Smaliholder Oil Palm Project East Central State FILE COPY · Appraisal of Smaliholder Oil Palm ... The domestic market currently absorbs all of Nigeria's palm oil ... contract through

Report No. 495a-UNI

Appraisal ofSmaliholder Oil Palm ProjectEast Central StateNigeria FILE COPYMarch 28, 1975

Agriculture Projects DepartmentWestern Africa Regional Office

Not for Public Use

Document of the International Bank for Reconstruction and DevelopmentInternational Development Association

This report was prepared for official use only by the Bank Group. It may notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness ot the report.

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CURRENCY EQUIVALENTS

Currency Unit : Naira (N)US$ 1 = N 0.66N 1 uS$ 1.52NJ1 = Kobo 100

WEIGHTS AND MEASURES

Unless otherwise stated, all weights andmeasures used in this report are metric:

1 metric (m) ton 0.98 long ton1 long ton 5 1.016 m ton1 long ton 2,240 lb1 hectare (ha) = 2.h7 acres (ac)1 acre (ac) = 0.405 ha1 kilometer (km) 0.62 mile

ABBREVIATIONS

AA Agricultural AssistantADA Agricultural Development AuthorityAO s Agricultural OfficerE I East Central State (used in tables)ECSMB s East Central State Marketing BoardFDA Federal Department of Agricultureffb s fresh fruit bunchesFMANR s Federal Ministry of Agriculture and Natural ResourcesFM] : Federal Military GovernmentFHO s Institut de Recherches pour les Huiles et Oldagineux

MAE s Ministry of Agricultural ExtensionMAPAH : Ministry of Agricultural Production and Animal HusbandryMEU : Monitoring and Evaluation UnitMW s Mid-Western State (used in tables)MWT M Hinistry of Works and TransportNAB Nigerian Agricultural BankNIFOR : Nigerian Institute for Oil Palm ResearchNPMC : Nigerian Produce Marketing OrganizationPAC Planting Authorization ComitteeSAO : Senior Agricultural OfficerSMU : Smallholder Management Unit (Western and East Central State)TCU a Tree Crop Unit (in Mid-Western State)W : Western State (used in tables)

FISCAL YEAR

April 1 - March 31

NIGERIA

SMALLHOLDER OIL PALM PROJECT

EAST CENTRAL STATE

TABLE OF CONTENTS

Page No.

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

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

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

General ......... ............................ 1Agricultural Sector ...... ................... 1Oil Palm Production ...... ................... 2Institutions ....... ......................... 3

III. THE PROJECT AREA ........ ......................... 3

IV. THE PROJECT ............................. 5

A. General Description ...... ................... 5B. Detailed Features ...... ..................... 6

V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ........ 10

Project Costs ....... ........................ 10Financing Arrangements ..... ................. 11Procurement ................................. 12Disbursement ....... ......................... 13Accounts and Audits ...... ................... 13

VI. ORGANIZATION AND MANAGEMENT ..... ................. 14

Smallholder Management Unit ..... ............ 14Agricultural Development Authority 1.......... i

This report is based on the findings of an appraisal mission composed ofMessrs. J. Bevan, M. Crowe, R. van der Lugt (Bank) and A. Bergan, J. Bogaerts,Osman Farruk, C. Hartley and C. Redfern (Consultants).

TABLE OF CONTENTS (Continued)

Page No.

VII. PRODUCTION, MARKETING, FARMER BENEFITS, FINANCIALIMPLICATIONS TO GOVERNMENT ...... ................. 17

Yields and Production ...... ................. 17Markets and Prices .......................... 17Farmer Benefits .18Financial Returns to ADA ..... ............... 19Financial Implications for the State

Government ............................. 19

VIII. BENEFITS AND JUSTIFICATION ..... .................. 20

IX. RECONMENDATIONS ........ .......................... 21

ANNEXES

1. State InstitutionsChart WB 8729 - Organization Chart of Cooperative Division

2. Planting Program under the project

3. Organization and Management

A. Smallholder Management Unit (SMU)B. The Agricultural Development Authority (ADA)C. Price Policy Committee and fresh fruit price calculation

Chart WB 83652R - Smallholder Management UnitChart WB 8362 - Regional Unit

Table 1 - ADA summarized accounts for the year endedMarch 31, 1973

4. Establishing Processing Facilities, Fruit Collection System anda Road Network

A. Processing Facilities, Phasing and CostsB. Fruit Collection SystemC. Road Improvement Program

Chart WB 8428 - Fruit collection center

Table 1 - Palm oil mills - capital expenditureTable 2 - Operating costs of millTable 3 - Comparison between one-stage and two-stage

fruit collection systemsTable 4 - Fruit collection in eastern areaTable 5 - Fruit collection in western area

ANNEXES (Continued)

5. Project costs

Table 1 - Summary of project costsTable 2 - Smallholder field establishment cost (per ha)Table 3 - Smallholder field establishment costsTable 4 - SMU headquarters investment costs and recurrent

expenditureTable 5 - SMU headquarters, staff and salariesTable 6 - SMU Regional UnitsTable 7 - Road Improvement ProgramTable 8 - Schedule and cost of trainingTable 9 - Palm oil mills, investment costsTable 10 - Fruit collection investment costs

Appendix 1 - Smallholder maintenance and harvesting cost(per ha)

Appendix 2 - Smallholder maintenance and monitoring costs

6. Disbursements

Table 1 - Financing planTable 2 - Detailed financing of project costsTable 3 - Quarterly disbursement schedule

7. Production Estimates for the Project

Table 1 - Project production of ffb, palm oil and kernels

8. Estimated Economic and Financial Millgate values of Palm Oil andKernels

Table 1 - Estimated Economic and Financial Millgate value ofPalm Oil

Table 2 - Estimated Economic and Financial Millgate value ofkernels

9. Smallholder Farm Budget for 1-ha Planting

10. ADA

Table 1 - ADA projected cash flow 1979-1991Table 2 - Inflation indices

11. East Central State Government cash flow

12. Calculation of the Economic Rate of Return and Sensitivity Analysis

Table 1 - Economic rate of returnTable 2 - Sensitivity analysis

MAP IBRD 10967 - Oil Palm ProjectsMAP IBRD 10965 - Project Area

Supplementary Annexes are included in report 474a - UNI and comprise:

1. Technical Aspects of Establishment and Production2. Farming Systems in the Project Area3. Federal Institutions4. Federal Department of Agriculture, Monitoring and Evaluation Unit5. Cost Comparison between Small and Large-scale Palm Oil Mills6. Field Studies of Small-scale Processing System in Wild Palm Groves7. Road Improvement8. Fruit Collection9. Smallholder Operational Procedures10. Grant/Credit Arrangements with Smallholders11. Training12. Markets and Prices13. Production Estimates for the Project

NIGERIA


EAST CENTRAL STATE

SUMMARY AND CONCLUSIONS

i. The Federal Military Government (FMG) has requested Bank assistanceto finance an oil palm project in East Central State. This report appraisesa smallholder oil palm project for which a US$19 million loan is proposed.Nigeria's agriculture is primarily domestic market oriented. Output ofstaple foods, animal products, palm oil, cotton fibre and a substantial partof groundnut production - together accounting for about 90% of agriculturalproduction - is entirely consumed in the country. In 1973-74 agriculturecontributed about 41% of value-added and provided employment for around70% of the labor force. However, agriculture is growing more slowly thanoverall GDP, and its contribution to GDP is falling and is now 41% comparedwith 65% in 1960.

ii. The long-term strategy of FMG is to transform agriculture from itspresent low technology semi-subsistence character to a modern, market orientedsector with greater regional specialization. This will necessitate providingincentives to encourage farmers to expand output and raise productivity andensuring that the necessary technology, inputs and infrastructure are avail-able. The domestic market currently absorbs all of Nigeria's palm oilproduction now estimated to be static at around 550,000 tons per annum.Demand projections indicate that domestic consumption could reach 825,000tons of palm oil by 1985, and additional production of nearly 275,000 tonsper annum would be required by then if Nigeria is to avoid becoming a majorimporter. About 125,000 ha of new plantings of high yielding oil palms wouldbe needed to meet the projected shortfall. The project described in thisreport aims at contributing to the above objectives by (a) applying improvedtechnology through the use of high yielding material, husbandry practice andmodern processing facilities, (b) increasing rural employment and thus redistri-buting income, and (c) expanding production to meet the increased demand forpalm oil.

iii. The project would be carried out over 9 years (1975-1983) and wouldinvolve replanting about 16,000 ha of smallholder wild palm groves. Thereplanting program would be implemented by a Smallholder Management Unit(SMU) within the Ministry of Agricultural Extension (MAE). Grant/creditin cash and kind to meet the costs of establishment and maintenance wouldbe channelled to smallholders through the SMU working in conjunction withthe registered cooperatives. 571 km of earth roads in the project areawould be improved to facilitate all-weather collection of fruit bunches.

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Nigerian staff and the smallholders would receive technical and manage-ment training at selected institutions. A subsidiary of the AgriculturalDevelopment Authority (ADA) would construct two central mills and estab-lish a fruit collection system capable of handling the fruit from the pro-ject smallholdings.

iv. Project costs over the nine-year development period (1975-1983)are estimated at N 24.7 million (US$37.5 million). The Bank loan of US$19million would finance 50% of total project costs; it would be equivalentto all foreign exchange costs (US$11.6 million) and 29% (US$7.4 million) oflocal costs. The remainder of the project costs would be financed by theState Government (US$16.5 million or 45%), and by the smallholders (US$2.0million or 5%).

V. Vehicles, road-making equipment, fertilizers, insecticides, polybags,tools, and wire netting valued at about US$4.5 million would be procured throughinternational competitive bidding (ICB) in accordance with Bank guidelinesfor contracts valued over US$25,000. The oil mills - civil works and equipment -

valued at about US$5.6 million would be procured through a single responsibilitycontract through ICB in accordance with Bank guidelines. Contracts for build-ings, office equipment, and some road construction (bridges) valued at aboutUS$0.6 million are not suitable for international competitive bidding becauseof their size and location. Contracts for buildings and bridges would beprocured through competitive bidding, advertised locally and in accordancewith local procedures which are satisfactory to the Bank. Contracts underUS$25,000 and for office equipment would be procured after inviting quotationsfrom at least three suppliers. Road construction valued at US$0.4 millionwould be done by force account. A major part of project costs valued atabout US$10.3 million would be for smallholder labor, salaries, training andthe operating expenses of SMU; none of which would be suitable for any form ofcompetitive bidding. The services of expatriate staff and consultants wouldbe obtained on terms and conditions acceptable to the Bank. Domestically manu-factured goods would be allowed a 15% preference or the applicable importduties, whichever is lower, when comparing bids with those of foreign manufac-turers. A 7.5% preference for domestic civil works contracts would apply.

vi. At full development the project would produce annually about 35.2thousand metric tons of palm oil for domestic consumption and 8.0 thousandmetric tons of kernels for export. Valued at the Bank's price forecast forpalm oil in 1985 current terms ($757 for palm oil and $504 for kernels), theannual foreign exchange savings/earnings are estimated at US$26 million.

vii. Based on a fresh fruit bunch price of N 19 per ton--smallholdersnet income from 2 ha of oil palm would start at N 54.6 (US$83) in the firstyear of production, rising to N 278 (US$423) during the loan repayment periodand thereafter would remain at N 350 (US$532) in maturity. The return permanday employed would rise rapidly from N 1.0 (US$1.5) in the first year ofproduction to an average of N 4.2 (US$6.4) during the years of loan repaymentand N 5.8 (US$8.8) thereafter. This compares favorably with a current ruralwa-'e rate of N 0.65 per manday. In addition smallholders income would beaugmented by bonuses from mill revenue surpluses.

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viii. Based on an average farm size of 2 ha, 8,000 farmers would parti-cipate. With an average size of 6-7 persons per family, therefore, 52,000people would benefit. During the establishment the project would create12,500 manyears of employment and maintenance and harvesting would require1,600 manyears annually at full maturity.

ix. The estimated economic rate of return is 19.7%.

x. On the basis of the assurances that were obtained during negotia-tions, the project would be suitable for a US$19 million Bank loan, for aperiod of 20 years including a five-year grace period on principal.

I. INTRODUCTION

1.01 The Federal Military Government of Nigeria (DIC) has requested aBank Loan to help finance the planting of high yielding oil palms in its EastCentral State. This report appraises a project that would establish 16,000ha of smallholder plantings as Phase 1 of a program establishing 32,000 haof high yielding palms.

1.02 The first Bank Group loan for agricultural development in Nigeriawas the Western State Cocoa Project (764-UNI) in 1971 which was followedby a loan for the Second Cocoa Project (Loan 1045-UNI) in 1974. The Bank isthe Executing Agency for the Nigerian Agricultural Bank Project financed byUNDP, which became effective in March 1973. A rice project, three agriculturaldevelopment projects, and a livestock project have been approved by the Boardin December 1974, and an irrigation project and a rubber project have beenappraised and are being processed. The first cocoa project is proceedingsatisfactorily.

1.03 The project was identified in November 1972 and prepared by a Bankmission in March 1973. This report is based on the findings of a Bank appraisalmission, composed of Messrs. J. Bevan, M. Crowe, R. van der Lugt (Bank), andA. Bergan, J. Bogaerts, Osman Farruk, C. Hartley and C. Redfern (Consultants),which visited Nigeria in November/December 1973 to appraise three palm oilprojects in the Western, Mid-Western, and East Central States. Details offeatures common to all three projects are in a supplementary report, entitledSupplementary Annexes to the Nigerian Oil Palm Projects Appraisal Reports(474a-UNI).

II. BACKGROUND

2.01 General. The 12-State Federal Republic of Nigeria covers about930,000 km2 and provisional results of a recent census indicate a populationof 80 million, growing at about 2.6% annually. About 41% of Gross DomesticProduct (GDP), estimated at N 6.5 billion (US$9.9 billion) in 1973/74, isgenerated in the agricultural sector which employs some 70% of the labor force.In 1972, total domestic exports amounted to US$2.1 billion of which petroleumrepresented about 82% (US$1.8 billion). The main agricultural exports arecocoa and groundnut products. In 1972 agricultural exports were valued atUS$290 million or 12% of all exports. Currently, the value of goods andbeverage imports is estimated at the relatively low figure of about US$2.6per capita annually. Dairy products, wheat, and sugar are the principal foodimports.

2.02 Agricultural Sector. Agriculture, including livestock, forestryand fishing, is the most important sector in terms of output and employment;provides all but a small proportion of the nation's supply of food; and isa significant earner of foreign exchange. Nigeria's agriculture is primarilydomestic market oriented. Output of staple foods, animal products, palm oil,

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cotton fibre, and a substantial part of groundnut production - together account-ing for over 90% of agricultural production - is entirely consumed in thecountry. However, agriculture is growing more slowly than overall GDP, andits contribution to GDP is falling and now is 41% compared with about 46% in1971 and 65% in 1960. While agricultural production has been hampered byshort-term factors, such as drought in parts of the north in 1972/73 and1973/74, the poor performance of the sector reflects agricultural and ruraldevelopment programs that generally are inadequate in terms of physical extentand quality.

2.03 Because of Nigeria's wide range of ecological conditions agricul-cural activity, while varied, is highly specialized by region and function.Thus the rain forest zone, covering Western, Mid-Western, East Central, SouthEastern and River States, is characterized by relatively high rainfall andcultivation of most of the tropical tree crops. Of the most important, cocoais dominant in Western State; oil palm, mostly wild, grows throughout butwith marked concentration in East Central and South Eastern States; and rubberis most important in the Mid-Western State. Cassava, yams, and cocoyams are themain food crops of the rain forest zone followed by maize and rice. Themiddle belt of the country, which includes the Kwara and Benue Plateau States,and the southern portions of the North Western, North Central, and NorthEastern States, constitutes an intermediate savannah zone (the Guinea Zone)well-suited for arable agriculture. Sorghum and pulses are the principalcrops, but there are also sizeable acreages under root crops, groundnuts,and cotton. The dry savannah zone (the Sudan Zone) of the far north, en-compassing Kano State and the northern parts of North Western, North Central,and North Eastern States, produces most of Nigeria's sorghum, millet, cowpeas,cotton, and groundnuts. This northern area, unlike most of the rest of thecountry is tsetse fly and trypanosomiasis free and the main cattle raisingarea of Nigeria.

2.04 The long-term strategy of FMG is to transform agriculture from itspresent low technology semi-subsistence character to a modern, market orientedsector with greater regional specialization. This will necessitate providingincentives to encourage farmers to expand output and raise productivity andensuring that the necessary technology, inputs, and infrastructure are avail-able to permit farmers to respond to such incentives. There are severalconstraints to implementing this strategy and these include: transport anddistribution bottlenecks; inadequate machinery for planning, coordinatingand implementing a national policy for rural and agricultural development;insufficient experienced manpower particularly at senior management level;and shortages of improved seeds, fertilizers, chemicals, credit, and otherfarm inputs. The project described in this report would remove these con-straints in so far as the oil palm subsector in the East Central State isconcerned.

2.05 Oil Palm Production. Oil palm grows throughout Southern Nigeriabut the center of palm oil production is the three eastern States. Approxi-mately 90% of production is from semi-wild oil palm groves operated by small-holders. These groves cover about 2.5 million ha and produce around 2.5 tons

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of fresh fruit bunches (ffb) per ha which yield about 200 to 225 kg of palmoil and around 135 kg of kernels. Total Nigerian production is estimated atabout 550,000 tons of oil and 300,000 tons of kernels. Exports of palm oil,which were valued at N 22 million in 1966, are now being displaced by domesticdemand. Demand projections indicate that domestic consumption could reach825,000 tons by 1985 and thus require production of an additional 275,000tons per annum by that time if Nigeria is to avoid importing palm oil. About125,000 ha of new plantings of high yielding oil palms would be needed to meetthe projected shortfall. The three oil palm projects in Western, Mid-Western,and East Central States that have been appraised by the Bank (see para 1.03)would produce about 100,000 tons of palm oil when at full maturity in 1990.

2.06 Institutions. The main institutions involved in the project wouldbe the Ministry of Agricultural Extension (MAE), the Agricultural DevelopmentAuthority (ADA), 1/ and the cooperatives (see Annex 1).

III. THE PROJECT AREA

3.01 The project area lies in a region covering some 360,000 ha andcomprising that part of the State extending south of the Umuahia-Owerri roadand west of a line running south from Umuahia to, and then along, the Stateboundary. See Map 10965.

3.02 Climate. Mean annual rainfall ranges from 2,126 mm (83.7in) at Umuahia to 2,438 mm (96.0 in) at Owerri with a tendency for therainfall to increase towards the southwest. There is a marked dry seasonfrom mid-November to early March and the mean annual water deficit isestimated between 250 and 300 mm. Sunshine at Umudike near Umuahia averages1,777 hours per annum. The mean annual temperature lies between 260 and270C. For West Africa conditions are relatively good for oil palms.

3.03 Vegetation. The area is an integral and important part of the"palm belt." The wild palm groves are almost continuous, with palm densitiesreaching over 150 palms per ha in the denser groves. Most of the area isheavily populated, and food crop cultivation, using fallow periods as shortas two years in some areas, is practised both within and between the groves.There has been some felling of very tall palms to give more land and lightfor food crops, and in some areas the palms are severely pruned, which reducestheir already low yield. West of Owerri the grove palms are less dense andthe periods df fallow tend to be longer.

3.04 Between 1962 and 1967 an estimated 15,600 ha of grove were replantedwith NIFOR selected tenera material and a further 3,600 ha were established onfarm settlements. These plantings were of varying standard but the majority

1/ To implement its component of the project ADA would establish a subsidiarycompany.

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suffered severely from neglect during the civil war. Eupatorium odoratum 1/is present throughout the region.

3.05 Topography. The rnorthern part of the area is bisected by the ImoRiver. In the northwest the area is drained by the Otamiri and OgochiaRivers. The area has an elevation of 60-110 m above sea level and is flat orgently undulating. The slopes towards the main rivers tend to be long andgradual.

3.06 Soils. About 80% of the area lies on the red Benin fasc of the AcidSands soils. The remainder, south of a line running east-west some three milesnorth of Aba, is on the yellow Calabar fasc soils. In Ukwa division the lattersoils contain appreciable areas of deep sands of very low clay content andfor phase 1 of the program this division has been excluded except for its north-west projection.

3.07 All the soils of the area have been degraded by frequent farming,but the majority are capable of giving satisfactory bunch yields with correctmanuring. On the wide areas of flat or gently undulating land the soils havea satisfactory clay content which increases down the profile. On the longslopes towards the main rivers however sandier soils are encountered and inthe selection of participating smallholders these areas would be avoided.

3.08 Population. The former Owerri and Umuahia Provinces, in which theproject area is located, have estimated populations of 3.0 million and 1.25 mil-lion respectively; with an overall density in the order of 400 per sq km, theyare amongst the most densely populated rural areas in Africa. The project areacovers some 3,600 sq km and thus may include a population of 1.4 million ormore. The average size of family is about 6 to 7, and with an estimated 80%of households engaged in agriculture, the project area may involve over 175,000farming families. In view of the shortage of employment opportunities theavailability of labor will not be a constraint.

3.09 Land Tenure. Generally land is vested in the various communitieswith any transactions being under the direct control of the head of the com-munity in consultation with the chiefs and elders. Land may be given (thoughunrecorded) by the community to an individual as his personal and disposableproperty. Alternatively, land may be given by the community to a family 2/under the provision that the head of the family may transfer it outside thefamily only with the consent and sanction of the elders. Although title toland is generally unrecorded, family and individual rights are usually wellknown and accepted within the community. In general the traditional systemprovides adequate security of tenure for the planting of permanent crops bynatives of a community, though not necessarily for outsiders. There is anincreasing tendency towards individual ownership in some areas and in thesetenancy on land belonging to absentees is common. Under the project, however,

1/ A noxious weed of comparatively recent introduction to Nigeria whichadversely affects oil palm establishment.

2/ T'mily usually means the extended family and may include several generations.

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the aim would be through the selection process (para. 6.04) to restrict parti-cipation to smallholders who are directly engaged in farming, and assurancesto this effect were obtained.

3.10 Farming Systems in the Project Area. While traditionally basedupon a shifting cultivation system of arable crop farming, population pressurehas necessitated a continued shortening of fallow periods. Typically, however,three years of food crop cultivation (yam, maize, cassava, cocoyam) are followedby about three years' fallow. Farm sizes tend to be small and it is estimatedthat the average area cultivated under food crops is about 0.5 ha, though thisconceals a wide variation in size of holdings and a high degree of fragmentation.Virtually all farming operations are carried out by manual labor. Many farmfamilies supplement their income by exploiting the wild palm groves.

3.11 Communications. The East Central State has a well developed communi-cations system. A dense network of hardtop and natural soil roads serves theproject area, although most roads are deteriorated and need upgrading (para4.07 and Annex 4).

IV. THE PROJECT

A. General Description

Objectives

4.01 The project area is well suited to oil palm cultivation, it is servedby a good network of roads, labor is not a constraint, and a smallholder re-planting project is feasible. Smallholder development is not linked with anucleus estate as is the case in the other oil palm projects (see para 1.03).However, ADA plans to develop estates and a feasibility study is being under-taken. This study will be completed early in 1975. (See para 6.12.)

4.02 The project involving planting some 16,000 ha of oil palm would becarried out over nine years (1975 through 1983) and be Phase I of a programscheduled to plant about 32,000 ha of smallholder oil palm during the period1975 through 1986.

4.03 The project would comprise:

(a) establishing a Smallholder Management Unit (SMU) within theMinistry of Agricultural Extension (MAE) to implement theplanting program;

(b) replanting 16,000 ha of smallholder wild palm groves;

(c) improving about 571 km of earth roads to facilitate all-weathercollection of ffb from smallholders;

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(d) operating a grant/credit scheme for smallholders;

(e) training staff and smallholders at selected institutions andthrough in-service courses;

(f) the construction and operation of two palm oil mills by thesubsidiary of the Agricultural Development Authority (ADA) toprocess the fruit produced by the project smallholders;

(g) establishing a fruit collection system to be operated by ADA'ssubsidiary for smallholder production.

B. Detailed Features

4.04 Details of the phasing of the project planting program are atAnnex 2.

Smallholders

4.05 Smallholders Management Unit (SMU). The SMU would have its head-quarters at Umuahia with regional units at Umuahia, Owerri and Aba. TheSMU would be responsible for appraising smallholder applications for creditsand grants and for supervising the technical and financial services involvedin the field establishment and post maturity stages. Details of the SMU'sstructure and functions are given in paras 6.02 - 6.06 and in Annex 3.

4.06 Smallholder Planting. The project would establish 16,000 ha of small-holder planting within a 37 km radius of the two palm oil mills. To facilitateffb collection plantings would be restricted to areas within 600 meters of aroad usable by tractor/trailers or 7-ton trucks all year round. Details ofplanting and maintenance procedures are in the Supplementary Annexes (Supplement1).

4.07 Road Improvement. No major realignment of roads is anticipated butpaved and earth roads need upgrading. The fruit collection road network (shownon map 10965) is 946 km of which 375 km is paved roads. The paved roads wouldbe upgraded (filling potholes, clearing ditches, reshaping shoulders, and someresurfacing) by the Ministry of Works and Transport (MWT). This work is esti-mated to cost N 560,000 (US$850,000); this amount is not included in the projectcosts, as it would form part of MWT's routine expenditure in the period 1976-1980. The cost of improving 571 km of earth roads is included under the projectand would be carried out by a road unit under SMU. MWT would become repsonsiblefor the maintenance of all fruit collection roads once they have been upgraded.Annual maintenance costs are estimated at N 280,000 (US$430,000). Details arein Annex 4. Assurances were obtained that in the project areas MWT would im-prove the paved roads, and would take over and properly maintain all fruitcollection roads once they have been upgraded.

4.08 Grant and Credit Scheme. Producer prices for palm oil destined forthe export market have been maintained well below world prices since the SecondWorld War, and Marketing Board surpluses generated in this way have been used

in other sectors of the economy (para 7.04). Consequently, until the veryrecent disappearance of palm oil surplus to domestic needs there has beenvery little incentive for farmers to plant even high yielding improved oilpalms, and the industry has stagnated. In the early 1960s an oil palm reha-bilitation scheme was introduced in the Eastern Region (now East-Central,Rivers, and South-Eastern States) under which the problem of incentives wasovercome by providing smallholders with grants consisting of cash payments,planting material and other farm inputs for new planting/replanting oil palm.Under the project somewhat different arrangements would be used to reflectcurrently much higher palm oil prices and grants in kind and credits in cashwould be provided to farmers. Combined with fair producer prices (see paras4.15, 7.07 and 7.09) this should provide adequate incentives for farmers toplant oil palms that take nearly four years to come into bearing and producerevenue.

4.09 The project would provide grants and credits to smallholders plant-ing, or replanting, a minimum of 1 ha and a maximum of 10 ha. One hectareis the smallest unit that is considered practical to administer under theproject; while at maturity more than 10 ha would require the average extendedfarm family to hire labor for its oil palm and food crop cultivation. Partic-ipating smallholders would be required to be members of a registered cooperativesociety. The FMG with the assistance of FAO is instituting a major program forthe development of farmers cooperatives. In view of this there should be noproblem in finding sufficient numbers of farmers who are members of registeredcooperatives. Project farmers would be required to sign agreements with SMUand their cooperative relating to the amount and use of grant/credit. Assuranceswere obtained that these arrangements would be employed and that the terms of theagreements would be acceptable to the Bank.

4.10 The total costs of clearing, planting and maintaining oil palmsuntil they enter into production four years later are estimated in constant1974 terms at about N 320/ha. SMU would distribute: (a) as a grant, and inkind, palm seedlings, cover crop seed, wire netting, fertilizer and chemicalsto a value of about N 170/ha; and (b) as credit, in cash, N100/ha for paymentof labor (see Supplementary Annexes Supplement 10). The credit would bear in-terest at 9.5% and have a term of 13 years from planting including 7 yearsgrace during which interest would be capitalized. The smallholder would con-tribute the balance of about N 50/ha in the form of labor and hand tools.Monthly repayments would be calculated on a per ha basis and deducted fromthe proceeds of each smallholder's ffb sales. In constant 1974 terms monthlyrepayments by the smallholder would amount to N 3.00 per ha (interest at 9.5%)and the cooperative would repay to SMU N 2.50 monthly (interest at 7.5%).The loan agreement between SMU, the cooperative, and the smallholder wouldinclude an undertaking by the smallholder to sell his ffb to the centralprocessing mill. See paras 4.16, 5.06 and 6.06.

4.11 Training. Technical training would be provided for Senior Officers,Nursery Staff, Field Staff, and Smallholders. A training schedule and costestimates are given in Annex 5, Table 8. Where training facilities are notavailable staff would be trained elsewhere in West Africa and for some seniorofficers possibly in the Far East. Funding for the latter possibility isincluded in project costs.

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4.12 Senior Officers (Agricultural Officer (AO) or above) would be given6-months training in planting techniques and management on large-scale oilpalm development schemes or commercial estates using appropriate husbandrystandards. Agricultural Assistants (MA) designated to supervise nurserieswould receive special training for twelve months in nursery techniques so asto cover a complete schedule of nursery operations from the germinated seedstage to field planting. Field staff (Agricultural Assistants) would be givena 2-3 months intensive course in modern planting techniques at the NigerianInstitute for Oil Palm Research (NIFOR) followed by 2-3 months practical train-ing in the supervision of field operations on existing estates. In addition,all field staff would be trained in smallholder appraisal and grant/creditsupervision procedures. Smallholder training would be developed on a groupactivity basis and would include (a) outlining application/appraisal proceduresand conditions of loan agreements, (b) demonstration of specific planting prac-tices, and (c) short courses of 1 to 2-day duration.

Agricultural Development Authority (ADA)

4.13 Palm Oil Processing Mills. At full maturity in 1988 project produc-tion of ffb would be some 160,000 tons; about 75Z of this quantity will come fromthe eastern and the balance from the western part of the project area. A 30-tonper hour mill will be constructed in the eastern part of the project area and a10-ton line of equipment will be installed in a mill that ADA would build inthe western part to cater for the production of its planned estates (see para6.12 and Annex 3, para 18). The build-up in required mill capacity would be:

1981 1982 1983 1984 1985 onwards-- (--------tons of ffb/hour)----------

Eastern area 10 10 20 20 30

Western area - - 10 10 10

4.14 Although sites have not been finally decided, the mill in the easternpart of the project area could be constructed near Owerri-Nta and in the westernpart of the project area a mill could be constructed at Ihiagwa on the riverOtamari. Expansion of the Owerri-Nta Mill to 30 tons per hour in 1985 wouldbe financed from retained earnings and is not part of project costs. ADA'ssubsidiary would undertake to engage consultants acceptable to the State andthe Bank to prepare the design and tender specifications for the new palm oilmills. Assurances to this effect were obtained. The undertaking would alsobe incorporated in the subsidiary loan agreement between the State and ADA'ssubsidiary.

4.15 Confirmation by $MU and the Tree Crop Section of the Monitoringand Evaluation Unit (see para 4.19) that the mill development proposals ofADA's subsidiary were in line with the projects overall production programwould be a condition of disbursement for investments in the mill and fruitcollection system (para 4.17). In addition assurances were obtained thatADA's subsidiary would adopt a pricing formula for the purchase of ffb from

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smallholders determined, in accordance with principles acceptable to the Bank,by a Price Policy Connittee, which would be established not later than 1980and which would comprise representatives of the Ministries of Finance andAgriculture, the Registrar of Cooperative, ADA, ADA's subsidiary, SMU, Market-ing Board, NPMC, and the Smallholders. See Annex 3.

4.16 SMU would be responsible for ensuring that an acceptable percentage(to be agreed with ADA's subsidiary) of the estimated production of small-holders ffb is delivered to the mills. Any financial losses incurred by themills of ADA's subsidiary as a result of deliveries falling below this figurewould be made good to ADA's subsidiary by the State Government. Assurancesto this effect were obtained.

4.17 Fruit Collection System. At full maturity in 1988 annual produc-tion from smallholder would be about 160,000 tons; 75% from the eastern, and25% from the western part of the project area. During the peak month, about800 tons of ffb would have to be collected each day. In the western part ofthe project area smallholders would be within a 20 km radius of the palm oilmill, but in the eastern part distances would range up to 37 km. Thereforea single stage fruit collection system is proposed in the western and a two-stage fruit collection system is proposed in the eastern part of the projectarea. In the two-stage fruit collection system, tractors with trailers wouldcollect the fruit from the smallholders and haul it to central collectionpoints, from where tipper trucks would transport the fruit to the mill.

4.18 The maximuin distance that participating smallholders would have tocarry bunches to a roadside pick-up point would be about 600 meters. Thebunches would be heaped in nets on the roadside to await collection, and thesmallholders would be informed well in advance of the time-table for the de-livery of nets and subsequent fruit collection. The bunches would be loadedon to trucks, or tractor/trailers as the case may be, by rear mounted cranesfitted with scales that would register the weight of the smallholder's fruitat the pick-up point. The smallholder would be given a receipt showing theweight of the bunches collected, the grade and the price. For details seeAnnex 4.

Evaluation and Research

4.19 Evaluation and Research is an important feature of all three oilpalm projects (para 1.03). The Tree Crop Section in the Monitoring and Evalua-tion Unit of the Federal Department of Agriculture would be responsible formonitoring and evaluating the project. All evaluation and research has, how-ever, been costed as part of the Mid-Western State Nucleus Estate/SmallholderOil Palm Project, processed concurrently with this project, and details canbe found in appraisal report, No. 497a-UNI.

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V. COST ESTIMATES AND FINANCIAL ARRANGENENTS

Project Costs

5.01 Project costs over the development period 1975-1983 are detailedat Annex 5 and summarized in the following table:

Foreign------ Naira'000 ------ -------US '000-------- ExchangeLocal Foreign Total Local Foreign Total Z

Smallholder FieldEstablishment 3,499 1,652 5,151 5,319 2,511 7,830 3251U Capital Costs 74 65 139 113 99 212 47SMU Personnel Costs 912 169 1,081 1,387 257 1,644 15SMU Recurrent Costs 74 54 128 112 82 194 42Regional Unit CapitalCosts 215 198 413 326 301 627 48

Regional UnitPersonnel Costs 1,993 167 2,160 3,030 254 3,284 7Regional UnitRecurrent Costs 133 109 242 202 165 367 45Road Program 280 133 413 426 202 628 32Training 109 83 192 166 125 291 43Mill Investment (ADA) 2,307 1,485 3,792 3,507 2,257 5,764 39Fruit CollectionInvestment (ADA) 186 198 384 282 301 583 52

Sub Total 9,782 4,313 14,095 14,870 6,554 21,424 31

Physical Contingen-cies (5.5%) /1 538 242 780 818 368 1,186 31

Price Contingencies(66%) /2 6,780 3,045 9,825 10,306 4,628 14,934 31

Total Project Costs 17,100 7,600 24,700 25,994 11,550 37,544 31

/1 As percentage of base costs./2 As percentage of base costs and physical contingencies.

5.02 The estimates are based on prices ruling at January 1, 1974. Theyinclude indirect taxes and duties amounting to about N 420,000 (US$640,000).Physical contingencies comprise 12% of the cost of civil works for the oilmills and 5% of other costs. Price contingencies, calculated over base costsand physical contingencies, allow for: compounded increase in the costs of(a) civil works, buildings, and houses, of 18% in 1974, 15% in 1975, and 12%annually thereafter; (b) vehicles, office and mill equipment, nonlabor farminputs of 14% in 1974, 11% in 1975 and 7-1/2% annually thereafter; and (c) labor,salaries, operating cost, consultancy services, and training, of 7% annually.

Financing Arrangements

5.03 The overall financing plan has been discussed and agreed with theFederal and State Governments and takes account of FMG's decision that eachState will be responsible for the balance of project costs. The financingplan (see also Annex 6) is summarized in the following table.

Financing Plan

IBRD STATE FARMER TOTAL------- million -----------… -----

Smallholder ProgramField Establishment 3.2 1.1 0.8 5.1smu 1.7 3.1 - 4.8

ADA Program 2.1 2.1 /1 - 4.2

Unallocated 5.4 4.7 0.5 10.6

Total 12.4 11.0 1.3 24.7

--------------$ million-----------------

Smallholder ProgramField Establishment 5.0 1.6 1.2 7.8SMU 2.6 4.6 - 7.2

ADA Program 3.2 3.2 /1 - 6.4

Unallocated 8.2 7.1 0.8 16.1

Total 19.0 16.5 2.0 37.5

50% 45% 5% 100%

/1 The State Government would make an equity contribution to ADA's sub-sidiary company (not included as a project cost) to cover workingcapital requirements during the development period estimated at aboutN 0.75 million (US$1.1 million).

5.04 The Bank loan of US$19.0 million would finance 50% of total projectcosts; it would be equivalent to all foreign exchange costs (US$11.6 million)and 29% (US$7.4 million) of local costs. The loan would be for a period of20 years, including a five-year grace period on repayment of principal. TheBank loan, would be onlent to the State Government on terms and conditionsacceptable to the Bank. The remaining project costs would be financed bythe State Government (US$16.5 million), and smallholders (US$2.0 million).

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5.05 The State would onlend part of the Bank loan and make its own con-tribution, totalling US$13.6 million, to ADA's subsidiary at a rate not lessthan the Bank's lending rate 1/ for a period of 20 years including a nine-yeargrace period for repayment of principal. The State Government would use theremainder of the Bank loan and its own contribution to finance SMU (US$11.0million), as well as the grants (US$6.9 million) and credits (US$4.0 million)to the smallholders. Credits made to smallholders would be channeled throughthe cooperatives, which in consideration for their guaranteeing smallholders'loans would receive an interest spread of 2X (see para 4.10). From its ownfunds the State Government would make an equity contribution to ADA's sub-sidiary company (not part of project costs) estimated at N 750,000 (US$1.1 mil-lion), to cover working capital in the development period (see Annex 10, Table 1).

5.06 During negotiations assurances were obtained that the terms andconditions of the subsidiary loan agreement between FMG and the State Govern-ment would be acceptable to the Bank; and also that the terms and conditionsof the subsidiary loan agreement between the State and ADA's subsidiary wouldbe acceptable to the Bank. Signing of these two subsidiary loan agreementswould be a condition of effectiveness. Subscription to ADA's equity by theState Government during the development period would be in accordance with aschedule satisfactory to the Bank, and assurances to this effect were obtained.Assurances were also obtained that the terms and conditions of the loan agree-ment between SMU, cooperatives and smallholders would be acceptable to the Bank.It was agreed that from the date of the ending of loan negotiations retro-active financing of up to $100,000 would be made mainly for the employment ofkey personnel and for nurseries.

Procurement

5.07 Vehicles, road-making equipment, fertilizers, insecticides, polybags,tools, and wire netting valued at about US$4.5 million would be procured throughinternational competitive bidding (ICB) in accordance with Bank guidelines forcontracts valued over US$25,000. The oil mills - civil works and equipment -valued at about US$5.6 million would be procured through a single responsibilitycontract through ICB in accordance with Bank guidelines. Contracts for build-ings, office equipment, and some road construction (bridges) valued at aboutUS$0.6 million are not suitable for international competitive bidding becauseof their size and location. Contracts for buildings and bridges would beprocured through competitive bidding, advertised locally and in accordancewith local procedures which are satisfactory to the Bank. Contracts underUS$25,000 and for office equipment would be procured after inviting quotationsfrom at least three suppliers. Road construction valued at US$0.4 millionwould be done by force account. A major part of project costs valued at aboutUS$10.3 million would be for smallholder labor, salaries, training and theoperating expenses of SMU; none of which would be suitable for any form ofcompetitive bidding. The services of expatriate staff and consultants wouldbe obtained on terms and conditions acceptable to the Bank. Domestically

I/ For calculating purposes an onlending rate to ADA's subsidiary of 9%was assumed.

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manufactured goods would be allowed a 15% preference or the applicable importduties, whichever is lower, when comparing bids with those of foreign manu-facturers. A 7.5% preference for domestic civil works contracts would apply.

Disbursement

5.08 The Bank loan would be disbursed over nine years from 1975 through1983 (see also Annex 6) to cover:

(i) 75% of grants and credits to smallholders, totallingN 3.3 million (US$5.0 million);

(ii) 35% of SMU's costs totalling N 1.7 million (US$2.6 million);

(iii) 50% of the costs of ADA's subsidiary totalling N 2.1 million(US$3.2 million);

An unallocated amount of N 5.4 million (US$8.2 million) would cover contin-gencies on the above items. Any surplus loan funds after completion of theproject would be cancelled.

5.09 Disbursements of the Bank loan would be against import documentation,contracts, and certified records of expenditure. For disbursements made againstcertified records of expenditure, documentation would not be submitted forreview but would be retained by SMU and ADA's subsidiary for scrutiny by Banksupervision missions.

5.10 In order to achieve a prompt and efficient flow of funds thefollowing procedures would be used: SMU would prepare reimbursement claimsunder the signature of its General Manager and Controller of Finance. Thesedocuments would be countersigned by the State Ministry of Finance who wouldsubmit them to the Federal Ministry of Finance for onward transmission to theBank. ADA's subsidiary would prepare reimbursement claims under the signatureof its manager and chief accountant.

Accounts and Audits

5.11 SMU would prepare annual budgets using cost estimates in this reportas a base, amended where necessary to reflect changes in costs and projectdevelopment policies. Such budgets would be submitted to the Steering Committeefor approval. SMU would thereafter establish, on a monthly basis, cash flowstatements indicating costs, revenues and additional capital requirements.Such monthly statements would be submitted to the Steering Committee for moni-toring but project management would be authorized to operate on such monthlybudgets unless officially informed to the contrary by the Chairman of the Steer-ing Committee.

5.12 On the basis of the approved SMU budget, the State Government wouldmake annual budget allocations to cover its own contribution to project costsas well as any additional funds required to bridge the gap between expenditure

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and disbursement of the Bank loan. Assurances were obtained from the StateGovernment during negotiations that a project bank account would be opened witha bank of their choice, and that SMU would have full access to funds within thelimitations of the approved annual budget. It would be a condition of loaneffectiveness that such account had been established and funded.

5.13 Assurances were obtained that ADA's subsidiary and SMU would: (i)keep records adequate to reflect, in accordance with consistently maintainedsound accounting practices, their operations and financial position; (ii) havetheir accounts audited by a firm of auditors acceptable to the Bank; (iii)submit copies of their audited accounts and the auditors' reports thereonto the Bank within four months of the end of each financial year; (iv) causethe reports of the auditors to be of such scope and detail as the Bank mayreasonably have requested; and (v) furnish such other information concerningtheir accounts as the Bank may reasonably have required.

VI. ORGANIZATION AND MANAGEMENT

6.01 Project implementation would involve: the Smallholder ManagementUnit (SMU), and the Agricultural Development Authority (ADA).

Smallholder Management Unit(SMU)

6.02 General. SMU would be responsible for the smallholder program.SMU would have a high degree of financial and administrative autonomy andwould be a component of the Ministry of Agricultural Extension (MAE). Itwould be a condition of effectiveness that SMU had been established andits senior management positions filled. A Steering Committee chaired bythe Permanent Secretary of MAE comprised of relevant Government agencieswould be responsible for determining SMU policy and approving development/operational programs and budgets. Details of the SMU's structure andoperational procedures are given in Annex 3. A consulting firm acceptableto Government and the Bank would be engaged to set up a system of mechan-ized accounts that would meet the needs of the project and assurances tothis effect were obtained.

6.03 Management Structure and Staffing. The structure of SMU is outlinedin the Chart attached to Annex 3. The SMU would be headquartered at Umuahiaand have regional units at Umuahia, Owerri, and Aba. SMU would be staffedprimarily with personnel now employed by MAE or recruited especially for thepurpose in Nigeria. However, the technical and financial complexity of theproject will demand well qualified and experienced staff (see Annex 3, para 7),and if suitably qualified Nigerians were not available to fill the SMU seniormanagement posts, staff for these posts would be recruited internationally.Assurances were obtained that SMU would be established in a form satisfactoryto the Bank and that it would be adequately staffed at all times; that SMU'sSteering Committee would have been established not later than 90 days after

loan effectiveness; and that senior management positions of SMU would befilled by qualified persons acceptable to the Bank and upon terms and conditionssatisfactory to the Bank.

6.04 Operational Procedures. Notices calling for applications from small-holders and giving details of the scheme would be publicized through such mediaas local newspapers, radio and public administration offices. To facilitatethe efficient employment of field staff, particularly in the year of plantingwhen the heaviest intensity of farm visits is required, a system of zonaldevelopment would be used. Thus in any given year applications for participationwould be restricted to specific zones within the project area. Any shortfallin applications from a primary zone could be catered for by having an adjacentreserve zone from which applications could be requested but only accepted inthe event of there being a shortfall in the primary zone. Applications wouldbe called at the beginning of January of the year preceding the year of plantingand the closing date would be the end of March in the same year. On receipt ofthe application, the smallholdings would be inspected by SMU staff to obtaindetails of vegetation, topography, soil type, size of holding, the compositionof the family labor force available, and, in consultation with the cooperatives,the credit status of the farmer. Applications would be approved by a PlantingAuthorization Conriittee (PAC) composed of SMU's General Manager as chairman,the Controller of Field Operation, the Controller of Finance and a representa-tive of the cooperative societies.

6.05 SMU staff would provide technical supervision and advice and ensurein particular that: (i) if Eupatorium infestation covered more than 30% ofthe area, the weeds were cleared before an application was approved; (ii) allold palm trees were felled before new planting/replanting; and (iii) in orderto prevent encroachment into the root systems area of the young palms, no inter-cropping would be permitted in the new plantings of palms. Assurances wereobtained that maintenance of suitable husbandry standards including thosespecified above would be a condition of smallholder participation in the pro-ject.

6.06 Purchase of Smallholder ffb. Every two weeks the mill would provideSMU with a schedule of ffb purchased, and amounts due to smallholders, andcredit the SMU account with the appropriate funds. SMU, after deducting loanrepayments due to the State Government, would pay the balance due to eachcooperative in respect of its members. The cooperatives after deducting theinterest spread would distribute the balance to its members. The cooperativeswould guarantee the repayment of the loans by their members. (See para 4.10)

Agricultural Development Authority

6,07 The Agricultural Development Authority (ADA) of the East CentralState uas established by an edict dated May 21, 1973, but taking effect fromJanuary 1, 1973. The edict provides that "the Authority, in pursuit of agri-cultural development, shall be engaged in the production, processing, storing,packaging, marketing, development and manufacture of agricultural products."

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6.08 The edict also provides that the Board shall consist of: (a) theAdministrator (Chairman); (b) the Commissioner for Natural Resources andAgricultural Extension 1/ (Deputy Chairman); (c) the President; (d) three otherpersons appointed by the Administrator. The senior management of ADA includesthe President, the Executive Vice-President, Secretary/Vice-President Admin-istration, Financial Controller (also a Vice-President), and Chief of Operations.

6.09 ADA took over all the projects of the Ministry of Agriculture thatwere designed to be revenue earning. There are presently over 60 projects,mostly in food crop production but also rubber and oil palm estates, represent-ing a total investment of over N 2.6 million. Few of the projects are profit-able (although many of them are still in the development stage); they showedan overall net loss of some N 400,000 in the year ended March 31, 1973.

6.10 ADA's management is conscious of the need to put its operations ona sound commercial basis. It intends to discontinue or dispose of investmentswhich show no prospect of becoming profitable. It sees ADA's future role asthat of identifying and developing profitable opportunities in agricultureand of encouraging private investors to participate in, or take over, projectsas they develop.

6.11 Under the proposed project, ADA would be responsible for the estab-lishment and operation of the oil mills and fruit collection system. Forthis purpose it would form a subsidiary company. ADA also proposes to askSOCFINCO for management assistance; the detailed arrangements have still tobe defined and negotiated. SOCFINCO is an associate of SOCFIN (SocieteFinanciere des Caoutchoucs) a Belgian company, and of the Dutch company HVA.These companies, or their associates, have provided management assistance toa number of Bank Group projects, including the oil palm project in IvoryCoast and the sugar project in Ghana. The establishment by ADA of a sub-sidiary company with a management structure acceptable to the Bank would bea condition of loan effectiveness. In addition, assurances were obtainedthat the posts of General Manager, Chief Accountant and Oil Mill Engineersin the new subsidiary company, would be filled by people with qualificationsand experience and on terms and conditions acceptable to the Bank.

6.12 SOCFINCO will complete in early 1975 a feasibility study for anestate program of about 40,000 ha. ADA also proposes to retain SOCFINCOservices for the establishment of the estates and related palm oil millsthat will be proposed in the feasibility study.

1/ As announced by the East Central State Government in its budget messageof May 1974, the Ministry of Natural Resources and Agricultural Extensionhas been split into two ministries namely the Ministry of AgriculturalProduction and Animal Husbandry (MAPAH) and the Ministry of AgriculturalExtension (MAE). ADA will now report directly to MAPAH instead of to theState Administrator as before, and SMU will be under MAE.

VII1. PRODUCTION, MARKETING, FARMER BENEFITS,FINANCIAL IMPLICATIONS TO GOVERNMENT

Ylelds and Production

1 C, Oil palms would begin yielding in the fourth year after planting. At:'Atl maturity smallholder plantings are expected to yield 10 tons per ha. Oilto ffb extraction rates are assumed to rise from 16% in the first year ofharvesting reaching 22% at full maturity; the weight of kernels is estimatedat 5% of ffb. These yield estimates and extraction levels are generally inline with those experienced with equivalent planting material under similarecological conditions in West Africa.

7.02 At full maturity in 1988 the project would produce annually about35,200 tons of palm oil and 8,000 tons of palm kernels. See Annex 7.

Markets and Prices

7.03 In 1970, production of palm oil in Nigeria was estimated to be about490,000 tons of which all but 9,000 tons was consumed in the domestic market.This is in marked contrast to earlier years when exports were considerable:for example in 1960 production was 545,000 tons and exports 189,000 tons.Based on an expected population growth rate of almost 3% per annum, a projectedper capita income growth of 3% per annum and an income elasticity coefficientfor palm oil of 0.5, household consumption of raw oil should increase at rough-ly 4.5% per annum until 1980, reaching a total of 690,000 tons in 1980, orabout 8.8 kg per capita. During the early 1980s per capita consumption can beexpected to level off, and domestic consumption should increase at about 3.25%per annum. This would result in a project domestic consumption of about810,000 tons by 1985. When the total estimated demand for palm oil from localprocessors, such as manufacturers of margarine and soap, is added, the aggregatedomestic demand in Nigeria is expected to be around 700,000 tons in 1980, and825,000 tons in 1985. The projections indicate that by 1985, and without amajor oil palm development program, there will be a shortfall of around 275,000tons of palm oil that will have to be supplied through imports.

7.04 The East Central State Marketing Board (ECSMB) is authorized, undercurrent legislation, to purchase all palm oil and kernels offered for sale.This is a legacy from times when Nigeria was a major exporter of palm oil andof kernels. Under the old arrangement ECSMB bought whatever oil was surplusto domestic requirements and exported this through the Nigerian Produce Market-ing, Company (NFMC). The amounts of oil available for export in the EastCentral State have declined rapidly in recent years and are now nonexistent.As there is almost no domestic market for palm kernels or for palm kernelproducts - palm kernel oil and cake - the great bulk of these continue to beexported through the medium of ECSMB and NPMC. As the Marketing Boardfunctioned in the past as much as a taxation mechanism as a price stabiliza-tion agency, it has jealously guarded its rights to purchase palm oil surplusto domestic needs. In particular it has tended to treat the production fromoil palm companies as being in the latter category. In recent years, however,

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it has permitted companies to sell oil on the domestic market although itwould appear to retain the power to purchase their oil. Given this situationassurances were obtained that ADA's subsidiary would be permitted to sell itspalm oil produced under the project freely on the domestic market. Thisassurance is required to ensure that ADA's subsidiary and the smallholderswould receive full market value for their production.

7.05 Domestic prices of palm oil have risen considerably during the lastfew years. Thus the average wholesale price of special grade oil in Ibadanrose from about N 160 per ton in 1971 to about N 200 per ton in 1972 and aboutN 240 in 1973. Significant seasonal price variations result in averageDecember-January prices of palm oil being nearly 50% higher than the averageApril-May prices. Because of the increase in prices for palm oil, small-holders have also obtained higher prices for their ffb, although it shouldbe remembered that presently smallholdings have very low yields.

7.06 The Marketing Board purchases virtually all palm kernels offered forsale and until recently farmers receive about N 47 per ton; however, FMG hasannounced that the price for the 1974/75 period would be N 135/ton. Kernelswere normally exported unprocessed but in recent years there has been consider-ably increased investment in kernel crushing operations in Nigeria. The projectwould sell kernels ex-millgate to the Marketing Board either for export or forsale to local crushers.

7.07 In calculating the project's benefits, a value for palm oil equiva-lent to an import substitution price for oil has been used. This is based onthe Bank's projected world price of US$495 per metric ton cif Europe in 1980.Palm kernels have been valued at an export parity price of N 120 per ton basedon the Bank's world price forecast of US$330 per metric ton cif Europe in 1980(see Annex 8).

Farmer Benefits

7.08 It is expected that most farm families in the project area would beable to plant and maintain 2 ha of oil palm without a significant reductionin their current farming activities. On such a typical planting of 2 ha alldeveloped at one time, production would begin in the fourth year from plantingand full bearing would be reached in the eighth year. Over the four-year estab-lishment period the farmer would receive a gross return 1/ from the cash ele-ment of the grant/credit equal to about N 0.60 per manday worked; the currentunofficial farm wage rate is about N 0.65. A farm budget is given in Annex 9.

7.09 Assuming a farmgate price of N 19.0 per ton of ffb, the gross return(in constant 1974 terms) from 2 ha would start at N 54.6 in the first year ofproduction (Year 4), rising to N 278.0 during the farmer's loan repayment period(Years 7 - 12) and thereafter would average about N 350.0 in maturity. Thesereturns compare favorably with those obtainable from alternative tree or foodcrops, even where improved management and planting material are used. Afterestablishment a 2 ha planting would require between 50 and 70 mandays a year

1/ Gross return is return to management, labor, land and capital.

ID 9 -

for maintenance and harvesting, and gross returns per manday would rise rapidlyfrom N 1.0 in the year of first production (Year 4) to an average of N 4.2during Years 7 - 12 of loan repayment and N 5.8 thereafter.

7.10 Official data on smallholder farm incomes is sketchy. However, grossreturns on existing smallholdings are estimated to be in the region of N 200to N 300 per year including N 100 - N 200 value of foodcrops consumed by thehonusehold. Thus, under the project a minimum planting of 1 ha of oil palmcapable of generating a gross margin of N 175 per year, when mature (see Annex9), would represent a very substantial increment to farm incomes in the area.

7.11 Participating smallholders would receive a bonus when the mill'sreceipts for palm products exceed the full cost of fruit collection, proces-sing and financial charges for the smallholders' component of mill throughput.The bonus would be distributed half-yearly through the cooperative societiesaccording to smallholders' fruit sales to the mill over the period. Withthe likely increase of palm oil prices in Nigeria over the project period thesesmallholder bonuses are expected to be substantial.

Financial Returns to ADA's Subsidiar

7.12 The projected cash flow for ADA's subsidiary company is at Annex 10and is expressed in constant (1974) terms. The effects of inflation on bothinflow and outflow have been calculated, using the price contingencies des-cribed in para 5.02 for project costs, a 7Z compounded rate for other costand the Bank's international inflation index for the value of benefits.

7.13 The annual cash balance during the project period 1979-1983 rangesfrom about N 125,000 to N 800,000 in constant terms and from about N 40,000to N 1.8 million in current terms. Accordingly, no liquidity problems areexpected and any temporary seasonal shortfalls should be readily covered bynormal overdraft facilities. After 1984, when loan repayment begins, thereis a rapidly increasing positive net cash flow in each year. This rises fromN 2.2 million in 1985 to almost N 4.1 million by 1990 in constant terms, andfrom N 5.6 million to N 13.5 million in current terms (in both cases after debtservice). These figures, however, take no account of company tax, dividendsor bonus payments to smallholders, none of which could be meaningfully esti-mated at this range because of difficulties in forecasting future levels oftaxation, price trends and ADA's policy with respect to new capital develop-ment projects. The repayment period of the loan, however, makes allowancefor these factors and the cover for debt service is considered adequate in theearly years of amortization, and ample afterwards.

Financial Implications for the State Government

I.14 Tle State Government's involvement in the project is threefold:(a) it holds 100% equity in ADA's subsidiary which should be highly profitable(see para 7.13) with a cumulative surplus in current terms of about N 120million 1i generated by 1994, the final year of loan repayment, (b) it sub-sidizes the smallholder scheme by providing grants during the oil palm estab-lishment phase, fertilizer subsidies, and the normal extension services that

1/ Prior to allowance for depreciation and reserves, and payment of taxes,dividends and bonuses to smallholders.

20

apply to small farmer agricultural activities throughout Nigeria, and (e) r tlends and onlends funds to ADA's subsidiary, which should give it some interestincome. Through this scheme (see also Annex 11) it is estimated that duringthe development and repayment period, the State Government would have to meetannual cash deficits in current terms ranging from N 560,000 (US$850,000) toN 2.9 million (US$4.4 million). By 1994 (last year of loan repayments)deficits would have accumulated to N 32.4 million (US$49.2 million). TheState would receive no direct revenue contribution from smallholder oil palmproduction as there would be no Marketing Board price differential or producesales tax; consequently the costs of this scheme would be defrayed againstgeneral State revenues. Federal policy with respect to the distribution ofmineral oil revenues basically aims at meeting overall financial deficienciesin State revenues that are considered justifiable and would include anyincurred as a result of the smallholder oil palm project. On the other hand,the State would be in receipt of substantial dividends from ADA (see para7.13). Furthermore if ADA develops its own estates the profits of itssubsidiary would increase considerably.

VIII. BENEFITS AND JUSTIFICATION

8.01 The direct benefits from the project would be the increase inpalm oil and kernel production which is estimated at 35,200 tons of palm oiland 8,000 tons of kernels annually at maturity in 1988 and thereafter. Theeconomic rate of return is estimated at 19.7%. Assumptions used in computingthe rate of return are given in Annex 12. Project life is taken as 30 years.Costs are detailed in Annex 5, yields in Annex 7, and prices in Annex 8. Laborcosts are shadow priced at 65% to reflect its average opportunity cost in theproject area and foreign exchange is shadow priced at N 1.00 = US$1.27 comparedwith the official exchange rate of N 1.00 = US$1.52 (a premium of 20%). Iflabor and foreign exchange are not shadow priced the rate of return is estimatedat 16.4%.

8.02 As is usual when project benefits occur after a long developmentperiod, the rate of return is relatively insensitive to changes in costs andbenefits (Annex 12, Table 2). A 10% increase in cost accompanied by a i0%decrease in benefits gives rates of return of 16.6%. A 20% increase in costsand a simultaneous 20% decrease in benefits reduces the rates to 13.6%.

8.03 Project palm oil production would substitute for imports that other-wise would be required and kernels or kernel oil would be exported. Treatingpalm oil production as foreign exchange savings and kernel production asforeign exchange earnings, and using the Bank's price forecast in current 1985terms (for palm oil US$757 per metric ton and for kernels US$504 per metricton) annual net foreign exchange earnings/savings at full maturity (1988 on-wards would be about US$26 million.

8.04 The project would sustain and develop an industry that at fullmaturity (1988 onwards) would generate annually incremental net economic bene-fits of N 7.0 million (US$10.7 million) in constant 1974 prices. During the

establishment period the project would create 12,500 manyears of employmentand about 8,000 smallholders would participate in the project. Assuming aver-age family size of 6 - 7, some 52,000 people in total would benefit from the: o ect.

K;i5 The project has a number of largely unquantifiable benefits. Inpacticular, it would demonstrate the feasibility of a well supervised agri-cultural scheme. It would form and strengthen an agricultural extensionservice which would be able to handle further phases of the oil palm programor use its experience for diversification into other crops. The cooperativeswould be strengthened through their participation in the project both organi-zationally and financially. The institutional framework established underthe project should ultimately facilitate the provision of credit not onlyfor oil palm planting but also for other crops grown by the farmers. The im-provement of roads under the project would benefit not just project farmersbut the whole farm comnunity of project areas through such effects as morepublic transportation, easier access for farm products to markets, greateravailability of goods and services to the project area and lower transportcosts.

IX. RECOMMENDATIONS

9.01 Among the assurances obtained were the following principal points:

(a) the project would confine the grant/credit scheme to smallholdersplanting, or replanting, a minimum of 1 ha and a maximum of 10 ha.Smallholders would also be required to be members of a registeredcooperative society (para 4.09);

(b) ADA's subsidiary would adopt the pricing formula for the purchaseof ffb from smallholders determined, in accordance with principlesacceptable to the Bank, by the State Price Policy Connittee whichwould be established no later than 1980 (para 4.15);

(c) Any financial losses incurred by the mills as a result of thesmallholders failing to deliver their produce to any of thepalm oil mills under the project up to annual targets agreedbetween SMU and ADA's subsidiary would be made good by theState Government (para 4.16);

(d) smallholders would sign a loan agreement with SMU and theircooperative societies and the terms and conditions of thisloan agreement would be acceptable to the Bank (paras 4.09,4.10 and 5.06);

(e) the terms and conditions of the subsidiary loan agreementbetween FMG and the State Government would be acceptable tothe Bank; the terms and conditions of the subsidiary loanagreement between the State Government and ADA's subsidiarywould also be acceptable to the Bank (para 5.06);

- 22 -

(f) SMU would be established in a form satisfactory to the Bankand it would be adequately staffed at all times; and itssteering committee would have been established not laterthan 90 days after loan effectiveness (para 6.03);

(g) Senior management positions of SMU would be filled withqualified persons acceptable to the Bank and would be employedupon terms and conditions satisfactory to the Bank (para 6.03);

(h) the General Manager, Chief Accountant, and Oil MillEngineers in ADA's subsidiary company would have qualifi-cations and experience and be appointed on terms andconditions acceptable to the Bank (para 6.11);

(i) ADA's subsidiary would be permitted to sell its palm oilproduced under the project freely on the domestic market(para 7.04).

9.02 Conditions of effectiveness of loan would be that:

(a) subsidiary loan agreements acceptable to the Bank had beensigned between FMG and the State Government, and theState Government and ADA's subsidiary (para 5.06);

(b) the State Government had established and funded a projectaccount (para 5.12);

(c) SMU had been established and its senior management positionsfilled (para 6.02); and

Cd) ADA's subsidiary has been established (para 6.11).

9.03 A condition of loan disbursement for investment in the mills andfruit collection system would be that: confirmation had been received fromSMU and the Tree Crop Section of NEU that the mill development proposals ofADA's subsidiary were in line with the project's overall production program(para 4.15).

9.04 It was agreed that from the date of ending of loan negotiationsretroactive financing of up to $100,000 would be made mainly for employmentof key personel and for nurseries (para 5.06).

ANNEXPage 1

NIGERIA

SMALLHOLDER OIL PALI PROJECT

EAST CENTRAL STATE

State Institutions 1/

1. Ministry of Natural Resources and Agricultural Extension (MNRAE).The Ministry is responsible for planning and executing agricultural programswithin the State. In the past, in the absence of effective planning andcoordinating at the Federal level, each State planned its own development, seldomlooking beyond its borders. Little or no consideration was then given to compara-tive economic advantage as seen from a country-wide basis and hence no regionalspecialization could develop. But ecological zones, water catchment areas,drainage basins and natural forest stands were part of the natural environmentbefore state boundaries were formed. State plans therefore do not necessarilyreflect the best allocation of resources for the nation as a whole. There wasand still is unnecessary duplication of efforts and the effectiveness of scarceresources (mainly trained manpower since at present funds from mineral oil areavailable in ample surplus) is therefore reduced. However, FMG and the Statesrecognize this problem and are taking steps to improve machinery for planningand coordinating agricultural development on a country-wide basis. The proposedTree Crop Section of the Monitoring and Evaluation Unit (see SupplementaryAnnexes, Supplement 4) is especially designed to further this as far as treecrops are concerned.

2. The State Ministry has only been established effectively since theend of the civil disturbances. In its May 1974 Budget Speech, the EastCentral State Government announced that MNRAE was split into two new minis-tries, namely the Ministry of Agricultural Extension (MAE) and the Ministryof Agricultural Production and Animal Husbandry (MAPAH). The proposedSmallholder Management Unit (SMU) would be under MAE and the AgriculturalDevelopment Authority (ADA) would be under MAPAH (see para 15).

3. The Cooperative Movement will play an important role in the project.Only members of cooperatives would be allowed to participate in the project, andcredit facilities would be provided through SMU in conjunction with the coopera-tives. A loan agreement would be signed between the farmer, SMU and the cooper-ative. Experience gained by the cooperatives in channeling credit to the farmersfor oil palm development would establish a sound basis for providing seasonalcredit to farmers both for oil palm and other crops.

1/ Federal Institutions are described in the Supplementary Annexes to theNigerian Oil Palm Projects Appraisal Reports (Supplement 3).

AN-NE XPage 2

4. The East Central State cooperative movement was part of the EasternRegion cooperative movement before the foundation of the East Central State.About 500 primary societies reportedly survived the war, and so did a few secon-dary unions. However, East Central State's present policy is to phase out allthe secondary unions, since their functions are regarded as purely administrativeand educational, and these could be more effectively performed by the apexorganizations. The apex organizations served the former Eastern Region and theyhad to be reorganized in accordance with the present State boundaries.

5. At present there are more than 800 registered primary cooperativeswith more than 41,000 members. More than 400 cooperatives with about 20,000members are proposed but not yet registered. Details are given below:

Cooperatives in East Central State

Type Registered ProposedNumber Membership Number Membership

('000) ('000)

Multipurpose 447 23.0 421 18.9Thrift and loan 239 9.5 - -Produce marketing 22 0.4 - -Community/cooperative farms 101 6.0 7 0.1Other 17 2.6 20 0.6

826 41.5 448 19.6

6. Reportedly about 117 farmer cooperatives have oil palm plantationsin East Central State. They have about 8,000 ha of land available of whichapproximately 5,000 ha are developed with 2,800 ha in production.

7. There are five apex organizations in the cooperative movement inEast Central State:

(i) the Cooperative Bank of Eastern Nigeria Ltd.;

(ii) the East Central Wholesale and Consumer Organization;

(iii) the East Central State Cooperative Produce Marketing Organization;

(iv) the East Central State Cooperative Development Association; and

(v) the Cooperative Union of East Central State.

8. The Cooperative Bank of Eastern Nigeria Ltd. is the banking insti-tution for the East Central State cooperative movement and is subject to therules of the banking law. It engages mainly in short-term lending and by theend of September 1973 its assets were valued at N 9.2 million of which loans andadvances amounted to N 4.8 million. The auditors report on the accounts forthe year ended March 1973 noted contravention of certain sections of the Banking

ANNEX 1

Page 3

Decree 1969; careless lending by some former officials; difficulties in evaluatingszr!urities lodged against advances; inadequate provision for doubtful debts;and difficulties in the valuation of assets. However, a new Board and managementm>t appointed early in 1973 and measures are being taken to reorganize the banki-uc. cegularize its lending policy.

9. The cooperative movement is well established in the East CentralState. Its accumulated capital is summarized below:

Capital Accumulated by Cooperative Societiesin East Central State (as of March 31, 1972)

(Naira '000)

Paid-up Savings/Shares Deposits Total

Primary Societies 315.7 133.7 449.4Cooperative Bank 1,273.1 5,732.5 7,005.6Other Apexes 14.9 2.6 17.5

Total 1,603.7 5,868.8 7,472.5

With the aid of the SMU, cooperatives will be able to participate in the channellingof credit and the distribution of payment for fruit collected. The cooperativeswould also guarantee the repayment of the loan and an interest spread would beprovided to cover the risk.

10. The Cooperative Division 1/ of the Ministry of Cooperatives 2/ regulatesthe cooperative movement, It is organized into seven sections (see attachedorganization chart). Field extension services are carried out under 38 divi-sional cooperative officers.

11. Legal steps required to form a cooperative are minimal. A minimumof 6 farmers can form a farmers' cooperative. For other cooperative societiesthe minimum requirement is 10. After the application has been approved, thecooperative society becomes a proposed society, and it can be fully registeredafter supervision by the Cooperative Division has proven that the society ishealthy.

12. Outside the cooperative movement another organization has recentlybeen formed to group farmers together, the Farmers' Forums. "The objectiveof the Forums shall be to improve farmers' farm income and standard of livingthrough the adoption of intensive and more effective farm practices and use of

1/ Before May 1974 the Ministry of Cooperatives was the Cooperative Divisionin the Ministry of Trade and Industries. However it can be assumed thatthe new ministry will have the same organization as the former division,the organization of which is at the attached chart.

2,/ At present the Cooperative Division is the only Division within theMinistry of Cooperatives.

ANNEX 1Page 4

prescribed inputs such as credits, fertilizers, good seeds, plant protectionchemicals, irrigation and farm mechanization." Farmers' Forums have a politi-cally oriented organizational structure and have strong backing of the Ministryof Agriculture. Farmers' Forums are being organized throughout the East CentralState, and comprise all active farmers in the Community Council area. Throughthe divisional level Farmers' Forums are grouped in a Farmers State Council.In order to benefit from state agricultural programs, membership of a Farmers'Forum is a definite requirement.

13. State Marketing Board. Details on the Marketing Boards and theEast Central State Marketing Board are given in the Supplementary Annexes(Supplement 12).

14. The State Ministry of Works and Transport (MWT), is responsible forthe building and maintenance of roads. Under the project, earth roads wouldbe built and upgraded by a road unit under SMU, but subsequent maintenancewould be the responsibility of MWT (for Road program see Annex 4).

15. The Agricultural Development Authority (ADA) of the East CentralState was established by an edict dated May 21, 1973, but taking effect fromJanuary 1, 1973. ADA is the successor to the Agricultural Development Cor-poration and before that the Eastern Nigerian Development Corporation. Thelatter served the former Eastern Region. ADA took over all the projects ofthe Ministry of Agriculture that were designed to be revenue earning. SinceMay 1974 ADA has been placed under the Ministry of Agricultural Production andAnimal Husbandry (MAPAH) (see para 2) and although it will remain an independentauthority ADA will report to MAPAH instead of reporting directly to the StateAdministrator as was done before May 1974.

NIGERIASMALLHOLDER OIL PALM PROJECT

EAST CENTRAL STATEOrganization Chart of Cooperative Division

REGISTRAR OFCOOPERATIVE SOCIETIES

DEPUTY REGISTRAR

|DEVELOPMENT AND ACCOUNTS AND LEGAL AND STATUTORY AGRICULTURAL AND COOPERATIVE EDUCATION AND PUBLIC APEX COOPERATIVESUPERVISION SECTION AUDIT SECTION DUTIES SECTION INDUSTRIAL CREDIT RESEARCH SECTION ENLIGHTENMENT SECTION SOCIETIES SECTIONr ~~~~~~~SECTION RSAC ETO NIHEMN ETO OITE ETO

DEVELOPMENT | ACCOUNTS |INQUIRIES | AGRICULTURAL RESEARC EUATION COOPERATIVE BANKCREDITSEDCTO .. ERTIA

SUPEVISIN A.IT.TIO INDSARILITEDIT UELICCOSMRSUPERVSION AND SURCHARGE INDUSTRIAL CREDITS PLANNING ENLIGHTENMENT |RA|ZCON

STATISTICS COOPERATIVE UNION

COOPERATIVE

PRODUCE MARKETINGIORGANIZATION

FIELD EXTENSION UNDER 38 DIVISIONAL COOPERATIVE OFFICES COOPENTIVE

DEVELOPMENT

ASSOCATION

World B..k - 8729

ANNEX 2

NIGERIA


EAST CENTRAL STATE

Planting program under the project

1. The phasing of the planting of a total of 16,000 ha under theproject in East Central State is as follows:

ha planted 1976 1977 1978 1979 1980 Total

Smallholder 2,000 3,000 3,000 4,000 4,000 16,000

2. Approximately 25% of the planted area will be in the western partof the project area and 75% of the planted area will be in the eastern partof the project area.

3. The project is Phase 1 of a program ultimately scheduled to plantaround 32,000 ha of smallholder oil palm plantings. In Phase 2, another 16,000ha of smallholder plantings will be established.

4. ADA is planning to establish a nucleus estate south and west ofOwerri. Assistance has been asked from SOCFINCO. (Details are in Annex 3,para 18)

1LNINEX 3Page 1

NIGERIA


EAST CENTRAL STATE

Organization and Management

1. Project implementation would directly involve three organizations,namely:

The Smallholder Management Unit (SMU) - which would be responsiblefor implementing the new planting/replanting program for small-holders;

The Agricultural Development Authority (ADA) - which would beresponsible for constructing and operating central processingmills and establishing a smallholder fruit collection system;and

The proposed Federal Department of Agriculture's - Monitoring andEvaluation Unit (MEU) 1/ - a section of which would be responsiblefor monitoring and evaluating progress in tree crop projects andassisting in planning future development programs for the sector.

A. Smallholder Management Unit

General Objectives

2. A Smallholder Management Unit (SMU) would be established to im-plement the smallholder replanting program. The SMU would have a high de-gree of financial and administrative autonomy and would report to theMinistry of Agricultural Extension (MAE). A Steering Committee comprised ofrepresentatives of relevant Government agencies would be responsible for de-termining SMU policy and approving development/operations programs and budgets.When establishing the SMU, a consulting firm acceptable to Government and theBank would be engaged to set up a system of mechanized accounts that meets theneeds of the smallholder project. The same firm would be asked to advise onthe type and venues for training the staff required to operate the system.

3. SMU headquarters would be in Umuahia with Regional Units located atUmuahia, Owerri and Aba. SMU would be staffed primarily with personnel either

1/ For details on MEU see Supplementary Annexes (Supplement 4).

ANNEX 3Page 2

seconded from the Ministry of Agricultural Extension or recruited elsewhere

in Nigeria. It must, however, be emphasized that the technical and financialdirection of the tree crop projects will require well qualified and experi-

enced staff (para 7). SMU would be responsible for appraising new planting/

replanting applications and providing the technical and financial servicesinvolved in the field establishment and post maturity stages. The plantingtechniques and standards to be followed by SMU would be those agreed with the

proposed Tree Crop Section of the Federal Department of Agriculture's Monitor-ing and Evaluation Unit (MEU) and the relevant Federal Research Institutions.

The Steering Committee - Its Composition and Functions

4. The Steering Committee would be comprised of the following:

i) Chairman - Permanent Secretary of Ministry of Agricultural Ex-tension;

ii) Permanent Secretary to the Ministry of Finance or his representative;

iii) A senior representative of the Cooperative Division of the Ministryof Cooperatives;

iv) A senior representative of the Ministry of Economic Development andReconstruction;

v) The General Manager of ADA;

vi) A representative of the Federal Ministry of Agriculture;

vii) The General Manager of SMU - who would be Secretary; and

viii) The Chief Agricultural Officer of MAE.

The Chairman would be authorized to co-opt up to three additional nonvotingmembers to the committee and during the road improvement period, a represen-tative of the Ministry of Works and Transport would be so co-opted. A quorumwould require 6 voting members and in the event of a tie, the Chairman wouldhave a casting vote.

5. The Committee would meet quarterly, and its principal functions wouldbe to:

i) determine policy;

ii) appoint the General Manager, Controller of Field Operations and theController of Finance, for which Bank concurrance would be required;

iii) review the organizational structure (see Charts attached to this Annex)

of the SMU, including terms of staff employment;

ANNEX 3Page 3

iv) approve the annual development/operational programs and budgets;

v) review quarterly progress reports and approve any program amendments;and

vi) approve the annual report and accounts.

Management Structure and Staffing

6. Management Structure. The basic management structure is outlinedin Charts 1 and 2, attached to this Annex, the main divisions of function being:

i) headquarters staff directing and supervising the technical andfinancial services being operated by the Regional Units; liaisingclosely with the Tree Crop Section of MEU in evaluating ongoingand planning future programs, establishing training programs forstaff and farmers;

ii) financial control, including budget preparation, control ofsmallholder grant/credit and fruit payment accounts, internalaudit and general administration; and

iii) the Regional Unit staff responsible for the distribution andsubsequent appraisal of applications, supervision of grant/credit services, providing extension and other services tothe farmers.

When ADA's subsidiary's central processing mill establishes a fruit collectionsystem, the Regional Unit staff will need to liaise closely with the mill toensure that the smallholders both understand and utilize the system. Deductionsfor loan repayments would be made from the value of fruit purchases. SMU'sController of Finance would be responsible for calculating: (a) the loan re-payments due to the State Government; (b) the balance to be passed on to theCooperatives; and (c) the part of that balance to be distributed to the indivi-dual producers in payment for fruit sold to the central mill.

7. Staffing. The project's technical and financial direction wouldrequire suitably qualified and experienced staff, recruited internationallyif necessary. Middle level technical and administrative positions would befilled by professional or senior technical grade officers recruited fromwithin the State or from other States in Nigeria. Lower level field andadministrative staff would be recruited from existing Government agencies orthe private sector. Details of the numbers and phasing of professional andtechnical staff requirements are given in Annex 5, Tables 5 and 6.

8. The Genera_l anager - the chief executive of SMU would be delegatedfull responsibility for implementing the new planting/replanting program.He would be directly responsible to the Permanent Secretary of the Ministryof Agricultural Extension. The person appointed should have a professionalqualification in agriculture, and at least 10 years experience, 5 of whichshould have been in a senior administrative position.

ANNE X 3Page 4

9. The Controller of Field Operations - would be responsible for organi-zing and directing the technical aspects of the program, including nurserywork, appraisal of applications, supervision of planting and maintenance inthe immature and mature stages. He would also be responsible for organizingin-service training for all levels of field staff. The person appointedshould have had at least 8 years experience of tree crop planting (oil palm,cocoa or rubber) preferably at a senior management level with a commercialorganization.

10. The Controller of Finance - would be responsible for the generaladministration of the SMU and all project financial controls and procedures.This man would need to be a well qualified accountant with at least 8 yearsexperience at senior management level preferably in agro-industry.

11. Regional Unit Managers - would be in charge of the field operationsat regional level and should be Senior Agricultural Officers (SAO) with about3 years experience at that level. Preference would be given to SAO's whohad experience of modern oil palm planting techniques, but in any event, theseofficers would be given in-service training courses at NIFOR. Other professional,technical and administrative staff of the Regional Units would mainly be re-cruited from Government services or directly from tertiary/secondary leveleducational institutions. In order to equip such staff with the specializedtechniques required for implementing this project, appropriate in-servicetraining would be given at selected institutions.

Operational Procedures

12. Operational procedures are described in the Supplementary Annexes(Supplement 9) and the grant/credit procedures are detailed in Supplement 10.

Training

13. Technical training at all levels will comprise a very important sec-tor of project activity. To ensure an effective start-up in 1975, intensivetraining in selected spheres such as nursery and field planting techniqueswill need to be started as soon as possible. The type of training involvedcan be divided into four basic categories: Senior Officers, Nursery Staff,Field Staff, and Farmer Training. A schedule and estimate of the cost oftraining are given in Annex 5, Table 8. More details are in the Supple-mentary Annexes (Supplement 11).

B. Agricultural Development Authority 1/

14. The Agricultural Development Authority (ADA) of the East CentralState was established by an edict dated May 21, 1973, but taking effect from

1/ As announced by the East Central State government in its budget messageof May 1974, ADA will now report directly to the Ministry of AgriculturalProduction and Animal Husbandry (MAPAH) and not as before to the StateAdministrator.

ANNEX 3Page 5

January 1, 1973. The edict provides that "the Authority, in pursuit of agri-cultural development, shall be engaged in the production, processing, storing,packaging, marketing, development and manufacture of agricultural products."

The Edict also provides that:

"The Board shall consist of -

(a) His Excellency, the Administrator, who shall be the Chairman;

(b) the Commissioner for Natural Resources and AgriculturalExtension, who shall be the Deputy Chairman; 1/

(c) the President;

(d) three other persons who shall be appointed by the Administrator:

Provided that the Administrator may in his discretion, from timeto time appoint any other person to be a member of the Board."

The senior management of ADA includes the President, the Executive Vice-President, Secretary/Vice-President Administration, Financial Controller(also a Vice-President) and Chief of Operations.

15. When ADA was formed, it took over all the projects of the Ministryof Agriculture that were designed to be revenue earning. There are presentlyover 60 projects, with the bulk of the investments in food production andrubber and oil palm estates. They represent a total investment of over N 2.6million, with the 10 largest projects accounting for some N 2 million. Few ofthe projects are profitable (although many of them are still in the developmentstage) and, after charging Head Office costs, they showed an overall net lossof some N 400,000 in the year ended March 31, 1973.

16. ADA's management is conscious of the need to put its operations on asound commercial basis. It is presently reviewing its investments and wishesto discontinue or dispose of those which show no prospect of becoming profit-able. It sees ADA's future role as that of:

(a) identifying and developing profitable opportunities in agriculturalproduction and processing; and

(b) encouraging private investors to participate in, or take over,projects as they develop.

17. Under the proposed project, ADA would be responsible for the establish-ment and operation of the oil mills and fruit collection system. For thispurpose it would form a subsidiary company. ADA also proposes to ask SOCFINCOfor management assistance; the detailed arrangements have still to be defined

1/ This will now be the Commissioner of MAPAH.

IANNEX 3

Page 6

and negotiated. SOCFINCO is an associate of SOCFIN (Societe Financiere desCaoutchoucs) a Belgian company, and the Dutch company HVA. These companies,or their associates, have provided management assistance to a number of BankGroup projects, including the oil palm project in Ivory Coast and the sugarproject in Ghana.

18. ADA has entered into an agreement with SOCFINCO to develop between100,000 and 200,000 acres (40,000 - 81,000 ha) of smallholder plantings andestates. The first stage of this oil palm development plan consists of soilsurveys linked with a sociological study of suitable areas in the State. Thiswould result in a feasibility study for an estate program of about 100,000 acres(40,000 ha) and recommendations as to its location. The feasibility study wouldbe completed by early 1975. ADA proposes to retain SOCFINCO services for themanagement of the estates, that will be proposed in the feasibility study, andfor the construction of the related palm oil mills. In view of the overlappinginterests of this program and the proposed project and because of East CentralState government's intention to approach the Bank for possible financing ofthis program, consultations have been held between the Bank, East Central StateGovernment, FMG, ADA and SOCFINCO.

19. It is proposed for this project that two new oil mills would beestablished by 1981 and 1983. One of the mills would deal wholly, and theother partly, with project production and their costs would be financedaccordingly. ADA's subsidiary would engage consultants to prepare the designand tender specifications for the mills. The fruit collection scheme wouldbe organized in close coordination with SMU on the lines outlined in Annex 4.A Transport Manager, under the Oil Mill Engineer, would be responsible fororganizing fruit collection and recording deliveries by individual small-holders as weighed and graded at the loading points. This information wouldbe transmitted to SMU for payment to farmers after deducting loan repayments.

20. Under the subsidiary loan agreement with the State, ADA's subsidiarywould undertake to construct and operate a central mill and fruit collectionsystem capable of handling the production of the areas replanted under thesmallholder component of the project. Prior to any funds being channelled toADA's subsidiary for mill and fruit collection development, SMU and the TreeCrop Section of MEU would confirm that the proposals of ADA's subsidiary werein line with the crop production schedules of SMU's planting program.

21. When purchasing fruit from smallholders, the mills would adopt anagreed pricing formula as determined by the State Price Policy Committee (seebelow). ADA's subsidiary would also channel the cash due on fruit purchasesto SMU where deductions for loan repayments would be made prior to handingover the balance to the cooperatives for distribution to the farmers.

22. On the other hand, SMU would be responsible for seeing that anacceptable percentage (to be agreed) of the projected crop production levelsare attained and that the smallholders participating in the program sell theirfruits to the central mill. This latter factor should be covered by the loanagreement between the smallholder and SMU. However, in the event of it proving

ANNEX 3Page 7

difficult for SMU to take over the management of defaulting smallholder plantings,t-+.y financial losses by the central mill that could be clearly demonstrated ashaving resulted from smallholder crop shortfalls, would have to be made good,rom State Government funds. It must, however, be emphasized that the under-rfiting of such losses by Government would not be permitted to be used as aaeans for ADA's subsidiary to cover up inefficiency on the part of its millmanagement.

C. Price Policy Committee and Fresh Fruit Price Calculation

Price Policy Committee

23. A Price policy committee would be appointed and would comprise:

(a) Permanent Secretary of Ministry of Finance - Chairman;

(b) Permanent Secretary of Ministry of Agricultural Ex-tension;

(c) Registrar of the Cooperative Societies or his representative;

(d) General Manager of ADA or a senior representative;

(e) General Manager of SMU - Secretary;

(f) General Manager of ADA's subsidiary;

(g) Representative of the Marketing Board;

(h) Two representatives of smallholders; and

(i) Representative of NPMC.

The committee would determine a purchasing price formula which ADA's sub-sidiary would be obliged to apply in calculating the price it would pay forffb. Using this formula ADA's subsidiary from month to month, or othersuitable time span, would announce a price to be paid for ffb. Any departurefrom this formula would be referred back to the Committee prior to implementation.

Price Calculation

24. The price paid per ton of ffb would be determined from the revenuereceived for the palm oil and kernels produced from a ton of ffb after allowingfor the costs of fruit collection and processing, including depreciation, taxesand financial charges. The financial charges would be adequate to provide areasonable return on the required capital investment, which return would besufficient to cover interest charges, and margins for building up reservesand paying dividends to the shareholders of ADA's subsidiary. The return on

ANNEX 3Page 8

capital would be measured on the basis of a percentage of net revalued fixedassets plus a reasonable allowance for working capital; this percentage wouldbe agreed by the price policy committee within a suggested 10% - 15% range.Depreciation on fixed assets would be taken on a straight line basis forshort-lived assets, such as those used for fruit collection; for longer livedassets, such as the mill, it is suggested that a more appropriate basis wouldbe an allocation over output processed compared to the estimated processingcapacity of the mills over their estimated remaining useful life. Havingdeducted these costs, calculated on a cost/ton basis, from the revenuereceived from the sale of one ton or produce, the price per ton of productsnet of all costs is known. This would be the base price.

25. Applying the appropriate extraction rate of products to bunches tothis base price, the price per ton of ffb can be calculated. Extraction ratesapplied would be related to the mill's previous three months processing results.Having determined an ffb purchase price discount rates would need to be deter-mined in order to take account of different grades of fruit. Further detailsare in the Supplementary Annexes (Supplement 12).

26. Any profits in excess of the agreed return on capital would bedistributed to the smallholders in the form of a cash bonus at the end of,say, each half-year. The amount paid to the individual smallholders beingproportional to the quantity of fruit sold to the company over the periodconcerned.

NIGERIA


EAST CENTRAL STATE

SMALLHOLDER MANAGEMENT UNIT

MINISTRY OF AGRICULTURAL | Chairman Permanent Secretary MAPAH

PRODUCTION & ANIMAL HUSBANDRY Permanent Secretary Ministry of Finance___________________________________ ~~~~~~~~or his representative

* Senior representative Ministry of Economic

_______________________________ Development and ReconstructionSenior representative Cooperative

STEERING COMMITTEE _ __________ Division, Ministry of Cooperatives

[ EXTERNAL AUDIT ] ______~_____________ *___4 General Manager ADA

[EXTERNAL AUDIT] m m m m m m iim m im Chief Agricultural Officer, MAEli Senior representative Federal

[ ADA ] _ _ _ _ _ _ __ _ _ _ _ _ ll SMU - GENERAL MANAGER1 l Ministry of Agriculture and NaturalADA ------- -------------- SM ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Resources; _ on_ ;, ecretary. SiviU - Gnerai Mvianager

I I;. _ _ _ . 1 S~~~~~~~~~~~~~~~~CONTFOLR OF

INTERNAL1 TRAIN;IN l PLANNING, A~ND |r REGIONAL _ EGIOA lEl REGIONAL | |SENIJORRCREDIT ||SENIORl

I~~~~~~~~~~~~~~N I

AUDIT ll OFFICER ||EVALAIN l NIT UNIT l NIT | |OFFICER ACCOUNTAMN |

_______________________L_____^_____- ~~~~~~~~~~~~~~~ADMINISTRATION|AND PURCHASES|

World Bank-8365(2R)

NIGERIA

SMALLHOLDER OIL PALM PROJECTEAST CENTRAL STATE

REGIONAL UNIT

UNIT IO MANAGER (SAO) O

r~~~~~~~~~~| CREDIT | 5 AGRICULTURAL 5/1 AGRICULTURAL |/1 AGRICULTURALOFFICER OFFICER (AO) OFFICER (AO) OFFICER (AO)

ADMINISTRATIONR ECOR DS

I . - . . ~~~~~~~~~~~~~~~~STORES

LOAN 5/10 AGRICULTURAL| 15/1° AGRICULTURAL 5/1O AGRICULTURALASSISTANTS ASSISTANTS (AA) ASSISTANTS (AA) ASSISTANTS (AA)

SPECIAL LABORERSX SPECIAL LABORERS SPECIAL LABORERS1 FOR EACH AA 1 FOR EACH AA 1 FOR EACH AA

World Bank-8362

ANNEX 3Table 1

NIGERIA

SMALLHOLDER OIL PAI PROJECT

EAST CENTRAL STATE

Agricultural Development Authority

Summarized Accounts for the Year Ended March 31, 1973

Consolidated Balance Sheet(N '000)

Net Fixed Assets 68Investment in Projects 2,604 2,672Current Assets

Fixed deposit 100Consumable stores 90ECS Government 12Advances & 174

Refundable bxpenses 715 1,091Cash ard bank balances

Current LiabilitiesBank overdraft (50)Creditors & Accrued expenses (140) (190)

Total Net Assets 3,573Represented by:Funds from Government

Balance at April 1972 1,115Received during the year 2,258 3,373

Government Ioan (unsecured) 200

Consolidated Trading and Profit & Loss Account

Sales ) 526Cost of production 659Less Increase in inventory 196

Overhead expenses 207Depreciation 48Head office 223 941

Net Loss (11)

ANNEX 4Page 1

NIGERIA


EAST CENTRAL STATE

Establishing Processing Facilities, Fruit Collection System and a Road Network

A. Processing Facilities, Phasing and Costs

1. At full maturity in 1988 project output would be about 160,000 tonsof ffb annually. It is estimated that about 25% of this production will comefrom the western and about 75% from the eastern part of the project area.

2. Monthly peak production is estimated at 12.5% of annual production.This percentage is arrived at, based upon a study of the production historyof Ajagbodudu estate in the Mid-Western State. Peak monthly production atfull development is therefore estimated at 20,000 tons of ffb (5,000 tonsin the western and 15,000 tons in the eastern part of the project area.)Assuming 500 working hours in a month, mill capacity required would be about10 tons/hour in the western area and 30 tons/hour in the eastern area. Anultimate capacity of 30 tons/hour is proposed in the eastern area and for thewestern area it is proposed to provide finance for a 10 tons/hour line ofequipment which would be incorporated in a larger mill that ADA plans to buildin conjunction with a planned estate project. (See Annex 3, para. 18) Sincethis project is the first phase of a larger program, the capacity of themills in the next phase of the program would need to be increased and in viewof this, mills should be designed so as to allow for expansion.

3. Phasing of mill capacity (details are in table 1) is as follows:

1981 1982 1983 1984 1985--------------(tons of ffb/hour)------------

Eastern Area 10 10 20 20 30Western Area - - 10 10 10

4. It is assumed that in 1980 fruit would either be processed in ADA'sexisting pioneer mills or sold to local processors; so would fruit produced inthe western area in 1981 and 1982, since the 10-ton line of equipment would becommissioned in 1983.

5. When selecting mill sites, it is essential to have a reliable andadequate supply of water as well as a good access road for fruit delivery and

ANNEX 4Page 2

the evacuation of products. In the eastern area Owerri-Nta (see map 10965) wouldprovide a good site for a mill. No site for a mill has been selected in thewestern area since this depends largely upon the future plans of ADA. However,a mill could be sited at Ihiagwa on the river Otamiri.

6. Estimates of mill costs are given in Table 1 and are based on ananalysis of (a) the Okitipupa mill contract between Speichim and the WesternState Ministry of Agriculture and Natural Resources and (b) the Hinvi Oil Millcontract between Usine de Wecker and Sonadar in Dahomey. These cost figuresreflect investment for mills to be commissioned in mid-1973. In order to re-flect end 1973/begin 1974 prices, the cost of equipment has been increased by10% and the cost of civil works by 12% (Annex 5, Table 9). 1/ Estimates ofthe operating costs of the mill are given in Table 2.

7. Project costs include all costs for the 10-ton line of equipment andits installation in ADA's future mill in the western area, and all costs forcivil works, equipment, and housing necessary for the processing of 20 tons/hourin the oil mill at Owerri-Nta. Expansion of this mill to 30 tons/hour by 1985would be financed from ADA's own funds.

B. Fruit Collection System

8. At full maturity in 1988 there would be about 160,000 tons of fruitbunches to be delivered to the central mills for processing. During the peakperiod 2/, there would be a daily production of about 600 tons in the easternand about 200 tons in the western part of the project area.

9. The organization and management of collection from project smallholdingswould be the responsibility of ADA.

10. Details on planning and organizing fruit collection systems arein the Supplementary Annexes (Supplement 8).

11. At full maturity in 1988 about 120,000 tons will be processed at theproposed mill at Owerri-Nta while the balance (about 40,000 tons) will be pro-cessed at the mill in the western part of the project area. Mechanical loadingusing rear-mounted cranes with built-in weighing scales would be used in bothcases. In the western part of the project area the smallholder production areaswould be scattered over a radius of about 20 kilometers from the central milland a single stage collection system using 7-ton tipper trucks (with crane andscales) is proposed. In the eastern part of the project area the smallholderproduction areas are located within areas that range up to 37 kilometers fromthe central mill. On the basis of cost comparisons (see Table 3) it is proposed

1/ Half of the assumed 1973 inflation rates.

2/ Based on monthly peak production (12.5%) and 25 working days/month.

ANNEX 4Page 3

that a two-stage system using tractor-trailers and tipper trucks be used forthe collection of fresh fruit bunches. Nine central collection points withloading ramps, storage hoppers and shelters for equipment and consumable supplies(see attached chart) would be established; the central mill would be the 10thcollection point for the area. The collection points are tentatively locatedon map 10965.

12. In the western part of the project area loaded trucks would return tothe mill and after weighing and unloading into the fruit reception bays, departon the next round of collection. In the case of the eastern part of the projectarea, 60-65 hp. tractors pulling 6-ton trailers would collect fruit from thesmallholders. A proposal to have each tractor pull two 6-ton trailers at alltimes is not considered to be generally feasible due to the condition of theroads and the terrain. However, such an operation is considered suitable forshort periods, during the peak production season. The tractor-trailer unitswould unload the fruit bunches into the 7-ton storage hoppers to be erected atthe central collection points 1/; 7-ton tipper trucks will be gravity-fed fromthese hoppers and will then transport the bunches to the central mill. Thesetrucks will not require any laborers.

13. It is estimated that the collection trucks used in the western partof the project area would be able to make about 4 trips during a 10-hour workingday and haul about 28 metric tons of ffb to the mill. At this rate, duringthe peak month at full maturity, 10 tipper trucks (including reserves), 10net delivery units and 400 nets would be required for this part of the projectarea. It is estimated that the tractor-trailer units in the eastern part ofthe project area would be able to make 5 trips during a 10-hour day and haulabout 42 metric tons of ffb (assuming that each tractor, on average, will beable to pull two trailers during two out of every five trips) to the centralcollection points. At this rate, during the peak month at full maturity,16 tractors, 23 trailers, 16 net delivery units, and 640 nets are required.Night loading from smallholder areas both by trucks and tractor-trailers isconsidered to be impractical. However, tipper trucks transporting bunchesfrom hoppers to the central mill would be able to operate at night and, as such,work up to about 16-18 hours during the peak days. It is assumed that on a16-18 hour working day, each tipper truck would be able to make about 6 tripsand transport 42 metric tons of ffb to the mill. In order to transport about600 metric tons of ffb during peak days to the Owerri-Nta Mill, about 17 tippertrucks (including reserves) are required.

1/ Each collection point has more than one hopper, and the average capacityof the collection point is 46 tons. Transport to collection points isrestricted to 10 hours a day. However, transport from collection pointsto mills could continue for 24 hours at peak. A mill of 30 tons/hourthus requires storage of (24 hours - 10 hours = 14) x 30 = 420 tons,which is about 46 tons average for each of the nine collection points,excluding the collection point at the mill.

ANNEX 4Page 4

14. All the central colllection points have been located so as to keepthe smallholder areas within a radius of 5-6 kilometers in order to be able toderive maximum benefits out of the slow moving short-haul tractor/trailers.These are, however, approximate locations, and the exact site should be chosentaking into consideration such factors as proximity to paved or truckable roads,availability of ample space for erecting the storage hoppers and ramps, garagingfacilities for tractors, and storage space for consumable supplies, etc. Parti-cular emphasis should be given to finding sites with natural elevation thatcan be used for constructing the loading ramps, thus reducing construction costs.It is estimated that the normal cost of constructing ramps would be reduced byabout 40% when taking advantage of the natural elevation.

15. The total costs of smallholder fruit collection as outlined aboveis given in Table 4 (eastern part project area) and Table 5 (western partproject area).

C. Road Improvement 1/

Introduction

16. The East Central State has a well developed commmunication system,consisting of about 18,000 km of roads, 290 km of railways, 400 km of navigablerivers and domestic air transport provided by the Nigerian Airways. The 290km of single track railway passing through the state is operated by the Niger-ian Railway Corporation and connects the northeastern part of the countrywith Port Harcourt. It is an important link in the export of products fromthe north, but does not play an important role in transportation of commoditiesinside the State because of the extensive road network and the relatively shortdistance to the port. The 400 km of navigable river, such as the Niger River,play an important role in the transportation sector of the State, especiallyin the coastal area where road construction is inhibited by the natural obstaclessuch as river deltas and swamps.

17. The road network consists of about 730 km of Federal "A" roads;2,150 km of "B" roads; and about 15,000 km of earth roads.

Cost of Reconstruction

18. The upgrading of earthroads to the standards discussed in the Supple-mentary Annexes (Supplement 7) would be done by a construction team workingunder the supervision of a road engineer and his staff. Costs, includinggrading and labor, but excluding supervision and depreciation, are estimatedas follows:

1/ More details are in the Supplementary Annexes (Supplement 7).

ANNEX 4Page 5

(a) N 380 - per km for improving an existing earth road to tractor/trailer standards;

(b) N 560 - per km for improving an existing earth road to truckstandards;

(c) N 430 - per km for constructing a new earth road to tractor/trailer standards; and

(d) N 610 - per km for constructing a new earth road to truckstandards.

If depreciation is included, the above costs, are respectively N 495, N 675,N 545, and N 725.

Administration of the Construction Program

19. The earth roads program would require experience and skills which arein short supply in Nigeria. Neither the Ministry of Works and Transport (NWT)nor the consultants in the State (whether local or foreign) appear to have wideexperience in building and maintaining all-weather earth roads. However, thetimber companies, which construct such roads for extraction purposes, havepersonnel with adequate qualifications.

20. A road engineer should be engaged to organize and supervise theroad construction program, assisted by two supervisors and two clerks. Theroad engineer should have wide experience in the construction of low-costall-weather earth roads and would preferably be recruited from the timberexploiting companies.

21. Of the 946 km of collection roads involved in the project, all earthroads (571 km) need improvement, 156 km to truck standard and the remaining 415km to standards suitable for tractor/trailer traffic.

22. The improvement of the 571 km of roads would be executed by aconstruction team working under the supervision of the road engineer. Con-struction time would be about 4-1/2 years. After completion of the work,the equipment would be handed over to MWT on the understanding that it wouldbe used exclusively for the maintenance of the roads within the project area.The repair of the bridges would be undertaken by the local contractors.

The Road Network

23. The road network needed for the 16,000 ha smallholder project isshown on map 10965. It has been assumed that planting will be confined toareas that lie within 600 meters on each side of the collection road. It isfurther assumed that only 12.5 ha per km of paved road and 20 ha per km ofearth road will be used for replanting palm trees under the project.

ANNEX 4Page 6

24. The total length of roads that need to be developed is shown below:

East West Total

Paved roads to be improved 282 93 375

Earth roads, improved to truck standards 12 144 156

Earth roads, improved to tractor standards - 415 415

294 652 946

25. Based on the above assumptions, total hectarage of smallholder plant-ings that could be developed along this road network is:

Paved roads 375 x 12.5 = 4,688 haEarth roads 571 x 20.0 = 11,420 ha

16,108 ha

Thus, this is sufficient for the planting of 16,000 ha.

26. The costs 1/ of reconstructing earth roads are detailed in Annex 5,Table 7 and summarized below:

Existing earth roads (truck standards) 156.0 at N 560 = N 87,360

Existing earthrroads (tractor standards) 415.2 at N 380 - N 157,776N 245.136

or rounded N 245,200

Repair 3 bridges 30,000

Capital costs equipment 71,000N 346,200

1/ Cost of supervision by the road supervision team of SMU not included.Supervision costs amount to N 66,875 over the five-year supervisionperiod.

NIG-RIASMALL HOLDER OIL PAL'M PROJECT, EASr CENTRAL STATE

Fruit Collection CenLre

z

K8> ~~30 m. | '16 m. 30 m.

z~~~~~~~~~~~~~~~~~~~~~~~2~~~~~~~~~~~~~~~

~~~~~~~~~~I L

A A

to

Steel hoppers

PLAN

30 m 16mm.30 m.

= ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~LO

SECTION A-A

10im. 4m., 5.6m..

L2QL-~~~~~~~~~~~~~~~~LSECTION B-B

World Bank-8428

NIGERIA

ShALLOiOLOER OIL PALM PROJECT

EAST CENTRAL STATE

Palm 0O1 Mills. Capital Expenditure

UnitCosts 1970 1979 1980 1981 1982 1983 1904 1985 1986 1987 1988 1989 1990

capaciiT Ri quired ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OnwardsCuesity Resistre

Eastern Area 1'

Predantien of FFB. (sterEi tens) - - 3,750 13,125 26,325 46,125 71,475 91,200 105,300 116,400 120,000 120,000 120,000

Peek predu-tion 2/ (mattri t-r/mna.h) - - 469 1,641 3,291 2,766 8,935 11,400 13,162 14,550 15,000 15,000 15,000Cepenity required 3/ (tans/ehor) - - 0.94 3.28 6.58 11.53 17.87 22.80 26.32 29.10 30.00 30.00 30. '0Capacity propreed Ttan/hour) - - - 5/ 10 10 20 20 30 30 30 30 30 30Capacity utili-etian (.) - - - 32.8 .65.2 57.7 89.4 76.0 87.7 97.0 100.0 100.0 100.0

Western Area , 4/

Prodentian of FFB (-rti Loa) - 1,250 4,375 8,175 15,375 23,025 30,400 35,100 38,h00 40,000 40,000 40,000

peak pradurtian 2/ (aetric toxu/n-anth) - - 156 547 1,097 1,922 2,978 3,800 4,388 4,090 5,0n0 5,000 9,000Cep-eity required 3/ (tens/hear) - - 0.31 1.09 2.19 3.84 5.96 7.60 8.78 9.70 10.00 10.00 10.00Capacity propserd (tanu/heur) - - - 5/ - 6/ - 6/ l0 10 10 10 10 10 10 10Cepecity atili-ation (%) - - - - - 38.4 59.6 76.0 87.8 97.0 100.0 100.0 100.0

7/Innesinent Casts

Oseri Nti Mill 8/

Civil WeeksPh9n / -409 400 75- -------

Ph.en 2 10/ - - - - 15

Phae 3 11/ - - - - - - 25

Total - 400 400 75 15 - 25

Equip .. t

Phse I q/ - 600 600 70 -PFes. 2 10/ - - - - 435 - - - - - -Phase 3 11/ - - - - - - 560 -

TotAlTetl - 600 600 70 435 - 560 - - - -

FPer Wheel Drion 4,100 - 4.1 - _ 4.1 _ - 4.I - _ 4.1

linurtn8

Engineers 10,000 12/ - - (1) 15.0 (1) 10.0 (2) 20.0Technioi.nx 2,000 - - (5) 10.0 (9) 18.0Leberers 700 - - (14) 9.0 (14) 9.8 (35) 24.5 - (2) 8.4

Total Hoonin .i34.8 37.8 44.5 - 8.4

Western Aene 13/

Civil Works - - - - - 95 - ' -

Equippent - - - - - 625

V/ 757. af total prod-ctioo in Oouto-n Arro.

2/ Monthly peak prad-etiun ia 12.55 of anoual prod-tion.

3/ Tone/hour based an 500 h-t- per .o.ih.

4/ 25% of total praduction it Weetern Area.

5/ Craps asnewod in be sold or proPiisnod In ADA'. neiitina pionert nillO.

6/ Crops eithen sold or prIonesed E Onrli-Nta Mill xr in ADA'w enjEtinr pionner milk5-

7/ BM.ed ex a-t-els Ear mills tE bn -uteistiooed in Mid 1973. Fu pro-ent .oste (ns. Anex 5 Tablr 9) i order to retflet end 1973prices civiil wrks increa snd by 12% and qeip,sent by 1O'.. Vehinle qud -u-xio unit route reflert nd 1973 prim.

8/ In Ertsern Area.

9/ Par 10 rons/hbor

10/ From 10 tone to 20 tone/hour

II/ From 20 tsns ro 30 taos/hbor.

12/ For Mill Mana.gr hour -nit .ot is N 15,000

13/ Projent perticipatixn Cot one 10 tan li-n of quipment in e Mill to bo extoblinhed by ADA in the Western Area.

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NIGERIA

SKA2LLHOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Coparison Bet..er gingle St.ge a-d T.o Stage ftmit Collertion RysteS,

E.stern Ares Western Area

siegle stone two tage sIngle t.ge 21 two stage

Unit r..sts Grit rests

Nairs (Uits) (Nsira '000) (Gnits) (Nairs '000) Nairs (Utits) (Esirs '000) (Units) (N.irs '000)

PerSe.-el Cost.transport ososger 5,200 (1) 5.2 (1) 5.2 5,200 (1) 5.2 (1) 5.2

r1.rk 750 (1) 0.8 (1) 0.8 750 (1) 0.8 (1) 0.8

driver 640 (63) 40.3 (50) 32.0 640 (20) 12.8 (19) 12.2

eehsnit driver 950 - - (1) 1.0 950 - - (1) 1.0

sera= i helper 600 - - (1) 0.6 600 - - (1) 0.6

load.r 430 (68) 29.2 (32) 13.8 430 (20) 8.6 (12) 5.2

Watching 460 - (18) 8.3 460 - (12) 5.5

total pe-soreel 75.5 61.7 27.4 30.5

Neise...... sod Operstiosusegr cr800 (1) 0.8 (1) 0.8 S00 (1) 0.8 (1) 0.8

tra rto/treil... 2,600 - (16) 41.6 2.600 . - (6) 15.6 7/

Net Deliver Unit 260 (29) 7.5 6/ (16) 4.2 260 (10) 2.6 (6) 1.6

tipper track 6,700 (34) 227.8 I/ (17) 113.9 4,500 (10) 45.0 (7) 31.5 8/

r.psir trnrk 4/ 6000 - - (1) 4.0 4,000 - . (1) 4.0

serice truok 314,000 - (1) 4.0 4,000 (l) 4.0

total operating 236.1 168.5 48.4 07.3

DearerRatiostrasepart a.sagr rer 1,067 (1) 1.1 (1) 1.1 1,067 (1) 1.1 (1) 1.1

trarter with er.ase 1,500 - - (16) 24.0 1.300 . (6) 9.0

tra iler 375 . (23) 8.6 375 . (9) 3.4

Net Delivery Unit 200 (29) 3.8 (16) 3.2 200 (10') 2.0 (6) 1.2

tipper track 2,875 - - (17) 48.9 2,875 - - (7) 20.1

tipper track with erase 3,757 (34) 114.7 - . 3,375 (50) 33.8 -

repair track 31 2,500 - . (1) 2.5 2.500 - -(1) 2.5

aervire track 3/ 2,000 - (1) 2.0 2,000 - (1) 2.0

.set. 12 (1.160) 13.9 (640) 7.7 12 (400) 4.8 (240) 2.9

frait .slle.tisn rester 750 - (9) 6.8 750 . . (4) 3.0

road iepreset s!.-14,4 . 10.6 . 4.9 5.6

total 149.9 115.4 46.6 48.8

GPlAD TOTALS 461.3 345.6 122.4 136.8

ten ffb 120.000 120,000 40.000 40.000

N.eira/to. ff6 3.85 2.88 3.06 3.42

1/Refle-ts sctOl costs of two stage system is eastern are.

2/Reflects actual costs af single stage sytes Er western are.

3/ Only reed ir two Stage sYste.

4/ B-se on road setsack in seet (472.2 icr) snd west (144 kc) erd assuming thot for single stir system all rods reed to he irproved to truck etndd (N 675/Ike), and in two stage system to trartor standards (N 495 his)

Depreiated ovr 20 years.

3/Assume each truck ca oaks 3 trips/day or r-rry 21 tons. Peek of 600 tore requires 29 trucks pl-. 157 .reere rapacity.

/A.ssume 29 NDU's, Sinc they can econoies on tripe, ospered with the truaoks.

Z/ Assumes each tractor makes 5 trips sod carries 42 tons (2 trips with two treilers and 3 trips with 1 treiler). Peak of 200 ton requiran 3 trator pl.s I r.esev. Foc trailers tvoreere (additional storage).

I/ A.ssues each truk isk.e 6 tripe and carries 42 tons. Peak of 200 tons requires 5 trucks plus 2 reserve...

NIGERIA

SMALLI!OLDgR OIL PALNI PROJECT

EAST CENTRAL STATE

Snallholder Fruit Collection.Eastern Area(Naira '000)

UnitCosts 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

OnwardsInvestment Costs

Transport Manager car 3,200 (1) 3.2 - _ (1) 3.2 - - 3.2 - -Tractors with crane 6,000 (1) 6.0 (1) 6.0 (3) 18.0 (2) 12.0 (4) 24.0 (3) 18.0 (5) 30.0 (3) 18.0 (5) 30.0Trailers 1,500 (2) 3.0 (1) 1.5 (4) 6.0 (3) 4.5 (6) 9.0 (4) 6.0 (7) 10.5 (4) 6.0 (8) 12.0Net delivery units 800 (1) 0.8 (1) 0.8 (3) 2.4 (2) 1.6 (4) 3.2 (3) 2.4 (5) 4.0 (3) 2.4 (5) 4.0Tipper trucks 11,500 (1) 11.5 (1) 11.5 (3) 34.5 (2) 23.0 (4) 46.0 (3) 34.5 (5) 57.5 (3) 34.5 (6) 39.0Repair truck 10,000 (1) 10.0 - - - (1) 10.0 - - - (1) 10.0Service truck 8,000 (1) 8.0 - - - (1) 8.0 - - - (1) 8.0Nets 24 (80) 1.9 (40) 1.0 (200) 4.8 (180) 4.3 (320) 7.7 (260) 6.2 (400) 9.6 (300) 7.2 (440) 10.6Fruit Collection Centers 15,000 45.0 45.0 45.0 - - -

Total Investment Costs 89.4 65.8 110.7 48.6 107.9 67.1 114.8 68.1 143.6 98.0 1/

Of which: Local Coats 52.5 39.3 52.7 17.1 37.5 20.3 36.6 21.2 42.3 29.1Foreign Exchange Costs 36.9 26.5 58.0 31.5 70.4 46.8 78.2 46.9 101.3 68.9

Recurrent Costs

Staff/Salaries

Transport Manager 5,200 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2 (1) 5.2Clerk 750 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8Drivers 640 (4) 2.6 (7) 4.5 (16) 10.2 (22) 14.1 (31) 19.8 (37) 23.7 (43) 27.5 (46) 29.4 (50) 32.0 (50) 32.0Mechanic driver 950 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0Mechanic Helper 600 (1) 0.6 (1) 0.6 (.1) 0.6 (1) 0.6 (1) 0.6 (l) 0.6 (1) 0.6 (1) 0.6 (2) 0.6 'I1) 0.6Loaders 430 (2) 0.9 (4) 1.7 (10) 4.3 (14) 6.0 (20) 8.6 (24) 10.3 (28) 12.0 (30) 12.9 (32) 13.8 (32) 13.8Collection point watchmen 460 (6) 2.8 (12) 5.5 (18) 8.3 (18) 8.3 (18) 8.3 (18) 8.3 (18) 8.3 (18) 8.3 (18) 8.3 (18) 8.3

Total Salaries 13.9 19.3 30.4 36.0 44.3 49.9 53.8 58.2 61.7 61.7

Maintenance and Operation

Transport manager car 800 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8Tractors trailers 2,600 (1) 2.6 (2) 5.2 (5) 13.0 (7) 18.2 (10) 26.0 (12) 31.2 (14) 36.4 (15) 39.0 (16) 41.6 (16) 41.6Net delivery unit 260 (1) 0.3 (2) 0.5 (5) 1.3 (7) 1.8 (10) 2.6 (12) 3.1 (14) 3.6 (15) 3.9 (16) 4.2 (16) 4.2Tipper truck 6.700 (1) 6.7 (2) 13.4 (5) 33.5 (7) 46.9 (10) 67.0 (12) 80.4 (14) 93.8 (15) 100.5 (19) 113.9 (17) 113.9Repair truck 4,000 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0Service truck 4,000 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0 (1) 4.0

Total Operations and Maintenance 18.4 27.9 56.6 75.7 104.4 123.5 142.6 152.2 168.5 168.5

Total Recurrent Costs 32.3 47.2 87.0 111.7 148.7 173.4 196.4 210.4 230.2 230.2

Of which: Local costs 24.4 35.5 63.9 80.9 106.4 123.5 138.9 149.0 162.3 162.3Foreign Exchange Costs 7.9 11.7 23.1 30.8 42.3 49.9 57.5 61.4 67.9 67.9

Depreciation

Transport manager car 1,067 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1Tractor with crane 1,500 (1) 1.5 (2) 3.0 (5) 7.5 (7) 10.5 (10) 15.0 (12) 18.0 (14) 21.0 (15) 22.5 (16) 24.0 (16) 24.0Trailer 375 (2) 0.8 (3) 1.1 (7) 2.6 :10) 3.8 (14) 5.3 (17) 6.4 (20) 7.5 (21) 7.9 (23) 8.6 (23) 8.6Net Delivery Unit 200 (1) 0.2 (2) 0.4 (5) 1.0 (7) 1.4 (10) 2.0 (12) 2.4 (14) 2.8 (15) 3.0 (16) 3.2 (16) 3.2Tipper truck 2,875 (1) 2.9 (2) 5.8 (5) 14.4 (7) 20.1 (10) 28.8 (12) 34.5 (14) 40.3 (15) 43.1 (17) 48.9 (17) 48.9Repair truck 2,500 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5 (1) 2.5Service truck 2,000 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0Nets 12 (80) 1.0 (120) 0.2 (240) 2.9 (280) 3.4 (400) 4.8 (480) 5.8 (560) 6.7 (600) 7.2 (640) 7.7 (640) 7.7Fruit Collection Center 750 (3) 2.3 (6) 4.5 (9) 6.8 (9) 6.8 (9) 6.8 (9) 6.8 (9) 6.8 (9) 6.8 (9) 6.8 (9) 6.8

Total Depreciation 14.3 20-6 40.8 51.6 80.4 ?9,5 90Q7 96.1 104.8 1Q4.8

1/ Average investments costs based on annual depreciation at full development (excluding depreciation of fruit collection center).

NIGERIA

SMALLFOLDER OIL XAIP PROJECT

EAST CENTRAL STATE

Fruit Collection Western Area(Naira ' 000)

UnitCosts 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Onwards

Investment Costs

Transport chief car 3,200 (1) 3.2 - - (1) 3.2 - - (1) 3.2 - -

Tipper trucks with crane 13,500 (1) 13.5 - (2) 27.0 (1) 13.5 (3) 40.5 (1) 13.5 (3) 40.5 (1) 13.5 (5) 67.5

Net delivery units 800 (1) 0.8 - (2) 1.6 (1) Q;8 (3) 2.4 (1) 0.8 (3) 2.4 (1) 0.8 (5) 4.0

Nets 24 (80) 1.9 - (160) 3.8 - (240) 5.8 (40) 1.0 (200) 6.7 (40) 1.0 (360) 8.6

Total Investment Costs 19.4 - 32.4 17.5 48.7 15.3 52.8 15.3 80.1 41.7 1/

Of which: Local Costs 6.6 - 10.6 6.8 16.0 4.5 18.0 4.5 25.8 13.8Foreign Exchange Costs 12.8 - 21.8 10.7 32.7 10.8 34.8 10.8 54.3 27.9

Recurrent Costs

Staff and Salaries

Transport chief 2,000 (1) 2,0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0 (1) 2.0Clerk 750 (1) 0.8 (1) 0.8 (3) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8Drivers 640 (2) 1.3 (2) 1.3 (6) 3.8 (8) 5.1 (12) 7.7 (14) 9.0 (16) 10.2 (16) 10.2 (20) 12.8 (20) 12.8Loaders 430 (2) 0.9 (2) 0.-9 (6) 2.6 (8) 3.4 (12) 5.2 (14) 6.0 (16) 6.9 (16) 6.9 (20) 8.6 (20) 8.6

Total Salaries 5.0 5.0 9.2 11.3 15.7 17.8 19.9 19.9 24.2 24.2

Maintenance and Operatin&

Transport Chief car 800 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0,8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8 (1) 0.8Tipper trucks 4,500 (1) 4.5 (1) 4.5 (3) 13.5 (4) 18.0 (6) 27.0 (7) 31.5 (8) 36.0 (8) 36.0 (10) 45.0 (10) 45.0Net delivery units 260 (1) 0.3 (1) 0.3 (3) 0.8 (4) 1.0 (6) 1.6 (7) 1.8 (8) 2.1 (8) 2.1 (10) 2.6 (10) 2.6

Total Maintenance and Operatlons 5.6 5.6 15.1 19.8 29.4 34.1 38.9 38.9 48.4 48.4

Total Recurrent Costs 10.6 10.6 24.3 31.1 45.1 51.9 58.8 58.8 72.6 72.6

Of which: Local Costs 8.2 8.2 18.1 23.0 33.1 38.1 43.0 43.0 53.0 53.0Foreign Exchange Costs 2.4 2.4 6.2 8.1 12.0 13.8 15.8 15.8 19.6 19.6

Depreciation

Transport chief car 1,067 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1 (1) 1.1Tipper truicks 3,375 (1) 3.4 (1) 3.4 (3) 10.1 (4) 13.5 (6) 20.3 (7) 23.6 (8) 27.0 (8) 27.0 (10) 33.8 (10) 33.8Net delivery units 200 (1) 0.2 (1) 0.2 (3) 0.6 (4) 0.8 (6) 1.2 (7) 1.4 (8) 1.6 (8) 1.6 (10) 2.0 (10) 2.0Nets 12 (80) 1.0 (80) 1.0 (160) 1.9 (160) 1.9 (240) 2.9 (280) 3.4 (320) 3.8 (320) 3.8 (400) 4.8 (400) 4.8

Total Depreciation 5.7 5.7 13.6 17.3 25.5 29.5 33.5 33.5 41.7 41.7

1/ Average investment costs based on annual depreciation at full development.

NIGERIA

SMALLHDLDER OIL PALM PROJECT

EAST CENTRAL STATE

Summary of ProJect Costs

Total Foreign Exchange1975 1976 1977 1978 1979 1980 1981 1982 1983 Project costs Component

(7.) (N'000)

Smallholder Field Establishment 96.7 415.0 636.2 818.6 1,099.1 998.8 504.4 382.1 200.1 5,151.0 32 1,651.8

SMU - Capital Costs 59.1 45.4 - 11.1 9.4 - 8.1 6.4 - 139.5 47 65.1- Personnel Costs 132.6 135.3 136.2 136.2 107.5 108.4 108.4 108.4 108.4 1,081.4 15 169.0- Recurrent Costs 9.2 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 127.6 42 53.7

Regional Unit - Capital Costs 140,4 137.9 29.6 12.3 55.8 24.0 12.3 - - 412.3 48 197.7- Personnel Costs 132.2 228.4 269.4 274.4 337.8 315.3 215.4 206.4 181.1 2,160.4 7 167.2- Recurrent Costs 14.1 26.2 31.0 31.0 37.4 37.4 21.4 21.4 21.4 241.3 45 108.7

Road Inprovement - 154.5 82.7 70.3 69.4 36.2 - - - 413.1 32 133.1

Training 53,6 58.2 24.4 16.0 39.5 - - - - 191.7 43 82.5

ADA Mill Investment - - - - 1,112.1 1,142.8 198.8 543.9 793.9 3,791.5 39 1,484.6

Fruit Collection Investment - - -- 108.8 65.8 143.1 66.1 383.8 52 198.2

Total 637.9 1,215.7 1,224.3 1,384.7 ,882.8 2,786.5 i49.4 1,426.5 1,385.8 14,093.6 31 4,31.6

Physical contingencies /1 31.9 60.9 61.2 69.2 171l.6 170.3 62.9 71.8 76,8 779.6 241.7Price contingencies /2 104.3 318.0 398.9 593.3 1,910.4 2,274.1 1,024.9 1,468,5 1,732.3 9,824.7 31 3,045.7

Grand Total 774.1 1,594.6 1,684.4 2,047.2 4.967.8 5,230.9 2,237.2 2,966.8 3,194.9 24,697.9 31 7,3599.0

_~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ _

1/ 5% except for civil. works under mill investment for which a 12% physical contingency has been applied.

2/ 18A5/12% compounded range for houses, buildings and civil works, 14Tl/7.5% compounded range for all - U

vehicles, equipment plants, farm inputs except labor 7% compounded for all other costs (salaries,operating costs and labor). Compounding has begun from 1974 onwards, and in the year concerned onlyhalf the inflation percentage has been taken into account.

NIOL'UA ~~~~~~~~~~Table INIGERIL

SMALLI4OLDER OIL PALM PROJECT

EAST CENTRAL STATE

Smallholder Field Establishment Costs(Per Ha)

1/Year - 1 Year O Iear l Year 2 Year 3 Total ES----------------------------- Naira-------------------------------

2/NURSERY COSTS

3,/Labor costs 15.00 1.68 - - - 16.68Seeds 7.50 - - - 7.50Polybags 11.81 - - - - 11.81 40Fertilizer 2.73 0.30 - - - 3.03 80Other non-labor costs 11/ 11.31 1.25 - - - 12.56 65

Total Nursery Costs 48.35 3.23 - - - 51.58

-_______________--------------Mandays---------------------------

SMALIHOLDER FIELD COSTS 5/

Labor Mandays

Under brushing and cleaning.i - 50.0 - - - 50.0Stacking, burning, cleaningrows - 25.0 - - - 25.0

Lining 5.0 - - - 5.0Weeding avenues, pre-coverplanting 5.0 - - - 5.0

Planting cover _ 2.5 - - - 2.5Holing, Refilling - 7.5 - - - 7.5Planting - 5.0 - - - 5.0Fixing wire collar - 2.5 - - - 2.5Maintenance Z/ - 27.5 35.0 30.0 22.5 115.0

Total Mandays - 130.0 35.0 30.0 22.5 217.5

--- -------- Naira-- -.- ---------

Labor Costs / - 84.50 22.75 19.50 14.63 141.38Cover Crops 2/ - 3.63 - - - 3.63Wire netting - 31.25 - - - 31.25 50Fertilizer - 7.37 15.33 21.00 30.40 74.10 80Chemicals - 2.50 2.50 2.50 2.50 10.0 80Tools - 2.50 2.50 2.50 2.50 10.0 50

Total Field Costs - 131.75 43.o8 45. 5 0 50.03 270.36

TOTAL FIELD ESTABLISHMENT COTS 48.35 134.98 43.o 8 45.5o 50.03 321.94

Of which: Labor Costs 15.00 86.18 22.75 19.50 14.63 158.06Local Costs 19.10 22.98 4.82 5.95 7.83 60.68FE Costs 14.25 25.82 15.51 20.05 27.57 103.20

/ Year 0 is year of planting.

2/ Cost of planting material is N 51.58 per planted ha. Costs are broken down in their main components.

3/ Nursery labor at N 1.00 per manday

-/ Includes irrigation equipment, fingicides, pesticides, materials, tools, transport costs and miscellaneous.

i/ Transport of materials costed under SMU

6/ Occurs November/December Year -1, but smallholder not refunded before Year 0.

Z/ Includes slashing rows and avenues, fertilizer application and weeding; and in Year 1 also supplving.

/ Smallholder labor at N 0.65 per manday.

21/ Perania 11 kg per ha to allow for an early planting followed by a second planting in March/April.

H H 00 H H

H H - HH HH O '0 0' H H H 00000 OH H 0' 00oO I HO 00 00 0020 HO tOO HO OH- I�. LI �' CO

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0 HO00 OH 00 00 00HH�0 H�00000* 00 0 0o0'�' 000 0 V 0000000000 0000000000 000000000 0000000000 0000000000 0000000000 00 0000000000 000000 .000000000 OHO 0 Ooooo 000000 00000 000000 000H0HJ0 00000 000.0000 00000 00000o 00oJo0 Ho"0D 00000000 00000000 0000000 00000000 0000000 000000000 0000000 0000000 00000000 00000000

000000 0000000 000000 0000000 00000 00000 000000 00000 000000 -20000 00000000 00000000 00000 000000 00000 00000 00000000 00000 0000000000 0026656 �g�g S88 000000 000000 000000000 000000 00000 H

000 00 00 0 00 0 0 0 0 0 0 00

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0000 - 00 - - 00 00 00 00 00 0 0 0 0 0 0 00

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0000 0 0 00 0 00 0 0 0 0 0 0 0 0 0 000 0 0000 0 0 0 �0 0

00000 jO0 0 00 0000 0 00 00 00 - 0 00 00 0 0 0 0 0 00 0 0 0 00 -00000 00 0 0 00 00 000 0 0 0 0 00 00 0 0 00 00 00 0 0 00 00 00

0 00 00 0 0 00 0 00 0 0 00 00 00 00 0 0 000 00 0000 00 0 0 0 0 00 r

-- 0 00 00 00 z E0000000000 00 00 -. - 00 0000 0 0 0 H' 00 0 0 0 0 00 00 I - 210000000 0 00 0 000000000 0 0 0 00 0000 0 00 HO 0 000 0 0 0 0 0 0.00 00 SHO 0040000000 00 00 0 0000 00 000 0 0 00 00 0 000 0 00 000 0 0000 00 00 00 0 00 0000 100

000000 - - - 00 0 0000 0 00 00 00000000 00 00 00 0' 00 000000 0 0 0 00 00 0 00 0 0 00 0000000 0 00 0 0000 00 0000000 00 0 0 0 00 00000 00 0 Ho 0 0

o o 0 00 00 00 000 0 j-00 00 00 0 0000 0 0000 00 00 00 o - 0000 00 00 000 0000 00 00 0 0 0 oo o g

000 00 00 000000 00 0000000 00 00 - 00 1.0 000.oO 00000 00000000 0 0000000 0 - 0 00 - 000000 00 0 0 00 0 00 0000.- H. 00 0 0000 0 0000 0 00 0 0 0 00000 00 0 0 00 00 0 0

400000 0 000000 0 0000 0' 0000

0000 0 00 0 00 0 OH 00 00000000 0 00 V

0000 0 0 0 00 00 00 0 00000 00 00 0 00 00 00' H 00 100

0000000 00000000 0 0000000 0 00000,0.000 00 0000000000 0 0 0000000 0000 000000000000000.- 00 OOoOO OoO00000 00 00 00 000000000 H 00000000 00000000 00000000 oooOOo 0 0 000000 00 00000000 0000000 0 00000 00 000000000000 0 0 0 000000 0. 00.01.000 00000000 0000 000000000000 0 0000000000000000000 0 00000000 0 0 '000000 I.'

0Y NIGERIA


'a. EAST CENTRAL STATE

SMU - Headquarters Capital Costs sod Recurrent Costs

(Noirs Thousand)

Unit Total Foreign 1984Costs 1975 1976 1977 1978 1979 1980 1981 1982 1983 1975-1983 E-channe X Onwards

CAPITAL COSTS

Buildings/Offices /L ON/8q ft 27.0 27.0 54.0 30

EquipmentOffier Furnitore and Equipment 12 9.0 9.0 18.0 40Ac-osnting machines 3,000 (1) 3.0 (1) 3.0 (1) A3,0 (1) 3.0 12.0 6012.0 12.0 3.0 3.0 30.0Consultants 12.0

12.0 100

VehiclesSedan 4,000 (1) 4.0 (1) 4.0 (1) 4.0 12.0 60 1.3 (4Four-wheel drivn 4,100 (1) 4.1 (1) 4.1 (1) 4.1 12.3 60 1.4 7/Safari wagon 3,200 8 (2) 6.4 - (2) 6.4 - (2) 6.4 29.2 60 2.1 88.1 6.4 8.1 6.4 8.1 6.4 43.5 60 4.8

Total Capital Costs 59.1 45.4 11.1 9.4 8.1 6.4 139.5 4.8

RECURRENT COSTS

Offics Maintee-ncn and RunninR ExPenses 8,000 4.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 79.0 60 8.0External Audit 3,000 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 27.0 3.0Vehinles OperatingSedan 1,000 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 (1) 1.0 9.0 (1) 1.0Four-wheel drive 1,200 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 (1) 1.2 10.8 (1) 1.2Safari stationwalon 800 - (2) 1.6 (2) 1.6 (2) 1.6 (2) 1.6 (2) 1.6 (2) 1.6 (2) 1.6 (2) 1.6 12.8 (2) 1.6Total Vehicle operating 2.2 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 32.6 3.8

Total Recurrent Costs 9.2 14.8 14,0 14.8 14.8 14.8 14.8 14.8 14.8 127.6 14.8

GRAND TOTAL SMU 68.3 60.2 14.8 25.9 24.2 14.8 22.9 21.2 14.8 267.1 19.6of which tonal costa 34.6 36.6 8.5 14.7 14.1 8.5 11.7 11.1 8.5 148.3 10.4foreign enchenge Costa 33.7 23.6 6.3 11.2 10.1 6.3 11.2 10.1 6.3 118.8 9.2

j/ SU ffisc building encompaassa 5,400 sq ft. Building phased aov 2 years.2/ Puochass of furniture and offico eqoipneet phased over 2 years.

Consultanto ti advise an Mechanisad annonuting system. Total costs N 21,000 divided between States on bhtei of ha planted.4/ Average yerly i-vest-ent based on one vehicle depreniated over 3 years.5/ Average yearly investnent based on two vehicles dep-esiated over 3 yeers.

?able S

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0E OO R°o 000 000 00 00 000 ,-ecoc ^1 ID t : 0000000000 01'0 00000-. X

_ 0000____000000000 00 0 _000000000000--0000000_ _ 00-o 000000 X W

Marc C0 E197.4

NIGERIA

;SMALLHOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Regional Units f

(Nains '005)Unit Total Foreign 1984

Costs 1975 1976 1977 1978 1979 1980 1981 1982 1983 1975-1983 Pecha -- / onwards

CAPITAL COETS (Pairs)

R.ildiogxoffites /2 NlO/eq it 42.0 42.0 84.0 30

Stores /3 N 5/sq ft 42.0 42.0 84.0 20

Total BSildiegs 84.0 84.0 168.0

Poreitrs soad Eqcip.eot /4 9.0 9.0 18.0 40

VehiclesMotertyrlen /5 550 (31) 17.1 (38) 20.9 (21) 11.6 (25) 13.8 63.4 70

5-ten lorries 6,000 (3) 18.0 (4) 24.0 (3) 18.0 (7) 42.0 (4) 24.0 /6 126.0 65 4.5

Fer-vhseel drive 4,100 (3) 12.3 - (3) 12.3 - (3) 12.3 36.9 60 4,1 5

Total Vehitles 47.4 44.9 29.6 12.3 55.8 24.0 12.3 226.3 8.6

Tortl Capitol Costs 140.4 137.9 29.6 12.3 55.8 24.0 12.3 412.3 48 8.6

PERSONNEL COSTS

Unit manager 5,600 (3) 16.8 (3) 16.0 (3) 16.8 (3) 16.8 (3) 16,8 (3) 16.8 (3) 16.8 (3) 16.8 (3) 16.8 151.2 10 (3) 16.8

AO,'/SAS /9 4,300 (4) 21.5 (10) 43.0 (10) 43.0 (10) 43.0 (13) 55.9 (13) 55.9 (9) 38.7 (9) 38.7 (6) 25.8 365.5 10 (6) 25.8

AA's /10 1,350 (31) 41.9 (60) 93.2 (90) 121.5 (90) 121.5 (115) 155.3 (103) 139.1 (59) 79.7 (54) 72.9 (47) 63.5 888.6 10 (40) 54.0

Credit Offirer 3,500 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 (3) 10.5 94.5 10 (3) 10.5

Lean Assistants /11 1,100 (3) 3.3 (6) 6.6 (8) 8.8 (12) 13.2 (15) 16.5 (14) 15.4 (14) 15.4 (14) 15.4 (14) 15.4 110.0 (14) 15.4

EO's 1,800 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 (3) 5.4 48.6 10 (3) 5.4

Clerks 750 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 20.7 (3) 2.3

Typist 750 (3) 2.3 (3) 2.3 -(3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 (3) 2.3 20.7 (3) 2.3

Storekeeper 1,400 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 (3) 4.2 37.8 (3) 4.2

Asdistent Storekeeper 740 (3) 2.2 (3) 2.2 (3) 2.2 (3) 2.2 ,31 2.2 ;3) 2.2 (3) 2.2 '3' 2.2 (3) 2.2 19.8 (3) 2.2

Drivers - Landr-vers 640 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 (3) 1.9 17.1 (3) 1.9

Drivers -Lrries 640 (3) 1.9 (7) 4.5 (10) 6.4 (10) 6.4 (14) 9.0 (14) 9.0 (4) 2.6 (4) 2.6 (4) 2.6 45.0 (3) 1.9

Drivers- spare 640 (1) 0.6 (2) 1.3 (2) 1.3 (3) 1.9 (3) 1.9 (3) 1.9 (2) 1.3 (2) 1.3 (2) 1.3 12.8 (1) 0.6

Watch-.n 460 (9) 4.1 (9) 4.1 (9) 4.1 (4) 4.1 (9) 4.1 (9) 4.1 (4) 4.1 (4) 4.1 (4) 4.1 36.9 (9) 4.1

Special laborers /12 430 (31) 13.3 (70) 30.1 (90) 38.7 (90) 38.7 (115) 49.5 (103) 44.3 (65) 28.0 (60) 25.8 (53) 22.8 291.2 (46) 19,8

Total Persoel Costs 132.2 220.4 269.4 274 .4 337.8 315.3 215.4 206.4 181.1 2 160,4 7 167.2

RECOERRENT CONGO

Office Meirtengnne and REonnire iononess 3,800 3.7 11,4 11.4 11.4 11.4 11.4 11.4 11.4 11.4 96.9 60 11.4

Vehicle Operantin

5-ton lorries 1.600 (3) 4.8 (7) 11.2 (10) 16.0 (30) 16.0 (14) 22.4 (14) 22.4 (4) 6.4 (4) 6.4 (4) 6.4 112.0 (3) 4.8

For--heel deives 1,200 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 (3) 3.6 32.4 (3) 3.6

Total 8.4 14.8 19.6 19.6 16.0 16.0 10.0 10.0 10.0 144.4 40 8.4

Total Rerurrent Costs 14.1 26,2 31.0 31.0 37.4 37.4 21.4 21.4 21.4 241.3 45 19.8

TOTAL REGIONAL UNITS 286.7 392,5 330.0 317.7 431.0 376.7 249.1 277,8 202.5 1,814.0 16 195.6

of ehich local costs 214.5 300.1 175.8 175.9 352.4 327.9 215.7 202.5 179.4 2,352.2 168.8

foreign exchange costs 72.2 84.4 54.2 41.8 78.6 48.8 33.4 25.3 23,1 461.8 26.8

/I There are 3 regional coits in East Central Otate./2 Regional .. it en.oipags 5,600 sq ft. Bcilding phased over two years./3 Store has 5,600 sq ft. Bnilding phased over two years./4 N 6,000 per regional coit. Purehanes phased over two yTess.75 Cne noorcycle for ech AA, when he is recroited in SMO, Moteoryrle cill bh nwncd and operated by M's, who repay

050U fron their vehicle allowance. Capital e-penditure is for initial p-chasos only and e revolving fond w 11 be

formed free repayments of AA'.s fro which food further purchases of motoccycles will be nade.

/6 Rssidual v-los of ove- -oplato vehicles N 21,000. howerer vehicles co-ld be coed in neot phase oiI pole progrsm or cold bhe traesfecrrd to othen pregrans

of tho Ministry of Agriculture./7 Average yearly lnvestment based n 3 ve'itles deprocioted over 4 ynans./8 Average yearly investnt-t based en 3 vehirle- deprecieted over 3 years.

/9 One AO for 5 - 10 M's and one AO ti give apecial attentioe to th nurseries.gT1 OSe 04 for 80 ha in Year -0 and YGoo O; I 0 for 240 ho in Years 1, 2 and 3; 1 AA far 400 ha froc Year 4 o-cocd,.

However after three years develop-ent cot sll M's are recruited in Y-ar -1. Tc addntioc there ore 2 M's for eech nurtery (there are three nurserisa).

/1l one LA for 400 Canners in YTar -1, aed 1 LA for 600 farmers fron Ynar 0 cowards.

/12 One for each AA engaged in field developmnt (nurAery labor costed ceder fleld esnahlisheent) and 2 for each .. it.

H 0" H H Ht 0

@ 1 rg Ho -- n 0r

g b= =O r wi OOr w ew tMo0 C C3 o w r °erwn wC ° Fl w 22w>< aa C o =0 0 9g^^er H o, 00 :10.0001 e¢X Cn> o o 0001 00To 0 H C

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NIGERIA


EAST CENTRAL STATE

Schedule and Cost of Training

Total Foreign Exchange

1975 1976 1977 1978 1979 1980 1981 1982 1983 1975 - 1983 Component

Training

Senior Staff 1/ (4)18.0 (6)27.0 - - (3) 13.5 - - - - 58.5 100

Field Assistants 2/ (25)10.0 (38)15.2 (21)8.4 - (25) 10.0 - _ - - 43.6

Nursery Staff 3/ (6) 9.6 - - - - 9.6 62

37.6 42.2 8.4 - 23.5 - - - - 111.7

Grant to NIFOR 4/ 16.0 16.0 16.0 16.0 16.0 - - - - 80.0 30

Total 53.6 58.2 24.4 16.0 39.5 - - - - 191.7

Local Costs 30.8 26.4 19.6 11.2 18.0 - - - - 109.2

Foreign Exchange 22.8 31.8 4.8 4.8 18.3 - - - - 82.5

1/ Training of all AO's for six months outside Nigeria @ N 4,500.

2/ Training of all AA's engaged in field development during 3 months at NIFOR @ N 400

3/ Training of nursery staff during 12 months; half the number in Nigeria @ N 1,200; half the number in

countries in West Africa @ N 2,000. Training should start in 1974.

4/ Used by NTFOR to organize field demonstration and to buy teaching materials. However specific equipment

needed by NIFOR in order to allow it to meet the training needs of the project (such as Hostel water

supply installation, minibuses, photographic equipment, beds for hostel, chairs, desks,cupboards and kitchen

equipment) are costed separately under the "field studies of small scale processing systems in wild palm groves",

and are part of the Mid-West State, Nucleus Estate/Smallholder Oil Palm Project.

NIGERIA


EAST CENTRAlI STATEI/

Palm Oil Mill - tnvotunt.i CouLs(NcratUO0Uy

Dnit lotal Post-SDiuho,ucu.o P GRAND For-ignCosts 1979 1980 1981 1982 1983 1975 1983 1 84 1985 E_triOd TOTAL E a

Oweri Nta Mill

Civil Works 3/

Phase I (10 ton/hour) 448.0 448.0 84,o - - 980.0 - - 980.0Phese 2 (20 ton/hour) - - - 168R - 16.8 16.8Phlse 3 (38 ton/hour) 2 _ - - _ : 28.0 28.0 28.5

Total Civil Works 448.0 448.0 84.0 16.8 - 996.8 28.0 - 28.0 1,024.8 20

Eqsipment 4/

Phase I (10 too/hour) 660.0 660.0 77.0 - 1,397.0 - - 1,397.0Phars 2 (20 too/hour) - 478,5 478.5 47 0

Phase 3 (30 ton/hour) 6,6___ _ __ __ 616.0_ __ _____

Total Equipoeot 660.0 660.0 77.0 478.5 1,875.5 616.0 - 616.0 2,491.5 to

Vehioles Four wheel Drive 4,100 (1) 4.1 - - (1) 4.1 - 8.2 - (1) 4.1 4.1 12.3 60

Engiosere 10,000 6/ - (1) 15.0 (1) 10.0 (2)20.0 - 45.0 - - 1(5.0 30

Technicians 2,000 - (5) 10.0 (9) 18.0 - - 28.0 - - 28.0 30Loborers 700 - (141 9.8 _ 14) 9, ..8 _ )24.5 _ 44.1 _ (12)L8.4 - - _ 8.4 4 2. 20

Total Noosing - 34.8 37.8 44.5 - 117.1 8.4 _ 8.4 _ 125.5

Total Ore0i Ntr Mill 1,112.1 1,142.8 198.8 543.9 2,997.6 652.4 4.1 656.5 3,654.1

Cootribution to Epnsion of CDC/ADA Mill

Civil Works 3/ - - - 106.4 106.4 - - - 106.4 20Equipment 4/ - - - - 687.5 87,5 - -_ -_ _ ____687.5 80

Total 793.9 793.9 - - - 793.9

GRAND TOTAL 1, 142.8 1198.28 93.9 3,791.3 652.4 4.1 56.5 4,448.0

Of ohioh Local Costs 620.1 627.1 88.8 399.6 571.3 2,306.9 500.1 2.5 502.6 2,809.5

Foreigo E-chaoge Costs 492.0 515.7 110.0 144.3 222.6 1,484.6 152.3 1,6 153.9 1,638.5

1/ See A.ex 4 Table 1

2/ In Esstern part projest area

3/ Sioe Toble 1 Annro 4 -eflects mid-1973 prices a 12% inressee has be-n applied to reflest sod 1973 renditions.

4/ Sin Table 1 Anner 4 reflests old 1973 priseo o 10% lorrasse has beso applied to reflert end 1973 -oditloor..

5/ ADA will estoblish an estots snd sill which sill olso take cter if the smollholdsrr projeOt pr-duction in the Western area.The mounot provided under the projects provides for a 10 tros/h.our pononn of the ALA mill.

6/ For Mill Manager Noosing Unit soot 6 15,1100.

NIGERIA

SMALLBOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Smollholder Fruit Collection. Inve.t=ent Corst

ForeignUnit Costs 1980 1981 1982 1983 1980-1983 1984 1985 1986 1987 1988 1989 Ia Exchange

Fruit Collection Eastern Area

Transport Manager car 3,200 (1) 3.2 - - (1) 3.2 6.4 - - (1) 3.2 - - 1.1 60Tractor with crone 6,000 (1) 6.0 (1) 6.0 (3) 18.0 (2) 12.0 42.0 (4) 24.0 (3) 18.0 (5) 30.0 (3) 18.0 (5) 30.0 24.0 85Trailers 1,500 (2) 3.0 (1) 1.5 (4) 6.0 (3) 4.5 15.0 (6) 9.0 (4) 6.0 (7) 10,5 (4) 6.0 (8) 12.0 8.6 55Net Delivery Units 800 (1) 0.8 (1) 0.8 (3) 2.4 (2) 1.6 5.6 (4) 3.2 (3) 2.4 (5) 4.0 (3) 2.4 (5) 4.0 3.2 70Ttpper Trooks 11,500 (1) 11.5 (1) 11.5 (3) 34.5 (2) 23.0 80.5 (4) 46.0 (3) 34.5 (5) 57.5 (3) 34.5 (6) 69.0 48.9 75Repair truck 10,000 (1) 10.0 - - - 10.0 (1) 10.0 - - - (1) 10.0 2.5 75Service trckss 8,000 (1) 8.0 - - - 8.0 (1) 8.0 - - - (1) 8.0 2.0 75Nets 24 (80) 1.9 (40) 1.0 (200) 4.8 (180) 4.3 12.0 (320) 7.7 (260) 6.2 (400) 9.6 (300) 7.2 (440) lO.6 7.7 10Fruit Collection Center 15,000 (3) 45.0 (3) 45.0 (3) 45.0 - 135.0 - - - - 25

Totol 1nveetnent Coats. Rosters Area 89.4 65.8 110.7 48.6 314.5 107.9 67.1 114.8 68.1 143.6 98.0

Fruit Colleotion Western Acre

Tr..e.sport chief cor 3,200 (1) 3.2 - - (1) 3.2 6.4 - - (1) 3.2 - - 1.1 60Tipper taboks with crone 13,500 (1) 13.5 - (2) 27.0 (1) 13.5 54.0 (3) 40.5 (1) 13.5 (3) 40.5 (1) 13.5 (5) 67.5 33.8 75Net delivery Units 800 (1) 0.8 - (2) 1.6 (1) 0.8 3.2 (3) 2.4 (1) 0.8 (3) 2.4 (1) 0.8 (5) 4.0 2.0 70Nets 24 (80) 1.9 - (160) 3.8 - 5.7 (240) 5.8 (40) 1.0 (200) 6.7 (40) 1.0 (360) 8.6 4.8 10

Total Investnent Coats. Western Acre 19.4 - 32.4 17.5 69.3 48.7 15.3 52.8 15.3 80.1 41.7

Total Investment Costs 108.8 65.8 143.1 66.1 383.8 156.6 82.4 167.6 83.4 223.7 139.7

Of which: Locol Costs 59.1 39.3 63.3 23.9 185.6 53.5 24.8 54.6 25.7 68.1 42.9Foreign Exchange Costa 49.7 26.5 79.8 42.2 198.2 103.1 57.6 113.0 57.7 155.6 96.8

1/ Based on annual depreciation at full devalopuent for vehicles only.

if

NIGER IA

SMALLHOLDER OIL PAL4 PROJECT

EAST-CENTRAL STATE

Smallholder Maintenance md Harvesting Costs

(per ha)

Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Yea_9 Year 11 Year 12 FE %onwards

---------------------------------------------- Mandays ---------------------Labor

Ring weedirg 5.0 5.0 5.0 5.0 5.0 5.0 5.0 3.75 3.125Slashing & avenue weeding 7.5 7.5 7.5 7.5 7.5 7.5 7.5 5.0 3.75Fertilizer application 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25Prunirg 2.5 2.5 3.75 3.75 3.75 5.0 5.0 6.25 6.875Harvesting 10.0 12.5 12.5 13.75 13.75 15.0 15.0 15.0 15.0

Total days 26.25 28.75 30.00 31.00 32.50 33-75 33.75 31.25 30.0

-______- ___- .______ _ -------.----- N a i r a ------------------------------------------------

2/Labor Costs - 17.06 18.69 i 9.50 20.15 21-13 21.94 21.94 20.31 19.50

Fertilizer 30.4o 30.4o 20.00 20.00 20.00 20.00 20.00 20.00 20.00 80

Chemicals 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 80

Tools 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 50

TOTAL 52.46 54.09 44.50 45.15 46.13 46.94 46.94 45.31 )4J.5c

of which labor costs 17.06 18.69 19.50 20.15 21.13 21.94 21.94 20.31 19.50

local costs 7.83 7.83 5.75 5.75 5.75 5.75 5.75 5.75 5.75

FE costs 27.57 27.57 19.25 19.25 19.25 19.25 19.25 19.25 19.25

1/ Tear 0 is year of planting.

2/ Labor @ 65 kobo per manday.

3/ Fertilizer : 200 ha of muriate of potash and in addition in Year 4 and 5, 130 kg of ammonium sulphate.

NIGERI A

SiiALLHOLDMI OIL PALIi PROJECT

EA3T CENTRAL STATE

Smallholder P.aintenance aid Harvesting Costs

(Naira '000)

1980 1981 1982 1983 a 985 1985 1986 1987 1988 1989 1990 1991 1992 FE,%onvards

plantir, plantedYear ha

Labor Costs1976 2,000 34.1 37.4 39.0 40.3 42.3 43.9 43.9 50.6 39.0 39.0 39.0 39.0 39.0

1977 3,000 - 51.2 56.1 58.5 60.5 63.4 65.8 65.8 60.9 58.5 58.5 58.5 58.5

1978 3,000 - - 51.2 56.1 58.5 60.5 63.4 65.8 65.8 60.9 58.5 58.5 58.5

1979 4,00o - - 68.2 74.8 78.0 80.6 84.5 87.8 87.8 81.2 78.0 78.0

1980 4,000 - - - 68.2 74.8 78.0 80.6 84.5 87.8 87.8 81.2 78.0

Total 34.1 88.6 146.3 223.1 304.3 320.6 331.7 337.3 338.0 334.0 325.0 315.2 312.0

Fertilizer1976 2,000 60.8 60.8 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 O0.0 40.0

1977 3,000 - 91.2 91.2 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.o

1978 3,000 - - 91.2 91.2 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0

1979 5,000 - - l1z.6 121.6 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0

1980 4,000 -- 121.6 121.6 80.0 80.0 80.0 80.0 80.0 80.0 80.0

Total 60.8 152.0 222.4 312.8 403.2 361.6 320.0 320.0 320.0 320.0 320.0 320.0 320.0 80

Chemicals1976 2,000 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0

1977 3,000 - 7.5 7.9 7.5 7.9 7.5 7.5 7.5 7.9 7.5 7.9 7- 7.5

1978 3,000 - - 7.5 7.5 7.9 7.9 7.5 7.5 7.9 7.5 7.9 7.9 7.5

1979 5,000 - - 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0

1980 4,000 _- 10.0 10.0 10.0 10.0 10 0 10.0 10.0 10.0 10.0

Total 5.0 12.5 20.0 30.0 40.0 40.0 40.0 40.0 50.0 40.0 .0 40.0 40.0 80

Tools1976 2,000 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 9.0 5.c 5.o s.0 5.0

1977 3,000 - 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

1978 3,000 - - 7.5 7.5 7.5 7.5 7.9 7.9 7.9 7.5 7.9 7.9 7.51979 4,000 - - 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0

1980 4,000 _ - - - 10.0 10_o . 10.0 10.0 10.0 10.0 10.0 10.0 10.0

Total 5.0 12.5 20.0 30.0) 40.0 40.0 50.0 hO.0 40.0 50.0 40.0 40.0 40.0 50

GRAND TOTAL 10L.9 265.6 508.7 995.9 787.5 762.2 731.7 737.3 738.0 734.0 725.0 715.2 712.0

of which labor costs 39U.1 88.6 146.3 223.1 3015.3 370.6 331.7 337.3 338.0 334.0 325.0 315.2 312.0

local costs 15.7 39.1 57.2 83.6 108.6 100.3 92.0 92.0 92.0 92.0 92.0 92.0 92.0

FE costs 55.1 137.9 209.2 289.2 37h.6 341.3 308.0 309.0 308.0 308.Fn 303.0 3P8.0 308.o

NIGERIA


EAST CENTRAL STATE

Financial Plan

IDRD State Gove-cnment TOTALLoan Own Funds IBRD Loan Srmallholders, ProJect Costs

------- O-…-------------~- -- - -- -… - -

Smallholders Program 3.2 191 3.2 0.8 5.1Field EstablishmentSMIJ 1.7 3.1 1.7 4.8

ADA ProgramOil Mill and FruitCollection 2.1 2.1 2.1 4.2

Sub total 7.0 6.3 7.0 0.8 14.1

Unallocated 5.4 4.7 5.4 0.5 10.6

TOTA1L 12.4 11.0 12.h 1.3 24.7Percentage 50% 45% 5O% 5'% 100%

------ ____ -----_US$OOO ---Smallholder ProgramFlield Establishment. 5eO 1.6 5.0 1.2 7.8SNU 2.6 4.6 2.6 7.2

ADA Program,Oil Mill and FruitCollection j 2 _ -

SubtotaL 10 9 10.8 1.2 21.h

UIxallocated _8. 71 8.2 0.8 16.1

TOTAL J<0 16j' 19.0 2.0 37.5 o5 ' 51% 100

NIDERIA

SMiLLHOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Detailed Financing of Project Cost

perCategories of Proposed Disbursement

Banik Loan SchiedulTe

1975 1976 1977 1978 1979 1980 1981 1982 1983 Total (N'OOO) (US$OO00) (2S0?o

FIELD ESTABLISHMENT

IBRD (75'b of grants/credits) 72.5 255.8 378.6 497.3 679.0 598.3 333.2 274.3 158.8 3,247.8 3,247.8 4,936.7 5,000.0ECSG (257 of grants/credits) 24.2 85.2 126.2 165.7 226.3 199.4 111.1 91.4 52.9 1,082.4SMALLHOLDERS - 74.0 131.4 155.6 193.8 201.1 60.1 16.4 (11.6) 820.8

SUB TOTAL 96.7 415K) 636.2 818.6 1,099.1 998.8 509.4 382.1 200.1 5,151.0

SMALLHOLDER MANAGEt34NT UNIT

IBRD (35%) 189.4 280.2 205.8 198.1 235.1 187.6 133.1 125.1 114.0 1,668.4 1,668.4 2,535.9 2,600.0ECSG 351.8 520.5 382.3 368.0 436.5 348.5 247.3 232.3 211.7 _ 3,098.9

SUB TOTAL 541.2 800.7 588.1 566.1 671.6 536.1 380.4 357._ 325.l 4,767.3

ADA PROGRAM

I3RD (50%) - - - 556.1 625.8 132.3 343.5 430.0 2,087.7 2,087.7 3,173.3 3,200.0ECSG - - _ . - 556.0 625.8 132.3 343.5 430.0 2,087.6

SUB TOTAL - - - - 1,112.1 1,251.6 264.6 687.0 860.0 4,175.3

UNALLOCATED

IBRD 56.6 167.0 224.7 335.9 1,068.0 1,242.9 571.2 810.3 928.1 5,404.7 5,404.7 8,215.1 8,200.0CSG lv 79.6 190.3 184.5 243.3 367.7 368.0 2t5.1 297.8 273.3 2,298.6

cSX; 2/-- 518.5 688.8 17Y.6 416.4 622_1 2,424.4

S%ALLHOLDERS - 21.6 50.9 83.3 121.8 144.7 52.9 15.8 (14.4) 476.6

SUB T&lAL 136.2 378.9 460.1 662.5 2,085.0 2,444.4 1,087.8 1,540.3 1.809.1 10.604.3

TOTAL 774.1 1.594,.6 1.684.4 2,047.2 4,967.8 5,230.9 2,237.2 2.966.8 3.194.9 24.697.9 12.408.6 180861.0 19,000.0

/ under field establishuent and SMU

2/ under ADA program

ANNEX 6Table 3

NIGERIA


EAST CENTRAL STATE

Disbursement Schedule and Bank Loan

CumulativeUS$'000 US$'000

FY 75 Second Half 200.0 200.0

FY 76 First Half 300.0 500.0

Second Half 500.0 1,000.0

FY 77 First Half 600.0 1,600.0


FY 78 First Half 700.0 2,800.0


FY 79 First Half 900.0 4h,oo.0

Second Half 1,600.0 6,000.0

FY 80 First Half 2,300.0 8,300.0

Second Half 1,600.0 9,900.0

FY 81 First Half 2,400.0 12,300.0

Second Half 700.0 13,000.0

FY 82 First Half 1,000.0 14,000.0

Second Half 1,100.0 15,200.0

FY 83 First Half 1,h00.0 16,500.0

Second Half 1,000.0 17,500.0

FY 84 First Half 1,500.0 19,000.0

19,000.0

ANNEX 7Page 1

NIGERIA


EAST CENTRAL STATE

Production Estimates for the Projects

1. Mean annual yield expectatiorn, based on experience and data whichare detailed in the Supplementary Annexes (Supplement 13) are as follows:

Metric tons/ha/year 1/

N4 N5 HI N7 N8 N9

Smallholders 2.5 5.0 6.3 8.8 10.0 10.0

2. Mill extraction rates are ex?ected to be as follows:

Percent N4 NS N6 N? N8 N9

Oil to bunch 16 17 18 19 20 22Kernels to bunch 4 4.5 5 5 5 5

3. Details of production are Thon in tabIe 1.

1/ Year 0 is year of planting.

NIGETIA


ZAMT CENTRAL STATE

Pret Production of FF, Palm Oil aI Kernels

(metric tons)

planting planted'year ha 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

FFB PRODUCTION -/

1976 2,000 5,000 10,000 12,600 17,600 20,000 20,000 20,000 20,000 20,0001977 3,000 - 7,500 15,000 18,900 26,400 30,00o 30,000 30,u00 30,0001978 3,000 - - 7,500 15,000 18,900 26,400 30,000 30,000 30,0001979 4,000 - - - 10,000 20,000 25,200 35,200 40,000 40,0001980 4,ooo - 10,000 20 000 25 200 35 200 10 ,000

TtlF8production 7 Y oo 2 c ~It ho,~, i%<95~~-O I%o I MoTh1 T0TToi ta St9lD ,ooo 17 50 r g J-b El r 52 1 6LO) ~5

OIL PAtM PRODU[CTION 2/1976 2,000 Bon 1,700 2,268 3,344 4,000 lb, c.o 14;)oo 4,00oo 6,600 6,)6c1977 3,000 - 1,200 2,550 3,402 5,016 6,000 6,600 6,500 6,600 6,Goo1978 3,000 - - 1,200 2,550 3,402 5,oi6 6,ooo 6,600 6,600 6,60o1979 14,000 - - 1,600 3,1400 14,536 6,688 8,000 8,800 8,800198O 4,DO _0 _ _ _ i 1600 3,400 4,536 6,688 8.o «BQo _ 0

Total oil pa pr_ootion 6,1 9I7 2,900 508 79 I 23,,22 32,8 34,40Q 35 35,200

KERNEL PRODUCTION1976 2,000 200 459 630 8Bo 1,000 1,00( 1,000 1,000 1,0001977 3,000 - 300 675 A1 5 1,320 1,500 1,500 1,500 1,o001978 3,000 - - 300 675 965 1,320 1,500 1,500 1,5001979 4,ooo - - I400 900 1,260 1,760 2,000 2,0001980 4,ooo - - -0oo 90,0 1,260 1 760 2 000

Total kernel a oduction 200 750 l960 2,900 14 5 7,020 7,7 __ oo_o o

year 14 ear 5 6 ear 7 Year 8 MEar 9 onwardsl/ yields (tons/ha) 2.5 5.0 6.3 8.5 10.0 10.0

2/ extraction rate 16% 17% 18i 19% 20%o 22%'

./ extraction rate 4% 4.5% 5% 5% 5% 5%

AN,-EX YPage

NIGERIA


EAST CENTRAL STATE

Estimated Economic and Financial

Millgate Values of Palm Oil and Kernels

1. For the purpose of this project the economic and financial pricesfor palm oil and kernels have been calculated using the Bank's projectionsfor 1980. These projections are as follows:

Projected Prices for Palm Oil ($/MT)

Year Current Prices Constant 1974 Prices

1974 710 7101975 595 5341976 438 3581977 458 3451978 469 3271979 490 3181980 495 300

1985 757 327

2. The actual prices for palm oil and kernels have been as follows:

Actual Prices for Palm Oil and Kernels(Annual Average)

1972 1973 1974 /3 1974 (Jul-Sept)

Palm Oil /1 217 378 710 681

Palm Kernels /2 116 259 480 417

/1 In United Kingdom ($/metric ton)./2 In Europe ($/metric ton)./3- Partly estimated.

ANNEX 8Page 2

Palm Oil

3. It has been assumed that without the proposed projects Nigeria woultibe a net importer of palm oil by 1980. The projections indicate that by 1985the net deficit would be around 275,000 tons of palm oil and most of thisdeficit would have to be supplied from Malaysia. The Ivory Coast would be ableto supply part of this deficit but it is unlikely that the cif price would bemuch below the Malaysian price. It has further been assumed that palm oilimported or produced by the project would be sold in or around the large urbanmarkets of Western Nigeria, such as Ibadan. Implicit in this assumption isthat the urban and rural markets of East Central State would be fully suppliedfrom alternative sources. It is probable that the rural parts of East CentralState and urban areas such as Enugu would also be the markets for the projectand this would result in higher economic and financial millgate prices since(a) the transport from port to the market would be higher, and (b) the trans-port from the mill to the market would be less than projected with Ibadan asthe market. Hence the price estimates tend to be on the conservative side.Furthermore projects would be in full production after 1985 and the forecastedprice for 1985 in constant 1974 terms is substantially higher than the 1980price.

Kernels

4. For the purposes of the economic and financial millgate prices ithas been assumed that kernels will be exported at a projected 1980 price ofUS$330 per metric ton. The charges included are based on what is currentlyexpected to be the role of the Marketing Boards and NPMC, where the Mill canbypass the Marketing Board and sell directly to NPMC and hence avoid anyMarketing Board commission.

5. With the rapid expansion of crushing industries from 2 mills atpresent, with a combined crushing capacity of 110,000 tons per annum, toabout 7 - 9 mills with a capacity of 350 - 400,000 tons, provided all presentlyprojected investment programs materialize (nearly all joint enterprises withState participation), it is probable that a large proportion of kernels wouldbe processed locally and exported as kernel oil. In that case the export pricefor kernel oil would be obtained and given efficiency in the crushing operationsthe added value for Nigeria would be higher. Therefore taking the export pricesfor kernels is again a conservative estimate.

'A :mtuc !';

SK.ALHOLDER Oh PALM PROJECT

EAST CEflTRAL STATE

Estimated Economic and Financial Millgate Values of Palm OiAl

It is assumed that palm oil will be imported from Malaysia in 1980 at IJS$ 4i 55 /1per metric ton and that the CIF Nigeria price is the same as the CIF Europe Price.

Economic Financial

CIF Apapa (metric tons)

in 1980 prices US$ 495.0

in 1974 prices US$ 300.0 2

N 236.2 /3 N 197.4 AAdd Import duty N 39.5 15

Add Handling, storage at port,etc. N 2.4 N 2.4L -

Add Transport Apapa to Ibadan N 6.0 /6 N 8.0 ¢

Less Transport Ibadan to Mill N 21.0 /8 N 28.0 /9

Economic Millgate Price N 223.6 N 219.3 /10

/1 Price forecast for 1985 is US$ 757 or US$ 327 in constant 1974 prices.7 Deflated with International Price Index(1974 100; 1980 = 1 65. 0).

7T Applying a shadow exchange rate of N 1.00 = US$ 1.27.E Exchange rate: N 1 = US$ 1.52./5 Based on the differential between the existing official exchange rate

and the estimated shadow exchange rate (1.52/1.27 = 20 percent)./6 100 miles at 6 kobo per ton mile (8 kobo excluding taxes at 25 percent).77F 100 miles at 8 kobo per ton mile.E 400 miles at 5.25 kobo per ton mile (7 kobo excluding taxes at 25 percent)./9 400 rmiles at 7 kobo per ton.

/10 It was announced in April 74 that the sales tax of 10% would be abolished.

NIGERIA

SMALIHOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Estimated Economic and Financial Millgate Values of Kernels

It is assumed that palm kernels will be exported and that the value will bebased on a world market price of US$ 330 1/ per metric ton in 1980.

Economic Financial

CIF Europe (metric tons)

in 1980 prices US$ 330.0

in 1974 prices US$ 200.0 2/

Less Freight and insurance US$ 30.0

FOB Nigeria (Port Harcour,Warri) US$ 170.0

N 133.9 3/ N 111.8 4/

Less Handling at port N 1.8 N 1.8

Less Transport to port N 3.1 5/ N 14.2 6/

Less Marketing and inspectioncharges 7/ N 2.4 N 2.14

Less Bags N 6.2 N 6.2

Millgate Price N 120.4 N 97.2 8/

1/ Price forecast for 1985 is US$ 5014 or US$ 218 in constant 1974 prices.2/ Deflated with the International Price Index (1974 = 100; 1980 = 165.0).3/ Applying a shadow exchange rate of N 1.00 = US$ 1.27.1T/ Exchange rate N 1.00 = US$ 1.52.g/ 60 miles at 5.25 kobo per ton mile (7 kobo excluding taxes at 25 percent).&/ 60 miles at 7 kobo per ton mile.7/ To be carried out by NPMC.5/ It was announced in April 74 that the sales tax of 10% would be abolished.

NIGERIA

SMALl.dOLDER OIL PALM PROJECT

EAST CENTRAL STATE

Smallholder Farm Budget for 1 ha Planting

(Naira per ha)

Year: - 1 0 -L 2 3 4 5 6 7 8 9 10 11 12 13-28

Production (ton, of ffb) 2.5 5.0 6.3 8.8 10.0 J0.0 10.0 10,0 10.0 10.0

Sales @ N 19.0/ton /1 47.5 95.0 119.1 167.2 190.0 190.0 190.0 190.0 190.0 190I o

On Farm Costa /2Labor 32.5 52.0 22.8 19.5 14.6 17.1 18.7 19.5 20.2 21.1 21.9 21.9 20.3 19.5 19.5

Non-labor - 8.8 20. 3 L6,0 35.4 35.4~ 35.4 25.0 25.0 25.0 .25.0 25.0 250( 25,~0- 25.0

Total 32.5 150.8 43.1 45.5 50.0 52.5 54.1 44.5 45.2 46.1 46.9 46.9 45,3 44'5 44.5

Net Receipts before Grant/Credit (32.5) (150.8) (43.1) (45.5) (50.0) (5.0) 40.9 75.2 122,0 143.9 143.1 14'.1 144.7 145 5 145. 5

Grant Receipts /3 - 96.3 17.8 23,5 32.9 1532 /8 35.2 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0

Ciedit Receipts /4 - 50.0 15.0 15.0 20.0

Cumulative Credit /5 - 51.4 71.3 93.1 122.0 133.5 146.2 160.0

Credit Repayments /6 36.0 36.0 36.0 36.0 36.0 36.0 -

Net Benefits (32.5) (4.5) (10.3) (7.0) 2.9 10.2 56.3 85.2 96.0 117.9 117.1 117.1 118.7 119.5 155.5

On Farm Labor Costs 32.5 52.0 22.8 19.5 14.6 17.1 18.7 19.5 20.2 21.1 21.9 21.9 20.3 19.5 19.5

Gross Return /7 - 47.5 12.5 12.5 17.5 27.3 74.8 104.7 116.2 139.0 139.0 139.0 139.0 139.0 175.0

On Farm Man-Days 50.0 80.0 35.0 30.0 22.5 26.25 28.75 30.0 31.0 32.5 33.75 33.75 31.25 30.0 30.0

Gross Return per MD - 0.6 0.4 0.4 0.8 1.0 2.6 3.5 3.7 4.3 4.1 4.1 4.4 4.6 5.8

Li Benefits calculated at constant 1974 price for ffb.

/2 On Farm Costs at constant prices; include labor costed at full market price of 65 kobo/manday; fertilizers at full roat: no contingencies.

/3 Assumling all materials for planting and establishment provided as grant (except hand tools).

/4 Cash payment of N 100.0 per ha regarded as medium-term loan.

/5 Interest capitalized at 9.5%.

/6 Based on repayment of N 3.0 per mouth for 6 years,

/7 To management, labor, land and capital.

A Assumes maintenance of 50% subsidy on fertilizer, which will affect farmer from year 4i onwards.

/9 Year 0 is year of planting.

Mean Return per Nan-day over 30 years t N 4.0

Mean Net Benefits per ha over 30 years N 108.8

ANNEX 10

NIGERIA TTbls I

SMALL8OLDER OIL PALM PROJECT

EAST CENTRAL STATE

ADA Subsidiary Pro-ectsd Cash Flow, 1979 - 1991

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 0O,wards

Inflow (Constant Prices)

Sales - Palm Oil - 175.4 636.0 1,319.8 2,389.5 3,519.8 1,121.1 6,189.5 7,000.8 7,543.9 7,719.4 7,719.4 7,719.4

Sal _s-lterssls - 19.4 72.9 156.0 281.9 443.7 581.3 682.4 754.3 777.6 777.6 777.6 777.6

Loan from 1,112.1 1,251.6 264.6 687.0 860.0 - - - - - - - -

State uEqity 250.0 300.0 200.0 - - - - - - -

Total Inflow 1,362.1 1,746.4 1,173.5 2,162.8 3,531.4 3,963.5 5,702.4 6,871.9 7,835.1 8,321.5 8,497.0 S,497.0 8,497.0

Outflow (Constant rioos)

Oil Mill It-ootmont 1,112.1 1,142.8 198.8 543.9 793.9 652.4 4.1 - - - - - -

Fruit Callnction InvsatEeet - 108.0 65.8 143.1 66.1 156.6 82.4 167.6 83.4 223.7 139.7 139.7 139.7

Proje-t .aso Cost 1,112.1 1,251.6 264.6 687.0 060.0 - . - - - . -

Opareting Cost

Oil Mill Re-urrent 10/ - - 96.5 130,7 151.1 150.2 186.0 181.4 189.3 191.2 191.2 191.2 191.2

Freit Collection R-corront - 42.9 57.8 111.3 142.8 193.8 22533 255.2 269.2 302.8 302. 302.8 302.8

Frait Porch...s 2/ - 95.0 332.5 666.9 1,168.5 1,810.7 2,310.4 2,667.6 2,948.0 3,040.0 3,040.0 3,040.0 3,040.0

HNad Offic- 3/ 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0

Sob-Total 1,187.1 1,464.5 826,4 1,670.9 2,397.4 3,046.7 2,883.2 3,346.4 3,565.7 3,832.7 3,748.7 3,748.7 3,748.7

9ebt Service on NAB/IBRD Loan 4/ 50.1 156.4 224.6 267.5 337.1 605.8 605.8 605.8 605.8 605.8 605,8 605.8 605.8

Total Otflow 1,237.2 1,620.9 1,051.0 1,938.4 2,734.5 3,652,5 3,489.0 3,952.6 4,171.5 4,438.5 4,354.5 4,354.5 4,35445

Annual Sarplus/(Defitit) ConstantPrices 124.9 125.5 121.5 224.4 796.9 311.0 2,213.4 2,919.3 3,663.6 3,803.0 4,142.5 4,142.5 4,142.5 12/

Comalotirt Surplns/(Oeficit)Consta-t Prites - 250.4 372.9 597.3 1,394.2 1,705.2 3,910.6 6,837.9 10,501.5 14,384.5 10,527.0 22,669.5 26,812.0

Enpecntd Eff.cta of Esfletion 5/Influw - Solos 6/ 7/ - 126.6 543.0 1,312.0 2,727.5 4,609.6 7,493.0 9,984.9 12,536.2 14,612.6 16,322.7 17,809.7 -

Loan from Stats IBRD Loan 1,037.1 1,377.7 357.2 832.7 1,244.1 - - - - . -

Total Inflow 1,037.1 1,504.3 900.2 2,144.7 3,971.6 4,609.6 7,493.0 9,904.9 12,536.2 14,612.6 16,322.7 17,809.7

Outflov - Conta Bsfoo DebtSnerie S/ 1,070.9 1,494.0 728.0 1,600.1 2,627.8 3,168.6 3,402.2 4,451.2 5,312.9 6,400.6 6,972.6 7,722.3

DSbt S-iee 9/ 46.7 155.2 233.4 287.0 380.4 703.5 703.55 703.5 703.5 703.5 703.5 703.5

Total Outflow 1,117.6 1,650.0 961.4 1,887.1 3,008.2 3,872.1 4,105.7 3,154.7 6,016.4 7,104.1 7,676.1 8,425.0 -

let Effsets of Inflation (80.5) 145.7 (61.2) 257.6 963.4 737.5 3,387.3 4,830.2 6,519.0 7,508.5 8,646.6 9,383.9

Annoal Suryplon/(Sfitit) CurrantPrices 44.4 (20.2) 61.3 482.0 1,760.3 1,048.5 5,600.7 7,749.5 10,183.4 11,391.5 12,789.1 13,516.4

Cumulati-v Socplus/(Dsficit)Cureont Prices 44.4 24.2 03.5 567.5 2,327.0 3,376.3 8,977.0 16,726.5 26,909.0 38,301.4 51,090.5 64,616.9

1/ In ..antant pri-es (vitheut conting.acins).Z/ N 19 psr ton of frash fruit.3/ Cost stinates en the basis of onistino natoton 1973-1974 budget.4/ Rapaynont starts in 1984 and -ado in 1994. Interst at 9%.5/ Foe irdi-es see Tolls 2.6/ Inflated with international price iadea which is ensunad to eoetino- tt 6% a ysar efter 1985.

7/ Aetusl -. ntin 8nmeosi included in ADA p6ojoet cost.N/ Actoal contingoenies for pro3Jet coat and 7% .onpoondod for all othbr costs.

9/ Diffscones bcownn debt nofvits elan latd in estat torts (withoot e-otingsnciea) and in current t-ows (with oonting.. is).

10/ 1307. of esearrot esst o f till L. Owecri-Nta to allow foe.. ce -tn cost dos 10 pcoJeet Snnntnot of a 10 ton lint of

squip=eat in ADA's mill in ths wastern part of the pro ject ace.11/ Effects of inflotiso -almad for 1991 only and no fo- years owards.

12/ Aft-r last yne- of debt se-oics a l surplus will bo N 4,748.3 (1995 owards).

13/ locEenntal calh flow; eov-cs only oil palm p-ojeet and not other aetioitics of ADA.

August 1, 1974

ANNEX 10Table 2

NIGERIA


EAST CENTRAL STATE

Inflation Indices

Cost 1/ Project Costs 2/Inflation Contingencles

1974

1975 111

1976 119

1977 127

1978 136 _ _

1979 145 193.3 179.4

1980 155 210.1 195.4

1981 166 234.9 219.1

1982 178 221.2 210.3

1983 190 244.7 231.1

1984 204

1985 218

1986 233

1987 2h9

1988 267

1989 286

1990 306

1/ 7% compounded (in year concerned only half inflation percentage).Used to inflate costs other than project costs.

2/ Overall effect of inflation on ADA project costs using different ratesof inflation (as required by guidelines).

3/ Contingencies (physical and price) as percentage of base costs.E/ Price contingencies as percentage of base costs and physical contingencies.

NIGERLA

ONALLhOLDER OIL PALM PROJECT

EANT CENTRAL STATE

East Centr.l Stats Government Praieed Cal, Flov 1975-1995(N. 000

1971 1976 1977 1978 1979 1980 1981 1982 1983 1984 1987 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

INFLOW

IBRD Loan L/ 2/ 318.5 703.0 809.1 1,031.3 1,538.2 2,654.6 1,169.8 1,553.2 1,630.7 - - - - - - - - - -Par-nra Lean Rapnyneet - - _- - - - - - - 60.0 150.0 240.0 360.0 480.0 480.0 420.0 330.0 240.0 120.0 -ALMa OnSbaldlaryrepaymnenrt 31 - - - - 96.8 311.6 458.0 554.5 717.5 1,309.309 .3 .3 09.3 1,309.3 1,309.3 1,309.3 1.309. 3 1,309.3 1

Total Inflow 318.5 703.0 809.1 1,031.3 2,635.0 2,966.2 1,627.8 2,107.7 2,408.4 1,459.3 1,549.3 1,669.3 1,789.3 1,789.3 1,729.3 1,639.3 1,549.3 1,429.3 1,309.3 1,309.3

OUTFLOW

Field Entsbliahn..t 1/ 119.0 416.6 708.4 996.0 1,460.1 1.376,2 832.7 745.3 466.9 - - - - - . - - - - -InallboldPro Nanoagoe=eDUnit 4/ 655.1 1,052.4 793.7 812.3 1,042.9 879.6 669.7 669.6 649.9 660.1 705.4 754.0 80598 864.0 925.5 990.2 1,058.2 1,132.6 1,213.5 1,297.6 1,388.2ADA BoiOty Contrhibtion - _ - - 250.0 300.0 200.0 - - - - - - - - - - - - -Loan to ALA - - - - 2,149.2 2,629.3 621.8 1,519.7 2,104.1 - - - - - _ _ _ _ _ -Sabsidien 61 - - - - - 47.1 126.2 197.9 297.2 411.3 394.1 372.8 398.4 427.2 457.6 4696 923.z 560.0 600.0 641.6 6D6.415,nbt ServIce - oOnn LenaC-iteasnt C-sgo 7/ 91.8 88.0 82.4 75.5 62.1 42.6 28.3 18.1 6.1 - - - - - -Interest 8/ 13.5 57.0 121.2 199,4 351.1 571.8 734.4 850.1 985.4 - - - - - -PrnLpoipl 9/ - -- - - - - - I,758.6 1,758.6 1,758.6 1,758.6 1,758.6 1,758.6 1,758,6 1,758.6 1,758.6 1,758.6 1,758.6;

Total Oatflan ,879.4 1,614.0 1,705.7 2,083.2 5,315.4 5,846.6 3,213.1 4,000.7 4,509.6 2,830.0 2,858.1 2,885.4 2,962.8 3,049.8 3,101,7 3,238.4 3,340.0 3,451.7 3,372.1 3,697.8 2,074.6

nnrpmion/(Letlctl ) (560.9) (911.0) (896.6) (1,051.9) (2,680.4) (2,880.4) (1,585.32 (1,893.0) (2,101.1) (1,379.7) (1,338.8) (1,216.1) (1,173.5) (1,260.5) (1,412.4) (1,599.1) (1,790.7) (2,021.9) (2,262.8) (2,388.5) (2,074.6)

Cosnlati-e I-plan!(Defivet) (560.9) (1j471,9) (2,368.5) (3,420.4) (6,100.8) (8,981.2) (10,566.5) (12,459.5) (14,560.7) (15,931.4) (17,240.2) (L8,456.3) (19,629.8) (20,890.3) (22,302.7) (23,901.8) (25,692.5) (27,714.4) (29,977.2)(32;365.7) (34,440.3)

j/ IEnlodlng eEntiege-rl-S.2/ At N 2.50 per ha/month aver oine yncn nltet e seven-year grace period.3/ loterent sneared at 9%. After 81cr yearn grace Eor principal repayneot io equal blnonoal iCstallenta4/ Inlading cantingencie- duaing project period -nd ofterwardo inflated

at 72. ronpnouded.5/ Calending part oP IDRD loan and Sratto non c- ntribcticc.6/ Snbaidine (at 58.) on fertili-nr ... d in notate *tage. FertilLeer car dating field nntablteh.ent

folly coated ander field eta-bll-sbnot. sab.idien itflstad ot 77. coopoanded.7/ At 3/4% on codiob-roed l10088/ At 8,9Z 08 ditbarsed loan.

2/ FrinoIpAl. and Internet for bi -J tL -ePaett aver 11 yearn period.

Page 1

NIGERIA


EAST CENiTRAL STATE

Calculation of the Economic Rate of Return and Sensitivity Analysis

1. The annual costs and benefits used in calculating the economic rateof return to the project are given in Table 1 and a summary of the sensitivityanalysis in Table 2.

(a) Project Life

The life of the project is assumed to be 30 years and no residualvalue is attributed after that period. Planting would be completedby the end of 1980. Production would commence in 1980, and allareas would be at full maturity by 1988;

(b) Project Costs

The costs are those shown in Annex 5 but with the followingadjustments:

(i) price contingencies are omitted;

(ii) identifiable taxes and duties are excluded, namely, importduties on vehicles and equipment and certain farm inputsand indirect taxes included in operating costs;

(iii) labor is shadow priced at 65% of the estimated financialcost (smallholder labor 65 kobo and nursery labor 1 Naira).The shadow wage rate reflects a weighted average of economicwages in both peak and slack seasons;

(iv) the official foreign exchange rate does not reflect exactlythe domestic value of a unit of foreign exchange because oftaxes and subsidies. Therefore a shadow exchange rateN 1 = $1.27 has been applied instead of the official rate ofN 1 = $1.52. This implies an estimated overvaluation of theNaira of about 20%;

(v) in estimating the mill recurrent expenditure, the recurrentexpenditure for the Owerri-Nts Mill (Annex 4, Table 2) hasbeen increased by 30% to reflect recurrent costs due to the10 ton line in the other ADA mill;

ANNEX 1.2Page 2

(vi) the cost of the Tree Crop Section of the Federal Monitoring andEvaluation Unit has been distributed between oil palm,rubber and cocoa projects on the basis of 50%, 25% and 25%respectively. Since there are three palm oil projects, the 50%share has been apportioned between projects on the basis ofha's planted; and

(vii) physical contingencies (at 5% over all costs) have beenincluded during the project period (1975-1983).

(c) Benefits

(i) Yields and production estimates are given in Annex 7;

(ii) economic prices have been based on the Bank's priceprojections for palm oil and kernels. The priceprojections are $495 per metric ton of palm oil in 1980($300 in constant 1974 terms) and $330 per metric ton ofkernels in 1980 ($200 in constant 1974 terms). The economicmillgate prices for palm oil (N 223.6) and kernels (N 120.4)are given in Annex 8.

(iii) the value of project palm oil is treated as foreign exchangesavings (import substitution) and the value of kernels asforeign exchange earnings;

(iv) no additional benefits due to road development are takeninto consideration; and

(v) the Owerri-Nta Mill is commissioned in 1981, but fruitcollected in 1980 is either processed in ADA's pioneermills, or sold at the local market. It is assumed thatunder these circumstances only 25% of benefits will berealized.

2. Based on these assumptions the economic rate of return is 19.7%.A 10% increase in costs with benefits unchanged reduces the rate of returnto 18.2%. As usual, where project benefits occur after a long developmentperiod the rate of return is relatively insensitive to changes in costs andbenefits (Table 2). Even in the case of costs increasing by 20%, and benefitsdecreasing by 20%, the economic rate of return is 13.6%.

3. Without shadow pricing of labor and foreign exchange the economicrate of return is 16.4%.

SUALHIJISWR OIL, P04.8 PROJECT

RAFr CENTRA1 STATE

Sate of Rotor CalomIatios

1975 1976 1977 1978 1979 1980 1981 1982 1983 1994 1905 1986 1987 1988 1989 1999 1991 1992 1993/2004

COSTSSoaIlholder field establishment 96 7 415.0 636.2 919 6 1 09 1 998.8 50 4 382.1 200.1 ----------

Labor 30.0 217.4 349.0 425.8 560.8 538.1 212.9 136.5 38.5 -- -------

Local. cots 38.2 103.1 135.8 171.6 216.2 152.4 66.5 55.1 31.53

Forign achooge Costa 28.5 94.5 151.4 221.2 322.1 300.3 225.0 190.5 010.3 - ------

Ss,ellboldor field sold enance - - - - - 104.9 745.6 409.7 595.9 787.5 - 742.7 751.70_4 737.5-5. 736.0 734.0_2725.02715.23 702.0 712.9

Labor- - --- 34.1 80.6 146.3 223.1 504.3 520.6 551.7 337,3 558.6 534.0 525.0 351.2 312.0 51 2.0

Loca Costs . 15.7 59.0 57.2 05,6 109.6 100.5 95.0 92.0 92.0 97.9 92.0 92.0 92.0 92.0

Forign Eochange -toos- - 55.1 137.9 505.2 509.2 374.6 541.5 506.0 308.0 509.0 309.0 308.0 308.0 308.0 509.0

,MU7 - -,Anao...nt and overhed cotO .

05 _ Ood.....t ca_pitol cnoc 59.1 45.4 - 11.1 9.4 - 9.1 6.4 - 4.0 4.0 4.0 4.8 4.6 4.8 4.0 4.8 4.9 .

S181 He-dqna..er- personl -ots 137,0 13531 156.2 1l ~ 2 107.5 168.4 100.4 106.4 100.4 100.4 166.4 108.4 100.4 100.4 108.4 108.4 100.4 100.4 109.4

01817 Sedno-rt-rar--ncc -ts 9.2 14.9 14.8 14.0P 14.9 14.0 14.6 14.7 14.0 14.0 14.6 14,0 14.7' 14.0 14 .9 14.8 14.8 14.8 14.0

918 MM eoR ooi Om.1 its c-pirol co..s 140.41 13 7.9 29. 0 , 2.3 55.9 74.0o 12.5 - - 9.6 9.8 .6 8,6 0.6 9.6 0.6 9.6 9.9 9.6

S00 Rogional Uoits personal .cots 132,7 220.4 245.4 274.4 . 337.0 515.3 215.4 206.4 101.0 I 17.7 16 7.5 167.7 167.2 14 7.2 167.2 19 7.,2 167.2 167.2 167.2

100 Regional UIiSto ---cotcot 14.1 26.2 51.0 51.0 37.4 57.4 21.l, 21,4 21,4 19.9 19.9 19.6 lv.F 19.9 19.9 09.9 19.9 19.9 19,93

Road loprov-.et progra - 154.5 82.7 70.3 69.4 56.2 -

Teloinol 53.6 59.2 244 1. 95 - - - -- - --- ---- --

Sob tota 545,2900.7 500, 566,1 6~71.6 53~6,1 300.4 5574 325.7 555.9 3256 525,6 523.6 525.6 523.6 ?37.6 325.6 323.6 132.6

Loca costs 351110 551.2 473.4 465.2 541 I.7 465.3 327.7 313.4 297,7 279.0 279.0 279.0 779.0 2--79.0 - 279.0 279.0 279.9 279. 279.0

F-rogo E-cbango F-sco 160.2 249.5 114,7 104.9 178.9 70.0 53.2 44.0 30.0 44.6 44.6 44.6 441. I 44.6 445.6 449.6 44.6 494 .06 44.4

Mill Sovetn-nt - - - - 1,117.9 1,142.9 197.0 543.9 7539 657.4 4.1 - - - - - - - -

Fron Folotio nv"r1 . - - - 100,0 65.0 1453.1 66.1 156.1 07.4 167.6 87 5 223.7 139.7 159.7 159,7 139,7 159.7

Mi ll R__ncet 1/ 946.5 130.7 151.1 150,1 106,0 101.4 109.5 191.2 191.2 191,2 591.7 191.2 191.2

Frnit Cl101-L00 bR-, ..c 2 9- 5_7 98 11. 42.9 193.9 2Ž?553 258, 263,2 102 9 3829 1 02.8 302.8 30~,f,....,..,.,2L

Sob t0101 _ -1 11 2, 1 1-707 5 418. 9..,9?.% 11...L5i.2.,...,161½1.-_ 497.8 60.7 54~1,9 717.7- 635.7 633.7 655.7 633.7 63.3Z

"oca -mob . 2i01 719 2412 9 639,6 807.2 799.3 386.7 349.9 333.3 399.6 574.4 374.4 374.4 574.4 374.4

F.trig Cohag2los - . i7 176.0 790.4 551.7 361.7 191.1 254.3 208.6 519.1 259.5 159.3 259.5 259.3 289.3

Monitoring and E-1-t inc Oinisi- 2/ 91.4 55.9 94,1 B6. 1 796 1 /7 74 9 50.4 50.4 - - - - - - - - -

Total C-oto 3/ 7 65.07 _,5Th1 ..? - 0 1757. 15' 3 1 1" h 1, 72 4I, ,,,2234.5 f5. 44..J,2.3 2,272.1 1.583.6 1,659.5 1.602_,9 1779.7 1,691.3 1,603.3 1,672.5 1,669.3 1,669.3

of obich - labor rosin 3 3' 1.5 227. 567.5 441 5~8 6(,I; %66 296.9 255,7 304.5 329.6 351.7 357.5 550.0 354.0 315.0 515.2 312.0 315.0

loa ot / 504.4 75I 9 Yhi,..5 725,6 1,502 n .7 , 7 1, 157,0 1,500.5 1,006.9 606.0 720.9 704.3 770.6 745.4 745,4 741.4 741.4 745.4

f-oigo -ohnoo.g ot 3 779_ 594.0 517,4 777 1 411. 0 1 It £.." C 704.7 041. 1 780.9 577.0 606.9 51.2 670.7 611.9 611.9 611.9 611.9 611.9

lab- -tOO 4/ 20Th~ 149,4 Ž117~ 1'1II 567 7 5501 5 24 1 197." 197.7 197,0 208.4 215.6 719. 219.7 217.1 211.5 204.9 202.8 202.

loca -oo- 50.46 777 0- 2~, "',, 1 4/.10 70. 11 1 , I51 2 1 177'. 5 1,160,9 606.0 720.9 700.3 770.6 745.4 7541. 745.4 741.4 745.4

f-rig,, -ohonge coL~ t / 7,7.1 472..E 441 I1 f~Cb6 76 11 1 9__0_P 5.5 857.91- 692.4 72893,5 675.4 8., 04.8 734,5 734.3 774.3 74.3 754.5

Snh total ~~~~~~~~~~~~~~~~~007.8 1,57-5.1 1, 4Cj 4 1,401) .17' ;2 5,117 7 70,74. 7 4 2 ii0n. 0 21,21.9 1,906.9 1,664.0 1,596.9 1,795.1 1,696.0 1,691.0 1,694.6, 1,602.3 5,691.5

las s canes .(2L.i)......,.±SIAIX. ,Jjg ,f( ,,,jj,,,,) ('5 71 ~~77.9) ),55 1) ( 5 47 QiS._5),_,A_5 04) h(L (5454511 192.976170.5)8172.259(7275757727555) (72.5) (72.51 (72,5

Oco..onic Foote 769.7 9,,~j2.l .s9

5 1 3757 701 / r,21-.k_2, 41 5

... 32 20.9i 537. 7 _ I596.2 t1,5376.1,,_,,12.j,,,_,,,,)624 3 j,661_2 ,611 1,610. 1O6~10.0

BENEFITS

Palo oil -44 17 7/ 640.4 1,545.4 2,4 r6.5 5,994.7 5,721,5 6,310.9 7,219.6 7,691.9 7,870.7 7,970.1 7,807.7 7,970.7 7,870,7

Kernls 6.0 7/ 90.3 193 2 545.5 549.6 720.0 845,2 914,3 963,2 963.2 963.2 963.2 965.1 993.2

Residoal valo 6/ - 5 21.0 - ---

Total B-efit. 59.2 759.7 1,550 9 2,795.5 4,444.3 5,941,5 7,156.1 0,153.9 8,655.0 8,033.9 8,633.9 8,833.9 9,053.9 9,035.9

130195 of -e-orrot cots of nill In 0-sari Nts to IlI- for r.c...n .. or don 1 to ho p-ojo-t esmn of a10 nn lone of oqn,tp-c in, ADA'o mill in, the -t- pert of the pro) ater

2/507. of cots of -oioload ..valoation division charged to oil polo projecc, divided bet--eo statn and s-ollhldors ond -oclo-o aao pot ho boom. SIT is F-orig -honge, reminder loca cot-

3/ -orldes physirl1 -onioga-ias (57.) notil 1993.

4/ Shadow Priced tr 65%.

7/ Shadoo Pe1ed at $1 - N 1.27 as coopare.d efth $1 - 8 1.52 selcb ..e..s. p-onine of 205..

6/ Residoal yams of rod eqoipo-t Ia 1980 (N 8.500) a-d of s..rplos 1S7 vehiclee in 1991 (N 21,006).

7/ oil Palo mill nosisnio...d i,n 1981. F-it procssd before in ADA pioneer oil nll. or sold tin h .bs loa -krbt. It he asemod rhot 25% of benfits sIll ho relised moder thes tno-taos

ANNEX 12Table 2

NIGERTA

SMALLHOLDER OIL PAIN PROJECT

EAST CENTRAL STATE

Economic Rate of Return. Sensitivity Analysis

% of Original Estimates ------ ------ Rate of Return -

Costs Benefits With Shadow Pricinz Without Shadow Pricing

100 100 19.65 16.35100 90 18.05 14.75100 110 21.15 17.75110 100 18.15 14-95110 90 16.55 13.35110 110 19.65 16.35120 100 16.85 13.65120 90 15.25 12.05120 80 13.55 10.35120 110 18.35 15.05

IBRD 1!i9+6,

W E S T E R N N I G E -: I A CHAXD

\ \S ! j ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~B E N U E- ! NIGER Af,

Q 9o> bdn( X1 P L A T E A U 5}-- 4 -

o * 1 ~~~~~~~~M I D- ,,, o ,r b

t § -_\ 2 ~~~~~~~~~~~~~~~~~~~~~WESTERN e 9r. ' =-

W -f,--- @ < ~~~~~~~~OkitipvprJo , Enugu J

LAGOS - A ",BnnCt (Ef{ t

t 55e: O~~~~~Agbor ; J +r

- N I G E R I A A,,t EAST -t ---

,. -- . ,>t'. C ~~~~~~~~~~~E N TRA L T ,(x o-(<

071L PALM PROJECTSAREAS t1

NATIONAL CAPITAL ID

> ///Umrha </< 1

STATE CAPItALS -- , ' f _OwerriO 0 j

STATE BOUNDARIES - t , ; _

-- RIVERS5 "Y'- z ~ t Abo

-- INTERNATIONAL BOUNDARIeS , ,f , .O a 7

1 , ,/J >t/a 1 z I_t C1 ; ~~~~~~~~Calabar

20 40 MIL E 80 100 IS \Rll VEtR S YoHarcourt ;;

0 20 40 60 80 ro0 120 140 160 r+(a ~>W<_8 ,_J -J'-

17w bounldarie, shnlvm on th2ls lylap d,v ,20r

4r hilpl; e 1ldes-renieszbmo v llr.epr.0wle hzf rhe

4' Iw-rd Banlkand it, alflftwes. 6 81~ - ARi 7

a 6045 NIGERIA 70010 15 730'

EAST CENTRAL STATE MILES

Oil Palm Project 0,,,,I, 1 5 20 2,5p ~~~~~KILOMETERS :\>

Project area boundary

* Proposed mill sites

®3 Proposed regional units

A Fruit collection points ,

-5- Existing main roads PI UAHI 5'30'-30' Existing secondary roads Ezebor

~Project roads, paved OER

…--Project roads, earth /i

- -State boundary

<~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

WJ~~ld o ro 0Th edm_mehm ,n hin,o d_ otT

7IhiteWoeld Bonk nod ittofjtttoteo

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