Domument of MM o@ECIIAL USIZ ONLY_ Mepr No. P-2159B REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE SOCIALIST REPUBLIC OF THE UNION OF BURMA FOR A SEED DEVELOPMENT PROJECT October 19, 1977 datmoema bi a irogefre miFlwk am may be met !r temsu oeDly.§ Ame jrf@nmmw ofi oinkid ammDX. lb com SX me i~ 2 isdB RI wi E firll1f1 l@ . CURRENCY EQUIVALENTS US$1 Kyat (K) 7.33 K 1 US$0.14 WEIGHTS AND MEASURES 1 mile (mi) 1.609 kilometers (km) 1 acre (ac) 0.405 hectares (ha) 1 long ton (lg ton) 1,016 kilograms Burmese Units English/US Units Metric Units 1 viss 3.6 lb 1.633 kg I basket rice 75 lb 34 kg 1 basket paddy 46 lb 20.9 kg 1 basket groundnut - shelled 56 lb 25.5 kg - in-shell 25 lb 11.4 kg BURMESE FISCAL YEAR April 1 - March 31 ABBREVIATIONS AC - Agricultural Corporation ARD - Applied Research Division (AC) ARI - Agricultural Research Institute (AC) CF - Central Farm ED - Extension Division (AC) GDP - Gross Domestic Product HYV - High Yielding Varieties NRCC - National Research Coordination Committee NSC - National Seed Committee PD - Procurement Division (AC) RCC - Research Coordination Committee SF - Seed Farm TIC - Textile Industries Corporation UNDP - United Nations Development Program F0t1 OFFICIAL USE ONLY GLOSSARY The terms used to describe the seed produced at various stages of the multiplication process vary considerably between countries and authori- ties. The following definitions apply only to this project. Breeder Seed - Seed which is produced under the direct control of the plant breeding institution (Agricultural Research Institute) and which forms the source for production of all later generations. Foundation Seed - The progeny of breeder seed which has been handled to maintain specific genetic purity and identity. Registered Seed - The progeny of foundation seed handled to maintain satisfactory genetic purity and identity. In this project the bulk of the rice seed produced on the Central Farms has been referred to as registered. Certified Seed - The progeny of foundation seed handled to maintain satisfactory genetic purity and identity and which is acceptable to the certifying agency. In this project the term has been used to describe cotton produced on the Central Farms for distribution to growers in selected townships. Commercial Seed - The progeny of certified seed handled to maintain satisfactory genetic purity and identity. Used to describe the progeny of certified cotton in this project. Quality Seed - The progeny of registered seed handled to maintain satisfactory genetic purity and identity. The term is used to describe the rice seed distributed to farmers in this project. This document has a restricted distribution and may be used by recipients only in the pi-rformance of their official duties. Its contents may not otherwise be disclosed without World IBaik zzithorization. SEED DEVELOPMENT PROJECT Credit and Project Summary Borrower: The Socialist Republic of the Union of Burma. Amount: US$5.5 million, equivalent. Terms: Standard Cofinancier: UNDP - US$975,000 equivalent, on grant basis, to finance cost of technical assistance component. Project Description: The project is designed to lay the groundwork for future development of the seed industry in Burma. The Project includes: streqgthening of the Govern- Tent's applied research capability through develop- ment of six research farms; modest rice and cotton seed multiplication programs; establishment of seed processing and storage facilities; initiation of a seed quality control program; a pilot groundnut storage program; overseas and in-service training and technical assistance. Realization of project benefits will depend greatly on the Government's setting seed prices at a level which will ensure responsible use. There are no other serious risks. Estimated Cost: US$ Thousands Equivalent Local Foreign Total Major Categories Applied Research 760 520 1,280 Farm Development 380 700 1,080 Seed Production Investments 800 725 1,525 Seed Processing Investments 365 210 575 Production & Processing Operating Costs -- 485 485 Commercial Cotton Seed Stores 235 125 360 Quality Control 10 30 40 Groundnut - Investments and Operating Costs 358 182 540 Groundnut - Working Capital 890 -- 890 ARD Headquarters 67 53 120 Training - 445 445 Technical Assistance 75 735 810 Total Base Costs 3,940 4,210 8,150 Contingencies: Physical Contingencies (6.1%) 250 250 500 Expected Price Increases (28.3%) 1,450 1 2°° 2,450 Total Project Costs 5,640 52460 11,100 Total Project Costs (4,840) (5,460) (10,300) (net of taxes) Financing Plan: US$ Thousands Equivalent Local Forejin Total IDA 1,000 4,500 5,500 UNDP 975 975 Government of Burma 4,625 - 4,625 Estimated US$ Millions Equivalent Disbursements: IDA FY 1979 1980 1981 1982 Annual 0.3 3.0 1.7 0.5 Cumulative 0.3 3.3 5.0 5.5 Rate of Return: Greater than 50%. Staff Appraisal Report: No. 1653--BA dated October 10, 1977 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE SOCIALIST REPUBLIC OF THE UNION OF BURMA FOR A SEED DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed de- velopment credit to the Union of Burma for the equivalent of US$5.5 million on standard IDA terms to help finance a seed development project. A cofinancing arrangement with UNDP to finance the technical assistance component of the pro- posed project (about US$975,000 equivalent) is about to be concluded (para 80). PART I - THE ECONOMY 1/ 2. World War II and the road leading up to independence in 1948 devastated the Burmese economy and divided the country politically. As a result, the 1950s were a period of turbulence. In 1962, parliamentary democracy was declared a failure, and the assembly and high court were dismissed. In their place, a Revolutionary Council was formed with General Ne Win as its Chairman, and the Burmese Socialist Program Party (BSPP) was established as the only authorized political party. After eleven years of government by the Revolutionary Council, a Constitution was adopted in a nation-wide referendum in December 1973 under which the Pyithu Hluttaw (People's Assembly) was created with supreme executive, legislative, and judicial authority. 3. The guiding philosophy of the present Government, as stated in the April 1962 document on the Burmese Way to Socialism, is based on a combination of traditional Burmese values and socialist doctrine. Nationalistic in character, its economic objectives are set out in the Twenty Year Plan, which was adopted by the BSPP in 1972 and is being implemented through a succession of five Four Year Plans. The intent is to fashion a new order for Burma by reorienting the economy to provide adequate food, clothing and shelter for the masses and to improve the quality of social services. 4. By and large, the Government has made notable progress in the attainment of its social and political objectives. Insurgency is still a problem, particularly in the hills and border areas, but there is probably greater territorial control by the Government now than at any time since Independence. Greater equality in the distribution of economic opportunity 1/ The latest economic report entitled "Development in Burma: Issues and Prospects" (1024-BA) was distributed to the Executive Directors on July 27, 1976. The 1977 Country Economic Memorandum (CEM) is being finalized and will be distributed to the Executive Directors in late October 1977. - 2 - has resulted from land redistribution which led to a more equal size of holdings among farm families, and the nationalization of a number of major economic activities in trade and industry. At the same time, the access of the population to social services has been expanded particularly in respect of education and health facilities. 5. However, the Government's ability to maintain the social well-being of the population has been eroded by slow economic growth. Per capita income at present is about $130 and permits little above basic needs for the greater part of the population. Unemployment is over 10% of the labor force. A large part of the labor force operates outside the regular economic system and underemployment is pervasive. 6. Burma's economic performance over the last decade and a half reflected to a significant extent the effects of the particular policies it adopted to prevent territorial disintegration of the Union and to establish economic independence. Capitalism was considered exploitive, and alien. Thus State control was established over the means of production and distri- bution in large parts of the economy and sweeping measures were taken to reduce the role of the private sector which was regarded as being largely synonymous with foreign investments. As public policies and public sector performance did not compensate for the drastic declines in private investment and production which resulted, economic growth stagnated. Throughout the period, investment levels were low. Gross capital formation averaged 10-11% of GNP. Even this limited investment was not directed towards the sectors having the greatest comparative advantage. With investment in nationalized industry providing the main thrust in the Government's efforts to reduce the country's reliance on external transactions, agriculture, forestry and mining did not receive due attention. The pricing policies of the Government exac- erbated the problem. They were aimed at keeping the cost of living low for the masses, but low producer prices discouraged the production of paddy and other crops and led to dwindling export earnings. Furthermore, State industrial enterprises, themselves, were not allowed full recovery of their costs, which led to a decline in their financial surpluses and ultimately in domestic savings. An increasing share of production was either traded in the unofficial market or was smuggled abroad at a multiple of official prices. In both cases, taxable income was siphoned off to the private sector with little opportunity for private enterprises to invest these resources produc- tively in the domestic economy. The distortions arising from this system were compounded by low official interest rates and an over-valued exchange rate. 7. As a result, value added by the directly productive sectors of the economy lagged behind population growth, while export volumes declined for most of the period. The latter in turn reduced the capacity of the economy to import essential raw materials, spares, and capital equipment which led to increasing under-utilization of capacity in most sectors of the economy and severely limited its ability to invest. 8. In recognition of the practical problems faced in the implementa- tion of its overall economic policies in the 1960s, the Government began - 3 - pragmatically in the early 1970s to evolve a modified approach to the attain- ment of its basic objectives. More rational pricing policies have been in- troduced. Procurement prices of a variety of agriculture products have been raised, to improve the economic position of the farmer, while others have been decontrolled. The procurement price for paddy was raised by 150% between 1972 and 1975. It has, however, remained unchanged since then despite rapid inflation. In industry, the Government has increased the ex-factory prices of State Economic Enterprises (SEEs) though the adjustments remain in- complete. New costing schedules were established in 1976 which, in principle, allow for the first time profit margins at the producing level. The official exchange rate of the Kyat was reduced by 25% in January 1975 and a further 9% in 1977, thus partially compensating for the over-valuation of the exchange rate. 9. In a policy announcement in 1973, the Government reaffirmed its aim "to transform the economy of Burma from an agricultural to an agriculture- based industrial country, and thence gradually to an industrial nation." In the same statement, however, the Government accorded priority at the present stage of the country's development to improvements in agriculture, livestock, fisheries, forestry and mining and the establishment of consumer goods indus- tries based on the raw material resources of the country. More recently, the need to increase production for exports has received increasing attention. In response, a significant shift in public investment in favor of the primary producing sectors has been effected. 10. Managerial and organizational reforms of the SEEs have also been initiated. In 1975, a comprehensive set of guidelines was introduced to enable SEEs to operate on a commercial basis and to liberate distribution of their production. The guidelines encourage autonomy in the management of SEEs; set standards by which their operational performance will be measured; introduce financial and costing practices to encourage efficiency, and provide for a bonus scheme under which management and the work force may be rewarded for successful performance. 11. A major tax reform was enacted in April 1976. It included the introduction of a Commodities and Services Tax and a Profits Tax. At the same time, revisions in the selling prices of SEEs in 1976/77, accompanied by improved economic performance, raised the current revenues of boards and corporations substantially. It resulted in increasing Government revenue from 9% of GNP in 1975/76 to 13% in 1976/77, in reversing the decline in domestic savings, and in halting the rapid expansion in money supply that fueled a high rate of inflation. It represented a major turnaround in public finance and was perhaps the most important achievement of the Government in recent years. 12. These actions have undoubtedly improved the conditions for accelerated economic growth and thereby contributed in a positive manner to economic performance under the Second Four Year Plan which is currently being implemented. Yet, much of the output expansion during the first three years of the Plan, reflected favorable weather conditions. In 1976/77 GDP is estimated to have risen by 6% in real terms compared to 4.8% in 1975/76 and - 4 - 2.6% in 1974/75. After a decline in 1974/75, agricultural output growth recovered mainly because of the aforementioned favorable weather conditions. The traditionally important forestry and mining sectors also recorded some improvement. A welcome development was the expansion of onshore crude oil production by 21% in 1976/77. With the increased availability of raw material from the primary sectors and larger imports of intermediate materials and capital equipment, the growth of the processing and manufacturing sector increased from 4.2% in 1974/75 to 10.6% in 1976/77. 13. After stagnating in 1974/75, gross fixed capital formation is esti- mated to have increased in real terms by 16.2% in 1975/76 and 12.6% in 1976/77, although the severe problems of implementation experienced during the period suggest that these estimates will almost certainly be scaled down. Along with the increase in investment, domestic savings expanded. The improved budgetary position of the Government lessened its dependence on the banking system which in turn contributed to a reduction in the rate of inflation. During 1976 the Consumer Price Index in Rangoon increased by 22% as compared with 30% in 1975. The consumer price index is projected to increase by about 10% in 1977/78. 14. The value of exports (in US dollars) grew by 9.8% per annum during 1974/75 and 1976/77 in nominal terms, principally the result of export price increases for most export products and an expanded volume of rice exports. This increase in exchange earnings, plus some use of external financing, enabled imports to rise although Burma's capacity to import continued to be tight in relation to its needs. 15. Despite these favorable developments, much remains to be done to put the economy firmly on the path to sustained, more rapid growth. Fur- ther progress needs to be made in rationalizing the role of agricultural and industrial prices in the allocation of resources. At present, investment and production decisions are still chiefly guided by plan targets rather than in response to changes in production and market conditions. In agriculture, a review of product and input prices, in particular for paddy and fertilizer, is warranted. In this connection, the Government has recently established a Rice Commission to examine such issues. In industry, further adjustments of SEE product prices are required to reflect resource scarcities more accurately, stimulate productivity growth, and generate surpluses for reinvestment in those industries with a potential for viability. In external trade, the impact of the present level of the exchange rate needs to be kept under continuing review given the importance of greater export growth for the development of the domestic economy. 16. Together with the use of prices to allocate resources to the most produc ive activities, a sharpening of sectoral development strategy aimed at rThu. tating productive capacity and ensuring more efficient use of the national resource endowment is also required. 17. The recent r nk agriculture sector survey as well as previous economic reports have drawn attention to the wealth of Burma's agricultural resources, its importance for the country's economic development, and the - 5 - difficulties in sustaining more rapid growth. Apart from the controlled price system which militates against fuller realization of potential and timely adjustments of production to changes in export market conditions, the problems confronting agriculture include insufficient supplies of essential farm inputs, inadequate transportation facilities and shortages of basic farm services, in particular agricultural credit and extension services. 18. If Burma's agricultural performance is to be improved, intensive and coordinated action will be necessary to deal with these difficulties. Along with such action, priority needs to be given to improvements of pro- ductivity in existing cultivated areas, with emphasis on quick-yielding projects. To effectively implement this strategy, it is further necessary that agricultural investment include integrated agricultural development projects because many of the services and inputs required to increase pro- duction are interrelated. 19. In forestry, Burma is estimated to have 75% of the world's remain- ing teak reserves in addition to extensive reserves of marketable hardwood. However, the contributions of this sector to national development in the recent past have been limited. The rehabilitation of existing and the pur- chase of new equipment; improved maintenance; construction of access and feeder roads to forest areas; and better management and coordination between Government agencies are priority requirements if the potential of the sector for increased production and export earnings is to be more fully tapped. 20. Burma's reserves of mineral products are similarly impressive. Al- though only a few areas of the country have been systematically prospected, it is clear that Burma has a highly varied and favorable endowment of minerals -- tin and tungsten, lead, zinc, silver and copper. Their effective utiliza- tion will, however, require that urgent attention be given to the rehabilita- tion, modernization and maintenance of existing mining operations, institution- building and technical training. The benefits foregone by past neglect and pre-war inadequate management are enormous. A new opportunity is that of petroleum where current production already permits self-sufficiency. 21. The primary sectors, in turn, provide Burma with a base for indus- trial development, provided managerial efficiency is improved and research and development are promoted. In contrast to this potential, investments in the recent past have concentrated on industries which have not always been in line with the country's comparative advantages. Notable cases in this connection are a number of heavy industries where capacity has been built up over the years to levels that do not permit efficient production. A review of indus- trial strategy is needed, given the character of the country's resource endow- ments and the fiscal and balance of payments implications of capital-intensive industrial development. 22. Together with the development of the primary and secondary sectors, enlarged attention is required for the rehabilitation of the country's physical infrastructure, in particular transportation. The transport sector is in a serious state of disrepair for lack of spares, new equipment and maintenance. Only some 60% of the stock of diesel locomotives, 50% of the fleet of trucks in the public sector, and 75% of inland watercraft are in running condition. - 6 - 23. The transport sector accounted for about 15% of all development expenditures during 1974/75-1976/77. An expanded share is justified during the next five years. Within such an allocation, the highest priority needs to be given to the rehabilitation and maintenance of existing capacity. At the same time, rationalization of transport pricing policy is essential. To have any substantial impact, these measures must, in addition, be accompanied by improvements in operational efficiency and management in the public sector. 24. The need for institution-building and management development geared to expanding absorptive capacity by improving the design, administration and implementation of development programs cannot be overemphasized (para. 43). The Burmese planning and administrative system, as it now exists, is complex and rigid in its manner of operation and excessively focused on the formula- tion rather than the implementation of targets. Streamlining of the entire planning and administrative apparatus, decentralization of decision-making and strengthening of the capability of Government entities to prepare and implement projects are urgently needed. 25. The Government concurs broadly with the above diagnoses of the prob- lems it faces and the issues to which attention must urgently be addressed. If pursued vigorously, and duly supplemented with additional measures, the Government's new policy orientation should lead to a significant acceleration of economic growth. In this connection, the newly enacted law on the "Rights of the Private Enterprise" is to be welcomed. By legitimizing private sector activity and establishing a clearer set of guidelines for the develop- ment of the public, cooperative and private sectors, some re-integration of the economy will take place which can be expected to have a beneficial impact upon economic performance. 26. The targets of the authorities for the next five year period entail GDP growth in real terms of 6.6% in 1977/78 and a minimum of 5.5% per annum under the Third Four Year Plan (1978/79-1981/82). Agriculture is targeted to expand by 5.5% per annum, and the processing and manufacturing sector by 8.5%. Total investment is planned to expand by 25% per annum in real terms. With public investment growing by 20%, these targets call for a marginal savings rate and marginal tax rate of about 27% and an increase in the external resource gap from 1.7% of GNP in 1976/77 to 5.8% in 1981/82. 27. A more modest view of the intermediate-term prospects of the economy, however, is forecast in the 1977 Burma CEM, because, unavoidably, it will take some time before recent reforms and intended new initiatives are fully imple- mented and begin to have a significant impact. Annual increases in GDP of 5% in real terms (with agriculture and manufacturing industry growing by 3% and 8.5% per annum, respectively) together with annual increases in investment of about 13%, constitute a more reasonable set of expectations. The targets, although modest, are a substantial improvement of performance over the past decade. The financing of such an investment effort will require that domestic savings should grow from 9.1% of GNP in 1976/77 to 11.1% in 1981/82, plus continued substantial foreign transfers of resources into Burma. While the tasks involved will put heavy demands on the fiscal, administrative and man- agement capacities of the Government, it should be feasible provided adequate action is taken. - 7 - 28. External assistance is needed for projects which contribute towards: -- intensified use of existing cultivated areas and the rec- lamation of abandoned land in agriculture (research and extension services, supply of essential inputs especially HYV, fertilizer and light agricultural machinery, improve- ment of irrigation facilities, in particular tubewell development, and integrated agricultural development); -- better utilization of forestry resources (through the improvement of extraction, and transport facilities); -- development of known mineral deposits; and -- development of agro- and mineral-based industries possessing clear comparative advantage (including food, fish and wood products and fertilizer production). Alongside such directly productive projects, external assistance is also urgently required for infrastructure development, particularly to rehabil- itate existing capacity in transportation. While project loans and technical assistance will be justified for most proj- ects in the above fields, commodity financing also will be required from external resources to meet Burma's needs for fertilizer, materials, spares, and equipment in support of its rehabilitation efforts. 29. Given Burma's low income level and the scarcity of foreign ex- change, such external assistance should be on concessionary terms and should, in addition, finance part of local cost requirements which cannot, at present, be covered adequately by domestic savings. Local cost financing is parti- cularly needed for the agricultural sector where most investments have a low foreign exchange component. 30. Burma's debt service ratio has gradually increased from 10% in the sixties to about 20% in 1976/77. By the end of March 1977, Burma's external public debt, disbursed and outstanding, amounted to US$321 million. With increased foreign assistance, external public debt will rise further, but Burma should have no major problem in servicing this debt, in view of its moderately favorable export potential. 31. Burma is potentially one of the richest countries in South Asia. Apart from an impressive natural resource base, it is endowed with a healthy and literate population. The crucial question is the quality with which these resources will be managed and developed. While there are some signs that Burma's performance in this regard is now being improved, these need to be strengthened and broadened. Provided Burma sustains its efforts at utili- zing this endowment efficiently, and combines them with a positive attitude towards population planning, it should make the task of economic development more manageable, and provide increasingly productive employment for its people in the longer run. -8- 32. The Bank Group, in close cooperation with the IMF, will continue discussions with the Government regarding further improvements in economic policy which would help Burma realize its promising potential for economic development. At the Government's request, the Bank has organized an Aid Group for Burma. The first meeting of the Group was held on November 30, 1976, in Tokyo. The second meeting is scheduled for December 14, 1977, in Paris. PART II - BANK GROUP OPERATIONS 33. Burma became a member of the Bank in 1952, IFC in 1956, and IDA in 1962. Between 1956 and 1961, the Bank made three loans totalling US$33.1 million, all for transportation projects. One loan for the Port of Rangoon helped finance the reconstruction of cargo berths and storage facilities, and the purchase of cargo handling and port equipment. Two loans helped finance the postwar reconstruction and dieselization of the railways. All three projects were satisfactorily completed and the loans fully disbursed by FY68. 34. No lending was requested between 1962 and 1973. At the request of the Government, IDA lending was resumed in 1973. Since 1973 IDA has made nine credits totalling US$158.5 million. About 50% of this assistance, $78.5 million, was in the agricultural sector, consisting of four projects: irrigation, forestry, livestock, and paddy development. Three credits, totalling $43 million (27%), were made to rehabilitate the transport sector (inland water transport, railways, and a second ports project). The telecom- munication sector received its first credit, $21 million (13%), and a first credit was also made to the mining sector for a $16 million tin/tungsten expansion project (10% of the total). Annex II contains a summary statement of Bank loans and IDA credits as of September 30, 1977, and also notes on the execution of ongoing projects. IFC has made no investments in Burma, nor are any planned. 35. In the past, lending was partly constrained by incomplete knowledge of some sectors and the lack of adequately prepared projects. Through our ongoing projects and sector work, our knowledge of many sectors has improved. The $2.5 million UNDP Technical Assistance project (Umbrella Project), for which the Bank is the Executing Agency, has developed a project pipeline suit- able for external financing in priority sectors such as agriculture, transport, power and industry (paras 44 and 45). A sum of $0.5 million has recently been added to the original amount and a second phase of this umbrella project is now under discussion with the Government and UNDP. Furthermore, the Associa- tion plans to continue its technical assistance on a project-by-project basis to help improve Burmese project preparation capabilities, as well as admin- istrat:ve and managerial skills through in-service and overseas training. 36. The primary objective of our economic and sector work program is to continue to assist Burma (i) to design strategies and policies to develop its sizeable natural ..d human resource endowment within the basic framework of the Burmese Way to Socialism; and (ii) to identify, prepare and implement - 9 - programs and projects to this end. With the resumption of Government/Bank relations in 1972, our Country Economic Memoranda (CEM) have focused on the socio-economic policy changes required to remove existing constraints on the development process. They have thus focused on the efforts required to modify inappropriate pricing policies, intensify the mobilization of resources, and strengthen sectoral investment strategy. The 1977 CEM, in addition, focuses on some of the measures needed to expand the absorptive capacity of the eco- nomy for new investment, particularly in the public sector. Subject to Gov- ernment agreement, we intend to send a mission in FY79 to review with the authorities the efforts being made for the development of administrative and managerial capacity in the public sector. This will be in addition to tech- nical assistance provided in the context of our regular project lending or in the Bank's role as executing agency in UNDP-financed efforts like the current UNDP Umbrella Project (para. 35). 37. Our economic and sector work program has emphasized and will conti- nue to stress the development of Burma's primary producing activities. In agriculture, a preliminary review of the sector was undertaken in 1974. This was been followed up by an agriculture sector survey which has now been dis- cussed with the Government and will be issued in October 1977. This survey paid particular attention to the potential for increased farm productivity through dissemination of improved technology and inputs; the framework of farmers' incentives needed to facilitate the adoption of new cropping systems and farm practices; and the institutional constraints which needed to be re- laxed to accelerate agricultural development. A follow-up agriculture sector mission is planned for FY80. 38. In mining, the execution of a sector survey is being considered by the Government. In addition, it is proposed to mount an oil and gas sector mission in late FY78. Analysis of information on the industrial sector was initiated by a mission in FY76. A follow-up sector study is proposed for FY80 -- the principal aims being to review strategy, priorities and the role of small scale industry. 39. A Transport Sector Memorandum has been completed and transmitted to the Government. The memorandum has highlighted some of the key issues within the transport sector including the role of private transporters, the performance of public corporations, the allocation of traffic and planning processes within the sector. Based on our ongoing operations, our knowledge of most modes is reasonably complete. Relatively little, however, is known about coastal shipping and pipelines. The transport memorandum will be updated as more information on these aspects becomes available. In power, a sector study is under way, financed under the UNDP Umbrella Project, and will be completed in July 1978. A telecommunications memorandum is planned for FY78. 40. In line with the importance attached by the Government, itself, to the development of the country's human resources, we intend in FY80 to review with it the policies being taken and proposed to this end. This study is planned to update the human resources survey undertaken in 1976 in connection - 10 - with the CEM for that year. The improvement of water supply and sewerage facilities would make a useful contribution to improving the quality of life of the poor in the country. Work has been initiated to update our knowledge of this sector. A water supply and sewerage sector memorandum is under prep- aration and will be issued shortly. 41. The sectoral studies will continue to be supplemented by special economic studies on such issues as pricing policies, public sector investment strategies, the planning process, and foreign trade issues in conjunction with our CEMs. Together, they should make possible the preparation of a Basic Report in FY81. 42. The Bank Group strategy is aimed at easing the most immediate con- straints to growth and particularly at increasing and diversifying production for export in order to alleviate the shortage of foreign exchange. Within this overall strategy, primary emphasis is being placed on the development of agriculture, forestry, and mining. Within this framework and where possible, priority is being given to quick-yielding projects. At the same time, finan- cing of infrastructure improvements will continue in such areas as transporta- tion and telecommunications, mainly to rehabilitate existing facilities. Many of these are at present inoperable and have increasingly impeded economic activity in the directly productive sectors of the economy. 43. The Association intends to assist the Government with the imple- mentation of these objectives within the framework of the Burmese system of socialism. However, the extent to which the Association would be able to provide assistance will depend largely on the pace by which the Government continues to improve overall macro-economic performance along the lines noted in paragraphs 15 to 24. In particular, future lending may be con- strained by the low absorptive capacity of implementing agencies, especially in the agriculture sector. Thus, the Government's action to improve its absorptive capacity, in particular to make its administrative machinery more conducive to development, will essentially determine the scope and volume of external assistance. 44. In line with the urgent need'of the country to increase foreign exchange earnings, most of the projects under active preparation are designed to have an impact on increasing agricultural surpluses for export. To boost overall agricultural production, a urea fertilizer project, based on Burma's reserves of natural gas as feedstock, is being prepared under the UNDP Umbrella Project. Due to the large size of the proposed fertilizer project, cofinancing arrangements with F.R. Germany are in progress. A second paddy- land development project is being appraised: it aims at increasing produc- tion of rice and other crops in Lower Burma through improving productivity of existing cultivated land and reclaiming abandoned paddyland. This project will replicate the first paddyland development project (FY76, $30 million) in other areas of Lower Burma (about 250,000 acres of existing cultivated land and reclaim about 60,000 acres of abandoned paddyland). A longer gestation irrigation project, Nyaunggyat Dam, is also being prepared: it is designed to increase food production in areas of Upper Burma, as well as to meet the raw cotton requirements of the domestic textile industry. Due to the large - 11 - size of the Naunggyat Dam project, the Association has explored co-financing with Canada, F.R. Germany and the U.K., who indicated their willingness to participate with IDA in financing this project. Japan has also been approached in this regard. Preparation has begun on a Lower Burma paddy storage and handling project, designed to reduce crop losses after harvest. Increased exports also are expected to result from a rubber rehabilitation project pre- pared under the UNDP Umbrella Project and planned for appraisal in November 1977. A second forestry project is also being prepared. 45. Programs to expand production and exports will need to be supported by complementary improvements in economic infrastructure. To assist with the latter, two projects are proposed. A highway rehabilitation and road trans- port project, prepared under the UNDP Umbrella project, is being appraised. In addition to the rehabilitation of the road network, the proposed project includes provision for spare parts, tires, batteries and new vehicles for distribution to the trucking industry (public and private). In view of the large size of the proposed project, phasing may be necessary. Cofinancing will also be required particularly for the road transport component. A second telecommunications project, prepared by the Government, will be appraised in early 1978. The latter project will complement the first telecommunications project (FY75, $21 million) by further rehabilitating the telecommunications network which is presently inadequate and is a major bottleneck to growth of productive sectors. The project will help finance improved international services through a satellite ground station, improvements and expansion of telex and telegraph facilities and extension of existing telecommunication facilities to meet demand in Rangoon, Mandalay and other smaller towns and rural areas. 46. The Bank Group presently accounts for about 15% of Burma's total external debt outstanding and about 7% of debt service. In five years, the Bank Group's share in the total external debt is projected to rise to about 20% and its share in the debt service to fall to about 2-3%. PART III - THE AGRICULTURAL SECTOR 47. Burma's agricultural crop sector accounts for 27% of GDP, employs 66% of the work force and. accounts for 58% of exports. About 60% of the industrial output is derived from cotton, jute, and sugarcane. During the period 1964/65 to 1975/76, performance of the sector has been poor with an average annual GDP growth rate of only 2.3% compared to a population growth rate of 2.2%. It was the reflection of a set of policies that gave the farmer no incentive to increase output and provided the sector with little direct support through services, inputs, and investment. As noted in the previous section, the Government's view of the role of agriculture in the development of the country has changed and creation of a healthy, growing agricultural sector is now seen as being of pivotal importance - as a means of increasing the income of the majority of Burmese who are farmers, as a source of foreign exchange through exports, and as a supplier of raw materials - 12 - to industry. With this change in attitude have come changes in policies - prices are used, if not always adequately, as a means of stimulating growth in output; provision is being made for expansion of services and the supply of inputs; the share of agriculture in public investment has risen signi- ficantly and is intended to be about 33% in the forthcoming Four Year Plan. It is in this context that the proposed project, which addresses seed pro- duction and distribution, should be seen. Agricultural Research 48. Basic research is the responsibility of the Agricultural Research Institute (ARI), a division of the Agricultural Corporation (AC) under the Ministry of Agriculture and Forests. Assisted by a UNDP project 1/ started in 1974, considerable progress has been made in strengthening ARI, though the rate of development of its farm at the main Yezin station should be accelerated. With expected staff increases and probable further support from UNDP and the International Rice Research Institute, it seems likely that basic research will not, in the short-run at least, be a primary constraint to agricultural development. It is likely that within three to four years ARI will have developed high-yielding rice varieties suitable for medium-deep water areas and jassid resistant varieties of medium staple cotton. 49. The Applied Research Division (ARD), also a division of the AC, is responsible for translation of ARI's basic research into regionally adapted technologies. This applied research is carried out on 16 Central Farms located throughout Burma. In addition, ARD is responsible for seed production which is undertaken on the Central Farms plus 54 widely dispersed Seed Farms. In contrast to ARI, ARD has not been developed and suffers from a limited budget, serious shortage of staff, inadequate research facilities, and lack of proper development of its farms. Early and significant action should be taken to improve ARD's applied research and seed production capability in order that proper use is made of the research output of Yezin. Seed Production and Distribution 50. The majority of seed used in Burma, as in other developing countries, is obtained by farmer retention and farmer-to-farmer trade. This traditional practice has limitations which can be overcome through an organized seed sup- ply system which would introduce and spread new varieties, maintain varietal purity, and provide reliable supplies of seed where on-farm storage conditions are adverse. 51. The AC does supply considerable quantities of seed, mainly paddy and cotton. About 90% of the rice seed supplied by the AC is obtained from farmers and the rest from ARD. Although some of the farmer-suppliers are 1/ See UNDP report "Strengthening the Agricultural Research Institute at Yezin" (BUR/72/033/A/01/12). - 13 - "seed growers," good farmers known to have planted ARD grown rice seed, the lack of quality control makes their product little better than the grain which is purchased from regular farmers to meet the balance of AC's needs. The rice seed produced by ARD itself is small in quantity and poor in quality. The Central and Seed Farms suffer severely from poor farm development, inadequate staff and little or no equipment other than traditional implements. 52. Most of the cotton seed supplied is simply gin-run seed. Cross pollination occurs in the field and physical mixture occurs during processing, resulting in varietal mixing. Also, from harvest to the next planting season, the seed suffers physical deterioration due to lack of proper seed storage facilities. The small amounts of seed from planned production programs are little better in quality, since they, too, suffer from lack of quality control and handling facilities. Seed processing is not practiced to improve physical quality. 53. There are no systematic quality control procedures for field inspec- tion or laboratory analysis. Furthermore, multiplication is not based on the recognized hierarchy of generations, i.e., breeder, foundation, registered and certified. Maintenance of trueness to type is, therefore, not possible. Important Crops 54. Rice. Burma's main crop is rice which accounts for 55% of the total sown area and is the main export commodity. Production has grown slowly, in- creasing by only about 2.0% per annum during the last decade, principally how- ever acreage did not expand and yield increased little. With more adequate price incentives to induce farmers to use improved technology, yields of tradi- tional varieties could be increased from the present average of about 1,500 lbs/acre to 1,700 - 1,800 lbs/acre. However, any significant yield break- through will depend on the widespread production of high-yielding varieties (HYV). Although the first HYV were introduced in Burma in the mid-sixties, they are as yet only grown on about 1 million acres (8% of the rice area). Two characteristics of these HYV contribute to this low utilization: (a) they can only be grown under good water management conditions; and (b) their eating quality is poorer than traditional varieties. ARI is conducting a program, which is well advanced, focusing on these problems and is expected to release more widely adapted and acceptable HYV in three or four years. If ARD's regional research and seed multiplication capacities are strengthened, to enable transfer of the new varieties to the farmers, HYV cultivation could be expanded to perhaps as many as five million acres. 55. Cotton. Cotton is grown on about 530,000 acres in Burma; short staple, predominantly G. aboreum, varieties account for about 70% of the area and the longer stapled 1/ G. hirsutum account for the balance. There is a serious shortfall in supply of cotton to the Government textile mills, and about 40 million kyat (US$5.5 million) worth of cotton yarn and thread have 1/ The cottons grown are internationally known as medium staple but are referred to as long staple in Burma. - 14 - to be imported annually. Cotton yields in Burma are among the lowest in the world. Poor productivity of cotton is due to a number of factors, among which are: (a) use of inappropriate imported varieties; (b) poor seed quality in the absence of seed handling facilities; (c) poor cultural practices; and (d) inadequate pest control. ARI has a variety improvement program under way and is expected to release varieties more suitable to Burmese conditions in the near future. A seed multiplication system will be needed to enable these varieties to be dispersed to farmers and to provide for annual renewal of quality seed. 56. Groundnut. Groundnut is grown on about 1.7 million acres and is used mainly for producing cooking oil, an important component of the Burmese diet. A shortage of groundnut oil has led to rapid price increases (estimated at about 50% from 1974 to 1975 and 100% from 1975 to 1976). Supply has res- ponded sluggishly to the large price increases, as the means for increasing productivity are lacking. Research on groundnut has been negligible and, in Central Burma, area expansion is limited by availability of suitable land. In Lower Burma, land is available, but seed, which is obtained from Central Burma, is in short supply and extremely expensive. Storage of seed over the monsoon is impossible there without special facilities and knowledge. PART IV - THE PROJECT 57. The proposed project was prepared (September 1975 to December 1976) under the UNDP "Umbrella Project". It was appraised during February/March 1977. A report entitled "Burma: Staff Appraisal of the Seed Development Project" (No. 1653-BA) dated October 10, 1977 is being circulated separately to the Executive Directors. Negotiations were held in Washington, D.C., during September 12 to 16, 1977. The Borrower's delegation was led by Dr. Bo Lay, Deputy Minister, Ministry of Agriculture and Forests. A. Project Description 58. The proposed project is designed to address the constraints which have most hampered development of seed supply in Burma: (i) the absence of improved varieties for most crops; (ii) inadequate applied research capabi- lity; and (iii) lack of manpower with relevant skills. Over a period of four years, the proposed project would begin improvement of the Government's applied research capability and would lay the groundwork for future development of the seed industry. The crops receiving the most emphasis from the project would be rice and cotton, through seed research, production, and processing. Other crops would also receive attention, namely, groundnut through research and storage programs, and jute through research on varieties and agronomic prac- tices. Support for jute research, however, is a very minor part of the project. Specifically, the project would: - 15 - (a) increase the capacity for applied research and seed production on six key Government Central Farms through land development, provision of buildings, equipment, and farm machinery and expansion of research and production staff. In addition, the research and seed production capacity of ARI's Yezin station would be strengthened through farm development; (b) develop seed processing and storage facilities on the six farms and at two or three ginneries selected for cotton seed handling; (c) develop a quality control program based on seed testing laboratories at ARI, on seed farms and at cotton and ground- nut facilities; (d) include a pilot project to establish the feasibility of providing groundnut seed storage in Lower Burma; (e) provide for overseas post-graduate training of research staff and overseas and local short courses for research staff, farm managers and quality control staff; and (f) provide about 116 man-months of technical assistance to train staff and assist in project implementation. B. Detailed Features Organization and Management 59. The main implementing agency for the project would be the Applied Research Division (ARD) of the Agricultural Corporation, which would be respon- sible for all procurement and contracting. ARD would arrange procurement and contracts for the Agricultural Research Institute (ARI), also of the Agricul- tural Corporation. Commercial cotton seed would be ginned, on behalf of ARD, by the Textile Industries Corporation (TIC), which owns and operates cotton ginneries in Burma. To enable ARD to handle these increased responsibilities, its headquarters would be slightly reorganized structurally and strengthened by the addition of about 150 professional staff, including a Deputy General Manager and two Assistant General Managers. This represents a substantial increase in ARD's staff, there is an adequate supply of agricultural graduates on which to draw. Government's approval of the incremental posts required for the project and appointment of suitable officers as Deputy General Manager (Seeds and Research), Assistant General Manager (Seeds), and Assistant General Manager (Research), are conditions of effectiveness of the proposed Credit (Sections 5.01 (b) and (c) of'the draft Development Credit Agreement). It was also agreed that for a period of five years after the signing of the Devel- opment Credit Agreement, ARD would employ suitable staff with qualifications acceptable to the Association in these three posts and in the post of General - 16 - Manager (Section 4.04 of the draft Development Credit Agreement). A Land Development Unit would be formed in ARD to undertake the development of the six project Central Farms and, in the future, to continue work on the farms not covered by the Project. Costs of strengthening ARD would be covered by the project. 60. A National Seed Committee (NSC) would be formed, as a condition of credit effectiveness, to provide a forum for the determination of seed policy with responsibility for variety release, variety recommendation, and quality control standards and procedures (Sections 3.03(b) and 5.01(a) of the draft Development Credit Agreement). The NSC would also ensure that there is close cooperation between ARI, TIC and ARD in project implementation. The NSC would be chaired by the Deputy Minister for Agriculture and ARD would provide the secretariat. From the Ministry of Agriculture and Forests, the members would comprise the Managing Director of the Agricultural Corporation, the General Managers of ARI, ARD, and the Extension and Procurement Divisions, and a representative of the Planning and Statistics Department. Other agencies represented on the NSC would be the Ministry of Planning and Finance, Ministry of Industry I, Trade Ministry, and Central People's Peasants Council. During the project period, NSC would also be responsible for monitoring and coordina- tion of project activities. NSC would provide quarterly progress reports to the Association based on detailed implementation schedules for major activ- ities to be prepared by the consultants provided under the project. 61. Research Coordination Committees (RCC) would be established at all of the Central Farms (Section 3.03 (a) of the draft Development Credit Agree- ment). The RCC would discuss performance of the previous season's research and extension programs and would prepare recommendations for the following season. A National Research Coordination Committee (NRCC) would be formed (Section 3.03(a) of the draft Development Credit Agreement) to review RCC's recommendations and to decide upon Central Farms' research programs and the extension packages to be promoted by the Extension Division. Its members would be the Deputy Minister of Agriculture (chairman), AC's Managing Director, the General Managers of the ARD, ARI, and Extension Division, and a represen- tative of the Planning and Statistics Department. Farm Development 62. Most of ARD's Central and Seed Farms were established more than 40 years ago. Productive capacity has been low due to poor initial layout combined with inadequate funding for staff and equipment and generally poor standards of management. To enable ARD properly to fulfill its research and seed production roles, six ARD farms would be developed under the project -- Hmawbi, Magwe, Mahlaing, Mandalay, Letpadan 1/ and Lungyaw. The project would also assist in development of the land at ARI's Yezin station, where the slow rate of farm development is a constraint on expansion of research 1/ The suitability of this farm will be determined by consultants provided under the project (para 79), or an alternate farm selected no later than July 31, 1978 (Section 3.07 of the draft Development Credit Agreement). - 17 - activity. A total of about 4,500 acres would be developed, of which 2,550 acres would involve development of irrigation works where none previously existed, 820 acres irrigation rehabilitation, and 1,130 acres dryland develop- ment. Farm development would include survey, planning and execution of farm layouts. Investments would be made in machinery, vehicles, farm buildings, housing, offices, facilities for seed processing and storage, and special field and laboratory equipment. As inadequate funds for staff and operations have been a key constraint to farm performance, the project would also cover incremental staff and operating costs through 1980, by which time incremental farm revenues would exceed the operating costs for the seed production and processing program. Applied Research 63. The scope of research programs would initially be modest because of staffing constraints. Mlajor emphasis would be on varietal improvement of all crops, with work on cultivation practices also being an important feature. This would include: land preparation; time of planting; spacing; fertilization (inorganic and organic); weed, pest and disease control; water management; and alternative cropping patterns. In rice areas, particular attention would be given to manipulating variety and to methods of land preparation and crop es- tablishment to determine potentials for double cropping. In the cotton zone, first priority would be given to selecting pest tolerant varieties and to developing an appropriate spraying system. In the Lower Burma groundnut area, a research program would be undertaken to determine whether nitrogen fixation could be improved to reduce reliance on artificial fertilizer. On-farm storage losses and the need for new storage systems would also be investigated. Seed Production 64. Seed production under the project would be confined to rice and cotton, for which significantly improved varieties are expected to be released by ARI in three or four years. No varietal breakthrough appears imminent for other crops. Only modest multiplication programs are proposed at this time, but manpower development under the project is expected to permit larger programs in the future. 65. The Rice Seed Program would be developed at Hmawbi, Letpadan, Lungyaw, Mandalay and Yezin. It would supply sufficient seed, of the new high-yielding varieties expected to be released by ARI, for their rapid spread over 3.5 million acres. Breeder and foundation seed would be produced at Yezin. Registered seed would 'be produced at all five locations; a total of 800 acres is expected to yield about 1,000 tons, sufficient to plant about 50,000 acres. In order to publicize a new variety, one year before sufficient seed is available for distribution to farmers, it was agreed that the Extension Division would plant a dense network of demonstration plots throughout the region to which the variety was adapted (Section 3.08 of the draft Development Credit Agreement). - 18 - 66. In order to achieve rapid spread of new varieties from a 1,000 ton annual supply, the seed would be distributed in large numbers of small packets. Farmers liking the new variety would then be able rapidly to build up their own seed stock. However, this system, which has worked elsewhere, has not been tried in Burma. About half the available seed would, therefore, be dis- tributed in 1 kg packets, the balance in 20 kg packets, which is the quantity required to plant one acre. It is anticipated that farmers who receive the large packets would sell and/or exchange some of the produce, thus contribut- ing to the spread of the new varieties. The program would be monitored to determine whether 1 kg or 20 kg packages led to more rapid spread of variety. 67. The Cotton Seed Program. Unlike rice seed, farmers must replace their cotton seed annually. The cotton seed program would, therefore, pro- duce each year a supply sufficient to plant the entire G. hirsutum acreage, about 175,000 acres. Two or three varieties should suffice to cover the range of growing conditions. Breeder and foundation seed would be produced at Yezin, registered seed at Lungyaw and Mahlaing, and certified seed at Lungyaw. The latter would be sufficient to plant about 22,000 acres and would be supplied to all cotton growers in two or three areas designated for commercial seed production (one variety per area). To preclude admixture of lint from different varieties during processing, which would vitiate the varietal purity of seed, it was agreed that the Government would designate the variety of cotton to be grown in all townships producing long staple (G. hirsutum) cotton (Section 3.09 of the draft Development Credit Agreement). Seed Processing and Storage 68. Rice. At present, rice seed is processed by traditional methods which makes it difficult to prevent mixing of varieties and results in lower germination than would mechanical threshing and rapid drying. Rice seed pro- cessing plants would, therefore, be established at Hmawbi, Lungyaw, Mandalay and Yezin. Because of the small quantity involved, rice seed from Letpadan would be processed in Hmawbi. A small air-conditioned store would be built for holding basic seed stocks at Yezin. Little staff would be required for these small plants. Overall responsibility for plant operation would be with Seed Specialists to be financed under the project; day-to-day operation would be the responsibility of Technical Assistants who would have a diploma in mechanics and who would be given in-service training in seed processing, drying and storage. 69. Cotton. A laboratory-size saw gin would be provided at Yezin to process breeder and research seed stocks. At Lungyaw, a ginnery would be built to handle the foundation and certified seed grown there. This ginnery would consist of 6 roller gin stands and aerated stores for seed cotton and delinted seed. Roller gins are proposed, in preference to the more efficient saw gins, because they are the only type in use in Burma. Adoption of stand- ard equipment, for a small unit as proposed, would minimize operating and maintenance problems. Some certified seed would be produced at Mahlaing Farm which has a gin. Any surplus could be ginned at Lungyaw. 70. Seed cotton from the commercial seed generation would be ginned at existing commercial ginneries where ample capacity exists. Ownership of the - 19 - commercial ginneries was recently transferred from AC's Procurement Division to the Textile Industries Corporation (TIC). It was agreed that the Govern- ment would designate suitable ginneries for handling cotton seed and that TIC would operate them in accordance with quality control procedures prescribed by NSC. Inter alia, they would require that the ginneries handle only a single variety of G. hirsutum (Sections 3.10 (a) and (b) of the draft Development Credit Agreement). 71. Aerated stores, for seed cotton and delinted seed, would be built at designated ginneries to maintain seed condition during storage. The stores would include a small office and laboratory for quality control operations. These facilities would be owned and operated by ARD. TIC would purchase seed cotton from the designated seed production area but collection and storage would be controlled by ARD. After ginning by TIC, lots of seed suitable for planting would be purchased by ARD at the oil mill price. Unsuitable lots would be sold by TIC for oil extraction. Quality Control 72. The National,Seed Committee (NSC) formed under the project (para 60) would issue regulations for seed quality control standards and procedures. The NSC would also establish and maintain a Register of Varieties and a List of Recommended Varieties. Seed production under the project would be confined to varieties on the List of Recommended Varieties (Section 3.11 of the draft Development Credit Agreement). 73. A fully equipped central seed laboratory would be established at Yezin to be run by ARI. Main regional laboratories would be established at Hmawbi, Lungyaw, and Mandalay, and small laboratories would be established at the groundnut (para 75) and cotton seed facilities (para 70); all would be run by ARD. The Yezin laboratory would, inter alia, monitor the work of the regional laboratories; it would be supervised by a Seed Technologist trained under the project. Issues concerning quality control work would be brought to the notice of the NSC. A Senior Quality Control Officer at ARD headquarters would supervise all ARD quality control operations. The regional laboratories would initially be concerned with quality control on their respective farms, and would form the base for an expansion of service as need arose. Groundnut Program 74. Because they are unable successfully to store groundnut seed over the monsoon, farmers in Lower Burma must buy seed at very high cost from Central Burma. It is expected that, if cheaper seed were available, farmers would expand their groundnut acreage. Air-conditioned, dehumidified stores located in Lower Burma would be capable of storing seed from the harvest of the Lower Burma crop to the next planting season without significant loss of viability. It is estimated that'such stores could be operated at a cost which, when added to the price of seed purchased from the harvest of the Lower Burma crop, would enable seed to be sold at a price much below present levels. 75. The proposed project would include a pilot program to determine the technical, financial, and economic feasibility of such storage in Lower - 20 - Burma. Five stores would be built, each with a small detached office and laboratory building. To reduce maintenance problems, spares equivalent to about 30% of capital costs would also be provided. Incremental working capital to purchase a stock of seed would be included in project costs. 76. The stores would be owned and operated by ARD under strict quality control procedures. Seed would be purchased from farmers in the area sur- rounding each store at prices competitive with those paid by oil mills. Sale prices would be set so as to cover costs in full and to give a nominal return (12%) on investment capital. In order to establish the feasibility of groundnut seed storage in Lower Burma, the Government agreed to conduct monitoring surveys for the pilot program, for a minimum of three years from its commencement (Section 4.03 of the draft Development Credit Agreement). Funds for such monitoring are provided under the project. Training 77. While Burma has a large number of graduates with a basic training in agriculture, very few graduates have received any specialized training and there is a resultant acute shortage of staff capable of implementing seed research and multiplication programs. Therefore, provision has been made for 690 man-months of overseas training, ranging from two-year Mlasters of Science degree courses to three-month short courses such as those conducted by the international research centers. Most of the training would be in disciplines essential to strengthening applied research capabilities, such as agronomy, plant breeding and experimental design and analysis. Also under the training component, senior farm management staff would be sent on short overseas courses for training in the latest production techniques for their main crops. The senior staff responsible for quality control would be sent on 12-month over- seas training courses in seed technology, with emphasis on field inspection and seed analysis. On their return these officers would train additional staff, as necessary, to expand the quality control service. It was agreed that prior to Mlarch 31, 1978 and thereafter annually until March 31, 1980, the Government would make arrangements satisfactory to the Association for overseas training (Section 4.05 of the draft Develop Credit Agreement). Technical Assistance 78. Technical assistance would be a key component of the project and would primarily consist of three main elements - land development, farm man- agement, and applied research. This would be contracted to one consulting firm (about 100 man-months) which would take responsibility for coordination of the total technical assistance program. In addition, short-term specialists (about 16 man-months) would be hired on an individual basis to provide advice on the design and operation of seed processing and storage facilities. The average cost of technical assistance (without contingencies) would be US$6,900 per man-month, of which US$2,800 would be salary, and the balance travel, expenses and overhead. 79. The consultants would prepare development plans for the six farms and for Yezin, and would supervise their implementation. At the same time, -21 - they would train a team of Burmese staff capable of planning and developing the balance of ARD's farms. The consultants would also formulate five-year management plans for the six farms and would develop farm management capabi- lity in ARD by training selected staff. The consultants would assist the Government in establishing priorities for applied research and formulating a program to be initiated during the project. Specialists in the fields of rice seed processing, cotton seed ginning and storage, and groundnut drying and storage, would be hired on short-term consultancies. They would design facil- ities and prepare tender documents, assist with installation and initial oper- ation of equipment, and train staff in machinery operation and maintenance. 80. During negotiations agreement was reached between the Government, UNDP and the Association that UNDP would finance the Technical Assistance component of the project (about US$975,000 equivalent over four years) with the Association as the Executing Agency. Agreement was also reached with the Government on terms of reference for the consultants. An assurance was ob- tained that the Government would retain consultants selected by the Association (Section 3.02 of the draft Development Credit Agreement). The Association has already taken initial steps to select consultants. C. Project Costs and Financing 81. Total project cost is estimated at US$11.1 million, which includes taxes of US$0.8 million, physical contingencies of US$0.5 million (6%), and price contingencies of US$2.5 million (28%). The foreign exchange component is estimated at US$5.5 million (or 50% of total project costs), of which UNDP would finance about US$975,000 for the technical assistance component. The proposed IDA credit of US$5.5 million would finance the remaining foreign exchange costs of US$4.5 million and US$1.0 million of local costs or about 70% of total project costs excluding taxes, duties, the seasonal credit re- quired for groundnut working capital, and the UNDP contribution. The Gov- ernment would finance the balance of US$4.6 million equivalent directly and through Myanma Economic Bank. In order to ensure the timely availability of local funds, it was agreed that, by April 30, 1978, the Government would raise the aggregate and annual ceilings for seed development in its Third Four Year Plan to reflect the project cost estimates agreed during negotia- tions (Section 3.13 of the draft Development Credit Agreement). Project costs and proposed financing are summarized below: - 22 - US$ Thousand Equivalent Cost Item GOB IDA UNDP Total % IDA Applied Research 755 1,050 - 1,805 58 Farm Development 515 885 - 1,400 63 Seed Production Investments 595 1,375 - 1,970 70 Seed Processing Investments 255 495 - 750 66 Production & Processing Operating Costs 360 290 - 650 45 Commercial Cotton Seed Stores 260 290 - 550 53 Quality Control 10 45 - 55 82 Groundnut - Investment and Operating Costs 270 445 - 715 62 Groundnut - Working Capital 1,540 - - 1,540 - ARD Headquarters 65 85 - 150 57 Training - 540 - 540 100 Technical Assistance - - 975 975 - TOTAL 4,625 5,500 975 11,100 50 82. Funds for ARI and ARD investment and incremental operating costs would be transferred as normal budgetary allocations to AC (or to its successor). ARD would obtain working capital for groundnut purchases from the Myanma Economic Bank on prevailing terms for short-term loans. D. Procurement and Disbursement 83. The majority of equipment, machinery, and vehicles would be pro- cured after international competitive bidding in accordance with IDA guide- lines. For some specialized or small items of equipment costing less than US$20,000 each and less than US$500,000 in aggregate, procurement will be in accordance with the Borrower's normal procedures, after bids have been received from at least three suppliers. For each tender package for goods with an aggregate value in excess of US$200,000, the Government would sub- mit bid documents to the Association for its review and would seek the Association's consent on bid evaluations before orders are placed. Con- sultants would be employed by the Association as Executing Agency for UNDP. 84. Civil works with an estimated cost of US$2.4 million (net of con- tingencies) comprise mainly houses, offices, laboratories and stores. The works are widely scattered and construction is to be phased over three years and hence would not attract international contractors. There is virtually no private construction industry in Burma. Some small buildings, each costing less than K 50,000 (US$7,000), would be constructed by ARD by force account. However, the bulk of the work would be carried out under contract by GOB's Construction Corporation. A program of the civil works to be started each year would be agreed between ARD and the Construction Corporation. These work programs, and the terms of the contract under which the Construction Corporation would execute them, would be satisfactory to the Association (Section 3.05 (a) of the draft Development Credit Agreement). - 23 - 85. The proposed IDA credit would be disbursed against: (a) 100% of the cost of training and of the foreign exchange cost of directly imported equipment; (b) 80% of the cost of imported equipment that is procured locally; (c) 100% of local expenditures (ex-factory) for equipment manufactured locally; (d) 60% of the cost of civil works; and (e) 45% of incremental operating costs. 86. Applications for withdrawals from the credit would be fully docu- mented except that disbursement for civil works under force account and incremental operating costs would be made against certified statements of expenditure submitted by ARD; documentation supporting statements of expen- diture will be retained by ARD for review during project supervision 1/. 87. The project is a first phase for future seed program development. Hence, upon completion of the project, any surplus in the credit account will be used, at the discretion of the Association, for project related expenditures. E. Seed Pricing 88. If full project benefits are to be obtained, seed produced under the project must be priced to ensure responsible use. Rice and cotton seed prices would be increased to conform with this principle; failure to do so would greatly reduce project benefits. In the case of rice, farmers would sell their genetically superior seed for grain, if they could buy seed at less than grain prices. In the case of cotton, too low a price would result in a continuance of excessive seeding rates (currently 72 lbs/acre compared with a more normal 20 to 30 lbs/acre). 89. To ensure responsible use of seed produced under the project, it was agreed that the Government would establish and maintain, for ten years after the signing of the Development Credit Agreement, seed pricing formulae satisfactory to the Association (Section 4.02 of the draft Development Credit Agreement). During negotiations it was also agreed that initial seed pricing formulae would be as follows: (i) The selling price of rice seed would basically be set by reference to the government procurement price plus all additional processing and handling costs. But to ensure responsible use of a valuable commodity, rice seed should sell at a price well in excess of the grain prices. Separate rice seed prices would be set for rice surplus and deficit areas. Under present procurement prices, rice seed prices would, at any rate, be at least 160% 1/ Burma's 1977/78 fiscal year would be the base against which to measure incrementally; where applicable incremental revenues would be taken into account in determining net incremental operating costs. The definition of, and disbursement procedures for, operating costs were agreed during negotiations. - 24 - and 200% of the Ngasein procurement price for surplus and deficit areas respectively. Rice seed prices would be announced well before planting time, i.e., in March of each year. Rice seed prices would automatically be reviewed after consultation with IDA whenever procure- ment prices were changed. (ii) The prices for commercial cotton seed and groundnut seed would be set annually at levels which would cover: raw seed costs; operating costs including transport and handling but excluding interest charges; and a 12% return on investment capital. Certified cotton seed would be sold by ARD to farmers at the price being charged for commercial cotton seed. 90. The application of the above formulae would result in an increase in the average price of rice seed of about 65%, sufficient to ensure respon- sible use. 1/ The cotton seed price would increase by about 200%; this is a large increase but the cost of seed per acre would remain low at K 9. It would be necessary to sell certified cotton seed at the same price as com- mercial seed because it would be difficult to determine accurately the cost of producing certified seed at Lungyaw and Mahlaing given the overlap of seed and research activities. Furthermore certified seed would be sold to farmers in designated seed production areas instead of commercial seed. Since it is the Government's desire that farmers would not be paid any premium for pro- ducing the commercial seed, it would be inappropriate to charge more for certified than for commercial seed. 91. The formula for groundnut seed would result in an ex-store price of about K 77 per basket (K 65 for raw seed plus K 12 for operating costs and return to investment). This would be a considerable reduction from present seed prices in Lower Burma and should lead to a significant increase in plantings. F. Financial and Economic Impact 92. With the above pricing policies, the ARD seed production and proces- sing program would be financially self-supporting by the fourth year from initiation of the project. The costs of research and training on ARD farms would not be fully offset by revenues from the seed production and processing program. At full development, four years from the beginning of the project, ARD would incur an annual project-related deficit of about K 300,000 when the full costs of research and ARD headquarters development are included. This is considerably less than the K 1.1 million operating deficit incurred by the six project farms in 1975/76. The setting of rice and cotton seed prices 1/ The average price paid to ARD would be about K 16/basket; this value has been used in calculating project costs and benefits. - 25 - higher than those proposed further to improve ARD's cash flow, is not con- sidered feasible. However, any failure to make ARD self-financing would be more than offset by the incremental revenues which would accrue to the Gov- ernment through its rice procurement operations. At full development, the project is expected to increase annual rice production by 188,000 tons. Assuming a marginal quota rate of 29%, 1/ and a procurement efficiency of 50%, the Government would annually procure an additional 28,000 tons of paddy as a result of the project. Most of this would be sold on the export market and result in additional annual revenues of about K 12 M (US$1.6 M). (The dif- ference between the export price, net of procurement and handling costs, and the procurement price is about K 450 per ton.) 93. The impact of the project on farmers would be considerable. The new HYV paddy suitable for medium-deep water regions would permit yield in- creases of about 50%. Taking into account increased costs of inputs, this would provide a net incremental benefit of about K 115 per acre sown. At full development, about 700,000 paddy farmers could benefit from the rice program. Cotton yields could be expected to increase at least 5% through use of pure seed of existing varieties which would provide a net incremental benefit of about K 30 per acre. A further and more dramatic yield increase could be expected when new varieties are released. The project would also reduce pro- duction costs of about 11,000 cotton farmers by about 20%, yielding an addi- tional net incremental benefit of about K 180 per acre. 94. The economic analysis has been carried out using international prices with appropriate adjustments for freight, handling and processing and quality differentials. Apart from rice, all project output would be consumed in Burma. The kyat has been shadow priced at K 13 to US$1. Unskilled labor has been valued at a rate intermediate between the prevailing market prices for periods of near full employment and the slack season rate. Economic re- turns for the major project components have been estimated using costs specific to each component plus a portion of the overhead costs (including land devel- opment, production equipment, housing, and quality control). Since the bene- fits from the research component are not easily separated from those accruing to improved extension and increased input use, no return has been estimated for this component. 95. The rice seed program would hasten the spread of new HYV. The marginal contribution of the project is estimated to be additional coverage of 0.5 million acres; this would produce an incremental 188,000 metric tons, valued at about US$43 million per year. The estimated rate of return is over 100% and remains so even if benefits are reduced, or costs increased, by 25%. 96. The cotton seed program would improve seed quality and lead to sav- ings in seed use. The seed saved would yield cooking oil worth an estimated US$1 million per year and the net incremental value of cotton produced on Government farms would be over US$0.14 million per year. The use of improved 1/ From Appraisal of the Lower Burma Paddyland Development Project (Report No. 1129-BA), Annex 15 and assuming an average holding of 5 acres and an average yield of 30 baskets per acre. - 26 - seed would increase yields of existing varieties by at least 5%. On this basis, the rate of return on the program would be about 27%; if costs were increased, or benefits reduced, by 25%, the rate of return would still be about 20%. Much larger yield increases and, thus, higher benefits could be expected following the release of new varieties. 97. The pilot groundnut program is expected to reduce the seed price by at least 25%, and hence lead to acreage expansion of at least 20% which would give a rate of return of about 19%. If costs increased or benefits decreased by 25%, the return would be about 14%. 98. Even without the substantial unquantifiable benefits from the re- search component, the economic rate of return for the entire project is esti- mated to be above 50% and remains so even if benefits are reduced, or costs increased, by 25%. G. Project Risks 99. The project would be exposed to two general risks: first, that the Government would not maintain incentive prices (in spite of recent pro- mising pronouncements and practice); second, that implementation would be slower than predicted because of delays in taking key administrative actions. However, since appraisal, the Government has been alerted to, and has acknow- ledged, the urgency of these actions. 100. There are three basic project specific risks. First, the rice program anticipates the release of new varieties in three or four years time, but it is possible that release will take longer. A sensitivity analysis shows that even if the new varieties take six years to release, the project rate of return would still be above 50%. Second, in cotton, seed improvement should be one element of a package of improvements covering extension, credit, and input supply. The March 1977 agricultural sector mission has recommended that cotton cultivation be surveyed in detail to establish the feasibility of launching a comprehensive improvement program. The proposed project has as- sumed that such a program will materialize and the cotton seed production program would be a necessary component. Should no complementary investments be made, however, estimates show that improved quality of seed alone would result in sufficient seed saving, hence increased oil production, to yield a return of about 13% on the cotton seed related investments. A third risk is that groundnut farmers would not expand their acreage sufficiently in response to lower seed prices to make storage economically viable. This risk appears minimal, however, given the strong demand for groundnut oil, the apparent large potential for area expansion in Lower Burma, and the fact that the investments would have at least a 50% salvage value. - 27 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 101. The draft Development Credit Agreement between the Socialist Republic of the Union of Burma and the Association, the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement and the text of a resolution approving the proposed credit are being distributed to the Executive Directors separately. 102. Special conditions of the credit are listed in Section III of Annex III. 103. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATIONS 104. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments October 19, 1977 ANNEX I TABLE 3A Page 1 of 4 pages BURMA - SOCIAL INDICATORS DATA SHEET LAND----- - ARA THU M2BURMA REFERENCE COUNTRIES (1970) TOTAL 676.6 MOST RECENT AGRIC. 107.5 1960 1970 ESTIMAT*E SRI LANKA THAILAND MALAYSIA** …--------------------------- _--- GNP PER CAPITA (USs) 50.0* 70.0* 120.0 A 170.0* 210.0* 440.0* POPULATION AND VITAL STATISTICS POPULATION (MIO-YR, MILLION) 21.8 27.0 30.8 /a 12.5 36.3 10.8 POPULATION DENSITY PER SQUARE KM. 32.0 40.0 46 0 /a 191.0 71.0 33.0 PER SQ. KM. AGRICULTURAL LAND 204.0 253.0 287.0 X 518.0 263.0 185.0 VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) 43.6 41.3 39.5 33.1 44.3 42.2 CRUDE DEATH RATE (/THOU,AV) 24.4 19.3 1 A.8 8.0 13.7 12.9 INFANT MORTALITY RATE (/THOU) 129.9 .. 40.3 50.0 90.0 40.ae LIFE EXPECTANCY AT BIRTH (YRS) 45.0 47.5 50.1 65.8 55.5 56.7 GROSS REPRODUCTION RATE .. 2.7 2.7 2.3 3.2 2.8 POPULATION GROWTH RATE (%) TOTAL 1.8 2.2 2.2 2.4 3.1 2.9 URBAN 5.7 3.7 4.6 4.5 4.9 3.2 URBAN POPULATION (% OF TOTAL) 17.1 19.9 22.3 22.0 15.0 26.9 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 37.1/a 40.0 40.5 40.0 451 44. a 15 TO 64 YEARS 58.4 7 ,b 57.0 55.9 56.0 51.8 52.1 a 65 YEARS AND OVER 4.5 ab 3.0 3.6 4.0 3.1 3*2a AGE DEPENDENCY RATIO 0.7 0.8 0.8 0.8 0.9 ECONOMIC DEPENDENCY RATIO 0.9/A 1.1/a 1.1A 1.41 FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOU) .- . *- 215.3 470.0 222.2 USERS (% OF MARRIED WOMEN) .. .. .. 7.0 10.0 8.0 EMPLOYMENT TOTAL LABOR FORCE (THOUSAND) 10600.0 10920.0 11700.0 4100.0 16700.0 l 2900.0/p LABOR FORCE IN AGRICULTURE (%) 68.0 70.0 67.0 52.0/a 79.0 43.0 UNEMPLOYED (% OF LABOR FORCE) - *- 13.0/a 9.0- 6-a INCOME DISTRIBUTION % OF PRIVATE INCOME RECD BY- HIGHEST 5% OF HOUSEHOLDS 14.6/d .. .d 18.8 22.0DA 28.3 HIGHEST 20% OF HOUSEHOLDS 44.7 7 *- 40.0/d 45.6 51.1 c 56.0 LOWEST 20% OF HOUSEHOLDS 6.5 .. 8.0 7.4 5.6/C 3.5 LOWEST 40% OF HOUSEHOLDS 16.5/4 .. 21.0 17.9 14.3 E 1.2 DISTRIBUTION OF LAND OWNERSHIP ______ ___ __ ___ ________ ___ % OWNED BY TOP 10% OF OWNERS .. .. .. % OWNED BY SMALLEST 10% OWNERS .. .. .. . . HEALTH AND NUTRITION POPULATION PER PHYSICIAN 12270.0 8970.0 6750.0 . 7970.0 POPULATION PER NURSING PERSON 11310.0 7540.0 A 7240.0 e 2730.0 k 6650.0 POPULATION PER HOSPITAL BED 1980.0 1200.0 1170.0 /d 330.0 C 890.0 270:0 /a PER CAPITA SUPPLY OF - CALORIES (% OF REQUIREMENTS) 88.0 101.0 103.0 101.0 103.0 110.0 PROTEIN (GRAMS PER DAY) 43.0 49.0 50.0 /f 50.0 52.0 49.0 -OF WHICH ANIMAL AND PULSE .. 13.0 .. 16.0 17.0/A 20.0 C DEATH RATE (/THOU) AGES 1-4 .. .. .. .. .. 5.5 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 72.0 111.0 107.0 99.0 81.0 89.0 a SECONDARY SCHOOL 10.0 21.0 22.0 51.0/A 16.0 34.0 a YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 11.0 10.0 10.0 12.0 12.0 13.0 a VOCATIONAL ENROLLMENT (% OF SECONDARY) 0.5 0.8 0.8 / 1.0/d 14.0 A 3.0 /a ADULT LITERACY RATE (%) 58.0/a 67.0 . 79.0 55.0 HOUSING PERSONS PER ROOM (URBAN) .. .. .. .. ./. OCCUPIED DWELLINGS WITHOUT PIPED WATER (%) .. .. .. .. .. 65.0 /ad ACCESS TO ELECTRICITY (% OF ALL DWELLINGS) .. .. .. .. .. 43.0 a RURAL DWELLINGS CONNECTED TO ELECTRICITY (%) .. . .. .. .. 30.0 /a CONSUMPTION RADIO RECEIVERS (PER THOU POP) 6.0 15.0 21.0 41.0 78.0 41.0 PASSENGER CARS (PER THOU Pop) . 1 IfA 1.o 1.o 7.0 5.0 27.0 ELECTRICITY (KWH/YR PER CAP) 19.0 22.0 25.0 65.0 124.0 382.0 NEWSPRINT (KG/YR PER CAP) 0.5 0.6 0.4 1.5 1.0 4.0 ---------------- - -AN- -D- - -------- - ---------------------------- --------- ----- SEE NOTES AND DEFINITIONS ON REVERSE ANNEX I Page 2 of I pages NOTES Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961, for 1970 boiet,en 1968 and 1970, and firl Mint fecnet Estioate between 1973 and 1975. - N? per capita dote are baned on World bank Atlas methodology (1974-76 basis). The onlectlon of Malaysia as sn objective imoctry on based on its ability to coMbine a high rate of ecnoic grow.th with no adequate level of nelfare. BRfNA 1960 /a 19541; A 15-59 years and 60 and over respectively, /c Patio of populatio under 15 and 6i sod over to total labor for..ce; /d 1958, Rangoon, urban; Le 16 years and over; /f 1962. 1970 /a Patio of populatnon under 15 and 65 and over to totalI labor force, /b Personne on governmnt servicen only, /4 1964-66. MO1ST RECEtfT ESTIMATE: A. 1976, A Patio of population under 15 and 65 and over to total labor force; /c Urban only; /d 1972, /e Personnel in government services only, /f 1969-71 average. SRI lAIPtA 1970 /a As percentage of employment, A RNegintered anemployedf /c Go-rernoet only; /d Netwoen 1965 and 1970 the duration of general secondary education v.es incressed from 4 to 7 Years; data cf vocational education refer to techn-ica institutes attached to the Moenstry of Education only. TfHAIlAlfb 1970 A. Patio of popslatiom under 15 and 65 sod over to econowically ac~tive population aged 11 yearn and over; Ab Econonm.ialy active population aged LI years and over; /c Rural only; /d 196i-66; /e Poublic schools, obhibh include technical education at tie post-secondary level. !aLAYSTA 1970 /a Went Mlalynia; lb R,glstored applicants for work, ft 196u-66, Ld Piped water inside R8, August 22, 1977 DRPDITION5S OP SOCIAL INtOICATORJ5 Lsad Area (thou ki2) PessIati.a par esrakig psres - Pop.latisn dtnided by n-abor at practIcing Total1 Total sorface aren c aprietig iced area end iniand waters, mal and tamal gradaste moras, "cecimed` er `certified` mosl,sd Aaric. M-Ma ras ... stase aagricaltusra1 area aed temp--ily em Peem- assiliar psrses,1 with traiintg or esp-riesc namely tar or.pa, pastoral, market a kitchee gardana er ta lits film. Ppusl.tias eat hesei tal bad - Pepsiatien dietded by aicber at halpical beds -milable km pablie and primate general and spciliseid heapital cad GNP ear ..Pita (VS$) - GN? pat capita estimae at. orr--t maclet prices, r-bbilitatti- casers eldcc anteing hems cad eatablIa.e.tss fsr -calcalted by eam -aercier sethed as World Bank Atlme (1973-75 basl.); .-atediel cad prevetive acre. i960, 1970 and 1905 data. Per caita lately of naere Pofa ressiret.et) - Capoted ifta esergy eqaiva leet oftact fod sapplisa ae-ilablc in nestry per capita per day, P.pslatioa and vital atatietin avilable sepplise scsprisa desetie prad.-onsa, imprts Ieas esperel, sad Pp.alatioa laid-eaty ela) setil "toe dit sat avilable, everage chamgs is --5d; set eapplice eld animal teed, .eeds, qantciciee used a.tw cad year easise 60b, 9197 ad 1973 dta. in tood preslee keg and iosees im dia-tibotion, reot,sawre ascimated by FAO bae.d as physiological ...cdn tar netaI activity and becieb osn.id- Peenlatias da...ity - ear assare Mi - Mid-year pepulatian pat equate kil-meter sting sevireenete1 tnparators, bohdy weights, age and ass dictrihotiana of (105 betarec)' at;v ree area. pop""te, a il n lot ta waste at honsheld Icvel. PepoI.lac deegity - getesmre i sof anti. loasd - foepated as abasPrPer capit!a sanely atf prai (gfras pear day) -'Protein netest ot per apitsa aginerLelnd anly. sa-t sopply et tasd par day; -e teapply at tend ia defined as abve, tqi met otr all esontries sesabliahed bY USDA cEsamaicRas.earcb Servi.ee Vital statistics prseide tee a mini- .a alloanc .f 60 grams of total prossle per day, and Erode kirth rate pear thouan.d, sysrage - AaamaI live bErtha par ibeousand at 20 grosse of animal and poles protein, of which lb gran abeod be asimal aid-year papolatia1;tn; eyer arithanstic averages eedLg Em I960 ned 1970, prateis; thece etandcrde are lasr than thess ot 75 gram of toed1 prateic cad tin-_yearaverage ceding in 1975 tar most resea t eatimate.and 23 grs at ceimal proteim as an avrage Par the unr1d, propesed by FAO Erode death rate pear theiusand. average - Annual deatha parthebasad ot mid-year it the Third Woerld road S-rvy. popsiation; tcn-yaarerithstitaveragaa ending is i960 and 1970 asd fiea- Par nas'it.a atati ese.. trn .sLm- caed polae - pretein sopply of iood year -rvrge ending is 1975 tsr east resent estimate, derIved irmaaiml sod pulses in gram per day Isteset mertality rate 1/thas) A-..nea deaths at isfast sndar nag year at age Death rate fishes) anas 1-4 - Annul deaths per ths.....d In age grasp i-4 pertheussd live birtht.. years, to shildren is chit age ginup, soggeseed aanindictotr of Liueresease-yeat birth (era) -Averge n-sber at years at bite remaining at-lntritis.. birth, us oally tive-yeer averages ending is I960, 1970 asd 1975 tsr dase1op- tag sauntries. Eduaclati iroes repredncties rate - average ,asber of lio dan,ghtere a sun wIll b.ar AdjustEtd nsrelL,e ra.tio - erimary echool - Enreilneee t oflI ages ec par- in her -eema repredostivePeriodi she espa~ienes Preset age-spacifin etage eto primary choul-ags papslatioes; issludes children aged h-li years terti lity ratna; usually Pica-year av-rgm ending is 1960, 1975 and 1975 bus adjostad tar ditterems 1engthe at primary eda..etion; Per coumtries siob tar davelping cnaserrs. nsiversal educ..eteo, enra11ne may en...ed 100% skate seIppils are belw pssainStatr ats1 (%) -ttea - Cspaamd casual growth ratec at mid-year or abase she fftisia1 eckel age. p9sats 5er1P-6s. 1960-75 and 1970-75. adilate.di.ertllusat rctio -esssndarv aschool - Campoted eabee; secondary peaia growth rats Mt - urban -_C_puted like growth rate at natal1edustian eqoirs at leatntutt yers of appra-ed primary ineroeis popalaties; different de1ili tin at stbam areas may aPiece smparability at praide. gc..era1, vesacienlf ator ee training ta-tr-toren for popils danta among netritte. at 12 ta 17 yeare of ge; sorreapondenc cstesar genraly ecided. irka ppitia (S of rtcth1 - stein et urban is aural pnpaiutias, different Ycare ef chbesling r-ided (-rt n ecn lvl) - Total years at definitions at rbaa crea may affect s -prabiliry at data aesog couetries. asbhonlig at aenadary evlvsaialimetrostina may be partisIly or snuopletely e..sloded. Ass O$t7trost eepots..t) - Cbtildree (5-LA yeara), working-ags (iS-hi years), Vacatikma erbst(5ascody)- vocati_ml anetitationa i.clode andreired (65 pearl and aver) se percentages oP mid-year pepulatias. technical, indoacria1 or other progran which aperate independently atra One dependency ratio - PRtis of.P.Ipepolam under 15 and 65 end aver to tbsue departsa.ts at secondary i-ti-loiona at ages 15 thr-ogh hi. Ad'lt 15teracY rat 5 Lierace ado1te (shin to read and stits) as per- canemnic depende..cy ratia -sti at poplation under IS and 65 and evr is Iaeg o sa ados popoIction ased 15 pears asd aver. the 1aber Parse in ag groop et1)h yers. tFsily elcsn- asceetors (coeslaiee ihaub - .-aslti-e soakr oP onoepiora H... ia of birth-central devise nader a..apice. at national family planning pragrm Pe-ea!mear trn- (orban) - Average soaker at perone per trn in ascupied since iscptio senven tiemaldwel1inga in urban areas ; dwellings e-slde sea-permannt Fasily rInsing-user ot a tmariedaas Per-etsgsa of married -re at sestread usasepiedpre child-barns5 age (IS-b4 yeara) sh bs iritb-soutr1 devices to all married c.psied delmso wtote dsa r i t) -occpied conv-etiona1 dwellimge wusen is esm age grasp. in urban and total ara sitheat inside er astaide piped water facilities as prtnentags at all onepied dwellins.. Edeloveset Ae..a. so electricity f5 of all dwellings) - Convastioma1 dwellings with Tntel laber tace (thausand) - E-oritaIIy active paransa, including aesd electricity ie living quartsre as parcent of total dwelinjgs Is urben and farce and anmlyed hut s-iding heoaseeksa, sdtodta, ate. ; detinitions rualaras inc:i - smtrise are nt smPatable. oRaljdwellinga sonnested in electricity (%5 - Coeputed as abase for total Lab- orcPre in asrisuitus it - Agri..sleura1 labor ferns (is faceig, toreesry, delings oly. boaingad t n)a -pratag fe atoteal labor fern. smemel,y.dave !ft of lbor tsrtcs) M- eployad arc u-us1y defined as parlous ha Cousmation are bIs au illing to take aJob,- oto job as a gives day, remined out Radie raceivare (net thou gee) - All typma of receivers toe rodin broadnaces at Jb, andseking sack faro eaified M =m period mat ssceeding one to gassed1 public per thousanad ot population; -1cldsa malisen..ed rea eivr sek, may mat bs etaparable boetwe coantriea due to different definitions is conatrisa and in ysre when registration of radio sets was in attest; ot snemplayedcad emotes. of date, e.g., employtest office eseiteise, sample data fa~r resent yeara may ass he spareble state esee countries sballahed su-vya, amopulary aseploysse insurance. lisemakag. PI,l:e:2etLcars Peer thou sass - Passenger car coprian noise care ecating Inema distribution - P.erstnsge oP private Lac-m (both in sah sad kind) lesta ight prsons; eacludee amobulances, hea.a.. and ilitary rece.ived by rieheas St. ricesat 201X, p-eset 201, and poorest apt of house- whisles. holda. El-etricity fkehs/v netsa) - Aanmal son-aptic of isdsetria1, -mnrtial, psoblin and pret lectricity in kilowatt hours par capia., generall1y Dietribstian at loand a -thicp - Percentages at load stond by sealehiese lOt based ma Pndustifn data, without alasefor lossess in grids hut allo-- and poorest lot of lad sownrs 1mg fcc impart ca eats of eletcIty eNepriet flea/yr ear sans - Per ca -i na te-option ia kileg-am Heslth and Nutrition estimated fern dooustic production plus net imports ot newsmprint. Poeulatian ear physicig - Population divded by eeber at practicing physisias qualifted fern a mica1 school at asiver-ity level. ANNEX I Page 3 of 4 pages COUNTRY DATA - BURMA AREA 2/ POPULATION DENSITY 678.528 kmr' 31.5 million (1977) 46 per km/ Rate of Growth:2.2% (from 1965 to 1977) 154 per k/of arable land POPULATION CHARACTERISTICS 1974 HEALTH 1976 Crude Birth Rate (per 1,000) 33.7 Population per physician 6,760 Crude Death Rate (per 1,000) 11.3 Population per hospital bed 1,475 Infant Mortality (per 1,000 live births) 55.8 INCOME DISTRIBUTION 1972 DISTRIBUTION OF LAND OWNERSHIP % of national income, highest quintile 40% % owned by top 10% of owners lowest quintile 8% % owned by smallest 10% of owners ACCESS TO PIPED WATER ACCESS TO ELECTRICITY % of population - urban.. % of population - urban. - rural ..-- rural NUTRITION 1972 EDUCATION 1974 Calorie intake as % of requirements 102.2% Adult literacy rate % 67% Per capita protein intake 71.2 Primary school enrollment % 83% GNP PER CAPITA inFY 1977:'- US$130 GROSS NATIONAL PRODUCT IN FY 1977 ANNUAL RATE OF GROWTH (%, constant prices) US $ Mln. % FY1965-70 FY1970-77 FY1965-77 GNP at Market Prices 3,968 100.0 2.0 3.5 2.6 Gross Capital Formation 406 10.2 - 3.7 - 0.8 - 1.9 Gross Domestic Saving 339 8.5 - - Foreign Capital Inflow 67 1.7 - - Exports of Goods, NFS 212 5.3 - 13.6 4.3 - 3.8 Imports of Goods, NFS 270 6.8 - 10.5 - 7.8 - 8.2 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN FY 1977 Value Added Labor Force V. A. Per Worker US$ Mln. % Mln. % US $ % Agriculture c/ 1868 46.7 8.4 67.8 222 68 Industry 355 8.9 0.9 7.1 394 121 Services/Trade 1706 42.7 2.3 18.3 742 228 Unallocated d/ 6 1.7 0-7 6.8 97 30 Total 3997 100.0 12.3 100.0 325 100 GOVERNMENT FINANCE General Government Union Government (Kyats Mtin.) % of GDP (Kyats Mln.) % of GDP FY77 FY77 FY77 FY77 Current Receipts 4803 e/ 17.9 !/ 3376 12.6 Current Expenditure 3854 14.4 3762 14.1 Current Surplus 949 3.5 - 386 - 1.4 Capital Expenditures 1704 6.4 400 1.5 External Assistance (gross) 799 3.0 - * All data for FY 1977 are revised estimates of the Government of Burma. a/ The Per Capita GNP estimate is based on a straight exchange rate conversion using FY 1977TGNP. b/ Tuta-l labor force: unemployed are allocated to sector of their normal occupation. c/ Includes livestock, fishery and forestry. d/ Mining, power, and construction. e/ Includes current surplus/deficit of Boards and Corporations. not available not applicable ANNEX I Page 4 of 4 pages COUNTRY DATA - BURMA 1970 1971 1972 1973 1974 1975 1976 1977 MONEY, CREDIT and PRICES Sep. Sep. Sep. Sep. Mar. Mar. Mar. Mar. (mln Kyats outstanding at end of period) Money and Quasi Money 2422 2399 2793 3581 4065 5342 6052 6335 Bank Credit to Public Sector 2616 3043 3676 4342 5040 6447 6663 6429 Bank Credit to Private Sector 537 557 668 1000 685 639 956 1457 (Percentages or Index Numbers) Money and Quasi Money as 7, of GDP 23.6 23.0 25.9 30.5 27.7 27.6 25.7 23.7 General Price Index (1972 = 100) 91.0 92.9 100.0 123.5 156.6 206.4 252.6 Annual percentage changes in: General Price Index -4.0 2.1 7.6 23.5 26.8 31.8 22.4 Bank credit to Public Sector 9.1 16.3 20.8 18.1 16.1 27.9 3.4 3.5 Bank credit to Private Sector 3.9 3.7 19.9 49.7 - 31.5 - 6.7 49.6 52.4 BALANCE OF PAYMENTS MERCHANDISE EXPORTS ( FY 1977) (US$ mln) FY75 FY76 FY77 US $ Mln % (Millions US5 $) Rice and rice produces 109 51 Teak 57 27 Merchandise Trade -99.9 -30.9 -58.8 Pulses and beans 9 4 Exports, mainly f.o.b. 176.6 179.9 192.8 Animal feedstuff 7 3 Imports, mainly f.o.b. -276.5 -210.8 -251.6 Base metals and ores 8 4 Services and private transfers 11.4 - 18.7 - 8.3 Official grants (net) 21.2 23.3 30.3 All other commodities 23 11 Total 213 100 Current account -67.3 -26.3 - 36.8 EXTERNAL DEBT, March 31, 1977 Long-term capital 117.2 25.0 41.6 Foreign loans 85.7 39.8 86.7 US § Mln Debt repaymenc - 23.5 -23.1 -39.2 Ocier capital (net) 55.0 8.3 - 5.9 Public Debt, incl. guaranteed Short-term bank credit 32.8 -18.3 -18.8 Non-Guaranteed Private Debt 320.9 Total outstanding & Disbursed capital account 150.0 6.7 22.8 DEBT SERVICE RATIO for FY77 - Errors and omissions 9.5 - 9.2 -6.0 % Overall balance 92.2 -28.8 -20.0 Public Debt, inel. guaranteed Non-Guaranteed Private Debt 19.6 Total outstanding & Disbursed Gross Reserves (end year) 172.5 134.9 109.3 Nec Reserves (end year) 38.9 39.7 40.8 RATE OF EXCHANGE IBRD/IDA LENDING, July 31, 1977 (Million US $): Through Dec. 27, 1971 From Feb.19,1973 to Jan.25,1975 IBRD IDA US $ 1.00 = K. 4.76 uS$1.00 = K. 4.81 From Jan.25,1975 to May 1, 1977 Outstanding & Disbursed 48.7 From Dec.27,1971 to SDR 1.00 = K. 7.74 Undisbursed 109.8 Feb.19,1973 US$1.00 K.6.67 Outstanding incl. Undisbursed M3T 5 US $ 1.00 = K. 5.35 As of May 2, 1977 SDR 1.00 = K. 8.51 US$1.00 = K. 7.33 a/ Ratio of Deot Service to Merchandise Exports. not available not applicable South Asia Programs Department, Division C October 1977 ANNEX II Page 1 of 5 pages STATUS OF BANK/IDA OPERATIONS IN BURMA A. Statement of Bank Loans and IDA Credits as of September 30, 1977 US$ Million Loan or Amount (less cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed Three loans fully disbursed 33.1 413 1973 Burma Inland Water Transport - 16.3 0.7 414 1973 Burma Third Railways - 16.7 1.0 483 1974 Burma Lift Irrigation - 17.0 6.2 493 1974 Burma Forestry - 24.0 15.5 551 1975 Burma Telecommunications - 21.0 18.7 597 1975 Burma Livestock - 7.5 7.2 642 1976 Burma Paddyland Development - 30.0 29.8 671 1977 Burma Second Ports - 10.0 10.0 686 1977 Burma Tin/Tungsten - 16.0 16.0 Total 33.1 158.5 of which has been repaid 33.1 - Total now outstanding - 158.5 Amount sold 2.7 of which has been repaid 2.7 - Total now held by Bank & IDA /a - 158.5 Total Undisbursed 105.1 105.1 B. Statement of IFC Investments None /a Prior to exchange adjustments. ANNEX II Page 2 of 5 pages C. Proiects in Execution 1/ Cr. No. 413 Inland Water Transport Project; US$16.3 Million Credit of July 2, 1973; Effective Date: September 17, 1973; Closing Date: June 30, 1977; Revised Closing Date: December 31, 1977 Procurement was slow in the beginning because the Inland Water Transport Corporation's management was not familiar with IDA procedures. The implementation of the project has been affected by high tender prices for certain equipment and materials. As a result, the scope of the project has been reduced and four passenger vessels are being constructed locally instead of importing six vessels as originally planned. The project is nearing completion. Cr. No. 414 Third Railways Project; US$16.7 Million Credit of July 2, 1973; Effective Date: September 17, 1973; Closing Date: December 31, 1977 The physical execution of the project has made good progress. Ex- cept for diesel locomotives, whose maintenance backlog continues to be the constraint on the Burma Railways Corporation's (BRC) carrying capacity, the rehabilitation of passenger coaches and freight wagons, as planned under the project, was completed in March 1977. As of April 1977, US$15.9 million equivalent had been committed which completed the procurement under the proj- ect. The remaining US$0.8 million equivalent will be used to cover transport and insurance costs for the procured equipment. The Credit is expected to be fully disbursed by the Closing Date. Freight tonnage, which declined drastically during 1972/73-1974/75, shows signs of recovery, but average haul continues to decrease, reflecting increases in shorter distance traffic. Passenger traffic continued its increasing trend in long-distance travel, until 1976/77, when it began to decline substantially. In spite of past in- crease in passenger traffic, tariffs, and railway control of labor and material costs, BRC's 1975/76 financial performance was poor, with an operating ratio of 99.2% and a net deficit of K 15.1 million. This was primarily due to a 98% increase in fuel cost which, in turn, was due to huge increases in prices of imported coal used for steam traction. The provisional results indicate a further deterioration in the financial performance for 1976/77 due to decline in passenger-miles and freight ton-miles and in spite of a 13.4% (5.4% effec- tive rate) increase in passenger fares beginning July 1, 1976. The last project supervision took place in February 1977. A project completion mission is scheduled for January/February 1978. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution and, in particular, to report any prob- lems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. ANNEX II Page 3 of 5 pages Cr. No. 483 Irrigation I Project; US$17.0 Million Credit of June 21, 1974; Effective Date: August 6, 1974; Closing Date: December 31, 1978 The project made a very good start. Within three months of the signing of the Credit Agreement, the Project Committee was established and functioning effectively; procurement actions were initiated for US$12.6 mil- lion equivalent of equipment and spare parts. In January 1975 the contract for procurement of 10,000 pumps and accessories was awarded and by March 31, 1977, 7,000 units had been supplied. Sales to farmers through March 1977 were about 3,300 units, much less than anticipated, apparently due to sales in 1976 having been limited to jute cultivators only. The Ministry of Agri- culture and Forests has been informed that, in line with the Credit Agreement, pumps be sold without restriction to the type of cultivation. The Ministry of Agriculture and Forests lifted this restriction in July 1977, as a re- sult pump sales should improve. Construction and equipment installation four four jute baling pplants is now underway and plans are being discussed which would enable completion on schedule. The program for the repair of Irrigation Department construction equipment is proceeding, still behind schedule owing to delay in supply of key spare parts purchased under the Credit. The program to rehabilitate and extend flood embankments, which was set back by the early arrival of 1976 monsoon, is now back on schedule, and it is still possible that the entire project will be completed by the end of 1978. Cr. No. 493 Forestry Project; US$24.0 Million Credit of July 10, 1974; Effective Date: February 27, 1975; Closing Date: March 31, 1981 Overall project status remains poor with implementation continuing to lag behind schedule. Principal constraints include; inadequate forward planning, delayed procurement of equipment, shortages of spare parts and poor equipment maintenance, and shortages of diesel fuel affecting timber haulage, road construction and operator training. A bid for logging trucks which was considered non-responsive by the Association was selected by GOB. However, following the August review mission and the September discussion, in Washington, with the Deputy Minister of Agriculture and Forests, GOB has recently decided to issue new specifications and tenders for smaller size logging trucks. An August review mission discussed major problems with GOB and identified actions necessary for improving project status. A new five year plan is to be prepared by December 77 and a new workshop consultant is expected to be in post by January 78. A November supervision mission will review general progress, the 77/78 operational plan, and assist in the preparation of the long-term plan. This mission will also discuss with GOB the preliminary report of the Forestry Projects Feasibility Study prepared by consultants funded under the project. ANNEX II Page 4 of 5 pages Cr. No. 551 Telecommunications Project; US$21.0 Million Credit of May 30, 1975; Effective Date: July 23, 1975; Closing Date: June 30, 1980 The project has had a good start and procurement of equipment items and coordination with Burmese construction agencies for construction works under the project are on schedule. Contracts for 90% of the equipment to be procured under the project have been awarded. The OPEC Special Fund has agreed to finance the cost overrun of about US$3 million. The Telecommunica- tions Corporation has consistently earned a good return on assets employed, and new tariffs introduced in April 1976, as well as improvements to the accounting system, are likely to maintain this record. Cr. No. 597 Livestock Project; US$7.5 Million Credit of December 30, 1975; Effective Date: March 2, 1976; Closing Date: March 31, 1981 The project continues to show a mixed performance: vaccine pro- duction and field services under the Department of Animal Husbandry and Veterinary Science (DAHVS) are proceeding satisfactorily; the education com- ponent under the Institute of Animal Husbandry and Veterinary Science has shown little progress over the past six months due to delays in consultant recruitment but early action is now expected; the Livestock Development and Marketing Corporation (LDMC) has devoted most of its efforts to the develop- ment of a State dairy farm, and has given secondary importance to the support of village livestock development. This reflects the priority attached by the Government to milk production on State farms rather than improvement of draft power in the villages. The project continues to receive close super- vision and consideration is being given to the transfer of service functions from LDMC to DAHVS. The Deputy Minister for Agriculture and Forests has agreed to consider the proposed transfer and the matter is being actively pursued by Bank staff. Cr. No. 642 Paddyland Development Project; US$30.0 Million Credit of June 21, 1976; Effective Date: August 20, 1976; Closing Date: June 30, 1983 The project Implementation Committee and the Project Unit are established, and assigning of professional staff is being completed. Con- struction surveys are nearly completed. Although bids for key construction and maintenance equipment (about $5 million) were opened in January 1977, awards have only been made in September 1977. As a result, disbursements are lagging behind appraisal estimates. Subsequently, supply of key con- struction equipment for start of next construction season has been delayed and a large part of the first construction season (November-May) has been lost. Nevertheless the project may be completed on schedule if no further delays in the supply of key equipment occur. GOB signed a contract with Hydrological Investigation consultant (Sir Halcrow and Associates) on September 19, 1977. GOB invited a short list of consultants for the Paddy Storage and Handling Study in August 1977. ANNEX II Page 5 of 5 pages Cr. No. 671 Second Ports Project; US$10.0 Million Credit of January 13, 1977; Expected Date of Effectiveness: April 13, 1977; Closing Date: December 31, 1981 There have been top management changes since the Credit was nego- tiated (Managing Director and Chief Traffic Manager), but there is no indi- cation that these will adversely affect the project. The dredging manager was assigned in January 1977. Burma Ports Corporation (BPC), the executing agency, appointed Crown Agents in July 1977 to prepare tender documents and to call for and evaluate bids for equipment and machinery. BPC employed a consulting firm, in August 1977, to prepare documents and evaluate bids for dredger rehabilitation and repairs. Orders for some spare parts (about $100,000) for existing equipment has been placed. The project is slightly behind schedule on the program for dredger rehabilitation. Cr. No. 686 Tin and Tungsten Expansion Project; US$16.0 Million Credit of March 25, 1977; Effective Date: June 13, 1977; Closing Date: March 31, 1983 Execution of the project has commenced on schedule. The engineering and project management consultants started work on April 1, 1977, and a project organization has been set up. Tender invitations for six major equipment packages totaling about US$7 million (including the dredge, about US$4.7 million) were to be issued in August 1977. However, due to some misunder- standing between GOB, IDA and the consultants invitations were delayed and are now expected to be issued in October 1977. Output of the No. 2 Mining Corporation, the Executing Agency, is presently at least 20% below appraisal estimates due mainly to delays in start-up of a new project at its largest mine and a drop-off in ore purchases from small miners due to increased smuggling. The scope of a mineral sector study which is part of the project is under discussion with the Government, but to date there is no agreement on the terms of reference. ANNEX III Page 1 of 2 BURMA SEED DEVELOPMENT PROJECT Supplementary Project Data Sheet Section I. Timetable of Key Events (a) Time taken to prepare the project Approximately sixteen months (September 1975- December 1976) (b) Agencies preparing the project UNDP-financed consultants and IDA (c) Date of first presentation to IDA and date of first mission to consider the project September 1975, first presentation to IDA October 1975, first mission (d) Date of departure of appraisal mission February 1977 (e) Date of completion of negotiations September 16, 1977 (f) Planned date of effectiveness February 20, 1978 Section II. Special IDA Implementation Action None Section III. Special Conditions Conditions of Effectiveness (a) A National Seed Committee is to be established (para 60). ANNEX III Page 2 of 2 (b) The Government is to establish the incremental positions required for the project and suitable officers are to be appointed as Deputy General Manager (Seeds and Research), Assistant General Manager (Seeds), and Assistant General Manager (Research) (para 59). Other Special Conditions (a) A National Research Coordination Committee and a Research Coordination Committee for each Central Farm will be formed (para 61). (b) The National Seed Committee is to be established which will maintain a Register of Seed Varieties and a List of Recom- mended Seed Varieties, and seed production under the project is to be confined to seed varieties on the latter (para 60). (c) The Extension Division is to carry out a demonstration program, sufficiently in advance, during the year prior to the date of the intended distribution of a new variety of seed or established variety of seed in a new area (para 65). (d) The Government will designate the variety of G. hirsutum cotton seed to be grown in each township where such species is grown and supply seed accordingly (para 67). (e) The Government is to designate suitable ginneries for handling cotton seed. These are to be operated by the Textile Corporation in accordance with quality control procedures prescribed by the National Seed Committee and each is to gin only a single variety of G. hirsutum seed (para 70). (f) by not later than July 31, 1978, the Government will con- firm that the Letpadan farm is suitable for winter ground- nut and jute seed research or have selected an alternative farm acceptable to the Association (para 62). (g) monitoring surveys will be conducted for the pilot ground- nut project for a minimum of three years after commence- ment of the pilot project (para 76). (h) by not later than April 30, 1978, the Government shall establish the total and annual estimated expenditure ceilings for seed development in its Third Four-Year Plan so as to reflect cost estimates for the project (para 81). IBRD 12888 94 96. 98* MAY 1977 BURMA SEED DEVELOPMENT PROJECT 'Il a \ , 211 Major Groundnut and Medium Staple Cotton Growing Townships Y eu Major groundnut growing townships S A G_ I N GlC' Major medium staple cotton growing townships SHW She~- Roads . -----+---A-I Railways M a - s'--Rivers 2 Division / state boundaries A - International boundary S P E C I A L K U 0 40 so 120 160 200 'KILOM'ETER'S 0 20 40 60 o8 100 120 140 unggyi ~~~~MILES Touo ' t s H A T;S T A T E -20- 70 >yi1.S -ge t-- O Bay~~~~hytycK Y of G o A G haW E -wo-,' - -;e ' tt \ I h SURMA j t m t X G Y a T J JAO AraDi a H IHAI AD I awo~~~~~~~~~~I Y~ asse~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~, \ ). o Anaan Areaafma -16- 16'-~~~~~~~~~~~~~ 96- I.b ioo BHUTArT' p- - hi , h, INDIA rl,'rd B-k -d Ji e . Rur115 B~~~~~~I 4BBE SYA O STAT\Ef,.. !b-, STT16 BlHI SPsi / |T ,OikO NonSg -COiA ." ' 5 n ~ \PEOPLE'S OF EHeisigyob 7 * 31, '.F M-J'-oo -xCVy I'5 -T~ -. -,\F B ~ ~ X8iIM 42 Y\ 0e F \ BENGA~$ fI Q I\)'( \\ 8 MAO MEIMSAL OTN GRWN ARA 2% \ \ -14° ~ ~ ~ ~ ~ ~ S e3e- PROEC CETA FAMC.ff 'ct 4 T HA A LAND N -1l~~~~~~~~6 Th~~~~~L 'C" I'~~~~~~j~~~ 1~~~e ~ 160 BURMA S!E~ED DEVELOPMENT PROJECT , MAJOR GROUNDNLITGROWING AREAS IN LOWER BURMA MAJOR ME DIUM STAPLE COTTON GROW ING A REAS IA14 Q PROJECT CENTRAL FARMS 14- 0 OTHER CENTRAL FARMS A PROJECT SEED FARMS A OTHER SEED FARMS Too-yh / BANGKOKISO PARED ROADS GRAVEL ROADS - / DIRT ROADS --I.-- SINGLE TRACK RAILWAYS DOUBLE TRACK RAILWAYS MAIN RIVERS _80_ ISOHYETSIINCHESI J DIVISION/STATE BOUNDARIES MOi " - ' - INTERNATIONAL BOUNDARIES _\ O 100 200 300 400 0 R S10 150 200 250 / w Mil-es H,FD I2' 916' loc. .