Subtotal 450,000

Grand Total 6,953,000

-79

ANNEX 8Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Credit for Land Leveling

Commercial Banks

1. Prior to 1972, the Agricultural Development Bank of Pakistan (ADBP)was the sole source of institutional agricultural credit (seasonal, mediumand long-term). Commercial banks (CBs) made same advances for marketing andprocessing crops, and for fertilizer supply. The CBs were nationalized inthe beginning of 1973, and under a scheme drawn up by the State Bank ofPakistan (SBP) (the central bank), every CB was given a target for agricul-tural loans covering seasonal inputs, cattle, tractors, tubewells and landimprovement. To implement the scheme, the five major CBs 1/ set up agriculturalcredit departments, staffed with agriculturalists administratively responsibleto branch managers empowered to approve loans up to a given limit. The depart-ments were adequately supplied with transport.

2. In addition, the National Bank of Pakistan (NBP) started a SpecialAgricultural Credit Scheme, to cater for the credit requirements of smallfarmers (less than 64 ac in Sind). The Scheme's headquarters are in Lahore;NBP's head office in Karachi formulates policy and coordinates operations.The Scheme has Basic Credit Units, each adequately staffed, serving 10 to 15villages. About 2,000 villages, and 20,000 farmers, whose average holdingsare 8 to 10 ac, are currently in the Scheme.

3. The CB lending criteria are basically sound: (a) close and frequentcontact with borrowers; (b) appraisal based on farm plan; (c) assessment ofadequate security, and (d) evaluation of credit worthiness. The NBP'scriteria under its Scheme include some features of supervised lending,including advice on credit utilization and farming problems, while its fieldofficers endeavor to obtain the farmers' confidence. Lending procedures(particularly under the NBP Scheme) are satisfactory, and from applicationto grant of loans reportedly takes under three weeks on the average.

4. A Pass Book system was legalized in May 1973. Each Pass Book givesfull particulars of the farmer's land, and records any mortgage or othercharges thereon. Duplicates are kept in the local Revenue Department office.When loans are made against an entry in the Pass Book, disbursement takes

1/ National Bank of Pakistan (NBP), Habib Bank Ltd. (HBL), United BankLtd. (UBL), Allied Bank Ltd. (ABL) and Muslim Commercial Bank (MCB).

80

ANNEX 8Page 2

place after the charge has been duly endorsed and certified by the RevenueOfficer. Other securities include: (a) a demand promissory note signed bythe borrower and endorsed (if required) by two guarantors; (b) hypothecationof the goods (usually for tractors and tubewells), and (c) a lien on standingcrops (mainly for seasonal loans and sometimes as additional security forlonger term loans). Wherever possible, loans are made in kind. Interestrates for all loans are usually 2% above the SBP rate, and are currently 11% pa.

5. At the end of FY1972 (June 30, 1972), CB agricultural loans out-standing were Rs 253 M (23% of the total for agriculture), or 2% of theirtotal portfolio, Corresponding figures at the end of FY1974 were Rs 927M (42% of the total for agriculture) or 5% of their total portfolio. Aboutfour fifths of CB agricultural loans made are seasonal. The CB share ofagricultural lending has increased as ADBP's has declined. The CB loanrecoveries are relatively good. The NBP's current figures are 96% in Punjab,98% in NWFP and 75% in Sind, compared with ADBP's 40% to 50%.

6. All five CBs have satisfactory financial positions. All are subjectannually to administrative, technical and financial inspection by SBP'sInspection Department, and each is audited by a private firm of accountantsof international standing. All CBs submit monthly and quarterly returns foranalysis by SBP's Banking Control Division.

Project Credit Requirements

7. Long-term credit is required in the project area: (a) to enablefarmers to meet the cost of land leveling, particularly for reclamation ofculturable waste, and (b) to enable contractors, farmers and Governmentagencies to borrow for financing tractors and land leveling equipment tocarry out (a) above. All 44,000 ac need fine leveling; in addition, 8,000 acof culturable waste needs considerable earthmoving requiring bulldozers.Total costs including equipment costs and excluding the work carried out bythe farmers would be about Rs 34 million. Long-term credit requirementswould amount to about Rs 20 million. Equipment to enable the leveling to bedone rapidly within the implementation period would include two bulldozersand 40 tractors of 60 to 65 hp with land leveling and cultivation equipmentat a total cost of about Rs 9.0 million, of which Rs 6.0 million would befor purchases by local contractors and Rs 3.0 million would be for purchasesby SDA for the heavier equipment.

8. Short-term production credit is necessary in the project area byparticipating farmers to enable them to obtain the maximum advantage fromtheir longer term land leveling investments. It would cover mainly seed,fertilizer and pesticides, and it is estimated to reach a maximum of Rs 7million by the seventh project year, assuming it covers three-fourths of thefarmers' total cost of inputs.

81

ANNEX 8Page 3

Proposed Credit Channels

9. The ADBP has received three IDA Credits totaling US$67 million.Appraisal of a fourth credit has been held up pending certain actions,covering financial, managerial and organizational changes necessary before IDAcould consider it. In the meantime, ADBP is not an acceptable channel forthe projects' agricultural credit requirements. The alternative is the CBs.They would administer the loans for land leveling, under an agreement withSBP the terms of which would be acceptable to IDA.These would include aclause to the effect that farmers receiving loans for land leveling wouldbe eligible for production loans to enable them to maximize their returnon investments. Any CB approved by SBP could be a channel for credit tocontractors, provided it entered an Agreement with SBP under terms andconditions acceptable to IDA.

Credit Terms and Conditions

10. Terms and conditions for loans to farmers and contractors are setout in detail in Table 1.

June 1976

82

ANNEX 8Table 1Page 1 of 3

PAKISTAN

THE KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Schedule of Principal Terms and Conditionsunder which Funds would be made available

1. Participating Banks to Farmers for Land Leveling.

(a) For leveling of cultivable commanded areas, loans notexceeding five years, minimum interest rate 11%;

(b) For leveling of culturable waste, loans not exceedingeight years, minimum interest rate 11%:

(c) Down payments by farmers with holdings up to 64 ac,minimum 10% of total cost (including on-farm manuallabor and bullock work);

(d) Down payments by farmers with holdings exceeding 64 ac,minimum 15%;

(e) Security to be provided in accordance with approvedNBP's normal requirements (minimum, Pass Book mortgage);

(f) Repayment period for loans for leveling cultivable land not toexceed five years, including a maximum of one year's grace inwhich interest only would be paid;

(g) Repayment period for loans for leveling culturable waste land,not to exceed eight years including a maximum of two years'grace in which interest only would be paid.

2. Participating Banks to Land Leveling Contractors.

(a) Annual interest rate of 11% minimum;

(b) Down payment by contractor of a minimum of 15% of delivered costof equipment and vehicles;

(c) Security in accordance with normal requirements of Banks approvedby State Bank of Pakistan (SBP), usually hypothecation of equipmentand vehicles;

83

ANNEX 8Table IPage 2 of 3

(d) Repayment period not to exceed five years including a maximumof one year's grace in which interest only would be paid;

(e) NBP and other approved Banks to assist contractors with legal,technical and managerial advice, in collaboration with PLLPstaff.

3. State Bank of Pakistan to Approved Participating Banks

(a) For on-lending by NBP to farmers for land leveling:

(i) SBP to finance 90% of NBP loans to farmers;

(ii) Annual interest rate of 6% minimum;

(iii) Installment repayments to coincide approximately withrepayment schedules from farmers, with total repaymentwithin one year of completion of loan terms.

(b) For on-lending to land leveling contractors by NBP, or by otherBanks approved by SBP, for equipment and vehicles;

(i) SBP to finance 90% of loans by participating Banksto contractors;

(ii) Annual interest rate of 6% minimum;

(iii) Installment repayments to coincide approximately withrepayment schedules from contractors, with total repay-ment within one year of completion of loan term.

4. GOP to SBP

(a) Annual interest rate of 5% minimum;

(b) Installment repayments to be phased approximately as repay-ments are received by SBP from participating on-lending Banks.

5. IDA to GOP

(a) Interest and repayment on standard IDA terms;

(b) GOP to bear exchange risk.

84

ANNEx 8Table 1Page 3 of 3

6. Interest Rates and Marginal Spread

MinimumInterest

Lending Agencies: Rate: Spread:

Participating Banks to ultimateborrowers 11% 5% to Participating Banks

SBP to participating Banks 6% 1% to SBP

GOP to SBP 5% 4-1/4% to GOP

IDA to GOP 3/4%

June 1976

85

ANNEX 9Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Water Supply, Demand and Quality

Water Supply J

1. The source of water for the project area is the Indus River, fromwhich the Sukkur Barrage diverts it into seven canals. The Khairpur EastFeeder, one of four canals taking off on the left bank, supplies the projectarea. Supplies in the river are usually far in excess of all demands ofthe Sukkur and the downstream (Kotri) barrages between mid-May and mid-October, the kharif season, when the limiting factor is canal carryingcapacities. Rabi supplies (mid-October to mid-May) are much more limitedand shortages have made it necessary to operate the perennial canals inrotation and the virtual closing of a branch canal, the Patni Distributary,commanding over three quarters of the project area. However, starting in1976-77, 9.3 M ac-ft of rabi supplies will be available from Tarbela storage,of which the share for the Khairpur East Feeder Command would be enough toallow the Patni Distributary to become a perennial canal and to meet thefull requirements of the proposed cropping pattern. Table 1 shows theaverage monthly availabilities in the project area between 1969 to 1974.

Water Demand

2. Crop water requirements were developed on the modified Penmanmethod. The crop factors used (Table 2) have been adapted to the total areaof the crop according to its span of growing season (Annex 16, Figs. 1 and 2).Actual water requirements have been assessed with regard to the fact thatunder practical conditions it is not possible to put less than 4 inchesof water onto a field and that at least one pre-irrigation must be givenfor land preparation. The crop factors in Table 2 and the foregoing con-siderations have gone into compiling Table 3 which gives the half-monthlywater requirement of each crop, in acre-inches, according to the croppingcalendar shown in Annex 16, Fig. 1.

3. Computing the water requirements of the present cropping pattern,and assuming an overall irrigation efficiency of 35% to 40% between canal headand the crop, under-irrigation of the order of 25% would appear to be takingplace in the Patni command, while water requirements in the Sathio and MirWah commAnd are just about met. This explains the salinization of the rootzone and the deeper water table in the former and the higher water tableand already existing salinity and drainage problems in the latter area.These conditions are typical of much of the Sind and indeed the whole IndusBasin.

86

ANNEX 9Page 2

4. It is expected that irrigation efficiencies will be increased to60% as a result of project works. The consumptive use requirements of thecropping pattern shown in Annex 16, Fig. 2, the canal head requirements,quantities and flow rates in each of the two main canals of the project areaare shown in Table 4. As the Sathio Wah and the Mir Wah serve large tractsof land, outside the project area, the additional flow in these, and themajor Khairpur East Feeder Canal can be accommodated by comparatively minorstrengthening and other earth works. However, the design capacity of thePatni is 208 cusecs; the table shows it must carry signficantly more thanthis in almost every month. Therefore this canal, and the minors originatingfrom it, will require major remodeling works. I

Water Quality

5. Table 5 shows the month-wise chemical composition of the irrigationwater. The water is of excellent quality and capable of absorbing substantialquantities of drainage effluent without affecting even the most sensitivecrop that is expected to be grown under project conditions.

June 1976

87

ANNEX 9Table 1

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Water Availabilities, 1969-74 (1,000 ac-ft)

Month Average Days Sathio Mir Wah Total Total Total forFlowing Command Command Sathio & Mir Wah Patni Command Project Area

April 28 3.0 .B 3.8 6.5 10.3May 31 3.5 .9 4.4 7.9 12.3June 30 4.2 .8 5.1 9.7 14.8July 31 4.3 .9 5.2 11.9 17.1August 30 4.4 .8 5.2 12.2 17.5September 29 4.4 .8 5.2 12.0 17.2

Kharif - 23.8 5.0 28.9 60.2 89.2

October 27 3.7 .8 4.5 10.0 14.5November 25 3.0 .7 3.7 7.6 11.3December 22 2.6 .6 3.2 5.5 8.7January 15 1.8 .4 2.2 2.8 5.0February 20 2.0 .6 2.6 3.6 6.2March 18 2.2 .5 2.7 3.1 5.8

Rabi - 15.3 3.6 18.9 32.6 51.5

Total 39.1 8.6 47.8 92.8 140.7

Source of data and method of calculation:

1. Sathio Wah water use are Irrigation Department data.2. Mir Wah discharges through direct outlet are 14.12 cusecs. The amount passing through was calculated from Hrn

the number of operating days per month.3. Figures pertaining to the Patni are the sum of direct readings of the Irrigation Department taken on days

when the canal was running.

co0c

ANNEX 9

PAKISTAN Table 2

KHAIRPUR TILE DBIN E AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Crop Factors, Weighted for Time Spread in Planting

Cotton Kharif Kharif Wheat Rabi Oilseeds Dates Vegetable Rabi Kharif Sugar Rice

Fodder Grain Fodder Pulses Pulses Cane

(guara)

Jan I .85 1.23 .925 .59 .80 1.05 .95

II 1.00 1.23 .8 .57 .80 1.075 .90

Feb I 1.075 1.23 .65 .58 .80 ,975 .80

II 1.10 1.18 .475 .60 .80 .725 .70

Mar I 1.05 1.07 .292 .63 .80 .525 .55

II .925 .98 .125 .68 .80 .25 .75

Apr I .55 .91 .73 .80 .80

II .054 .125 .75 .76 .80 .90

May I .130 .75 .80 *95

II .135 .244 .70 .80 1.00

Jun I .31 .394 .7 .011

II - .42 .566 .72 .80 1 12

Jul I .59 .723 .19 .78 .80 .415 1.20 1.25

II .77 .873 .44 .85 .80 .525 1.20 1.075

Aug I .985 .819 .65 .93 .80 *75 1.25 1.125

II 1.11 .743 .725 1.00 .80 .95 1.25 1.175

Sept I 1.09 .629 1.045 1.05 .80 1.05 1.25 1.175

II .955 .479 .995 .063 1.10 .80 .975 1.25 1.125

Oct I .775 .387 .775 .52 .138 1.07 .80 .675 1.20 .90

II .63 .150 .6 .59 .263 .98 .80 .19 .25 1.10 .35

Nov I .555 .25 .19 .70 .413 .88 .80 .415 1.10

II .265 .415 .89 .588 .77 .80 .5 1.00

DecI .50 1.07 .772 .68 .80 .65 .88Dec II 5.65 1.18 .875 .63 .80 .875 .75

Source: Khairpur II Project Planning Report, modified according to LIP and other studies.

PAKISTAN

KHAIRPUR TILE DRAINAGE ANNEX 9AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II) Table 3

Crop Water Requirements per Acre as Calculated. Adiusted to Minimum Practicable Dose-WI

(ac-in)

Sugarcane Cotton Sumcer Summer Wheat Winter Winter Date Vegetable Winter Summer Ricefodder grain fodder oilseed orchard pulses pulses

January I 2 2 2 2 - 2II - - 2 - 2 2 2

l'4bruary I 2 2 2 2 2 2 2II - 3 2 1 - 2 2

March I 3 3 3 - 2 2II 2 3 3 3 3

April I 3 2 2 3 4 3II 3 2 1 4 3

May I 5 3 1 4 4II 4 3 2 4 3

June I 6 2 2 5 4 2 4II 5 2 3 2 4 3 3 4

July I 6 3 3 2 5 4 2 6II 5 3 4 3 4 3 3 4

August I 6 4 3 4 4 4 4 6II 5 4 4 3 4 4 4 5

September I 5 4 2 4 4 4 4 4II 5 4 2 4 1 3 3 4 5

October I 4 3 2 2 1 3 3 2 2 3II 3 2 2 * 1 3 2 3 2

November I 2 2 2 * 1 3 2 1II 2 2 2 2 2 2 1

December I 2 2 2 2 - - III 2 - 2 2 2 2 l _ _ _

82 41 31 24 23 23 15 71 64 17 28 44NtSupplied as part of cotton irrigation.

Notes: Applications below 4"' per month imply the application of at least 4' to part of the area under the crop in question.

ANNEX 9Table 4

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Pro,ject Monthly Water Requirements

1/Crop Canal Head Requirements for Pro.ject AreaWater Total

Requirements Command Patni Command Sathio Wah Command(000 ac-ft) (000 ac-ft) (000 ac-ft) (cusec) (000 ac-ft) (cusec)

2/ 2/ 3/Kharif

April 12.3 20.5 15.8 263 4.7 78May 13.6 22.7 17.5 282 5.2 84June 13.2 22.0 17.0 283 5.0 83July 15.0 25.0 19.3 311 5.7 92August 17.4 29.0 22.4 361 6.6 106September 17.9 29.8 23.0 383 6.8 113

Subtotal 89.4 149.0 115.0 317 34.0 93

Rabi

October 15.2 25.3 19.5 315 5.8 94November 13.8 23.0 17.8 297 5.2 87December 8.7 .14.5 11.2 181 3.3 53January 7.3 12.2 9.4 152 2.8 45February 13.0 21.7 16.8 300 4.9 88March 15.8 26.3 20.3 327 6.0 97

Subtotal 73.8 123.0 95.0 262 28.0 774/ hi

Total 163.2 272.0 210.0 288 62.0 85

Notes 1/ Assuming an overall irrigation efficiency of 60% from canal head.

2/ Apportioning between Patni and Sathio Wah command on 3 ratio, i.e. 77% to Patnicommand.4400

3/ Figures show flow rates used in project area; about 8% of total.

4/ Average flow for period indicated.

91

PAKISTAN

KHAIR TILE DRAINAGE Table 5AND IRRIGATED PARMI)i DELOPMENT PR0JBCT (KHAIRPUR II)

Chemical Analysis of Indus Waters at Sukkur Barrage

E.C. Milliecuivalents per litre TotalMonth (mmhos/cm) C03 H003 C1 S04 Ca Kg Na K SA? Solids

_ _ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(PPm)

April .16 .20 2.43 .55 1.30 1.24 1.01 1.38 .14 1.30 310

May .36 .14 2.38 .61 1.78 1.72 0.80 1.93 .13 1.76 350

June .25 .12 1.68 .41 1.28 1.16 0.69 lO00 .10 1.00 240

July .23 .14 1.45 .40 1.37 1.04 0.54 1.49 .12 1.66 238

August .21 .00 1.52 .32 .96 1.02 0.47 1.00 .12 1.16 2014

September .24 .10 1.57 .40 1.33 1.09 0.63 1.35 .13 1.46 245

Average Kharif .24 .13 1.84 .45 1.34 1.21 o.69 1.36 .12 1.39 264

October .23 .08 1.83 .38 1.37 1.23 .54 1.28 .13 1.39 259

November .27 .00 2.22 .31 1.24 1.68 .53 1.32 .13 1.26 282

December .34 .00 2.52 .49 1.57 1.74 .85 1.61 .13 1.44 334

January .36 .00 2.62 .55 1.62 1.50 .99 1.82 .12 1.63 344

February .38 .26 2.78 .52 1.50 1.68 .97 1.50 .14 1.31 352

March .37 .28 2.55 .57 1.33 1.55 .95 1.50 .15 1.33 330

Average Rabi .32 .10 2.42 .47 1.44 1.56 .81 1.34 .13 1.39 317

Average .28 .12 2.13 .46 1.39 1.39 .75 1.35 .13 1.39. 291

Mo1 *Sodiumjy Absorption Ratio

PAKISTANKHAIRPUR TILE DRAINAGE AND

IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR 11)Construction Schedule

FY76/77 | FY7/78 FY78/79 FY79/80 FY80/81

Main Activities Flesponsibility 1977 1978 1979 .980 1=

Consultants July July July JulySelection & appointment- WAPDAIn post- _ .

Agricultural Extension SCARP Khairpu-Training - Agrieultural WingContact farmer selection-Intensive operation -

Soil reclamation-

Civil Works

Equipment Procurement: WAPDASpecifications & documents _ _Bidding -- - -

A-ard- -

Delvery-

Drainage SVstem \NAPDASurvey and design

Land acquisition - (Revenue Dept,)

Construction ofDisposal sVstem -

Collectors and laterals- - -

0 & M - (SI&PD) - - -

Canal Remodehng. WAPDASurvey & design -

Construction ofDistributaries (Sl&PD)Minors -

Warercourses. WAPDASurvey & design _ - - - - - - -

Construction inArea A- -

Area B - -

Road Improvements WVAPDAConstruction

Land LevelingStaff Training

Field assistants- PLLPConmmernial bank NBP ,

Procure equipment - - -

Establish branch - NBPDepartment work - SDA/PLLP _ Construction Local contractors

World Bank-15745 -

D ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

ANNEX 11Table 1

PAKISTAN Page 1 of 3 pages

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KRAIRPUR II)

Detailed Cost Estimates

Estimated Imported*Estimated Unit Civil Work Cost MachineryQuantity Unit Rate Rs Local Foreign & Materials Total

---- (Rs million)----------

I. Land Acquisition 310 ac 6,500 2.0 - 0 0 2.0

II. (a) Drainage System

Mi) Lateral drain 7,900,000 ft 7.5 59.2(ii) Collector drain 715,000 ft 29.7 21.2

(iii) Disposal drain- Pump station 130 no 85,000 11.1- Disposal canal 45 mi 64,500 2.9

Subtotal 33.0 11.00 50.4 94.4

(b) Canal Remodeling

(i) Patni distributaryand minor canals 63 mi 101,600 6.4

(ii) Left bank KEFitrengthening SUM 1.6

(iii) Outlets and controlstructures SUM 2.9

Subtotal 4.1 1.4 5.4 10.9

(c) Watercourse Reconstruction

New and reconstructedwatercourses (includ-ing 11 mi lining) 200 mi 42,500 5.4 1.8 1.3 8.5

(d) Road Improvement

(i) Feeder and Improvement 40 mi 60,000 2.4(ii) Village road improve-

ment 60 mi 50,000 3.0

Subtotal 2.6 0.9 1.9 5.4

III. On-farm Works

Land leveling 44,000 ac 807 25.0 0.0 10.5 35.5

* See Annex 11 under IV Construction Equipment, Vehicles and Materials to be Imported

1/ This represents cost of land only and not civil works. 94

ANNEX 11

Table 1Page 2 of 3 pages

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Detailed Cost Estimates

Local cost CustomsEstimated cif Cost Freight Duties---------------(Rs million) ----

IV. Construction Equipment, Vehicles& Materials to be Imported

(a) Drainage system equipment

(i) Concrete aggregate andgravel production 8.0 0.2 0.9

(ii) Concrete pipe production 8.7 0.3 1.0

(iii) Plastic pipe production 2.0 0.1 0.2

(iv) Tile drainage installation 19.0 0.5 2.1(v) Permanent installation 5.5 0.2 0.6(vi) Materials 5.7 0.2 0.7

Subtotal 48.9 1.5 5.5

(b) Canal remodeling equipment

(i) Construction equipment 4.7 0.1 0.5(ii) Materials 0.6 0.0 0.1

Subtotal 5.3 0.1 0.6

(c) Watercourse reconstructionequipment 1.3 0.0 0.1

(d) Road improvement equipment 1.8 0.1 0.2

(e) Project OSM equipment 2.0 0.1 0.2

(f) SCARP Khairpur spare parts 2.0 0.0 0.2

Subtotal 61.3 1.8 6.8

V. Agricultural Equipment and Vehiclesto be Imported

(a) Land leveling equipment 8.9 0.2 1.1

(b) Transport vehicles (extension) 1.3 0.1 0.1

Subtotal V 10.2 0.3 1.2

(Total for imports under IV 71.5 2.1 8.0)

95

ANNEX 11Table 1Page 3 of 3 pages

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARNING DEVELOPMENT PROJECT (KHAIRPUR II)

Detailed Cost Estimates

Foreign TotalLocal Currency Exchange Cost

------------(Rs million) ---------

VI. Technical Assistance and TrainingConsulting firm's specialists

Civil engineer 36 man-months 0.4 2.8 3.2Mechanical equipment engineer 24 man-months 0.4 1.8 2.2Extension and farm management

expert 36 man-months 0.4 2.8 3.2Drainage and reclamation

engineer 36 man-months 0.4 2.8 3.2Short-term specialists 36 man-months 0.4 2.8 3.2

Subtotal 2.0 13.0 15.0

VII. Engineering and AdministrationFor WAPDA tSZ), SI&PD, andAgricultural Extension

Staffing and housing SUM 7.5 0.0 7.5Crop compensation SUM 1.5 0.0 1.5Building and offices SUM 1.4 0.0 1.4

Subtotal 10.4 0.0 10.4

VIII. Physical Contingencies-/ 15.0 5.0 20.0

IX. Expected Price Increases 42.0 25.0 67.0

Project Cost 143.6 129.6 273.2

X. ERTS Survey

ERTS consultants for survey SUM 0.2 10.0 10.2

Total project costs 143.8 139.6 283.4

XI. Custom Duties SUM 8.0 0.0 8.0

Grand Total 151.8 139.6 291.4

1/ 307. for drainage system, 20%o for canal remodeling, watercourse reconstructionand road improvemont, and 15% for on-farm works. 96

ANNEX 12Table 1

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Estimated Schedule of Expenditures

76/77 77/78 78/79 79/80 80/81 Total-------------------(Rs Million) ---------------

1. Land Acquisition 0.5 0.5 1.0 - - 2.0

2. Civil Works 6.0 9.1 15.1 18.0 12.0 60.2

3. Land Leveling 3.0 5.0 6.5 5.5 5.0 25.0

4. Construction Equipment& SCARP Khairpur Spare Parts 22.0 35.0 6.1 0.0 0.0 63.1

5. Agricultural & LevelingEquipment 2.0 3.5 3.0 2.0 0.0 10.5

6. Consultants & Training 3.0 4.0 3.0 3.0 2.0 15.0

7. Engineering & Administration 2.4 2.0 2.0 2.0 2.0 10.4

8. Physical Contingencies 2.0 3.0 5.0 6.0 4.0 20.0

Subtotal 40.9 62.1 41.7 36.5 25.0 206.21/

9. Expected Price Increases 3.9 12.1 14.5 19.2 17.3 67.0

Total Project Cost 44.8 74.2 56.2 55.7 42.3 273.2

10. Aerial Photography andERTS Surveys 10.2 0.0 0.0 0.0 0.0 10.2

Grand Total 55.0 74.2 56.2 55.7 42.3 283.4

1/ Table 4

97

ANNEX 12Table 2

9AKTSTAN

KHAIRPUR TILE DRAINAGE

iRRIGAI2-. ~4L - ]V.LOLPUENT PROJECT (KHAIRPUR !I-1

Proposed Credit Allocation

AmountCategory Description Allocated Percentage Financing

US$ Million

I Civil Works 1.5 25% of total expenditures

II Commercial Bank loans

(a) to farmers for land levelingwork 1.0 50% of amounts disbursed by

participating banks

(b) to contractors for purchaseof land leveling equipment 0.4 70% of amounts disbursed by

participating banks

III Equipment, vehicles, spare partsand imported materials and supplies(other than II (b)) 100% of c.i.f. prices

100% of exfactory pricesfor locally manufacturedequipment

70% of off-the-shelf price(limit to the totalof $200,000)

(a) WAPDA 6.0

(b) GOSind 0.6

IV Technical assistance 1.0 100% of foreign expenditures, or70% local expenditures

V Overseas training 0.3 100% of foreign expenditures

VI Aerial photography and ERTS surveys 1.0 100% of foreign expenditures

VII Unallocated 2.2

Total 14.098

ANNEX 12

Table 3

PAKISTAN

KHAIRPUR TILE DRAINAGE

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Schedule of Credit Disbursements

IDA Fiscal Year Accumulatedand half-year Disbursements Disbursements

US$ million US$ million

19771st 0.0 0.02nd 0.9 0.9

19781st 1.5 2.42nd 2.2 4.6

19791st 2.5 7.12nd 1.6 8.7

19801st 1.5 10.22nd 1.3 11.5

19811st 1.0 12.52nd 0.9 13.4

19821st 0.6 14.0

99

ANNEX 12Table L

PAKISTAN

KHAIRPUR TILE DRAINAGE AND

IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Price Contingencies

Annual Accumulated BasicJalendar Rate of Fiscal Rate of Project PriceYear Price Increases Year Price Increases Disbursements ontiencies

(%) (%) (Rs M) (Rs M)

Bjuipment and Consultants

1976 9 1976/77 9 27.0 2.2

1977 8 1977/78 17 42.5 7.2

1978 8 1978/79 26 12.1 3.1

1979 8 1979/80 36 5.0 1.7

19P0 7 1980/81 46 2.0 .9

Total 17 88.6 15.1

Civil Works and Local Costs

1976 13 1976/77 13 13.4 1.7

'?77 12 1977/78 26 19.0 4.9

1978 12 1978/79 41 28.5 11.4

iQ79 12 1979/80 57 31.5 17.5

1980 10 1980/81 73 23.0 16.4

Total 45 115.4 51.9

Grand Total 33 204.0 67.0

- :e: December 1975100

ANNEX 13Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Supporting Services

Background

1. Before 1972, agricultural supporting services including agricul-tural credit for the entire Khairpur II project area were administered bythe SCARP Khairpur directorate (Annex 1). In 1972, parts of Rohri talukaoutside SCARP Khairpur reverted to the Extra-Assistant Director of Agricul-ture (EADA), Sukkur District. The dehs in Khairpur and Kot Diji talukascontinued under SCARP Khairpur's agricultural wing.

2. To ensure unified administration of agricultural supporting servicesin the drained areas, it would be essential to restore the pre-1972 situation.The staff of the SCARP agricultural wing has been exposed for several yearsto conditions brought about by good drainage. In some of SCARP's freshgroundwater areas, they are already providing some of the advice and assistancerequired by farmers who receive usable water supplies from the tubewells.Fig. 1 shows SCARP's agricultural wing's organizational chart and staffrequirements.

Services to be Extended

3. Apart from the crop husbandry advice now given, the following pointswould require special emphasis under project conditions:

-- farm planning services, in view of increased watersupplies;

-- close supervision of reclamation by leaching;

-- survey and subsequent certification of works for landleveling;

-- closer supervision of and assistance with plantprotection than at present;

-- agricultural inputs provision, and

-- agricultural credit.

Farm Planning Services

4. With greatly increased water supplies, more careful thought thanat present must be given to the sequence of operations, the tillage aids 101

ANNEX 13Page 2

used and the planning of crop sequences and varieties. Mechanization willbe increasingly necessary. Organization and the best method of administeringthe service will not emerge for some years, but the work the new farmmachinery should do and the kind of assistance required by farmers can bereadily identified in the third or fourth year of operation of expectedproject conditions.

5. In setting up the SCARP Khairpur extension service and preparingthe manuals for its operation, the project consultants envisaged that sucha service would be needed in the fresh groundwater areas. The guidelineshave been prepared, but no staff member has had operational experience.Since the best training is through actual planning work on operating farms,the necessary expertise would be made available at a time when projectimplementation is sufficiently advanced.

Reclamation

6. Most of the area not fit for cultivation is saline. The estimatedarea of saline-alkaline lands is of the order of 1% or some 400 ac. There-fore most reclamation activities will consist of leaching only. Beforeleaching, however, the land must be leveled (paras 7-12). The farmers areunlikely to use water for leaching as long as they are short of irrigationsupplies. A real incentive for reclamation will have been created onlywhen there is assurance that the increased water supply is reliable andmore than can be used on land already fit for cultivation. The technicalproblems then to be faced are well within the capabilities of the SCARPextension service which works closely with an agricultural chemist. Anadministrative routine for sampling the soil before and during the leachingprocess must be organized. Advice on cultural practices during the reclam-ation process must be given and the irrigation regime devised, once reclam-ation has progressed far enough to grow crops. No extra expenditure in wayof support services is required beyond ensuring that laboratory equipment isfunctional and the necessary chemicals are available.

Land Leveling

7. The Precision Land Leveling Project (PLLP) is an on-going projecttechnically supported by USAID. It aims at leveling each irrigation unit.This would ensure that the field was evenly watered especially when irrigatedfor the first or second time after sowing when the plants are still smalland can be damaged by prolonged submergence or early desiccation. Apartfrom increasing the field efficiency of irrigation applications, fine levelingeliminates the high spots where salts would accumulate and makes reclamationby leaching much more economical.

8. Under PLLP, all the work is performed by the participating farmer.The technicians' task is to peg out the fields for leveling, discuss andmark out possible changes in field alignment and calculate the number ofcubic meters of earth that will have to be moved. On completion, if the

102

ANNEX 13Page 3

work is found to comply with specified standards, a certificate by the

technician enables the farmer to collect a subsidy.

9. The USAID advisers calculated that, using the rate of tractor hireand wages in 1974, it cost Rs 2.60 to move one cubic meter of soil. TheCentral Government, under which the project operates, reimburses the farmer atthe rate of Rs 1.30 per m3, irrespective of what his actual costs are. Thesubsidy applies at present to no more than 10 ac of any one owner's land.

10. Leading farmers have, through their own efforts, achieved a re-

markable degree of perfection. The use of ox or tractor-drawn scraper boardsis routine in land preparation for all the major crops. Nevertheless, the

project meets a long-felt need in:

a. providing means to mark fields for leveling (i.e.not to rely on the naked eye and trial floodingsfor accuracy);

b. fostering the manufacture and use of specializedequipment for the wheel tractors in general use, and

C. providing a grant to speed up leveling works which,until now, have progressed slowly, especially onfarms of less than 10 ac.

11. In Sind, PLLP has been little more than of demonstration value.Based on their experience, technicians associated with the project estimatethat some two thirds of the presently cultivated area will need some level-ing, of which nearly half would mean moving 350 to 400 m3 soil per ac andthe rest about 150 m3. In FY 1975, and again in FY 1976, the total alloca-tion for leveling grants was Rs 700,000 which, prorated to the project area,is roughly Rs 3,500, the subsidy required for only 7 to 8 ac of leveling.To make a meaningful contribution, the amount of money to be committed ona provincial scale would have to be several tens of million rupees per annum.Such a financial commitment would be impractical.

12. Leveling as a first step to reclaiming culturable waste and landnever before cultivated in the project area is unlikely to gather momentumuntil it is obvious to farmers that water for reclamation is either actuallyavailable or that the remodeling of canals is near completion. Eventually,the project authorities expect to become part of the agricultural engineeringwing providing a technical service. The grant component of the project willlikely become a minor part of their operation. Therefore, under the project,a revolving fund of about Rs 24 M would be provided through commercial banksfor lending to farmers for land leveling. The technical and survey backup wouldcome from staff trained by PLLP, as will the training of commercial bankofficials whose task would be to verify the quantity and technical accept-ability of work done. This sum would be adequate to meet the full requirementsof the project area inclusive of the heavy leveling, involving the use ofbulldozers, oln an estimated 8,000 ac. The method of using the loan is describedin Annex 8. 103

ANNEX 13Page 4

Plant Protection

13. The crops at risk from pests are cotton, Brassica oilseeds, sugar-cane and the expected high yielding grain sorghum. There is at presentlimited aerial spraying available for cotton, and some farmers use manual ormotorized knapsack sprayers. Aerial spraying is free. For ground spraying,the farmer purchases the pest control chemical at a subsidized rate, getsthe sprayer on loan, free of charge and provides his own labor to do thespraying. The sprayers available are usually badly designed and maintenanceis inadequate, largely due to lack of spare washers, packings and nozzles.

14. For sorghum and sugarcane, granular formulations are best. Theseare applied by hand, using plastic gloves and elementary sanitary precautionsagainst contamination through the skin.

15. The estimated cotton area will be about 15,000 ac. During Augustand September, this may have to be sprayed up to four times (i.e. at 15 dayintervals). One motorized knapsack sprayer would cover 7 ac per day, ifit is adequately serviced with water and chemicals. Therefore, 145 sprayerswould have to be provided. Aiming for 75% protection by ground spraying andrelying on aerial control to cope with any excess or possible outbreaks ofepidemic proportion, 110 sprayers are needed. Before August, the frequencywill be less and the ground covered by one sprayer more per day because theplants are smaller and do not yet meet in the row. The required number ofsprayers in the off-peak period would be less than 110, allowing repairsand maintenance to be done in this period. The estimated cost is US$200per sprayer. The total investment, including 20% extra for spares, isUS$26,400. The successful tenderer should be requested to provide amechanic for three months to assemble and commission the first 25 machinesand train local staff in maintenance, operation and repair. The mechanic'sservices would cost an estimated US$10,000. The same sprayers can handlethe Brassicas that have to be sprayed during the rabi (Table 1).

16. To support the expected plant protection activities, the field as-sistants-and of course their supervisors- must be trained to be able tospot and evaluate pest outbreaks. The appropriate training is within thecapability of the Plant Protection staff. Sprayer operation will be taughtto the same people by two mechanics who will, in turn, be trained by themanufacturer's representative.

Agricultural Inputs

17. Fertilizers. Fertilizer supplies and the distribution infrastruc-ture is adequate in the area. The Esso Pakistan Fertilizer Co., Ltd. (EPFCL)supplies the area with urea from its plant, 80 mi away. Another two plantswith three times EPFCL's capacityare planned to feed off the same gas field.The combined capacity of 2,100 tons of ammonia per day will be more than thewhole of the Sind will need for many years to come. The Sind AgriculturalSupply Organization (SASO) also operates in the area and provides phosphaticand potassic fertilizers and nitrogen in forms other than urea.

104

ANNEX 13Page 5

18. Pesticides. Pesticides are distributed by the Agricultural Depart-ment. Supplies are procured by the Central Government from sources thatoffer the most advantageous terms. Since the chemicals and their formulationare proprietary, there are no guarantees that the same active ingredient inthe same formulation will be available from one year to the next. Adequatesupplies of chemicals in the right formulation and with comprehensiveinstructions for use written in English and Sindhi should be allocated to theproject area.

19. Seeds. Traditionally, farmers obtain seeds either from their owncrop o- from cotton ginneries. Landlords often make their tenants plant seed

that they have selected from an outstanding field. Other seed sources arethe grain merchants and, to a far smaller extent, Government-supportedorganizations like SASO. New crop varieties are made available either by

the extension service or SASO and then spread either from farmer to farmeror through grain merchants.

20. The system works efficiently when new varieties are introduced(e.g. as in the spread of Mexi-Pak wheat and IR3 and IR6 rice). In suchcases, the demonstrable advantages readily convinced the farner to seek thenew variety. But the advantages of changing seeds when not changing thevariety can only be demonstrated when the seed offered is pure, disease-free and germinates and grows vigorously in its early stages. The IDA-sup-ported Cereal Seeds project will provide high quality certified seeds. Itwould be desirable that farmers purchase certified instead of ordinary ginnerycottonseed every year and, for the other crops, purchase certified seeds everyfour or five years.

Agricultural Credit

21. Credit is available through cooperative societies set up for thepurpose. Funds are limited to resources and their own credit rating. Thereis no cooperative bank from which they can borrow and they may not borrowfrom the Agricultural Development Bank of Pakistan (ADBP). Some 38 suchsocieties exist in Khairpur administrative District, which has 5,000 membersbut which is unable to expand. The ADBP has provided, in the same area,Rs 1.3 M in short-term and Rs 1.2 M in medium-term credit to some 6,000farmers.

22. The relatively low credit availability in the past does not seemto have slowed down the growth of fertilizer consumption which is the greatestsingle purchased input. However, a growth rate higher than the present 20%may not be sustainable without increased credit facilities. To increasecredit facilities, the cooperative movement must expand and acquire accessto additional working capital. Once this is assured, a concerted drive toincrease membership and also the number of societies would become meaningful.

Organization of the Extension Service

23. The Method. To make the extension service efficient in the projectarea, it is proposed to institute an operational systeu that is simple to

105

ANNEX 13Page 6

organize and easy to supervise. The technical soundness of its messagemust be unequivocal and the effects clearly demonstrated. The message willcover matters of crop husbandry, fanr planning, reclamation, land levelingand intensified plant protection. Executors would be the field staff, FieldAssistants (FA), and Agricultural Assistants (AA). They would work throughcontact farmers in each watercourse. Staff support work would devolve onthe Extra-Assistant Director of Agriculture, (EADA) SCARP Khairpur, theheadquarters support staff and the Subject Matter Specialists (SMSs). Theline of responsibility would be straight and liaison duties and functionswould rest with the EADA only.

The Field Assistant

24. The basis of the farmer contacts would be the FA. He would bea matriculate, have had secondary education up to the age of 16 and thenhe would have spent two years in a Field Assistant Training Institute.Another potential is the new agriculture gyaduate who has had only limitedfield experience and may gain it by working as an FA for a time. He mustreceive frequent in-service refresher training. The unit area would be awatercourse command of approximately 200 ac and in each of these commandsthere would be one or two progressive working farmers who would be the FA'scontact with the other farmers. He would have 13 or 14 watercourses underhis care and would visit each once a fortnight. The day and time of thevisit would be known in the watercourse. The FA would demonstrate on fieldsof the contact farmer the crop husbandry techniques that are on schedule forthe visit. All farmers of the watercourse command who have similar problemswould be invited to attend and participate. Time would be spent in visitingthe fields of farmers who would raise special problems during the demonstrationand/or who will have asked the contact farmer previously to arrange such avisit. All who have genuine problems must be visited, either in the courseof the day or on one special day during the week set apart for the purpose.Any problems not related to the specific extension task of the period-assist-ance with crops not normally grown, farm planning, special reclamationproblems, etc.--will be handled on that day. Previous notice of suchproblems would enable prior discussion with the AA by the FA in the courseof the routine meeting or training session with that officer. The rest ofthe FA's time would be spent in training, in routine office work and inreporting. To cover the 44,000 ac of the project, there would be about 18 FAs.

The Agricultural Assistant

25. The FAs would be supervised by three AAs. The AA would be agraduate with at least three years of post-graduate practical agriculturalexperience. He would be sufficiently trained to backstop his FA in problemsof crop husbandry and farm management that are likely to occur with anyregularity. Ile would spend eight days in the field per fortnight and leaveone day a week free to attend to specific problems brought to him by an FAand with which the FA cannot cope even after discussing it with his super-visor. The rest of his working time would be spent on routine reportingand training duties and on attending to his own demonstration plots orfarms.

to 6

ANNEX 13Page 7

26. It is mandatory for the AA to visit each of his FAs once in afortnight, and for the FAs to be in each watercourse on the same day ineach fortnightly period. It is, however, equally important that the MAvisit a different watercourse whenever he visits an FA. Therefore, itwould be essential to draw up a schedule of visits for each month whichwould enable the AA to inspect all his watercourses in a strict rotation.

27. Each of the AAs should concentrate on one or two of the specialproblems of the area, like the Brassicas, lan'1 leveing. fielSlayout, etc.They would then be available for the whole area in matters pertaining totheir subject.

The Subject Matter Specialist

28. Supporting the AAs on a technical level would be the SMSs. Theywould be attached to the EADA's office and would be available to all theAAs. Initially, the disciplines most needed are: plant protection; landleveling and reclamation; irrigation practice, and training. Farm planningshould not be a specialty. One operating AA should specialize in it, butall must be trained to prepare farm plans.

29. The SMS for land leveling and reclamation would be the officercertifying that fields leveled under the PLLP-sponsored project (nara 7)meet the criteria of the project. He would also keep in close touch withleaching operations and would be the link between the chemist (para 35) andthe field works.

30. The SMS would be available for all training sessions and for anyspecial demand made on them by the AAs. Besides, they should schedule oneroutine visit per fortnight to each AA to more familiarize themselveswith problems in their field, to draw attention to problems not readilyobserved by the AAs and to offer solutions.

The Extra-Assistant Director of Agriculture

31. The project would share the services of the EADA with that ofSCARP Khairpur. The EADA should devote one week per month to the projectand he would be available at other times for administrative, technical andliaison matters that require his decisions. He would visit a particular AAon a different day on each occasion, so that he would see a different partof the project and a different FA each time, thereby ensuring his maximumexposure to different parts of the project area as well as to all his staff.The supporting services shown on the chart must be equally available tothe project and must be strengthened by the SMSs.

Extension Committees

32. Major failings which could hamper the effectiveness of any extensionorganization are: not keeping in touch with pertinent developments in thescientific and social field; not being fully informed concerning all proposedactivities and not evaluating past campaigns with the leading farmers of thearea. Therefore, it is proposed that an Extension Committee be set up for the

107

ANNEX i3Page 8

project area. Its chairman would be the Project Director. Members wouldbe the EADA, selected AAs, the SMSs, delegates from the Tando Jam AgriculturalResearch Station, any markhaz officer functioning in the project area (para 40)irrigation officials directly involved in the problems of the area and a numberof leading farmers, selected from among the contact farmers in the water-courses. The functions of the committee, which would meet twice a year aftereach season, would be to review the previous season's activities, and achieve-ments, the general policy guiding it and to consider any changes that may beneeded. The detailed liaison would be carried out through four requiredbranch committees for: kharif crops; rabi crops; plant protection, and landleveling. They would be headed either by the SMS or the AA who would havespecial interest and aptitude for the discipline involved. The branchcommittees should meet on an ad hoc basis, but not less frequently than onceevery three months, to discuss past and future activities and plans for thesubject matter in question. The chairman of the groups would transmit thedeliberations at his next meeting with EADA unless there was some specialurgency.

Training (Appendix 1)

33. For extension workers to have an impact, it is most important thatthey be fully competent to advise the farmers. During visits, the FAswill concentrate on only a few points. Therefore, a well designed trainingprogram scheduled to take place once or twice a month and concentration onthe few salient points to be imported can ensure the desired degree of com-petence. Training would be communicated in a two-tier program. One wouldtake a week and would be held before the kharif and rabi season. Therewould also be a monthly, one day refresher course and a monthly planningsession, aimed to synthesize technical and organizational problems. Theplanning session would be scheduled to take place halfway between the re-fresher courses. The refresher courses would be held for all the FAssimultaneously. Formal and informal opportunities would be provided tocompare and exchange information from all parts of the project area. Theorganization and planning session would be in one extension circle, wherethe schedule on how to execute the technical information learned a fortnightearlier would have been developed. It would be helpful to hold these meetingsin a watercourse, on a farm that would best illustrate the problem at issueand to allow the contact farmer to participate. He, in his turn, must betrained into an outstandingly successful operator who is so conversant withevery detail of practical farming that he commands other farmers' respecton this ground and motivates them to emulate him.

34. The twice-yearly courses would be organized by the EADA, assistedby SN$3s who would be lecturers and discussion group leaders. The AAs wouldassist and participate in these functions. The SMSs also would take partin the monthly meetings and maintain regular monthly contacts with researchstaff on all matters relevant to the area. In all training courses therewould be room for speakers on special subjects. They can be research workersor outstanding farmers of the area or the neighborhood.

108

ANNEX 13Page 9

Work Planning

35. The FA's work plan would be the basic one to which all others wouldbe geared. The key factors relating to each major crop in each area wouldbe identified during the pre-seasonal training courses. Only major constraintswould be picked out and not more than a few of those even if the results areexpected to fall short of the ideal. For instance, the yield of dwarfwheat depends principally on the time of planting, the amount of the soakingdose and the timing of the first and third irrigation. It is most importantto get the three operations as nearly perfect as would be attainable beforethe precise amounts and timing of other inputs could be expected to havea major impact on yields. Each AA would have to be able to evaluate his areaas to the emphasis it needs and he would then follow it throughout theseason. In his demonstration plot, he would follow all good practices tomaximize the yield and would then point this out to visiting farmers on thepre-harvest field day. The farmer meetings following would further explainthe practices. The conclusions would serve as a guide for the next seasonas to which key factors emphasized during past season have become acceptedpractices and can therefore be committed from the next year's package.

36. The detailed work plan, concerned with the execution of the overallextension plan, would be worked out during the monthly meeting of the FAswith their AAs and, if necessary, further refined during the fortnightlyfield visits. This plan would set out in fortnightly periods, the targetoperations on which to concentrate.

37. The AA's backup activities would extend to supplies and services.Briefed by his FAs, he would ensure that fertilizers are available inadequate quantities, with dealers supplying the watercourse in questionfor the demands of the next fortnight's work program. This could involve forthem ad hoc contacts with the main fertilizer distributors, in persuadingdealers to order and to ensure timely deliveries. The pesticide suppliesmust be ensured through the Plant Protection SMS. The placement ofsprayers at strategic points in perfect working condition and with necessaryfuel must be ensured. All these activities can be planned well in advanceand pinpointed during the monthly meetings as to the exact day when they areto be carried out.

Transport

38. Experience in Pakistan shows that anything smaller than a four-wheel drive vehicle under Government control has a short service life incontrast to when it is in private hands. Therefore, it is proposed to ensurethat the AAs and the headquarters support staff have four-wheel drive vehiclesfrom project resources. The FAs would have to own motorcycles. They wouldget a three year loan for purchase and a mileage allowance for operation.Since motorcycles are not manufactured in Pakistan, under the proposed creditforeign exchange would be made available to an importer, selected by theGovernment, who has adequate spares and servicing facilities in Khairpur,to import 36 machines (100 cc) for sale to the FAs at prevailing rates.Budgetary provisions should be made to the project authorities to ensurethe prompt payment of a fair and equitable mileage allowance. Under the 109

ANNEX 13Page 10

project, funds would be provided for 10, four-wheel drive vehicles and 36motor scooters, and would include replacement vehicles for purchases madeearlier in project implementation.

39. The build-up and annual operating cost of the extension organiza-tion are in Table 2.

The Integrated Rural Development Program

40. Pakistan is committed to an Integrated Rural Development Programin an administative entity called markhaz, corresponding in the Sind to ataluka. Under a markhaz officer, who acts as chairman and executive officerof the local development committee, all development activities are co-ordinated and work programs arranged to serve the agreed objectives arrangedfor the technical officers and credit organizations.

41. At present, no markhaz is functioning in the project area, butone is scheduled for Kot DiJi taluka. A desirable precondition is that thewhole area should be at about the same stage of development and while detailedvillage-by-village needs may vary, the variation would not be too wide. When,however, the present project, involving an investment of over US$400 perac is implemented in part of the area, then its incremental service needs,like an agricultural service of maximum efficiency, must be fully and un-equivocally met, to safeguard the main investment. Therefore, it is proposedto concentrate on building up and ensuring the efficient functioning of theorganization as outlined in the three extension Circles, comprising theproject area. About three full agricultural cycles after project effective-ness, enough operational experience will have accumulated to extend thesame support services approach to the whole of Rohri, Khairpur and Kot DiJitalukas. The expanded organization will be perfectly placed to be integratedinto the markhaz as it it gets established. Subsequently, it will be entirelypossible to extend the system to the entire Khairpur District, or even beyondif achievements warrant it.

June 1976

110

ANNEX 13Appendix 1Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Agricultural Staff Training Needs

1. Special training will be required in extension methods, farm plan-ning and land leveling surveys. Crop production technologies will requireupdating only in refresher courses and the fortnightly training sessions.New technologies required by new varieties or a changed environment will beimparted to the SMSs by the research institutes. Improved extension methodswill make their dissemination easier than in the past.

Extension Methods

2. The best way for all staff to appreciate and learn the operationof the extension methods proposed is to see it in operation. This requiresvisits to areas where there is no language barrier between the Sindhi traineesand local farmers. But as an alternative, the language in which the FAsreport and the bi-monthly meetings are held must be undertstood. Some ofthe States of India would meet this requirement. It is therefore proposedto send the AAs and EADA to a suitable project area for about one month.

Farm Planning

3. The aim is to enable full utilization of the extra water and alsoto devise a year-by-year cropping pattern that will maximize profits. It isexpected to be a continuous operation: farm plans need restructuring as somecrops change in profitability due to price changes or technological advancesin production. Intricate knowledge of the area concerned is required aswell as an accurate assessment of the ability of the farmer concerned toimplement changes smoothly and effectively. Consequently, it has to bean in-service training operation, by someone who himself is familiar withlocal conditions.

4. It is proposed to have a consultant for a period of 15 months,starting about two years after the commencement of the project by which timea scope for the task will have developed. The consultant would be expectedalso to assist with the extension training program and integrate the basicsof the farm planning work into the schedule of the training sessions for theAAs.

ANNEX 13Appendix 1Page 2

Land Leveling

5. Training in the necessary survey techniques, the calculationsinvolved and subsequent pegging out of the fields are part of the USAID-sponsored Precision Land Leveling Project. Since 1965, the teaching ofthe use of leveling instruments to undergraduates taking agriculturaldegree courses has been discontinued, extending the training required underthe project. Therefore, all AAs in the project must participate in thePLLP training course to be available to assist farmers wishing to do landleveling.

June 1976

112

ANNEX 13Table 1

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVELOPhENT PROJECT

(KHAIRPIR II)

Capit.ai Cet- and pIasin" of Agricultural SupDorting Services

Year 1975/76 1976/77 1977/78 1978/79 1979/80 Total

AgricultuTal ExtensionEquipment

No Rs No Rs No Rs No Rs No Rs No Rs

4-wheel vehicles - - 3 - 5 - - - 2 - 10 _

local i - - 3.00 5.00 - 2.00 - 10.00

F.E. - - - 120.00 - 200.00 - - - 80.00 - 400.00

Motor scooters - - 10 - 8 - - - 18 - 36 -

local - - - 5.00 - 5.00 - - - 9.00 - 18.00

P.E. - - - 70.00 - 70.00 - - - 126.00 - 252.00

Slide projector &canera 1 - - - - - - - - - -

F.E. - 3.00 - - - - - - - 3.00

TOTAL - 3.00 - 198.00 - 280.00 - - - 217.00 - 683.00

Extension and FarmPlanning Consultant

local - - - 92.00 - 92.00 - 46.00 - - - 230.00

F.E. - - - 550.00 - 550.00 - 275.00 - - - 1,375.00

Total - - - 642.00 642.00 - 321.00 - - - 1,605.00

Reclamation

Lab, requisiteslocal - - - 1.00 - 1.00 - 1.00 - 1.00 - 4.00

F.E. - - - 10.00 - 10.00 - 10.00 - 10.00 - 40.00

Total - - - 11.00 - 11.00 - 11.00 - 11.00 - 44.00

Land Levelina

Equipmentlocal - .30 -. 60 - .30 - - - 1.20

F.E. - 3.00 .00 - 3.00 - 12 - - 12.00

Total - 103.30 - 206.60 - 503.30 - 1,.00 - 1,000.00 - 2,813.20

Plant Protection

Sprayers -- - 25 10local 36 - .50 3.00 - 3.00 - 2.50 - 1.0

F.E. - - - 60.00 - 72.00 - 72.00 - 60.00 - 264.00

Total - - 62.50 - 75.00 - 75.00 - 62.50 - 275.00

Mechanic Advisor

local - - - 36.00 - - - - - - - 36.00

F.E. - - - 100.00 - 00 - 100.00

Total - - - 136.00 - - - 136.00

Fellowships

local - - - 1 200 - 4 - 3 - 1

T.E. - 10.00 - 20.00 - 40.00 - 30.00 - 100.00

Total - - - 10.00 - 20.00 - 40.00 - 30.00 - 100.00

GRAND TOTAL

local - .30 140.10 105.30 50.00 1l.50 310.20

F.E. - 6.00 - 926.00 - 911.00 - 397.00 - 306.00 - 2,546.00

Total 6.30 1,066.10 1,016.30 hk7.00 320.5o 2,856.20113

ANNEX.13Table 2

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVEIOPMENT PROJECT

(KHAIRPUR II)

Operating Cost of Agricultural Extension Service

(Without Consultants)(Rs)

1975/76 1976/77 1977/78 1978/79 1979/80 1980 onward

Agricultural Assistants

Sa1ary (Rs 500/mo) o,000 12,000 15,000 18,000 18,000T.A.*(Rs 100/mo) 1,200 2,400 3,000 3,600 3,600Transport (1000 m/mo;(6 Rs 1.20) 14,100 28,200 35,200 42,200 42,200

Field Assistants

Salary (Rs 250/mo) 1s,000 36,000 45,000 54,000 54,000£ileage allowance

(Rs 0.40/m; 250 rn/mo) 7,200 14,400 18,000 21,600 21,600

Subject Matter Specialists

Salary (Rs 250/mo;1/3 of time) 6,6oo 6,600 6,6oO 6,600 6,600

T.A. (Rs 75/mo) 2,700 2,700 2,700 2,700 2,700Transport (200 m/mo;

@ Rs 1.20) 8,640 8,640 8,640 8,640 8,640

EADA

Salary (Rs 1000/mo; 20%) 2,400 2,400 2,400 2,'400 2,400T.A. (Rs 150/mo) 1,800 1,800 1,800 1,800 1,800Transport (100 m/mo;

9 ils 1.20) 1,440 1,440 1,440 1,440 1,440

Share of EADA's Staff (est.) 2,400 2,400 2,400 2,400 2,400

Lab. Chemicals andSamples 370 750 925 1,100 1,100

Printing, Posters,Puiblications 7,000 12,000 16,000 20,000 20,000

Contingency 7,850 13,270 16,895 19,020 19,020

87,700 145,000 176,000 205,500 205,500

Area Covered (acres) 8,noo 20,000 32,000 44,000 44,000

Cost per acre 10.95 7.25 5.50 4.o7 4.67* Trin~1liz% allowance. 114.

Trnvrllintg allowance. 114

ANNEX 13Figure 1

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIr73TED FARMING DEVELDPMENT PROJECT

(KHAIRPUR II)

Organization of SCARP Khairpur Agricultural Extension Wing - November 1974

Project Directcr; - SCARP Khairpur

Deputy Director of' Agriculture

I~~~~~In2ormation Officer Assistant Plant Agricultural Chemist Agronomist

Protection Office (vacant; an acting(vacant; an actin appointee)appointee)

Photographer

Extra-Assistant Director of Agriculture

ISector Officers

( substantive, 1 acting)

I15 Agricultural Assistants

+ one vacancy)

171 Field Assistants( F four vacancies)

115

ANNEX 13Figure 2

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVELOPMENT PROJECT

(KHAIRPUR II)

Proposed Organization Chart, Project Extension Service

PD - SC.IP Khairpar

PD - Khairpur II(for pertinent matters only)

EADA …- xtension Corinit-4tee

----- -61S

--- SMS

I ~ ~~~~~~ -* - _._

AA *1AA

FA FA FA FA FAFE

CF CF CF C? CF CF CF CF CF CF C CF

116

ANNEX 14Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE AND

IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Consulting Services

General

1. The Water and Power Development Authority, Southern Zone (WAPDA,SZ),

which would be responsible for project implementation would engage a consult-

ing firm acceptable to IDA to assist WAPDA(SZ) in the preparation of engineer-

ing designs and supervision of construction of project works and to provide

expertise to the SCARP Khairpur Agricultural Extension Wing in developing

extension services and in monitoring project performance and production in-

creases. The engineering services would include assistance in detailed

designs, preparing equipment procurement documents, managing and supervising

construction, operation and maintenance training and preparing operation and

maintenance manuals. Agriculture services would include assistance in

identifying local production constraints, managing extension activities and

intensifying existing services.

Services Required

2. The services of the following specialists would be required for

a total of about 170 man-months:

Man-months

(a) Civil Engineer:

Team leader, responsible for assist-ance in design and construction super-vision. He should have extensive ex-perience in the design and constructionof tile drainage and gravity irrigationdistribution sytems. 36

(b) Mechanical Equipment Engineer:

Would prepare specifications and biddingdocuments for all equipment requiredfor the project, assist in selectingand procuring it and in supervising itsoperation and maintenance; he shouldhave extensive experience with the typeof construction equipment, in particularthe tile laying and earthmoving equipment,to be used. 24

117

ANNEX 14Page 2

Man-Months

(c) Extension and Farm Management Expert:

Would advise agricultural extensionstaff in developing the extension servicesprogram and assist in implementing it.Also would assist in improving farmwater management techniques and inoptimizing farm use of crop inputsunder changing local conditions. 36

(d) Drainage and Reclamation Engineer:

Would advise on identification ofdrainage requirements -- surface andsub-surface drainage design criteria,planning and design and installation ofsurface and sub-surface drains -- aswell as on soil reclamation methods andprocedures. 36

(e) Short-Term Specialists:

Would advise and assist in solvingspecific problems relating to soilsand water quality and to tile drain-age design criteria installation, etc. 36

Total number of man-months required is estimated at: 168

Responsibility of the Consultant

3. The WAPDA(SZ) would engage a consulting firm to provide the ser-vices of the qualified specialists described above. These specialistswould give technical advice, assistance and direction to the engineering andagricultural staff assigned to the project, particularly in regard to deter-mining design and construction methods appropriate for prevailing conditionsin the locality. They would assist in the following activities:

(a) A review of all pertinent published and unpublisheddata and reports on the project area;

(b) The completion of the soil, groundwater and topo-graphical surveys and drainage investigationsneeded for the design of drainage works;

(c) The preparation of specifications and tender documentsfor international and local bidding satisfactory to theBank Group and the evaluation of bids for civil works

118

ANNEX i4Page 3

and the procurement of vehicles and equipment, includingspare parts;

(d) Plans, designs, and estimates of the tile drainageand surface disposal system, including pump stationsand power transmission lines;

(e) Overall planning and coordination of the drainageconstruction program, including pipe manufacture,pipe storage and delivery, gravel filter supply andpipe installation by alternative methods andequipment; training of WAPDA personnel in mechanizedpipe laying techniques;

(f) The supervision of drain installation and drainagemonitoring in the field;

(g) The preparation of cost estimates for projects worksand the establishment of cost accounting proceduresfor review of project costs;

(h) The preparation of drainage system operation andmaintenance including annual budgetary requirementscovering staff and equipment;

(i) A review of irrigation water distribution, deliveryscheduling and the means to improve irrigation servicesin the project area;

tj) Development (by SCARP Khairpur Agricultural Wing) ofappropriate training courses for extension staff;

(k) The reclamation of saline lands in the project area;

(1) The preparation of a detailed work program and schedulefor intensification of the extension service fieldstaff activities;

(m) Development (by SCARP Khairpur Agricultural Wing) ofan intensive farm management advisory service,particularly to improve farm use of increased watersupplies.

4. The Team Leader would assist the Project Director in the prepara-tion of project quarterly and annual reports for submission to GOSind,GOP and IDA.

119

ANNEX 14Page 4

Services To Be Provided By The Government

j. The Government will:

(a) Exempt or bear the cost of any taxes, duties, fees,levies and other impositions imposed under its laws andregulations or the laws and regulations in effect inits territories or any political sub-division of agencythereof, on the consultant and/or his personnel (otherthan those who are citizens or permanent residentsof Pakistan) in respect of:

(i) any payments made to the consultants or to suchpersonnel in connection with the carrying out ofthe agreed services;

(ii) any equipment, materials and supplies broughtinto the country for the purpose of carrying outthe services and which, after having been broughtinto such territories, will subsequently be disposedof in a manner to be decided by the Government ofPakistan;

(iii) any property brought into Pakistan by the personnelof the consultant and dependents for their personaluse and which, after having been brought into Pakistan,will subsequently be withdrawn therefrom upon departureof such personnel after obtaining clearance of Govern-ment of Pakistan. However, to qualify for these exemp-tions, shipment of such property will have to bearranged by contract no later than three months afterthe arrival of the staff member;

(b) facilitate prompt clearance through customs of any equip-ment, material and supplies required for the services andof the personal effects of the consultants' personnel;

(c) ensure that:

(i) the consultants' expatriate personnel and theirdependents are promptly provided with any necessaryentry and exit visas, residence permits, exchangepermits and travel documents required fortheir stay in the territories of the Government;

(ii) all necessary permits and authorization for carry-ing out of the services, including prompt reviewof the experience resume of the consultants' proposedstaff, are provided promptly and that if the consultanthas not been advised of approval or disapproval of

120

ANNEX 14Page 5

the proposed employee within a period of 15 daysfrom the date of receipt of such proposal fromthe consultant by the executing agency, the proposedemployee will be considered as accepted for employ-ment.

6. Services and facilities that will be made available to the con-sultant include:

(a) reasonably furnished family living quarters, orcompensation therefor, for consultant personnel whilein Pakistan in connection with the project work. Theconsultant will be responsible for furnishing andmaintaining the accommodations and the cost of the samewill be reimbursed by the executing agency;

(u) all existing aerial photographs, maps, drawings, data,reports and other information pertinent to the executionof the work;

(c) suitably furnished office facilities, including adequateoffice equipment and supplies that may be required forthe proper execution of the consultants' work;

(d) counterpart professional and clerical staff as may berequired for the proper execution of the consultants'duties in Pakistan;

(e) overland transportation facilities and/or air transporta-tion and service vehicles, including drivers and the costof operation and maintenance, required in the conduct ofofficial work; and

(f) telephone, telegraph, cable and postage expenses andprinting and reproductions required by the consultantin the performlance of the work.

June 1976

121

ANNEX 15Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Net Farm Incomes

General

1. Present agricultural practices in the project area and anticipatedchanges under the proposed project are discussed in Annex 16. This Annexassesses the effects of those changes on individual farm incomes and thecapacities of project beneficiaries to repay part of the costs of the newfacilities.

Crop Enterprise Budgets

2. The bases for preparation of complete farm budgets (Table 4) arethe crop enterprise budgets given in Table 1, which presents per acre cropincomes as well as production costs. These budgets are determined by usingthe financial price estimates discussed in Annex 17, the yield projectionsdiscussed in Annex 16, and the production inputs requirements shown on Table1. The Department of Agriculture, the Sind Agriculture Supply Organization,and commercial fertilizer distributors provided the data used for these esti-mates. The following assumptions underlie this analysis:

3. Fertilizers and Pesticides. Since use of fertilizers is wellaccepted in the area, scope for increased use of fertilizers will be deter-mined by increasing crop yields (Annexes 5 and 16). If production remainsconstrained by waterlogging, salinity, and limited water supplies, fertilizeruse is likely to decline. Under the project, with these constraints removed,and extension services intensified, fertilizer use is expected to increaseabout seven times over the development period. Pesticide use which presentlyis limited and not very effective due to local shortage of chemicals andequipment, would increase to levels adequate to support the anticipated yieldsof cotton and oilseeds.

4. Seed. Average annual requirements are given for each crop, includ-ing sugarcane which is a ratoon crop reseeded every three years. Farm ownerssave part of their crops for seed and purchase the balance of their and theirtenants' requirements. For this analysis, the aggregate cost of purchasedand farm produced seed is included as a deduction from the gross crop value.

122

ANNEX 15Page 2

5. Power. The annual requirements for power used in field preparationare given in terms of ox-pair days. Small and medium farmers and most largefarmers use oxen which they either own, share, or hire on various termswhich include provision for fodder. A few large landowners own tractorswhich they use primarily for heavy leveling and which they occasionally hireout to other farmers. Power requirements for land leveling and other farmdevelopment are included as part of the project costs.

6. The cost of bullock power, derived in Table 2, amounts to aboutRs 20 per ox-pair day (Rs 28 in 1975 terms), of which about half is thelabor cost of the driver. The remainder includes the average cost of re-placement, upkeep, feed, as well as the value of fodder, grain straw, andcane tops produced on the farm.

7. Farm Labor. The annual labor requirements are the sum of familyand hired labor requirements by month given in Table 3.

8. Irrigation. The costs of operating and maintaining the existingand proposed facilities and the associated capital recovery costs are treatedas a separate part of the farm budget.

Farm Incomes

9. On the basis of the increments in net crop values shown above, theanticipated 60% expansion of cropped areas and 100% increase in field employ-ment opportunities (Annex 4), estimated net farm incomes at full developmentwould average about seven times future farm incomes without the project andabout five times at present levels. Table 4 shows the estimated incomes fromfarm production and field wages for three farms which illustrate the range ofconditions under the project within the limits of available data.

10. Non-Farm Earnings. Information on the various sources and levelsof non-farm earnings needed to establish the effect on total farm incomes ofthe increase in field labor requirements under the project is not adequate.Consequently, the mission recommends that the proposed project monitoringunit collect this information as part of the proposed benchmark survey. Inanalyzing the net increase in farm incomes for this appraisal, the monthlyrequirements for hired labor and the monthly opportunities for field wageearnings are determined from a month by month analysis of field labor require-ments in relation to the various farm family labor supplies (para 12). Inestimating wage earning opportunities, potential wage earnings based on theexcess availability of the family labor supply are discounted in proportionto the overall employment ratio of project area field labor demand to localsupply. Wage earning opportunities in the slack period are assumed negligi-ble because the employment ratio then is very low.

123

ANNEX 15Page 3

11. Farm Budgets. Nearly half the farms in the project area are under7 ac, which presently is about the minimum area required to support an aver-age family. 1/. Most farms, therefore, are subsistence oriented, consumingmost of their own grain, pulse, and vegetable produce and marketing for casha little cotton, wheat, oilseeds, and in some cases livestock products. Onlyowners of 15 ac or more have date orchards, which are grown under contractfor cash. The available information is not sufficiently accurate or compre-hensive to draw fine distinctions, but analysis of the following three farmtypes indicates the range of project effects on subsistence incomes, cashcrop returns and field wage earnings:

(a) submarginal farm of 5 ac whose household income mustbe derived in part from field wages;

(b) subsistence farm of average size, 10 ac, and

(c) cash crop oriented farm of 25 ac.

12. The budgets are estimated on an annual financial basis under thefollowing assumptions:

(a) Farm Population: The average size family in the area isabout six persons. Based on surveys in other rural areas,farm family sizes generally vary somewhat according tosize of holding. For the three farms in this analysisthe following has been assumed:

Farm Area Number of Persons

5 ac 510 ac 625 ac 8

(b) Subsistence Requirements: In 1974, minimum living expensesfor a farm family in the area averaged about Rs 400 perperson per year (Rs 570 in 1975 terms), about one-thirdnational average per capita income. This included annualrequirements for food and clothing, as follows:

1/ Average family size generally varies with farm size. While the averagefarm of 10 ac can now support about six persons, which is averagefor the area, a farm of 7 ac can support about five persons, which isabout average for that farm size.

124

ANNEX 15Page 4

Minimum AnnualPer Capita Living

Expenses

Grain (4.2 mds) 85Edible Oils (0.1 md) 20Livestock by products 130Other food 90Clothing 45Miscellaneous 30

Total 400

Miscellaneous expenses include a minimum allowance forhealth, education, and important celebrations.

(c) Farm Family Labor Suly: In the Sind, women and childrenwork part time, picking cotton and harvesting grain. Pre-vious surveys suggest that a family of six includes on theaverage about three adult field workers or the equivalent:

AdultFamily Field Field WorkersMembers Weight (or equivalent)

Males over 14 1.5 1.0 1.5Males between 10 & 14 .5 .8 .4Females over 14 1.0 .5 .5Females between 10 &14 .5 .4 .2Children under 10 .5 .4 .2Children not working 2.0 0 0

Total 6.0 2.9

Assuming an average monthly capacity per adult of about20 days, the family labor supplies for the three farmsare estimated to be:

Farm Size Family Labor Supply(acres) (man-days/month)

5 4810 5825 77

(d) Hired Labor Costs: The seasonal variation in laborrequirements forces families with otherwise sufficientannual supply of labor to hire outside workers. Theannual costs of hired labor, therefore, are determined

125

ANNEX 15Page 5

according to the estimated monthly labor requirementsand average monthly availability of family labor for eachfarm.

(e) Cropping Patterns: Reflect the average for the projectarea, but have been adjusted for the 5 ac and 25 ac farmsto illustrate the differences due to subsistence and cashoriented farming in the area.

(f) Irrigation Costs: The project implementation and operatingcosts are pro-rated per farm acre. The costs includerecovery of initial investment costs assuming an interestrate of 10%.

Project Cost Recovery

13. The capital costs of the Khairpur II project investments, excludingthe costs of land leveling and equipment to be financed directly by farmersthemselves, would amount to, for irrigation, about Rs 430 per ac of theproject and, for drainage, about Rs 3.0 per ac spread over the entireirrigated area of the Indus Basin (about 30 million ac). Annual charges torecover the irrigation component over 30 years with 10% interest per annumwould be about Rs 45 per ac while the charges to recover the drainage com-ponent would be only REs 0.32 per ac. Annual 0 & M costs for all proposedfacilities and services would average about Rs 50 per ac.

Repayment Capacity

14. Farmer's ability to pay such charges in general would be determinedby his production increases due to the project, the prevailing farm gate com-modity prices and adequate increases in net farm income as incentives toincrease production. A measure of this, the project rent, is the portionof his increase in net farm income due to the project which would be avail-able after taking into account suitable rewards for family labor andmanagement and a margin for cultivation risks. Suitable rewards for familylabor and management should include adequate farm production incentives.Such incentives are speculative and in practice would vary depending on localalternative income opportunities. In this report, family labor is valuedat Rs 14 per man-day, the peak opportunity cost for wage labor, and rewardsfor management are 10% of the residual farm income. In the absence ofstudies of the variance in crop yields and market price projections, a marginfor cultivation risks is taken as 10% of the gross crop income.

15. Through price regulation, GOP holds down prices of some agriculturalproducts, particularly wheat, cotton, and sugarcane, as a means to lowerconsumer prices primarily for landless wage earners and urban residents(Annex 17). In relation to market prices and to prices which would prevailif GOP were to impose no import or export restrictions, this price regula-tion comprises an implicit tax on farm holders and tenants who must sell

126

ANNEX 15Page 6

at least a part of their production to GOP. 1/ In past years, the part ofmarketable wheat surplus which GOP has procured has varied depending onthe relative levels of procurement and free market prices and the ocassionalrestrictions which Government has placed in certain areas on grain movementsnear harvest time when the bulk of procurement is completed. Inevitablyduring this period, the farmers who sold to Government were the poorerfarmers with pressing cash needs. In general, since implicit tax rates varyfor different crops this form of taxation is inequitable and regressivein that it puts a heavy burden on the subsistence farmers who cultivatemostly wheat and cotton and puts little burden on large cash crop farmerswho cultivate crops such as pulses and date orchards which bear no in-direct taxation. Consequently, such general taxes are not an appropriateinstrument for cost recovery, and they involve broad issues and policieswhich extend beyond the perspective of a single investment project such asthis. However, the regulated prices must be taken into account in assess-ing the farmers' abilities to make payments.

16. Amounts which farmers could pay would depend on which agriculturalpricing policy GOP would follow in the future. Table 5 shows the projectrent estimates for the three farm models. If GOP were to increase procure-ment prices somewhat as a measure to stimulate farm production increases,the project rents after full development would range from about Rs 730per ac on small farms (5 ac) to about Rs 1,330 per ac on large farms (25 ac).On the other hand, if GOP were to maintain present price levels, the projectrents after full development would range from only about Rs 250 per ac toabout Rs 850 per ac.

17. Farmers' abilities to pay would reach such levels only after fulldevelopment should they achieve the anticipated increases in yields and croppedareas. During the interim, project farm incomes would increase gradually,more rapidly for some farmers than for others. Actual capabilities topay water charges, therefore, should be based on field recorded increasesin farm water supplies and production and increases in farm incomes evaluatedusing prevailing actual farm gate prices. Benchmark assessments of farmproduction and incomes would be required before construction completion.Subsequently, new assessments would be required periodically to adjust foractual production increases and changes in price levels.

Existing Tax Structure

18. Water Rates. Sind landowners who are entitled to a proportion ofthe watercourse flow determined by their size of holding served, now pay acomposite tax which contains a component for water charges. The owner pays

1/ In addition, farmers must sell their remaining surplus production inmarkets where prices, although usually higher than procurement prices,still are controlled indirectly through price restrictions on endproducts.

127

ANNEX 15Page 7

land revenue to the Revenue Department and water charges to the IrrigationDepartment overseer, the patwari at each watercourse. The tax amount isdetermined as follows:

1. Land revenue = area owned x produce index unit x land rate;

2. Water charge - area owned x produce index unit x water rate.

19. The Produce Index Units (PIU) and the land and water rates were mostrecently fixed in September 1973 pursuant to the "Sind Canal Water Flat RateRules of 1973". The figures are effective for five years from the date ofpublication. A different PIU is applicable in each taluka based on evalua-tion of the land productivity. Within each taluka are several PIUs, one forland under each type of irrigation reflecting the general water availability.Within the project area, all lands fall into the hybrid grade, "gravity flowirrigation". The water rates are assessed for each village area (deh), takinginto account local land fertility/salinity relative to land elsewhere in thetaluka.

20. The PIU for Rohri taluka is 34, for all talukas of Khairpur dis-trict, 40. The assessment for the water averages Rs 0.30 for the dehs inRohri taluka and Rs 0.29 for the dehs in Khairpur and Kot Diji talukas. Theaverage for the project area is Rs 0.30. Therefore the expected revenue inthe project area that is clearly attributable to water supplied is,

Rohri: 31,800 ac x Rs 0.30 x 34 Rs 332,200

Khairpur &Kot Diii: 12,200 ac x Rs 0.29 x 40 Rs 142,000

Rs 464,200

(Rs 10.55 per ac)

21. Changes in the numerical factors are possible every five yearswithin the present system so long as they are directly related to improvedconditions. In view of the fact that the present assessment does not coverannual operating costs, let alone build up reserves for future capital works,a change in assessment is clearly indicated. Working, however, within thepresent framework, the following can be deduced.

(a) The project would provide drainage which would renderthe land as good as the best of Sind. The PIU forsuch lands is 42. They are in the Rohri CanalCommand, where the design duty of water is 2.6 ft3/1,000 CCA. In Khairpur, the design duty is 3.03 ft3/1,000 CCA. Therefore an appropriate PIU would be(3.03/2.60) x 42 - 49.

128

ANNEX 15Page 8

(b) The water rate is now Rs 0.30 per PIU. Under the project,the design cropping intensity increases from 91K to 1441%,or by a factor of 1.6. Also, the desigrn cropping patterncontains a higher area of crops that have a higher waterrequirement than the design cropping pattern for theKhairpur Feeder Canals did in 1932. Therefore, the factorto be applied can be adjusted upwards to at least 1.75.Thus the new unit water rate would be Rs 0.30 x 1.75 = 0.53.The expected rate is 49 x Rs 0.53 = Rs 26 per ac and thetotal water rate collection 44,000 ac x 26 = Rs 1.14 whichwould be sufficient to cover about half the O&M costs butnone of the capital recovery.

22. Drainage Charges. At present, GOP does not charge farmers ex-plicitly for drainage and has not increased water charges in drained areas.It regards drainage not as an improvement but as a measure needed to restoreland to its former productivity and regards drainage charges as impracticalto administer since they appear inequitable among farmers living near farmsrequiring no drainage. The provision of additional water supplies in theproject area would provide GOP with an appropriate basis for collectingadditional charges for drainage investments.

June 1976

129

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ANNEX 15Table 2

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROECT (KHAIRPUR II)

Net Farm Incomes

Annual Cost of Bullock Field Power in Sind

Depreciation (assuming 8 years useful life)

One pair costing Rs.6000 net2./ Rs 750

Feed

Green fodder, 1.5 ac @ Rs1400/acZ/ Rs 2,100

Wheat straw (bhoosa), 110 mds @ RslO/md Rs 1,100

Gram, 3.5 mds @ Rs6O/mdl/ Rs 210

Upkeep

Veterinary expenses Rs 100

Repairs to driving equipment Rs 100

Driver

Wages for 1 full time man @ Rs250 per month Rs 3,000

Total per annum Rs 7,360

Average Cost per Cropped Acre

Assuming 12.5 ac (i) under intensity of 120%(15 ac) 490

(ii) under intensity of 100%(12.5 ac) 590

(iii) under intensity of 85%(10.6 ac) 690

1/ Residual value taken into consideration.2/ Green fodder - Rabi Rs1200 - 1,h00 per acre.

Kharif Rs800 - 1,000 per acre.3/ As the intensity increases more gran, etc., would be

required and feeding charges would be higher.

132

AINNE 15Table 3

PAKISTAN

KHAIRPUR TILE DRAINAGEANfD IRRIOATED FARIDKG DEVELOPMENT PROJECT (KHARIRPR II)

Net Farm Income

Monthly Crop Labor Resuirements(man-days/ac)

Jan. Feb. March April _Ma June July _An. Sept Oct. Nov. Dec. Total

Cotton: P 0 0 0 2 5 2 2 2 1 9 12 2 37W O 0 0 2 5 2 2 2 1 9 12 2 37W 0 0 0 2 6 3 2 3 2 11 15 13 47

Wheat: p 0 0 0 5 5 0 0 0 0 2 3 1 16W 0 0 0 5 5 0 0 0 0 2 3 1 16W 0 1 0 7 7 0 0 0 1 2 4 3 25

Sorghum: P 0 0 0 1 1 1.5 0 0 0 3 4 0.5 11y 0 0 0 1 1 1.5 0 0 0 3 4 0.5 11w 0 0 0 0 1.5 1.5 2 1 1 3 5 5 20

Rice: P 0 0 0 0 4 4 0 1 1 6 7 2 25W 0 0 0 4 4 0 1 1 6 7 2 25

w 0 0 0 0 4 4 0 1 1 6 7 2 25

Sugarcane: p 11 11 10 1 0 0 0 0 0 3 10 11 57W 11 11 10 1 0 0 0 0 0 3 10 11 57W 12 11 12 1 1 1 1 0.5 0.5 0 11 12 63

Dates: p 0.5 0.5 1 2 0 0 3 3 0 0.5 0 0.5 11W 0.5 0.5 1 2 0 0 3 3 0 0.5 0 0.5 11w 0.5 0.5 1 2.5 0 1 4 4 0 1 0 0.5 15

Oilseeds: P 2 2 2 1 0 0 0 0 0 1 1 0 9'i 2 2 2 1 0 0 0 0 0 1 1 0 9w 2 2.5 2.5 1 0 0 0 0 1.5 1.5 0.5 0.5 12

Kharif Fbdder: P 0 0 0 1 1 0.5 1 0.5 0.5 1 1 0 6.5V o 0 0 1 1 0.5 1 0.5 0.5 1 1 0 6.5

W 0 0 0.5 0.5 2.5 3.5 3.5 3.5 2 2 2 0 20

Rabi Fbdder: P 3 3 3 3 0 0 0 0 0 0.5 1.5 3 17W 3 3 3 3 0 0 0 0 0 0.5 1.5 3 17W 4 4 4 3.5 0 0 0 0 0 0.5 1 3 20

Kharif Pulses: P 0 0 0 0 0.5 1 0.5 0 0 3 4 1 10

W 0 0 0 0 0.5 1 0.5 0 0 3 4 1 10w 0 0 0 0 0 0 2 1 2 14 4 2 15

Rabi Pulses: P 0 0 1 3 1 0 0 0 0 1 2 1 9W 0 0 1 3 1 0 0 0 0 1 2 1 9

w 0 0 4 3 1 0 0 0 0.5 1 0.5 0 10

Vegetables: P 10 10 10 10 10 10 10 10 10 10 10 10 120

W 10 10 10 10 10 10 10 10 10 10 10 10 120w 10 10 10 10 10 10 10 10 10 10 10 10 120 oi|

m

Note: Requirements are based on an average of 7 hours labor per day.

%rmbols: P - Present situation.W - Future without the proposed project.W - Future with the proposed project. 133

ANNEX 15Table 4

PAKISTAN

IKRARPUR TILE DRAINAGEAND IRRIGATgD FARMING DEVELODPMENT PROJECTM(EMAIRPUR II)

Net Farm Incomes

5 Acres 10 Acres 25 AcresPresent Without With Present Without With Present Without With

Cropped Area (acres)

Wheat 1.4 1.2 2.3 2.7 2.3 4.7 4.5 3.2 10.5Sorghum .6 .7 1.0 1.4 1.7 1.3 2.5 2.5 .9Paddy .6 1.0 .0 1.2 2.0 .0 3.0 3.5 .0Oilseeds .0 .0 .0 .1 .1 1.0 .4 .4 2.5Pulses .1 .2 .2 .1 .2 .5 .9 1.0 .5Vegetables .0 .0 .0 .0 .0 .0 .1 1.0 .5Sugarcane .0 .2 .5 .0 .4 1.0 .0 1.8 3.5Dates .0 .0 .0 .0 .0 .0 .8 1.0 2.2Cotton 1.0 .5 1.5 2.0 1.1 3.8 5.7 3.0 7 5Fodder .5 .5 1.2 .9 .7 1.3 3.5 3.0 3.0

TOTAL 4.2 4.3 6.7 8.4 8.5 13.6 21.4 19.5 30 7Overall Intensityl/ (7) 84 90 144 84 89 146 89 89 146

Gross Crop Income (Rs)

Cereals 1414 3385 8400 2794 6946 15708 5196 10145 31,164Sugarcane 0 868 2170 0 1736 4340 0 7812 15,190Cotton 1419 1155 4125 2839 2541 10450 8090 6930 20,625Dates 0 0 0 0 0 0 6624 16100 35,420Other 207 307 820 402 543 3130 1725 2368 7,310

TOTAL 3040 5715 15515 6035 11766 33628 21635 43355 109,709

Production Costs

Purchased inputs (Rs)a 595 601 2639 1175 1213 537 2650 3391 12,543Bullock Power (Rs)3

1454 441 1017 904 883 2183 2138 2005 5 089

sobtotal 1049 1042 3656 2079 2096 7553 4788 5396

4/Family Labor (man-daysa)/ (123) (125) (232) (207) (211) (388) (390) (450) (781)Hired Labor (man-days) - ( 0) ( 0) ( 48) ( 38) ( 36) (200) (243) (162) (582)Hired Labor (Rs) 0 0 672 532 504 2800 3402 2268 8148

TOTAL 1049 1042 4328 2611 2600 10353 8190 7664 25,7p0

Wage Earnings (Re) 360 295 460 245 200 145 105 100 0

Land Tax (Rs) -70 -70 -70 -140 -140 -140 -350 -350 -350

Net Farm Income (Rs)(Before charges for Irrigationand Drainage) 2281 4898 11577 3529 9226 23280 13200 35441 83,579

Increase in Not Farm Income(Before charges for Irrigation

and Drainage)

Future "With" minus "Present" (Rs) 9296 19751 70,379Increase per acre (Rs/ac) 1860 1975 2,815

Charges for Irrigation and Drainmge

O6Mg/ (RN) 70 70 250 140 140 500 350 350 1,250Capital Recovery (Rs) 0 0 1750 0 0 3500 0 0 8,750

TOTAL 70 70 2000 140 140 4000 350 350 10,000Total per acre 14 14 400 14 14 400 14 14 400

Net Farm Income (Rs)(After charges for Irrigationand Drainage) 2211 4828 9577 3389 908b 1928u 12850 3591 73,579

Increment in Net Farm Income Due to Prolect

Future "With" minus "Without" (Rs) 4749 10194 38,488Increment per man-day of additional

family labor (Rs/men-day) 45 58 116Increment per ac (Ralac) 950 1020 1,540

Notes: Present - Under present conditions.Without - In the future, without development under the proposed project.With - In the future, after full development under the project.

1/ In calculating intensity, the areas under sugarcane and dates, being perennial crops are counted twice..

2/ Includes the costs of fertilizers, pesticides, certified seed, and contingency allowance of 10%.

3/ ExcLudes the labor costs for bullock drivers which are included as part of farm family and hired labor.

4/ Also includes bullock driver requirements in May and November.

5/ Present costs are the current water component of the flat rate tax. 134

ANNEX 15Table 5

PAKISTAN

KHAIRPUR TILE DRAINAGE AND IRRIGATED FARMING DEVELOPMENT PROJECT

(KEAIREUR II)

ProJect Rent

Farm Income/ ense-/ 5 Ac Farm 10 Ac Farm 25 Ac Farm(Rupees) Without With Without With Without With

Gross Income 5,715 15,515 11,766 33,628 43,355 109,709

Certain Income (90%) 5,143 13,964 10,589 30,265 39,019 98,738

Expenses:

Inputs (1,042) (4,328) (2,600) (10,353) 7,664 25,780

Fixed Tax (70) (70) (140) (140) (350) (350)

Family Labor (1,750) (3,250) (2,950) (5,430) (6,300) (10,930)

Residual Income 2,281 6,316 4,899 1h,342 24,705 61,678

Management Fee (10%) (228) (632) (490) (1 43O (2,705 (60168)

Net Income 2,053 5,684 4,409 12,908 22,235 55,510

Project Rent 3,631 8,499 33,275

Per Acre Rent 726 850 1,331

NOTE: Without -- Future, without project developmentWith -- Future, after full project development

1/ From Table 4.

2/ Includes purchased inputs, bullock power and hired labor.

135

ANNEX 16Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Present and Future Cropping Patterns and Production

Present Situation

1. The present cropping pattern is diagrammatically shown in Fig. 1.

The percent of project area (44,000 ac) occupied by various crops are asfollows:

Kharif Rabi-- % Project Area---

Sugarcane 0.5 0.5

Date Orchards 4.0 4.0

Fodder 1.0 12.0

Pulses 0.5 3.0

Kharif grain 9.0 -

Oilseeds - 1.0

Cotton 23.0

Rice 12.0

Wheat 17.0

Total 50 37.5

Cropped area as % of CCA 83%

Cropping intensity /a 87%

/a Counting area occupied by perennial crops (sugarcane and dateorchards) twice.

In fact, at present only some 60% of the project area is being cropped,

because 17,300 ac are too saline for profitable agriculture. Thus, thereis double cropping on 26% of the CCA. Figure 1 shows the present situation

on the land actually cropped.

136

ANNEX 16Page 2

Cropping Pattern and Yields Under Project Conditions

2. The future cropping pattern has been developed taking into con-sideration the Government's plan thiat a sugar mill, with a daily crushingcapacity of 1,500 tons of cane will be built in Kot Diji.

Kharif Rabi--- % Project Area---

Sugarcane 12 12

Date Orchards 8 8

Vegetables 1 1

Fodder 4 12

Pulses tr 2

Kharif grain 5 -

Oilseeds - 8

Cotton 30 -

Wheat _ 42

Total 60 85

Cropped area as % of CCA 125%

Cropping intensity /a 146%

la See footnote on page 1.

Thus, cropping intensity is expected to increase by nearly 60%, but thecropped area by only 40%, owing to now uncultivable saline land being re-claimed. Nevertheless, as the schematic representation of the expected crop-ping pattern shows (Fig. 2) managerial and planning skill over and above thatcalled for at present will be required to fit in the necessary crop sequences.The imparting of this, and the more exacting techniques required to attainthe projected yields, will be the task of the strengthened agricultural sup-porting services (Annex 13).

3. Table 1 also shows the present and future yields. Yields underproject conditions are expected to bridge the gap between the present andexpected level as follows:

137

ANNEX 16Page 3

Year After Project Completion No Change

Year Five 33% of expected increase

Year Seven 66% " " "

Year Ten 100% " " "

Future Development Without the Project

4. The time perspective for considering the probable "without project"situation is around 1990, by which time, with the project, full benefitswould be attained. In that time, probable development without the projectwould be the following:

a. The area will receive its share of water from upstreamstorage in Tarbela and Chasma. This would bring aboutthe following changes:

i. Area Al (which will receive rabi supplies) rabiyields and cropping intensities would increase.Yields would still be below the "with project" levelsbecause of less extensive leveling and no possibilityof kharif leachings. The cropping intensities wouldalso be lower because the area will have no specialrights for rabi water, as it will not be a developmentarea where other investments must be safeguarded.Therefore, the water table will not yet have risento levels where it would seriously lower yields, butwould have risen enough to cause a sizeable shift tomore water and salt-tolerant crops, mainly at theexpense of cotton, the potential wheat area in therabi and the potential date and sugarcane areas.

ii. Area A2 (which at present receives almost full rabisupplies) would continue to deteriorate; the croppingpattern will shift towards the low-value water andsalt-tolerant crops and, despite the sugar millthat will be built virtually within the area, theacreage of sugarcane would remain low. Also, thetotal cropped area would decline due to water loggingand salinization.

iii. Area B (which is already drained by tubewells and willreceive rabi supplies) would attain rabi developmentalmost equal to that expected under project conditions,handicapped only by lack of leaching water in the kharifand the slower progress of land leveling.

138

ANNEX 16Page 4

b. Developments in cotton agronomy. This will mean the releaseof monopodial varieties that are higher yielders than thosegrown at present and are more responsive to fertilizers. Suchvarieties are said to be in advanced testing stages. Pestcontrol technology will advance and is expected to receivebackstopping not only from enthomologists but also fromapplication technologists. Therefore yields, where notconstrained by soil conditions, will improve. The overallacreage will however decrease: in Al and A2 because ofdeteriorating soil conditions; in B it will have to competewith sugarcane, which is potentially more profitable. Thebetter pest control technologies will have their effect onthe yield of Brassicas, which are expected to improve where-ever they can be grown.

c. The revitalizing and greater effectiveness of the extensionservice will affect yields and production.

d. PLLP will proceed within the resources available and whileits direct influence may not be great, the advent of extrarabi water will act as an incentive in areas Al and B forfarmers to accelerate their efforts and to upgrade them toPLLP standards. Its total achievements, and therefore effecton production, will however be lower than under the project.

e. Until now, there has been no development in sorghum agronomyin Pakistan comparable to that in India and Sri Lanka, wherethe high-yielding hybrids and dwarf grain varieties have madeimportant headway. There is little doubt that with arevitalized extension service high-yielding sorghums willtake over a significant part of the area devoted to this crop,greatly influencing present average grain yields.

5. The composite effect of the foregoing is shown in Table 1. Whilemost crop yields are expected to show some advance event without a project,they are expected to be lower than what can be reached with the project.Most importantly, however, the acreage of the more profitable crops willdecline, due to deriorating soil conditions. After 1990, the shift tothe less profitable crops will accelerate and yields of all crops willdecline more.

June 1976

139

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PAKISTANKHAIRPUR TILE DRAINAGE AND

IRRIGATED FARMING DEVELOPMENT PROJECT(KHAIRPUR II)

Schematic Representation of Cropping Patterns AiNNE i6

Present Situation

Pc ccl cI

100 _ _ . , A ' ' " ' , . - " . . ' ' ' . ' 1

80 -

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40~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4

PAKISTANKHAIRPUR TILE DRAINAGE AND ANNEX 16

IRRIGATED FARMING DEVELOPMENT PROJECT Figure 2(KHAIRPUR 11)

Schematic Representation of Cropping PatternsFuture at Full Development

I<rt

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ANNEX 17Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Marketing and Prices

General

1. Marketing. Prospects for the project's major crops will be linkedto international markets. Cotton lint and lint manufactures will in partbe exported, and surplus grain, sugar, oilseeds and dates will help offsetimports. Fertilizer and pesticide inputs will be imported, and in the caseof nitrogenous fertilizers, in addition to imports, large amounts will bedomestically produced. Almost all pulses and vegetables and the greaterpart of the fodder will be consumed on the farms. Future market prospectsfor these commodities and price estimates for the financial and economicanalyses are discussed below.

2. The project is situated near large market centers which are locatedat major rail and highway junctions. The production increases in crops orcrop manufactures, given in Table 1, are all small compared with the presentmarket volumes in the area. Consequently, additional marketing or distribu-tion facilities would not be required.

3. Prices. For internationally traded commodities and crop inputs,price estimates are based on Bank projections (dated May 27, 1975) of WorldMarket prices through 1985, and for other crops and crop inputs are based onpresent levels and historic trends of local prices (Table 2). The prices andeconomic values are expressed in terms of constant currency, using December1975 prices as the base. Separate estimates for present and future takeinto account the anticipated changes in the long-term supply and demandrelationships for each commodity. Farm gate price estimates, in taking intoaccount taxes and subsidies, assume future relaxation of some Government pricecontrols, as discussed below. Values for the economic analysis are derivedusing an exchange rate of US$1 = Rs 11 and exclude taxes, subsidies, and valueadded between farm and market. The estimates are given in Table 3.

Cotton

4. Cotton in the form of lint, yarn, and cloth comprised 35% of thevalue of Pakistan's exports in 1973/74. Even with steady growth in cottonexports, however, the domestic market has regularly consumed one-third toone-half of annual production.

143

ANNEX 17Page 2

1969/70 1970/71 1971/72 1972/73 1973/74

Production (million bales lint)

Punjab 2.2 2.3 3.0 2.8 2.4Sind 0.8 0.8 1.0 1.1 1.2

Total 3.0 3.1 4.0 3.9 3.6

Exports (million bales lintequivalent)

Raw cotton 0.6 1.4 1.2 1.0 0.3Yarn, cloth and waste 1.0(est.)1.0 1.2 1.6 0.9

Total 1.6(est.)2.4 2.4 2.6 1.2

Value (US$ million) 217 249 360 416 364Share of all export value (%) 38 41 56 50 35

5. Future domestic requirements will continue to comprise a major partof the market as the country's population and income levels increase. Worldconsumption is forecast to continue increasing at a long-term rate of about1.7% per year. In the next few years, however, a relatively rapid increasein world productivity is expected to balance international supply and demandand lower world prices.

6. Average quality 15/16 inch lint usually fetches a price about 90%of the price for best-quality Ilexican 17/16 inch lint. Khairpur qualitylint, 15/16-inch, sells for about 10% less. Based on the Bank's projections,lint from the project area would command a price fob Karachi in constant1975 terms of about US$0.60 per lb in 1974 and an estimated US$0.47 per lbin 1985.

7. In 1972 at the time of devaluation when an upward trend in inter-national prices took place, the Government imposed a 35% ad valorem exportduty on raw cotton. After a severe shortage of fertilizers and loss of morethan one million acres due to the 1973 floods, the Government raised theduty to 45% and restricted exports to prevent sudden domestic shortages andprice increases. In August 1973, GOP nationalized the export of cotton andfixed the price at which the Cotton Export Committee could purchase lint fromthe ginners. One year later GOP reduced the nominal duty to 35% and during1974 the Government's overall margin on exports averaged about 35%. In de-termining the future farm gate price, it has been assumed that under grad-ually declining international prices, the Government's margin would declineto about 30%.

80 Ginning, baling, marketing, transport, and handling costs in 1974totaled about Rs 70 per md lint (Rs 100 in 1975 terms) between Karachi andthe Khairpur gins. Transport and handling costs between local farms and thegins averaged about Rs 2 per md of seed cotton (Rs 3 in 1975 terms). Theestimates assume the ginning ratio of one maund lint to two maunds seed, andseed prices which are based on the assumptions are discussed in paras 20 to22. 144

ANNEX 17Page 3

9. Gin capacity in the Khairpur area presently is 25,000 lg tons lintbased on an operating season from mid-November to April. The existingcapacity which can increase somewhat by extending operations, therefore, ismore than adequate to handle the estimated 2,800 lg ton increase under theproject. Of the ten existing ginneries in the Khairpur area, four were builtin the last six years, and additional ginneries can be expected to appearas production throughout the vicinity increases.

Wheat, Sorghum and Coarse Rice

10. In recent years, Pakistan has imported, net of rice exports, 4% to8% of its foodgrain requirements:

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74… -- -- -- -(million lg tons)---------- - --- -

Net Production

Wheat 5.7 5.9 6.5 5.7 6.1 6.4Sorghum and

Coarse Grains 0.5 0.5 0.6 0.6 0.5 0.6Rice (Basmati andCoarse) 1.9 2.2 2.0 2.1 2.1 2.2

Subtotal 8.1 8.6 9.1 8.4 8.7 9.2

Trade

Wheat Imports 1.4 0.2 0.2 0.7 1.5 1.1Rice Exports 0.4 0.5 0.3 0.3 0.8 0.6

Net Imports 1.0 (0.3) (0.1) 0.4 0.7 0.5

Consumption 9.1 8.3 9.0 8.8 9.4 9.7

Net Imports as %of Consumption 11.0 - - 4.5 7.4 5.2

/1 Figures show amounts available for consumption, including wheat pro-duced in the previous year. Figures are net of seed, feed, and wastageamounting to 10% for wheat, 60% for sorghum and coarse grains, and 6%for rice.

Since 1968, when fertilizer responsive high yielding wheat varieties becamewidely accepted, average annual production growth of about 3% or more justkept pace with population growth. After eliminating the current deficit,production of foodgrains, primarily wheat, must continue to increase atabout 3% per year to maintain self-sufficiency. Increases will be requiredin sorghum and coarse grain production to meet the expanding demand for live-stock products as per capita incomes increase, and in rice exports to expandforeign exchange earnings. 145

ANNEX 17Page 4

11. World production is expected to grow somewhat faster than demand(at about 2.4% per year) for wheat and at about the same rate as demand forcoarse grains and rice. International trade in grains, which represents onlya small proportion of the total production, is expected to decline some-what, assuming moderate gains towards foodgrain self-sufficiency in develop-ing countries and an overall decline in coarse grain imports for livestockproduction in developing countries. Based on the Bank's projections, grainprices cif/fob Karachi are expected to decline, in constant terms, as follows:

1974 1985($/metric ton)

Wheat 288 208Sorghum 180 140Rice (coarse) 408 220

12. In line with the general policy to hold down consumer prices, theGovernment set the wheat procurement price at Rs 25.50 for the 1974 harvest,about 70% below the World Market equivalent. Sorghum prices maintained arelative position about 30% below the wheat price. The Government procuredcoarse rice for export at Rs 40 per md, about 60% below the World Marketequivalent. It is expected that GOP will want to stimulate domestic pro-duction even when the World Market becomes more competitive. Therefore,future difference between World Market and farm gate prices is assumed tobe 30%.

13. Grain marketing, transport, and handling costs between Karachiand project area markets averaged about Rs 12 per md (Rs 17 in 1975 terms),and between the markets and farms they averaged about Rs 2 per md (Rs 3in 1975 terms). Rice milling costs totaled about Rs 1.5 per md rice (Rs 2in 1975 terms) and mill yields were about 2 md of rice for every 3 md ofpaddy.

Sugar

14. Pakistan has imported sugar in most years to keep pace with thegrowing demand for the refined product:

146

ANNEX 17Page 5

1967/68 1968/69 1969/70 1970/71 1971/72 1972/73

Factory RefinedSugar ('000 lg tons)

Production 248 401 600 511 369 426Change in stocks 95 (120) (140) 139 97 (54)Net imports 16 216 (13) (142) 11 176Domestic consumption 359 497 447 508 477 548

Village Refined Sugar('000 lg tons gur equivalent)

Production (estimate)1,299 1,408 1,506 1,293 1,299 1,209As % of consumption

of all sugarproducts 78 74 77 72 73 69

15. Although about one-half of cane production is still processed bygrowers in village industries, factory refined sugar increasingly substi-tutes for the village products, such as gur, particularly in urban areas.In view of the rapid growth of urban areas, expected growth in supportingmarkets such as soft drinks and sweets, and mnore stable domestic prices forsugar, the FAO estimates that Pakistan's future demand for the factory re-fined product will increase at about 8% per year through the 1980s, a rategreater than the expected rate of growth in domestic output. 1/ Demand forthe village products, which generally declines in relation to increases inhousehold incomes, is expected gradually to level off.

16. Due to production shortages, world stocks of factory refined sugarhave been drawn down for five consecutive years. The corresponding risein World Market prices is expected to result in a sharp expansion of production,especially in developing countries. In the long term, world production isexpected to outpace demand. Sugar prices cif Karachi (in constant 1975 terms)are expected to decline from an average of US$0.31 per lb in 1974 to US$0.16per lb by 1985, based on the Bank's projections.

17. The Government at present controls prices at the mills for sugar-cane and factory refined sugar at levels which before 1973 were near WorldMarket levels. In 1974, however, the ex-mill price was Rs 95 per md sugar,about 65% below the World Market equivalent. The anticipated decline inWorld Market prices will virtually eliminate the Government margin over theex-mill rate. For the purpose of analysis, therefore, the future farm gateprice has been estimated assuming an unregulated price for sugar. In addi-tion, mills paid an excise tax of about Rs 15 per md sugar, and accordingly,the mill-gate price for cane in 1974 was fixed at Rs 5.2 per md. The sameexcise tax is assumed to apply in the future.

1/ FAO, Commodity Policy Study on Sugar, Report to the Government ofPakistan, 1974.

147

ANNEX 1 7Page 6

18. Milling costs are estimated to be about Rs 30 per md sugar (Rs 43in 1975 terms). At present mill efficiencies, sugar recovery averages about8.9% by weight. Distribution and handling costs averaged an estimated Rs 7per md sugar (Rs 10 in 1975 terms) between Karachi and the project area;farm to mill transport costs averaged about 10% or Rs 0.50 per md of cane(Rs 0.70 in 1975 terms).

19. The mill to be built at Kot Diji would have a capacity of 1,500lg tons of cane per day, which is adequate in the vicinity of roughly 30,000ac of cane. Based on experience in the Sind, roughly 30% of total caneproduction in the vicinity is expected to go to the mill and the remainderfor gur, "chewing" cane, juice, seed, or fodder. Prices would be largelydetermined by mill gate prices.

Cotton and Brassica Seeds

20. Over the last five years, domestic consumption of vegetable oilsincreased at an average rate of over 12% per year and Pakistan importedsoybean and sunflower oil to supplement domestic production. Vegetable ghee,which is made mainly from domestically produced cotton seed and Brassicaseed oils and imported soybean and sunflower oil are used in the manufactureof vegetable ghee which is the second most important food item in localhouseholds. The ghee industry, which furnishes about half of the country'stotal edible oil supplies, uses 70% to 85% of Pakistan's cotton seed production.Brassica seeds (rape and mustard seeds) supply an additional one-quarter ofthe edible oil supplies. The seed cakes are used primarily for livestockfeed.

21. International vegetable oil prices are expected to decline (inconstant terms) from their shortage-related highs, while seed cake priceswhich are related to livestock production, are expected to rise slowly. Thedemand for oilseeds will reflect the joint demand. Based on the Bank's pro-jections of prices for vegetable oils and seed cakes, World Market cottonseed prices cif Rotterdam (in December 1975 Dollars) are expected to declineinitially and then rise gradually from US$263 per metric ton in 1974 toUS$245 per metric ton in 1975. Since seed and oil shipments travel about asfar to Karachi as to Rotterdam, the prices cif Karachi and cif Rotterdamwill be about the same.

22. As the result of regulated prices for vegetable oils, domesticseed prices have remained below World Market levels. In 1974, however, themarket price for cotton seed which averaged about Rs 50 per md was only aboutRs 2 per md below the World Market equivalent due to the high demand for seed-cakes. The future price estimate assumes no regulation. In relation to cot-ton seed prices, Brassica seed prices are expected to be about 30% higher.

23. Most of the seed crushing takes place at ginneries in majortowns, although numerous farm households crush seed using simple animal-powered machines ( anis). In estimating the farm gate prices, seed dis-tribution and handling costs are assumed to average about Rs 2 per md (Rs 3

148

ANNEX 17Page 7

in 1975 terms) from project farms to local markets, and about Rs 5 per md(net) (Rs 8 in 1975 terms) between local markets and crushing centers.

Dates

24. The Khairpur area is the second of two main date areas in Pakis-tan. Up to 1974, Pakistan supplemented domestic production with lowerquality dates imported mainly from Iraq, and exported very small quantitiesof luxury quality dates grown in the Mekhran coast area, where Pakistan'sonly central packing facilities exist. In 1973, following sharp increasesin international prices for dates, Pakistan cut back imports by 80% and in1974 halted them entirely.

25. Growers often sell dates as a standing crop to contractors, whobear all expenses and risks of picking, transporting and marketing. Thedates are marketed domestically in bulk, either fresh or boiled and dried.Khairpur production has grown over the past five years at rates of about 3%per year. Incremental production under the project would amount to lessthan one third of current market volume in the area and could be readilyhandled by the existing infrastructure.

26. In the absence of Bank price forecasts for dates, domestic pricesare estimated in relation to the average values of date exports from Iraq.The average prices for all Iraq date exports, adjusted to cif Karachi, havebeen nearly the same as the average prices for the low quality Pakistanimports. Khairpur dates are of high quality. As shown in the followingtable, prices for Khairpur dates in the town of Sukkur consistently com-manded a premium of 100% or more.

1970 1971 1972 1973------------(Rs/md)------------

Average Price for Imports from Iraq 12 12 15 38

Sukkur Harvest Time Price 30 27 40 73(estimate)

27. The 1974 harvest time price in Sukkur was Rs 75 per md, indicatingthat the recent restriction on imports did not significantly affect pricesfor high quality domestic dates. With production increasing steadily, markedchanges in the supply and demand relationship are not anticipated, and futureprices, excluding increases due to inflation, are expected to remain at pres-ent levels. Therefore, after allowing 15% as contractor's margin, Rs 65 permaund (Rs 92 in 1975 terms) is used for the present and future farm gateprices.

Fertilizers

28. Pakistan currently imports about 35% of the nitrogenous fertilizersused in the country, most of the phosphatic and all potassic fertilizers. New

149

ANNEX 17Page 8

plants planned to begin production in 1977, 1978 and 1979 will bring down

the average cost of domestically produced nitrogeneous fertilizers. As-

suming moderate growth in domestic requirements at rates of 11% for nitro-

genous and 21% for phosphatic fertilizers (IBRD Report No. 373-PAK, dated

April 3, 1974), imports would still comprise about 20% of supplies of nitro-

gen and about 45% of supplies of phosphorus after the new plants are in

operation.

29. The Bank projects that World Market prices will decline, in con-

stant terms, from the peak 1974 levels. Using these projections, import

prices cif Karachi (in constant 1975 terms) are estimated as follows:

1974 1975(US$/metric ton)

Urea (46% N) 395 192

DAP (18% N, 46% P205) 432 274

Muriate of Potash (60% K20) 117 105

30. Estimated levels of imports and production, and the average port of en-

try and ex-works prices under these assumptions are as follows:

1973/74 1980/81

Supply Price Supply Price

('000 ntr (Rs/lg ('000 ntr (Rs/lg

tons) /1 ton) /1 tons) /1 ton)/1

NitrogenDomestic:Esso 78 2,870 80 2,870

Dawood-Hercules 145 2,520 155 2,520

PIDC, existing 58 6,560 58 6,560

PIDC, new 0 - 240 3,750

Pak-Saudi 0 - 240 3,750

Fauji-Agrico 0 - 240 3,750

Imports 149 8,730 - _

Total/average 430 5,720 1,013 4,053

PhosphorusDomestic;PIDC, existing 9 8,120 10 8,120

PIDC, new 0 - 115 2,710

Imports 51 6,130

PotassiumImports 10 1,980 45 1,780

/1 Nutrient lg tons abbreviated ntr tons.

150

ANNEX 17Page 9

Transport costs and distribution margins are expected to return from presenthigh levels which, converted to terms of nutrient lg tons, average aboutRs 300 per lg ton (Rs 245 in 1975 terms) to 1973 levels of about Rs 200per nutrient lg ton (Rs 285 in 1975 terms) for nitrates and phosphates,comprising about 45% nutrient, and correspondingly less for potassics, com-prising 60% nutrient.

31. In 1974, the Government fixed retail prices (e.g. at Rs 1,500 perton urea, Rs 440 per ton single super phosphate, and Rs 652 per ton ofsulphate of potash), which resulted in subsidies to farmers averaging about20% on nitrogenous, 50% on phosphatic, and 10% on potassic fertilizers. Esso,Dawood-Hercules, and PIDC carried out the distribution of domestic products,and were taxed or reimbursed the difference between the fixed and the ex-works prices after allowance for distribution costs. The future priceestimates assume that, the overall subsidies are eliminated.

Pesticides

32. Estimated prices in Karachi for some of the pesticide concentratesthat could be used are as follows:

US$/lb

Endrin (95%) 2.47Methyl Parathion (80%) 1.30Dimecron 2.17Diazinon (90%) 2.25

33. Pesticides which may be used in the project area are expected tobe diluted to 20% for endrin, 56% for methyl parathion, and to 15% fordiazinon. Transport and distribution costs totaling Rs 200 per ton dilutehave been assumed. The costs of effective pest control per acre generallyvary little, irrespective of the brand of pesticide used. For purposes ofcomputation, the use of certain proprietary contact and systemic pesticidesis assumed which are expected to control the full spectrum of insectsattacking the crops at risk.

June 1976

151

ANNEX 17Table 1

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMnIG DEVELOPMENT PROJECT (KHAIRPUR II)

Marketing and Prices

Production Increases in Crops and Crop Manufactures

Future Future IncrementWithout With 'With" minus

Present Project Project "Without"

----------- (lg tons)----------------

Wheat_/ 4,180 6,800 21,000 14,200

ice-2/ 1,820 2,100 0 (2,100)

Sorghum-2 800 2,500 2,700 200

Subtotal, Grain 6,800 11,400 23,700 12,300

Sugar-/ 20 930 3,630 2,700

Cotton Lint 1,470 1,500 4,000 2,50o

Dates 5,810 7,400 22,600 15,200

Seed Oil- 460 390 1,530 1,14Q

Seed Cakes- 1,840 1,510 6,280 4,770

l/ Assuming the sugar mill is built.7/ Available for local consumption after deducting seed, feed,and wastage

amounting to 10% for wheat and sorghum and 6% for rice.3/ White sugar potential from 30% of production at existing mill efficiencies./ Includes product of cotton and Brassica seeds.

152

ANNEX L7Table 2

PAKISTAN

KHAIRPUR TILE DRAINAGEAND IRRIGATED FATT'ING DEVELOPMENT PROJECT (KHARPUR II)

Marketing and Prices

World Market Prices1/(in Constant December 1975 Dollars)

1974= 1985

Cotton Tint - Mexi can SM 1 1/16 inches(}/lb cif Iiverpool) 76 61

Wheat - CWRS($/n ton fob Canada) 242 162

Grain Sorghum - No. 2 Milo($/m ton fob U.S. Gulf) 140 97

Rice - 5% Brokens($/m, ton fob Bangkok) 628 338

Sugar(¢/lb fob Caribbean) 29 14

Cotton Seed($/1m ton cif Liverpool) 263 245

Soybean Oil - U.S. crude($/Inton cif Rotterdam) 920 507

Urea - 46% N, bagged($/-I ton fob Rotterdam) 366 163

DAP - 18% N, 46% P205($/ mton fob U.S. Gulf) 386 228

Muriate of Potash - 60% K($/ai 1ton fob Vancouver) 71 59

1/ IBRD Econoric Analysis and Projections Department,May 27, 1975. Prices for cotton seeds areimputed from the market prices for vegetable oilsand seedcake.

153

ANNEX 17

Table 3

PAKISTAN

KHAIRPUR TILE DRAINAGEAND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Marketing and Prices

Estimated Prices for the Financial and Economic Analyses(in Constant Decenber 1975 Rupees)

1974 19851nancial9 Economic financial Economic

Crop Produce (Rs/md)Seed Cotton 118 212 110 168Wheat 35 132 70 99Grain Sorghum 25 92 49 69Rice Paddy 32 6 30 44Sugarcane 5 21 6 9Brassica Oilseeds 89 126 105 117Cotton seeds 71 100 83 93Dates 92 92 92 92Pulses 50 50 50 50Vegetables 21 21 21 21Fodder 1 1 1 1Straw 7 7 7 7Sugarcane Tops 1 1 1 1

Fertilizers (Rs/lb nutrient)Nitrogen 2.1 4.5 1.6 2.2Phosphate 1.6 3.2 1.8 2.3Potassium 0.9 1.1 0.9 1.0

Pesticides (Rs/lb)Ehdrin 5.3 5.8 5.3 5.8Methyl Parathion 9.2 10.1 9.2 10.1Dimecron 21.8 24.0 21.8 24.0Diazinon 3.8 4.2 3 8 4.2

154

ANNEX 18Page 1

PAKISTAN

KHAIRPUR TILE DRAINAGE ANDIRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR II)

Economic Analysis

Assumptions

1. The economic analysis is based on the following assumptions:

(a) Benefits -- The direct benefits of the project would be theincremental agricultural production over the estimated futureproduction without the project. The project would also havesubstantial secondary employment effects in trade and trans-port. This analysis considers only the economic benefitsfrom the increase in agricultural production which can bedirectly valued. Expected crop yields and acreages are shownin Annex 16. Farm gate prices are derived from the Bank'sprojections of World Market prices or from trends in domesticmarket prices as discussed in Annex 17.

(b) Crop Production Costs -- Per acre input requirements areshown in Annex 15. The value of labor inputs are discussedin Annex 4.

(c) Pricing of Labor -- Farm family and hired labor are evaluatedat a seasonally adjusted opportunity cost. The economic costper man-day is estimated at about Rs 4.70 (Rs 6.70 in 1975terms), about half the market wage for field labor duringpeak activity (Annex 4). Unskilled construction labor hasbeen valued at market wages.

(d) Irrigation & Drainage Costs -- The additional drainage operatingcosts and the increase in operating costs for the improved partsof the existing canal and watercourse system serving the areaare included as recurrent project costs.

(e) Land Acquisition -- Agricultural land has been valued at itsopportunity cost based on the resulting loss of crop production.This is reflected in future income without the project.

(f) Investment Costs -- All investment costs, net of taxes andduties and price contingencies are included in this analysiswith the exception of the estimated costs for ERTS imagery, mapping

155

ANNEX 18Page 2

facilities, and related technical assistance and equipment.These items would not be prerequisites for development of theproject area.

(g) Development Phasing -- Construction would be phased overfive years. Incremental production would be realizedbeginning in some areas in the sixth year. Attainmentof the full increment over the project area it is assumedwill take about ten years after project completion, withone third to be attained in the first half of the ten yeardevelopment period.

(h) Exchange Rate -- Foreign investment costs and pricesfor internationally traded goods used in the economic analysisare based on a shadow exchange rate of US$1 - Rs 11 to reflectthe scarcity of foreign exchange.

Economic Rate of Return

2. Based on the foregoing and assuming a 30 year period of analysis,the economic rate of return is 17%.

Sensitivity Analysis

3. The sensitivity of the analysis to alternative assumptions isgiven in the following tabulation:

EstimatedRate of Return

(a) that a sugar mill is not built at Kot Diji; 15%

(b) increase in construction costs of 15%; 15%

(c) decrease in future prices of farm crops of 15%; 15%

(d) increase in costs of crop inputs of 15%; 17%

(e) combination of (a) and (c); 13%

(f) combination of (a), (c) and (d); 11%

(g) farm labor valued at the peak wage forhired labor (Rs 10 per man-day -- Rs 14 in1975 terms) 16%

156June 1976

ANNEX 18Table 1

PAKISTAN

KIATRPUJR TILE DRAINAC,

AND IRRIGATED FARMING DEVELOPMENT PROJECT (KHAIRPUR TI)

Economic Analysis

Cost and Benefit Streams(Rs Million)

AgriculturalSupport

Year Civil Works Costs Costs Net BenefitsOperation, Net Value

Maintenance & of CropConstruction Replacement Production

1 38.h 0 0.5 0

2 61.5 0 1.0 0

3 40.6 0 o.5 o

h 36.5 .5 0.5 0

5 25.0 1.5 0.5 0

6 0 2.2 0.5 6

7 0 2.2 0.5 11

8 0 2.2 0.5 22

9 0 2.2 0.5 39

10 0 2.2 0.5 61

11 0 2.2 0.5 77

12 0 2.2 0.5 88

13 0 2.2 0.5 97

14 0 2.2 0.5 105

15-30 0 2.2 0.5 111

157

7 e,. - TeO.,Rt ~~~~~~~~~~e To Molten PAKI STA N t0 ~~~~~~~~~BRD11526T. PAKISTAN ~~~~MA' 1975

NShodad. ar Tile Drainage and~~~~V~~~~~~(lV~~~~~~~~~~~~ ~~ Pvrr i Development Project

~~ WeOee as ~~~~~~~~ ~~~ Li ~~Khairpur II Project/ ff'4H~~~~~~~~~~§I5 P~~~~~ROJCT-LOCATIO-N

' '1) 2 f,r~~~~7~rr'f~~,,3'\ ,~~~ BARRAGE n~~~-e---B-rdory Of Kh- por I area

~~ ((/1> Somber ,~~~~~~~~~~$ -'~~~~-.---n~~~~- Budary of KIroirp.r I area

- K MH~~~~!PRL xx Propoced t, dr.i, area, Kh.,rpon It proleCt

r' ,,s,~~~~~ r>jcl "j~~~~~ ~~ '1 '1r /~~~~~2~~' SalineF-1 grOard w-ler area, Kh.,rpur I project

A-, 1, Dye,erOO & ~~~~~~~~~~~~~~~~ __________~~~~~~~5 Sine grocod water aots,de prajeot areas

l'~~~~/~~ f -- {'Arvu•i~~~~~~~~~~~~'~~~P ~Rivers- barrages

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/Kerd soma loon - Confours ir metere

II In~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Tor Desert

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IBRD 11527ToJ-cobobed eB Shikar o6Co T.o B.haneepur MAY 1975

Shrahdadkot> \ V

Khairpur Tile Drainage andWAhdAH fRAN 5a Irrigated Farming Development Project

Khairpur II Project-Boundary of E-sr and Wes,t Feeder Cana.l C-errone

---P/ Bou ndary of Khairpur I (SCARP prCnol area_'_ .Boundery of Khoarpur It project area

/ , Tile drairnge area, Khairpur 1I projectT,,b-oee drone.d area, Khairpur I and U pronechs

V Xf--[fSaa,line groundwater area, Khoirpur I and Il projects

______Saline groundwater area, Knairaur East Feeder Command,outside Kh airpur I project

Frs raundwater area, Khoirpur I project

Fresh groundwater area, Kohrpur West Feeder Command,. outside Khairpar I pro aect

I// 'ono Major coon1

Other ccanls

/:::=~V R vers- barrage

J-..-----cMajor roads

Kharpur thaa Shah 0 _ \t

a MIL~~~~~~~~~~~~~~~~~~~~~~~C ES

!0 1 't/ F

The uhin -p i rorely esiororo,or or o ,rpo hi r,

a / a -

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\ XE t f k IR I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~eXt V \ \ / I~~~~~~~~~~~~~~~~~~~~~~~

0\W~~~~~~~~~~~~~~~~~~~~~~~z O -GH NISTAI

; ~~~~~~~~d 4dn Mip, Kh:

IBRD 11528

MAY 1975

SUKKUR R~~~OHRI

PAKISTANKhairpur Tile Drainage and V-

Irrigated Farming Development Proiect

Khairpur II Project Baberlc\

Project area boundaryMain canals

- Main drainsBranch/other canalsBranch drainsMain roads(metalled) /-Unmetalled roads

, Railway4 Urban areas

District bounary . ndraTaluka boundary

* Khairpur I (SCARP) tubewells K T A L UK A W

Area & ,to be tile drained 7R- * R" Area (E)drained by < TA L-' KA -

7 A lubewells R\P U- P R r011

+ | / . 9:; ~~~~~~~~~~Shadi Shahid MILES -~~~~~~~~~~~~~~~ ~~~~~~~0 24

KILOMETERS

> U. S.S. R/ ;} j 1 } < .9\ n ..4.ffCHINA

TA L UKA GIX 2 TIS D I J I < Pes*t "10

/ If islomab4 ' Apprn. f

AFGHANISTAN 5-e-oe

Burir" Khanona hore '^

PAKISTA JQuettag

/ /: Khairpur2

sli2\>MF y _ ) 95~~~~~~~~~~~~~~~~ I N D I A

eTh bonda'ies shown on this rnap do not Arvbifao eta:Kot Diji bmply endorsmenent or acceptance by the ..

World Bank and i.t af- .ii-tea