Report No. 282a-UNI FILE COpyAppraisal ofSecond Cocoa ProjectNigeriaMay 21, 1974

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 of the report.

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CURRENCY EQUIVALENTS

Currency Unit Naira (N)US$ 1 = N 0.66Ni = US$ 1.52N 1 = Kobo (K) 100

WEIGHTS AND MEASURES

Unless otherwise stated, all weightsused in this report are metric. Theunit of area used is the acre.

1 metric (m) ton = 0.98 long ton1 long ton 1.016 m ton1 long ton = 2,240 lb1 hectare (ha) = 2.47 acres (ac)

1 acre (ac) = 0.405 ha

ABBREVIATIONS

AA : Agricultural AssistantACC Agricultural Credit CorporationAIIC Agricultural and Industrial Investment CorporationAMI Areas of Mass InfectionANCE Association of Nigerian Cooperative ExportsAO Agricultural OfficerAS : Agricultural SuperintendentCDU Cocoa Development UnitCFO Controller of Field OperationsCFS Central Financing SocietyCPMS Cooperative Produce Marketing SocietyCPMU Cooperative Produce Marketing UnionCRIN Cocoa Research Institute of NigeriaCSA Cooperative Supply Association, LimitedDECS Draft Expanded Cocoa SchemeFMANR Federal Ministry of Agriculture and Natural ResourcesFMG Federal Military Government

LBA Licensed Buying AgentMANR Ministry of Agriculture and Natural ResourcesoMD : Man-dayMWNCF Mid-Western Nigerian Cooperative Federation

a NAB Nigerian Agricultural BankNIFOR Nigerian Institute for Oil Palm ResearchNP New PlantingNPMC Nigerian Produce Marketing CompanyPID Produce Inspection DivisionPMAU Project Monitoring and Analysis Unit

RP ReplantingSAO Senior Agricultural OfficerSL Special LaborerSSVD : Swollen Shoot Virus DiseaseSWR Shadow Wage RateTCU : Tree Crop UnitUNDP United Nations Development ProgrammeWNMB Western Nigeria Marketing BoardWSFU Western State Farmers'Union

FISCAL YEAR

April 1 - March 31

NIGERIA

SECOND COCOA PROJECT

TABLE OF CONTENTS

?age No.

SUMIARY AND CONCLUSIONS ............................

L. INTRODUCTION ....................................... 1

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

III. THE COCOA INDUSTRY ................................. 3

A. Background ............... , 3B. Producer Prices ............................... 6C. Institutions .................................. 6

IV. THE PROJECT AREAS ................................ . 9

A. Western State ... 9B. The First Cocoa Project (764-UNI).11C. Mid-Western State .11

V. THE PROJECTS .11

A. Description .11B. Field Development .12

Vl. COST ESTIMATES AND FINANiCIAL ARRANGEMENTS .... ...... 15

A. Project Costs ................................. 15B. Proposed Financing ..... ....................... 17C. Procurement ................................... 19D. Disbursement .................................. 20E. Accounts and Audits ........................... 21

VII. ORGANIZATION AND MANAGEMENT ........................ 21

A. Organization .................................. 21B. Credit Arrangements and Terms of Sub-loans 23C. Staffing ...................................... 25

This report is based on the findings of an appraisal mission consisting ofMessrs. P. rh. Grosjean (Bank), J. Phillips and J. Braudeau (Consultants) whovisited Nigeria in January/February 1973, and a follow-up mission consistingof Messrs. P.A. Courbois and T.M. Kulatilaka (Bank) in August/September 1973.

TABLE OF CONTENTS (Cont'd)

Page No.

VIII. PRODUCTION. MARKETS, FARMER AND GOVERNMENE BENEFITS 26

A. Yields and Outputs ............................ 26

B. Markets and Prices ........................ ,. 26

C. Farmers Benefits ........................ . 27

.). Impact of Project on the Governments' FiscalSituations ................... ..... 28

IX. BENEFITS AND JUSTIFICATION ......................... 29

X. AGREEMENTS REACHED AND RECOMMiENDATIONS .. 30

ANNEXES

1. Marketing Boards and Cocoa MarketingTable 1 - Structure of the LBA Buying Allowances -

1972-73 CampaignTable 2 - Nigeria and World Production of Cocoa 1950/51 -

1972/73Table 3 - Cocoa Export, Value, Average Price and Contrib.ution

to Foreign Exchange EarningsTable 4 - Western State Marketing Board, Ba)lance Sheets

Table 5 - Western State Marketing Board Appropriatioxi ofAnnual Surplus and Producer Reserve Accournt

Table 6 - Western State Marketing Board, Cocoa TradingAccount

Table 7 - Mid-Western State Marketing Board - Balance

SheetTable 8 - Mid-Western State Marketing Board - Appropriation

of Annual Trading Surpluses and Produce ReserveAccount

Table 9 - Mid-Western State Marketing Board - Cocoa TradingAccount

2. Rate of Return CalculationTable 1 - Yields and Outputs

Table 2 - Price Breakdown from Spot New York to ProducerPrice, Allocation of Proceeds and Project EconomicValue of Cocoa

Table 3 - Western State - Economic Rate of Return

-Table 4 - Mid-Western State - Economic Rate of Return

'Table 5 - Economic Rate of Return - Western State Project,Sensitivity Analysis

",,Table 6 - Economic Rate of Return - Mid-Western StateProject, Sensitivity Analysis.

Table 7 - Breakdown of different prices used in sensitivity

analysis.

TABLE OF CONTENTS (Cont'd.)

3. Cocoa Marketing Cooperatives and Farmers' Union

Chart 1 - The Western State Co-Operative MovementOrganization Chart

Chart 2 - Western State Farmers' UnionOrganization Chart

Chart 3 - Western State, Ministry of Trade and Cooperatives,Co-operative Societies DivisionOrganization Chart

Chart 4 - Mid-Western State Cooperative Societies DivisionOrganization Chart

Table 1 - The Association of Nigerian Cooperative Exporters, Ltd.

Ibadan, Basic DataTable 2 - Western State Farmers' Union

Summary of Financial Statement

4. Agricultural Credit Organizations

Table 1 - Western State, Cooperative Investment andTrust Society, Ltd.Balance Sheets and Profit and Loss Accounts (1966-1972)

Table 2 - Western State, Cooperative Investment and TrustSociety, Ltd.Schedules of Loans and Investment (1966-1972)

Table 3 - Cooperative Bank of Western Nigeria, Ltd.Balance Sheets and Profit Appropriation Accounts

Table 4 - Cooperative Bank of Western Nigeria, Ltd.Profit and Loss Accounts (1967-1972)

Table 5 - Mid-Western Nigeria Cooperative,Central Financing Society, Ltd.Balance Sheets and P/L Accounts (1968-1972)

5. Technical Aspects, Project Organization and ImplementationTable 1 - Western State MANR Seed GardensChart 1 - Western State Organization ChartChart 2 - Mid-Western State Organization Chart

6. The Road Construction ProgramsAppendix - Details of the Mid-Western State Road Program

7. Project Program and Detailed CostsTable 1 - Total. Project CostTable 2 - Western State Planting ProgramTable 3 - Mid-Western State Planting Program and

Fieldi OrganizationTable 4 - Western and Mid-Western State Planting

- Per Acre CostTable 5 - Western and Mid-Western State New Planting

- Per Acre Cost

TABLE OF CONTENTS (Cont'd.)

Table 6 - Western State - On-farm CostsTable 7 - Western State - Buildings and VehiclesTable 8 - Western State - Personnel Cost 1974 - 1979Table 9 - Western State - Operational CostsTable 10 - Mid-Western State - On-farm CostsTable 11 - Mid-Western State - Buildings and VehiclesTable 12 - Mid-Western State Personnel CostsTable 13 - Mid-Western State - Operating CostsTable 14 - Western State Road ProgramTable 15 - Western State Road Program

- Equipment Requirements and CostsTable 16 - Mid-Western State Road ProgramTable 17 - Mid-Western State Road Program

- Equipment Requirements and Costs

S. Project FinancingTable 1 - Western State

- Detailed Financing of Project CostsTable 2 - Mid-Western State

- Detailed Financing of Project CostsTable 3 - Disbursement of Federal Government loanTable 4 - Disbursement schedule of Bank loan

9. Farmers' BenefitsTable 1 - Cash Flow to the Farmer, Four Acres of New

Planting Cocoa\Table 2 - Cash Flow to the Farmer, Four Acres of Replanted

Cocoa

10. Project Cash Flows\Table 1 - Western State Government Cash Flow\Table 2 - Mid-Western State Government Cash Flow\Table 3 - Federal Government Cash Flow

MAPS

Map 3006 R. Second Cocoa Project Area (Western State)Map 10495 Second Cocoa Project Area (Mid-Western State)

NIGERIA

SECOND COCOA PROJECT

Summary and Conclusions

i. This report appraises a project for which a US$ 20.0 million loanis proposed. It would expand the first IBRD financed 43,500 acres cocoa pro-ject in the Western State to 105,500 acres and establish 10,000 acres ofcocoa in the Mid-Western State. The first cocoa project, for which theFederal Military Government (FMG) and the Bank signed a US$ 7.2 million LoanAgreement (764-UNI) in June 1971, has developed sufficiently well to justifythe Bank supporting its expansion as requested by the Western State andFederal Governments. The Western State produces about 97% of Nigeria's totalcocoa production which has averaged some 240,000 tons annually in recentyears. In view of the enormous increase in oil exports, cocoa now representsonly 7% of Nigeria's total exports, however in Western State, where anestimated 1.2 million acres is planted, cocoa remains the mainstay of theeconomy. Much of the States' cocoa is old and in future production willdecline if replanting and some new planting does not take place. Theproposed project would have the objectives of the first project: to developa balanced program of replanting old and uneconomic cocoa farms and of newplanting on land suitable for cocoa cultivation. In the Mid-Western State,there are about 42,000 acres. These are quite,young and thus in this Statethe project would be concerned with new plantinig alone; mostly in Northernareas of the State where cocoa is the most rewarding cash crop availableto the farming community.

ii. The project consists principally of providing loans in cash and inkind as well as supporting extension services to some 27,000 cocoa farmers.The loans would be for planting or replanting up to 4 acres of cocoa. Loanswould be made to farmers in the Western State through the Cooperative Trust,and through the newly formed Agricultural Credit Corporation (ACC). In theMid-Western State, credit would be distributed through the Central FinancingSociety (CFS) of the cooperative movement. Credits to farmers made underthe project would total US$ 10.7 million, US$ 9.3 million in the WesternState and US$ 1.4 million in the Mid-Western State. Project farmers wouldbe either members of cooperative societies or, in the Western State, of theFarmers Union. Participants would be required to sell their cocoa to theircooperative societies or Union branches and from these cocoa sales creditrepayments would be deducted. As in the first cocoa project, farmers wouldbe provided with training as required.

iii. Project farmers would receive loans of up to N 96.5 per acre fo:-repl'iiiLng and 4 91.S per new planting, at 9-1/4, interest to be repai-j )svr

13 or 12 years. Farmers' loan repayments are expected to average about 307rof the net return from their new farms and when the loan has been fullyrepaid annual income per acre would be around triple the national average.In the case of replantings debt service would account for about 4rv of the

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net return and after repayment annual income per acre would be more thandouble the national average. The project would generate incremental cocoaproduction of about 25,000 tons annually at maturity in 1986 of which almost4,000 tons would be produced in the Mid-Western State. At a projected worldprice of US5 61/lb, Spot New York in 1980, the project would earn some US$30 million in net foreign exchange in 1986 and subsequent years.

iv. Project costs are estimated at US$ 40.0 million, USS 32.9 millionfor the Western State Project and US$ 7.1 million for Mid-Western StateProject. The proposed loan of US$ 20.0 million would finance 50% of projectcosts, covering the foreign exchange component estimated at US$ 10.0 million(25% of total project costs) and the balance of US$ 10.0 million would cover33% of the local costs.

v. Vehicles, tractors, sprayers, road making equipment, tools,fertilizers and insecticides estimated to cost US$ 6.1 million would beprocured through international competitive bidding in accordance withIBRD guidelines. Contracts for building, road construction and othercivil works, amounting to about US$ 3.8 million would not be large enoughto attract international interest and would therefore be granted underlocal competitive bidding, the rules for which are satisfactory to theBank. The major part of project costs would be some US$ 20.1 million forstaff salaries, on-farm hired labor, planting materials and operating cost;none of which would be suitable for any form of competitive bidding. Nigeriahas no pre!ferential import tariff agreements and competition between foreignmanufacturers on the domestic market is keen.

vi. In the Western State, the project would be implemented by theCocoa Development Unit (CDT) already established within the State Ministry ofAgric:ulture (MANR) to carry out the first cocoa project. In the Mid-West-t,rn 'Otate, a new Tree Crop Unit (TCU) would be established in MANR to car-ry out first the cocoa project and later, smallholder oil palm projectskappraised) and rubber projects (prepared). The Western State appointed aCoordinating Committee to oversee the ongoing project and this would auto-matically assume responsibility for the proposed new project. A similarcommittee would be established in the Mid-Western State to coordinate thework of agencies involved in that State's cocoa project and to advise themanager of TCU.

The project while making a contribution to Nigeria's foreignexchange earnings would serve mainly to ensure that an important section ofthe farming community retains its source of income which, without the project,would progressively deteriorate with the aging of the cocoa trees. Theproject would also continue to demonstrate an integrated approach to helpingsmall farmers and would develop institutions by supporting the cooperative

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movement, and ACC and the Western State Farmers Union. Based on the Bank'scurrent forecast of cocoa prices the estimated rates of return from invest-ment in the projects are 25% and 19% in the Western and Mid-Western Statesrespectively.

viii. The Bank has decided to limit its financing of projects whichincrease the production of commodities with an inelastic demand to caseswhere potential borrowers have few if any alternatives. This report showsthat the proposed project would in no way upset the balance between supplyand demand. In fact prospects for cocoa are good and without increasedproduction prices might increase to a level where substitution for cocoaproducts might become attractive and be to the disadvantage of cocoagrowing industry as a whole.

ix. The project would be suitable for a US$ 20 million Bank lcan, witha term of 20 years and a grace period of five years.

NIGERIA

SECOND COCOA PROJECT

I. INTRODUCTION

1.01 The Federal Military Governmennt (FMG) has requested a Bank loan tohelp finance cocoa development in its Western and Mid-Western States.

1.02 This report describes two projects, one for each state, whichwould assist farmers by providing credit for planting and replanting cocoa.The projects include the training of extension staff and farmers, thestrengthening of the cooperative movement and of the Western State Farmers'Union, and the rehabilitation of crop extraction roads in the project areas.

1.03 On June 23, 1971 FMG and the Bank signed a US$ 7.2 million LoanAgreement (764-UNI) for the planting and replanting of 43,500 acres (17,600ha) of cocoa in the Western State. At that time, Government expressed disap-pointment at the project's size in comparison with the Western State's 1.2million acre cocoa industry, and the project was started in October 1971 onthe understanding that the Bank would consider a second cocoa project ifthe results of the first were favorable. In November 1972, a Bank reconnais-sance mission recommended that the initial project should be expanded to100,000 acres as soon as possible and that a smaller 10,000 acre project,prepared by the Mid-Western State in an area contiguous to the Western Statecocoa area should be considered for financing by the Bank at the same time.Consequently this report appraises a Second phase cocoa project in WesternState and a new project in Mid-Western State.

1.04 This report is basec on a feasibility study 1/ prepared by thePlanning Unit of the Ministry of Agriculture and Natural Resources (MANR)of Western State; on a detailed Note 2/ prepared by MANR of Mid-WesternState; and on the findings of a Bank appraisal mission composed ofMessrs. P. Th. Grosjean (Bank), J. Braudeau and J. Phillips (Consultants)which visited the Western and Mid-Western States in January/February 1973.Subsequently a follow-up mission consisting of Messrs. P.A. Courbois,T.M. Kulatilaka and P. Th. Grosjean (Bank) visited Nigeria in September1973 to review the proposed credit channels. The proposed loan was negotiatedin Lagos In February 1974.

1.05 The proposed project would be the Bank group's third loan foragricultural development in Nigeria. The first was the Western State CocoaProject whose progress to date justifies its expansion and the second is alivestock project, for which Board presentation is scheduled in ',T-.In addition, the Bank is Executing Agency for the Nigerian Agricultural Bank(NAB) Project financed by UNDP, which started in March 1973.

1/ "Draft Expanded Cocoa Scheme" (DECS) by MANR, Ibadan, June 1971, 6 volumes.* 2/ t"Smallholder Cocoa and Oil Palm Projects" - MANR, Benin.

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II. BACKGROUND

2.01 The 12 state Federal Republic of Nigeria covers about 924,000 sqkilometers and in 1972 its population was estimated at 71 million. 1/ About50, of GDP, estimated at US$ 7.5 billion in 1971 is generated in the agri-cultural sector which employs some 70% of the labor force. In 1972, totaldomestic exports amounted to US$ 2.2 billion of which petroleum representedaonut 30" (US$ 1.8 billion) and agriculture represented 13% (US$ 0.3 billion).The i-ain agricultural exports are cocoa, groundnuts, groundnut oil and cakewitih cocoa representing 7% of total exports. Following recent price increases,tie valoe of petroleum production is expected to at least double in 1974,perhabs exceeding US$ 5 billion and to increase to around $10 billion by 1980.Oil palm products used to be important exports, but in view of increasingdomesti. consumption and the neglect and decline of the industry, palm oilis no longer exported in significant volume and palm kernel exports aredwindling. By and large Nigeria is self-sufficient in food, except for wheatwhich is being used in increasing quantities as bread consumption rises inNigeria's expanding urban population. Currently food imports are estimatedat about US$ 2.60 per capita annually with wheat imports costing a total ofabout US$ 33 million annually.

2.02 The Western State, with a population of about 10 million people, Illies between latitudes 6° and 90 and longitudes 2° and 4°, and comprisesabout 78,000 sq kilometers. Within the State there is considerable climaticvariation, rainfall varying from 45 inches (1,125 mm) in the northwesternsavannah zone to over 100 inches (2,500 mm) in the southeastern forestzone. The forest zone consists of swamp and rain forest, and producesrubber, cocoa, kola, palm products, citrus, robusta coffee and timber forlocal use and export. Food crops are also produced in the forest zone, butthe population is heavily dependent upon food from the savannah zone, whichcomprises about 35% of the State. This latter zone is well suited to theproduction of arable crops, such as yams, maize, sorghum, rice, tobaccoand cotton and has an important potential for livestock production. Beefcattle production in the western savannahs is being sponsored under theproposed Bank-financed livestock project.

2.03 The Mid-Western State lies approximately between longitudes 5° 00and 60 45 and latitudes 4° 45 and 70 30N, covers some 38,800 sq kilometersand has a population of 2.5 million. 1/ Bounded to the east by the NigerRiver the land is low-lying except for hills in the north, and is mostlycovered with tropical forest and its derivatives. With a seven-month rainyseason rainfall averages 100 inches (2,500 mm) in the coastal area and 60inches (1,500 mm) in the north. About 80% of the population is engaged inagriculture. The principal food crops are cassava, yams, maize and riceand the State's principal export crops are palm products, rubber and cocoa.The timber industry is also important. The Mid-Western State is one of themost important petroleum producing States of the Federation.

1/ The results of the November 1973 Census are not yet available.

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III. THE COCOA INDUSTRY OF NIGERIA

A. Background

3.01 Nigeria is the world's second largest cocoa producer after Ghanat.In 1971/72, 1/ out of a world production of 1.5 million tons, Ghana produced440,000 tons, Nigeria 255,000, 2/ and Ivory Coast 220,000. Nigeria's averageproduction over the period 1967-71 was about 239,000 tons or about 17% ofworld production, and of this about 97% was grown in Western State. TheMid-Western State produced nearly all of the remaining 3% and the smallbalance was from the other southern states. With insignificant exceptionscocoa is produced on smallholdings where yields average about 450 lb of drycocoa beans per acre. Yields vary widely, however, due to differences inmanagement, soils, and climatic conditions. The average individually ownedplanting of cocoa is about 3.5 acres, but more than 50% of farmers grow lessthan 2.5 acres and own only about 20% of total cocoa acreage; 25% of farmershave between 2.5 and 5.0 acres and own some 23% of total acreage; and theremaining 20% of farmers have more than 50% of total acreage.

3.02 From 1946 to 1958 Nigerian cocoa production stagnated at about100,000 tons annually. Thereafter, production increased steadily reachinga peak of 294,000 tons in the good growing season of 1964/65, however, thislevel was not achieved again until 1970/71, when excellent growing conditionsresulted in a record crop of 303,000 tons. In the intervening years, 1966-1970,production was much lower averaging about 217,000 tons. The substantial in-crease in production in the late 1950's and early 1960's stemmed from largeplantings of cocoa made in the 1950's in response to good producer prices,and the subsequent introduction by Government of an effective pest and diseasecontrol program. Cocoa production and export statistics are at Annex 1.

3.03 Due to substantially lower world cocoa prices in the 1960's than inthe 1950's and low Government controlled producer prices until 1969 (seepara 3.11) there has been no new planting or replanting of cocoa on a majorscale since 1961. Thus, while there is no accurate data available (see para4.02) it is probable that the productive acreage of Nigerian cocoa hasremained more or less static over the last decade with new plantings andimproved cultural techniques such as pest control barely offsetting lossesresulting from old cocoa being abandoned due to low yields. Governmentsurveys show that about 900,000 acres of Western State Cocoa trees, nearly75% of the usually accepted total of 1.2 million acres, are more than 30years old, and there is extensive visual evidence of large areas of cocoathat have been abandoned because falling yields have made farms unprofitable.However, the efficiency of Government cocoa survey work fell off sharply inthe late 1950's and 1960's, especially in the newer less settled eastern

1/ The cocoa year starts with the West African harvest which begins inSeptember.

2/ Nigera's cocoa production was 236,000 tons in 1972/73 and is estimateiat 219,000 tons in 1973/74 (see Annex 1, Table 2).

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areas, and it is probable that plantings in these areas are substantiallygreater than recorded. Recently Government increased the producer price ofcocoa from N 302/ton to N 400/ton. It appears that the lower producer pricewas just sufficient for farmers to maintain their farms satisfactorily, butthere is no evidence that it was inducing new planting or replanting on asignificant scale. Plantings in the 1950's were made when producer pricesranged between N 300 and N 400/ton. Given inflation and labor costs thatsince that time have more than trebled it is clear that the incentives toinvest in cocoa were appreciably less than 15-20 years ago. Alao there isa diminishing amount of land suitable for new planting, and replantingpreseats technical problems that generally are beyond the capacity of theaverage farmer to surmount without a large amount of technical assistance.Until 1972 Government was unable to supply such assistance on a significantscale.

3.04 The proposed projects were prepared to conform with FMG cocoa policywhich is aimed at ensuring that Nigeria retains its share of the world market.The Western State Government believes that this can be achieved only throughreplanting some 460,000 ac of aging cocoa over the next ten years togetherwith the establishment of about 95,000 ac of new cocoa. Whether such a largeprogram is justified will be determined by the survey of cocoa farms referredto in para 4.02. In the interim it appears that the ongoing project and theproposed project described in this report are justified.

3.05 In its projections of world cocoa supply the Bank 1/ estimatesworld cocoa supply at 1.8 and 2.1 million metric tons in 1980 and 1985,respectively; and that equilibrium between supply and demand will be reachedin 1980 at a current price of 61 cts/lb. This corresponds to 44.4 cts/lb in1974 prices. Demand and supply are expected to grow at around 2.6X annuallyuntil 1980 and at 3% thereafter, taking into account, as far as this ispossible, all planned and ongoing projects, including that described in thisreport. Indeed, it could well be that without planned additional production,a shortfall would occur in supplies that would increase prices to the extentthat substitution for cocoa might become attractive and thus detrimental tothe cocoa growing industry as a whole.

iAXf In the Bank's projections Nigeria is expected to produce about320,300 tons by 1980 and 385,000 tons by 1985, thereby retaining its shareof the world market. Included in this projection is production from theongoing and proposed Bank projects which would total some 41,000 tons atmaturity by 1986.

3.07 It may appear that there is little justification for Nigeria takingmeasures to improve the productivity of its cocoa farmers given (a) thenation's oil wealth and much lessened dependence on agriculture for foreignexchange, and (b) the growing urban community with its increasing demand forfarm products. Unfortunately, however, the scope for cocoa farmers to

1/ "The World Cocoa Market - Review and Outlook for Bank Lending" (R74-36).

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diversify is very limited since while with cocoa they enjoy an almost worldwide comparative advantage, in the case of most other farming activitiesthe converse is true. The cocoa belt is too dry for tree crops such as oilpalms and rubber and apart from citrus which is already grown widely,the only other alternative tree crop is robusta coffee, a commodity offeringfew if any advantages over cocoa. Farms are too small for grazing livestock,and a severe disease problem exists for all but trypano-tolerant cattle.If the cocoa farmer switches to food crops he is confronted by (a) the yetto be solved problem of maintaining soil fertility apart from using a systemof long duration fallows and (b) the need to cultivate by hand cropE for whichimproved varieties capable of producing returns per man day employed compar-able to cocoa have yet to be bred. In short, the Nigerian cocoa farmer withhis aging trees faces, in the absence of the proposed project, decliningincomes and standards of living unless his industry receives the new invest-ment that is needed to retain its comparative advantage by the use of themodern technology that has been developed in Nigeria and elsewhere.

3.08 In its cocoa policy Nigeria acknowledges that substantial Governmentassistance is necessary to induce farmers to undertake new plantXng and re-planting, and to begin to use inputs such as fertilizer, pesticides, and im-proved planting material. Consequently, Government provides:

a. credit for new planting and for replanting; and

b. subsidies on pesticides, improved planting materialand fertilizers.

While some credit was made available to cocoa farmers in Western State from1965 to 1970 this was inadequate in amount to sustain a well-organized program;and as supervision of participating farmers was inadequate, its impact on pro-duction has been insignificant. The situation changed in 1971 when implemen-tation of the Bank-financed Western State Cocoa project (764-UNI) began, seepara 4.07. To date no credit program for cocoa has been implemented in theMid-Western or other southern states.

3.09 In Western State, 50% of the cost of fertilizers, pesticides andseedlings is met by Government subsidies which cost about N 1.8 million perannum. The greater part of this is made up of subsidies on pesticides, andin particular insecticides. This cost compares with average annual StateGovernment revenues of N 29 million (1966-1970) from cocoa (see Annex I,para 18), and thus up to now cocoa subsidies have been financed by the industryitself.

3.10 Subsidizing farm inputs is part of Government's overall agriculturaldevelopment policy, and is aimed at establishing a realization in the farmingcommunity of the benefits of using such inputs. Although with the expectedhigher prices for cocoa, farmers should be able to pay the full cost of fer-tilizers and pesticides that are now subsidized, there is insufficient evidence,

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at this time, to show that cocoa farmers would apply part of their additionalincomes to purchase the same quantity of inputs at a higher price. Moreover,Government's input subsidization policy is applied throughout the agriculturalsector and since cocoa accounts for only a small part of the sector, it wouldbe impractical to introduce changes for one crop. For example, it is highlyprobable that a black market would develop in subsidized inputs with cocoafarmers purchasing fertilizers and pesticides from farmers who have boughtthese at subsidized prices. Additionally, the subsidization of agriculturalinputs forms part of Government's income redistribution policy, under whichoil revenues are distributed to other sectors. During negotiations assuranceswere obtained from Government that it would review with the Bank from time totime its subsidization policy affecting the cocoa production.

B. Producer Prices

3.11 Producer prices for cocoa were set by the State Marketing Boardsin advance of each harvest season until 1972. This was done in agreementwith the Federal Military Government, the Central Bank, and other StateMarketing Boards dealing in cocoa. In early 1973, FMG announced that infuture it would determine producer prices and that export taxes, previously15 to 20% of fob value of cocoa, would be lowered to 10% or the fob value.Appropriate details and legislation are still awaited, but the changes willbe made, and are in line with recommendations to increase producer pricesmade by the IBRD agriculture sector mission which visited Nigeria in April/May 1971 1/. In the meantime it has been announced that the cocoa producerprice for the period October 1973 to October 1974 will be increased fromN302/ton to N400/ton. On this basis and assuming the Bank's price forecastof a world price of 44.4 US cts/lb in 1974 the farmer would receive 68% offob value. With increased efficiency in the marketing and handling of cocoathe price for the farmer could be increased (see tables at Annex 2 forbreakdown of different prices).

C. Institutions

3.12 Mtinistries of Agriculture and Natural Resources (MANR). In bothStates MANR, which are headed by Commissioners for Agriculture appointed bythe State Military Governors, have responsibility for agricultural develop-ment. The MANR assist farmers by providing agricultural extension servicesand by operating fisheries, veterinary and forestry divisions. The MANR areresponsible also for export produce inspection services. Cocoa research, aresponsibility of FMG, is conducted by the Cocoa Research Institute of Nigeria(CRIN) whose main station is located at Gambari near Ibadan. CRIN hasdeveloped valuable new cultivation techniques as well as new high yieldingcocoa varieties.

1/ Agricultural Sect r Survey Nigeria, Report PA-115A, January 26, 1973(3 volumes).

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3.13 The impact of the MANR, in cocoa and other fields, has been patchy,not because of any serious lack of trained staff - by and large staff numbersand quality are adequate - but because extension advice is not supported bythe other services, credit, input supply, and product marketing that areessential for any successful program of agricultural development. The cocoaproject financed with Loan 764-UNI represents the only agriculttural developmentprogram in Nigeria where to date this approach has been adopted, although itis a feature of the rural development, rice, livestock and oil palm productionprojects that the Bank has recently prepared, and appraised in Nigeria.

3.14 Cocoa Marketing Cooperatives have existed in Nigeria since 1930 anddespite a somewhat chequered career have proven generally successful. Thebasic unit of the cooperative system is the primary society which operatesat village level. The apex organization in the Western State is the Associa-tion of Nigerian Cooperative Exporters (ANCE) and the Mid-Western NigerianCooperative Federation (MWNCF) fills a similar role in the Mid-Western State.In both States the cooperative movement is being actively assisted and en-couraged by Government. Further details on Cooperatives are given in Annex 3.

3.15 The Western Nigeria and Mid-Western Marketing Boards were establishedunder the Western Region Marketing Board Law of 1954 and separated in 1963after the creation of the Mid-Western State. They are responsible for market-ing their State's main export crops, until recently for fixing cocoa and otherproducer prices, and for accumulating operating surpluses to support producerprices at times of low world prices (Annex I gives details of the Boards'activities and organization). The Boards operate through licensed buyingagents (LBAs) who purchase, grade, store and transport produce to port ofshipment. Twenty-seven LBAs in the two States are cooperative unions andthese handle about 17% and 43% respectively of Western and Mid-Western cocoaproduction. Details of LBA functions and allowances are in Annex I.

3.16 The Produce Inspection Divisions (PID) of the State MANR are res-ponsible by law for maintaining quality and for ensuring that cocoa is ofexportable quality when handed over for shipment. A further quality checkis made immediately prior to shipment by the Federal Produce Inspection Service.About 99% of all cocoa exported from Nigeria is Grade I.

3.17 The Nigerian Produce Marketing Company Limited (NPMC) is a non-profit export marketing agency for all State Marketing Boards. NPMC collectssale proceeds, pays export duty and port, shipping and handling charges, andremits the balance less operating and handling charges, to the respectiveboards. Most cocoa is sold by private contract for delivery in six to ninemonths. These arrangements worked satisfactorily, but the role of NPMC willbe changed (see para 3.11). Details of NPMC are in Annex I.

3.18 The Cooperative Investment and Trust Society, Ltd. (CooperativeTrust), together with its subsidiary, the Cooperative Bank of Western Nigeria,was established to provide the Western State cooperative movement with com-. mercial banking services; seasonal production loans to cooperative society

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members, and seasonal cocoa pu;-chasing loans to Cooperative Unions. The Trustand the Cooperative Bank are well managed and organized. They have expandedrapidly over the last three years and enjoy the full confidence of both thecooperative movement and financial institutions in Nigeria, in particularbecause they have maintained satisfactory banking standards and preservedtheir financial and economic decisions from direct political influences evenin the politically agitated period follaoing Independence. The Trust andCooperative Bank have proved a satisfactory channel for loans to participantsin the first phase project, and would continue this role in the second. De-tails of the two agencies together with financial data are in Annex 4.

3.19 The Western Government reorganized its official agricultural creditsystem by creating a new Western State Agricultural and IndustrialInvesttient Corporation (AIIC) in early 1972. AIIC had just completed itsfirst financial year at the time of appraisal, but since then AIIC has beendissolved on the recommendations of consultants (the Economist IntelligenceUnit). The Agricultural Credit Corporation (ACC) has been established in itsplace. The ACC has been formed but funding arrangements and staffing havevet to be finalized.

3.20 MANR encouraged the formation of the Western State FarmersUnion (WSFU) to represent farmers interests at State level. MANR,which continues to support WSFU has proposed that ACC and WSFU should beused for the distribution of farm credit to non-cooperative members underthe proposed project with ACC acting in the same way as the CooperativeTrust and branches of WSFU in the same way as the cocoa marketing cooperatives.The follow-up mission which visited Nigeria in September 1973 concluded that:

(a) in its present form the WSFU is not a suitable institutionto assume responsibilities similar to those of the cooperativeand lacks the legal powers to perform functions such ascocoa marketing and credit recovery;

(b) to carry out similar functions to the cooperatives, WSFUshould create a financially and administratively autonomousagency in the form of a multipurpose cooperative, company orcorporation. This agency, which would be subject to appro-priate Governmental supervision, would provide WSFUT memberswith cooperative marketing facilities;

(c) ACC could be a channelling agency for credit to cocoa farmersprovided that it is:

(1) established under conditions satisfactory to the Bank;

(2) properly staffed at the head office and in the field; and

(3) adequately funded and not burdened with responsibilityfor recovery of bad debts incurred by AIIC.

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Government indicated that ACC and the proposed WSFU agency would be fundedand staffed in forms satisfactory to the Bank before their participation inthe project. Even if this may take a substantial amount of time, it isbelieved that in the meantime sufficient potential participants who arecooperative members will join the scheme and thus ensure achievement ofplanting targets. Further details on WSFU and ACC are in Annex 3 and 4,respectively.

3.21 In Mid-Western State, the Central Financing Society (CFS) is theapex financing society for cooperatives. Although not as well developed asthe Cooperative Trtst, CFS would be a suitable credit channel for farmersparticipating in the proposed project. Further details on CFS are at Annex 4.

IV. THE PROJECT AREAS

A. Western State

4.01 The Western State project area covers the same cocoa growing areasas the first cocoa project: the former Abeokuta, Ibadan, Oyo, Ondo and IjebuProvinces (see Map). Within these areas climatic and soil conditions arewell suited to cocoa production, and although Swollen Shoot Virus Disease(SSVD, see Annex 5) is endemic, the Nigerian strains do not cause trees todie. In two areas - designated areas of mass infection (AMI) - one nearIbadan with about 100,000 acres of cocoa, and the other near Ilaro with about25,000 acres of cocoa (see Map), no SSVD control measures are practised,since the only effective form of control would require cutting out most of theexisting cocoa trees, and the economy of these areas would be completely dis-rupted. The AMI's, however, include areas very suitable for cocoa replantingand this can be done provided the measures described in Annex 5 are undertaken.Elsewhere all cocoa farms are regularly surveyed and when SSVD is identified,the diseased trees and their contacts are mandatorily uprooted and the growercompensated. CRIN has developed cocoa varieties with resistance to SSVD andwhen sufficient seed of such varieties becomes available, see para 5.08, thesewill be very suitable for planting in the AMI and other areas where the inci-dence of the disease is high.

4.02 Survey of Cocoa Farms. The last comprehensive survey of the State'scocoa industry was made in the mid-1950's and is now out of date. Consequentlya survey of the Western State cocoa industry is being financed under the firstcocoa project. The survey is under way and accurate data on total cocoaacreage; farm size and age of plantings; number of farms, farmers and farmfamilies, and average yields, costs and returns, should be available in 1974.Such data will be invaluable for planning the development of, and for manag-ing the State's cocoa industry. Preliminary information indicates that morethan 90% of Western State cocoa is within the project area.

4.03 Labor Situation and Requirements. In view of the various climato-logical sub-regions of the Western State, there is no marked slack season forrural labor but there are peak labor requirements during the May to August

period, when food crops are being planted and food and tree crop farms weededand maintained. The average cocoa farm family has some three active equivalentworkers. Additional labor is hired daring the harvest period, particularlyin September and October, thus, hired labor, particularly that moving in fromthe savannan zone and the Northern States, is essential to cocoa farmers inthe project area, especially those whose holdings exceed 2 to 3 acres. Thereturn per acre affects the amount of labor used on a cocoa farm, and the useof new varieties, fertilizers and improved disease and pest controls, wouldenable farmers to offer wages sufficiently attractive to ensure an adequatesupply of labor.

4.04 Farming Systems and Incomes. Cocoa farmers generally produce mostof the food crops needed for family subsistence. Data collected in the 1960'sfrom intensive surveys of selected villages, showed a typical cocoa growerIn the former Ondo Province to have the use of some 20 acres 1/ of which about10 acres in fallow, 3 acres planted with maize, cocoyams, cassava, cowpeas andvegetables, and about 5.5 acres in tree crops of which some 3.8 acres incocoa and the balance in coffee, oil palms and kola with citrus being grownin the housing compounds. All cocoa farmers kept livestock, goats, sheepand poultrv, and it was estimated that cocoa farmers in the surveyed villageearned an estimated average gross income of N 40 per acre from food crops,and about N 43 per acre from tree crops, giving an annual net return of aboutN 350 (US$532) per farm. With an average farm family of 6 persons, averagenet annual income from crops was N 58 or US$88 per capita. Most familieshave other sources of income, from petty trading and other activities.

4.05 Cocoa farmers generally live in large villages or small towns, nonelive on their farms. Usually water is obtained from wells, but in the largercenters supplies are reticulated and some centers have electricity. Primaryeducation is available throughout the area although secondary schools aremore dispersed. Government dispensaries are maintained in most villages,and hospitals have been established in the major towns. By and large thecocoa areas enjoy substantially better standards of social welfare than therest of rural Nigeria.

4.06 Communications. Good roads and a railway are available forevacuating cocoa from the project area to the ports of Lagos and Warri.The project area is generally well served by primary roads and secondaryroads, although secondary roads linking small villages to cocoa purchasecenters and farm access roads are often in poor repair and farmers usingthese have to pay excessive transportation charges.

1/ Population pressure in the former Ondo Province is less than in othercocoa growing areas and total farm size greater.

B. The First Cocoa Project (764-UNI)

4.07 The Western State Cocoa Development Project began operations inNovember 1971 with the objective of planting or replanting 43,5G0 acres byend of 1976. Progress has been satisfactory and although a slow start made itimpossible to establish all the nurseries required for the 1972 season's,9,000 acre establishment target, 5,500 acres were planted by July 1972. Thestandards of planting were good although the establishment of shade prior tococoa replanting in many cases was unsatisfactory due to the same timeconstraint experienced in the case of the nurseries. Despite this, anddespite the abnormal dry season of 1972/73 losses in 1972 plantings wereonly 45%, compared with 75% on plantings made by CRIN, and the 10-15% acceptablein a normal year. For 1973, time was available for preestablishing shade andoverall technical standards are good. In 1973 the planting target of 10,000acres was slightly exceeded and all 1972 vacancies supplied; consequentlymore than 15,000 acres are established compared with an appraisal estimateof 18,000 acres. Field counts made in late 1973 reveal losses of less than 5%.A recent expert technical supervision mission has commented most favorably onthe technical aspects of the project.

4.08 Farmer response has been good. Credit aspects have been handledefficiently, and CDU management is satisfactory. A high degree of espritde corps and dedication has developed within CDU which is fully Nigerianstaffed. Project costs are in line with appraisal report estimates.

C. Mid-Western State

4.09 Cocoa in Mid-Western State is confined to its northwest areas whichadjoin the Ondo Province of Western State. In these areas rainfall and soilsare very suitable for cocoa. The project area would include parts of theAkoko, Edo, Etsako Owan, Ishan and Eastern Benin and Western Benin (see Map).

4.10 The Mid-Western State has about 42,000 acres of cocoa, yielding anaverage (1968-72) annual production of about 10,000 tons; or about 530 lbper acre. The situation of the cocoa industry and of the cocoa farming com-munity is similar to that obtaining in the Western State.

V. THE PROJECTS

A. Description

5.0I In Westeni State, the project would be the second phase of a programbegun in 1971 with Bank assistance to rehabilitate the Western State cocoaindustry, and would be carried out over a seven year development period.The project would involve:

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a. planting with high yielding cocoa varieties up to 18,100 acresof new cocoa and replanting up to 43,900 acres on which cocoais either old and yielding at sub-economic levels or has beenabandoned. This would be achieved by providing some 24,000cocoa farmers with credit for planting material, labor, fer-tilizers and chemicals under the close supervision of theexisting Cocoa Development Unit (CDU);

b. training project staff and farmers in modern cocoa productiontechniques;

c. rehabilitating some 200 acres of MANR cocoa seed gardens plantedwith Amazon hybrid varieties and in establishing a 25 acre seedgarden of SSVD resistant varieties with CRIN assistance; and

d. rehabilitating or upgrading 600 miles of secondary and farmaccess roads in the project area.

5.02 In Mid-Western State the project would be carried out over eightyears and would involve:

a. planting with high yielding cocoa varieties up to 10,000 acresof new cocoa. This would be achieved by providing some 3,000farmers with credit for planting material, labor, fertilizersand chemicals under the close supervision of a Tree Crop Unit(TCU) to be established under the project;

b. training staff and farmers in modern cocoa productiontechniques;

c. rehabilitating the 16 acre MANR seed garden at Uhonmora withhigh yielding Amazon hybrid varieties; and

d. constructing or upgrading some 63 miles of secondary roadsin the project area.

B. Field Development

5.f3 Including plantings that would continue to be made under theongoing first phase project, the acreage of cocoa plantings (NP) and replant-ings (RP) would be as follows:

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Caleadar Year 1972 1973 1974 1975 1976 1977 1978 Total------------------------- acres…--------------------------

Western State

RP ongoing project 2,500 6,900 8,600 9,000 - - - 27,000RP proposed project - - 4,900 11,250 27,750 - - 43,900

NP ongoing project 3,000 3,300 4,200 6,000 - - - 16,500NP proposed project - - 2,100 3,750 12,250 - - 18,100

Total ongoingproject 5,500 10,200 12,800 15,000 - - - 43,500

Total proposedproject - - 7,000 15,000 40,000 - 62,000

Total Western State 5,500 10,200 19,800 30,000 40,000 - - 105,00

Mid-Western State

Proposed project - - - 1,500 2,750 2,750 3,000 10j000

GRAND TOTAL 5,500 10 200 19,800 31_500 422750 2,750 3,000 115 500

In Western State all project cocoa would be in production by 1979, and inMid-Western State by 1981. Operations in Western State would be apportionedas follows between the various CDUi administrative circles:

Akure Ife Ibadan Abeokuta Total…___-__----------------…---acres…--------------------

RP 17,500 22,200 19,100 12,100 70,900NP 19,000 14,700 500 400 34,600

Total 36,500 36,900 19,600 12,500 105,500

In Mid-Western State, project plantings would be apportioned equally betweenthe three project zones.

Cocoa Establishment

5.04 In establishing their cocoa, farmers would receive credit for seed-lings, labor, fertilizers and capsid control. Credit would be in kind - cocoaseedlings produced by the project units in centralized nurseries, fertilizer,insecticides, and sprayers and in cash for part of the labor required for farmdevelopment and maintenance until plantings are four years old. Fertilizerswould be supplied by the project unit for application in the first four years.After the four years, farmers would be able to obtain seasonal input credits. from the credit institutions.

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5.05 The Western State project would involve the supply and distributionto farmers of some 32 million seedlings, 10,000 tons of fertilizer, 16,000gallons of chemicals and 12,000 sprayers; and in the Mid-Western State 5.2million seedlings, 1,600 tons of fertilizer, 2,500 gallons of chemicals and1,500 sprayers.

5.06 Pro ject Staff Training. The Cocoa Research Institute of Nigeria(CRIN) would provide inservice training for the staff of both projects. Itwould give an intensive two-week course covering modern methods of cocoa pro-duction. This training of some 340 agricultural officers and superintendents,agricultural assistants and special laborers would be financed under theproject. In addition, an estimated 10% of project farmers would attend a 5day-course in cocoa farm management at CRIN which is equipped for this purpose.CRIN would also supply the services of its scientists to the project units asrequired. Under the first cocoa project CRIN has proved that it is capableof handling these training requirements.

5.07 Project Administration. To implement the cocoa project financedunder loan 764-UNI a Cocoa Development Unit (CDU) responsible to Western*;tate MANR was established. CDU works well and would be responsible for thesecond phase project. In Mid-Western State, a Tree Crop Unit (TCU), responsibleto MANR would be created which would be responsible for carrying out thecocoa project appraised in this report and oil palm and rubber projects nowunder preparation. Details of project organization are in Chapter VII.

5.08 Seed Gardens. Western State MANR operates six seed gardens pro-ducing high yielding hybrid varieties totalling some 200 acres. Under the pro-ject CDU would assume responsibility for these and has already made arrange-ments to increase pod production to meet 1974 planting requirements. Similarly,in Mid-Western State, MANR's seed garden at Uhonmora would be taken over byTCU. This garden will not be in full production for another four years,and until that time seed required for the project would be obtained fromGRIN. With CRIN assistance CDU started to establish a new 25-acre seed gardento produce SSVD resistant hybrids to meet AMI needs. Seed from this willnot be available for five to six years. The costs of all seed gardens havebeen included in project costs. Assurances that CRIN would supply all additionalseed pods required for the projects were obtained during negotiations.

5.09 Construction Program. In Western State CDW headquarters in Ibadanwould be expanded to accommodate the necessary increase in CDU staff and anoffice building and store would be constructed in each of the four projectcircles. Six smaller sub-circle branch office buildings would also be con-structed. In Mid-Western State, TCU headquarters would be built in Benin,and three office buildings with stores at each of the three Regional Units.In addition two houses would be built for officers in charge of Regional Units.

.0

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5.10 Road Program. Western State CDU estimates that some 1,400 milesof secondary and farm access roads need upgrading to permit the efficienttransport of cocoa from growing areas. Under the project, 600 miles of secondaryand farm access roads would be improved during the three-year period 1974-77.This program would cover priority needs and should not be a burden on CDUmanagement, which would establish a road unit, headed by a road engineer.Equipment 1:o be purchased would be employed by CDU and maintained by the sup-plier in accordance with a special covenant in the equipment sales contract.After const:ruction the equipment would be handed over to the local authoritiesresponsible for maintenance, or retained by CDIU if it is to continue the roadprogram. In project costs it has been assumed that some 350 miles of existingsecondary :roads would be upgraded and that 250 miles of farm access roads,which are Little more than improved tracks, would be developed. The mainthrust of the program would be in the eastern part of the State (Akure, Ilesha,Ife, Ondo, Owo and Ekiti), as roads in the Abeokuta - Ilaro area and aroundIbadan are generally in fair condition. Specifications and design standardsare at Annex 6.

5.11 The Mid-Western State Road Program. In Mid-Western State some 63miles of roads would be upgraded to secondary road level. The road sectionshave been :identified; they and the work required on them are listed in Annex 6,and the roads are shown on the Map. As in Western State a road engineer wouldbe hired to execute the road program, see Chapter VII.

VI. COST ESTIMATES AND FINANCIAL ARRANGEMENTS

A. Project Costs

6.01 Estimated costs for both Western and Mid-Western projects totalN 26.3 million (US$ 40.0 million) with a foreign exchange component of aboutN 6.6 million (US$ 10.0 million) or 25% of total costs. The share of the twoprojects in total project costs would be:

FE ComponentN US$ % of Total N US$Million cost Million _

Western State 21.6 32.9 82 5.4 8.3 25

Mid-Westerni State 4.7 7.1 18 1.2 1.7 24

6.02 The breakdown of project costs is detailed in Annex 7 and summarizedin the fol.lowing table:

Summary of Project Costs 1974 - 1982

ForeignLocal Foreign Total Local Foreign Total ExchangeA. Wese N million ..... 00000 US$ million .....0 %

A. Western StateOn-farm costs - replanting 4.51 1.30 5.81 6.85 1.98 8.83 22

- new planting 1.67 0.54 2.21 2.54 0.82 3.36 24Subtotal 6* 1 18 8 T 8 oO2 9.39 2 =5 12.19 23

Staff and training 3.54 0.39 3.93 5.38 0.59 5.97 10Buildings 0.27 0.08 0.35 0.41 0.12 0-53 23Vehicles and sprayers 0.16 0.66 0.82 0.25 1.00 1.25 80Road program L 1.82 0.92 2.74 2.76 1.40 4.16 34Operating costs L2 0.20 0.19 0.39 0031 0.29 0.60 49

Subtotal 12.17 b- 16.25 1 T705 620 2 240

Contingencies - physical 0.62 0.20 0.82 0.94 0.30 1.24 25- price 3-43 1015 4.58 5.21 1675 .j96 25

Total Western State 16.22 21.65 24.65 8Q25 32.90 25

B. Mid-Western StateOn-farm costs 0.92 0030 1.22 1.40 0.46 1.86 29Staff and training 1.17 0.13 1.30 1.78 0.20 1.98 10Buildings 0.13 0.04 0.17 0.20 0.06 0.26 25Vehicles and sprayers 0.06 0.16 0.22 009 0.24 0.33 75Road program /1 0.31 0.15 0.46 0.47 023 0.70 32Operating costs /2 0.07 0.08 0.15 0.11 0.12 0.23

Subtotal 27 .06 3.52 07 31 T36 2

Contingencies - physical 0.14 0.04 0.18 0.21 0.06 0.27 24- price 0.74 0.23 0.97 1.12 0.35 1.47 24

Total Mid-Western State 3.54 1.13 4.67 5.38 1.72 7.10 24

C. SECOND COOOA PROJECT 19076 6.56 26.32 30.03 Z.9740. 2L

/1 Road program includes per onal costs, equipment operating costs, civil works contracts, and road equipment.

/2 Operational costs are tho costs due to operating of offices and vehicles of the staff.

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6.03 Project costs include a 5% physical contingency calculated over theseven and eight year development periods and price contingencies 1/ compoundedannually over the proposed seven-year loan disbursement period (see paras 6.10and 6.11). Contingencies amount to N 6.6 million (US$9.9 million) or 24.8%of total project costs. Costs which reflect end 1973/begin 1974 conditions,are based on Government salary and wage scales, up-to-date building and roadconstruction costs, and recent quotations by suppliers of vehicles, materialsand farm inputs. Labor requirements, operating and other relevant costsare based on experience obtained fror,i the on-going cocoa project after reviewwith MANR and CRIN. Project costs include imnort duties, income tax on staffsalaries, and other local taxes estimated at N 0.78 million (UIS$1.18 million)consisting of N 0.61 million (US$0.93 million) and N 0.17 million (USSO.25million) for the Western and Mid-Western States respectively.

B. Proposed Financing

6.04 Agricultural projects in Nigeria, except those involving massiveinfrastructure, typically have a low foreign exchange component. If IBRDfinanced only this percentage its contribution would be excessively small;thus it is proposed that IBRD should make a loan of US$ 20.0 mil'ion to cover50% of project costs. Such loan would be made to the Federal Military Governmentfor 20 years including a five-year grace period for principal during whichinterest and commitment charges on the Bank loan would be paid. Under thisarrangement US$ 10.0 million or 50% of the loan would cover the estimatedforeign exchange component and the balance of US$ 10.0 million (25% of theloan) would finance 33% of local currency costs. The IBRD Loan would beappropriately apportioned and onlent to the Western and Mid-Western Stateson identical terms together with Federal Military Government grants totallingUS$ 10.0 million (N 6.6 million) or 25% of project costs. On this basis,the Western State Government would receive a total of N 16.2 million (US$24.7 million) from FMG of which N 10.8 million (US$ 16.5 million) would comefrom the Bank. Similarly the Mid-Western State would receive N 3.5 million(US$ 5.3 million) including N 2.3 million (US$ 3.5 million) from the Bank.In both States, the FMG grants and Bank loans would represent some 75% of theproject costs and the remainder would be provided by the respective StateGovernments. These contributions would be N 5.4 (US$8.2 million) for theWestern State and N 1.2 (US$ 1.8 million) for the Mid-Western State.

6.05 Each year the State Governments would make block budgetary alloca-tions to cover annual project costs, and the funds so earmarked would bemade available quarterly in advance to the respective project managementunits. Expenses reimbursable under the FMG loan agreements would be claimed

1/ Price contingencies applied are in accordance with Bank guidelines andare:

12/10/8/8 ... etc. range for buildings and local civil workcontracts.

9/7/5/5 ... etc. range for equipment, furniture, vehiclesand farm inputs.

6/6 ... etc. range for labor, salaries and operatingexpenses.

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from the Federal Ministry of Finance which would in turn claim from the Bank

under the IBRD loan agreement. During negotiations, assurances were obtained

from the Governments that the terms and conditions of the subsidiary loanagreements between FMG and the two State Governments would be acceptable to

the Bank and that funds would be made available quarterly in advance to the

project units.

6.06 In summary, the financing of the two projects would be as follows:

Western State Mid-Western State TotalProject Project Projects Costs

N US$ % N US$ % N US$ X

State Govern-ment 5.41 8.22 25 1.17 1.78 25 6.58 10.00 25

FMG 5.41 8.23 25 1.17 1.77 25 6.58 10.00 25

Bank 10.83 16.45 50 2.33 3.55 50 13.16 20.00 50

Total Costs 21.65 32.90 100 4.67 7.10 100 26.32 40.00 100

6.07 The Western State Government would apply the total N 21.65 million

(US$32.90 million) representing the proceeds of the Bank loan, FMG grant and

the State's contribution in the following manner:

a. to CDU, an amount of N 7.42 million (US$11.27 million) forstaff salaries, operating costs, building, vehicles andequipment, and subsidies on farm inputs;

b. to CDU, an amount of N 2.74 million (US$4.17 million) tofinance and operate the road program;

ce to CDIU, an amount of N 5.40 million (US$8.21 million) ascontingencies on the above items; and

d. to the Cooperative Trust, and to ACC a total amount ofN 6.09 million (US$9.25 million) for onlending to farmersfor farm inputs and hired labor.

The amount to be- onlent through the Cooperative Trust and ACC would be fixed

annually and approved by the Bank on the basis of the CDU work program and

budget for the following year. This requirement would be incorporated in

the subsidiary loan agreements between the Western State Government and the

two credit organizations; the terms and conditions of these agreements (see

para. 7.13) would be acceptable to the Bank and assurances to this effectwere obtained during negotiations.

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o.08 The Mid-Western State Government would apply the proceeds of theBank loan, FMG grant and its own contribution, amounting to a total of N 4.67million (US$7.10) as follows:

a. to TCU, an amount of N 2.15 million (US$3.27 million)for staff salaries, operating costs, building, vehiclesand-equipment, and for the subsidies on farm inputs;

b. to TCU, an amount of N 0.47 million (US$0.72 million) tofinance and operate the road program;

c. to TCU, an amount of N 1.14 million (US$1.72 million) ascontingencies on the above items; and

d. to CFS, an amount of N 0.91 million (US$1.39 million) foronlending to farmers for farm inputs and hired labor.

The amount to be onlent through CFS would be fixed annually and approved bythe Bank on the basis of the work program and budget for the following yearof the TCU cocoa division. This would be incorporated in the subsidiary loanagreement between the Mid-Western State Government and CFS; the terms andconditions of this agreement would be acceptable to the Bank, and assurancesto this effect were obtained during negotiations.

C. Procurement

6.09 Procurement of vehicles, tractors, road making equipment, sprayers,tools, fertilizers and insecticides, valued at about N 4.0 million (US$6.1million), would be through international competitive bidding in accordancewith IBRD guidelines. Domestically manufactured goods would be allowed a15% preference when comparing domestic bids with those of foreign manufactur-ers. Contracts for building, road construction and other civil work, valuedat N 2.5 million (US$ 3.8 million), are not large enough to attract foreigninterest and would be awarded under local competitive bidding. In the latterforeign firms would not be precluded; as such work would be advertised in atleast one local newspaper and the representatives of all Bank members and ofSwitzerland in Lagos would be notified. A 7.5% preference for domesticcontractors will apply. The major part of project costs would be for laborhired by project farmers, staff salaries and planting material, valued atN 1.'.2 million (1S$18.5 million) and operating costs of vehicles, headquartersand road equipment amounting to N 1.0 million (US$1.6 million). None of thesecost, totalling N13.2 million (US$20.1 million) would be suitable for any formof competitive bidding. Contingencies of N 6.5 million (US$ 9.9 million)would be used as required. Nigeria has no preferential import tariffarrangements and competition between foreign manufacturers on the domesticmarket is keen.

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D. Disbursement

6.10 The IBRD loan to Western State project would be disbursed over theseven year (1974/75-1980/81) development period. The disbursement periodwould cover the proposed three-year planting program, plus four additionalyears for consolidation and upkeep of immature cocoa.

6.11 In Mid-Western State the IBRD loan similarly would be disbursedover seven years (1974/75-1980/81), the eighth-year development costs beingfinanced by the State and FMG. These costs would be small and consist ofon-farm and TCU operating costs required to bring the last 3,000 acres intobearing.

6.12 During the seven-year disbursement periods, the Bank loan would beexpended against:

a. s0% of all loans made to farmers under the project, exclud-ing sprayers, which are provided for in (b) below, totallingN 5.57 million (US$8.50 million); N 4.87 million (US$7.40million) in the Western State and N 0.70 million (US$1.10million) in the Mid-Western State;

b. 100% of the CIF cost of directly imported vehicles, tractors,sprayers and road making equipment or 80% of the cost ofthese items if locally procured, totalling N 1.29 million(US$1.95 million); N 1.05 million (US$1.60 million) in theWestern State and N 0.24 million (US$0.35 million) in theMid-Western State; and

c. 45% of the staff and training costs, building costs androad program costs, excluding the road construction equip-ment mentioned in (a) above, totalling N 3.72 million (US$5.65million); N 2.94 million (US$4.45 million) in the WesternState and N 0.78 million (US$1.20 million) in the Mid-Western State.

An unallocated amount of N 2.57 million (US$3.90 million); N 1.96 million(US$3.0 million) and N 0.61 million CUS$0.90 million) in the Western andMid-Western States respectively, would meet contingencies on the aboveitems. The breakdown of the proposed Bank loan by categories is detailedin Annex 8. Disbursements would be against import documentation, contracts,and certified records of expenditures. For disbursements made against cer-tified expenditures, documentation would not be submitted for review as amatter of course but would be retained by the respective project managementunits for scrutiny by Bank supervision missions. Any undisbursed Bank fundsdue to cost savings would be cancelled.

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6.13 The two FMG grants of N 5.41 million (US$8.22 million) and N 1.17million (US$1.78 million) to the Western and Mid-Western States would bedisbursed under the same categories as the IBRD loan but over seven and eightyears respectively. FMG would disburse to the States 80% of the differencebetween the total cost of each item eligible for financing by IBRD and thatpart of the cost financed by IBRD.

E. Accounts and Audits

6.14 Project accounts and records of disbursements to individual farmerswould be maintained by the project units, and farmers' loan accounts would bekept by the Cooperative Trust, ACC and CFS. Project accounts, and farmers'loan accounts maintained by the credit institutions would be audited annuallyby independent auditors, mutually acceptable to State and Federal Governmentsand to the Bank. The auditing of cooperative societies' accounts would con-tinue to be the responsibility of the Registrars of Cooperatives (see Annex3). Arrangements would also have to be made for the auditing of WSFU accounts.Audited annual accounts, balance sheets, and operating statements of all proj-ect units would be submitted to the Bank within four months of the closingof the financial year. During negotiations, assurances to this effect wereobtained.

VII. ORGANIZATION AND MANAGEMENT

A. Organization

7.01 In both States project implementation would be the responsibilityof( units responsible to the MANR, but enjoying more autonomy than the usualgovernment department. The Cocoa Development Unit (CDU) would operate inWestern State and the Tree Crop Unit (TCU) in the Mid-Western State. CDU isin existence and its performance has been satisfactory; consequently, functions,organization and responsibilities would be maintained for the proposed project.and assurances to this effect were obtained during negotiationCS. Senior ACCofficials wotuld also be seconded to CDU for project credit operations if ACCis reorganized and participates in the project (see para 3.20).

7.0? CDtl field management in Western State is effected through fourmain offices or circles located at Ibadan, Ilesha, Abeokuta and Akure, andeachi staffed by an officer equivalent to the grade of Agricultural Officer(AO). Each field office controls two to five operational units each managedby an Agricultural Superintendent (AS) and including four agricultural assist-ants (AA), responsible for soil testing and planting and replanting operations.Each AA directs four special laborers (SL) who work at farmer level. These

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arrangements provide a coverage of one SL to 25 farmers in the planting years,

and an average overall coverage of one SL to 55 farmers. CDW also has a field

control unit which makes an independeit technical audit of CDU work.

7.03 For the proposed second project these arrangements would be slightly

modified. The four Circles would be retained but would become the responsi-

bility of officers of the grade of Senior Agricultural Officer (SAO) or

equivalent; and the operational units would be formed into two or three

groups which would be headed by AO's. These arrangements would give the

same farmer coverage but would substantially reinforce Circle management.

Project credit aspects would be handled by two Credit Officers at each Circle

who would be assisted by six Cooperative Inspectors to be seconded from theCooperative Division of the Ministry of Trade and Cooperatives or directly

recruited by CDIU and approved by the Cooperative Division. Detailed CPU

staffing is given in Annex 7 and an orgartization chart is attached to Annex 5.

Ass',rances to this effect were obtained from government.

7.04 In Mid-Western State, the small size of the proposed project would

not justify a unit similar to that in Western State. However, as largesmallholder oil palm and rubber projects are being prepared a Tree Crop Unit

(TCU) would be established to manage these and the proposed cocoa project.TCU would start operations in 1974 with the proposed cocoa project. It wouldbe a condition of effectiveness of the Mid-Western State Project Agreementthat TCU had been established with terms of reference satisfactory to theBank and that the project manager and the Head of TCU's Cocoa Division had

been appointed.

7.05 TCU would be headed by a Project Manager reporting to the Permanent

Secretary of MANR. The Project Manager would be assisted by a Controller of

Field Operations (CFO) and a Financial Controller. The CFO would be responsi-

ble for the technical aspects of all tree crop development projects managed

by TCU and would be assisted by three Division Heads each responsible for

one crop. The Cocoa Division would be formed when TCU is established and the

other Divisions when the oil palm and rubber projects are implemented. The

Financial Controller assisted by a Senior Accountant and a Senior Credit

Officer would be responsible for project accounting, and farmers credit opera-tions. Detailed staffing requirements are given at Annex 7, Table 12 and an

organization ciart is attached to Annex 5.

7.06 Field management in the Mid-Western State would be effected through

three regional units located at Igarra, Uhonmora and Odighi. Each field officewould be headed by an AO controlling two or three operational units similar

to those of the Western State. A Credit Officer seconded from the CooperativeDepartment would be assigned to each field office and would be assisted by

two Loan Assistants. During negotiations, assurances were obtained that

cooperative staff would be seconded to the Cocoa Division of TCU as and whenrequi red.

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7.07 Road Program Both CDU and TCU would establish road sections, whichwould be responsible to the Project Managers for the execution of the roadcomponents of the projects. The annual road programs and responsibilitiesfor their execution would be agreed and coordinated with the respective StateMinistries of Works and Transport and Local Councils. Details of the RoadSection staffing are at Annex 7, Tables 14 and 16.

7.08 FMANR would establish a Project Monitoring and Analysis Unit (PMAU)to monitor and evaluate this cocoa project and other Federal Governmentfinanced tree projects. The unit will also assist in the preparation of:further tree crop projects. Assurances to this effect were obtained.

Project Coordinating or Steering Committees

7.09 In Western State a project Coordinating Committee chaired by thePermanent Secretary, MANR and composed of representatives of all institutionsor departments involved in the project was established under the first cocoaproject. It has met regularly to review progress, financial statements andtechnical aspects, and has provided useful advice to the Project Manager.Government intends to maintain the Committee and to include representativesfrom FMANR, Ministry of Works and Transportation and from ACC. Assurancesto this effect were obtained during negotiations.

7.10 In Mid-Western State, a similar Steering and Coordinating Committeewould be established under the chairmanship of the Permanent Secretary, MANR.The Committee would include senior representatives of the Ministry of Finance,the Cooperative Division, the Cooperative Financing Society, and the ProjectManager. It is also proposed to appoint a representative of the FederalMinistry of Agriculture and to coopt a representative of the Ministry ofWorks and Transport for the period during which the road program would beexecuted. The Head of TCU's Cocoa Division would act as secretary forCocoa Project business. Additional members would be appointed at a laterstage to accommodate the needs of oil palm and rubber projects. The Steeringand Coordinating Committee would advise on policy and operational procedures,and would review the appointment of senior staff, the annual budget and workprogram, quarterly progress reports and the annual reports and accounts. Itwould be a condition of effectiveness that the Steering Committee had beenestablished in the Mid-Western State with membership and terms of referencesatisfactory to the Bank.

B. Credit Arrangements and Terms of Sub-Loans

7.11 Approved project farmers, in either State, would be eligible toreceive:

- credit, in cash and kind, of up to N 366 (US$556) to plantfour acres; two acres in the,first year of participationfollowed by two acres in the third year if the initialtwo acres are maintained satisfactorily;

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- credit, in cash and kind, of up to N 386 (US$586) to re-plant 1/ four acres; two acres in the first year of partici-pation and if these are maintained satisfactorily an addi-tional two acres in the third year.

The additional credit required for replanting largely reflects shade estab-lishment costs. For new planting, shade is provided by existing trees untilthe cocoa canopy is formed.

7.12 Credit would be disbursed in annual installments as follows:

Year 1 2 3 4 5 6 7 Total_____ ------------- ----- Nai ra---------------------------

RP (4 ac) 36.0 61.0 70.0 91.0 66.0 30.0 32.0 386

NP (4 ac) 95.0 42.0 117.0 66.0 22.0 24.0 - 366

Credits would be disbursed directly by the project authority, installmentsbeing paid subject to the satisfactory completion of planting operations, seeAnnex 5.

7.13 Credit would be provided through the Cooperative Trust, CFS andACC. Terms of new planting credits would be 12 years including a grace periodfor principal of six years and the option to capitalize interest for fiveyears. Terms of replanting credits would be 13 years including a grace periodfor principal of seven years and the option to capitalize interest for sevenyears, see Annex 9, Tables 1 and 2. Interest would be 9-1/4%, assuming a7-1/4% rate of interest on the Bank loan and a 2% margin to be retained bythe financial channel to cover administrative costs and credit risks. Theinterest rate of 9-1/4% p.a. is'satisfactory.

7.14 A farmer wishing to participate in the project would apply to thenearest CDU or TCU office whose staff would check his farming experience andcreditworthiness, and establish the suitability of hi§ farm for cocoa growing.If the project criteria are satisfied and the farmer's membership of a cooper-ative society or a branch of WSFU's agency confirmed, the farmer would sign aloan agreement with his society or branch.

7.15 The Cooperative Trust, ACC and CFS would enter into loan agreementswith their respective State Governments for the amounts to be on-lent to primarycooperative societies and to branches of WSFU's agency. These societiesand branches would have individual loan agreements with their members. Loans

1/ In Areas of Mass Infection the farmer is required to clear a cordonsanitaire of 30 meters at a cost of N 15.75 per acre, or N 63 for anaverage farm. These farmers would therefore be eligible for additionalcredit up to N 63,000, over and above the renlanting credit.

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would be dlisbursed in kind and in cash by the Project Units in coordinationwith the societies and branches to which project participants belong. Projectparticipants would market their cocoa through their societies, and branchesand the loan agreement between each participant and his society or branchwould entitle the latter to deduct loan repayments from the participant'scocoa sales proceeds.

7.16 The project unit staff would include loan officers experienced inagricultural lending activities, seconded from the respective credit institu-tions. They would be primarily responsible for appraising the creditworthinessof project participants and ensuring that individual loan agreements are signedwith the respective societies and branches before credit is disbursed. Farm-ers' loan agreements would make provision for settlement of outstanding loansby the inheritors of a deceased participants' farm, and would also stipulatethat loans would become payable immediately if the participant ceased to bea member of the society or branch through which he was given a loan. It wouldbe a condition of disbursement of the respective farmer loan categories ofthe proposed Bank loan that the Western State Government had entered into asubsidiary loan agreement with the Cooperative Trust and ACC and the Mid-WesternState Government had entered into a subsidiary loan agreement with CFS. Thesubsidiary loan agreements should be satisfactory to the Bank and cover theterms and conditions of Government on-lending to these institutions, and theterms and conditions of on-lending to societies and to project farners. Inaddition, the subsidiary loan agreements would provide for the disbursementof approved loans to participants to be made by the project unit.

C. Staffing

7.17 Key positions at CDU and TCU head offices would be filled Iby suit-

ably qualified and experienced staff, recruited internationally, if necessary.

During negotiations, assurances were obtained from the Government that initial

appointment to the posts of Project Managers, Deputy Project Managers,

Controllers of Field Operations, Financial Controllers, Senior Credit Officer

and the Heads of the Road Sections and the terms of reference and conditions

of employment of these officials would be mutually acceptable to the Governments

and the Bank. The Project Manager, Deputy Manager, Financial Controller and

Senior Credit Officers of CDU have already been appointed with Bank approval.

Nigeria has a very adequate system of training agriculturalists at professional

degree, and sub-professional diploma and certificate levels, and no problems

are anticipated in obtaining adequate numbers of professionally qualifiedstaff.

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VIII. PRODUCTION, MARKETS, FARMER BUDGETS

AND GOVERNMENT BENEFITS

A. Yields and Outputs

8.01 Trials in the project area with hybrid cocoas have yielded over2,000 lb/ac at maturity. Because of the large number of farmers involvedin both projects, substantial variations in farm management standards andvields are inevitable. Thus, it is estimated that new farms planted underthe project would yield an average of 850 lb/ac from the seventh year afterplanting, and that replanted farms would average about 750 lb/ac. Bothreplanted and new cocoa would begin yielding in the fourth year afterplanting, and yields would increase progressively up to the seventh yearafter which it is assumed that they would remain stable. After 1983plantings made under the two Bank financed projects in Nigeria (764-UNIand the proposed loan) would produce about 41,000 tons of cocoa annuallyvalued at about US$50 million in foreign exchange, at the projectedworld price of US161/lb (in 1980) see para 8.03. Further details on yieldsand production are at Annex 2.

8.02 Food Crops. The majority of farmers would plant some plantain andcocoyams as temporary shade for their cocoa. These crops would be a sourceof food and, in some cases cash income to the farmer. However, because ofthe extreme variation between the practice on different farms and listancefrom markets it would be,highly speculative to estimate either average pro-duction per farm or average cash income from this source. Consequently, noaccount is taken of this benefit in the economic rate of return calculation.

B. Markets and Prices

8.03 World production of cocoa is now about 1.5 million tons. From themid-1940's to the end of the 1950's, the world cocoa situation was characterizedby short supplies and relatively high prices. The latter encouraged technicalimprovements and new plantings, and as a result an excess supply situationdeveloped which was reflected by comparatively low prices in the 1960's.In turn these low prices restrained expansion of production and in recentyears the cocoa market has tended to move back to a short supply situation.Consequently average prices have risen from US^32.3/lb in 1972 to US464.7/lbin 1973. Current prices are aroundJUSM9O.0/lb (Feb/March 1974). These highprices have caused concern in the trade that large scale substitution ofcocoa butter 1/ with cheaper materials will occur. The Bank's EconomicAnalysis and Projections Division anticipates that by 1980, world cocoa demandand supply will be in t ...ance and that the world price would be US161/lb,Accra Spot New York 2..

1/ The valuable component of the cocoa bean.2/ The World Cocoa Market - Review and Outlook for Bank Lending (R74-36).

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8.04 International Cocoa Agrement. An International Cocoa Agreementbecame effective in mid-1973 to cover an initial period of three years.The main objectives of the Agreement are to prevent excessive fluctuationsin the price of cocoa, and to help stabilize and increase the cocoa exportearnings of producing countries, while taking account the consumers' interestsof importing countries. Signatories account for 93% of cocoa producing and70% of cocoa consuming countries. The Agreement aims at maintaining dailyselling prices for cocoa within a 23-32 USU/lb range through export quotasand the manipulation of buffer stocks. The total basic quota for all pro-ducers in 1973/74 is 1.58 million tons, of which Nigeria has been allocated19.5X or 307,800 tons. A buffer stock of 250,000 tons is to be establishedwhich will be operated by the Agreement's Secretariat. Cocoa will be boughtin when world prices fall to the lower limit of a pre-determined range, andsales made when prices reach the upper limit. Stock financing would beinitially through a US41/lb levy to be paid by cocoa exporting countries;the IMF also has agreed that its buffer stock financing facilities could beused. More details on the Agreement are in the Bank's cocoa paper. 1/ It isanticipated that the Agreement will improve the earnings of producing countriesin the long run, and that it should not limit Nigeria's capacity to maintainits share of the world market 2/. However with the present prevailinlg highprices of cocoa, the Agreement has been largely inoperative. Funds were notavailable to purchase buffer stocks and the range outside which the cocoaAgreement will operate on the market are to be reviewed during the first halfof 1974.

8.05 During the 32nd Session of the Sub-group on Statistics of theIntergovernmental Group on Cocoa held in April 1973, FAO experts recommendedthat the Bank should proceed with its proposed lending program for cocoaprojects in view of the optimistic price forecasts for the 1980's andsubsequent years. The Secretariat of the FAO Intergovernmental Group onCocoa confirmed that prospects for cocoa are good. They expect world consump-tion to expand significantly during this decade, and while believing thatproduction would also increase think that it would be unlikely to expandsufficiently to upset equilibrium between supply and demand to an extentwhere surplus would tend to depress prices significantly.

C. Farmers Benefits

8.06 Estimated farm budgets for new planting and replanting are atAnnex 9. They are based on the credit terms outlined in Chapter VII and onthe current producer price of N 400/ton, see para 3.11.

1/ The World Cocoa Market - Review and Outlook for Bank Lending (R74-36).2/ See T.A. Kofi, "Simulation of the 1968 Draft International Cocoa

Agreement" in Food Research Institute Studies, Stanford University,California, Vol. XI, 1972.

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8.07 New Planting. Making allowances for hired labor (Annex 9, Table 1),annual net income to the farmer from 4 acres during the debt servicing periodYear 6 througih Year 12 ranges from N 70 (US$106) to N 330 (US$500) when interestis capitalize(l. Debt servicing over the 7 years would account for about 30percent of net return. From Year 13 onwards net income to the farmer wouldbe N 440 (US$669) after deducting N-44.0 for hired labor. This is equivalentto N 110 (US$167) per acre which is about two and half times the presentestimated average net income of N 43 per acre obtained by cocoa farmers inNigeria (see para 4.04). At maturity when debt service is completed theaverage return per manday (MD) for family labor employed in operating thefarm, after paying hired labor, would be about N 3.23 or US$ 4.91 which ismore than three times the official wage rate.

8.08 Replanting. Allowing for payment of hired labor (Annex 9, Table2), annual net income to the farmer from 4 acres during the debt servicingperiod Year 8 through Year 13 ranges from N 33 (US$50) to N 254 (US$386)when interest is capitalized. Debt servicing over the 6 years would accountfor about 40 percent of net returns. From Year 14 onwards net income to the

farmer would be N 381 (US$579) after deducting N 44.0 for hired labor. Thisis equivalent to N 95 (US$145) which is more than double the present averagenet income of N 43 per acre obtained by cocoa farmers (see para 4.04). Atmaturity the average return per manday (MD) employed in operating the farmwould be about N 2.80 or US$ 4.26 which is almost three times as high as theofficial wage rate.

D. Impact of Project on theGovernments' Fiscal Situation

8.09 State Government revenues from the project would comprise exporttaxes and surpluses accruing to the Marketing Board and loan interest paidby the Cooperative Trust, ACC and CFS. In addition to project costs the StateGovernments would pav financial charges on the Bank loans. State Governmentswould continue to provide farmers witlh extension services and import subsidiesafter the project development period. FMG onlends the Bank loan to the Statestogether with additional grants. During the project period FMG runs a deficitequal to its grants, thereafter Payment to the Rank by FMG equals repaymentof loan Dlus interest by the States to FMG. Based on the present marketingstructure, the financial. position of the Western State Government is satis-factorv. 8v 1PS0/81 the cumulative cash deficit totals N 7.2 million (US$10.9 million), which is recovered by 1986/87; thereafter the nroject is insurplus. Tn the case of the Mid-West State, the financial position is notsatisfactory, as the cumulative cash deficit rises to N 2.0 million (US$3.0million) and remains at about this level until the end of the loan repaymentPeriod. This is due mainlv to the small size of the planting program and thedisproportionatelv large overheads of TCU (also responsible for other tree

crop projects). However, -he present marketing organizations are under reviewand the proposed changep could adverselv affect the surpluses accruing to theState Governments. _

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IX. BENEFITS AND JUSTIFICATIONS

9.01 The project's principal benefit would be the increase in incomeof some 27,000 cocoa farmers and thus the betterment of the standard ofliving of about 170,000 members of cocoa farm families. The project wouldpermit Nigeria to retain its present share of the world cocoa market, andto increase its foreign exchange earning from cocoa. It is estimated thatwith a world market price of USf61/lb in 1980, the Western State projectwould generate annually about US$26.0 million in net foreign exchangeearnings, and the Mid-Western State about US$4.5 million. Also, the projectwould continue the process initiated under the first cocoa project ofdeveloping competent integrated agricultural support services capable ofdemonstrating and ensuring the adoption of improved agricultural techniques.Such services are essential if Nigeria is to meet its rapidly growing foodand industrial crop needs. In addition, agricultural credit institutionsand farmers' organizations would be strengthened, and communications improvedin the project areas.

9.02 The economic rates of return for the projects are estimated at25% and M9% for the Western and Mid-Western States respectively. Importantassumptions used in computing these rates of return are:

a. an Accra Spot New York price of USJ44.4/lb in terms of1974 dollars equivalent to US161/lb in 1980;

b. a shadow wage rate (SWR) equal to 65% of the officialwage rate (official wage rate being N1.00);

C. a shadow rate for foreign exchange of N 1 = US$1.27compared to the official rate of N 1 = USS1.52; and

d. the costing of all family labor at the shadow wage rates.

The calculations and assumptions are in Annex 2.

9.03 A detailed sensitivity analysis is in Annex 2, the results of whichare summarized below:

Costs Benefits Rate of ReturnWestern State Mid-Western State

100 100 25 19100 90 22 17110 100 23 17110 90 20 15120 100 21 16120 90 18 13

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The economic rates of return are relatively insensitive to increases in costsand decreases in benefits. If the average 1973 cocoa sale price of USJ64.7/lbis substituted, then the rate of return is 35% in the Western State and 27%in the Mid-West State. A 20% cost increase would reduce these rates to 30%and 23% respectively. Without shadow pricing labor the rate of return atprojected prices would be 21% for the Western State and 16% for the Mid-WesternState. A 10% increase in costs would reduce these rates to 19% and 14%respectively. The lower returns for the Mid-Western project reflect thehigher management costs per unit inherent in the diseconomies of its smallercocoa development program and the slower pace of development envisaged.

9.04 As the project contains no measures to improve the social infra-structure, such as health, education and public utilities, no direct socialbenefits can be claimed for the project. Such components have been excludeddeliberately from the project on the grounds that the cocoa areas are betterserved in these fields than any other part of Nigeria, both by Governmentagencies and private organizations.

9.05 In addition to providing additional income opportunities for27,000 farmers in the cocoa belt, who otherwise would be faced with decliningincome, the project also would provide, at full development, labor employmentopportunities equivalent to more than 2,000 man-years annually.

X. AGREEMENTS REACHED AND RECOMMENDATIONS

1(.(1 Assurances were obtained from the Federal and State Governmentson The following principal points:

(a) the policy of subsidizing agricultural inputs related to thecocoa production would be reviewed from time to time (para 3.10);

(b) ACC and the proposed WSFU agency would be funded and staffed informs satisfactory to the lank before their participation in theproject (para 3.20);

(c) the Federal and State Governments would enter into subsid-iary loan agreements, satisfactory to the Bank, providingfor the on-lending of the Bank loan to the State Governmentsand for the granting of additional funds from the FederalGovernment to the State Governments (para 6.04 and 6.05);

(d) subsidiary loan agreements satisfactory to the Bank wouldhe signed between the Western State Government, theCooperative Trust, and ACC, and between the Mid-WesternState Government and CFS (paras 6.07, 6.08, 7.15);

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0(e) in Western State CDU would be responsible for management

of the project and would be expanded to permit it to executethe road component of the project (para 7.01 and 7.07);

(f) TCU would manage the Mid-Western State project and would beestablished with terms of reference satisfactory to theBank. It would also execute the road program (paras 7.01and 7.07);

(g) the Western State project coordinating committee would beexpanded, and a similar Steering or Coordinating Committeeestablished in the Mid-Western State with membership andterms of reference satisfactory to the Bank (paras 7.09and 7.10); and

(h) initial appointment to the posts of Project Managers, DeputyProject Managers, Controllers of Field Operations, FinancialControllers, Senior Credit Officers and Heads of the Road sectionsand the terms of reference and conditions of employment of theseofficials, would be mutually acceptable to the Government andthe Bank (para 7.17).

10.02 Effectiveness of the proposed Bank loan would be conditional uponthe Federal and State Governments having entered into the loan agreementsreferred to in para 10.01 (c), and upon the establishing of TCU (para 10.01(f)), the appointment of TCU's manager and Cocoa Division Head (para 10.01 (h))and the establishment of a steering and coordinating committee (para 10.01 (g)).

10.03 Conditions of disbursement of the proposed Bank loan to either oneof the States would be that the State had complied with, or given theappropriate assurances; called for under paras 10.01 (d).

10.04 With the above assurances the project is suitable for a US$20.0million loan to the Federal Republic of Nigeria.

ANNEX 1Page 1

NIGERIA

SECOND COCOA PROJECT

MARKETING BOARDS AND COCOA MARKETING

Background

1. Until 1939 exports of cocoa and other crops were made by expatriatecommercial firms who had agents and buying stations in the crop producingareas. To correct deficiencies in the then existing marketing system, andto ensure the delivery of essential commodities during the war period, theBritish Government established statutory marketing organizations with anexport monopoly of all essential crops from Nigeria. An Agency - the WestAfrican Produce Control Board - was also established in the United Kingdomfor the purposes of handling the marketing of these essential commoditiesduring the period 1939-1945.

2. Early in 1947 a draft Nigerian ordinance was prepared to establisha Nigerian Cocoa Marketing Board and an advisory Committee to guide the Board.A bill was prepared and after consideration and amendment in the regionalhouses of Assembly, it was presented to and passed by the Legislative Councilin August 1947. The resulting law, known as the Nigerian Cocoa MarketingBoard Ordinance, was brought into effect on September 6, 1947, as GovernmentOrder No. 1257. This ordinance made the Nigerian Cocoa Marketing Board thesole purchaser of all cocoa produced in Nigeria for export, and it empoweredthe Board to purchase such cocoa at prices fixed by it and approved by theCovernment. In the same year the Nigerian Produce Marketing Company Ltd.,was formed and incorporated in the United Kingdom under the Companies Actof 1929. This firm was located in London since it was anticipated that theorganization would handle sales abroad of vegetable oils and oils seeds aswell as cocoa.

3. In 1953, at the London Conference on the Ni.gerian Constitution,it was decicled that the existing commodity marketing boards should beregionalized. Recommendations were made that:

(a) existing commodity marketing boards which operated on a country-wide basis and handled a single commodity or group of commodities,should be replaced by a single 'all-purpose' marketing board foreach region and be made responsible for all the purchasing arrange-ments within the region and for price stabilization, research anddevelopment policy;

(b) a central boardl witlh executive powers relating to the prescriptionof grades, callinig forward for export, shipment and overseas salesof produce on behalf of the regional marketing boards should beestablished.

ANNEX 1Page 2

At the same time, the constitutional conference decided that reserves of theformer commodity boards should be distributed to the regional marketing boardson the principle of origin of produce. Accordingly, an initial provisionaldistribution of E 25 million was made to the Western Nigeria Marketing Board(TNMB) whose area of operations included what is now the Mid-Western State.

4. The Marketing Board Law was enacted by the Legislature of theWcstern Region in September 1954, and the board came into legal existencein October of the same year. In 1955, the Nigerian Central Marketing Boardwas legally established. The main functions, responsibilities, and powersof the Central Marketing Board were the following:

(a) to arrange for export, shipping and sale of produce;

(b) to prescribe grades and standards of quality of producepurchased by the regional marketing boards for export;

(c) to pturchase produce from the regional marketing boardsfor export and sale;

(d) act as the agent of the regional marketing boards for theexport and sale of produce.

5. In 1957, the conference to review the Nigerian constitutionconsidered the future of the Nigerian Central Marketing Board and othermatters concerning the statutory structure for handling export produce.The conference decided that both the Nigerian Central Marketing Board andits overseas selling organization, the Nigerian Produce Marketing Company,Ltd. (NPMC), should be abolished. Functions performed by these two bodieswoul(d be allocated among;

(1) the regional marketing boards, and

(2) a company to be called Nigerian Produce Marketing Company,Ltd., Lagos (i.e. incorporated in Nigeria).

Estiblishment of NPMC (Lagos) and the other changes mentioned above becameeffective October 1958. During the 1960/61 marketing season, NPMC'soperations were revised to permit the sale of marketing board producefrom Lagos as well as London. Thus, foreign buyers were given the optionof buying either on a cif, or fob, basis. The Company's practice ofconcluding sales contracts only through intermediaries in London was alsodiscontinued. Sales were henceforth made on a net price basis, effectiveDecember 1, 1961. During the 1962/63 marketing year, the London office ofNPMC was closed and all sales functions were handled from the Lagos office.

ANNEX 1Page 3

Western Nigeria Marketing Board (WNMB)

6. WINB was established by law as a corporate body with perpetualsuccession. The Board consists of a Chairman plus not less than seven normore than ten members who are appointed by the Minister (or by the MilitaryGovernor). The Chairman holds office for 5 years from his date of appoint-ment and members serve for three years, all being eligible for re-appointment.As now constituted the Board has its own executive committee anid in opera-tional matters functions autonomously.

7. In 1963, the Mid-Western Marketing Board was established on thesame pattern as its parent organization, the WNMB. Part of WNMB assetswere allocated to the new Marketing Board and a new law (Edict No. 1, 1972dated November 4, 1971) was issued in 1972 to accommodate the particularneeds of the Mid-Western State marketing system.

8. The lMarketing Boards are charged by law with the following mainfunctions and responsibilities:

(a) marketing the States' main export crops, namely Cocoa, PalmKernels, Palm Oil, Seed Cotton, Lemons and Grapefruit;

(b) appointing Licensed Buying Agents (LBA) to perform on theBoard's behalf the purchase, grading, storage and evacuationof the produce to port of shipment;

(c) fixing producer prices at the beginning of each produce seasonan entire crop-year and the building of reserve funds forstabilizing these producer prices in time of low market prices;and

(d) providing assistance to the producing industries for the benefitand prosperity of the people of the States.

Cocoa Buying

9. The Matrketing Boards are responsible for marketing the main exportcrops of the respective States, and for securing the most favorable arrange-menits for the purchase and evacuation to port of these commodities. TheBoard appoints Licensed Buying Agents (LBA) who are responsible for thepurchase, grading, storage and evacuation of the produce to port where itis exported and shlpped by the Nigerian Producer Marketing Company Limited(NPMfC). LBAs are paid a Block Buying Allowance to cover the purchiase price,the cost of evacuating produce and a-remuneration fee. The main functionscocoa LBAs are required to perform on behalf of the Board are:

(a) to purchase cocoa at gazetted buying stations at no less thanthe minimum fixed prices;

ANNEX 1Page 4

(b) to bag and arrange for cocoa inspection in accordance with theregulations;

(c) to finance cocoa purchases and provide suitable storage untilthe time of evacuation to port;

(d) to make ,returns of purchases and stocks as the Board or itsduly authorized executive may require; and

(e) to arrange for conveyance and delivery of cocoa to Boards'stores according to their instructions which may be issuedfrom time to time by the Boards' executive.

The agents of the Boards are supervised by their own inspectors.

10. The annual producer price is jointly determined by the States'Marketing Boards with the approval of the States' Government ExecutiveCouncil and the Federal Ministry of Finance; and with the agreement ofthe Bank of Nigeria who finances the Marketing Board operations. Beforeeach buying season opens the Boards announce the price per long ton to bepaid at all buying stations. The producer price remains fixed for theentire season regardless of fluctuation in world market prices. The Boardsmaintain inspectors in the field to ensure that producers receive at leastthe official minimum price.

11. The Western and Mid-Western Boards pay LBAs a block allowance, atpresent N 26.73 per long ton (for breakdown see Table 1) to cover allexpenses of handling cocoa from buying points up to loading for transportationto port of shipment. Transport costs from local stores to port stores arenot included in the allowance as they are paid directly by the Board. Theblock allowance includes a commission of N 2.10 and a N 5 renumeration.

Sources of Funds for Financing Cocoa Purchases

12. LBAs are responsible for financing cocoa purchases and raise therequired funds by borrowing from commercial banks while cooperative unionsobtain their funds from the Cooperative Bank. Interest rates charged toLBAs by commercial banks vary between 8% and 10% depending on creditworth-iness, and the Cooperative Bank interest rate to Unions is slightly less.The agents are liable for losses in quality and quantity.

13. LBAs take title to farmers produce immediately after purchaseand retain it until the product is graded by the Produce Inspection Division,when thev receive a certificate of acceptance. Once graded, the cocoaautnaticallv becomes the propertv of the Board and LBAs can collect thedeclared value. Pavment of the block buying allowance, and any other allow-able expenses are made upon acceptance of the graded cocoa at Apapa or Ikejaports of shipment.

ANNEX 1Page 5

14. Prior to the 1967/68 season the Boards obtained credit facilities,for the purchiase and evacuation of cocoa to port of shipment, from a consor-tium of commercial banks. Thereafter, all Marketing Boards were requiredby law to obtain such funds only from the Central Bank of Nigeria. Creditfacilities of between N 30 million and N 40 million are made available eachyear in the form of bills which are financed at a discount rate of 6 percentagainst the pledging and registration of forward sale contracts by the NPMICwith the Central Bank. Bills are drawn by the Board early in the season tofinance purchases and movement of cocoa through its licensed buying agentsfrom September/October through March. From April through July NPMC makesrepayments to the Central Bank from its forward sales proceeds and borrow-ings are always fully repaid before the commencement of the followingseason.

15. For overseas sales and cocoa shipments NPMC incurs certain directcharges such as export duty, wharfage, lighterage, shipping, insurance andcertain costs at ports of discharge and retains some 25% of the sales priceto cover these.

Taxation - Revenue to Government

16. Before the proposed reorganization of the Marketing Board system(see para 21) export duties of 15% were payable on a cocoa fob price of

N 300 per ton, increasing by 1% for each additional N 20 rise in fob priceup to a maximum of 20%. Duties are payable by NPMC on behalf of the StateBoards and are repaid in total to the State from which the produce originated.In addition, each State used to levy a sale tax of N 8 per ton which wasdeducted by the LBAs from the purchase price.

17. Cocoa sales totalled about 225,000 tons in 1971/72 and total ex-port duty accruing to the Western State Government on an average fob priceof N 535/ton was some N 24 million. The sale tax represented an averageN 1.6 million annually. In the Mid-Western State, the average annual cocoaexports of some 10,500 tons (1968-1971) produced export duties of aboutN 184,000 per annum and sale taxes totalling N 841,000. Export duty andsales tax represented about 50% of the Western State Government currentrevenue in 1971/72 and 7% in the Mid-Western State.

18. In addition to the various taxes collected by the Marketing Boards,the State Governments are allocated Dart of the trading surpluses accruingto the Boards. From 1954 to 1970, the Western State (then Regional) Govern-ment was given N 152.6 million (US$214 million) representing an annual aver-age of about N 9.6 million (US$13.4 million) of whlch 80% resulted fromcocoa operations. From 1963 to 1970, the Mid-Western Government was allo-cated N 2.6 million or about N 360,000 per annum, 50% of which was attribut-able to cocoa. In sutnmary the average annual revenues to the two Governmentsfrom cocoa for the period 1964-1969 was as follows:

ANNEX 1Page 6

Western State Mid-Western State…----- N '000 …

Export Duty 12,000 840Sales Tax 1,700 40Appropriation from MarketingBoards (1966-1970) 7,700 180

21,400 1,060

% of Total Revenue ± 30% ± 20%

19. In addition to this contribution to Government operating expenses,the Marketing Boards have been assisting in the financing of the agriculturalresearch institutes (CRIN and NIFOR). Details are given in Tables 5 and 8.

Conclusions on the Marketing Board Cocoa Operations

20. During the period 1966 - 1970, the Marketing Boards were successfulin making cocoa sales abroad, obtaining consistently fob average prices repre-senting more than 90% of the New York spot price. Their operating costs,which represented some 5% of the fob value, are reasonable. The MarketingBoards seem to have achieved the targets set by the overall Marketing Boardsystem for cocoa operations with a reasonable degree of efficiency. However,since 1970, no financial statements have been issued and the financial sit-uation of the Marketing Board is reported to have deteriorated significantlywith losses amounting to some N 30 :o N 40 per ton of cocoa for the year 1972.

21. In early 1973, the FGN announced important reforms of the MarketingBoard system including a reduction in duty payable on cocoa to a flat 10% ofthe fob value, the transformation of NPMC into a Federal Agency with respon-sibilities for annual financing of rational producer prices and the reductionof revenue collection through the Marketing Board. The legislation to en-force this is still awaited, but in the meantime it has already been announcedthat the cocoa producer price for the period October 1973 to October 1974 willbe ?I 400/ton, compared to N 302/ton previously paid to producers.

ANNEX 1T h'Ic 1

NIGERIA

SECOND COCOA PROJECT

STRUCTURE OF THE LBA BUYING ALLOWANCES

1972-1973 CAMPAIGN

N/long ton

(1) Producer Price 310.00

(2) Sales Tax 8.00

(3) Net Producer Price 302.00

(4) Finance Charge (0.1 ."' on item 3' 0.30

(5) Insurance Premium (0.145% on item 3) l.!l

(6) Overheads - Variable h.ol

Fixed 4 *

(7) Middlemen Corrmission 2.10

(8) Return on working capital(5.75% p.a. for 8 weeks on itemns 3-7) 2.78

(9) LRA's Remuneration 5.00

Sub-total 20.73

(10) Bag allowance 6. O

LBA Buying Allowance 26.73

1/ Expressed in Naira.

ANNEX 1Table 2

NIGIERIAL

SECOND COCOA PROJECT

NIGERIA AND Wl)ED PRODUCTION OF COCOA

1950/51 1972/73

(Thousand long tons)

Cocoa Year 1/ Nigeria World Nigeria

i950/5i 110 799 13.81951/52 115 635 18.11952/53 105 784 13.L,1953/54 98 759 12.01954/55 85 788 10.8

1955/56 107 823 13.11956/57 131 881 14.91957/58 76 764 9.91958/59 13h 891 15.(1959/60 1h9 1,02h 14.6

1960/61 186 1,156 16.11961/62 191 1,124 17.01962/63 176 1,155 15.21963/64 216 1,191 18.21964/65 29h 1,h90 19.7

1965/66 182 1,205 15.11966/67 263 1,329 19.81967/68 23h 1,329 17.c1968/69 189 1,199 15.81969/70 217 1,405 i5.1

1970/71 303 1,141 20.61971/72 255 1,53L 16.71972/73 4/ 236 1,397 16.E1973/74 )4/rV 219 1,421

1/ October - September.

2/ Cocoa Statistics Bulletirn, FAD, Various Issues.

3/ About 95% -roduced in the Western. State.

Source: FAO Intergovernmental wroup on cocoa,docunent CCP: EC/Sr n.overnmber 1973.

5/ Forecast.

NIGERIA

SECOND COCOA PROJECT

COCOA EXPORT, VALUE. AVERAGE PRICES AND CONTRIBUTION TO FOREIGN EXCHANGE EARNINGS

1958 - 1972Average Cocoa Export as

Cocoa FOB Value of Export Average World Market Average Total Value a Percentage ofYear Exports Cocoa Exported Price (FOB) Price f£)r Cocoa Producer Price of Exports Total Exports

('000 (LN millions) (bN/l.t) (USW/lb) (USe/lb) (bN/l.t) (US#/lb) (NE millions)l.tons)

1958 - 26.9 - - 44.3 150.0 18.75 135.6 19.81959 - 27.5 - - 36.5 150.0 18.75 163.6 17.11960 - 22.9 - - 28.5 160.0 20.00 169.2 13.51961 - 32.2 - - 22.o 160.0 20.00 173.5 18.4

1962 - 32.4 - - 21.1 100.0 12.50 168.6 18.91963 - 36.6 - - 25.4 105.0 13.13 189.5 1A. .

1964 200.0 40.1. 200.5 25.06 23.4 110.0 13.75 214.5 18.71965 305.6 42.5 139.7 17.46 17.2 120.0 15.00 268.4 15.1

1966 193.2 28.2 146.0 18.25 24.4 65.0 8.13 283.1 9.91967 248.2 54.7 220.4 27.55 29.0 90.0 11.25 243.1 22.61968 1/ 208.8 51.7 247.6 30.95 34.4 95.0 11.88 210.8 24.21969 T/ 173.6 52.5 302.4 37.80 45.7 100.0 12.50 323.2 16.2

1970 195.9 66.5 339.5 42.43 34.2 150.0 18.75 442.7 15.01971 271.7 71.6 263.5 32.93 26.8 155.0 19.38 640.4 11.21972 224.0 50.6 225.9 28.24 32.3 155.0/2 21.03 701.0 7.2

1/ Excludes the three Eastern States.

2/ Ir. 1973 average producer price was £UT 200 (or Naira 400).

S F aSource: FAO Cocoa Statistica. -

INIGERIA

SECOND COCOA ?ROJECT

WEST9 STAT3 FMRKETITG BOARD

BALANCE SHEETS

(NL 000)

____'t 67 196y 1v70

ASSETS

Fixed Assets

Land 315 315 315 315 315Building 2,137 2,936 3,411 3,300 3,230Furniture and equipment 78 147 158 146 127Motor Vehicles 153 106 176 155 168

Investments 2,683 3,504 4,o60 3,916 3,840

Lend and Building 5,086 n.a. 5,109 n.a. 5,109Portfolio 1,924 n.a. I,9214 n.a. 1,924Loans and accrued interests 3,].02 n.a. 3,102 n.a. 3,102

10,112 10,135 10,135 10,135 10,135Share Capital and Long-term Loans 10,593 l,0o84 12,635 19,043 19,530

Current Assets

Mid-Western Marketing Board _ (4) 73 72 72Stocks 2,205 2,348 2,638 1,484 4,652Sundry debtors 1,547 3,236 6,740 4,930 8,658Cash in hand and in Banks 930 1,676 1,312 404 831

4,682 7,256 10,763 6,890 14,213

TOTAL ASSETS 28,070 31,779 37,593 39.985 47,718

LIABILITIES

Current Liabilities

Sundry Creditors 10,959 7,095 6,447 4,014 7,569Bank Overdrafts 63 10 48 774 485Mid-Western Marketing Board 2,25 6.. n.a. n.a.

13,287 7,105 6,495 4,788 8,054

Produce Reserve Accounts 310,360 20,1°l 26,948 3 3 T13 37,7142

Reserve Surplus 4,423 4,283 4,150 2,094 1,922

TOTAL LIABILITIES 8,07c 31,779 37,59L 39,985 47.718

MxMay 2 1 3 5D

V

'5CN0D COCO A PA3OJEC T

WESTERN2 STAI'R MARK2TI;IG 30ARD

APPPRP?TAfIOH OF A M1: fl'fl01TM iOilERV. iiAUDUCO:i NSSaj -C

(Fii' 'co'0)

1566 16.1 71968 196y 1970- (&st

7Smtoc) (Colmrated)

Annual Trsdtng Scocluses

Cocoa 2,390 13,630 10,854 1!s, 404 13,159?cLa Produce 2,293 2,180 1,612 (188) (36)Cotton (5 - (7)Others (3) (3) (2) (f) (1-2

Total Sucolu3cs 4,69Ž 15, ,°r)c l,i,; 14,4203 13, D61

Appropriation of Annu.l Prading Surol usses

To Western State (Regi on) Government 3,698 ,615 4,349 6,068 5,00ON A N R 750 750 75( 1, 252 750W. N. Agricultuiral Credit Corporation 25 17-Cocoa Research Institute (CRIN) 100 400 150 371 250Cocoa Spraying Subsidy 417 54

8542 328 1,506

Feedar ioad Program - - - - 500Institute for , e

1PE1n Research (MFOR) 56, 56 56 - 56

Oil Palm Development Project (NAN?) - - 3c n.a. 187Other grants 26 2c7 21 ci 24

Total Apprnopritiot; 5,072 ,77 5,907 6b,O4c 8,273

Net Surplvs after Appropriation (39O) 10,031 6,557 6,155 4,788

Produce Rececx'e Accounts

CiumvLative Trading Surpluses '61 , 94C (9,627 55,429 97,893 111,947Cumulative Appropriation to

Western State (Regioni) OnGerrlocenr: 41,311 45,009 48,624 52,973 59,041M A N R 7,992 8,742 9,492 10,242 11,494W. N. Agricultural Credit Corporation 300 325 500 500 500Cocoa Research Institute (CRIN) 599 699 1,099 1,249 1,620Cocoa Spraying Subsidy 2,100 2,517 3,065 3,607 3,935Special Road Program 1,0tO 1,000 1,000 1,000 1,000W. S. Production Development Board 350 350 350 350 350Institute for Oil Palm Research (-NIFID) 308 364 420 476 476Oil Palm Development Project - - - 39 n.a.Others 235 261 488 509 577

Total Cumulative Appropriation 54,195 59,267 65,038 70,945 78,993

Per Produce Reserve Account 2/ 10,750 10,360 20,391 26,948 32,954Net Surplus of the year (390) 10,031 6,557 6,155 4,788

PRODUCE RSSERVE ACCOUNT 10,360 20,391 u6,948 33,103 3i,742

1/ Froi 1954 to the end of toe retvious year.

2/ At Wle end of the previous year.

May 9, 1973

NISGRIA

SSCOND COCOA P2OJECT

WESTPIS. STATE MAR KTI;NG BOARD

COCOA TRADING ACCOUNT

(it 13;'X)

19566 -5 267 1968 1969 1970

Sales: Volume (Tons) (181,330) ('47,767) (217,597) (157,913) (179,520)

Value (fob) 19,881 s46,516 1.4,l63 46,155 54,529

Less: Export Duty 2,289 6,525 6.924 8,319 9,436Shi pping and handling 380 531 426 341 388

Net Sales Proceeds 18,212 39,460 37,495 44.705

Purcbasns anc Stock at October 13t 13,044 22,113 21,561 19,448 29,985Buying allowanrce (including bags) 2,308 2,950 2,618 2,166 2,705Less Stock at Seotember 30th (702) ) (868) (53) (3.274)

Gross Income 31962 4 4 13.502 6 141289As adjusted 31 - 15, 14 - 16,39 -

7xpenditures

Bills Expenses, Interest and charges !6(7 893 1,169 260 50,Produce Inspection bC!3 118 112 110 135Transport and Storage (49) 195 1,011 1,184 1,251IFPNC Agency Charge 73 148 94 250 57

Othe-rs 589 15, 2 261 187 184

Total Expenditures 1,172 1,511 2,647 1,991 2,129

THADING PROFIT (LOSS) 2,390 13,630 10,855 14,404 13.160

Trading Profit (Loss) (Nh/ton) 13.18 56.37 49.88 76.65 73.31

Average Sale Value (NE/toln) 109.64 192.40 202.96 245.62 303-75(UsW/lb) 13.71 24.05 25.37 30.7C 37.97

Average New York Spot Price 17.20 24.40 29.10 34.40 45.70

Average Sale Price as a % of theNew York Spot Price 80% 99% 87% 89% 83%

I/ Year ending September 30, 1966.

2/ Prevlous year.

3/ As ad4usted in the following year reports.

May 4, 1973

ANNEX 1Table 7

NIGEIAL

-SMDOND COCOA PROJ2T

)ED-wEsTINR STATE MARKGETING BDARD

BALANOS SHEETS

1966 1967 1968 / 1969 1970

ASSETS

FiYed Assets

Buildings 107 263

Vehicles 1 _ _ 8FPerituor and JquipOenlt 3 2 1 2

2 1 273

In-vestiseets

tJPM shares 383 383 383 383Ot.Ir inaesteents - 5 20 31Long te.-, deposits _ - 89 491

I.o~~~~~~~~~~~~~~~~~~~~~~-7 3M + 1 517

Cqrrent Assets

States 42 4 73 586

5undry Dectors 168 124 422 222

5WV0 Bserd 2,271 2,241 2,231 2,231

icso in hand and in Bark 400 1 945 615 363

2.89 ti4 3,311 3,402

206AL ASSEIS 3,268 4.704 4,062 4,631

LIAdILI ES

Currnt I isbilitieo

Sassds7 Sreditors 94 1,210 98 195vid-mlectsm Stases 2,231 2,231 2,231 2, 231

esIeteri NFIB - - 72 72

2,325 3,W4 2,40i 24,

Grant from Westem States 100 100 100 100 100

do ,'snue! Re3serves

tvens-ion Pon.d n.a. n.e. 5 7

?rofit and Loss Appropriation(FrDduce Raseis Account) 843 1 163 1,556 2 026

843 0 3 1

TOTAL lIABILITI3S 3,268 4,704 4,062 4,631

1/ NDt available.

May 4, 173

3KCC''7D CrOOE PROJECT

MID-JEST3EilN STATE MYIAETmNG SCA;i

A?EO?RtA l'b.O CF ANiMUAJ, 'OADUjIjCI SURP'LUSES AND PHODUCE RLS&RVE ACCOUNT

(: 'rE oo )

1 96t-, 1967 1968 1969 1970

Annual Trading Surmluses(Oeficit) -/

Cocoa 1D3 147' n.a. 647 781Palmn Produce 323 125 n.a. (328) (13)Ottlers (Cotton, ... ) - n.a. _

Total Surpluses 1422 600 859 31'9 768

Appropriation of Annual Trading Surpluses (Ect4.mated) _/

To: Mid-Wnestern State Government 20n -,0 300 202Cocoa Research Institute (CRIN) 5r 5° 50 SoInstitute for Oil Palm Research (NIFOR) 28 28 28 31Cocoa Spraying Subsidy 2 11 12 12Cotton Spraying Subsidy - - I -Others - 2 3 3

Total Aopropriation 280 391 394 298Nlet Surplus ^fter appropriation 320 46e (75) 1470

Produce Reserve Account

Comulative Trading Surpluses 2/ 1,261 1,B61 2,720 3,039Cumulative Appropriation to

Mid-Western State Covernment 250 450 750 1,050Cocoa Research Institute (CRIN) 96 146 196 246NIFOQ 70 98 126 154Cocoa Spraying Subsidy - 2 13 25Cotton Spraying Subsidy - - - 1Others 2 2 I, 7

Total Cumulative Appropriation 418 69 1, 089 1, 483

Per Produce Reserve Account 31 843 1,163 1,631 1,556Net Surplus of the year 320 468 (75) 470

PRODUCE R3SEiAVE ACCOUNT 41 11,53 2.026

Cocoa 300 n.a. n.a. 1,559rpalrm Prodaea 863 n.a. n,a. 1467

HSi

1/ Ad3juted to 4nc.uide OPRO sxupous (losses). CO2 From 193 -i 964 to t+h end oif lhe preylit yea".

3 t. 'he ean, o t'he 'roun year.r/ erBaarc 2lno ,

2/,^con. oi -*ltl

SECOIrD cOODA PROJECT

HITD-iWZhTSRN S77 V9S 1KSKETING BOARD

COCOA TR IDING ACCOUTJT

1/ ~~~~~~~311966- 1967 1968 1969 1970

Sales: Volume (tons) 7,172 8,274 - 7,509 9,726

Va2ue (fob) 810 1,611 _ 1,892 2,911

Less: Export duty 100 231 -Shipping costs 10 10 - 383 592

Net Sale Proceeds 700 1,370 1,50o 2,319

Purchase and stock at October 1st - 484 756 - 783 1,548Buying allowance and jute tags BR9 10.J - 19 29Transport to port n.a. n.a. 26 33Stock as at September 30th - _ -- (5-)

Gross Income 127 510 - 781 759

Expenditures

Produce inspection 7 12 15 12Port storage and shipping charges n.a. n.a. - 61'PC Agency charges 3 - 3 2Arbitration charges - -5Others 2 12 2 7

Total expenditures 13 27 - 25 27

TRADING PROFIT (LOSS) 114 483 - 656 732

Trading Profit (Loss) per ton (Nt) 15.89 58.37 - 87.36 75.26

Average sale value (N%/ton) 112.93 194.70 - 251.96 299.30(uS,l Lb ) 15.32 2

6.hi2 3

1.1P9 4o.61

Average New York Spot Price (US& lb) 17.20 24.40 - 34.40 5.70

Average selling price as a % of theNew York Spot Price 89% 108% 99% 89% D

1/ Year ending on September 30th.

2/ Previouls year.

3/ Not available.

October 26, 1973

ANNEX 2Page 1

NIGERIA

SECOND COCOA PROJECT

RATE OF RETURN CALCULATION

1. Table 1 shows the assumed yields and output of the project,3 andTahle 2 the calculation of the economic value of a ton of cocoa; the latter is

based on present and forecasted New York spot prices; Table 7 gives a break-

down of the prices used in the sensitivity analysis. Tables 3 and 4 detailthe annual costs and benefits for the Western and Mid-Western State projects

respectively, and Tables 5 and 6 show the sensitivity of the project to chang-

es in future cocoa prices and project costs. The assumptions used in the above

calculations are discussed briefly below.

2. The project life is assumed to be 30 years reflecting the expected

minimum life of cocoa trees established under the project. The first farmsplanted under the project would come into bearing in the fourth year and

would produce benefits for 26 years; consequently, the benefits of the last

project plantings which would be made in year four would only be includedfor 22 years. The project is assumed to have no residual value at the endof 30 years.

3. The on-farm costs reflect the per-acre costs given in Annex 7, Ta-bles 4 and 5 which have been aggregated into 3 main components, labor, otherlocal costs, and foreign exchange costs. Hired labor is valued at the officialwage rate of N 1.00 per manday.

4. Project administration and investment costs are detailed in Annex7, 'Fables 7 to 9 and 11 to 13. The component of the Project Monitoring and

Analysis Unit (PMAU) 1/ cost attributable to the cocoa projects (25%)

has been apportioned between Western and Mid-Western States on an acreagebasis. The remaining 75% of PMAU costs are assumed to be borne by other

planned tree crop projects including the oil palm and rubber projects. Inthe case of the Mid-Western State cocoa project, one third of the 3enin TCIJ

headiquarters cost has been allocated to the cocoa project, and one third toeacti of the State's proposed oil palm and rtibber projects.

5. The road program costs are derived from Tables 14 to 17 in Annex 7and assume that labor represents 60% of local contract and maintenance costs.The residual value of road construction equipment has been included as a pro-ject benefit at the end of the road construction period; other benefits gen-

erated bv the road program are discussed at Annex 6, para 19 - 23.

1/ FMG intends to establish such a pnit to monitor tree crop projects for

which FMG provides finance.

ANNEX 2Page 2

6. Four main adjustments have been made to all direct costs:

(a) Hired labor and family labor have been valued at theofficial wage rate of N 1.00/MD and shadow rated at65%. The shadow wage rate reflects a weighted averageof economic wages in both peak and slack seasons.

(b) The official exchange rate does not reflect exactly thedomestic value of a unit of foreign exchange because oftaxes and subsidies. Because of this a shadow exchangerate of N 1 =$1.27 had been applied instead of the offi-cial rate of N 1 = $ 1.52, an estimated overvaluation ofthe Naira of about 20%.

(c) The estimated tax component of project costs has beendeducted.

(d) A 5% physical contingency on all costs - except familylabor - has been applied for the project period (forthe Western State up to 1980/81 and for the Mid-WesternState up to 1981/82).

7. The New York spot price of USi61/lb forecasted by the Bank's tconomicAna!ss.ts and Projections Department for 1980 has been discounted with the Inter-national inflation index 1/ to arrive at a constant 1974 price of !jSd44.4/1b.Thus the numeraire for both costs ani benefits is the same. At this price.th,- economic value of project output is N 530/ton at the official exchangerate and N 640/ton at the shadow rate. The latter has been used for economicrate of return calculations.

8. Replanting will require cutting down old cocoa trees. Since thesetrees are at or near the end of their productive lives, no adjustment hasbeen made to the benefit stream for loss of output resulting from their beingdestroyed.

9. The economic rates of return are 25% for the Western and 19% forMid-Western State projects respectively. The lower returns of the Mid-WesternState reflect the higher management costs inherent in the diseconomies ofscale and the slower pace of development envisaged. In the sensitivity analy-sis in Tables 5 and 6 cocoa prices of US$ 27.5 (midpoint present price rangecocoa agreement), 40.0 (10% underforecast), 44.4 (forecast), 48.8 (10% overforecast) and 64.7 (average 1973 price) per lb in terms of 1974 US$ have beencmplloyed. Thie various rates of return are shown in Tables 5 and 6.

1l 1973 = 100, 1974 = 108.3 and 1980 - 148.8

.~~~~~~~~NIGERIA

SECOND COCOA PROJECT

YIELDS AND OUTPUTS

Year 1 2 3 4 5 6 7 8 9 10Yield/ac (lbs) - New Planting - - - 100 200 3 m 700

- Reolanting - - - lO( 200 35° 550 6Uo 750 750 7!

1,74/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/28/2

W25TEliN STATES

First Cocoa Prozect

New Planting - 134 415 952 1,896 2,940 4,138 5,175 5,859 6,261 6,261 6,261 6,261 6,261Replanting - 112 53 1 1,391 2 862 4567 6,357 7 853 8,638 039 9° 39 9 039

Subtotal 946 2,343 ,5 7,57 10.495 13,02 7 15,300 15,30 0 1 5,300 15,300

Second Cocoa Pro ect

New Planting _ _ - 94 355 1,210 2,196 3,491 4,977 6,048 6,868 6,868 6,868 6,868Replanting 219 940 3 009 5 439 8,55 13 46G 14.699 14 699 1

Subtotal - - - 313 1,295 7,69 19,508 221 21,567 21,567

Total Western State

New Planting - 134 415 1,046 2,251 4,150 6,334 8,666 10,836 12,309 13,129 13,129 13,129 13,129Replanting - 112 531 1 610 3 802 7,576 11,796 16,403 20.358 22 99 23.738 23.3383 23.738 23

Total - 826 11,726 18,130 209 31,194 3808 3867 36,7T 36,867 36

MID-WESTEfN STATE

New Planting - - - - 67 256 602 1,055 1,719 2,572 3,209 3,595 3,795 3,795

WESTERN AND KID-WESTERN STATES

First Cocoa Project

New Planting - 134 415 952 1,896 2,940 4,138 5,175 5,859 6,261 6,261 6,261 6,261 6,261Replanting - 112 531 1,391 2862 4,567 6357 7 853 8,638 9 039 9 039 9iO2 2,3 99

Subtotal - 12,343 77 _ 5 14,' 497 15t,30 1 ,3 Io H 8 0 15,300 1300

Second Cocoa Pro,ect

New Planting - - - 91 422 1,466 2,798 4,546 6,696 8,620 10,071 10,463 10,663 10,663Replanting 219 940 3,009 5439 8,550 11720 1360 14699 1461499

Subtotal _ _ _ 313 1,362 4,475 13,096 3 24,776 2

Total Both States

New Planting - 134 415 1,046 2,318 4,406 6,936 9,721 12,555 14,881 16,338 16,724 16,924 16,924Replanting - 112 531 1,61O 3,802 7,576 11,796 16,403 20,358 22,499 23,738 23,738 23,738 23,738

GRAND TOTAL _ 9 2 6 11.982 18,73 2 26.124 32.913 37.380 40.C76 =2 :? i 2

/1 Yields are assumed to decline as from Year 30 in five years

/2 Output would start declining as from 2002 and phase out by 2012

October 15, 1973

ANNEX 2Table 2

NIGERIA

SECOND COCOA PROJECT

PRICE BREAKDOWN FROM SPOT NEW YORK TO PRODUCER PRICE

ALLOCATION OF PROCEEDS AND PROJECT ECONOMIC VALUE OF COCOA

Percent of ProjectedCurrent Price Projected Price FOB Price

1972 1973 1974 1980 1973 1980

Spot New York (US cents/lb) 32.3 1/ 64.7 2/ 44.4 3/ 61.0 4/ - -

Spot New York (US$/long ton) 723.52 1,449.28 994.56 1,366.40 - _

Insurance, freightand marketingefficiency 5/ (US$/long ton) 72.35 114,93 99.46 t36.64 -

FOB Nigeria (US$/long ton) 651.17 1,304.35 895.10 1,229.76 - -

FOB NigeriA (N/long ton) 428.40 868.13 588.88 809.05 100.0 100.0

Allocation of ProceedsTo Farmers

Producer price 310.00 400.00 400.00 600.00 6/Sales tax (8.00) (8.00) - -Net Producer 302.00 392.00 400.00 600.00 68.0 74.1

To LBI

Block buying allowance 20.73 20.73 20.73 20.73 3.5 2.6

To Marketing Boards 11/

Transport to shipment 10.95 10.95 10.95 10.95Storage, handling and bags 10.00 10.00 10.00 10.00Finincial charges 4.20 4,20 4.20 4.20 ) 4.8 3.6Insurances 7/ 0.75 1.50 1.03 1.42Board overheads 2.80 2.80 2.80 2.80Board surplus (deficit) (27.46) 225.57 69.37 67.12 11.8 8.3

Total to Marketing Boards 1.24 255.02 98.35 96.49 16.6 11.9

To NPMC

Agency charges 3.00 3.00 3.00 3.00 - -Deterioration, inferior quality allowance 1.70 1.70 1.70 1.70 - -

Shore handling 4.00 4.00 4.00 4.00 - -Sundries (fumigation, rebagging) 0,02 0.02 0.02 0.02 - -

Total to NPMC 8.72 8,72 8.72 8.72 1.5 1.1

To State Government

Export tax 8/ (% of FOB value) 85.68 171.63 58.88 80.91 - -Produce inspection charge 2.03 2.03 2.20 2.20Producer sales tax 9/ 8.00 8.00 -

Total to State Government 95.71 181.66 61.08 83.11 10.4 10.3

PROJECT ECONOMIC VALUE OF I TON OF COCOA 10/ 368.22 797.20 528.25 748.03 89.7 92.5

1/ Average 1972

2/ Average 1973

3/ Price forecast 1980 of Commsolity Division deflated by projected inflation index of InternationalEconamy Division (1973 = 100; 1974 - 1C8.3; 1980 - 148.8

4/ Price Forecast 1980 of Commodity Division.

5/ On average from 1960 to 1970, the FOB value of cocoa in Nigeria represented about 90% of theNew fork spot price, and in the projected price a similar percentage is employed.

6/ Current producer price inflated by inflation index of International Economy Division gives N 595.20 say N 600.

7/ 0.175% of FOB value.

8/ 20% under current price, but in line with Government's policy a 10% tax factor has been applied toprojected price.

9/ Under Government policy sales and export tax will be combined in one tax, for which a 10%factor has been applied.

10/ Sum of Producer Price, the Board surplus, the export and sales tax.

11/ Only estimates in the absence of financial statements on the Marketing Board since 1970.

March 21, 1974

NICERIA

SECOND COCOA PROJECT

WESTERN STATE

Economic Rate of Return(N 000)

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 '984/85 1985/86 1986787 1987/88 - 2003/4

Sn Farm Costs

Peolantiag 104.D 490.1 1,286.5 1,630.0 969.8 916.3 1,032.4 1,282.5 1518.5 1,874.7 2.261 8 R 7 6A 0 70 R0

of which: Labor 92.2 374.1 972.7 979.4 559.7 406.2 344.8 272.3 360.0 493.4 529.2 535.1 535.1 535.1

LocFa Costs 11.8 68.9 178.1 286.8 130.7 158.3 221.1 317.1 370.1 447.4 559.1 604.9 604.9 604.9

Foreign Ea-h-bga Cosca - 47.1 135.7 363.8 271.4 351.8 466.5 693.1 788.4 933.9 1,173.5 1,264.8 1,264.8 1,264.8

New Plan-tig 131.8 292.9 903.0 428.2 313.4 399.1 526.6 621.4 763.6 935.3 1,011.3 1,052.9 1,052.9 1,052,9

Of ohich- Labor 92.4 203.5 620.6 256.3 103.9 96.4 111.6 145.1 202.4 218.2 221.8 224.4 224.4 224.4

Local Costs 19.2 41.5 131.1 61.0 64.7 88.8 130.2 152.0 181.8 231.6 256.0 269.7 269.7 269.7

Foreign Rachaogs Costs 20.2 47.9 153.3 110.9 144.8 213.9 284.8 324.3 379,4 485.4 533.5 558.8 558,8 558.8

Road Pro-ram

Program 794.4 731.0 728.0 484.0 - - - - - -

Msinc.anoco _ _.. _ 1/ 175.0 185.0 15.0 150.0 150.0 158.O 130. 150.5 13.O O150.0

Sub-Total 794.4 731.0 728.0 484.0 175.0 165.0 155.0 150,0 150.0 150.0 150.0 130.0 150.0

Of which, Labor 145.7 309.3 327.1 235.7 105.0 99.0 93.0 90.0 90.0 90.0 90.0 90.0 90.0 90.0

Local Coats 201.3 231.1 230.6 139.2 35.0 33.0 31.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

Foraign Eahnbnga Cost 447.4 190.6 170.3 109.1 35.0 33.0 31.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

8tafF and Ov-rhoad

Salarias (14.4) 520.0 1,146.1 832.7 642.0 493.4 250.0 230.0 200.0 175.0 175.0 175.0 175.0 175.0

Buildinga 347.1 3.8 2.3 - -- - - - -_

Vah(clea 246.0 150.4 121.3 35.1 21.9 11.9 2.5 2.5 2., 2.5 2.5 2.5 2.5 2.5

Training 20.8 16.9 19.8 - - - - - - - - - -

Sprayers 34 0 72 9 124.4 Opsoating Costa 17.0 39.5 97.2 90.5 70.6 43.5 37.8 30.0 28.0 25.0 25.0 25.0 25.0 25.0

Feder-l TCDU - 109.5 109.2 109.3 99.6 90.7 82.0 87,5 55.8 33.8

Sub-Total 650.5 913.0 1,620.3 1,067.6 834.1 639.5 372.3 350.0 286.3 258.3 202.5 202.5 202.5 202.5

of whioh: Loc-l Coats 341.0 626., 1,218.1 875.4 684.4 528.8 298.9 280.6 231.7 207.7 170.8 170,8 170.8 170.8

Foreign Enchanga Casts 309.5 290.4 402.2 192.2 149.7 110.7 73.4 69.4 54.6 50.6 31.7 31.7 31.7 31.7

TOTAL COSTS 2/ 1,764.7 2,548.3 4,766.7 3,790.3 2,406.9 2,225.9 2,190.6 2,403.9 2,718.4 3,218.5 3,625.6 3,810.2 3,810.2 3,810.2

Of whioh: Labor 346.8 931.2 2,016.4 1,544.9 807.0 631.8 576.8 507.4 652.4 801.9 841.0 849.5 849.5 849.5

Loo-l Rorst 602.0 1,012.3 1,845.8 1,430.6 9hs8.9 849.3 715.3 779.7 813.6 916.7 1,015.9 1,07Y.4 1,075.4 1,075.4

Foreign REnhango Cocts 815.9 604.8 904.5 814.8 631.0 744.8 898.5 1,116.8 1,252.4 1,499,9 1,768.7 1,885.3 1,885.3 1,885.3

FAMILY LABOR ('000 Mandays) 175,7 509.4 1,442.2 1,140.5 892.4 780.4 1,040.2 1,413.9 1,711.6 2,080.3 2,108.0 2,108.0 2,108.0 2,108.0

ECONOMIC COSTS

Lab-r 225.4 605.3 1,310.7 1,010.7 524.6 410.7 374,9 329.8 424.1 521.3 546.7 552.2 552.2 552.2

Faily Labor 114.2 331.1 937.4 741,3 580.1 50723 676.1 919.0 1,112.3 1,352.2 1,370.2 1,370.2 1,370,2 1,370.2

Local Costs 602, 1,012.3 1,845.8 1,430.6 968.9 849.3 715.3 779.7 813.6 916.7 1,015,9 1,075.4 1,075.4 1,075.4

Foreign Rxchangs Coat 979.1 725.8 1,085.4 977.8 757.2 893.8 1,078.2 1,340.2 1,502.8 1,799,9 2,122.4 2,262,4 2,262.4 2,262v4

1,920.7 2,674.5 5,179.3 4,160.4 2,830.8 2,661.0 2,544.5 3,368.7 3,853.0 4,590.1 5,055.2 5,260.2 5,260,2 5,260.2

Loss: Tanos (122.0) (121.0) (159.8) (92,9) (54.1) (39,2) (23.5) (22.1) (20.3) (18.1) (18.1) (18,1) (18.1) (18.1)

TOTAL 1.798.7 2.553,5 5.019.5 4,067.5 2,776.7 2,621.8 2,521,0 3,346.6 3.832.7 4,572.0 5,037.1 5,242.1 5,242,1 5,242.1

BENEFITS

Coco. valued at N 640/tNew Planting - - - 60.2 227,2 774.4 1,405.4 2,234.2 3.185.3 3,870.7 4,395.5 4,395,5 4,395.5 4,395.5

R.pl-ntin8 - - - 140.2 601.6 1,925.8 3,481.0 5,472.0 7,5001, 8,614.4 9,407,4 9 407 4 9,407.4 9,407.4

Tatal C.o.o - - - 200.4 828.8 2,700.2 4,886.4 7,706.2 19,685.4 12,485.1 13,802.9 13,802.9 13,802.9 13,802.9

Benfits fro REoad Program - 96.7 248.1 483.5 845.0 580.0 580.0 580,0 590.0 580.0 580.0 580,0 580,0 580.0

TOTAL 96.7 290.1 683.9 1,673.8 3 280 2 5,466,4 6,8. 11,265.4 13,065.1 14,382.9 14,382.9, 14,32.9 14,382.8

RATE OF RETURN 25.45%

1/ Inloded order road vrogr-m

U/ Up to 1980/81 phyrical contingencies of 57 included.

3/ Inclndes r-sidoal volon of toad equipent at N 265,000.

NIGERIA

SECOND COCOA PROJECT

MID-WESTERN STATE

ECONOMIC RATE OF RETURN(N 8 000)

1974/75 i975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1987/R1 198R/94 1594(0; 1985/96 1986/87 1987;88 - 2003/04

On Farm Coets 94.2 213.6 271.4 332.3 212.1 214.0 265.8 343.8 414.5 487.7 546,8 571.6 581.8Of which: Labor - 66.1 148.4 180.1 206.3 93.1 56.3 63.9 81.2 1S0.3 117.3 522.10? 43.44Local Costs 6 17 30 .3 39.0 500 8 39.2 44'3 64.4 83.6 101.1 120.0 137.7 125.7 179:Foreign Esohasga Costs - 14.3 34.9 52.3 7530 7988 10852 137 5 179.0 213.1 250.4 287 0 302 5 308.7

Road Program

Program 208.4 253.8 - - - - - - - - - - -Maiotenon-e - 1/ 18.9 18.9 17.9 13.8 15.8 15.8 15.8 15.8 15.8 13.8 15.8 15.8

shb-Tetes 208.4 253.8 18.9 18.9 9 17.8 15.8 15.8 15,8 13.8 15.8 15.8 15.8 1518 15.8Of vhich: Labor 65.2 134.2 11.3 11.3 10.7 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4Local CEsts 48.9 65.2 3.8 3.8 3.6 3.2 3.2 3.2 3.2 3 2 3.2 3.2 3 2 3.2Foreign Eachasge Coats 94.3 54.4 3.8 3.8 3.6 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2

Staff Overhead

Staff salaries sod ellowances 60.6 128.8 187,1 211.6 229.7 177.7 118.1 104.7 92.0 80.0 70.0 70.0 70.0 70.0Buildings 40.0 83.6 - - - - - - - - - - - -Vehicles 23.4 42.9 16.8 30.2 43.2 13.7 9.0 2.1 2.5 2.5 2,5 2.5 2.5 2.5Treinino e.s 0.5 0.6 0.7 - - - - - - - -Sprayers 2.5 7.4 9.7 4.9 4.9Op?e,tLOg Coats 10.5 18.6 22.4 23.9 24.2 21.6 18.0 12.2 10.0 7.5 5.0 5.0 5.0 5.0Federal TCDU - 10.8 10.8 10.8 9.8 9.0 8,1 8.6 5.5 5.5

lob-Total 137.5 292.6 247.4 282,1 311.8 220.0 153.2 127.6 110.0 95.5 77.5 77.5 77.5 77.5

Of which: Local Costs 96.9 208.2 193.2 219,0 237.7 180.4 123.1 106.6 92.1 80.1 66.2 66.2 66.2 66.2P,reign Eachasgo Costa 40.6 84.4 54.2 63.1 74.1 41.6 30.1 21.0 17.9 15.4 11.3 11.3 11.3 11.3

TOTAL COSTS 1/ 363.2 672.6 503.9 601.0 695.1 472.3 402.2 429.7 460.6 525.8 581.0 690.1 664.9 675.1

Of which: Lacbr 68.5 210.3 167.7 201.0 228.1 107,6 69.0 77.0 90.6 109.7 126.7 131.5 132.E 133.4Local Coats 153.1 301.5 238.7 274.9 306.7 233.9 184.6 182.9 178.9 184,4 189.4 207.1 215.1 218.5Foreign Exchange Costa 141.6 160.6 97.5 125.1 160.3 130,8 148.6 169,8 200.1 23t.7 264.9 301.5 317.0 323.2FAMTLY LABOR ('000 Macdays) - 55.5 118.3 159.1 213.3 155,3 186.1 211.3 262.5 298.5 334.0 340.0 340.0 340.0ECONOMIC COSTS

Labor 44.5 136.7 109.0 130.7 148.3 69.9 44.9 50.1 58.9 71.3 82.4 85.5 86.3 86.7Family Labor - 36.1 76.9 103.4 138.6 100.9 121,0 137.3 170.6 194.0 217.1 221.0 221.0 221.0Local Costa 153.1 301.5 238.7 274.9 306.7 233.9 184.6 182.9 178.9 184.4 189.4 207.1 215.1 218.5Foreigs E-chasge Cotst 169.9 193.0 117.0 150.1 192.4 157,0 178.3 203.8 240.1 278.0 317.9 361.8 580.4 587.836 7.5 667.3 541.6 659.1 786.0 561.7 528.8 374.1 648.5 727.0 868754 982.8 rLes.: Tases (28.4) (35.5) (17,8) (23.1) (23.6) (14.01 (10.4) (6.8) (5.9) (5.4) (4.7) (4.7) (4,7) (4,7)TOTAL 339.1 631.8 523.8 636.0 762.4 547.7 518.4 567.3 642,6 722.3 802.1 870.7 898.1 909.3

BENEFITS

Cocoa Voiced @ N 640/T - - - - 42.9 163.8 385.3 675.2 1,100.2 1,646.1 2,053.8 2,300.8 2,428.8 2,428,8Additional Road Benefits - 20,3 120.8 2/ 60,8 60.8 60,8 60.8 60.8 60.8 60.8 60.8 60.8 60.8 60.8

TOTAL _ 20,3 120.8 60.8 183.7 224.6 446.1 736,0 1,161.0 1,706.9 2 2,361.8 2.4896 2489.6

RATE OF RETURN: 19.25%

2/ Vp to 1981/82 physical contingencioe of 5Y. inoloded.

3/ Soclod-a residoal valor of road eqoipment at 5 60,000.

ANNEX 2Table 5

NIGERIA

SECOND COCOA PROJECT

Western State Project

Sensitivity Analysis

Cocoa Spot N. Y. Price in USl/lb

27.5 /1 40.0 44.4 /3 48.8 /4 64.7-5

Costs as Estimated 2.25 22.45 25.45 27.45 34.75

10% Increase in Costs 9.45 20.05 23.05 25.05 32.25

207. Increase in Costs 6.65 17.85 20.85 22.95 30.05

Costs Without Shadow Rating

of Labor 6.85 18.25 21.35 23.35 30.65

107 Increase in Cosl:s 3.25 15.75 18.95 20.95 28.25

20% Increase in Costs - 13.45 16.65 18,75 26.05

Costs and Benefits IWithoutany Shadow Rating 2.25 14.85 17.65 20.05 26.95

107. Increase in Costs - 12.35 15.25 17.65 24.55

/1 Mid-point of price range of present International Cocoa Agreement (38% below price forecast)./2 1974 price forecast less 10%./3 1974 price forecast for cocoa (1980 price forecast of 0.61 deflated by international deflation

index (1973 = 100; 1974 = 108.3; 1980 = 148.8)./4 1974 price forecast plus 107./5 1973 average price.

March 25, 1974

ANNEX 2Table 6

NIGERIA

SECOND COCOA PROJECT

Mid-Western State Project

Sensitivity Analysis

Cocoa Spot N. Y. Price in US#/lb

27.5 L 40.0 /2 44.4 /3 48.8 /4 64.7 /5

Cost as Estimated 7.85 16.75 19.25 20.85 26.75

10% Increase in Costs 5.35 14.75 17.25 18.95 24.75

20% Increase in Costs 2.75 12.95 15.55 17.25 23.05

Costs Without Shadow Ratingof Labor 3.25 13.35 15.95 17.65 23.55

10% Increase in Cos-s - 11.35 13.95 15.75 21.65

20% Increase in Cos:s - 9.35 12.15 13.95 19.95

Costs and Benefits Withoutany Shadow Rating - 10.95 13.35 15.45 21.15

10% Increase in Cos:s - 8.75 11.35 13.45 19.25

/1 Mid-point of price range of present International Cocoa Agreement (38% below forecast)./2 1974 price forecast less 10%./3 1974 price forecast for cocoa (1980 price forecast of 0.61 deflated by international inflation

index (1973 = 100; 1974 = 108.3; 1980 = 148.8)./4 1974 price forecast plus 10%./5 1973 average price.

March 25, 1974

C9

ANNEX 2

Table 7

NIGERIA

SECOND COCOA PROJECT

BREAKDOWN OF DIFFERENT PRICES USED IN SENSITIVITY ANALYSIS

Spot New York (JSf/1b) 27.5 2/ 40.0 4/ 44.4 3/ 48.8 - 64.7 -

Spot New York (Uic/long ton) 616.00 896.00 994.56 1,093.12 1,449.28

Insurance,Freignt, and MarketingEfficiency (1)%) 61.60 89,60 99.46 109.31 144.93

FOB Nigeria (US$/long ton) 554.40 806.40 895.10 983.81 1,304.35

FOB Nigeria (N/long ton) 364.74 530.53 588.88 647.24 858.13

To farmer 300.00 7/ 400.00 8/ 400.00 400.00 9/ 400.00 10/

To LBA 20.73 20.73 20.73 20.73 20.73

To Marketing Boa:-dsConstant Costs 11/ 27.95 27.95 27.95 27.95 27.95Insurance (0.175M FOB) 0.64 0.93 1.03 1.13 1.50Surplus (deficit) (31.97) 16.95 69.37 121.79 311.22

(3.38) 45.83 98.35 150.87 340.67

To NMPC 8.72 8.72 8.72 8.72 8.72

To GovernmentProduce Inspection Charge 2.20 2.20 2.20 2.20 2.20J½xes (10% FOB, 36.47 53.05 58.88 64.72 85.81

38.67 52.25 57.91 66.92 88.01

ECONOMIC VALUE

Farmer 300.00 400.00 400.00 400.00 400.00Marketing Board Surplus (deficit) (31.7) 16.95 69.73 121.79 311.22Taxes 36.47 53.05 58.88 64.72 85.81

304.50 470.00 528.25 586.51 797.03Say 300.00 470.00 530.00 590.00 800.00

(At aadow exchange rates) 12/ 360.00 560.00 640.00 700.00 960.00

1/ See also Annex 2, Table 2.

2/ Midpoint price of price range of present International Cocoa Agreement (38% below price forecast).

3/ 1974 price forecast for cocoa (1980 price forecast of 0.61 deflated by international inflationindex (1973 = 100; 1974 = 108.3; 1980 = 148.8)

4/ 1974 price forecast less 10%.

5/ 1974 price forecast plus 10%.

6/ 1973 average price (45% over price forecast).

I/ At this prevailing international price the farmer could get less (around N 260).

8/ At this prevailing international price the farmer could get this price.

9/ At this prevailing international price the farmer could get N 500

10/ At this previiling international price the farmer could easily get N 600.

NOTE: Notes 7 through 10 are only true under all other conditions being equal.

S 11/ Transport to Shipment N 6.95; Storage handling and bags N 10.00; Financial charges N 4.20;Board overheeds N 2.80

12/ Shadow exchar-ge rate of N 1.00 = US$ 1.27 compared to actual exchange rate of N 1.00 = US$ 1.52gives a premium of 20%.

March 21, 1974

ANNEX 3

Page 1

NIGERIA

SECOND COCOA PROJECT

Cocoa Marketing Cooperatives and the Western State Farmers' Union

I. Cocoa Marketing Cooperatives

A. Western State

The Cocoa Marketing Cooperatives

1. The cooperative movement was launched in the 1930's by.the thenDepartment of Agriculture to organize cocoa marketing amongst smallholdersand to encourage competition with private companies and traders handlingcocoa exports. In 1936, a cooperative law was passed, establishing theRegistrar of Cooperative Societies' 1/ powers and duties, and permittingthe organization of cooperative societies. In 1945 the Association ofNigerian Cooperative Exporters, Limited (ANCE) was established as anorganization embracing all Cooperative Produce Marketing Unions (CPMU) andSocieties (CPMS) in the then Western Region. Following independence in1960, the cooperative movement suffered from political interference: eco-nomically unsound societies were established, loans were made withoutguarantees, and established cooperative laws were overruled. However, thissituation no longer exists and, since 1965, the cooperative movement,insulated from political pressure, has steadily developed. In 1965, fol-lowing the establishment of the mid-Western State, a new cooperative move-ment was started in Benin following the same basic principles as itsparent organization.

2. The Primary Societies. The basic unit of the cooperative movementis the primary society organized at village level. During their annualgeneral meeting, members of a primary society elect a Committee, ronsist-ing of a President, Vice-President and Treasurer, and a maximum of eightother members. The Committee is responsible to the general meeting forthe executive management of the society and appoints a secretary to managethe day-to-day operations. The secretary is responsible for purchasingcocoa from society members, bookkeeping, stock maintenance and cash opera-tions. He prepares the society's profit and loss account, and the balancesheet, which the Conmittee presents to the annual general meeting, and tothe Registrar of Cooperatives for approval.

1/ The Registrar of Cooperatives is now a Divisional Director in theMinistry of Trade and Cooperatives of Western State.

ANNEX 3Page 2

3. Cooperative societies are primarily interested in cocoa marketingbut they also provide their members with farm inputs such as pesticides,fertilizers and sprayers and with seasonal credit for their purchase. Incarrying out these functions, the primary societies are assisted by theCooperative Supply Association Limited and the Cooperative Bank in theWestern State, and the Mid-Western Nigeria Cooperative Federation and theCentral Financing Society in the Mid-Western State. Seasonal loans grantedin kind to members at an average interest rate of 15% per annum are repaidby deduction from the proceeds of each member's sale of cocoa and there isa well established practice of keeping loan accounts at the primLry societylevel. In addition to production loans, primary societies may grant short-termcash loans to members. The credit-worthiness of a member is appraised by thecommittee and the total indebtedness of each member cannot exceed three-quartersof the estimated value of his cash crop for the ensuing season. A member isnot allowed to borrow money from any source other than the society withoutprior approval of the general meeting and Registrar.

4. To become a member of a primary society, a farmer must be over18 years of age and own a cocoa farm. He pays an entrance fee of about 1I 0.5,varying from society to society, and subscribes at least three shares of? 2.0 each. A member must sell his cocoa only to his society, exceptwhere prior permission has been given by the Committee. This system workssatisfactorily as long as the cooperatives are able to make immediate cashpayments for their members' cocoa. In practice, however, there are occasionswhere societies are short of cash and consequently members sell to otherbuying agents. No member is entitled to withdraw from his society unlesshe has been a member for at least two years and has given six months' notice.If a member withdraws from his society or is expelled by a decision of thegeneral meeting for misconduct toward the society, outstanding loans andinterest thereon become payable immediately. Under the project, the loanagreement to be entered into by cooperative members with the CooperativeTrust or the Central Financing Society would provide for immediate totalloan repayment, if a project participant leaves the society through whichhe was given a development loan.

5. Primary societies derive their main income from that part of thelicensed buying agent allowance passed on to them by the Unions. Additionalincome accrues from shares purchased&by members, entrance fees, intereston seasonal loans, and commission on the purchase of farm inputs by members.Societies may also accept deposits from members in individual savingsaccounts and use such proceeds for investment or for loans to members.Reserve Funds are held by societies to meet losses and depreciation ofassets and many societies have established an Educational Fund to financescholarships for members' dependents.

ANNEX 3Page 3

The Unions and Association of Nigerian Cooperative Exporters (ANCE)in Western State

6. In 1971/72, the Western State had about 830 cocoa marketing primarysocieties grouped in 25 Unions, and organized as cooperatives with theirmembers the constituent primaries. The Unions are licensed buyihg agentsand organize the cocoa marketing of their societies as prescribed by theMarketing Board (see Annex 11). Besides their marketing operations, Unionsgroup farm input orders from their constituent societies and pass bulk ordersto the Cooperative Supply Association. If members' requests for productionand consumption loans exceed available funds, unions borrow directly fromthe Cooperative Bank for on-lending to their member societies. The Unioncommittees decide the creditworthiness of each society and fix the maximumamount each is permitted to borrow. Societies are not entitled to borrowfrom sources other than their union without prior Union and Registrarapproval.

7. ANCE, with headquarters in Ibadan, started operations in 1945,with a membership of 4 Cooperative Produce Marketing Unions. Membershipgrew steadily and, during the period 1966/67 - 1971/72, averaged 23 unionsrepresenting some 850 primary societies and about 48,000 individual members.During the same period ANCE handled a yearly average of 39,500 tons ofcocoa or approximately 17% of the total Western State production. Thisrepresents an average annual production of 1,715 tons per union, 46 tons persociety or 0.82 tons per member, or an average gross income from cocoa ofN 246 per farmer. In addition to cocoa marketing, its main operation,ANCE deals also with palm products, coffee and copra and small quantitiesof other cash crops. Further data on ANCE and its constituent unions aregiven in Table 1. Production statistics show a marked decrease in 1968/69when crop production was substantially reduced by bad weather throughoutWest Africa. In addition, the establishment in 1965/66 of the Mid-WesternState with its own export cooperative association deprived ANCE of fourunions which joined the new Association. In 1969, another union leftANCE following the establishment of Lagos State. The consolidation of smallsocieties in larger units led to the reduction of the number of societiesin 1969/70.

8. ANCE is organized on the cooperative pattern, each union beingrepresented at the Annual Meeting. A committee, consisting of the President,Vice-President and one representative selected by the unions of eachProvince, is responsible for the executive management and appoints a Sec-retary to carry out day-to-day operations. ANCE's main object is to operateas a central marketing agency for members' produce. Initially, ANCE wasthe sole licensed buying agent for the whole cooperative movement but, in1960, each member union whose cocoa throughput exceeded the minimum requiredby the Marketing Board, registered as a licensed buying agent and tookdirect advantage of the buying allowance. ANCE also provides services toits members such as transport, storage and marketing of produce which arenot controlled by the Marketing Board. It assists also its member unionsin their relation with the Marketing Board. ANCE is responsible for the

ANNK. 3Page 4

general development of cooperative marketing organizations, representstheir interest at Government level and participates in the CooperativeUnion of Western Nigeria which is the apex organization of the cooperativemovement in the Western State. If a member union runs into difficulties,incurs losses, or is generally mismanaged, ANCE may take over temporarilyby appointing a Secretary directly responsible to ANCE. The same procedureis applied when new unions are established. In 1971/72 ten societieswere under the direct control of ANCE and their production was handled underANCE's buying license.

9. ANCE's funds are derived from share capital subscribed by members(N 20 per society member of the union), deposits from members as long-termloans, and most importantly from charges levied on their members forservices rendered. On average, over the 1966-70 period, each union paidlevies of N 0.2 and N 0.01 per ton of cocoa from a buying allowance ofsome N 18 per ton. Further income accrues from debt service on loansgranted to member unions and from cocoa buying allowances for cocoahandled directly by ANCE. Details of ANCE profit and loss accounts andbalance sheets for the period 1966-1972 are given in Table 1 and informationon previous years' results is available in the first cocoa project AppraisalReport (PA 69a, April 6, 1971).

10. The Cooperative Supply Association, Ltd. (CSA). In 1965, thecooperative movement realized the aevantages of purchasing inputs needed byits members in bulk directly from foreign producers. Unions and societiesformed a new cooperative society, the Cooperative Supply Association, tocollect all the societies' orders for farm inputs and purchase these inbulk. The Cooperative Supply Association Ltd. has grown steadily sinceits inception and now covers the whole of Western and Mid-Western States.Through a network of district and field units, the CSA collects farm inputorders from cooperative societies and unions, calls for bids, and importsand organizes their distribution amongst purchasers. CSA, the biggestimporter of farm chemicals in Nigeria, also assists cooperatives from otherStates in purchasing their farm inputs.

11. Other Cooperative Organizations. In addition to ANCE and theCooperative Supply Association, the Cooperative Union of Western Nigeriaincludes also the Cooperative Bank (see Annex 4), 35 unions consistingof some 1,400 cooperative thrift and credit societies, and some 270 craftsconsumers' and building societies. Total membership of the CooperativeUnion of Western State exceeds 100,000 members. (See Chart 1, Organizationof the Cooperative Movement.) The Union maintains an audit which ensuresa permanent control of all accounts in each society, union or association.This unit operates satisfactorily and the Registrar of Cooperatives usesits services occasionally to ensure societies' audits which he is empoweredto do by law (see para 12).

12. The Cooperative Societies Division. This Division, directed bythe Registrar, is within the Ministry of Trade and Cooperatives, and con-trols the cooperative movement, using legislation provided by the Cooperative

ANNEX 3Page 5

Societies Law (1953), and subsequent regulations. It registers eligiblesocieties, supervises societies, unions and associations, audits cooperativeaccounts at least once a year, and approves balance sheets and allocationof bonuses. The Registrar's consent is needed for cooperatives to grantloans to non-members and to borrow outside the cooperative movement. Ifany member of a society committee or other officer is deemed unfit by theRegistrar, he may require his replacement and can appoint a replacementafter a thirty-day vacancy.

13. New societies undergo a probationary period of approximatelyone year before registration. After applying for registration, new primarysocieties are supervised and audited by the Department of Cooperatives asa fully registered society. Registration is granted when the Registraris satisfied that cooperative legislation is being correctly applied, atleast 10 members have paid more than the minimum share of N 2.0, and thecocoa throughput of a cocoa marketing society exceeds 40 tons per year.

14. In 1972/73, besides the Registrar and the Chief AssistantRegistrar, the Division employed some 210 officers and had a total budgetof about N 300,000. It also organizes, together with the Cooperative Unionof Western Nigeria, revision courses for its own officers and cooperativesecretaries, in cooperative principles, law, bookkeeping and commercialpractices. The training program, staffed by cooperative officers, iscarried out at the cooperative college in Ibadan. Chart II shows theorganization of the Division.

15. Present Situation of Cooperative Unions and Societies. With theexpansion of the cocoa project in the Western State, it is expected thatall 25 State cocoa marketing unions will become associated with the project.These unions and their 829 constituent societies are generally in goodstanding. In 1971/72 their members had borrowed a total of bN 534,094(i.e. bN 9.1 per individual) for seasonal farm inputs of which 73% wasrepaid by the end of the following fiscal year. Although the liquidityof the unions is generally good some are reluctant to reimburse outstandingANCE debts, preferring to retain the funds repaid by their constituentswithin the union. The Registrar of Cooperatives announced that firm actionwould be taken against such Unions at the last ANCE Annual Meeting inAugust 1972 and the position has since improved.

B. The Mid-Western State

Cooperative Movement

16. Although the Mid-Western State Cooperative Movement was part ofthe Western Region Cooperative Movement before the formation of the Mid-Western State, it suffered from the separation, and particularly from thecivil war. Nevertheless, the cooperative movement is progressivelyrecovering and has basically the same organization as the Western Statemovement.

ANNEX 3Page 6

17. In the year 1971/72, some 915 primary societies with 31,800 members

representing 24 unions marketed some N 408,000 of palm kernels and cocoarepresenting an average of N 446 per society and N 12.8 per member. In

the same year seven Cocoa Marketing Unions with 6,035 farmers traded about

3,500 tons of cocoa, or 32% of the Mid-Western State cocoa exports. Thisrepresents an average of 500 tons of cocoa per Union, and 0.58 tons permember. The Mid-Western State cooperative movement is less dependent 'oncocoa than the Western State, with only 7 Unions and 20% of its membersdealing in cocoa.

18. The cocoa cooperative societies are all members of the Mid-WesternNigerian Cooperative Federation, Ltd. (MWNCF) through their Unions. MWCNF is

an apex organization, similar to ANCE in Western State, and is in charge of

marketing, transporting and exporting its members' production via theMarketing Board, and of buying in bulk required farm inputs and consumptiongoods. MWCNF is well managed and would provide a satisfactory marketingchannel for the cocoa produced by project participants.

19. All the cocoa trading societies are also members of the Central

Financing Society (CFS), an apex organization established to meet thefinancial needs of the Cooperative movement and through which project funds

would be on-lent to cooperative members participating in the project.

20. The Cooperative Societies Division. The Cooperative Societies

Division of the Ministry of Trade and Industry (Mid-Western State) has

basically the same functions as those of its counterpart in Western State

(see para 12). Headed by the Registrar of Cooperatives, it has its

headquarters in Benin and main branches in 5 areas are providing services

to, and control of, the unions and societies (see Chart 4). In additionto the Registrar and Deputy Registrar, the Cooperative Societies Divisionin 1970/71 employed 119 senior and junior cooperative officers with atotal budget of about N 168,000.

C. Conclusion

21. The cooperative movement is well established in the Western Stateand satisfactorily in the Mid-Western State. It is experienced in providingseasonal loans to its members. Under the supervision of the project units,it would be able to provide the basis for a satisfactory system of inputdistribution and loan recovery, with the full participation of its keyorganizations - the Cooperative Bank and Central Financing Society.

6

ANNEX 3Page 7

II. The Western State Farmers' Union (WSFU)

Introduction

22. Following Nigeria's Independence, numerous farmers' organizationswere hastily formed claiming to represent the interests of the State'sfarming community. MANR made many attempts to unify these various groupsinto one association but did not succeed until 1969 when the Western StateFarmers' Union (WSFU) was officially launched. This Union is an apexorganization which embraces farmers' groups at village levels, through thedivisional levels (based on administrative divisions) to the GeneralAssembly which consists of representatives of all the Divisional Unions.

23. Objectives. The main objective of WSFU is to promote andsafeguard the economic and social interests of Western State farmers andfishermen, mainly by organizing multipurpose cooperative societies whichwould group farmers for productive purposes, collective purchase of farminputs and marketing of their production. The Farmers' Union would alsorepresent farmers' interest vis-a-vis the Government and with the publicor private institutions of the State which deal with the agriculturalsector.

24. Organization. There are 13 district branches throughout WesternState which are grouped into 25 divisional organizations. The General Assem-bly is the principal governing body. Each level is directed by an electedcommittee made up of a President or Chairman, 2 Vice-Presidents or Vice-Chair-men, a Treasurer, Secretary, Financial Secretary, and members who delegate(lay-to-day management to the secretary. District annual assemblies elect onedelegate to represent 500 members at the Annual Assembly which in turn electsthe Central Council, the principal executive body. Staffing is weak at alllevels and is limited to 10 head office staff, 25 divisional secretaries,131 part-time district secretaries, 23 storekeepers, a few assistant store-keepers and some produce ledger clerks.

25. Membership and Production. The reported membership is about 101,000,incltuding 65,000 cocoa producers, who have access to some inputs and market-ing facilities. Cocoa deliveries to the Marketing Board increased rapidlyfrom about 1,500 tons in 1969-70 to some 17,000 tons in 1972-73, equal toabout 7% of the total State production. However, this is small for a reported

65,000 cocoa producers. Contrary to its objectives, WSFU has not attemptedto organize multipurpose cooperative societies.

26. Financial Organization and Situation. UJnder the WSFU constitutionthe Hnance Committee is in charge of all financial matters and reports tothe Central Council but can delegate day-to-day operations to the FinancialSecretary. The Committee prepares the annual budget, annual accounts, andorganizes and suipervises the financial procedures to be followed throughoutthe movement. Because WSEU has no legal existence, it cannot borrow, and inorder to buy cocoa, wealthier members of the elected committees have to standguarantor by pledging their own properties as collateral to secure creditfacilities from financing institutions.

ANNEX 3Page 8

27. Since inception WSFU overall operating results have been negative,hut there is a reported surplus from the initial income derived from the saleof membership cards (see Table 2). Collections; from the sale of cards have,however, dropped from N 39,850 during 1968-69 tD some N 2,000 in 1972-73, de-spite a considerable potential membership. Although all members are requiredto pay annual contributions of half a Naira each, no collection has been made.

WISFU has no share capital, hut has an accumulated surplus. Thismay be overstated because the assets include frozen debts and inventories.There are inconsistencies in the financial statements and field operationsare not properly recorded. WSFU employs a firm of public accountants asauditors 'Jut reports do not comment on the accounting procedures and financialsituation.

29. Role of the WSFU in the Project. The credit system of the firstcocoa nroject is based on membership of project participants in cooperativesocieties. The Cooperative Trust is formed by the State cooperative societiesfor on-lending tn farmers who repay their loans through deduction fromcocoa sales to the cooperative societies.

30. For socio-political and historical reasons, a large part of thefarmers' community does not wish to join the existing cooperative movementand the CDU has reported cases in which significant numbers of farmers haverefused to join the project because of the cooperative membership condition.The Western State Government has insisted that WSFTJ be employed as a creditchannel in the second cocoa project mainly to remove the feeling that onepart of the farming community is being favored against the other, but alsoto allow the cocoa program to expand beyond the cooperative movement whichmay otherwise become a limiting factor.

31. WSFU is relatively new and has not shown great management andadministrative ability in its first years of operation. Although WSFU issupposed to be an independent movement, it is strongly supported by MANRwhose officers have acted as recrxJting agents and which has seconded acivil servant to T4SFU Secretariat for managerial assistance. AlthoughMANR's policy to organize farmers is quite justified, the close connectionbetween MANR and WSFU may give farmers the impression that WSFU is Govern-ment-controlled and that loans made by WSFU will be subject to the extremelylax administration, particularly repayments, that have characterized pastGovernment loan schemes.

32. In view of the Government request that WSFU should be used to chan-nel credit to project farmers as restriction to cooperative members may limitproject expansion, the following is proposed:

(1) A new Agency, legally empowered to carry out businessactivities, would be created to assume WSFU's activi-ties. If nossible it should be established under theCooperl_ive Law, the Companies Act or as a statutorycorpor.i tion;

ANNEX 3Page 9

(2) The agency should be adeqllately staffed and funded andsubject to strict control of its performance and finances;

(3) Its local branches would not be used for project purposesunless they are properly established with a capable secre-tary; and

(4) WSFU farmers joining the project should satisfy the samecriteria as those applied to cooperative members, andsimilar procedures should be adopted for their selectionand creditworthiness. Farmers would be required to de-liver their cocoa to the agency which would be responsiblefor collections.

33. Project costs include the cost of five qualified credit off,icersattached to the CDU who would assist the agency and its branches to establishfinancial procedures and supervise their cocoa operations under the project.

34. Although the creation of the WSFU agency and its funding and staffingmay take time, it is believed that sufficient potential participants who arecooperative members will join the scheme and thus ensure achievement of plantingtargets.

S?

NIGERIASECOND COCOA PROJECT

THE WESTERN STATE CO-OPERATIVE MOVEMENT

ORGANIZATION CHART

CO-OPERATIVE UNIONOF WESTERN NIGERIA LTD.

CO-OPER4g49W INVESTMENTAND 19;iNI SOCIETY CO-OPERATIVE SUPPLYCOOPI;10t-iIr BANK ASSOCIATION

ASSOCIATION OF NIGERIANCO-OPERATIVE EXPORTERS

CO-OPERATIVE PRODUCE CO-OPERATIVE THRIFT AND

MARKETING UNIONS (25) CREDIT UNIONS

+ 300 Crafts, Consumers, Building Societies Etc. 829 Ca-operative Produce Marketing Societies + 1,400 Co-operative Thrift and Credit Societies

(MEMBERSHIP: + 20,000) (MEMBERSHIP: 58,778) (MEMBERSHIP: + 35,000) *

*Number of societies and membership as during 1971/72. World Bank-7715

I0NIGERIA

SECOND COCOA PROJECTWESTERN STATE FARMERS' UNION

(W.S.F.U.)ORGANIZATION CHART

ANNUAL GENERAL ASSEMBLYOF DELEGATES

CENTRAL EXECUTIVECOUNCIL

PRESIDENT GENERAL........... ........... ................ .... ,

CONSULTATIVECOMMITTEE COMPRISING EXTERNAL AUDITORM.A.N.R. AND W.S.F.U. ... . ................

GENERAL SECRETARY I

FADMINISTRATI FIELD OPERATIORODUENGADINSPRDUC GRDINU RDCCGAIGPODCERDN

| ADMINIS 'RATIVE I FIEPAOFRATMENT |FINANCE DEPARTMENT IIDPARTEN RESEARCH, IPUBLICATIONS|

DEPARTMENT 5 DIVIIONALSUPERISILONRSLE SUPEVIS RS UPRVSOSSUERISR

I DEPARTMENT I FARM M1 DAGER ISTRICTROLLE | PRODUCE MANAGER P 1PUBLIC RELATIONSDC

TI ACC~~~~~EOTN ST REKERSD EPTSOEEPR EO TREEPRTEO TR EPR

EKPR ONEAST PRDUE ASSTANT AA BOUAPOD ST RD ST PROrD. BASST 7

r ZONE ZONE7 |ZABEOUA|AS || ILESHA ||IBADAN |A|EABEOK

4 DIVISItONAL 5 DIVISIONAL 5 DIVISIONAL 14 DIVISIONAL I4 , ~~~~~~~~~PRODUCE GRADING PRODUCE GRADING PRODUCE GRADING IPRODUCE GRADINGI125 DIVISIONAL ISUPERVISORS SUPERVISORS SUPERVISORS ISUPERVISORS IISECRETARIESII

1 1 1 ~~~~~~~~18 DISTRICT PRODUCE II18 DISTRICT PRODUCE II18 DISTRICT PRODUCE II18 DISTRICT PRODUCEI13 131 DISTRICT I[IDEPOT STOREKEEPERS IIDEPOT STOREKEEPERS IIDEPOT STOREKEEPERS IIDEPOT STORE KEEPERSII RANCHES I

'PROD. ASST. =PRODUCE ASSISTANT World Bank-7717

NIGERIASECOND COCOA PROJECT

WESTERN STATE

MINISTRY OF TRADE AND COOPERATIVES

CO OPERATIVE SOCIETIES DIVISION

ORGANIZATION CHART

EHEADOLUARTERS PERMANENT SECRETA

rINAIICC S AUDIT ~~CO.ORPETASAl OLCA OC.O-TRCNT SAITO-T DA-TICS Rl-T OR~AAN,AT-O

FIELT

ASTISTATAr TCAISIAAA ASSI~~~~~~REG ST ANT TF I,IoSRAT ASOTA soISTS ASIEA TIFA

NATO ARCAKUTA SACAS SCACI SASOMAST OSTOARO~ ~~~~~~~~~~ PClE AXITIRAPA oEGSooA AD RTE

NIGERIASECOND COCOA PROJECT

MID-WESTERN STATE COOPERATIVESOCIETIES DIVISION

ORGANIZATION CHART

MINISTRY OF TRADEAND INDUSTRY

PERMANENT SECRETARY

HEADQUARTERS IN BENIN

COOPERATIVE SOCIETIESDIVISION

REGISTRAR OF COOPERATIVESDEPUTY REGISTERAR

BRANCHESHEAD BY cRDITASSISTANT BRANCH BRANCH BRAN ANG PLANNIREGISTRARS

COOPERATIVE PRODUCE CENTRALIN CHANGE OF ~MARKETING SOCIETIES CRDTMLIPROESOCIETIES APPLYING IACNI ~ ~~~~ ~~IT I |G

CONTROLLING INCLUDING M.W.N.C.F. SOCIETIES SOCIETIES FOR REGISTRATION SOCIETY

FIELD ORGANIZATION

CIRCLESHEADED BU _ ISENIOR ASSISTANTREGISTRARS

IN CHARGE OF I 857 PR~~~~~~~~~~~~IMARY COOPERATVI IN CHARGE OFSOITECONTROLLING SONS

21 UNIONS Ik7

ANNEX 3Table 1NIGERIA

SECOND COCOA PROJECT

The Association of Nigerian Cooperative Exporters. Ltd.

Ibadan

Basie Data

1966/67 1967/68 1968/69 1969/70 1970171 1971/72 Average 5/

MembershipUnions 21 22 22 23 24 25 23Societies 869 885 899 815 827 829 854Individoel members 48,347 44,163 45,283 45,695 47,937 58,77D 48,367Average number of societies per onion 41 40 41 35 34 33 37Average sneber of individuals per onion . 2,302 2,007 2,058 1,987 1,997 2,351 2,103

per societies 56 50 50 56 58 71 57

Throughpot (T)Cocoa 39,361 40,374 30,691 36,989 52,333 36,915 39,444Share of the W. State _ocoa production (7) * 16 18 17 18 19 16 17Pete kernels 308 951 1,694 2,288 2,526 1,446 1,536Rubber - - - - 52 62 57Coffee 268 359 306 23 18 30 167Copra 950 900 850 550 - - 812Sheenots 119 48 - - - - 84Cotton - - - - 75 25 50Ginger - - 24 123 82 70 75

Average Throughput of C>ceo (T)per Union 1,874 1,835 1,395 1,608 2,754 1,477 1,715per Society 45 46 34 45 63 45 46per Meeber 0.81 0.91 0.67 0.81 1.09 0.631 0.82

BALANCE SHEETS (6N)

AssetsFixed 31,320 24,181 17,275 11,551 8,687 n.a. 18,602Portfolio 86,672 120,078 194,099 194,099 194,099 n.e. 157,809Stocks 4,169 11,879 28,496 13,654 18,094 n.a. 15,252Loans to Meeber Unie-s 278,488 273,276 318,663 307,472 332,713 n.e. 302,122Sundry debtors and c,-sh 35,159 39,768 66,786 96,501 158,322 n.79,307

Total Assets 435,808 469,182 625.317 623,277 711,885 n.573092

Liabilities 1/Share Capital - 6,120 6,510 6,530 6,530 6,530 n.a. 6,444Rese-ves 2/ 127,970 130,294 133,624 139,287 149,849 n.a 136,204Onions' fT-d deposil:s 3/ 149,018 142,766 139,240 119,738 119.338 n..132,100Building loans 4/ 11,790 7,879 3,949 977 977 n.e. 5,114Scholarship fonU pro.'ision 2,468 2,468 2,468 2,468 2,468 n.a. 2,468Overdrafts end soodrc creditors 34,377 81,879 154,158 159,533 232,940 n.e. 132,570Bank leans 85,000 76,500 172,777 168,000 168,000 n.e. 134,055Various staff funds 18,300 20,266 21,838 25,752 29,833 n.a. 23,208Proposed dividend en, bonuses to Management 765 620 733 992 1,536 n. 929

Tot.l Liabilities 435,808 469,182 625,317 623,277 711,885 n.e. 573,092

PROFIT AND LOSS ACCOUNT'

IncoeReceipt accruing fron previous year operations 3,502 1,417 2,418 1,583 3,941 n,a. 2,572Trading accounts' recE ipts 742,079 881,760 772,193 1,247,652 1,315,424 n.e. 991,822Interest on loans to Unions 17,084 16,862 18,571 19,001 26,295 n.a. 19,563Other interests, dividends end rents 13,413 13,418 19,186 22,064 22,003 n.a. 18,017Levy on palm kernel rorcbhse 66 51 171 33 139 n.e. 92Levy on ocoa purch- 8,062 7,938 6,225 7,210 10,996 n.e. 8,086Ag.eny consin2,732 3 168 .2_974 2,781 3.097 n.e.295

Total Ione 786,938 924,614 821.738 1,300.324 1,381.895

.a. 1,04,102

ExpendituresTrading account experses 730,932 869,764 761,295 1,233,413 1,301,445 n.a. 979,370Staff 17,418 16,433 18,189 19,976 21,704 n.e. 18,744Rent and Office Maintenance 3,582 2,438 2,886 4,032 4,830 n.e. 3,464Other operating costs 5,161 5,323 4,980 6,527 7,425 n.e. 5,883Interest and financial charges 17,553 20,518 23,155 23,593 31,842 n.e. 23,332Depreciation 7.707 7.195 7.170 6.128 3.0 n.a. 6.240

Total Expenditures 782,353 921,671 817.675 1,293,669 1,369.796 n.a. 1,037,033

PROFIT fLOSS) 4.585 2,943 4,063 6.655 12.099 n.a. 6.069

) 1/ Shares of L 10 subscribed by member Unions.2/ One quarter of the profit at least is paid into the Reserves.3/ Statutory long-ter deposit.4/ Loans for the constraction of offices and sterns.5/ Average ever the period of which date are available.

Source: Ministry of Trade and Industry, Department of Cooperatives, Ibadan.

May 9, 1973

ANNEX 3

Table 2_

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE FARMERS' UNION

SUNMARY OF FINANCIAL STATEhENTS

(MN)

BALANCE SHEETS INCGrE AND EXPENDITURES ACCOUNTS

1968/69 1969/70 1970171 1971/72 1968/69 1969/70 1970/71 1971172

ASSETS INCOME

Fixed Assets Membership lands 19,925 2,137 2,675 634Bank interest 93 328 1,229 1,245

Furniture - - 826 n.a. Levy us Cocoa (previous year) - - 743 0.a.

Vehicles _ _.a. - " - (curreet year) - - 3,710 0.a.

Total Fixed Ass-ts _ 2 n.a. Levy on Palo Produce (previous yr.) - - 30 n.a.- " - (current yr.) - - 6 0.0.

Current Assets Gress incosm fron cocoa sales . . 14,350 52,879- " - paln kernel sales - - - 1,965

Stocks and Debtors - - 1,578 n.a. Sales and discount on ceimicals - - 720 -Doe fron Produce Accounts - - - .. a. Transport 311 175

for the previous year - - 772 n.a. Miscellaseous - 22 50 539for the current year- - 3,717 na

Balance with Books 16,530 11,635 2,215 na Total Income 20.018 2,487 23.524 57A43Cash in hacd 49 - 149 n.a.

Total Current A:sets 16,579 11,635 8,431 0.a.

EXPFNDITURES

Total 1ssets 16.579 11.635 11,157 0.0. Cost of personnel 3,279 4,355 3,708 1,935Other operating costs - 614 613 870

Office equipesent and nodelling - 116 1,564 -LIABILITISS Transport and travelling 201 1,313 1,144 282

Cheeieals - 900 5,484 -

Accumulated funds Cocoa Trading Account -- 8,475 44,945Palo Kernel Trading Account- - 981

lalance at start 16,530 16,530 11,324 0.0. Bags - - 3,000 581Excess of expendictre ove incom-e _ (5.205) (207) na. Financial and insurance charges 8 401 8 40

Others - 94 ___ 6Long-tern liabilities 16,530 11.324 11,017 n a,9

Total Expenditures 3z5 7.693 24,65 4963Current Liabilities

Salaries (unpaid) - 147 18 n.a. CUORENT PROFIT (LOSS) 16,530 (5.206) (41) 7803Unclaied allowance 49 t64 22 0.0.

Correct Liabilities 49 311 40 0.a.

Total liabilitics 16,579 11.635 11.157 -a.

May 7, 1973

ANNEX 4Page 1

NIGERIA

SECOND COCOA PFOJECT

A ricultural Credit Organizations

Introduction

1. In 1946, Government established the Nigerian Local DevelopmentBoard - subsequently replaced by four regional boards, one for each of the

then few Regions of Nigeria - to provide credit to individuals, private com-panies and cooperative societies for agricultural and industrial projects.In 1953, the Cooperative Bank was established by the cooperative movement tocater for the credit requirements of the unions and cooneratives and tookover such activities from the Board. In 1955, the Western Regional Develop-ment (Loans) Board was taken over by the Western Region Finance Corporation.

2. The Western Region Finance Corporation which was not involved incredit to cooperatives, tended to overlook agricultural credit needs andconcentrated on industrial development. In 1964, the Western Region

Government created a new corporation specializing in agricultural credit:the Western Nigeria Agricultural Credit Corporation. The new corporationtook over some 50,000 agricultural loans from the Western Region FinanceCorporation totalling about NY 1.5 million, 40 percent of them being consid-ered as bad debts to be written off. Following proposals made if 1967, thetwo Corporations were merged again in Anril 1972 and are known as the WesternState Agricultural and Industrial Investment Corporation.

I. Western State Agricultural CrpditCorporation (ACC)

I. In 1970, the first cocoa appraisal mission turned down a Governmentproposal to use the Agricultural and Industrial Investment Corporation (AIIC)as a oroject credit institution because of its weak financial structure andpoor performance. Since that time, AITC has received technical assistance fromUSAIP, has been reorganized and access to additional resources, and has im-proved the quality of its loan appraisals and lending operations. Collectionrates have, however, remained unsatisfactorv. At the beginning of 1973, theState Government dissolved AIIC and entrusted its agricultural credit opera-tions to the newly formed Agricultural Credit Corporation (ACC). This waspart of a complete reorganization of the statutory corporations and state-

owmed companies in the Western State undertaken on the basis of recommenda-tions of a British firm of consultants, the Economist Intelligence Unit. Anedict (No. 8 of 1973) established ACC, but a further edict postponed its im-3 plementation because of delays in the oractical arrangements for the liquida-tion of AITC, including the sharing of assets and liabilities and distribu-tion of personnel among the new agencies.

ANNEX 4Page 2

4. Some of the provisions of Edict No. 8 establishing ACC raise -rob-lems. The powers given to the Executive Council of the State Government,which should normally belong to the governing body of the Corporation, mightlead to excessive government interference. In addition, the Edict is vagueregarding the funding of the ACC.

5. ACC could, therefore, become a suitable credit channel provided that:

(a) Its head offices and field agencies are properly staffedwith competent and experienced personnel, and it is ableto supply CDU with field staff;

(b) It is adequately funded with new liquid resources to pur-sue its lending operations. Furthermore, it should notbe burdened with responsibility for the recovery of thebad debts of its predecessors; and

(c) It is subject to effective control.

II. The Cooperative Bank and the CooperativeInvestment and Trust Society, Ltd. in the

Western State of Nigeria

Introduction

6. In 1953, the leading cooperative organizations in Western Nigerialaunched a credit organization, the Cooperative Bank of Western Nigeria, tocollect and distribute savings available inside the cooperative movement,and to borrow additional funds as required. The Cooperative Bank of WesternNigeria was established as a cooperative society. It was given a Governmentgrant of Nt 1 million (N 2.0 million, US$2.8 million) and its firstmembers were the primary societies, unions and apex organizations of thecooperative movement. At first the Cooperative Bank confined itself mainlyto the financing of cocoa purchases by ANCE and cooperative unions andsocieties. Short-term funds required for such operations were provided bycooperative savings and by heavy borrowing from commercial banks. Thecooperative Bank developed rapidly, entering more and more into normalcommercial banking as well as into the field of long-term loans andinvestments. At the beginning of the 1960's the Central Bank of Nigeriawarned the Cooperative Bank that it should become a licensed company underthe Banking Ordinance (1958) if it wished to continue commercial banking.To comply with bank legislation specifying liquidity of assets, and topreserve long-term investment operations it had already entered into, theCooperative Bank became a subsidiary of a new "Cooperative Investment andTrust Society, Ltd." which took over all the long-term loans and investmentoperations of the Cooperative Bank. The Cooperative Bank transformed itselfinto a company and became a full-fledged commercial bank under the BankingOrdinance.

ANNEX 4Page 3

The Cooperative Investment and Trust Society, Ltd.

7. Only unions and societies duly registered in the Western and LagosState can become members of the Trust which is established and registeredas a cooperative society under the Cooperative Societies Law (1953). TheBoard of Management, elected at the annual meeting, consists of the President,Vice-President, the Treasurer, one member coming from each well-defined areaand the managers of the apex organizations of the cooperative movement.It is responsible for the general management of the Trust, day-to-day opera-tions being left to the General Manager who is appointed or dismissed bythe Board with approval of the annual meeting.

8. The Trust's capital, paid in shares of NE 1 (N 2.0) each, amountedto Nt 85,000 (N 170,000, US$257,000) as of March 31, 1972. There is nofixed authorized capital and each member is free to subscribe any amount abovethe minimum set for each type of society and union. Reserves at the samedate were valued at N$ 1,227,000 (N 2,454,000, US$3,705,000). About ninety-five percent of the Trust portfolio valued at NE 746,000 (N 1,492,000,US$2,253,000), consists of 700,001 shares of N 2.0 each of the CooperativeBank, the remaining Nt 146,000 (N 292,000) being miscellaneous investmentsin cooperative ventures, especially in cocoa plantations totalling morethan 1,500 ac. As of March 31, 1973, total loans and advances of theCooperative Bank amounted to N 621,191 (Nt 310,595) out of which N 448,749(Nt 224,374.5) or 72 percent were overdue. The situation has not changed,since as of September 30, 1973, arrears were reported at N 451,951 or 74% ofthe portfolio. The Cooperative Trust is well aware of the situation and hasadopted a firm course of action towards debtors and this resulted in betterresults in 1972/73. About one third of the loans and advance was for coopera-tive societies' agricultural projects, one third for cooperative buildings andequipment, including 3 supermarkets being constructee by the Cooperative Sup-ply Association, and the remainder being for various commercial and manufactur-ing loans. In 1971/72, the Trust made a profit of Nt 170,000 (N 34,000,US$51,000) compared with an average annual profit of Nt 12,000 (N 24,000,US$36,000) over the last eight years. In the same year the Trust realizedan additional N$ 7,000 profit by selling insurance company equity holdings.Details of the Balance sheets for the last 6 years and the portfolio andloans accounts for the last 5 years are given in Tables 1 and 2.

The iooperative Bank of Western Nigeria

9. In 1963, the cooperative society "Cooperative Bank of 'westernNigeria" became a company registered under the Company Ordinance and obtaineda full banking license. Its members are registered cooperative societiasin the Western and Lagos States and these comprise the annual meeting wcthpowers apportioned to the number of shares subscribed by each member. Indivi-duals or other organizations may become members and subscribe shares buthave no voting powers in the company. The majority of the Cooperative Bankmembers are also members of the Cooperative Trust, and the elected manage-ment board of the Bank also serves as a Management Board for the Trust. The

a General Manager of the Trust is also the Manager of the Cooperative Bank.

ANNEX 4Page 4

10. Under the General Manager, the Cooperative Bank's administrationis split into four departments: the Investment, Accounts, Inspectorate andAdministrative Departments. They are responsible for supervising the! 14branches opened in the main towns of the Western and Lagos States throughwhich the Cooperative Bank receives deposits and disburses loans. In March1970, the Cooperative Bank employed 231 staff members of which 36 werequalified professionals.

11. Authorized capital of the Cooperative Bank is fixed as NE 1,000,000(N 6 million, US$3 million) of which NE 705,000 had been paid in as ofMarch 31, 1972. The Trust has subscribed and paid in NE 700,001 (US$2.1million, N 1.4 million); the remaining capital was subscribed by ANCE, theCooperative Supply Association and other apex organizations, Uniouas andSocieties, of the Cooperative movement. The Reserve account has increasedfrom NE 26,050 (N 52,100 in 1963/64 to NE 243,000 (N 486,000) in 1971/72 orabout 10 percent of the share capital. At the end of the financial year1971/72, more than 4,000 current saving and bank accounts reflectedtotal deposits of NEL 8.1 million (US$24.0 million, N 16.2 million) which,compared to total deposits of NE 2.8 million in 1968/69, represents a 188percent expansion in three years. The total loans and advances at the endof 1971/72 were NE 8.3 million (US$25 million, N 16.6 million). Profits forthe year were Nt 307,000 (US$927,000, N 614,000), more than twice the averageannual profit for the last six years NE 114,000 (US$344,000, N 228,000) andrepresents a return of about 30 percent on capital employed or 4 percent oftotal deposits. The balance sheets and profit and loss accounts for the last6 years are given in Tables 3 and 4. The Cooperative Bank and the Trustaccounts are audited by an independent auditor (Spencer Thirwell Alalade andCo.). In addition, by a special covenant of the Articles of Association, theRegistrar of Cooperatives is entitled to supervise and audit all the Coopera-tive Bank's accounts.

12. As described in Annex 3, the Cooperative Bank is mainly concernedwith financing cocoa purchasing and other cash crops. The Cooperative Bankhas its own resources for these operations but also borrows short term(repayable in less than one year) from the Central Bank at 8 percent to 10percent interest per annum and has never defaulted on such borrowings. TheCooperative Bank on-lends these funds to the Unions for thier purchasesand Unions distribute the funds amongst their member cooperatives. Interestrates charged by the Cooperative Bank to the unions, which are the licensedbuying agents, are about 12 percent per annum.

13. In close coordination with the Cooperative Supply Association (CSA)the Cooperative Bank finances farmers' agricultural inputs and provides CSAwith the short term credit required for bulk purchases. Within the limitationsof the Cooperative Law regulations (see Annex 3) the Cooperative Bank providescredit for seasonal cash loans to farmers at an interest rate of 15 ppercentper annum.

ANNEX 4Page 5

The Cooperative Trust and the Cocoa Project

14. The role of the Cooperative Trust and Bank in the second cocoaproject would be identical to that of its role in the first cocoa nroject.The creditworthiness of applicants who are or would become members of aCooperative Society would be appraised by the Cooperative Trust Staffseconded to the project unit. After successful applicants have signed aloan agreement with the Trust, the project unit would disburse the loanin cash and kind, and debit the farmer's loan accotnt kept by the societyand the Trust. Primary societies would collect loan repayments by deductionfrom the sales of cocoa and transfer them to the Trust. These operationswould 1cle carried out through the Cooperative Bank''s branches in the projectarea. The risk incurred by the Trust and the onerating costs of the Coopera-tive Bank would he covered bv a 2 nercent margin on the loan interest ratecharged to project farmers. The total loans disbursed bv the project onbehalf of the Trust, would be reimbursed by the Trust to the Government withinterest of 7-1/4 percent per annum.

Conc Lusi on

15. The Trust and the Cooperative Bank have operated verv satisfactorilysince their inception: their financial nerformances have been good; theyhave the full confidence of the cooperative movement and of other financialinstitutions in the country: and they are backed by the Cooperative Divisionand the Government whose policy supports the expansion of the CooperativeBank's agricultural lending. During a politically agitated period, theyhave been able to maintain high banking standards and to preserve theirfinancial and economic decisions from direct political Pressures. Over thelast three vears the Bank has experienced a dramatic and successful expansionbased on sound management and adherence to basic cooperative principles.The Trust and the Cooperative Bank are therefore able to continue providinga satisfactory svstem of loan recoverv tnder the second cocoa project.

III. The Mid-Western Nigeria CentralFinancing Society, Ltd.

I6. The Mid-Western State Cooperative M4ovement has not yet developecfinancial institutions comparable to the Western State Cooperative Trustand Cooperative Bank. However, a similar policy is being followed and theCentral Financing Societv, Ltd. (CFS), an apex financial societv, was formedin 1968 whose main objective is to cater for the financial needs of 'U.1constituent societies. CFS is registered as a cooperative society whosemembers are the 21 UJnions of the State representing some 211 societiesincluding the seven cocoa marketing unions. Government intends CFS to becomethe central financing institution of the Mid-Western State cooperative move-ment and hopes that savings can be obtained from cooperative societies andunions for lending to its constituents. CFS would also borrow outside thecooperative movement as required and would generally act as the financialagent of the various cooperative entities.

ANNEX 4Page 6

17. CFS is managed by a Board of "irectors (currently fifteen) electedat the annual general meeting. Dav-to-day management is the charge of aSecretary who is currently a civil servant seconded from the CooperativeDivision .

Financial Situation

18. Although modest, CFS development to date has been satisfactory.As Shown in Table 5, CFS paid-in share capital increased from NE 7,000(N 14,000) in 1968/69 to NE 10,800 (N 21,600) in 1971/72 and reserves accruedduring the same period are equal to 10 percent of the share capital. This,coupled with a long-term loan of Nt 16,000 (N32,000) from MNCA, enabled tolend Nt 28,500 (N 57,000) to its constituent societies in 1971/72 and to earna net surplus of NE 3,523 (N 7,046) representing some 12 percent on capitalemploved. Loans are usually made for less than one year but indebted Unionsusually repay after 15 to 20 months, which gives a temporary high ratio ofdebts overdue. At the end of FY 1971/72 (August 31, 1972), out of a totalloan portfolio of NE 18,500 (N 57,000), Nt 21,700 (N 43,000) or some 75 per-cent were overdue. By January 31, 1973 overdue loans had been reduced toN4E 9,000 (N 18,000) or 30 percent and this should be reduced to 10 percent bythe end of FY 1972/73. CFS management does not consider an extension of loanterms that would improve the poor repayment record on the basis that debtorswotuld always be tempted to repay their loans after the due date, whatever theterms. However, the Registrar of Cooperatives has adopted a firm policy re-garding overdue loans and this is expected to improve the situation duringthe next financial year.

The Role of CFS in the Project

19. CFS would carry out identical functions in the Mid-Western Stateto those of the Cooperative Trust in the Western State. Each projectparticipant would be or would become a member of a cooperative union tradingin cocoa. After being approved technically by the Project Unit (TC,I) andhis credit rating had been accepted by society and project credit staff, hewould sign a loan agreement with his society and receive installments incash and in kind from the project unit through his Cooperative Society.Individual loan accounts would be kept by both the primary society and CFS.The primary societies would collect annual repayments by deductions fromthe farmer's cocoa sales and transfer them to CPS. A loan interest marginof 2 percent would cover the risks incurred by CFS and part of the lendingcosts. Assuming an onlending rate of 7-1/4 percent p.a. to CFS, thefarmer would be charged 9-1/4 percent p.a.

Conclusion

20. CFS is a voung institution which has been correctly managed to dateand which should be assisted to provide for the credit needs of the coopera-tive movement. With the -ssistance of TCTT for the disbursement of loans incash and in kind, it .id provide a satisfactory credit system for the cocoaproject in the Mid-We.-.ern State. s

ANNEX 4Table 1

SECOND COCOA DROJECT

WESTERN STATE

COOPERATIVE INVESTMDENT AND TRUST SOCIETY, LTD.

BALANCE SHEETS AND PROFIT & LOSS ACCOUNTS (1966 - 1972)

(£N '000)

1966/67 1967/68 1968/69 1969/70 1970/71 1971/72

BALANCE SHEETSASSETS

Fixed AsE ets 436 443 456 483 369 360Portfolic (Investment) 556 556 556 556 656 746Loans and Advances 355 349 330 309 309 294Sundry' debtors and Prepayment 13 19 20 12 7 5Cash in land and at Bank - _ - 13 _

'Total A-sets 1,360 1,367 1,362 1,360 1,354 1,405

LIABILITIL5

Share Capital (Shares of £ 1) 47 54 59 66 77 85Reserve Funds 1,203 1,2114 1,221 1,217 1,225 1,227Loans 77 58 38 19 9 -

Accounts payable 13 11 28 23 32 16Cooperative Bank 4 18 11 19 - 60Profit ard Loss Account 16 12 5 16 11 17

Total Liabilities 1,360 1,367 1,362 1,360 1,354 lL4Lu

PROFIT AND LOSS ACCOUNTSINCONE

Rent and Property Income n.a. n.a. 36 46 47 53Interest Receivable n.a. n.a. 21 21 19 19Other Income n.a. n.a. 1 1 1 P

Total Income n.a. n.a. 58 68 67 80

EXPENDITURES

Cost of Personnel n.a. n.a. 18 20 25 27Rent and Building 7Maintenance n.a. n.a. 11 8 11 aOther Operating Costs n.a. n.a. 1 1 1 1Financial Charges n.a. n.a. 1 - - _

Depreciation n.a. n.a. 24 23 21 20

Total Expenditures n.a. n.a. 55 52 58 56

Current Profit (Loss) n.a. n.a. 3 16 9 24

Brought forward from previous year 16 12 12 5 16 11Less Dividend on shares - - 3 3 3 4

Allocation to reserves - - 7 2 10 11Other allocations 1

a As per Balance Sheet 16 12 5 16 11 17

May 22, 1973

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE

COOPERATIVE INVESTMENT AND TRUST SOCIETY, LTD.

SCHEDULES OF LOANS AND INVESTMENT (1966-1972)

(£N '000)

1967/68 1968/69 1969/70 1970/71 1971/72

LOANS AND ADVANCES SCHEDULE

Agricultural projects 96 103 111 117 105

C. S. A. and Cooperative buildings 163 147 123 109 93

Manufacture 1 1 1 1 -

Commerce 10 10 4 13 8

Investment 77 68 68 68 68

Staff advances and miscellaneous 2 2 2 1 20

349 331 309 309 294

INVESTMENT SCHEDULE (AT COST)

New Africa Insurance Co., Ltd. n.a. 10 10 10

C. S. A., Ltd. i/ n.a. 1 1 1 1

G. L. GAISER (Nig.), Ltd. n.a. 43 43 43 43Cooperative Press, Ltd. n.a. 2 - - 2

Cooperative Union of Western Nigeria 2 n.a. - - -

Cooperative Bank of Western Nigeria n.ao 500 500 600 700

n.a. 556 556 656 746

(D X

2/ Amount of less than £N 1,000.

May 21, 1973

ANNEX 4

Table 3

NIGERIA

SECOND COCOA PROJECT

COOPERATIVE BANK OF WESTERN NIGERIA, LTD.

BALANCE SHEETS AND PROFIT APPROPRIATION ACCOUNTS

(6N '000)

1966/67 1967/68 1968/69 1969/70 1970/71 1971/72

BALANCE SHEETS

ASSETS

Fixed assets including vehicles 13 20 31 n.a. 194 277

Loans. Advances and other accounts 1,486 1,800 2,476 n.a. 5,307 8,260Cash in hand and at Banks 451 1,100 1,176 n.a. 3,071 2,583

Other Assets - - - n.a. 18 279

Liabilities of customers 361 379 302 n.a. 957 857

(acceptance, endorsement, etc.)

Total Assets 2 311 3,299 3.985 n.a. 9.547 12,256

LIAB ILIT IES

Share Capital paid-in 503 503 505 n.a. 605 705

Reserves 28 36 42 n.a. 122 243

Current Liabilities- Current Deposit and Bank Accounts 1,351 2,298 2,822 n.a. 6,255 8,103

- Loans and other accounts payable 31 31 260 n.a. 1,312 1,869

Acceptance and endorsement on customers' behalf 360 378 302 n.a. 957 857

Profit and Loss Account brought forward- from previous year 18 17 28 n.a. 71 172

- Net Profit from 20 36 26 n.a. 225 307

Total Liabilities 2,311 3.299 3,985 n.a. 9,547 12.256

PROFIT APPROPRIATION ACCOUNTS

Debit

Profit unappropriated previous year 18 17 28 n.a. 71 172

Net Profit of the year 20 36 26 n.a. 225 307

Total Debit 38 53 54 n.a. 296 479

Credit

Reserve Fund, including bad debt provision 21 22 29 n.a. 108 292

Contingencies Fund - - 3 n.a. 10 45

Dividends and Bond Fee - 3 2 n.a. 4 6

Other appropriations - - - n.a. 2 52

Carried forward 17 28 20 n.a. 172 84

Total Credit 38 53 54 n.a. 296 479

May 21, 1973

ANNEX 4

Table 4

NIGERIA

SECOND COCOA PROJECT

COOPEEATIM BANK OF WESTERN NIGERIA, LTD.

PROFIT AND LOSS ACCOUNTS

(1967-1972)

1967/68 1968/69 1969/70 1970/71 1971/72

INCOME

Interest Receivable

Current Accounts n.a. n.a. n.a. 321 485Deposit AccOILt n.a. n.a. n.a. 16 1Loans and Staff Accounts n.a. n.a. n.a. 111 160

Total Inte'est Receivable U 202 n.a. e .

Transfer Charg,e3 18 23 'n.a. 75 99

Other Income

Commission on Credit and Collection n.a. n.a. n.a. 23 32Bank Charges anti Comaission n.a. n.a. n.a. 94 107Management fees and others n.a. n.a. n.a. 27 7Discount on bilLs n.a. n.a. n.a. 16 23Miscellaneous n.a. n.a. n.a. - 2

2E -53 n.a. lw 17 1

Total Income 244 281 n.a. 683 917

EXPENDITURES

Interest payabln to Bank- in Nigeria n.a. n.a. n.a. 169 230- abroad n.a. n.a. n.a. 1 2

Transfer Charges n.a. n.a. n.a. 9 10Bank Charges n.a. n.a. n.a. 9 7

Total Financial Charges -7 90 n.a. I 9

Staff Cost n.a. n.a. n.a. 174 203Building Maintenance and Rent n.a. n.a. n.a. 32 57Office and legal. expenses n.a. n.a. n.a. 25 60Committee and others n.a. n.a. n.a. 10 11

Total Administrative Expenses 12 n *.a. 31T

Depreciation 6 10 n.a. 29 29

Total Expenditures 208 254 n.a. 458 609

PROFIT (LOSS) 36 17 n.a. 225 308

May 21, 1973

20210, ri'

L- AiS T& N

SRAI, 10 ,5 50153 I IT_ r A ID OSS 7-C(YUWTS

1060/095u 7'-y69/7u 170/71 1971/72 18 3/') 1069/7: 97c,"7 1971/72

ASSETS I 7050M

Fixed Assets (Office Eouipment) . 4_ Loan lrterest Re-.ei red 419 1,414 4, 075 5,158Loans and Advances 14,433 3 6,05r 32,236 2, 546. Bank Interest Received 115 13 15

Less bad debt reserves - - (1,515) (, 21') L eri 5- -

Tnve,'o ents - - 1,4(1 222Loan Interest Due 5 Total Income 536 119 4.108 5,173Cash in nand and at Bank Y'64 2,134 2 47Stocks it 25 13 _O

Total Assets jj1977 .2,2JO XPCl1\22RS

Cost of Staff 6' 2-04 218 358LI4BILITISS Financia CFl large 177 611 1,227 1,161

Share Capital ~ ~~~~~~~~~~~~~~~~~Office Goeratiug Costs (068 31 >Share Capital 3, ob; e C ,.1 no 838 Deoreecati.c ((Inc- e. oaa 0 ) 42 42 1,558Reserves _188 Other 36 39 26 5Long-term Loan (1,NCF) 6,57 ; -9,

- It - (ICC) - - '3 Total Exnenditure 384 964 3 6 l

Savings and Deposits 1I 372 35r 386Unallocated Provisions 1,016 1,748 922 155Net Surplus 152 455 1,048 ) 523

Surplus per balance sheet 152 455 1,04L 3.523Total Liabilities 14,977 2824 3 ,200 3Z958

Biet SurPlus Appropriation

Reserve Fund 8 11 881Education Fund 15 45 105 353Dividend on Shares 8 - 53 176Honorarium to Board Members 8 23 79 176Bonus to Staff 8 23 27 88Entertainment - - 200 300Development Fund 75 250 322 1,5?.

Total Appropriation 151 455 1,04^ 3,5x

Jure 3, 2973

I

ANNEX 5Page 1

IIIGERIA

SECOND COCOA PROJECT

Technical Aspects, Project Organization and Implementation

A. Introiuction

1. A note on the historic development of the cocoa industry inNigeria and a summary of cocoa-growing technology were given in Annex 5 ofthe first cocoa project Appraisal Report (PA-69a) and will not be repeatedhere. This annex gives additional details on project organization,technical practices, procedures, and conditions of participation.

B. The Projects and Project Areas

Climate and _cology

2. Both project areas are in a climatological zone which has a hotdry season from November to March and a cooler rainy season from April toOctober. The rainy season is interrupted by a minor dry season whichnormally lasts from late July to early September but varies in durationfrom year to year. In late December and January the area is affected byhot, dust laden, drying winds - the harmattan - from the north. Duringthese periods, cloudless skies with high day temperatures and cool nightspredominate.

3. A feature of the climate of the area is the large variation inrainfall from year to year and from location to location in the area. InIbadan average rainfall for the period 1952 - 1958 was 50 inches, with aminimum of 41 inches in 1958 and a maximum of 63 inches in 1957. For Ondoduring the same period and rainfall averaged 62 inches, with a minimum of47 inches in 1958 and a maximum of 96 inches in 1957.

Geology

4. The project area overlies Precambrian metamorphic rocks. Rockcomposition is variable, ranging from course-grain pegmatite to fine grainedschist and from acid quartzite to basic rocks.

Relief, Drainage and Vegetation

5. Apart from small areas, particularly in the north of the Mid-Western State, the land is gently undulating and descends from about 800 ft

a above sea level in the north to 400 ft in the south. The main rivers

ANNEX 5Page 2

generally flow southward. They run throughout the year, but the stveamswhich feed them flow only in the wet season. Vegetation is largely rainforest, but due to shifting cultivation little high forest remains, andmost of the uncropped areas of the cocoa belt are secondary forest or bush.

Soils

6. Soils in the project area are generally described as beingmoderately to strongly leached, with low to medium humus content., weaklyacid (pH 5.5) to neutral surface layers, and moderately to strongly acidsub-soils. The soils are derived from rather acid crystalline rocks, andare fairly deep, porous, friable and free draining. Clay and silt contentsare low, and the soils are generally suitable for cocoa production.

Planting Material and Seed Gardens

7. Project planting material would be confined to a selectionfrom a series of Amazon/Amelonado hybrids - Series II Hybrids - which infield trials have given superior yields, and to a series of "Elite" varietiesproduced by the Cocoa Research Institute of Nigeria, selected for theirdrought resistance and SSVD tolerance.

8. In the Western State, at Alade, Ilesha, Otu, Ibule, Owena, andU. 81<j MANR has established six seed gardens totalling 191 ac andplanted with the hybrids mentioned in para 7. Production amounted to some282,000 pods in 1971, sufficient to produce the seed required to plant some12,800 ac (22 pods produce sufficient seed to plant 435 seedlings per acre.)The potential output of the seed gardens in 1973 is estimated at a minimumof 700,000 pods but could reach 1 million pods; it is expected that by 1976output will exceed 2 million pods. (See further details in Table 1.)

9. For the project in the Western State pod requirements have beenestimated as follows:

Planting Supply- Total Pod Requirements2------ acres…----------- ------000…-----

1973 10,200 2,200 12,400 272.81974 20,000 4,080 24,080 529.81975 30,000 8,000 38,000 836.01976 40,000 12,000 52,000 1,144.01977 50,000 16,000 56,000 1,232.01978 50,000 20,000 70,000 1,540.0

7V- Assuming that 40 percent of the previous year's plantinghas to be replaced.

/2 22 pods/ac to be planted.

Pod production in MANR s-ed gardens would therefore be sufficient tosatisfy project requ ,nents.

ANNEX 5Page 3

10. However, to ensure that project pod production from MANR seedgardens is achieved, they must be properly maintained. Therefore, themaintenance of the six MANIR seed gardens has been taken over by CDU.Maintenance costs of the seed gardens are included in project costs at arate of N 0.545/pod under cost of seedlings.

11. In the Mid-Western State, a seed garden of 16 ac was establishedby I4ANR in 1967 on a plot contiguous to the CRIN station at Uhonmora. Fourunits of four ac were planted for the production of bi-clonal hybrid seedsbased on the following crossings:

Units Clones Acreage

I C74 x C18 4II C75 x C25 4III C74 x C23 4IV C77 x C67 4

Due to a poor access road and to inadequate shade and management, losseshave continued to be as high as 60 percent. Under the project the seedgarden would become TCU's responsibility, an all-weather access road to theseed garden would be constructed, and all four units would be replanted andregularly maintained. The estimated cost, excluding the access roac, isN 5,000 over 4 years and is included in project costs together with theN 0.0545 charge per pod. The cost of the access road is included in the roadprogram costs.

12. If the seed garden is rehabilitated in 1974, production willnot begin before 1978, and pods required for the project planting programwill have to be procured from CRIN in the following quantities:

Planting Supply Total Pod Requirements---- acres…0-----00…- ______OOO_---

1975 1,500 - 1,500 33.01976 2,750 600 3,350 73.71977 2,750( 1,100 3,850 84.71978 3,000 1,100 4,100 90.21979 2,500 1,200 3,700 81.41980 2,500 1,000 3,500 77.0

CRIN seed gardens in the Mid-Western and Western States can provide theserequirements. From 1980 onward the Uhonmora garden should be abL e to pro-duce some 125,000 pods annually; this is sufficient to meet projec c require-ments.

13. In addition to its hybrid seed gardens, CDU would also ectablish a25-ac seed garden at Ibule with SSVD resistant varieties. The cost of thisseed garden, is estimated at N 60,000 by CRIN. CRIN would assist in the

ANNEX 5Page 4

i-tablishment rf this seed garden, which would be irrigated to ensure rapiddevelopment of cuttings and early production of selected pods. Seeds of SSVDresistant varieties produced in this seed garden would be made available toMtl-West State and other Cocoa Projects if required.

Seedling Nurseries

14. In both states the standard nursery used in the first phaseWestern State cocoa project would be continued. The standard requires'IO beds of 5 x 100 polythene bags, with a theoretical capacity of 20,000

seedlings. The provision for losses is 20 percent plus 10 percent atplanting time, resulting in an estimated production of about 13,000 plant-able seedlings per nursery. This is equivalent to the first year require-ments for planting 32 ac or 16 farmers. Nursery establishment, includingsowing, requires some 200 MD and therefore fulltime maintenance by oneman. Sowing in the nursery should commence in October and continue untilJanuary, according to the period of maximum availability of seeds. Forsatisfactory development of the seedlings, especially those planted inOctober, which would be in the nursery for up to seven months, 14" deep,olvthene bags should be used.

Planting and Shade Requirements

15. Planting would take place in May-June immediately after thebeginning of the rainy season. Planting in July or August is too late foryoung seedlings to develop sufficiently before the dry season. Spacingwould be at 10' x 10' following CRIN recommendations; this represents astand of 435 trees per ac.

16. The establishment of adequate shade before planting is essentialto the success of all cocoa planting. For both new planting and replantingfield work will begin in the year prior to planting. For new planting thedense natural shade would be selectively thinned and the undergrowth cleared.in the following year, planting lines would be cleared and planting holesdug at 10' x 10'. Regular hand weeding would be carried out, and progressiveshade removal by cutting, ring barking, and poisoning would begin in thefourth vear after planting. For replanting cocoa would be underbrushed, andold cocoa trees would be retained as temporary shade supplemented withplaintain wlhere necessary. It would be a condition of replanting that suchtemporary shade has been successfully established. If required, additionaltemporary shade could be provided with palm leaves. Debris and othermaterial would not be removed but would be used as ground mulch. Weeding;)ould be by hand and no chemicals would be used. As seedling cocoa develops,the old cocoa trees would be progressively removed. In the areas of Massinfection, all cocoa would be removed from both within the area to be plantedand from a cordon 30 ft wide completely surrounding the newly planted cocoa.

17. Generous quantities of mulch would be applied around each cocoaFree immediately after -' .ting and would be renewed on a regular basis.

ANNEX 5Page 5

Harvesting

18. Harvesting, fermentation and drying would follow traditionalpractices, although use of hybrid varieties would present some featuresnew to Nigerian cocoa farmers and thus would require improved managementtechniques. The changed cropping pattern resulting from the hybrids, i.e.production over a much longer period of the year, would mean an increasednumbet of harvestings. However, the higher proportion of pods in canopybranches would make harvesting more tedious and would increase the chancesof missed pods.

Anti-Capsid Control

19. In the project area capsid damage is still extensive, despitewidespread control spraying, and capsid resistance to benzene hexachlorideinsecticides has been found. The resistance is not as widespread as inGhana, and CRIN is carrying out selection trials to determine a suitablealternative insecticide.

20. Capsid spraying for young cocoa begins in June and is followedby repeat spraying every other month until February. Mature cocoa sprayingbegins in August, followed by a second application 28 days later; there-after spot spraying is carried out as required.

Swollen Shoot Virus Disease (SSVD)

21. SSVD is endemic in the project area, and the presence of the Areasof Mass Infection (AMI) have precluded complete eradication of the disease.The Ministry of Agriculture is responsible for SSVD control throughoutNigeria's cocoa belt. Inside the AMI replanted farms would have a cocoafree cordon 30 ft wide surrounding the new areas. Replanted farms would beregularly reinspected for virus infection and infected trees would be cutout. Outside the AMI, control consists of cutting out infected and contacttrees and replanting them at the beginning of the next rainy season freeof charge. Survey and control would be continued during the course ofthe project.

Yields

22. Yield variation is large within the project area. Amelonadovields varying from 100 lbs/ac to 1,000 lbs/ac, with an average porentialyield of 800 lbs/ac and an estimated average yield of 450 lbs/ac. Liczledata is available concerning hybrid yields under small scale farming con-ditions, but trials have given yields of over 2,000 lbs/ac. On the basisof thwe intensity of supervision to be provided by the project unit and theproposed use of farm inputs it is estimated that the following averageyields would be obtained by project farmers:

ANNEX 5Page 6 9

Year/ 1 2 3 4 5 6 7 8 9------------------lb/ac-----------------

New Planting - - - 100 200 350 550 700 850

Replanting - - - 100 200 350 500 650 750

/1 Year 1 is planting year.

Fertilizers

23. Fertilizers would be applied to cocoa planted under the projectfollowing CRIN's directives. For all farms except those near Ilaro, acompound NP 25:15 fertilizer would be used. For farmers near Ilaro, acompound NPK 15:15:15 or 15:15:10 would be used. In general fertilizerswould be applied as follows, except in the case of new plantings onrecently cleared forest lands, where applications would be reduced or evenforegone:

Year 1: 1 oz/tree in July and again in September.Year 2: 2 oz/tree in April followed by 1 oz/tree in August.

Years 3 and 4: 2 oz/tree in April and again in August.Years 5 - 7: 1 cwt/ac in April repeated in August.liature Cocoa: 2 cwt/ac in April followed by 1 cwt/ac in August.

C. Conditions for Project Participation

A. Requirements for Project Participation

24. New Planting

(a) Applicant must be able to prove rights of usage to atleast 4 contiguous ac of good cocoa land, of which2 ac must be under cultivation of satisfactorilymaintained cocoa.

(b) Applicant must be a member of a cocoa marketingcooperative society or of WSFU.

Replanting

(c) Applicant must be able to prove ownership of at least2 contiguous ac of land, carrying old cocoa on goodcocoa soils

ANNEX 5Page 7

(d) Temporary shade must. be satisfactorily establishedduring the year prior to planting. Failure toestablish shade would automatically cancel the rightto any further credits.

General Applicants must:

(e) be prepared to plant or replant the minimum requiredarea with cocoa;

s(f) show evidence, or be assessed from farming standardson the applicant's holding, of ability to adapt satis-factory agricultural methods;

(g) live sufficiently near his farm to allow his regularpersonal supervision of operations;

(h) possess a spraying pump in workable condition or,alternatively, be prepared to purchase one on credit ifnecessary.

B. Special Requirements for Areas of Mass Infestation with Swollen Shoot

25. (a) Participants within the area of swollen infection arerequired to establish a 30-foot wide cocoa-free cordonaround their replanted farms.

(b) Participants must agree to special inspection by theCocoa Survey Branch of the Ministry and to the removalof swollen shoot diseased trees and contact trees withoutcompensation, other than replanting by the cocoa SurveyBranch of the areas cleared.

C. Requirements for Soil, Climate, and Fertility

26. (a) Land to be planted must satisfy the requirements ofgood cocoa land set by the Soil Survey Branch of theMinistry of Agriculture.

(b) Land must be in a satisfactory rainfall area.

(c) Land to be newly planted must be under forest or bushfallow for more than 10 years duration.

l. Requirements for Following Recommended Cultivation Practices

27. Project farmers would be required to follow recommended cultivationpractices. Failure to do so will result in cancellation of the loan agree-ment between the farmer and the credit organization,*and legal action wouldbe taken to recover the values of credits issued to the farmer.

ANITEX <NIGERIA Table 1i

SECOND COCOA PROJECT

WESTERN STATE WMiR SEED GARDENS

Location Acrg e Clones Pod Product. on

Actual Potential 1973971 MMin. 'Max.

.000 Pods

1. Alade Na 32 ) ,(1958) Pa 35 ) 1).3 19.o

2. Ilesha 20.0 C77 x C27 - - -

(1961) 25.0 C7h x C78 - - -

Total Ilesha 9 __5 61.& 92.B

3. Otsu 15.0 C75 x C25 - 128.3 2O .2(1961) 15.0 C74 x C23 -77.6 1)1.

15.0 C73 x C357. 1~-.15.0 C75 x C1 - 18.9 28.4

Tl'otal OtSU W_ ii6C 2?24.-. 1-4T.-

4. Ibule 20.0 C69 x C20(1967) 59.3 75.C 142.1

5. Owena 20.0 C74 x C18 - 101.L <52.7(1967) 20.0 075 x C25 - ) 14'6Q.,

20.0 C75 xC14 -)-

20.0 C77 x C27 - 1&.5 27.RTotal Owena 9U.u 5.O 31h." 569f.

6. Ille Oluji 5.0 C77 x C67 2.0 - 39.2(1967)

Total 191.0 282.8 695.7 1 194.5

1/ Year of creation and first planting.

June 9, 1973

I

NIGERIASECOND COCOA PROJECT

WESTERN STATEORGANIZATION CHART

FAA.N.R. ~~~COORDI NATINGCOMMIT;Er

Permanent secetry M.A.N.R.,Pemamment Sec.

Chair.mProject Mnager Sec.

HEAD QUARTERS Register of CoopemfetlIBADAN Minstry of Finance

Project Manager WiMwstry of Economic Planning

Dreputy Manager P. W. cVf D.

Financial Cotroller CRINAccountant AlIIC

Credt Officer Cooperaive TrustIn,tamal Audit

CIRCLES

Heeded by Circle | URE CIRCLECLE IBADAN CIRCLE AEEOKUTA CIRCLE

Officne. EqupIantto SAO'.

GROUIPS AKR W D-EKIT ILESHA ISONDO IwoBADANT IAR~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IWO AEONKUTAHeeded bay AO's

OPERATING UNITSHeaded bV AS-.

FINAL ACREAGE ac)

REPLANTING 17,500 2Z2200 19.100 12.100

NEW PLANTING "9e00 14.700 bON 400TOTAL 34500 36,900 19g.w 12,00

an)

SAO-Senior Agricultural OfficerAO-Agricltura. Offirer

AS-Agricultural SuPerintendant World Bank-7691(R\

Chart 2

NIGERIASECOND COCOA PROJECT

MID-WEST STATEORGANIZATION CHART

Chariman - Permanent Secretary, M.A.N.R.Ministry of Agriculture Permanent Secretary, Minister of Finance& Natural Resources or his representative

Senior Representative of the CooperativeDepartment

Senior Representative of N.A.B.Steering Committee 9 Senior Representative of the Central

Financing SocietyA representative of the Federal Ministry

of AgricultureThe General Manager of the T.C.U.

TCU - General Manage- Head Cocoa Division - Secretary(For Meetings On Cocoa)

Controller of Controller ofiFIld Operations | n ance

Internal Adit Trainn9 Office Flanning& Senior Credit SeirAcutnInternal Audit] TrainingEOaluation Uit Officer

T.C. U.| T.C.U. Cocoa Division T.C.U.

Oil Palm Division Head Cocoa Division Rubber DivisionCredit Officer

Regional Units IG HM MORA IGARRA

Operational Units 3

Acreaga (ac) 2,500 3,750 3,750

)0 World Bank-8577

I

ANEX 6Page 1

NIGERIA

SECOND COCOA PROJECT

The Road Construction Programs

Introduction

1. In the cocoa growing areas of both states, communication linksare in poor condition both the secondary roads serving small villages andhamlets, and crop extraction tracks linking these villages with cocoafields. Transport costs are high and in some cases cocoa is not harvestedbecause of prohibitive transport costs. The rehabilitation of certainroads would open up new planting areas and allow proper maintenance andharvesting of existing farms. Although this investment would largelyfavor the transport of cocoa, movement of other crops and goods would befacilitated. This annex discusses the road program separately for eachstate and analyses the benefits.

The Western State Road Program

2. Size of the Program. The Western State CDU reports that some1,4100 miles of secondary roads need upgrading to transport cocoa fromthe cocoa growing areas. As part of the second cocoa project, 600 miof secondary and farm access roads would be improved during the three-yearperiod 1974-77. This program would cover priority needs and would notbe a burden on the project management. In costing the road program ithas been asstmed that some 350 mi of existing secondary roads would beupgraded and that 250 mi of farm access roads, which are really littlemore than imnroved paths, would be developed. The main thrust of theprogram would be in the eastern part of the state (Akure and Ilesha - Ife),as roads in the Abeokuta - Ilaro area and around Ibadan are generally inbetter condition. The remaining 800 mi of required road improvement couldhe included in a subsequent cocoa project; alternatively, the developmentof the cocoa area may eventually justify a separate feeder road project.

3. General Description of the Area. The area covered by the CocoaProject varies in elevation from about 600 ft to 3,000 ft above sea levelantd is intersected by many rivers flowing in a general north to southdirectiont. The whole area is served by tarred trunk roads anc a networkof secondary roads. Because the latter have been allowed to deterio^cte,considerable improvement is essential to make them adequate to ha.16ethie increased volume of cocoa to be transported. Although in some casesthe road surface is bitumen (broken and pot-holed), the majority of roadsare surfaced with a thin layer of laterite. The laterite roac.s are insuch disrepair that complete reconstruction of long sections :am Lerative.The soils in the area, classified as ferruginous tropical soils orncrystalline acid rocks, are deep, porous and free draining. Deposits oflateritie gravel suitable for road surfaces are well distributed throughoutthe area.

ANNEX 6Page 2

Design Standards. At the present time cocoa, agricultural cropsan! general supplies for the area are transported by 3-5 ton trucks andthr ubicquitous "Mammy-Wagons". The volume of traffic will increase as cocoaprocuction increases. Once the road surfaces have been improved, it isProbable that there will be an increasing number of passenger vehicles.

Or. this basis, road upgrading can be restricted to improvementcf thle vertical alignment and drainage, and the application of a lateriticsur'[ace compacted to 6-in depth on the secondary roads. The farm accessroa(is, which will be subject to less frequent traffic, will only requirea 4-in compacted course, and will have a narrower running surface.

6. No relocation of existing roads is contemplated. Adjustmentswill be minor. Where the right of way is to be widened, a slignlt lateralmovement of the center line will be required. Allowance has been made forrepairing or replacing concrete culverts of the type approved by the'finistry of Worlks and Transport. An additional allowance has been includedto cover the cost of bridge repairs as necessary.

The specifications for the upgraded secondary roads would be:

Surface width 12 ftSurface material Lateritic gravel compacted

to 6-in depthSubgrade width 16 ftDitch width 3 ftDitch depth 1 ftMinimum clearing width 40 ftMinimum curve radius 65 ftfaximum sustained favorable grade 15%

M,aximum short pitch favorablegrade 20%

'4a%imun sustained adverse grade 6%Maximum short pitch adverse grade 8%Culverts - concrete made in

place, average 5 per mileStorm drains and sumps 100 per mileCrown at center line of road 2 in

.The farm access roads would meet the following minimumspecEfications:

ANNEX 6Page 3

Surface width 10 ftSurface material Lateritic gravel compacted

to 4-in depthSubgrade width 14 ftDitch width 3 ftDitch depth 1 ftMlinimum clearing width 40 ftMinimum curve radius 45 ftMaximum favorable grade 25%Maximuri adverse grade 10%Culverts - Concrete made in

pLace, average 5 per mileStorm drains and sumps 60 per mileCrown 1-1/2 in

In both road standards, the road surface would be at least six Inches abovethe level of surrounding flat land, no tree branches would be allowed tooverhang the road surface, and all culverts would be covered with at leastone foot of road making material.

9. Constnrction Techniques. No new ro-d construction is envisagedin the W4estern State program, the works being restricted to upgradingexisting roads and trails; thus little surveying or office design workwill be required. The assistant-surveyors to be emtloyed by the CDU wouldstake the road sections requiring more than simple ripping and reforming.The Roads Engineer would be responsible for ensuring that the gradientsand standards of the finished roads conform to specification. It isconsidered that this upgrading could be carried out for a period of 220 daysper year.

i! . Upgrading of existing roads would include the following steps:

(a) Carry out reconnaissance surveys to identify and indicatethe improvements required.

(b) Widen right of way to 20 ft each side of central line whererequired. Remove any tree branches overhanging theroad surface to eliminate dripping after heavy rainfall.

(c) Prepare road surface for gravelling by ripping and gradingto required elevation. This would be accomplished withtrack-type tractors, equipped with rippers and straightbulldozer blades.

(d) Dig, load, transport and dump lateritic gravel on roadsurrace. Rubber-tired loaders and tipper trucks would beem?loyed for this phase, assisted where necessary bycontractor-owned vehicles. If required, a ripper-equipped) tractor would assist in opening-up laterite deposits.

(e) Spread and compact surfacing material and form lateralditches using motor-graders, rollers and water trucks

ANNEX 6Page 4

(which are used to obtain particle consolidation in theroad surface) would probably not be required.

(f) Dig storm drains and sumps to reduce the water level inditches during downpours.

(g) Repair or replace concrete culverts, made to Ministry ofWorks and Transport specifications.

(h) Repair or replace bridges with concrete box culverts toMinistry standards.

To increase the participation of local workers, it is suggested that Items(b), (f), (g) and part of Item (d) of the above procedures be let on smallcontracts. As the upgrading programs will cover many short stretches of road,distributed over the whole project area, it wou:d not be attractive to largecontractors. The allocation of one road enginetr and two assistant-surveyorsto construction supervision and coordination should permit the program to pro-ceed as planned.

11. Capital and Operating Costs. The equipment required to carryout the 600 mi program in three years is listed in Annex 7, Table 15; itis estimated to cost 1493.4 thousand (US$749.9 thousand) and to have aresidual value of N265,000 after completion of the program. Operating costs,including the CDU personnel attached to the project road unit, would averageN947 (US$1,440) per mile; and small civil works should cost about N2,393(US$3,640) per mile. Thus, after deduction of the residual value from thecapital cost, and encluding maintenance costs the total road program cost inthe Westfrn State, estimated at N2.23 million (see Annex 7, Table 14), wouldaverage 143,720 (US$5,655) per mile. It is estimated that the annual maintenancecost of these roads would amount to N300 per mile during the first three yearsand reduced to N250 per mile afterwards. 1/

12. Organization and Management. Final responsibility for the road pro-gram would rest with the Cocoa Development Unit. To that effect, CDU wouldestablish a Road Unit led by an experienced and qualified road engineer as-sisted by two surveyors and supporting staff. The road engineer would deter-mine the roads to be improved, agree the annual programs and budget with theMinistry of Works and Transport (PWD) and the Local Government Councils, andbe responsible for the execution and supervision of work. The equipment ownedby CDU during the construction period and operated under CDU budget would bemaintained by the supplier in accordance with a special covenant in the equip-ment sale contract. PWD would also second foremen and drivers to CDU for theprogram, but CDU would recruit them directly if need be.

13. The maintenance 1/of repaired roads would be the responsibilityof the Ministry of Transport and Works and the Local Councils as appropriate,and part of the purchased equipment would be used for that purpose. Tnebalance would be handed - _c to PWD or kept by CDU for additional road develop-ment and improvement ini he cocoa areas.

1/ Project cost includes maintenance of roads during execution of the roadprogram.

ANNEX 6Page 5

The Mid-Western State Road Program

14. Scope and Size of the Program. In Mid-Western State, it isproposed to upgrade some 63 mi of roads and patwhs to secondary road level(see para 7). The roads are listed in the following table and are shownon the Mal. Work to be done on each section is described in the Appendix.

Description of Routes to be Upgraded

Description of Road Length(in miles)

1. Okha - Usen 4-1/22. Usen - Ulorin 83. Ulorin - Ugbogui 94. Igbobo - Ogbesse 205. Sabongidda - Agbanikka 166. Orhua - Umokpe 47. Uhonomora - Seed Garden 1-1/2

63

The above roads are important to evacuate cocoa and also to open up newareas where soils are suitable for cocoa growing. It is not necessaryto improve farm access roads in the Mid-Western State, as cocoa farms aregenerally located near existing roads or roads to be upgraded under theproject.

15. General Description of the Area. The area in wnich these roadsare situated varies in elevation from 100 ft to 400 ft. The road linkingOrhua to Umokpe rises from 700 ft to 800 ft in the section to be upgraded.The soils are similar to those of the Western Szate Cocoa Project areas,i.e. ferruginous tropical soils on crystalline acid rocks. Over the narrowlatitudinal strip involved, annual rainfall averages about 60 inches, with90 to 100 rainy days per year.

16. Design Standards and Construction Techniques. The cost ofimproving each of the road sections as specified for 12 ft secondary roads(para 7) has been calculated. Since the condition of each road isdifferent, and their different measures are required, the road sectionsare dealt with separately in the Appendix. In each case, the steps tobe followed for upgrading will correspond to those given for Western State(para 10). In Mid-Western State, however, participatior. by smail local.contractors represents a higher proportion of the total road buildir.gcosts than in the Western State. The reason is that the purchase o- loadersor dump trucks is not justified because of the small size of the road program.Thus all digging and transport of lateritic surfacing material woul6 becontracted locally.

ALNNEX 6Page 6

l.'. Capital and Operating Costs. The total road program in Mid-WesternState excluding residual value of equipment and maintenance costi; would costabout N395,000 (US$600,000). Equipment would amount to N84,600 (US$130,000)and its residual value is estimated at N60,000. Average cost is N6,284 permlfle (US$9,950) after deduction of the N60,000 residual value of equipmentand the maintenance costs. Maintenance costs after construction would averageN300 per mile per annum for the first three year and N250 mile per annumafterwards (see Annex 7, Tables 16 and 17 for detailed costs).

18. Management and Organization. The Tree Crop Unit would be responsi-ble for the cocoa project road program which should be completed during the

two year period 1974-1975. It would establish a Road Unit which would first

complete the cocoa project roads and which would also be responsible for theroad rehabilitation program under the proposed oil palm project. The RoadUnit would be managed by a road engineer whose responsibilities would besimilar to those of the Road Unit engineer in the Western State. The samearrangements with suppliers for maintenance and with PWD for road maintenanceafter construction or rehabilitation (see paras 12 and 13) would also apply.

Road Program Benefits

19. The cocoa project road program would generate three main typesof benefits. First it would open up new land for production, mainly incocoa but also in other crops; second, it would reduce cocoa transportcosts, and finally, it would increase the number of road users and reducecosts for purposes other than cocoa transport.

20. Survey data 1/ show that some 65% of the area land is arable, ofwhich some 30% is under fallow, 10% is cultivated in food crops, 15% is under

cocoa and the last 10% under other tree crops. It can be assumed thereforethat 1 mi of road would serve 4 sq mi of land, or 2,560 ac out of which some

385 ac would be under cocoa, 260 under food crops and 260 under other treecrops (oil palm, kola, coffee). This assumption checks with the estimate madeby the Western State MANR that its 555,000 ac cocoa program would require some1,400 mi of roads or 1 mi for 395 ac of cocoa. The project would develop some105,000 ac of cocoa out of which one third would be new planting, i.e. about35,000 ac, or 60 ac per mile of road construction under the project. Thus,it is assumed that 1 mxii of road would serve 445 ac of cocoa made up as follows:

270 ac of existing cocoa,115 ac of replanted cocoa, and60 ac of newly planted cocoa.

Assuming in addition that the 270 ac of existing cocoa yield 450 lb ofcocoa per annum, and that the new planting and replanting yields are those

1/ "Agriculture in South Western Nigeria" by Martin Upton, University ofReading 1967.

ANNEX 6Page 7

given in Annex 2, the tonnage of cocoa per mile of road is estimated asfollows:

Year 1 2 3 4 5 6 7 8 9

Tons/mile 54 54 54 62 70 81 97 106 115

21. In addition to cocoa planting, it is estimated that each mileof road would serve 260 ac of other crops and that the production of thosewould be as follows:

Yield Acreage TonnageTracre % ac T

Yam 2 35 91 182Cassava 5 35 91 455Maize 0.5 10 26 13Plantain 0.5 20 52 26

100 260 676

Assuming the aabove yields and allocation of land it is estimated that some676 tons of food crop would be transported on each mile of road. Similarly,the 260 ac of other tree crops in addition to cocoa (oil palm, kola andcoffee) are estimated to generate some 150 tons per annum per mile.

22. Transport fees on unimproved farm access roads are presentlyabout N 2.5 per ton-mile (US$3.80) but are estimated to be reduced toN 1.00 (US$1.52) per ton-mile after improvement. The current high chargesare explained by the remoteness of the cocoa farms from important trafficcenters and the small size of each load. On the secondary roads to beimproved, it is estimated that current transport charges would decreasefrom N 1.50 to N 0.50 per ton-mile.

23. The above assumptions have been used to estimate the additionalbenefits due to road improvement under this project (Additional benefits areshown in Annex 2, Tables 3 and 4).

ANNEX 6

AppendixPage 1

NIGERIA

SECOND COCOA PROJECT

Sections of Road to be Improved in YMid-Western State

Okha-Usen (4--1/2 miles)

1. This 4l-1/2 mile road section is passable by dry-season vehiculartraffic but requires widening to permit free passage of 5-ton vehicles.The estimated cost of improving this road to the desired standard is aboutN 24,200 including about N 20,300 which would be paid to local contractors.

Usen-Ulorin (8 riles)

2. This link was formerly used by vehicular traffic, but with thedestruction of two small bridges and six culverts, it can no longer beused even by motorcycle traffic. Crossing the River Aden presents a

problem, especially in view of the rainy season water levels. To provide

a meaningful estimate of the bridging costs, detailed site and foundation

surveys would he required. As a result, the total cost could well reachN 100,000 or more. Since the cocoa project should not have to bear thiscost, it is suggested that the Ministry of Works should build this bridgeas part of their normal road improvement projects.

3. The lack of a bridge need not hamper development of this area

for cocoa production, since the upgrading program will permit crops fromboth sides of the river to be transported to tarred roads for sale. The

last two miles of this trail into Ulorin have already been widened to

permit log--extraction during the dry weather.

4. If the cost of bridging the River Aden is excluded, the cost

of upgrading this section of road is estimated to be about N 45,500 of

which N 39,600 would be payments to local contractors.

Vlorin-Ugbogui (9 miles)

5. These two villages have recently been joined by a dry-season

roac passable by motor vehicles. Traffic is limited to about one vehicle

per week. For the first two miles, the road passes through laterite andqtcartz deposits. Some lowering of adverse grades will be required. The

total cost of upgrading will be about N 36,400, N 30,600 being expended

on local contracts.

Igbogo-Ogbesse (20 miles)

X 6. This road passes through many small villages before terminating

on the banks of the River Ogbesse, the Fronti-er between the Mid-Western

and Western States. Vehicular traffic consists of Government and private

ANNEX6AppendixPage 2

b)uses and "Mammy Wagons" said to be making a total of some eight round tripsper day. The total cost of bringing this road up to the desired standardis estimated to be about N 89,300, with work estimated to cost N 73,600being let to local contractors.

Sabongidda-Agbanikka (16 miles)

7. Some 10 mi of this road passes through the Ora-Luleha-OzalaForest Reserve but field and tree crops are planted along the existingroad. Apart from the last 8 mi approaching Agbanikka, where dry weathertraffic passes freely, this road is only passable by motorcycle. It wouldbe necessary to replace eight box culverts in the first 10 mi, inaddition to surfacing the road for vehicular traffic. The total cost ofimproving this road is estimated to be N 111,200 about N 94,100 of whichwould be let to local contractors.

Orhua-Umokpe (4 miles)

8. This road requires simple upgrading. The estimated cost willbe about N 17,900 including N 14,700 in payments to local contractors'share.

11honmora-Seed Garden (1-1/2 miles)

9. At present the cocoa seed garden is linked to the Uhonmora-Iruekpen trunk road by a foot trail passable by motorcycle. Since thegarden will supply cocoa planting material to a large area, this trailmust be improved to take year-round vehicular traffic. The main obstacleis a small creek that forms a tight loop across the trail. It is suggestedthe loop should be eliminated by cutting a short canal linking the twostream beds a few yards from the trail, and installing box culverts in theold beds to handle drainage from higher ground. The estimated cost ofupgrading this road section, including the stream diversion, is aboutN 17,700 of which work estimated to cost N 15,200 would be handled by localcontractors.

NIGERIA

SECOND COCOA PROJECI

TOTAL PROJECT COST(N '000)

Total ForeignDisbursement GRAND Exchange

1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Period 1981/82 TOTAL c Amount

A. WESTERN STATE SECOND PHASE COCOA PROJECT 1/

On-Farm Costs

Replanting (6) - 104.0 490.1 1,286.5 1,630.0 966.3 775.5 557.7 5,810.1 - 5,810.1 22 1,299.7

New Planting (6) _ 131.8 292.9 905.0 426.8 254.2 197.4 - 2,208.1 - 2,208.1 24 536.3

Total On-Farm Costs (6) - 235.8 783.0 2,191.5 2,056.8 1,220.5 972.9 557.7 8,018.2 - 8,018.2 23 1,836.0

Staff Salaries and Related Costs (9) (306.8) 292.4 520.0 1,146.1 832.7 642.0 493.4 250.0 3,869.8 - 3,869.8 10 387.0

Buildings (7) 85.2 261.9 3.8 2.3 - - - - 353.2 - - 353.2 23 82.9

Vehicles (7) 119.1 126.9 150.4 121.3 35.1 21.9 11.9 2.5 589.1 - 589.1 78 462.0

Road Program (14) - 794.4 731.0 728.0 484.0 - - - 2,737.4 - 2,737.4 34 918.5

Training 8.1 12.7 16.9 19.8 - - - - 57.5 - 57.5 10 5.8

Sprayers - 34.0 72.9 124.4 - - - - 231.3 - 231.3 85 196.6

Operating Costs 3/ (9) (12. 9) 29.9 39.5 97.2 90.5 70.6 43.5 37.8 396.1 - 396.1 49 193.0

Sub-total (107.3) 1,788.0 2,317.5 4,430.6 3,499.1 1,955.0 1,521.7 848.0 16,252.6 - 16,252.6 25 4,081.8

Contingencies - Physical 5% 4/ - 89.4 115.9 221.5 175.0 97.8 76.1 42.4 818.1 - 818.1 25 204.5

- Price 5/ - 171.2 399.4 1.044.9 1,098.8 723.5 688.0 456.7 4,582.5 _ 4.582.5 25 1,145.6

Sub-total - 260.6 515.3 1,266.4 1,273.8 821.3 764.1 499.1 5,400.6 - 5,400.6 25 1,350.1

TOTAL WESTERN STATE (107.3) 2,048.6 2,832.8 5,697.0 4,772.9 2,776.3 2,285.8 1,347.1 21,653.2 - 21,653.2 25 5,431.9

B. MID-WESTERN STATE COCOA PROJECT 2/

On-Farm Costs (10) - - 94.2 213.6 271.4 330.9 169.3 91.7 1,171.1 48.4 1,219.5 24 295.7

Staff Salaries and Related Costs (13) - 141.6 128.8 187.1 211.6 229.7 177.7 118.1 1,194.6 104.7 1,299.3 10 129.9

Buildings (11) - 62.0 107.6 - - - - - 169.6 - 169.6 25 416.9

Vehicles (11) - 28.8 42.9 16.8 30.2 43.2 13.7 9.0 184.6 2.1 186.7 73 136.3

Road Program (16) - 208.4 253.8 - - - - - 462.2 - 462.2 32 148.9

Training - 0.5 0.5 0.6 0.7 - - - 2.3 - 2.3 10 0.2

Sprayers - 2.5 7.4 9.7 4.9 4.9 - - 29.4 - 29.4 85 25.0

Operating Costs (13) - 10.5 18.6 22.4 23.9 24.2 21.6 18.0 139.2 12.2 151.4 50 75.7

Sub-total - 454.3 653.8 450.2 542.7 632.9 382.3 236.8 3,353.0 167.4 3,520.4 24 853.6

Contingencies - Physical 5% - 22.7 32.7 22.5 "7.1 31.6 9.1 11.8 167.5 8.4 175.9 24 42.2

Price 5/ - 43.7 129.8 98.2 158.6 234.7 173.1 128.2 966.3 - 966.3 24 231.9

Sub-total - 66.4 162.5 120.7 185.7 266.3 192.2 140.0 1,133.8 8.4 1,142.2 24 274.1

TOTAL MID-WESTERN STATE - 520.7 816.3 570.9 728.4 899.2 574.5 376.8 4.486.8 175.8 4,662.6 24 1.127.7

C. SECOND COCOA PROJECT (107.3) 2.569.3 3.649.1 6,267.9 5,501.3 3,675.5 2,860.3 1,723.9 26.140.0 175.8 26,315.8 25 _ 6.559.6

l/ For the Western States the table gives incremental project costs, i.e. the difference between the total cost of development 105,000 ac minus the

cost of development 43,500 ac already provided for in the First Cocoa Project. Since savings occurred in the first project due to its late start,

incremental costs are negative in 1973/74. Bracketed figures refer to the detail cost tables.

2/ In the Mid-Western State, 1974/75 costs include the total cost of establishing and running TCDU headquarters; afterwards, HQ.costs are apportioned

for one-third to the Cocoa Project and two-third to the Palm Oil and Rubber Projects except for the building costs entirely charged to the Cocoa

Project. See Tables indicated between brackets for detailed calculations.

3/ Operating costs in 1973/74 are found by combining operating costs in 1973/74 and 1972/73 (see Table 9).

4/ Since no negative physical contingancy has been included, total contingencies are thus slightly higher than 5°. of totals.

5/ Price contingencies applied are: 9/7/5/5 . . . etc. range (compounded) for equipment, furniture, vehicles, sprayers and farm inputs.

12/10/8/8. . . etc. range (compounded) for buildings and local contractors. 5 <

6 (compounded) for labor, salaries and operating expenses. - I

ANNEX 7A

Table _

NIGERIA

SECOND COC0A PROJECT

WESTERN STATE PLA8NTING PROGRAM

1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 Total

FIRST COCOA PROJECT

REPLANTINGTotal new acreage 2,500 6,900 8,600 9,000 - - 27,000Cumulative acreage 2,500 9,400 18,000 27,000 27,000 27,000 -Cumulative number of farmers 1,250 4,700 7,750 8,800 8,800 8,800 8,800

NEW PLANTINGTotal new acreage 3,000 3,300 4,200 6,000 - - 16,500Cumulative acreage 3,000 6,300 10,500 16,500 16,500 16,500 -Cumulative number of farmers 1,500 3,150 3,750 5,100 5,100 5,100 5,100

TOTAL FIRST COCOA PROJI.CT

Total new acreage 5,500 10,200 12,800 15,000 - - 43,500Cumulative acreage 5,500 15,700 28,500 43,500 43,500 43,500 -Cumulative number of farmers 2,750 7,850 11,500 13,900 13,900 13,900 13,900

SECOND COCOA PROJECT

REPLANTINGTotal new acreage - - 4,900 11,250 27,750 - 43,900Cumulative acreage - - 4,900 16,150 43,900 43,900 -Cumulative number of farmers - - 2,450 8,075 16,670 16,670 16,670

NEW PLANTINGToa.Tew acreage - - 2,100 3,750 12,250 - 18,100Cumulative acreage - - 2,100 5,850 18,100 18,100 -Cumulative number of farmers - - 1,050 2,925 7,130 7,130 7,130

TOTAL SECOND COCOA PROJECTTotal new acreage - - 7,000 15,000 40,000 - 62,000Cumulative acreage - - 7,000 22,000 62,000 62,000 -Cumulative number of farmers - - 3,500 11,000 23,800 23,800 23,800

COMBINED PROJECTS

REPLANT INGTotal new acreage 2,500 6,900 13,500 20,250 27,750 - 70,900Cumulative acreage 2,500 9,400 22,900 43,150 70,900 70,900 -Number of new farmers 1,250 3,450 5,500 6,675 8,595 - 25,470Cumulative number of farmers 1,250 4,700 10,200 16,875 25,470 25,470 -

NEW PLANTINGTotal new acreage 3,000 3,300 6,300 9,750 12,250 - 34,600Cumulative acreage 3,000 6,300 12,600 22,350 34,600 34,600 -Number of new farmers 1,500 1,870 1,650 3,225 4,255 - 12,280Cumulative number of farmers 9,500 3150 4,800 8,025 12,280 12,280 -

TOTAL COMBINED PROJECTSTotal new acreage 5,500 10,200 19,800 30,000 40,000 - 105,500Cumulative acreage 5,500 15,700 35,500 65,500 105,500 105,500 -Number of new farmers 2,750 5,100 7,150 9,900 12,850 - 37,750Cumulative number of farmers 2,750 7,850 15,000 24,900 37,750 37,750 -

April 24, 1973

n SECOND COCOA PROJECT

MID-WESTERN STATE

PLANTING PROGRAM AND FIELD ORGANIZATION

1974/75 1975/76 1976/77 1977/78 1978/79 Total

NEW PLANTING PROGRAM

Total new acreage 5/ 1,500 2,750 2,750 3,000 10,000Cumulative acreage - 1,500 4,250 7,000 10,000 -Number of new farmers - 750 1,375 625 125 2,875Cumulative number of farmers - 750 2,125 2,750 2,875 -

Technical staff 6/

Special laborers (SL) 1/ - 30 38 120 143Agricultural Assistants (AA) 2/ 3 8 22 30 36Agricultural Superintendents (AS) 3/ 2 4 8 8 8Agricultural Officers (AO) 4/ 1 3 3 3 3

Administrative Units

Operational Units 2 4 8 8 8Regional Units 1 3 3 3 3

1/ Planting year and year after planting 1 SL/50 acres; following 2 years 1 SL/150 acres; In Year 5 1 SL/450 acres.

2/ 1 AA/4 SL.

3/ 1 AS for each operational unit.

4/ 1 AO for each regional unit.

5/ Advance recruitment and organization for 1975 planting program.

(D -e6/ Staff will be phased out after 1978/79 planting year.

NIGERIA

SECOND COCOA PROJECT

WESTERN AND MID-WESTERN STATES

REPLANTING - PER ACRE COS? 1/(Man-days and Naira)

a.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ga

Year 1 Year 2 Year 3 Year 4 Year 5 Year I -5 Year6 Year 7 'Year Year 9 Year 10

LABOR

Clearing and stumping 15 -i - - 15 - - - -

Underbrushing and row weeding 6 - -- 6 -

Lining, pegging and peg cutting (shade and cocoa) 3 3 - - - 6 -

Holing for shade and cocoa 2 4 - - - 6 - - - -

Carrying and planting shade and cocoa 4 9 1 - 14 -Filling vacancies - - I - 1 -

Shade manipulation - - 1 1 1 3 -Mulching - 2 2 2 - 6 - - - -

Weeding - 21 18 12 12 63 10 8 8 6 6Fertilizer application - 1 1 1 1 4 1 1 1 1 1Capsid Control - - 3 3 3 9 5 5 5 5 5Black pod control - - - - - - 3 4 8 8 8

Harvesting and processing - - - - 3 3 6 9 21 25 25

Total MD Required 30 40 27 19 20 136 25 27 43 45 45

Hired ND 10 15 12 to 9 56 5 6 10 11 11

---------------- ----------------------------------- (Naira) --------------------------------------

Total Cost of Hired MD (N 1.00/MD) 10.00 15.00 12.00 10.00 9.00 56.00 5.00 6.00 10.00 11.00 11.00

FARM INPUTS

Cost to the Farmer

Seedlings @ N 0.02 each - 9.00 2.00 - - 11.00 - - - - -

Shade material 8.00 2.00 - - - 10.00 - - - -

Insecticide - - - 0.96 0.96 1.92 1.92 2.88 2.88 2.88 2.88Fungicide - - - - - - 0.90 0.90 1.98 3.14 6.26

Fertilizers - 2.08 3.12 4.16 4.16 13.52 8.30 8.30 8.30 12.46 12.46Tools, excluding sprayers - 2.16 - - 1.30 3.46 - - 0.27 0.27 0.27Transport - - - - 0.70 0.70 1.40 2.45 3.85 4.90 5.95

Cost of farm inputs to the Farmer 8.00 15.24 5.12 5.12 7.12 40.60 12.52 14.53 17.28 23.65 27.82

Per acre cash cost to the farmer (incl. Iabor) 18.00 30.24 17.12 15.12 16.12 96.60 17.52 20.53 27.28 24.65 38.82

Cost to Govermnent

Seedlings @ N 0.03 each - 13.50 3.00 - - 16.50 - - - -

Insecticides - - - 0.52 0.52 1.04 1.02 1.54 1.54 1.54 1.54Fungicide - - - - - - 0.28 0.28 0.64 0.98 1.96

Fertilizer - 2.08 3,12 4.16 4.16 13.52 8.30 8.30 8.30 12.46 12.46

Per acre cash Cost to Government - 15.58 6.12 4.68 4.68 31.06 9.60 10.12 10.48 14.98 15.96

TOTAL PER ACRE CASH COST 18.00 45.82 23.24 19.80 20.80 127.66 27.12 30.65 37.76 49.63 54.78

1/ The MANR study, Draft Expanded Cocoa Scheme, Annex 1, envisages two models for replanting: outside and inside ANM. ,IThe present model applies to replanting outside AMI. Inside AMI replanting 4 ac would require the clearing of a30-meter cordon sanitair around the to-be-replanted area plot in Year 1. This represents an additional clearing of4.2 ac at 15 MD/ac on an additional N 15.75/ac of cocoa.

NIGERIA

SECOND COCOA PROJECT

WESTERN AND MID-WESTERN STATE

NEW PLANTING PER ACRE COST(Man days and Naira)

TotalYear 1 Year 2 Year 3 Year 4 Year 1 - 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

------------------------------------------------- Mandays --------------------------------------------------------------LABOR

Underbrushing and shade control 30 -30 - - --Peg cutting, pegging and lining 3 -- 3 - - -Holing for cocoa and shade 4 -- 4 - -4Carrying cocoa seedlings 4 1 - - 5 - -Planting and filling vacancies 5 1 - - 6 -Mulching 2 2 2 - 6 - - - - -Weeding 18 18 18 12 66 10 8 6 5 -

Fertilizer application 1 1 1 1 4 1 1 1 1 -Spraying against capsid - 3 3 3 9 5 5 5 5 -Pruning - - - 1 1 1 1 1 1 -Black pod control - - - - - 3 4 8 8 -Harvesting and processing - - - 3 3 6 9 21 25 - -

Total MD Required 1/ 67 26 24 20 137 26 28 42 45 45 45

Hired MD 2/ 30 15 6 5 56 5 6 10 11 11 11

-------------- ---------------------------------------- (Naira) ----------------------------------------------------------

Total cost of hired ND (N 1.00/MD) 30.00 15.00 6.00 5.00 56,00 5.00 6.00 10.00 11.00 11.00 11.00

FARM INPUTS

Cost to the Farmer

Seedlings (N 0.02/seedling) 9.00 2.00 - - 11.00 - - - - - -Shade material 4.00 1.00 - - 5.00 - - - - - -Insecticide - - 0.96 0.96 1.92 1.92 2.88 2.88 2.88 2.88 2.88Fungicide - - - - - 0.90 0.90 1.98 3.14 6.26 8.04Fertilizer 2.08 3.12 4.16 4.16 13.52 8.30 8.30 8.30 12.46 12.46 12.46Tools, excluding sprayers 2.16 - - 1.30 3.46 - - 0.27 0.27 0.27 0.27Transport - - - 0.70 0.70 1.40 2.45 3.85 4.90 5.95 7.00

Cost of farm inputs to the farmer 17.24 6.12 5.12 7.12 35.60 12.52 14.53 17.28 23.65 27.82 30.65Per acre farmer cash cost (incl. labor) 47.24 21.12 11.12 12.12 91.60 17.52 20.53 27.28 34.65 38,82 41.65

Cost to Government

Seedlings (N 0.03/seedling) 13.50 3.00 - - 16.50 - - - - - -Insecticide - - 0.52 0.52 1.04 1.02 1.54 1.54 1.54 1.54 1.54Fungicide - - - - - 0.28 0.28 0.64 0.98 1.96 2.52Fertilizer 2.08 3.12 4.16 4.16 13.52 8.30 8.30 8.30 12.46 12.46 12.46

Per Acre Cash Cost to Government 15.58 6.12 4.68 4.68 31.68 9.60 10.12 10.48 14.98 15.96 16.52

TOTAL PER ACRE CASH COST 62.82 27.24 15.80 16.80 122.66 27,12 30.65 37.76 49.63 54.78 58.17

1/ MANR study, Draft Expanded Cocoa Scheme (DECS), Vol. II, P. 1 - 6.

2/ Assuming four acres in two installments, see DECS Vol. II, Table 20.

( X

N CCERIA

SECOND COCOA PROJECT

WESTERN STATE - ON FARM COSTS(N '000)

ForeignExchange

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Total E Amount

REPLANTING

(Total Acres) (4,900) (11,250) (27,750) - _ (43,900)(of which inside AMI) (1,000) ( 4,000> (10,00o) - - - (15,000) -

Farmer Costs

Hired labor 64.8 249.0 662.6 600.3 489.6 378.8 249.8 2,694.9(of which for cocoa) (49M0) (186.0) (505.1) (600.3) (489.6) (378.8) (249.8) (2,458.6) - -(of which clearing) 1/ (15.8) (63.0) (157.5) - - _ _ ( 236.3) -Seedlings - 44.1 111.1 272.3 55.5 - - 483.0 25 120.8Shade material 39.2 99.8 244.5 55.5 - - - 439.0 -Insecticide - - - 4.7 15.5 37.4 26.6 84.2 70 58.9Fertilizer - 10.2 38.7 113.2 153.8 162.2 115.4 593.5 70 415.5Tools excluding sprayers - 10.6 24.3 59.9 6.4 14.6 36.1 151.9 50 76.0

Total Farmers' Costs 104.0 413.7 1,081.2 1,105.9 720.8 593.0 427.9 4,446.5 15 671.2(of which for clearing cordonsanitair) 1/ (15.8) (63.0) (157.5) - - - - (236.3) - -

Government Costs

Seedlings - 66.2 166.6 408.4 83.3 - - 724.5 25 181.1Insecticides - - - 2.5 8.4 20.3 14.4 45.6 70 31.9Fertilizers - 10.2 38.7 113.2 153.8 162.2 115.4 593.5 70 415.5

Total Government Costs - 76.4 205.3 524.1 245.5 182.5 129.8 1,363.6 46 628.5Total Replanting On-Farm Costs 104.0 490.1 1.286.5 1.630.0 966.3 775.5 557.7 5.810.1 22 1.299.7

NEW PLANTING (Acres) (2,100) (3,750) (12,250) - - - - - - -

Farmer Costs

Hired labor 63.0 144.0 436.4 216.8 92.3 61.3 - 1,013.8 - -Seedlings 18.9 38.0 117.8 24.5 - - - 199.2 25 49.8Shade material 8.2 17.1 52.8 12.3 - - - 90.4 - -Insecticides - - 2.0 5.6 15.4 11.8 - 34.8 70 24.4Fertilizer 4.4 14.4 45.9 62.5 66.6 51.0 - 244.8 70 171.4Tools, excluding sprayers 4.5 8.1 26.5 2.7 4.9 15.9 - 62.6 50 31.3

Total Farmers' Costs 99.0 221.6 681.4 324.4 179.2 140.0 - 1,645.6 17 276.9

Govertanent Costs

Seedlings 28.4 56.9 176.6 36.8 - - - 298.7 25 74.7Insecticides - - 1.1 3.1 8.4 6.4 - 19.0 70 13.3Fertilizers 4.4 14.4 45.9 62.5 66.6 51.0 - 244.8 70 171.4

Total Government Costs 32.8 71.3 223.6 102.4 75.0 57.4 - 562.5 46 259.4

Total New Planting On-Farm Costs 131.8 292.9 905,0 426.8 254.2 197.4 - 2,208.1 24 536.3

_ 235.8 783.0 2,191.5 2.056.8 1.220.5 972.9 557.7 8,018.2 23 1,836.0

1/ Costs of clearing 30 meter of condor sanitair in Areas of Mass Infection (see Annex 7, Table 4, Footnote 1).

*~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o1

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE - BUILDINGS. AND VEHICLES

; F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~orei3n

Unit Cost 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Total _ Amount

BUILDINGS

E.panSi.O of h..dqu.rte.. _ - 73*3 - - - - 73.3Cirle Headq-arters (4 baildingc @ N 10/sq ft) - - - 105.6 _ _ _ _ _105.6CirEle Storet (4 stores N 5/sq ft) - - - 33.6 - _ _ _ _ _ 33.6Areo Efice. (6 officeS 0 N 1ERq fc) - _ _ 100.0 - _ _ _ _ 100.0

Total Z73. 239.2 - 312.5 20 62.5

FURNITURE AND EQUIPEMENT

Head OffEce H _ 11.9 10.8 0.6 233 - -Circle and Area _ _ 11.9 3.2 2.3 _ _ _ 17.4

Total 11.9 22.7 3.8 2.3 - - - - 40.7 50 20,4TOTAL BUILDENGS AN0 FUENITJRE - - 85,2 261.9 3,8 2,3 _- _ _ 53.2 23 82.9

EEHICLES, TEACTORS AND TRUCKS N

Four-wheel drive core 1/ 4,100 _ (2) 8.2 (4)16.4 (7)28.7 (2) 8.2 (4)16.4 (4)16.4 - - 94.3 65 61.3Motorcycles 2/ 550 - - (10) .55 (04) 7.7 (14) 7,7 (10) 5,5 (14) 7.7 110) 5.5 - - 39.6 70 27.7Tractors aed Lrail-rs 3/ 4,400 - - (20)89.0 (20)98.0 (2018,.0 (20)88.0 352.0 85 299.2Lorries 4/ 6,000 - - (1) 6.0 (1) 6.0 (2)t2.0 (1) 6.0 (1) 6.0 - (1) 6,0 _ 42.0 75 31.5Bioycles 5/ ST - _ (160) 8.0 (176) 8.8 (280)14,0 (204)16.2 (100) 5.0 _ (50) 2.0 (50)2.5 51.0 70 35.7Saloon oar 3,470 0 (1) 3.4 _ _ (1) 3.4 _ (1) 3.4 _ 10.2 65 6.6TOTAL VERIICLES 1 1 119.1 126.9 150.4 121.3 35.1 21.9 11.9 2.5 589.1 78 462.0

1/ O s 4E per AO plpus ens fee -ach Cir-le Credit Officer plas one for each Field Coolntl UOit Officer mi-s -vehicles alreadyprovided in Cocoa Prajec-t , 4 Year life.

2/ One fee each Agric-l--ral Sapertntendei, 3 year life.

3/ Oee 45 hp tractor with 2 trailers per 1,000 arres misas 40 tractors and trailers already provided in ca P-rjent I,I year life. Tratr: N 3,000, Trailer N 700.

4/ Teo ST tr=oks per circle imos 8 tracks already p-ovided in Ccoa Poroject 1, 4 Year life.

_/ One per AA and one per SL.

ANNEX 7Table 8

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE - STAFFING SCHEDULE, 1973 - 1978

Unit CostPosts Per Annum 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

I. HEADQUARTER3

Prolect Manager 12,500 1 1 1 1 1 1Deputy Project Manager 10,000 1 1 1 1 1 1Financial Controller 10,300 1 1 1 1 1 1Senior CredLt Officer 7,900 1 1 1 1 1 1Internal Auditor 5,500 1 1 1 1 1 1Accountant 4,600 1 1 1 1 1 1Administrative Officer 3,000 1 1 1 1 1 1Agricultural Officer (DPM's Office) 4,300 1 1 1 1 1 1Agricultural Officer (FCU) 5,000 1 1 1 1 1 -Accounting Assistant 2,300 5 5 5 5 5 2Auditing Asn3istant 2,300 5 5 5 5 5 2Area Credit Officers 3,500 9 9 9 9 9 4Agric. Superintendent (FCU) 3,500 5 6 8 8 8 4Confidential Secretary 2,100 1 1 1 1 1 1Stenographers 1,000 I 1 1 1 1 1Loan Assistatnts 1,100 18 25 25 25 12 12Typist Grade I 900 1 1 1 1 1 1Executive Officer 1,800 1 1 1 1 1 -

Typist Grade II and III 750 4 4 4 4 4 4Clerical Of'icers 750 4 4 4 4 4 2Storekeeper 1,400 - 1 1 1 1 1Assistant Sltorekeeper 740 1 - - - -Accounts Clerks 750 5 5 5 5 5 2Drivers 640 3 4 4 4 4 3Messengers 500 3 3 3 3 3 3Telephone Operators 680 - 1 1 1 1 1Receptionist 680 1 1 1 1 1 1Nightwatchaen 460 2 2 2 2 2 2Audit Clerk 750 1 1 1 1 1 1

Total HQ (N t000) 174.6 187.0 194.2 194.2 194.2 127.1

?. AGE A." GROlUP OFFICES

Circle Leaders 5,60o - 3 3 3 3 3Agricultural Officers 4,300 5 7 10 10 10 7Clerical Officers - Circle 750 4 10 10 10 10 5Typists - Circle 750 4 6 6 6 6 4Assistant Storekeeper - Circle 740 4 4 4 4 4 4Messenger - Circle 490 4 4 4 4 4 4Nightwatchmen - Circle 460 4 8 8 8 8 8Clerical Officers - Zonal 750 - 8 8 8 8 6Typists - Zonal 750 _ 8 8 8 8 6Messengers - Zonal 490 - 8 8 8 8 6Drivers M/V 640 13 20 28 28 28 15

Total (2) (N '000) 42.6 96.4 114.2 114.2 114.2 83.8

3. OPERATIONAL UNITS

Agricultural Superintendent 2,900 26 40 54 54 30 25Agricultural Assistant - Planning 1,350 78 120 162 162 120 100Agricultural Assistant - Soil 1,540 26 40 54 54 -Special labcrers 430 280 400 624 828 600 500Drivers - Tractor 430 26 40 54 54 40 20

Total (3) (N '000) 352.3 528.8 750.0 837.7 524.3 431.1

TOTAL PERSONNEL (N '000) 69. 812.2 1.058. 1,146. 832. 6

Cost of personnel provided inCocoa Project I El (N '000) 876.3 519.8 538.4 - -

Balance required forCocoa Project II (N '000) (306.8) 292.4 520.0 1,146.1 832.7 642.0

/ After 5 year development staff will be gradually phased out. If another cocoa project is executedthere is no need to phase the staff out.

2/ See AR Pa 69a, Annex 2, Table 2. For 1973/74, the amount is obtained by adding L 168,000 for 1971;; 176,300 for 1972, 1. 199,000 for 1973 minus L 105,200 spent in 1971/72 for staff.

ANNFXc 7Table 9

i; fa;;M5.-a-a'a;

'a aCCC r r u0O at- I_ --

CCCC .o -a-00N aS O r

0_ 1_ -4'aC- 'a < oH0 |t at 0 -ar 1

_OC -a CaC-aCOD i C_

- .a 0- oa r 0- 'a CO -

o ~ ~ ~ ~ ~ ~~~~~~~~- Ca *. V

_~~~~ ~ ~~~~~~~~~~ COC : 4 Oa-C-a_CO

-s~ ~ c 0-C 0.a - H1 r2

C 0 .aC. a q, i

0C I. OcC C . C OF C C .

NIGERIA

SECOND COCOA PROJECT

MID-WESTERN STATE - ON FARM COSTS(N '000)

Total Foreign Exchange1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Disbursement Period 1981/82 Total 7 Amount

New Planting Program (Acres) (1,500) (2,750) (2,750) (3,000) - - (10,000) (10,000) _ _

Farmers' Costs

Hired labor 45.0 305.0 132.8 155.3 75.3 31.8 545.2 l5.0 560.2Seedlings 13.5 27.8 30.3 32.5 6.0 - 110.1 - 110.1 25 27.5Shade material 6.0 12.5 13.8 14.8 3.0 - 50.1 - 50.1 - -

Insecticides - - 1.4 4.0 5.2 5.5 16.1 2.9 19.0 70 13.3Fertilizers 3.1 10.4 20.5 32.4 32.2 23.9 122.5 12.5 135.0 70 94.5Tools, excluding sprayers 3.2 5.9 5.9 8.5 3.6 3.6 30.7 3.9 34.6 50 17.3

Total Farmers' Costs 70.8 161.6 204.7 247.5 125.3 64.8 874.7 34.3 909.0 17 152.6

Government Costs

Seedlings 20.3 41.6 45.4 48.8 9.0 - 165.1 - 165.1 25 41.3Insecticides - - 0.8 2.2 2.8 3.0 8.8 1.6 10.4 70 7.3Fertilizers 3.1 10.4 20.5 32.4 32.2 23.9 122.5 12.5 135.0 70 94.5

Total Government Cost 23.4 52.0 66.7 83.4 44.0 26.9 296.4 14.1 310.5 46 143.1

TOTAL ON-FARM COSTS 94.2 213.6 271.4 330.9 169.3 91.7 1,171.1 48.4 1,219.5 24 295.7

NIGERIA

SECOND COCOA PROJECT

MID-WESTERN STATE - BUILDINGS, AND VEHICLES(N '000)

a> Total Foreignav Unit Disbursement Grand ExchangeCost 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Period 1981/82 Total % Amoun

BUILDINGS

Headquarters N 10/sq.ft 27.0 27.0 - - - - - 54.0 - 54.0Regionol Unit Officeo N 10/eq.ft 16.7 33.3 - - - - - 50.0 - 50.0Regional Unit Stores N 5/sq.ft 5.0 10.0 - - 15.0 - 15.0Houses N 12/sq.ft - 24.0 - - - - - 24.0 - 24.0

Total Buildings 48.7 94.3 - _ 143.0 - 143.0 20 28.6

Furniture and Equipment

Headquarters 9.0 9.0 - - _ _ _ 18.0 - 18.0 -Regional Units 4.3 4.3 - - - - - 8.6 - 8.6 -

Furniture and Equipment 13.3 13.3 - _ _ 26.6 _ 26.6 50 13.3

TOTAL BUILDINGS 1/ 62.0 107.6 - - - - - 169.6 - 169.6 25 41.9

Costed under Oil Palm and Rubber Projects - - - - -Costed under Cocoa Project 1/ 62.0 107.6 - - - - - 169.6 - 169.6 25 41.9

(Charged to Cocoa II) 2/ (40.0) (83.6) - - (123.6) _ (123.6) (25) (30.9)

VEHICLES, TRACTORS AND TRUCKS

Headquarters (N)

Sedan (Stationwagon) 4,000 (1) 4.0 - (1) 4.0 - (1) 4.0 12.0 _ 12.0 65 7.8Four-wheel Drive 4,100 (1) 4.1 - - (1) 4.1 - - (1) 4.1 12.3 - 12.3 65 8.0Safari Station Wagon 3,200 - (2) 6.4 - (2) 6.4 - - 12.8 (2) 6.4 19.2 65 12.5

Regional Units

Four-wheel Drive 4,100 (1) 4.1 (2) 8.2 (1) 4.1 (1) 4.1 (2) 8.2 (1) 4.1 (1) 4.1 36.9 - 36.9 65 24.05T Trucks 6,000 (1) 6.0 (2)12.0 (1) 6.0 (1) 6.0 (2)12.0 (1) 6.0 - 48.0 - 48.0 75 36.0Tractors and 2 Trailers 4,400 (2) 8.8 (4)17.6 - (2) 8.8 (4)17.6 - - 52.8 - 52.8 85 44.9Motor Cycles 550 (2) 1.1 (2) 1.1 (6) 3.3 (2) 1.1 (6) 3.3 (2) 1.1 (4) 2.2 13.2 - 13.2 70 9.3Bicycles 50 (13) 0.7 (37) 1.9 (68) 3.4 (1503 7.5 - (50) 2.5 - 16.0 - 16.0 70 11.2

Total Vehicles 28.8 47.2 16.8 35,6 47.5 13.7 14.4 204.0 6.4 210.4 73 153.7

Costed under Oil Palm and Rubber Projects - 4.3 - 5.4 4.3 - 5.4 19.4 4.3 23.7 73 17.3Costed under Cocoa Project 3/ 28.8 42.9 16.8 30,2 43.2 13.7 9.0 184.6 2.1 186.7 73 136.3

(Charged to Cocoa) 4/ (23.4) (42.9) (16.8) (30,2) (43.2) (13.7) (9.0) (179.2) (2.1) (181.3) (73) (032.3)

1/ Building costs are completely costed under Cocoa Project II

2/ For economic cost cal-ulation only 1/3 of Headquarter buildings and furniture charged to cocoa. Other costs charged fully.

3/ In 1974/75 total vehicle costs are costed under Cocoa Project II

4/ For economic cost calculation onIy one-third of headquarters vehicles charged to cocoa. Other vehicles charged fully.

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NIGE-RIA

SECOND COCOA PROjECT

MID-WESTERN STATE OPERATING 0ASTS

ForignSnit Cost Total Disburs- Crndtsh--oPer Anoos 1974/75 1975/76 _1970/77 1977/78 1978/79 1979/80 1980/91 P.ot toiud 1981/82 ToruSl Ae... t

OPERATING COSTS

Office S-ric-s Reet -nd Buiidig Repair

Hendq atet- 3.0 5.0 8.0 8.0 8.0 8.0 8.0 48.0 0.0 50.0--

Field ffEice 2.0 3.0 4.0 5.0 5.R 5.0 0,0 29.0 5.0 34.0--Other Mlioteon- 0.6 0.8 1.0 1.5 5.8 1.8 5.8 9.3 1.8 11.1-

Rub-Total (17 5.6 8.0 13.0 14.5 04.0 14.8 14.0 86.3 14.8 101.1 60 60.7

Ve.hiles N

Poo--h-el Orivol' 1,20 (2) 2.0 (4) _.1 (5) 5.1 (5) I. (5) 5.1 (4) 4.1 3.,1 (3) 20.0 (1) 1.0 29.6 - -Truks 1,320 (5) 1.3 (3) 4.0 (4) 5.5 (4) 5.3 (4) 5.3 (35 4. 2.6 (2) 27.0 (15 1.3 29.1 oda_ aed Saf_ri StatLi_ 1ag_o 90 () 0. 3 .5 ()2 ((3), I. 3 , (3) 72. 3)1. (3) 22(.

Motor, Tyclo 120 (2) 0.2 (4 ) . (8)' 1.0 (0) 10 (8)1.0 (6)0.7 0.3 (41) 4.9 (7) 0.2 5.1--Tr-coc ao d Trailer 320 (2) 0.5 (13.1l (6) 3.1 (6) 5.1 (6) 3.1 (6)35.1 2.1 (4) (8.1 - 10.1-

Vehicle Soe-ciin Costs 4.9 14.4 17.2 17.2 17.2 14.6 11.0 96.3 5.2 101.7 40 40. 7

Totu Ocut ot 10.5 23.7 30.2 31.7 32.0 29.4 25.8 182.8 20.0 202.8 50 100.4

App-trle-d to Oil Pal. and Robber Pr-je-t 1 - '4.6 7.8 '7.8 27.8 ~ 7.8 17.8 43.6 7.8 51.4 90 25.7Apporti-ed to Coco Ptoj..t 10.5 18.6 _22.4 23.9 24.2 21.6 18.0 039.2 12.7 131.4 50 73.

PERSONNEL CO.STS 2141.6 128.8 107.1 2

1/ Two-thirds of hadq-tt- office serice ... o.d two-thirds of -ebio oP-rtini nste of S Po-r whel drive sod 3 sedan cod safari stuti-obgus. 1o your 1974/75oil cots apparti-ud to coco ST.

2/See Staffiug -ch.dule Ae... 7 Table 13. After pl-oti.g Te- 1978/79 stuff is gad..lly ph-ad .ct. M. phasing out would be - -esay if u opre)eut will ho esected.

NIGERIA

SECOND COODA PROJECT

WESTERN STATE ROAD PROGRAM

ForeignUnit ExchangeCost 1974 1975 1976 1977 Total % AmountN ………--…-…-=-…----- - ----- (Miles) -- …--…------------------

I. Roads Improved 100 200 200 100 600

-- -------------- ----- (N '000) ---------------------- - - (N'000)--

II. Personnel Costs

Road Engineer 6,000 (0.5) 3.0 (1) 6.0 (1) 6.0 (0.5) 3.0 18.0Assistant Surveyor 1,500 (1) 1.5 (2) 3.0 (2) 3.0 (1) 1.5 9.0Draftsman (half time) 800 (0.5) 0.4 (1) 0.8 (1) 0.8 (0.5) 0.4 2.4Clerk Typist 660 (0.5) 0.3 (1) 0.7 (1) 0.7 (0.5) 0.3 2.0Laborer 350 (6) 2.1 (12) 4.2 (12) 4.2 (6) 2.1 12.6Driver 600 (10) 6.0 (20) 12.0 (20) 12.0 (10) 6.0 36.0Equipment Operator 650 (6.5) 4.2 (13) 8.5 (13) 8.5 (6.5) 4.2 25.4Operator helper 500 (6.5) 3.3 (13) 6.5 (13) 6.5 (6.5) 3.3 19.6Mechanic Driver 840 (0.5) 0.4 (1) 0.8 (1) 0.8 (0.5) 0.4 2.4Mechanic's helper 500 (0.5) 0.3 (1) 0.5 (1) 0.5 (0.5) 0.3 1.6

Total Personnel Costs 21.5 43.0 43.0 21.5 129.0 10 12.9

III. Equipment Operating Costs

Track-type Tractor 9-554 (2) 19.1 (4) 38.2 (4) 38.2 (2) 19.1 114.6Motor Graders 4,811 (1.5) 7.2 (3) 14.4 (3) 14.4 (1.5) 7.2 43.2Bucket Loaders 5,475 (1.5) 8.Z (3) 16.4 (3) 16.4 (1.5) 8.2 49.2Rubber-tired Rollers 3,360 (1.5) 5.0 (3) 10.1 (3) 10.1 (1.5) 5.0 30.2Water Trucks 1,190 (1.5) 1.8 (3) 3.6 (3) 3.6 (1.5) 1.8 10.8Dump Trucks 3,870 (5) 19.4 (10) 38.7 (10) 38.7 (5) 19.4 116.2Crew Trucks 1,350 (1.5) 2.0 (3) 4.1 (3) 4.1 (1.5) 2.0 12.2Low Loader 1,194 (0.5) 0.6 (1) 1.2 (1) 1.2 (0.5) 0.6 3.6Road Engineer Vehicle 1,350 (0.5) 0.7 (1) 1.4 (1) 1.4 (0.5) 0.7 4.2Field Repair Truck 1,992 (0.5) 1.0 (1) 2.0 (1) 2.0 (0.5) 1.0 6.0Fuel Truck 2,970 (0.5) 1.5 (1) 3.0 (1) 3.0 (0.5) 1.5 9.0

Operating Costs 66.5 133.1 133.1 66.5 399.2Suppliers Margin for Maintenance (10%) 6.7 13.3 13.3 6.7 40.0

Total Operating Cost 73.2 146.4 146.4 73.2 439.2 40 175.7

IV. Local Contracts for Small Civil Works 239.3 478.6 478.6 239.3 1,435.8 20 287,2

V. Purchase of Equipment I/ (See Table 15.) 460.4 33.0 - - 493.4 80 394.7

VI. Maintenance 21 (( N 300) - 30.0 60.0 150.0 240.0 20 48.0

TOTAL WESTERN STATE ROAD PROGRAM 794.4 731.0 728.0 484.0 2,737.4 34 918.5

1/ Estimated residual value at the end of the construction program: N 265,000

2/ Maintenance of project roads during extension of the road program included in project costs.

Table 15

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE ROAD PROGRAM

Equipment Requirements and Costs

Unit NumberEquinment Cost Required Total

140 hp Track-type tractor 34,300 4 148,176Three-tooth rippers for above 2,900 2 6,264

100 hp Motor grader 17,280 3 55,987130 hp Front end, 2-1/2 cu.yd, bucket

loader 25,340 3 82,102100 hp Rubber-tired roller 6,400 3 .20736125 hp Flat-deck truck with pump, water

tank and sprinkler bar 5,020 3 16,2653 cu.yd Dump truck 6,500 10 70,200

Four-wheel-drive crew truck 3,800 3 12,312Low loader 17,000 1 18,360Fouz-wheel-drive vehicle forRoad Engineer 3,800 1 4,104

125 hp Flat-deck truck, equipped tocarry out field repairs 7,000 1 7,560

125 hp Flat-deck truck, equipped to refueland servic equipment in the field 6,000 1 6,480

Spare parts for all above equipment 44/ 85 /

Total =L93 *h

./ Unit costs increased by 8 percent to reflect prices at ent 1973.

/ At 10% of equipment value

N/ N 11,885 in 1974 and N 33,000 in 1975

NI GERIA

SECOND ~OCOA PROJECT

MID-WESTERN STATE ROAD PROGRAM COSTS(N '000)

ForeignUnit ExchangeCost 1974 1975 Total % Amount

-ost ---- Miles-------------

I. Roads Improved 21 42 63

-(__OO_)-----------(N'000)-----------------------------

II. Personnel Costs

Road Construction Supervisor 3,000 (0.5) 1.5 (1) 3.0 4.5 - -

Laborers 350 (2.0) 0.7 (4) 1.4 2.1 - -Drivers 600 (0.6) 1.0 (2) 1.2 1.8 - -

Equipment Operators 650 (1.5) 1.0 (3) 2.0 3.0 - -

Operator Helpers 500 (1.5L 0.8 (3) 1.5 2.3 - -

Total Personnel 4.6 9.1 13.7 10 1.4

III. Equipment Operating Costs

Track-type Tractor 9,554 (0.5) 4.8 (1) 9.6 14.4 - -

Motor Grader 4,811 (0.5) 2.4 (1) 4.8 7.2 - -

Rubber-tired Roller 3,360 (0.5) 1.7 (1) 3.4 5.1 - _Water and Fuel Truck 1,968 (0.5) 1.0 (1) 2.0 3.0 - _Crew and Supervisor's Vehicle 1,350 (0.5) 0,7 (1) 1.4 2.1 - -

Operating Costs 10.6 21.2 31.8 - -

Suppliers margin for maintenance (10%) 1.1 2.11 3.2 - -

Total Operating Costs 11.7 23.3 35.0 40 14.0

IV, Local Contracts for Small Civil Works 107.5 215.1 322.6 20 64.5

V. Purchase of Equipment (see Table 17) /1 84.6 - 84.6 80 67.7

VI. Maintenance 2/ (@ N 300/mile) - 6.3 6.3 20 1.3

TOTAL MID-WESTERN STATE ROAD PROGRAM 208.4 253.8 462.2 32 148.9

1/ Estimated Residual Value at the end of the construction program: N 60,000

2/ Maintenance of project roads during road program execution included in project cost.^ ^ H _,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o

ANNEX7Table 17

NIGERIA

SECOND COCOA PROJECT

MID-WESTERN STATE ROAD PROGRAM

Equipment Requirements and Costs

(N)

Unit Number 1/EquiPment Cost Required Total

1h0 hp Track-type tractor 34,300 1 37,0e1

Three tooth ripper 2,900 1 3,13

100 hp Motor Grader 17,280 1 18,662

100 hp Rubber-tired roller 6,400 1 6,912

125 hp Water and fuel truck 6,500 1 7,020

Four wheel drive vehicle for crewand Supervisor transport 3,800 1 4,10h

;nare parts for above 2/ 7,687

Total 8h,561

/ Increased by 8% to reflect prices at end 1973

2/ At 10% of equipment value.

NIGERIA

SECOND COCOA PROJECT

WESTERN STATE

DETAILED FINANCING OF PROJECT COSTS

DisbaeG,eo C24 Categories of Proposd Per Disbrs-et

Project Costs and Categories 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Persod 1981/82 TOTAL Bank Loan Scehdule

of Disburement -(O'05 (0S$ 205) (US$ 0'D0)

BANK

CategorY S

L.acs to Farners - Total Cost 203.1 635.4 1,762.5 1,430.5 900.2 733.6 4'7.R 6,093.1 - 6,093.1 - -

Bank Disbursceset (80%) 162.5 50R.3 1,410.0 1,144.4 720.2 5R6.9 342.2 4,874.5 - 4,874.5 4,R74.5 7,409.3 7,400

Category II

Vehifles, Teastos, Sprayers 280,0 223.3 245.7 35.1 21.9 11.9 2.5 820.4 - 820.4 - -

Read Conet-rtion Esnipsent 460.4 33.0 - - - - - 493.4 - 493.4

Tatal Colst 740.4 256.3 245.7 35.1 21.9 11.9 2.5 1,313.8 - 1,313.8 - - _

Bank Disbursement (80%) 592.3 205.0 196.6 28.1 17.5 9.5 2.0 1,051.0 - 1,051.0 1,050.0 1,597.5 1,600

Catee-ry III

Staff Salaries and Training 6.4 536.9 1,165.9 832.7 642.0 493.4 250.0 3,027.3 - 3,927.3 - - -

Building 347.1 3.8 2.3 - - - - 353.2 _ 353.2

Rood Pr-p'-n (less Equipnent) 334.0 698.0 728.0 484.0 - - - 2.244.0 - 2.244,0

Total Costa t87.5 1,230.7 1,896.2 1,316.7 642.0 493.4 250.0 6,524.5 - 6,524.5

Bank Disbur,semnt (45%) 309.4 557.4 853.3 592.5 288.9 222.0 112.5 2,936.0 2,936.0 2,936.0 4,462.8 4,450

Unallocated - Total 260.6 515.3 1,266.4 1,273.8 821.3 764.1 499.1 5,400.6 - 5,400.6

Bank Disbursenent 94.6 187.1 459.8 462.5 298.2 277.4 181.2 1,960.8 - 1,960.8 1,960.8 2,980.4 3,000

Total Project Costs partly finanred by Bank 1,891.6 2,645.7 5,170.8 4,056.1 2,385.4 2,003.0 1,179.4 19,332.0 - 19,332.0 - -

TOTAL BANK DISBURSEMENTS 1,158.8 1.457.8 2,919.7 2.227.5 1,324.8 1,095.8 637.9 10.822.3 - 10.822.3 10,822.3 16,450.0 16.450

FEDERAL GOVERNMENT

SBaaer of the above rests of wkhih FGNYaOUld finance atound 80% 732.8 1,187.9 2,251.1 1,828.6 1,060.6 907.2 541.4 8,509.7 - 8,509.7 - -

Total FGN Dikabrsements 1/ 518.9 816.8 1,473.2 1,133.3 635.8 527.9 304.1 5,410.0 - 5,410.0

WESTERN STATE GOVERNMENT

Balance of costs financed sbo-e 213.9 371.1 777.9 695.3 424.8 379.3 237.4 3,099.7 - 3,099.7

Cents totally financed by WS Covern-entSbsidies 32.7 147.6 429.0 626.3 320.3 239.3 129.9 1,925.1 - 1,925.1

Operating Casts 17.0 39.5 97.2 90.5 70.6 43.5 37.8 396.1 - 396.1

TOTAL WESTERN STATE 263.6 558.2 1.304.1 1.412.1 815.7 662.1 405.1 5,420,9 _ 5,420.9 - -

TOTAL FINANSCING 1,941.3 2.832.8 5.697.0 4,772.9 2,776.3 2,285,8 1,347.1 21.653,2 - 21,653.2 - - _

1/ nee An.ne 8 Table 3 for details,

NIGERIA

SECOND COCOA PROJECT

MID-WESTERN STATE

DETAILED FINANCING OF PROJECT COSTS

Total PerDisb.rsement GRAND C.tegories of Proposed Disburse.ent

Projeft Costs snd Categories 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Period 1981/82 TOTAL SANE Loan ScheduleOf Disburse,ent ----------------------------- - - (N 0001-o)--- ------------- - - (N 000) ~ !SS o03 I..,,'

Category I

Loans to Farmers - Total Costs - 70.8 161.6 204.8 214.5 125.1 64.8 874.6 34.4 909.0Bank Disbursements (80%) - 56.7 129.3 163.8 198.0 100.1 51.8 699.7 - 699.7 699.7 1.063.5 1.100

Category II

Vehicles, Tractors, Sprayers 31.3 50.3 26.5 35.1 48.1 13.7 9.0 214.0 2.1 216.1 - - -Road Construction Equipment 84.6 - - - - - - 84.6 - 84.6 -

Total Costs 115.9 50.3 26.5 35.1 48.1 13.7 9.0 298.6 2.1 300.7 - - -Bank Disbursements (80%) 92.7 40.2 21.2 28,1 38.5 11.0 7.2 238.9 - 238.9 238.9 363.1 350

Category III

Staff Salaries and Tiaining 142.1 129.3 187.7 212.3 229.7 177.7 118.1 1,196.9 104.7 1,301.6 - -

Building 62.0 107.6 - - - - - 169.6 - 169.6Road Program (Less Equipment) 123.8 253.8 - - - - - 377.6 - 377.6

Total Costs 327.9 490.7 187.7 212.3 229.7 177.7 118.1 1,744.1 104.7 1,848.8Bank Disbursements (45%) 147.5 220.8 84.5 95.5 103.4 80.0 53.1 784.8 - 784.8 784.8 _l192.9 1,200

Unallocated - Total 66.4 162.5 120.7 185.7 266.3 192.2 140.0 1,138.8 8.4 1,142.2Bank Disbursements 35.8 87.7 65.2 100.3 143.8 103.8 75.5 612.1 - 612.1 612.1 930.5 900

Total of Project Costs partlyFinanced by Bank 510.2 774.3 496.5 637.9 791.6 508.7 331.9 4,051.1 149.6 4,20C.7 - - -

TOTAL BANE DISBURSEMENTS 276.0 405.4 300.2 387.7 483.7 294.9 487.6 2,335.5 - 2.33

5.,5 2.335.5 3.550 3,530

FEDERAL GOVERNMENT

Balance of the above costs of whichFGN would finance(around 80%) 234.2 368.9 196.3 250.2 307.9 213.8 144.3 1,715.6 149.6 1,865.2 - - -

Total FGN Disbursements 1/ 168.8 249.7 123.3 148.2 171.8 117.4 76.2 1,055.4 114.6 1,170.0

MID-WESTERN STATE GOVERNMENT

Balance of Costs financed above 65.4 119.2 73.0 102.0 136.1 96.4 68.1 660.2 35,0 695.2Costs totally financed by MWS

Subsidies - 23.4 52.0 66.6 83.4 44.2 26.9 296.5 14.0 310.5Operating Costs 10.5 18.6 22.4 23.9 24.2 21.6 18.0 139.2 12.2 151.4

Total 1lID-WESTERN STATE 75.9 161.2 147.4 192.5 243.7 162.2 113.0 1,095.9 61.2 1,157.1

TOTAL FINANCING 520.7 816.3 570.9 728.4 899.2 574.5 376.8 4.486.8 175.8 4.662.6 - -

1/ See Anne. 8, Table 3 for details.

-L is

- AN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NEX8NIGERIA Table 3

SECOND COCOA PROJECT

Disbursement of Federal Military Govern ent Contribution

(Na.ri '000)

Tttib-e, GRAND Categories of

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Period 1981/82 TOTAL Dinboreent-t

A. WESTERN STATE

Category 1

Tnt.1 203.1 635.4 1,762.5 1,430.5 900.2 733.6 427.8 4,874.5 - 6,093.1Bank (807%) 162.5 508.3 1.410.0 l1J44.4 720.2 586.9 342.2 4.874.5 _ 4,874.5

Balante 40.6 127.1 352.5 286.1 180.0 146.7 85.6 1,218.6 - 1,218.6FldC (807 of Balance) 32.5 101.6 282.0 228.9 144.0 117.4 68.5 974.9 - 974.9 974.9

Category 11

Total 740.4 256.3 245.7 35.1 21.9 11.9 2.5 1,313.8 - 1,313.8Bank (80%) 592.3 205.0 196.6 28.1 l7.5 9.5 2.0 1,051.0 _ 1,051.0

Balance 148.1 51.3 49.1 7.0 4.4 2.4 0.5 262.8 - 262.8FMG (807. no Balance) 118.5 41.0 39.3 5.6 3.5 1.9 0.4 210.2 210.2 210.2

CategOry III

Total 687.5 1,238.7 1,896.2 1,316.7 642.0 493.4 250.0 6.524.5 - 6,524.5Bank (457) 309.4 557.4 853.3 592.5 288.9 222.0 112.5 2.936.0 - 2,936.0

Balance 378.1 681.3 1,042.9 724.2 353.1 271.4 137.5 3,588.5 - 3,588.5FMG (80% nf Balance) 302.5 545.0 834.3 579.4 282.5 217.1 110.0 2,870.8 2,870.8 2,870.8

Elnallocated

Totol 260.6 515.3 1,266.4 1,273.8 821.3 764.1 499.1 5,400.6 _ 5,400.6Bank 94.6 187.1 459.8 462.5 298.2 277.4 181.2 1.960.8 1 1.960.8

Ba3 nce 166.0 328.2 806.6 811.3 523.1 486.7 317.9 3,439.8 _ 3,439.8FMG 65.4 129.2 317.6 319.4 205.8 191.5 125.2 1,354.1 - 1,354.1 1,354.1

Tatal FM8 Conrtibution 519.9 816.8 1.473.2 1.133.3 635.8 527.9 304.1 5.410.0 - 5,410.0 5

B. 041D-WFST STATE

Category I

Total 70.8 161.6 304.8 247.5 125.1 64.8 874.6 34.4 909.0Bank (807) - 56.7 129.3 163.8 198.0 100.1 51.8 699.7 - 699.7

Balance - 14.1 32.3 41.0 49.5 25.0 13.0 1,174.9 34.4 209.3F51 (80% of B1lanc-) - 11.3 25.8 32.8 39.6 20.0 10.4 139.9 27.5 167.4 167.4

CateRooy I1

Total 115.9 50.3 26.5 35.1 48.1 13.7 9.0 298.6 2.1 300.7Bank (807.) 92.7 40.2 21.2 28.1 38.5 11.0 7.2 238.9 _ 238.9

Balance 23.2 10.1 5.3 7.0 9.6 2.7 1.8 59.7 2.1 61.8F0'G (805 f B al...e) 18.6 8.1 4.2 3.6 7.7 2.2 1.4 47.8 1.7 49.5 49.5

Categorv 00I

Tota1

327.9 490.7 187.7 212.3 229.7 177.7 118.1 1,744.1 104.7 1,84808Bank (457.) 147.5 220.8 84.5 95.5 103.4 80.0 53.1 784.8 - 784.8

Balance 180.4 269.9 103.2 116.8 126.3 97.7 65.0 959.3 104.7 1,064.0FMG (807. of Balance) 144.3 215.9 82.6 93.4 101.0 78.2 52.0 767.4 83.8 851.2 851.2

Unallocated

Total 66.4 162.5 120.7 185.7 266.3 192.2 140.0 1,133.8 8.4 1,142.2lank 35.8 87.7 65.2 100.3 143.8 103.8 75.5 621.1 - 621.1

Balance 30.6 74.8 55.5 85.4 122.5 88.4 64.5 512.7 8.4 1,530.1Fb'G 5.9 14.4 10.7 16.4 23.5 17.0 12.4 100.3 1.6 101.9 101.9

Total F0G Contribution 168.8 249.7 123.3 148.2 171.8 117.4 76.2 1,055.4 114.6 1.170.0

ANNE

Table 4NIGERIA

SECOND COCOA PROJECT

DISBURSEMENT SCHEDULE OF BANK LOAN(US$ '000)

Western State Mid-Western State Total Cumulative Total

FY 75 Quarter 1 770 190 960 960Quarter 2 510 130 640 1,600Quarter 3 510 130 640 2,240Quarter 4 510 130 640 2,880

FY 76 Quarter 1 920 190 1,110 3,990Quarter 2 620 130 750 4,740Quarter 3 620 130 750 5,490Quarter 4 620 130 750 6,240

FY 77 Quarter 1 1,400 160 1,560 7,800Quarter 2 930 110 1,040 8,840Quarter 3 930 110 1,040 9,880Quarter 4 930 110 1,040 10,920

FY 78 Quarter 1 1,000 210 1,210 12,130Quarter 2 680 140 820 12,950Quarter 3 680 140 820 13,770Quarter 4 680 140 820 14,590

FY 79 Quarter 1 640 220 860 15,450Quarter 2 430 150 580 16,030Quarter 3 430 150 580 16,610Quarter 4 430 150 580 17,190

FY 80 Quarter 1 500 140 640 17,830Quarter 2 330 90 420 18,250Quarter 3 330 90 420 18,670Quarter 4 330 90 420 19,090

FY 81 Quarter 1 240 70 310 19,400Quarter 2 160 40 200 19,600Quarter 3 160 40 200 19,800Quarter 4 160 40 200 20,000

Total 16,450 3,550 20,000

NIGERIA

SECOND COCOA PROJECT

CASH FLOW TO THE FARMER

Four Acres of New Planting Cocoa,

YEAR 1 2 3 4 5 6 7 17 13 1

Acreage Planted 2 - 2 - - - - - - - - - _ _

Yield of Cocoa (lbs/ac) - - 100 200 350 550 700 850 850 850 850 850 850

Total Farm Production - - - 200 400 900 1,500 2,100 2,800 3,100 3,400 3,400 3,400 3,400

Sources of Funds

Sale of Cocoa (X 400/T.) - - - 36 71 161 268 375 500 554 607 607 607 607Cocoa Development Loan 95 42 117 66 22 24 - - - - - - - -

Total Sources of Funds 95 42 117 102 93 185 268 375 500 554 607 607 607 607

Applications of Funds

On-farm Cost - Hired Labor 60 30 72 40 22 22 30 34 42 44 44 44 44 44- Material 35 12 45 26 35 43 60 76 90 100 117 123 72 72

Total On-Farm Costs 95 42 117 66 57 65 90 110 132 152 161 167 167 167

Return before Debt Service - - - 36 36 120 178 265 368 402 446 440 440 440

Debt Service 1/

Without Capitalized Interest 9 13 24 30 32 34 82 82 82 82 82 82 - -With Capitalized Interest - - - - - 45 110 110 110 110 110 110 - -

Net Cash Flow

Without Capitalized Interest (9) (13) (24) 6 4 86 96 183 286 320 364 358 440 440With Capitalized Interest - - - 36 36 75 68 155 258 292 336 330 440 440

Number of MD employed (per acre) 67 26 24 20 26 28 42 45 45 45 45 45 45 45on the 4 acres 134 52 182 92 100 96 136 146 174 180 180 180 180 180Less Hired MD included in theon-farm costs 60 30 72 40 22 22 30 34 42 44 44 44 44 44

Family Labor 74 22 110 52 78 74 106 112 132 136 136 136 136 1362/

Average Net Earnings of Family Labor (N/MD) - - - 0.12 0.05 1.16 0.91 1.63 2.17 2.35 2.68 2.63 3.23 3.23Average Net Earnings of Family Labor (N/MD)3/ - - - 0.69 0.46 1.01 0.64 1.38 1.96 2.14 2.47 2.42 3.23 3.23

1/ 9.25% interest rate per annum, 6 years grace for principal asd option to capitalize for 5 years and repayments after Year 6 in equal installment. -Ix

2/ Without capitalized interest - 'o

3/ With capitalized interest.

NIGERIA

SECOND COCOA PROJECT

CA2I1 FLOW TO THE FARMER

Four Acres of Replanted Cocoa 1/(N)

YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Acreage Planted - 2 - 2 - - - - - - - - - -

Yields of Cocoa (lbs/ac) - - - - 100 200 350 500 650 750 750 750 750 750

Total of farm production - - - - 200 400 900 1,400 2,000 2,500 2,800 3,000 3,000 3,000

Sources of Funds

Sales of Cocoa (N 400/T.) - - - - 36 71 161 250 357 446 500 536 536 536Cocoa Development Loans 36 61 70 91 66 30 32 - - - - - - -

Total Sources of Funds 36 61 70 91 102 101 193 250 357 446 500 536 536 536

Application of Funds

On-Farm Costs - llired Labor 20 30 44 50 42 30 30 30 34 42 44 44 44 44- Material 16 31 26 41 24 35 43 60 76 90 103 111 111 111

Total On-Farm Costs 36 61 70 91 66 65 73 90 110 132 147 155 155 155

Return before Debt Service - - - - 36 36 120 160 247 314 353 381 381 381

Debt Service 2/

Without capitalized interest 3 9 15 24 30 33 36 87 87 87 87 87 87 -With capitalized interest - - - - - - - 127 127 127 127 127 127 -

Net Cash Flow

Without capitalized interest (3) (9) (15) (24) 6 3 84 73 160 227 266 294 294 381With capitalized interest - - - - 36 36 120 33 120 187 226 254 254 381

Number of MD employed 60 80 114 118 94 88 94 136 144 176 180 180 '80 180Less Hired MD included in on-farm costs 20 30 44 50 42 30 30 30 34 42 44 44 44 44

Family Labor 40 50 70 68 52 58 64 106 110 134 136 136 136 136

Average Net Earnings of Family Labor (N/MD)3/ - - - - 0.12 0.05 1.31 0.68 1.45 1.69 1.95 2.16 2.16 2.80Average Net Earnings of Family Labor (N/MD)4/ - - - - 0.69 0.62 1.88 0.31 1.09 1.39 1.66 1.87 1.87 2.80

I/ This model excludes replanting in areas of mass infection where around the area to be replanted a cordon sanitaire of 30 meters needs to be established.This represents an additional clearing of 4.2 acres of 15 MD/acre or an additional N 15.75/acre of cocoa, or an additional cost (with hired labor) of N 63 in Year 1. X

2/ 9.257, interest per annum, 7 years grace for principal, option to capitalize interest for seven years and repayment after Year 7 in annual equal installements. a,m3/ Without capitalized interest. aX4/ With capitalized interest.

VNIGERIA

SECOND COCOA PROJECT

WESTERN STATE GOVERMEOENT CASH FLOW

1974/75 1 75'78 1976177 1977/7t 19787t '9 179/O 1980/81 1981/82 1982183 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 91 1 /97 19Q7/99 19931p6 109/. /95-

-/88 -- - ~~~~~~~~~~~~~~~~2083 984

IBRD Loan 1,158,8 1,457.8 2,919.7 2,227.5 1,324.8 1,095.8 637.9 - - - - - - - - - _ _ _ _ -

rG ratnta 518.9 816.8 1,473.2 1,133.3 635.8 527.9 304,1

Export taxes 1/ - - - 18.4 76.3 248.4 449.5 709.0 983.1 1,148.6 1,269.9 1.269.9 1,269.9 1,269.9 1,269.9 1,269.9 1,269.9 1,269.9 1,269.9 1,269.9 1,269.9

Marketing Board Surplus 2/ - - - 17.4 71.9 234.1 423.7 668.3 926.7 1,082.7 1,197.0 1,197.0 1,197.0 1,197.0 1,197.0 1,197.0 1,197.0 1,197.0 1,197.0 1,197,0 1,197,0

Repaymant Fa-rer Loans 3/ 15.9 66.7 142.8 226.3 314,0 378.0 469.0 722,1 1,129.1 1,295,6 1,295.6 1,295.6 1,214.4 862.7 253.4 - - - - - -

TOTA8L INFLOW 1.693.6 2,341,3 4.535,7 3,622,9 2.422.8

2.484,2 2,284.2 2,099,4 3,038.9 3.526,9 3.762,5 3,762.5 3,681. 3,329.6 2,720.3 2.466.9 2.466.9 2,486. 2466.9 2,466,9 2.466.9

OUTFLOW

projent Costs

plaoting/roplstting Credits 4/ 203.1 635.4 1,762.5 1,430.5 900.2 733.6 427.8 - - - - - - -

Bobsidio- 32.7 147.6 429.0 626.3 320.3 239.3 129.9

Sprep-rs 34.0 72.9 124.4 - - - - _ _ _ _ _ _ _ _ _ _ - _ _

Btlff Balarios and Training 6.4 536.9 1,165.9 832.7 642.0 493.4 250.0

Buildings 347.5 3.8 2.3 - - - - - - - - - - _ _ - _ - _ _

ohiolls 246.8 10.4 121.23 35.1 21.9 15.9 2.5 - - -----------

Opetrting Costs 17.0 3995 97.2 90.5 70.6 45.9 37.8 - _ _

Road Progr-n 794.4 731.0 728.0 484.0 - - -

ConEingonclos 260.6 515.3 1.266.4 1,27328 821.3 764.1 699,1 _ _- -_ - - _ - - _ - - - -

Total 1,941.3 2,832.8 5,697.0 4,772,9 2,776.3 2,285.8 1,347.1 - - - - - - - - _ _ _ - _ -

Susbidios - - - - 20.2 104.3 335.2 560.6 690.2 815.6 965.7 999.8 999.8 999.8 999.8 999.8 999.8 999.8 999,8 999.8 999.8

Projent AdainistraEtin 7/ - - - - - - - 262.5 230.5 202,5 202.5 202.5 202.5 202.5 202.5 202.5 202.5 202.5 202.5 202,5 202.5

R8pay..Et IBRD Losn

Cqpmqitment Ch-rgo 8/ 72.5 61.5 39,6 22,9 13.0 4.8

lInoreat 9/ 84.6 189.7 401.4 56279 658,9

Principal ond InterettC 10/ …_…_… _… _… _… 1,195,3 1,195.3 1,195.3 1,195.3 1,195.3 1.195.3 1,195.3 1,195.3 1,9953 1,195.2 11 9

5,3 1,1935, 1,195593 1,195.3 1,195.3

Total 156.5 251,2 441.0 585.8 671.9 1,200.1 1,195,3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3 -

TOTAL OUTFLOW 2,097.8 3, 4590 I 0 5,358,7 3,468,4 3,593.2 2.877.6 2.018.4 2,116.0 2,213.S 4 ,3' 3,3 2,3.97,6 2.3.7,6 2,397j6 23 2,3.6 2,397A 2397,6 2,397.6 2,397,6 1.202,3

8utpluR/(Deficit) (404.2) (742.7) (1,602.3) (1,735.8) 71,049.6) (1,106.0) (593.4) 81.0 922,9 1,313,5 1,990 1,34.9 283.7 932.0 522.7 69.3 69.3 69,3 69.3 69.3 1,264.6

C-onlative SBrplos (Ueficit) (402.2) (1,146.97 (2,749.27 (4,485.0) (5,550.6 (6,636.6) (7,230.0) (7,149.0) (6,226.1) (4,912.6) (3,513.6) (2,178.7) (1,865.0) ( (67.0) 389.7 459.0 528.3 597.6 666.9 736.2 1l/

1/ At a Neo York spat prUie of US$nt 44.4/lb, -onoFOB -1.am In Nig-ia i. Wa 588.88. An Export too of 10% yiolds tan.s t N 58.88 per long ton.

2/ At a Neo York spot prUie of US$ nt 44.4/lb, -prplna is 8 69.37 per long ton (-ec Anoco 2, Tahle 2), Asonnod 80-. apportionod to Stato Onorroont

3/ Toterostat 7.257 and pninnipsl repovod by Cooper-tiEe Trust and/on ACC.

4/ Cast to fansnr fon oNioh hN -ico-es -edit.

2/ BuSbidi-s on agri-ulntrsI inputs du-ing fild -stxblish..nt t

6/ SnbEidios on agri-nltural inp-te sftor field -tsablsh-nt.

7/ Aftnr projont poriod.

8/ At throo-qu.rtter of 17. on undiobi-ro-d .o-nt of IBRD Loan.

8/ At 7 for 5 y-ars on disburFrd IBR0 loan. L.

10/ 1 10,822.3 thonsand at 30 oq.xl 6 nonthly insEallotU of in-r-Rt and principal over 15 y-E5,

11/ N 13,382.2 thoosand by y-ar 2003/04.

NIGERIA

SECOND COCOA POOJElY

MIO-ROST STATE GOVESRNKENT CANSH FLOW

(Nairs '000)

1974/75 1975/76 1976/77 1977/79 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/83 1985/86 1986/87 1987/S8 1900/05 1989/SO 1990/91 1991/92 1992/93 1993/94 1994/95-2003/04

19R0 L..o 270.0 405.4 300.2 297.7 403.7 294.9 187.6 - - - - - - ------ -

P9M1 Grant 169.0 249.7 123.3 148.2 071.8 117.4 76.0 114.6 - - - -- -------

Export T-xt 1/ - - - - 3.9 15.1 33.5 62.1 001.2 131.3 180.9 211.6 223.4 223.4 223.4 223.4 2034 03.4 223.4 223.4 223.4

Marketing Boad S-rPlus 2/- - - - 3.7 34.2 33.4 58.6 39.4 142.7 178.1 199.9 210.6 210.6 210.6 210.6 210.6 210.0 210.6 210.6 21.

Rsps9nyo Parser. Loans 3/. 5 .2 16.9 30.1 46.4 57.4 40.7 503.0 174.3 193.4 193.4 193.4 193,4 133.4 29.0 - - - ---

Tonal INFLOW 444.0 660.3 440.4 566.0 009.2 499,0 395. 3395 370.9 487.6 56004 604.5 627.4 549.4 483.0 434.0 434.0 434.0 434.0 43.440

OUTFLOW

Plaortxg/Etplsotiog Credits 4/ - 70.0 161.6 204.0 247.5 125.1 04.0 34.4 - ---- -------SokeOdOas 2/ - ~~~~~ ~~~~~ ~~~~~ ~~~~~23.4 52.0 464 9 3.4 44.2 26.9 14.0 - -- ---------Oprayera 2.3 ~~~~ ~~~~ ~~~~ ~~~~ ~ ~ ~ ~ ~~7. 9.7 4. 4.9 - - - - ----------

StaE iaals and Toailntg 142.1 129. 10. 213 22. 177. 110.1 104.7 - -- ---------

Iotidtngs 62.0 107.0 - - - - - - - -----------VakBoles 28.8 42.9 14.8 37.2 43. 13.7 9. 2.1 - --- - -------Iperting Costa 10.5 10.6 20.4 2 3.,9 24.2 21.6 10.0 12.02 Road Progran 208.4 2533.0 - - - - - - - ----- ------

Cootiooonoinx ~~~~~ ~~~~~~ ~~~~66.4 102.5 120.7 105.7 266.3 192.2 14 0. 8.64

Total 520.2 906.3 570.9 720.4 09 9 .2 574.3 376.0 125.8 --- - -------

Sob.idios 6/ - - - - - 14.4 41.6 49.9 107.9 224.3 141,3 159.0 163.5 169.2 163.2 163.2 162.2 163.2 165.2 145.1 165.Project Adxlo;irt-ti- 7/ - - - - - - - - 104.3 90.0 07.5 77.5 72.5 77,5 77.5 77.5 77.5 77.5 77.8 775 77.1 5

RspaY-nst I380 L.a.

C.-itl...xr Charge 15.4 12.4 10.2 7.2 3.6 2.2 - - -- ----------Int-rot 20,0 49.4 71.2 99.3 134.3 - - - ----------Petextpol sod Iotsr-t - - - - - 23752. 9 237.9 257.9 279 979 3.959 2522.9 257.9 097.9 257. 3. 9. 5. 9.

Total 33.4 61.0 81.4 106.5 137.9 260.1 257.9 257.9 297.9 237.9 257.9 257.9 257.0 257.9 017.9 297.9 257.9 257.9 297.9 257.9 -

TOTAL IIOPLOWO 554.1 078.1 652.3 934L.9 [.037.1 84.9 .0 676.3 303.6 470.3 47.2 47. 4.94.4 498. 9 50. 0. 0. 0. 0. 0. 9.4.

toenliss/(OnEloit) ~~~~~~~~~~~~~~(111.33 (217.8) (211.9) (260.97 (327.6) (350.0) (200. 9) (104.5) 509.47 15.4 03. 7 110.1 120.5 68.8 (32.65) (66.6) '66.6) (66.6) (6.6) (66.6) 191.3

(111.3) (329.1) (341.07 (209.95 (1,137.5) (1,487.3) (1,760.4) (1,902.9) (1,972.3) (1,95n.9) (1,873.20 (1,763.1) (1,634.6) (1,560.92 (1,603.4) (1,678.0) (1,736.6) (1,803.2) (1,969.9) (1,936,4), l1/

I./ At aNSe York spot prite of 05$ tt 44.4/14,. ...os FOB -1-o in Nige-ia is N 598.08. An e-por Ion ot lOT, yields te.op t1 0 58.98 pee long CO..

2/ At aN.. York spot nto of 05$ -t 44.4/lb, s-rplus is N 69.37 pot long ton (S-e Anne 2. Table 2).Ass-nd 907 ap-ortonod to Ststn Covoo-tot.

3/ Interet or 7.251 end prlnoipal ropsynd by Cr0.

4/ Cost to fare Per phioh he ropiv- t-edOt.

5/ Oukedixa oo agont linpu~ts dotiog field enroblish-eor

6/Sobstditex oogri-o tLro 1 inPoto d-riog field p-rebliabhant.

7/After projoot period.

9/AL th-e-q-et-P of 17, on oodisb--sd 80000 of 1000 Loo.-

9/ At 7kl Per 5 years on disb(r5pod IBR5 Lean

10/ N 2,333.5 rhoo..sod 01 30 qoaI 6 -othln -tnsrll-xts oIf inrer-t sod proia vr15 Y-r..

II/ (N23.4 L e .. di y 200304.

NIGERIA

SECOND COCOA PROJECT

IFMG - CASH FLOW(N'aira '0oee

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 15Q3/84 1984/85-1993/94

INFLOW

IBRD Loan 1,434.8 1,863.2 3,219.9 2,615.2 1,808.5 1,390.7 825.5 - - _

Repayment 3/

By Western State Government 1/ 156.5 251.2 441.0 585.8 671.9 1,200.1 1,195.3 1,195.3 1,195.3 1,195.3 1,195.3By Mid-West State Government 2/ 35.4 61.8 81.4 106.5 137.9 260.1 257.9 257.9 257.9 257.9 257.9

Total 191.9 313.0 522.4 692.3 809.8 1,460.2 1,453.2 1,453.2 1,453.2 1,453.2 1,453.2

TOTAL INFLOW 1,626.7 2,176.2 3,742.3 3,307.5 2 2,850.9 2,278.7 1,453.2 1,453.2 1,453.2

OUTFLOW

Onlending IBRD Loan

To Western State 1,158.8 1,457.8 2,919.7 2,227.5 1,324.8 1,095.8 637.9 - - - _To Mid-West State 276.0 405.4 300.2 387.7 483.7 294.9 187.6 - - - _

Total 1,434.8 1,836.2 3,219,9 2,615.2 1,808.5 1,390.7 825.5 - -

FMC Grant

To Western State 518.9 816.8 1,473,2 1,133.3 635.8 527.9 304.1 - - - _To Mid-West State 168.8 249.7 123.3 148.2 171.8 117.4 76.2 114.6 - - _

Total 687.7 1,066.5 1,596.5 1,261.5 807.6 645.3 380.3 114.6 - - -

Repayment IBRD Loan 3/ 191,9 313.0 522.4 692.3 809.8 1,460.2 1,453.2 1,453.2 1,453.2 1,453.2 1,453.2

Total Outflow 2,314.4 3,242,7 5,338.8 4,569.0 3,425.9 3,496.2 2,659,0 1,567.8 1,453.2 1,453.2 1,453.2

Surolus/Deficit (687.7) (1,066.5) (1,596.5) (1,261.5) (807.6) (645.3) (380.3) (114.6) - -

1/ See Annex 10, Table 1

2/ See Annex 10, Table 2

3/ Commitment charge, interest and capital (after 5 years grace).

REPLANTING AREAS

f7 \ L113NEW PLANTING AREAS

AREAS OF MASS INFECTION-. g.i~: \(with swollen shoot dosease)

( \ O~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 10 20 30 40 50

3 S > r~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~~n- boule h.,, on th, -p do not

/J

1' ( m < > ~~~~~~~~~~~~~~ ~~~~~~~~~~~~~Ado 'SFkiti ~

/ -J '- '\% r _ _ < ) S t S W ) : e - -

! ,-- -,, i byOndo th(

* +~~~___ 0[°jebu-Ode OIPLMRJET >J.. NIF~

NIGE~~~~~ R IA N IGERIA

0 ~ ~ ~ ~ ~ ~ ~ 0

W EST ERN S TATE_: t WESTERN r._

. ~S E CON D CO C OA P ROsJ E C T \ .STATE MIS-

PROJECT AREAS <l CA M E

-~~~~~

5'00 tj0 / 6'00' 30

NIGERIA 4-MID -WESTERN STATE LOK

SECOND COCOA PROJECT '_ KEKbba

Z 31 CocoE G,r.ong A-eo

Proposed Project Feeder Roads \

leearrel Reg,on el Umrts s

t Westerr -nd MWd-WVeste-o Stete OdI Pqle Prelects es _ -.

- Trunk Roeds / -t RLd Okene-7°30 Peved Roeds f o:'o

FE Stese Cp,tels . 1

Lij Provnceal 3Heodq.erters I A- AK K ' EvDO7* Droisronel Heedgoerters _ 3- 8 >1?) )o Tows end Vdileges N

- - - PrSorwoel B- onderes C(- I.

. -Dovisionot BoonderOes | ) ° p E T S A KOeC---oT Rivers I Q Agnebede 7

0 10 20 30 4 S !> O~~~~~~~~~~~~~ ~~~~~~ W A N 1 _gd.k

To jboOd -) - o

-7- 00' MILES v U ( 47bbp .71:00l°02,0 4,0 6,0 \*fe.. I .(p

- 0 o -- no.30

t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ k 1

ONITY _Ht.A s -- Tscrs7-v-ds > 1( '- ~~~~~~~~~~~~~~~~~~~~~~~. /'\gsake......2--.......... L

5 00 , * U , ' ¢ - i U R H 1 ° B O V Usere, /.¢<~ - Ocsesh,- b h T

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