RETURN TO RESTRICTED REPORTS DESK -21a W¡THtN ~~~~~~~~~~~~~~~Report No. PA-a WI¡THINNL Ln OrNE WEEEK This report was prepared for use within the Bank and its affilioted organizations. They do not accept responsibllity for ¡ts accurocy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION LIVESTOCK DEVELOPMENT PROJECT HONDURAS December 16, 1969 Agriculture Projects Department CURRENCY EQUIVALENTS US$ 1 = Lempiras 2 Lempira 1 = Us$ o.50 Lempiras 1,000 = US$ 500 Lempiras 1,000,000 = Us$ 500,000 WEIDHTS AND MEASURES Metric System 1 kilogram (kg) = 2.20 pounds 1,000 kg = 2,200 pounds 1 kilometer (km) = 0.62 mile 1 hectare (ha) = 2.47 acres 1 square kilometer(km2) = 100 ha = 0.39 square mile = 247.11 acres 1 liter = 0.26 gallon 1,000 millimeters = 39.37 inches GLOSSARY OF ABBREVIATIONS GNP = Gross National Product IDB = Inter-American Development Bank NÇDB = National Development Bank PB = Participating Bank HOND~0AS LIVESTOCK DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ... ................................. ii I. INTRODUCTION . ....................................1 II. BACKGROUND ........... ............................ 1 A. General ........ ........................... 1 B. The Livestock Sub-sector ................. ... 3 C. Animal Uealth . ............................. 5 D. Agricultural Services ..... .................. 5 E. Agricultural Credit ...... ...................6 F. Government Policies on Livestock Development 7 Gr Land Tenure ................... ............ 7 III. THE PROJECT . ....................................8 A. Description ..................... 8 B. Project Area ................................ 9 C. Cost Estimates ....... ....................... 9 D. Proposed Financing ................ . .......... 10 E. Procurement ....... .......................... 11 F. Disbursements ............ ...................... 12 G. Auditing .. . ................................. 12 H. Organization and Management.. 12 Project Administration .................... 12 Technical Services ..... ................... 13 I. Lending Operations ...... .................... 13 Policies .................................. 13 Terms and Conditions ................. 13 IV. MARKETS, PRICES AND PRODUCERS' BENEFITS .......... 14 Markets ........ ........................... 14 Prices .............................. *.............. 15 Producer Benefits ...... ................... 16 V. BENEFITS AND JUSTIFICATION ..... .................. 16 VI. RECOMMENDATIONS ..... 17 This report vas prepared by Messrs. F. Knobel, D. Argyle, A. Otten (IDA), and F. Thomas (Consultant), with Mr. Knobel having primary responsibility. ANNEXES 1. Composition of Exports 2. Organization Chart - Ministry of Natural Resources 3. The Banking System, pp 1-4 Table 1 - Loan Portfolio by Sector of the Banking System Table 2 - Amount and Per Cent of Agricultural Credit by Kind of Lending Institution Table 3 - Summary of Financial Account, Central Bank Table 4 - Consolidated Balance Sheet of Principal Banking Institutions 4. Model 1 - Development of Beef Breeding/Fattening Ranch, 400 ha Table 1 - On-Ranch Investment Cost Projections Table 2 - Herd Development Projections Table 3 - Projection of Sales and Operating Expenses Table 4 - Financial Projection 5. Model 2 - Development of Dairy-Steer Fattening Ranch, 150 ha Table 1 - On-Ranch Investment Cost Projectiona Table 2 - Herd Development Projections Table 3 - Projection of Sales and Operating Expenses Table 4 - Financial Projection b. Model 3 - Development of Beef Breeding Ranch, 1,500 ha Table 1 - On-Ranch Investment Cost Projections Table 2 - Herd Development Projections Table 3 - Projection of Sales and Operating Expenses Table 4 - Financial Projection 7. Project Costs and Foreign Exchange Component 8. Technical Services Budget 9. Phasing of Project Investments 10. Project Organization Chart 11. Duties, Responsibilities and Authorities of Project Director 12. Projected Sources and Application of Funds - Central Bank Livestock Account 13. Projected Sources and Application of Funds - Participating Banks 14. Cattle Population - Supply and Demand Projections 15. Financial Rate of Return of Ranch Models 16. Economie Rate of Return MAP - Project Areas HONDURAS LIVESTOCK DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a livestock development project in Honduras. This would be the first Loan/Credit made by the Bank Group to Honduras in the agricultural sector. It would also be the country's first project in the agricultural-livestock sector that vould provide long-term private commercial bank loans to ranchers on terms and conditions appropriate for the develop- ment of their ranches. The banks vould make a sizeable contribution to the Project in the form of capital for ranch investments and operating capital, plus technical and administrative services. ii. The principal objectives of the Project are to assist Honduras in its national agriculture policy to raise its extremely low level (3.7 kg per capita, 1967) of beef consumption and to assist in its diversification of agriculture with particular emphasis on production for exports. Today, its principal export earnings are from bananas, followed in much lesser amounts by coffee, timber and cotton. iii. The objective of the Project vould be achieved by financing the development of approximately 135 beef ranches and dairy farma. Investment inputs, expert technical services and good management would increase na- tional livestock production by about 15% as compared with pre-project con- ditions. iv. The Project would be country-wide, but vould be carried out prin- cipally in the North Atlantic zone vhich has the greatest concentration of suitable ranches and most favorable resources for development. V. The coordination of Project policies would be by a Project Comnis- sion representing the various institutions concerned with livestock develop- ment in Honduras. The management and execution of the Project vould be under a Project Director, assisted by livestock technicians employed by participating banks but seconded to his office for purposes related to the Project. vi. Total Project cost, estimated at US$5.2 míllion, would be financed approximately as follows: Amount Percent (US$m) IDA Credit 2.6 50 Comercial Banks 1.8 35 Ranchers 0.8 15 5.2 100 - ii - The estimated foreign exchange component is US$1.1 millíon. This repre- sents about 20% of total Project cost and 40% of the Credit. vii. Goods required for the Project vould be obtained through exist- ing comercial channels in Honduras. Several retail sources are available and active competition exists to assure an adequate supply as vell as satis- factory servicing. Input items such as agricultural machinery and equip- ment, vire fencing, and veterinary supplies are imported from United States, Japan, Western European countries and are distributed through local fran- chised dealers. Disbursements from the Credit for ranch development would be a percentage (75%) of ranch development loans disbursed by participating banks. Such loans, based on ranch development plana approved by the Project Director, vould be granted by the banks at 9% interest for terms of 8-12 years including grace periods of 3-5 years. viii. The rate of return to the economy vould be about 18%. Partic- ipating ranchers would earn about 16% to 21% on their incremental invest- ments under the Project. Substantial increased net earnings vould begin around Year-10 when full ranch development would be achieved. ix. The Project i8 suitable for an IDA credit of US$2.6 million. The Government vould on-lend about US$2.4 million of these funds to the Central Bank for channeling to private commercial banks and a private finance company for long-tern ranch development loans. The other US$0.2 million would be a grant by Government for technical services. Surplus funda not required to amortize the IDA Credit during the first 16 years of the Credit vould be relent by the Central Bank to participating banks, or other qualified finan- cial institutions, for livestock purposes. HONDURAS LIVESTOCK DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of Honduras has requested financial assistance to provide long-term funis for financing livestock development, mainly beef cattle. An IBRD mission helped prepare the Project in March 1967. At that time a broadly-based Government committee vas established which prepared the Project under direction of the Central Bank. 1.02 The original investment program developed by the committee totaled about US$14 million and an external fíinacing of about US$8 million vas re- quested. The other US$6 million vas to be provided by livestock producers, commercial banks, Central Bank and Government. The program involved a country-wide development of about 300 ranches; each ranch would be e.bout 300 ha in size, carrying on average 300 head of cattle prior to development, and about tvice this number at full development. The IDA found thae. this type of ranch was not suffíciently characteristic of the industry and pro- posed to Government three types of ranching enterprises. Furthernore, in viev of the limited number of suitable ranches and the limited suppiy of female stock for breeding, and steers for fattening, the IDA agreed vith Government on a reduction of the investment program to about US$5.2 million and about 125-150 ranches. Although the Project vould cover the whole of Honduras, about 85% of the ranches vould be in the North Atlantic zone. 1.03 This appraisal report is based on the findings of a mission led by F. Knobel and composed of D. Argyle and A. Otten (IDA) and F. Thomas (Consul- tant), vhich visited Honduras in January/February 1969. II. BACKGROUND A. General 2.01 Honduras is the poorest of the Central American countries U/. The countrfi is small and quite mountainous vith a total land area of 115,000 km (45,000 sq mi). Of this only 15% is tillable. Bounded by the Caribbean Sea, Nicaragua, El Salvador, Guatemala, and the Pacifie Ocean, the principal economic activities are centered around banana exports from the 2/ GNP per capita expressed In US dollars: Costa Rica $410, El Salvador $270, Guatemala $310, Honduras $240, Nicaragua $360, Panama $550. Source: World Bank Atlas, 1969. -2- coastal plain along the Caribbean coast. Recent road and port develop- menta vith considerable Bank Group assistance 1/ have contributed to uni- fication of the country, developed additional accese to the Pacific and into El Salvador, and opened up new agricultural possibilities. 2.02 The country can be divided into three zones - Atlantic, Central and Pacific - (see Map): (i) The Atlantic zone comprises 46% of the total land area and contains the most productive and extensive valleys in Honduras. The zone runs in a broad belt along the Caribbean coast. It has a reliable rainfall of 1,500 - 2,000 m= per annuim with a semi-dry period of tvo to four months. Soile in the valleys, coastal plaina and low hills are fertile and vell suited to intensive cropping, livestock production and the banana indus- try. The area ls vell serviced with infrastructure and com- mercial facilities; hoaever, a considerable portion of the eastern end í8 virtually uninhabited, providing Bcope ín the long-run for new development. (ii) The Central zone is generally hilly to mountainous and com- primes 41% of the total land area. The valleys are generally amall and discontinuous, making cormunications difficult. Soils are generally of loy fertility, but much of the area í8 cropped on a shifting rotation. Rainfall varles from 900 - 1,100 mm per annum, but there la a severe dry season of about five months from January to June. (iii) The amall Pacific zone, making up the rest of the total land area, is largely arable land vith average fertility. Rainfall varies from 1,000 - 1,800 =m but there is a pronounced dry season of approximately five months during January-June. 2.03 The Honduran economy i8 predominantly agricultural vith agriculture - lncluding forestry and fishing - contributing 40% of Gross Domestie Product and occupying about 70% of the 2.4 million population. Bananas are the most important single crop, accounting for about 35% of agricultural produetion. The banana industry is concentrated ln the Atlantie zone on plantations largely owned by two companies. Livestock production la about one fifth of total agricultural production. Principal farm cash crope include coffee, cotton, corn and tobacco. Three-fourths of the farm units are under six ha snd many contain hilly slopes. Larger farns usually have more than one enterprise, but only a limited number of faraers depend on livestock opera- tiona for the major source of income. 2 Loan 135 -Righway Maintenance, 1955 Loan 463 - EXpans ion and Improve- Loan 195 - Highway Construction, 1958 ment, Puerto Cortes, 1966 Loan 400 - Road Construction, 1965 Credit 1 - Western Highvay Proj- Loan 495 - Highway Paving, 1964 ect, 1961 Credit 71 - North Road Project, 1965 -3- 2.04 Agricultural products account for 75% of total exports, of which about half ís bananas. The country experienced a satisfactory ínerease in Gross National Product averaging 5% per annum over the 1964-1968 period, partly absorbed by a population increase of around 3.4% per year. Growth was mainly export induced; banana exports more than doubled due to a quick recovery of banana Droduction in this period following replacement of di- sease infected plantations (Annex 1). Ample foreign exchange reserves en- abled Government to promote industrial growth successfully by liberalizing imports of raw materíals and equipment. 2.05 The outlook for the future is somewhat less promising. Banana production would still inerease during the next three years, 1969-72, but at a slover rate than in the past. It is likely that production would level off after 1972 as it is exoected that export prices vould decline. Further- more, the country is faced with uncertain world markets for two other lead- ing exnort conmodities: coffee and cotton. Increased export demand la ex- pected to continue for livestock, in particular live cattle and beef, but cattle production has not been incneasing. There ís wide scope for an ex- panded production of good quality cattle through improvement of animal husbandry, whlch can be realized by an adequate supply of ranch development credit combined with technical services. B. The LiveBtock Sub-sector 2.06 The cattle population ls estimated at 1.3 million head of beef, milk, and draft animals. However, most of these animals (75%) are on small- scale mixed farms which average about 10 head each. These farma generally have limited scope for livestock expansion but many are receiving assistance from the National Development Bank (NDB) through programs supported by the United States Agency for International Development and the Inter-American Development Bank. The larger and more efficient ranchers have received little credit except for short-term production purposes. It ie estimated that less than 5% of all farms vith cattle have the potential for econo- mically expanding beef production. Consequently, the number of eligible farms limits the scope of the Project. 2.07 In terms of land area, cattle are distributed fairly evenly: Atlantie zone accounts for 41%, Central zone 43%, and the Pacifie zone 16% of total population. Traditionally, most cattle are dual purpose (milk and meat), even on larger ranches, but there is a trend tovard grealer beef specialization, especially on ranches with more than 500 head. In recent years there has been a nominal increase in swine production and a marked inerease in poultry production, especially broilera for domestic consumption. 2.08 The beef cattle industry is best developed in the Atlantie zone. Most of the larger ranches are found in this area and the quality of cattle is better than ín other zones. The area is the main source of export beef and whole milk production. Stocking rate i about one animal pér ha but, with good management, this could be increased, over much of the zone, to two animals per ha. -4- 2.09 Most cattle in the Central zone are on small non-commercial type farms, providing draft pover, meat and milk for home consumption, or cheese. The quality of stock is generally poor. Overall stocking rates are about one animal per ha. The variable rainfall pattern and infertile 90ils gi . a safe carrying capacity of not more than one animal per ha. 2.10 The Pacific zone carries a surprisingly high number of cattle in ratio to land area, particularly in view of the dry season, and stocking rates of one or more animals per ha on many properties are above safe carry- ing capacities. Hovever, by-products from cotton and sugarcane are avail- able for supplemental feeding, and green feed is produced by irrigation on some ranches. Production is more commercially oriented and cattle qual- ity 15 somewhat better than in the Central zone. 2.11 Most of the cattle are of the native or criollo type. In recent years there has been considerable introduction of improved breeds from the United States in the Atlantic zone and some introduction in the other zones. The most favored improved beef breed ia the Brahman, followed, to a much lesser extent, by Santa Gertrudis and Charolais. Por dairying, Brown Swiss is the most popular followed by Holstein and Red Polled. Purebred bulls are available fron the Government's Comayagua Stud Farm, United Fruit Company and several private studs, at prices below imported animals. Artificial in- saemination services are available for most major dairy herds. 2.12 Commercial offtake has averaged only about 13% since 1950, but with the national herd showing very little increase. This is mainly the result of inadequacies in animal husbandry, nutrition and parasite control resulting , in iiigh calf losses, slow growth rates and an effective calving rate of only 35-40%. The average age of slaughter steers is 4-5 years with an average liveweight of about 275 kg (600 lb), being higher in the Atiantie zone. 2.13 Livestock exports have increased in recent years. With production not rising (para 2.12) there has been a fa). in domestic consumption of beef from the low level of 6 kg per person in 1961 to 3.7 kg per person in 1967. This has been due mainly to the rising price of beef, resulting from the higher prices being paid for the cattle by the meat exporters and cattle buy- ers from Guatemala. Strong export demand for beef wil). probably continue to limit the availability of beef for domestic consumption. 2.14 There are ample slaughter plants in the country for slaughtering and processing of boneless frozen beef for export. Processing facilities would be adequate for the Project since about 70% of the beef produced vould be exported (para 5.01). Slaughterhouse facilities for local con- sumption are poor and many aninals are illegally slaughtered for local consumption. 2.15 The only modern milk plant is at San Pedro Sula in the Atlantic zone. Demand for its products has been steadily increasing and should con- tinue. Raw milk is collected from a considerable part of tbe zone, and the products are distributed to a wide area of Honduras including Tegucigalpa, 300 km dístant. -5- C. Animal Health 2.16 Poor nutrition and failure to follow basic principles of good live- stock husbandry are the most iLtportant factors contributing to poor animal health and performance. The most serious deficiency is the inadequate nutrí- tion of calves which normally receive only a portion of the motherlB mulk. This practice results not only in heavy calf mortality but slow growth, poor reproductive performance and susceptibility to disease. Poor pastur-e man- agement practices and lack of forage conservation for dry periods also con- tribute to poor nutrition. 2.17 The most important diseases are brought about by a variety of internal parasites: calf scours, and such infectious díseases as blackleg, hemorrhagic septicaemia and anthrax. Tickborne diseases are hazarda to lm- ported cattle but can be controlled by pre-immunization. Infestation by varble fly can cause high physical and economic losses. This and other in- festations can be controlled by dipping or spraying. Facilities for this purpose on Project ranches are provided in the Project. 2.18 There is no foot-and-mouth disease as a result of effective quaran- tine restrictions. This is of particular signifícance in the development of ftuture exports to Europe or United States. D. Agricultural Services 2.19 The national institutions responsible for the development of the livestock sector are primarily the Ministry of Natural Resources, operating through its specialized departments and its semi-autonomous Extension Serv- ices (DESARRURAL), the National Development Bank, and the National Agrarian Institute. There are, hovever, numerous other national and international institutions which both directly and indirectly provide services and credit to the livestock industry (Annex 2). 2.20 The general organization of the Ministry and the Extension Service is good. There is also good liaison at senior and fíeld levels between the National Development Bank and the Ministry. The specialized departments of the Ministry dealing wlth animal health, varble fly control and artificial insemination have specific programs to follow. Hovever, these institutions should give more emphasis to defining long-term livestock development poli- cies. 2.21 Graduate professional staff for work in the livestock sub-sector is limited. A recent detailed study 1/ shows that in Honduras there are 35 2] "Orgenizacion Administrativa del Sector Agropecuario de Honduras" IICA October 1968 Vol. 1. -6- professionally qualified veterinarians. General agriculturists vrith formal training are in greater supply. These largely form the fleld staffs of the National Development Bank and Extension Service, which now have about 100 such personnel. The Extension Service intends to in- crease its staff from the present 60 to about 100 in 1971. In addition, the Ministry of Natural Resources has about 75 trained vorkers in re- search. Technical services that would be required for the Project vould be supplied by the participating banks (para 3.22) and there are adequate resources, both private and government, to provide any specialized serv- ices, e.g., veterinarian. E. A&ricultural Credit 2.22 Institutional agricultural credit, vhich includes l.ivestock credit, 18 provided principally by a government development bank, aix private com- mercial banks and one private finance compeny. The aount of credit granted more than doubled during 1964-1968, rising fron L30 millíon (US$15 million) to L72 million (US$36 million). Hovever the ratio of agricultural credit to total creX4t for all sectors has remaíned relatively the same, being around 30% (Annex 3, Table 1). About two-thirds of the agricultural credit comes from the National Development Bank (Government), 30% from private conmercial banks, ana the other 5% from the private finance company. Agricultural sup- pliera' credit ¡e nominal, but borrowing from traditional private lenders is common smong low-income rural farnilies. i: 2.23 .Credit for agriculture and livestock is mostly short-term. Very few medium-term loans, perhaps leas than 100, have been granted for livestock developnent, almost entirely by the National Developme-nt Bank. A sizeable amount of.credit i8 furnished by the banking system for financing the pur- chase of iature steers for fattening. This in 1968 amounted to about L10 million (US$5 million). The Central Bank provides short-term credit by re- discounting agricultural `paper` not exceeding 360 days at 4% interest. The interest rate for all types of rural credit averages about 9%. This com- pares with credit for cormercial purposes at around 8%. 2.24 The private commercial banking system i8 vell developed. It is agressive, competitive, and covers the entire country. All the principal banks have headquarter offices in Tegucigalpa. Credit. for agriculture and livestock i8 principally short-term for purposes of production, marketing and financing feeder cattle. The amount of agricultural credit held by the banks has steadily increased from about L19 million (US$9.5 million) in 1964 to L27 million (US$13.5 million) in 1968 (Annex 3, Table 2). The banks are becoming inereasingly avare of the importance of broadening their agricultural credit service by making long-term development loans. It is expected that three to five of the banks and a private finance company, nov extending agricultural credit, vould participate in the Project. They vould be in a position to contribute a portion of the financial requirements as vell as providing the necessary administrative and technical services. -7- 2.25 Although the National Development Bank (NDB) is the principal sup- plier of rural credit (para 2.22), it would not participate in the Project. It obtains capital from Government and external sources, principally the Inter-American Development Bank and the US Agency for International Develop- ment. Its credit operations, which principally are vith lo income farmera, have not been satisfactory. Financially, NDB has experienced arnual oper- ating losses and there is need for better technical services. Annex 3 con- tains further information on the banking system in Honduras. F. Government Policies on Livestock Development 2.26 A three-year development plan, 1969-71, prepared by the National Planning Council, is being considered by the Cabinet. It states that the goals of Government policy toward agriculture, among others, are: "t-o raise the supply of livestock products for domestic consumption" and "to diversify agricultural production vith particular emphasis on production for export". This program calls for an increase in agricultural inveat- mente from the present 4% of total public investments to a level of' 12%, most of the inerease going into irrigation and land settlement schemeR. 2.27 With respect to livestock, the Plan envisages a continuation of on- going programs in the fields of animal health, livestock improvement and animal breeding. In 1969 Government budgeted L2.6 million (US$l.3 Million) Lor these programs or slightly more than 1% of the total budget (current and capital expenditure combined) of which about L880,000 (us$44o,ooo) re- presented capital investments in the livestock sector, or 1% of total public investments. Thi8 share for the livestock sector is not commensurate with the stated objectives. The pressing need to increase livestock production la demonstrated by the loy and declining beef intake per capita, and the groving contribution of both the beef and saine industry to exports. 2.28 The Project would support livestock development through an inte- grated approach to ranch development, based on a combination of, capitsl investments and technical services, and would make an important contribu- tion tovards the objectives of the National Development Plan. G. Land Tenure 2.29 An Agrarian Reform Lay vas passed in 1962. It declared that pri- vately owned ranches vould not be expropriated provided that they vere prop- erly managed. The law defines "proper management" as a minimum stocking rate of 0.5 animal unit per ha. Since all ranches participating in the Project vould reach a stocking rate vell beyond this minimum rate, they vould not be adversely affected by the Agrarian Reform Lay. 2.30 Many state and conmunal lands have been oecupied in the past for private use. In many cases, clear titles of private ownership have not been established by the users, but if land pressure develops, such lands could be claimed by the National Agrarian Institute for redistribution among peasants. A cadastral survey is being carried out by the Institute to determine the extent of this situation. 2.31 Loans to ranchers participating in the Project would be baseá on lande with clear titles. The participating banks do not aaticipate eny serious difficulty in this respect. III. THE PROJECT A. De!scç n 3.01 The Project vould be a five-year program for the development of about 135 existing ranches vhich by type and size vould range approximately as follows: - 75 beef breeding/fattening ranches, 400 ha (Model 1, Annex 4? Tables 1-i4) - 50 dairy-steer/fattening ranches, 150 ha (Model 2, Annex 5, Tables 1-4) - 10 beef breeding ranches, 1,500 ha (Model 3, Annex 6, Tables 1-4) The development program would be carried out through the provision of long- term development credit vith funds from IDA and private commercial banks together with short-term operating credit from the banks, supported by technical services. 3.02 The ranch development program would include financing of limited land clearance for new pasture establishment, but major emphasis would be placed on the improvement through cleoring of regenerative bush and reseeding of large areas of existing pasture lands. Other ranch development vould in- elude fencing, water supply, facilities for handling stock and controlling disease, farm machinery, purebred bulls, improved commercial breeding COWs, and feeder steers. 3.03 The coordinating and supervisory authoríty for the Project would be a Project Commi±ssion. The technical services would be headed by a Project Director, assisted by a staff of qualified livestock technicians who vould be employed by participating banks. 3.o4 Working capital for purchase of feeder steers, for fattening on surplus pastures available during development, vould be supplied by partie- ipating banks. This finance is important to the success of the Project since it would ensure better use of pasture resources, thereby giving higher eash incomes to ranchers during the time required to build-up their breeding herd inventories. -9- B. Pr2oect Area 3.05 About 85% of the ranches participating in the Project would be in the Atlantic zone and vould be concentrated in Sula Valley in the Departments (provinces) of Atlantida and Cortes (see Map). Most of the beef breeding/ fattening (Model 1) and dairy-steer/fattening (Model 2) types of ranches vould be in this zone. It i9 the most favored area in the country for live- stock production due to climate, topograxhy and soil. It has a vide variety of natural and introduced grasses including guinea, molas8es, para, pangola and elephant. It also has better types of cattle than other areas, and has ready access to markets. 3.06 Participation in the Central zone would be limited, and would be principally in the eastern part vhere ranching operations on an extensive scale are found (see Map, Departments of Olancho and El Paraiso). The require- ments in this zone are mainly to improve the quality of breeding stock, to increase pasture production, and to improve its utilization by conservation of fodder for dry season feeding. Most of the beef breeding ranches (Model 3) would be in this zone. 3.07 The Pacific zone is largely utilized for cropping and mixed farm- ing. Physical problems of livestock production in this zone are similar to those in the Central zone (para 3.06), but in some areas there are ample supplies of groundwater vhich could be further developed for supplementary irrigation of fodder crops. Development in this zone would include a few beef breeding/fattening (Model 1) and beef breeding (Model 3) types of ranches. 3.08 The Project management office would be in the Central Bank, Tegucigalpa, capital of Honduras, so that a strong liaison vould be maintained with governmental services and banking institutions. Although about 85% of Project loans would be made in the northern Atlantic zone, accessibility and communícations between Tegucigalpa and San Pedro Sula (trade and commercial center of Atlantic zone) are good by telephone, cable and several daily com- mercial airline flights. C. Cost Estimates 3.09 Cost estimates are based on prices prevailing in Honduras. An additional aiount of about 10% 18 included to cover unforeseen costs. The estinat.e of total Project cost ls US$5.2 million, which is summarized in the folloving table: - 10 - Total Project Cost Lempiras '000 _US' 000 Eqiuivalent Categories Local Foreígn Total Local y Tota . Development Cai_tal Ranch Development 2,658 908 3,566 1,329 454 1,783 Breeding Cattle 2,660 410 3,070 1,330 205 1,535 Machinery and Equipment 196 462 658 98 231 329 Contingencies 680 76 76 28 378 Subtotal 6,194 1,856 8,050 3,o44 981 4g025 Working Capital /a Feeder Steers 2,060 - 2,060 1,030 - 1,030 Technical Services 140 212 352 70 106 176 Grand Total 8,394 2o68 462 4,144 0 5231 la Reflects the amount of ineremental credit needed to finance the purchase of feeder steers for fattening. 3e10 The estimated foreign exchange expenditure is US$1.1 million. This would represent 21% of total estimated Project cost and 42% of the Credi.t. See Annex 7 for detailed components of Project devel9pment costs and Annex 8 for technical services budget.. D. Proposed Financin; 3.11 The estimated Project cost of US$5.2 million would be financed as follow.,:it ComnLercial IDA Credit Banks Ranchers Central Bank Total Cae…us$ -… - 00 Development Capital 2,>415 805 805 - 4,025 (D:Lstríbution) (60%) (20%) (20%) (100%) Working Capital - 1,030 - - 1,030 (Distribution) (100%) (100%) Technical Services 140 - - 36 176 (lDistributiíro) _ (80%) - (20%) (100%) Total 2,555 1,835 805 36 5,231 (Distribution) (49%) (35%) (15%) (1%) (100%) - 11 - 3.12 On the above basis, IDA funds would finance 60% of on-ranch in- vestments and 80% of technical services or about 49% of total Project cost. This would mean that in addition to the foreign exchange component of US$1.1 million (para 3.10) IDA would finance about US$1.5 million of local curreney expenditures. 3.13 Participating commercial banks would finance 20% of on-ranch in- vestments and 100% of working capital requírements, or, on average, about 35% of total Project cost. The short-term credits provided by the banks would also be used to purchase feeder steers. To ensure availability of funds for short-term credit, assurances vere obtained during negotiations that the Central Bank would redíscount short-term credit paper if not otherwise available from the banks' own resources. 3.14 The ranchers would contribute, on average, 20% of estimated on- ranch development costs in the form of cash, labor and materiíal.. In some instances they would make a further contribution because their annual net in- come during the early stage of ranch development is reduced due to retention of breeding stock which otherwise would have been sold (Annex 6, Table 2). 3.15 Funds from the IDA credit would finance the cost of the Project Director including salary, international travel, family end housing allow- ances, and the foreign exchange component of goods associated with his serv- ices, e.g., a vehicle. Other costs including in-country travel, salaries of office staff and miscellaneous office expenses would be paid by the Central Bank. The Central Bank would also provide office facilities. E. Procurement 3.16 Goods required for ranch development, including fencing, agricul- tural machinery and equipment, materials for ranch structures, pasture seed, and livestock would be obtained through existing commercial channels. These channels are adequate for the Project. Since there are several retail sources for most goods, both imported and local, sufficient competition in the supply of goods is assured. Inputs having a high foreign exehange component such as agricultural machinery, equipment, fencing, fertilizers and veterinary sup- plies are imported from countries in Western Europe, the United States and Japan. Charges on imported goods and dealers' markups are within an accepta- ble range (15-25%), and there are no discriminatory import quotas or controls. Adequate facilities exist for the servicing and maintenance of agricultural machinery and equipment. 3.17 All purchases of breeding stock required for the Project would be subject to the approval of the Project Director with respect to the quality and suitability of such stock. Since the type and quality of anímals required can only be obtained from specific regions of the world, international com- petitive bidding would not be appropriate for livestock procurement. Because of its proximity to Honduras, United States has been the principal source of imported cattle. - 12 - F. Disbursements 3.18 Disbursementa from the Credit would be made to the Central Bank against 75% of the ranch development loans (60% of ranch development cost) disbursed by participating banks upon documentation submitted to the Central Banko. Such documentation would include disbursements by development categor- ¡es, country of origin of goods, certification by the lending bank that dis- bursements irere made for approved ranch development purposes, and approval of the Project Director. The documents would be submitted by the Central Bank to IDA to support withdravals from the Credit account., Disbursements from the Credit for services of the Project Director (para 3.15) vould be made upon appropriate documentation submitted by the Central Bank on behalf of Governnent. Full disbursement of the Credit vould be achieved w'ithin five years although around 80% of the Credit would be disbursed by the end of the third year. See Annex 9 for phasing of Project investmenta. Any unused funde should be channeled to the Central Bank for livestock purposes. G. Auditing 3.19 There are several independent auditing services which would be acceptable to IDA, both the official Government auditing bodies such as the Superintendent of Banks and External Auditor, and at least two inter- national auditing firms, Price Waterhouse and Company, and Peat, Marwick, Mitehell and Co. (USA). Assurances were obtained during negotiations that the Central Bank and each participating bank would maíntain separate ac- counts for the Project activities, that these accounts would be audited annual2ly by an accounting service acceptable to IDA, and that the audit report would be submitted to IDA not later thian four months after the close cf the respective insti.tutionla fiscal year. H. Organization and Managlet Project Adminístratíon 3 20 The Government would be the Borrover and the Central Bank would act as Administering Agency for the Project. Coordinating and supervisory authority would be vested in a Project Commission created by Government decree. Thís Commission vould formulate policies and procedures and approve the Project Director. The Commiesion vould be composed of representatives from various Government entities, participating banks, and the National Cattlemenls Association. Government would be represented by the Central Bank, Ministry of Natural Kesources, Ministry of Economic Affairs and Finance, Zational Agrarían Institute, National Planning Council and, as an observer, the National Development Bank because of its important role in agricultural credit. The Project Director would act as Executive Secret ary. The organi- zational structure of the Project Comnmssion (Annex 10) together with its funetions would be subject to the approval of the IDA. Assurances to this effect were obtained during negotiationa. I - 13 - Technical Services 3.21 The Project Director would be responsible for the execution of the Project, dealing particularly with the technical, financial and eco- nomic aspects. He would approve or reject ranch development plans and would submit approved plans to participating banks for lending. He and his tech- nical staff vould supervise the execution of ranch development plans. This technical staff of livestock technicians would be employed by the partici- pating banks and seconded to his office for purposes of the Project; he would train and supervise their work. The duties, responsibilities and authoritíes of the Project Director are set forth in Annex 11. During ne- gotiations, it vas agreed that a Project Director would be employed through- out the disbursement period (5 years); that his qualifications, duties, responsibilities and terms of contract would be subject to IDA approval; and that his appointment would be made before thé effective date of the Credit Agreement. 3.22 Government agreed that recruitment of a Project Director outside of Honduras would probably be necessary. No difficulty ¡a expected on the availability in Honduras of four to five livestock technicians that would be required from the participating banks. During negotiations assurances were obtained that participating banks would employ and second to the Proj- ect livestock technicians acceptable to the Project Director. I. Lending Operations Policies 3.23 Applications and loans would be processed and serviced by private commercial banks and the private finance company. Loan applications would meet the creditworthiness criteria of these institutions which would bear the full loan risk. Security for loans vould include real estate mortgages based on acceptable titles, and if needed, chattel mortgages on livestock and equipment. Increased real estate value resulting from ranch development im- provements would be reflected in the values established for collateral pur- poses. Terms and Conditions 3.24 Government would make available to the Central Bank the proceeds of the IDA credit to be used for on-ranch development purposes in local cur- rency at 4.5% interest per annum for a term of 16 years. 1/ The Central Bank would repay the principal to Government at 1% per year during Years 11- 15 (same as IDA terms) and the balance at end of Year-16. Since surplus 1/ A 16-year period is used to cover 12-year ranch loans made in the third year of the Project plus one year for slippage. - 14 _ funda vould acerue from the payments received from the participating banks (para 3.25) these funds would be made available to participating banks by the Central Bank for livestock credits. The rollover would add about Lll million (US$5.5 million) to the Lending Program (Annex 12). At the end of the 16-year period, all IDA funds used for ranch development would be re- paid to Government. During negotiations, assurances as to these terms and conditions were obtained. 3.25 The Central Bank would establish and maintain a Livestock Project Account to relend the Credit funds to each participating bank approved by it, equal to 75% (60% of ranch development costa) of the loans disbursed by the participating banks for ranch development purposes. These funds would bear 5% interest per annum and would be repayable on terms similar to those grant- ed by the banks to ranchera. The spread of 0.5% between the cost of Credit funds from Government and the on-lending rate of 5% vould be used by +he Central Bank to pay the local and office costs of the Project Director and for reimbursement of its administrative services related to the Project. Duríng negotiationa assurances vere obtained vith respect to these terms and conditions. 3.26 Development loans, based on ranch development plano approved by the Project Director, vould be made to ranchers by participating banks at 9% in- terest for terms of 8-12 years including grace periods of 3-5 years. An in- terest rate of 9% is in line wíth the prevaílíng rate for rural credit (para 2.23) and vould be an acceptable rate to the ranchers. The difference between this on-lending rate and the rate of 5% at which IDA funda vould be obtained from the Central Bank (para 3.25) would give the banks a spread of 4%. This would be adequate to cover the cost of technicians seconded to the Project (para 3.22), the loan risk, the admininstrative cost and profit. Loans greater than US$100,000 would require prior approval by IDA. The application of funda generated by the Project is shown in Annex 13. During negotiations, aseurances as te these lending terma and conditions were obtained. IV. MARKETS, PRICES AND PRODUCERS' BENEFITS Marketa 4eOl Until recently the beef cattle sub-sector produced mainly for do- mestie consumption, which ís still low. In 1961, beef consumption was only 6 kg per capita compared with an average of 11 kg for all Central American countries, and 70% of production was for the domestic markets; the remaining 30% consisted of live cattle exporta to neighboring countries for fattening. Beef production has since found additional outlets, principally in the form of bonelase frozen meat exports to the United States. Honduran exports to thís market have risen much faster than the increase in United States imports. While vorld-wide meat imports almost doubled in the 1960-68 period, imports from Honduras increased fourfold. At present, 53% of Honduran cattle pro- duction is for the export market, of which 36% is processed into boneless frozen meat, and 17% is exported on the hoof - mainly to Guatemala. 1402 Meat importe into the United States are subject to import control legislation. At the end of 1968, the United States applied the Meat Import - 15 - Act 1/ for the first time, limiting boned frozen meat imports to a 4% inerease in 1969. The allowed increase is applied equally to all exporting countries. Extraction from the national herd, however, has reached its upper limít under present production practices. Projections on the basis of historic trends indicate that without implementation of the Project, production vould not in- crease over the 1966 level during the next five years. Under such conditions, even a small increase in exports of 2.5% annually would further reduce avail- ability of beef for local consumption (Annex 14). With the Project, an in- crease over present production levels from 4% in the fourth year up to about 15% in the tenth year is estimated. Of this approximately 70% would be ex- ported. The Project would contribute in the tenth year about 30-35% of the increase in exports. 4.03 There is a free market movement of cattle vithin londuras, and no sales or export taxes are levied at any point. Export packing plants pay slaughter taxes averaging L4.20 (US$2.10) per head as compared with taxes and fees of up to L8 (uS$4) being paid at municipal slaughterhouses which supply the domestic market. Largely as a result of these charges there is an extensive illegal slaughter of cattle for local consumption. 4.o4 The present market system has several deterrents to more prof it- able livestock production. They include: (i) on-ranch purchases of live animals by middlemen on an estimated carcass weight basis; (ii) lack of a grading system that vould enable price differ- entials for better quality cattle; (iii) inadequate municipal slaughtering facilities; and (iv) poor communications to outlying areas, resulting ín price variations up to 20%. This situation has been improved to some extent by the privately owned export meat packing plants. They publish price listinga for purchase of slaughter cattle, have adequate slaughter facilities, provide some credit for steer fattening, and offer higher prices per pound for heavier animals. Prices 4.05 An increase of approximately 58% in export prices from 1960 to 1968 stimulated an expansion of boneless meat exporta. (FOB prices in Cen- tral American countries increased from US$0.68/kg to US$1.08/kg during this period). In Honduras, the price increase vas largely pasead on to the pro- ducer, because more export packing plants vere built and competition for cattle increased betveen the plants and Guatemalan cattle buyers. Average Uj Public Lay 88-482 of 1964 regulates US meat imports in accordance vith increases in domestic production. - 16 - national producer prices went up from about L100 (US$50) to L150 (US$75) per animal or US$0.14 to present prices of US$0.22 per kg liveveight. The re- action from producers has been to increase the rate of extract ion from the national herd but with little, if any, improvement in herd productivity. It is unlikely that a downward trend in prices would occur in the future as the application of import quotas by US would not lead to surplus beef production under present and projected supply conditions (para 4.02). Under the Project, producer prices are estimated to be the same as present prices paid for better quality cattle and vould range from L170 (Us$85) to L200 (US$100) per animal. Producer Benefita 4. o6 Substantial increases in net annual income would be derived from investments under the Project (Annexes 4-6, Table 4). After 10 years, annual net incomes prior to debt service on a 400 ha breeding/fattening ranch (Mode) 1) vould increase from about L3,000 (US$1,500) to L30,000 (US$15,000); on a 150 ha dairy-steer/fattening ranch (Model 2) from L4,000 (US$2,000) to L15,000 (US$7,500); and on a 1,500 ha breeding ranch (Model 3) from L14,000 (US$T7000) to L52,000 (US$26,000). After the same time, incrementol increases in the capital value of the herd would be 118%, 66% and 61% respectively. The financial rates of return on the ineremental investments under the Proj- ect, giving livestock producers a strong incentive to participate in the program, would range from about 16% to 21% for these types of ranches (Annex 15). V. BENEFITS AND JUSTIFICATION 5.01 The Project vould asesist Honduras in increasing its supply of beef and milk for domestic consumption and beef for export. After full develop- ment, incremental production wr agriculture and considering this importance, the mission reviewed its organization, policies, lending experience and financial operations. ANNEZ 3 14. The operations of NDB cover several funetions outside of its credit and banking activities. It is concerned with the operation of smail agricultural supply stores; operates the Government's floor price progran for purchase of corn, rice, beans and sorghum together with 17 storage and marketing facilities; operates the country's principal milk pasteurization plant at San Pedro Sula and a cotton gin; is involved in tobacco operations and administers the National Coffee Fund. By-and-large, these operations have not been profitable. The most profitable operations have been the San Pedro milk pasteurization plant and the Coffee Fund. It ia likely that the income from these activities will be sharply reduced in the future since there is a plan for NDB to relinquish its interest in the milk plant to private shareholders. As for the Coffee Fund, about 70-80% of the proceeds are to be used in the future for a program of agricultural diversification. 15. NDB's credit operations have been weak. It has a serious record of past-due accounta. Of its total agricultural loan portfolio (December 31, 1968) 46% of L42.7 million (US$21.3 million) was either past-due, temporarily extended, or had been re-written. Reserves agaínst doubtful accounts and probable losses were not set-up until 1968, following a special audit review by the Superintendent of Banks of all loans with respect to age of delinquency, probability of re- paynment, and collateral value of security. These reserves are now about 5% of gross loan portfolio but this still n'- bo inicdequate especially in view of the substantial amount of delinquencies and weak collection policies. 16. NDB is well capitalized, having about L22 million (US$11 million) in paid-in capital. This has come principally as interest free grants from Governnent. In 1968, LL million (US$2 million) was received and an equal amount is expected in 1969. Also it has received funds from US-AID (US$2.0 million) for housing, about US$8.0 million is expected out of a ne* loan anicuntiíig to US$9.5 mil lion and three loans have been grantad by the Inter-American9Davel.opment Bank aggrega- ting US$15.5 million. It is expected that the balance of the third IDB loan will be disbursed by the end of 1969. 17. The financial operations of NDB reflect continuous annual losses. Losses during 1965-1968 ranged from about L370,000 (US$185,000) to Ll million (US$0.5 million) annually. The highest loss was experienced in 1968 after provision was made for more adequate reserves against doubtful accounts. (Under proper accounting practices such reserves should be distributed over previous years rather than charging the full amount against one year's operationsa) Annual losses have caused NDB to live on about one-half of the capital contributed by the Government, which from 1965-1968 totaled L13.2 million (US$6.1 million). 18. NDB would not participate in the Project as one of the partici- pating banks. It has several on-going and prospective credit projects, financed in part by IDB and US-AID. Although some improvement in its operations is underway, its credit and financial operations are not considered to be satisfactory. December 16, 1969 HONDURAS A!1ÁŽZX ' 'farle 1 LIVESTOCK DEVELOPMETIT PROJECT Loan Portfolio by Sector of the Banking _ystem, November 30, 1968 (Lemlpiras million) Commercial Banks Development Banks 1/ Finance Companies Entire Banking System Sector Anount % of Total ount % of Total Amount % of Total Amount % of Total Agriculture 14.3 9 25.2 45 0.3 1 39.8 17 Livestock 7.5 5 17.3 31 2.4 10 27.2 12 Hogs and poultry 1.4 1 0.5 1 - 2/ - 1.9 1 ish o0.4 - - 2/ - 2/ / _ °.4 Forestry 2.9 2 - - _ 2.9 1 Subtotal 26.5 17 43.0 77 2.7 11 72.2 31 Mining 0.5 - 0.2 - - - 0.7 - Industry 26.4 18 6.4 12 12.2 53 45.0 20 Services 6.5 4 0.4 1 0.9 4 7.8 3 Transport U.h 8 _ 2/ - 1.0 4 12.4 5 Housing 31.1 21 3.5 6 3.8 17 38.4 17 Conmercial 36.h 24 1.1 2 1.5 7 39.0 17 Consumption 12.0 8 1,2 2 1,0 4 14.2 7 Total 150.8 L00 55.8 100 23.1 100 229.7 100 1/ Banco Nacional de Fomento (95%) and Banco Municipal Autonomo (5%). 2/ Less than 100,000 Lempiras. Source: Banco Central Statistical Bulletin, November 1968. December 16, 1969 ANNa( 3 Table 2 HONDURAS LIVESTOCK DEVELOPMENT PROJECT Amount and Per Cent of Agricultural Credit by Kind of Lending Institution (Lenpiras million) 1964 1965 1966 1967 1968 % of % of . % of % of %of Lending Institution Amount Total Amount Total Amount Total Amount Total Amount Total Private Commercial Banks 9.2 30 12.3 30 16.9 33 18.8 31 26.6 37 Development Banks 20.7 69 27.2 67 32.4 64 40.0 67 43.0 59 Finance Companies 0.3 1 1.1 3 1.5 3 1.2 2 2.7 4 Total 30.2 100 4o.6 100 50.8 100 60.0 100 72.3 100 Source: Banco Central December 16, 1969 ANIMX 3 Table 3 HONDURAS LIVESTOCK DIVELOPMENT PROJECT Summary Financial Account, Central Bank 1968 (Lempiras million) ASSETS LIABILITIES International Reserves 120.2 Foreign 45.9 Notes in Circulation 60.4 Domestic Assets Coins in Circulation 7.1 Central Government Deposits 15.8 Public Sector Credit: Local Government Deposits 0.1 Central Government 5.1 Autonomous Institutions Deposits 6.0 Local Government 0.3 Conimercial Banks 17.6 Autonomous Institutions 3.9 National Development Bank 0.4 Autonomous Mun. Bank 0.3 Banking Sector Credit: Other Institutions o.6 Commercial Banks 9.8 Monetary Deposits 0.3 National Development Bank 11.5 Other Deposits 0.5 Other Financial Institutions 1.5 Miscellaneous 1.2 Total .5i6. Private Sector Securities 0.1 CAPITAL AI\D RESMRVES 15.2 Miscellaneous 19.0 Total 171.h Total 171.h Source: Central Bank. December 16, 1969 HONDURAS LIVESTOCK DEVELOPMENT PROJECT Consolidated Balance Sneet of Principal danking InstItations .Decemer 3D, lqac! a n(Lempiras million Private Finance Private Commercial 3anks Company National de El Ahorro Londres y Bank of Financiera Development 9' ASS«'rS Atlantida Honduras _ondureno Montreal America Bancahsa Hondurena Bank(Gov't) Current Cash 5.0 1.3 1.5 1.1 0.7 0.4 - 1.B Deposits - Central Bank 5.3 i.5 2.( 1.I 1.3 0.9 0.1 2.4 Government Secirities 7.9 1.6 2.6 2.14 0.5 1.2 0.2 1.0 Other Deposits & Cheo:es 2.1 0.7 0.6 1.2 0.3 0.2 0.4 0.4 Sabtotal 21¡ 57 3.2 2.7 0.7 Investments Loans and Discounts 65.2 20.2 21.7 10.3 12.2 12.9 18.4 54.2 Other Investments and Bonds 2.3 0.4 - - 0.2 0.1 0.3 7.4 Subtotal 67.5 20. .21 10.3 12 13.0 7 6i.6 Real Estate and Equipment 8.3 2.4 0.8 1.0 o.6 1.3 1.3 6.5 Other 3.6 1.6 0.5 2.2 1.5 0.5 o.B 17.4 Total 103.7, 30.1 3 19.9 17.7 17.5 91.1 LIABILITIES Deposits Demand 41.6 15.4 9.3 8.1 10.0 2.4 1.2 10.7 Time 41.7 6.2 16.9 7.6 4.2 4.2 - 5.4 Special Savings 6.2 Subtotal 3 2ó.2 15.7 114.2 1.2 161 Other Liabilities Central Bank 3.7 - - - - 1.5 11.2 Accounts Payable o.6 0.2 0.3 - 0.1 0.1 0.1 Long-Term Foreign Loans - - - - - 13.0 26.0 Miscellaneous 2.3 2.3 2.2 0.1 0.3 3.4 1.1 6.4 Suototal óó 0 5 0.1 - 15.7 Total Liabilities 924.1 37É.7 I gU 16.3 16 .9 59.7 CAPITAL AND RESERVES Capital - paid-up 14.0 3.0 0.4 3.5 3.0 0.8 4.0 22.8 Legal Reserves 6.8 2.4 0.9 0.1 - 0.1 0.4 Contingency Reserves 3.0 o.6 0.4 0.1 0.3 0.2 8.6 Sa0total ___7_ __ T17 1 3.1 1.2 ___ -317 Total Liabilities, Capital and Reserves 103.7 30.1 30.4 19.9 17.7 17.5 21.5 91.9 Soirce: Central dank HONIJUaA LIVESTOCX DEVEL0O---T PROJECT Model 1. - Development of Beef Breeding/FattEning Ranch, 400 Ha On-Ranch Investnent Cost Projections Average Units Unít Cost Average Ccet Inmbtments by Yeare Total Cost for 75 Ranchos ,grRach per Ranch 123 _ Lenptra Dol-lar EqMliv. Investment Category (L) (L) Units(No.) Cost (L) Inits(No.) Cocut (L) Unita Cost ( (L Wo T (US* 000) Pasture Establishbwt New Formation (Ha) 10 150 1,500 10 1,500 - - - 112.5 56.25 Renovation (Ha) 200 60 12,000 100 6,ooo 50 3,000 50 3,000 900.0 450.o Fences New (Fm) 5 500 2,500 5 2,500 - - - - 167.5 93.75 Renl ( 14 150 2,100 lo 1,500 2 300 2 300 157.5 78.75 Watering Facilities Wells (No.) 1 3,000 3,000 1 3,0oo - - - - 225.0 112.5 Troughs (No.) 5 100 500 3 300 1 100 1 100 37.5 18.75 Engines and Pumps (No.) 1 2,000 2,000 1 2,000 - - - - 150.0 75.o Ranch Structures Corrals and chutes (No.) .5 1,800 900 .5 900 - _ _ _ 67.5 33.75 Dips/Spray Races (No.) .5 1,500 750 .5 750 - _ _ - 56.25 28.13 Silos (trench or bunker) (No.) 2 500 1,Ooo _ - _ _ 2 1,000 75.o 37.5 Machinery and Equipment Traetors (No.) .5 7,000 3,500 - - - - .5 3,500 262.5 131.25 Forage Equipment (No.) .5 6,000 3,000 - - - .5 3,000 225.0 112.5 lreeding Stock Heirers (No.) 70 300 21,000 50 15,000 20 6,ooo _ - 1,575.0 787.5 Bulls (No.) 9 1,500 13,500 6 g,ooo 2 3,000 1 1,500 1,012.5 506.25 Ssbtotal - - 1 2,400 _0 12,400 W 2521.9 Contingencies - - 6,750 4,250 1,250 1,250 506.2 253.1 T O T A L - _ 7Li,000 46,700 13,650 13,650 5,5500. 2,775.0 IE! H06DtlAS LIVESIOCK DEVlWllT PROJECT Yodel 1. - Deovlltent of BErding/Fattenir4 Ranch, 400 Ha Herd Devuloment ProJeotione ---------- End of Ranoh Year--------------------------------- Before Category Deelopaent 1 2 3 4 5 6 7 8 9 10-20 Herd Cempotition (No.) Breeding Cows 140 199 219 220 224 240 260 260 260 260 260 Bulla 6 8 9 9 9 10 10 10 10 10 10 Calves 78 B4 124 142 154 168 1BO 194 194 194 194 Heifers - 8-24 montha 36 37 40 60 69 75 82 88 95 95 95 Heifera - 24-36 34 35 36 39 58 67 73 80 86 93 93 Steera - 8-24 36 37 40 60 69 75 82 88 95 95 95 Steers - 24-36 34 35 36 39 58 67 73 80 86 93 93 Steers - Over 36 months 33 33 34 35 38 - - - - - - Total Animala 397 468 538 604 679 702 760 800 826 840 840o Total Animal Units (AUla) 319 384 414 462 525 534 580 606 632 646 646 Purehased Steers - 96 186 218 195 266 220 194 168 154 154 Total AU'a 319 1480 600 680 720 800 800 800 800 800 800 Mortality (No.) Breeding Cows 7 6 9 7 7 4 5 5 5 5 5 Calves After Weaning 4 4 4 4 4 4 4 4 4 4 4 Heifers - 8-24 months 2 1 1 1 2 2 2 2 2 2 2 leífers -.24-36 2 2 2 1 1 1 1 1 2 2 2 2 Steers - 8-24l 2 1 1 1 2 2 2 2 2 2 2 2 Steers - 24-36 2 1 1 1 1 - - 1 2 2 2 St.eers - Over 36 months 1 1 1 1 1 - - - - - - Purchased Steers (2) - 2 4 4 4 6 5 4 14 4 4 Total 20 18 23 20 22 19 19 19 21 21 21 Sales (No.) Cull Cows 17 17 24 27 27 27 30 30 30 30 30 Cull Bul4s - - 1 - 1 - 1 Heifers - 24-36 months - - - - - 10 11 37 143 49 56 Steers - 24-36 - - - - - 58 67 72 79 84 91 Steers - Over 36 32 32 32 33 34 38 - - - - - Subtotal 49 53 57 61 61 133 109 139 152 163 178 Psrchased Steers - 94 182 214 191 260 215 190 1614 150 150 Total 49 147 239 275 252 393 324 329 316 313 328 Purchases (No.) Breeding Females - 50 20 BuJís 1 6 2 1 - 2 1 - 1 - 1 Feeder Steers - 96 186 218 195 266 220 194 168 154 154 Total - 152 208 219 195 267 221 194 169 154 155 114 Production Data Mortality (Adult) -% 5 4 3 3 2 2 2 2 2 Effective Calvíng Rate - 55 60 61 65 70 75 75 75 75 75 75 1 c Carrying Capacity - AU/ha 1 1.2 1.5 1.7 1.8 2.0 2.0 2.0 2.0 2.0 2.C Area of Pastures - Ha 390 400 400 400 400 400 400 400 400 400 400 Total Carrying CaDacity - AU'S 390 480 600 680 720 800 800 800 800 800 800 Actual Herd Nos. - AU's 319 384 414 462 525 534 580 606 632 646 646 access Capacity for F. Steers - No. 71 96 186 218 195 266 220 194 168 154 1514 fi Output Rate - % 12.3 11.3 10.6 10.1 9.0 18.9 14.3 17.1 18.4 19.4 21.2 HONDURAS LIVESTOCK DEVELWRfiNT PRJECT Nodel 1. - Development of Breeding/Fattening Ranch, 400 Ha Pr jection of Sales and Operating Expenses Unit Value of Cattle Before -------------------------------------------- Ranch Year---- -- -- Category Tears 0-5 Tears -10 Develcpment 1 2 3 4 5 6 7 8 9 10-20 (L) Y L) NoN. L No. (L) No. (L) No. (L) No. (L) No. ML) No. (L) No. (L) No. (L) No. (L) No. (L) Sales Cull Cows 150 170 17 2,550 17 2,550 24 3,600 27 4,050 27 4,050 27 4,050 30 5,100 30 5,100 30 5,100 30 5,100 30 5,100 Cull Bulls 280 350 4 1,120 1 280 1 280 - 1 350 1 350 1 350 Surplus Heifera 280 280 10 2,800 11 3,080 37 10,360 43 12,040 49 13,720 56 15,680 Steera - 24-36 montha 190 230 58 11,020 67 15,410 72 16,560 78 17,940 84 19,320 91 20,930 Steers - 36-48 months 210 32 6,720 32 6,720 32 6,720 33 6,930 34 7,140 38 7,980 Feeder Steers 200 200 94 18,800 182 36,400 214 42,800 191 38,200 260 52,000 215 43,000 190 38,000 164 32,800 150 30,000 150 30,000 Subtotal - - 9,270 29,190 47,000 54,o60 49,390 77,850 66,940 70,020 68,230 68,140 72,06O Milk Sales ,/ 96 45 4,300 45 4,300 45 4,300 45 4,300 45 4,300 45 4,300 Total Sales 13,570 33,490 51,300 58,360 53,690 82,150 66,940 70,020 68,230 68,140 72,060 Operating Expenses (L) Salt and Minerals 3/ 900 1,400 1,800 2,100 2,150 2,300 2,400 2,400 2,400 2,400 2,400 Animal Health h1 1,350 2,200 2,950 3,250 3,300 3,350 3,800 3,800 3,800 3,800 3,800 Pasture Maintenance 5/ 1,900 3,000 3,500 3,500 4,000 4,000 4,000 4,000 4,000 4,000 4,000 Fence & Water Maintenance 6/ 300 400 400 400 400 400 500 700 800 1,000 1,000 Building Maintenance 7/ 200 400 400 400 400 400 500 500 500 500 500 Wages Foreman 8/ 1,500 2,250 2,500 2,700 2,700 2,700 2,700 2,750 2,750 2,750 2,750 Wages Stockmen 92 2,400 4,000 4,000 4,900 5,000 5,000 3,600 3,600 3,300 j,300 3,300 Fuel, Oil & Lubricants 400 800 800 800 800 800 800 800 800 800 800 Machinery Maintenance 10/ 250 600 600 700 800 800 800 800 800 800 800 BU11 Replacement 11/ 800 - 1,000 1,000 - 1,000 1,000 Miscellaneou= 500 800 900 950 900 950 800 800 700 850 850 Subtotal 10,500 15,850 17,850 19,700 20,450 21,700 20,900 20,150 20,850 20,200 21,200 Purchase of Feeder Steers - 12,500 24,200 28,300 25,400 314,600 28,600 25,200 21,800 20,000 20,000 Total Expenses 10,500 28,350 42,050 48,o0o 45,850 56,300 49,500 45,350 42,650 40,200 41,200 Net Operating Inccme 3,070 5,140 9,250 10,360 7,840 25,850 17,440 24,670 25,580 27,940 30,860 1, Due to imorovement in weight and quality as a result of upgrading. 7/ Rising to 5% of L10,000. - 2/ lilk returna based on milkdng 45 cows, each cou producing 600 litres per year 8/ Above average foreman required. atL 0.16 per litre (i.e. L 96 per cow per year). 9/ Five stocimen while milking- three thereafter. 1/ L3 per AU including feeder steera. 10/ 10% of estisated value, or L 8,000. -/ L4.5 per AU including feeder steera plus reterinary. ia LI0 per ha. Nonduran bred bulls at L 1,000 per head. 6/ Rising to 4% of L25,000. eHONDURA 5 LIV'bS*SC DEV7LC0P2EN PROJEC(T Model 1. - Developraent of Beef Breeding/Fattening Ranch, 4G& Ha Fina;.cial Projection ço ~~~~~~~~~~~~~~~~~~~~~~~~~(L'000) Before ----------------------------------------- Ranch Year- - ------- Development 1 2 3 4 5 6 7 m 9 10 U-20 1. Cash Infloir Total Sales 13.6 33-5 51.3 58.4 53.7 62.2 66.9 70.0 68.2 68.1 72.1 72.1 Cormercial Bank Loan 37.4 10.9 10.9 Total 13.6 70.9 62.2 69.3 53.7 82.2 66.9 70.0 68.2 68.1 72.1 72.1 2. Cash Outflow Ranchers' Investment Contribution - 9.3 2.7 2-7 Investment of Loan Funds - 3 7. L 10.9 10. 9 Operating ?apenses 10.5 23.1 42.1 48.o 45.9 56.3 49.5 45.4 42.7 40.2 41.2 41.2 Total 10.5 7 5.1 55.7 61.6 h5.9 56.3 49.5 145.4 42.7 40.2 41.2 41.2 3. Cash Balance (1-2) 3.1 (4.2) 6.5 7.7 7.8 25.9 17.4 24.6 25.5 27.9 30.9 30.9 4. Debt Service Interest on Bank Loan 3.4 14.3 5.3 5.3 5.3 4.8 4.2 3.2 2.1 1.0 - lnterest on Working Capital 1.3 2.4 2.8 2.5 3.5 2.9 2.5 2.2 2.0 2.0 2.0 Loan Amortization - - - - 6.o 6.o 12.0 12.0 12.0 11.? - 5. Cash Balance after Debt Service (3-4) 3.1 (8.9) ( .2) .4) - 11.1 3.7 5.9 8.1 11.8 16.7 28.9 6. Annual Incr utal Caoh Balonce 1/ (12.0) (3.3) (3.5) (3.1) 8.0 .6 2.8 5.- 8.7 13.6 25.8 7. Annual ILcrmeantal Herd Value 2/ 17.1 9.4 6.9 10.9 9.6 17.4 5.4 4.1 2.4 - 8. Total Annual Incremental Balance 5.1 6.1 3.4 7.8 17.6 18.0 8.2 9.1 11.1 13.6 25.8 (6 + 7) 1/ As coimared with ranchers' net cash pcsition before development. 2/ As compared with before development herd value of L 70,3'X). Also reflects rising value of 'ottle of abou; 0% from years 1-5 to years 6-20. e HONDIJRAS o LIVEST'C: DEVELOPMEN1T .POJECT Nodel 2. - Development of Dairy-Steer/Fattening Ranch, 150 Ha On-Ranch Investment Cost Projections 'o Average Unita tnit Average Cost Invemtente by Year Total Cost for 50 ¡nches Investment Category per Ranch Cost per Ranch 1 2 3 1 ir Doll v (No.) (I) Units (No.) Cost (L) tJnits (No.) Cost (L) Ulits (No.) Cost (L) r 1 . Pasture &c Forage Feed Establishment Pasture R%ovation (Ha) 50 70 3,500 25 1,750 25 1,750 - - 175.0 87.5 Forage Feed (Ha) 25 100 2,500 10 1,000 10 1,00X 5 500 125.0 62.5 Fences New (Km) 4 500 2,000 2 1,000 1 500 1 500 100.0 50.0 Renewal (Km) 10 150 1,500 4 600 4 600 2 300 75.0 37.5 Watering Facilities Wells,Equipped 1 3,600 3,600 1 3,6(X) 180.0 90.0 Troughs and Piping 250 1,000 2 500 2 500 50.0 25.O Dairy (incl. tak1 1 500 500 500 25.0 12.5 Ranch Structures Dairy Shed Improvement 1 500 500 500 25.0 12.5 Workers' Hauses 1 500 500 500 25.0 12.5 Yards, Cattle Facilities .66 1,500 1,000 500 500 50.0 25.0 Equipment Tick Control Spray Pump .5 800 &00 400 20.0 10.0 (Mobile) Cattle Breeding Bulls 3 1,000 3,000 2 2,000 1 1,000 150.0 75.0 Heifera 10 250 2.500 8 2,000 2 500 1-25.C 62.5 Subtotal - * 22,500 - 13,890 - 7,350 - 1,300 1,125.0 562.5 Contingencies - - 2,500 - 1,650 - 650 2 200 125.0 62.5 TOTAL _ _ 25,000 15,500 6,000 1,500 1,250.0 625.0 HONDURAS LIVESSOCK DEVEWPNMNT PROJECT Model 2. - Develo pment of Dairy-Steer Fattening Ranch, 150 a Herd Development Projections Before --------------------------------------- Ehd of Ranch Year- - - --- - -- Development 1 2 3 4 5 6 7 8 9 10-20 Herd Carposition (No.) Breeding Cows 70 80 85 87 89 90 90 90 90 9C 90 Bulls 4 4 4 1 4 1 4 4 4 4 4 Calves 32 32 40 44 48 53 59 59 59 59 59 Heifers - 8-24 months 15 15 15 19 21 23 25 28 28 28 28 Heifers - 24-36 14 14 14 14 18 20 22 24 27 27 27 Steers _ 8-24 15 15 15 19 21 23 25 28 28 28 28 Steers_ 24-36n 114 4 114 14 18 20 22 24 27 27 27 Steers over 36 13 13 14 14 14 7 10 11 11 11 11 Total Numbers - Dairy Nerd 177 I77 215 233 2140 257 274221 Total Animnal Units - Dairy Herd 144 155 161 171 185 187 198 209 215 215 215 Piorchased Steers - 25 64 814 85 113 102 91 85 85 85 Total Aninal Unita (AUI's) 180 225 255 270 300 300 300 300 300 300 Mortality %Xe.) Breeding Cows 4 4 4 4 4 4 3 3 3 3 3 Calves 4 2 2 2 2 2 3 3 3 3 3 Heifers - 8-24 mionths 1 1 1 1 1 1 1 1 1 1 1 Heifers - 24-36 1 1 - - - - 1 1 1 1 1 Steers -8-24 1 1 1 1 1 1 1 1 1 1 1 Steers -24-36 1 1 - - - 1 1 1 1 1 1 Steers - Over 36 months Porchased Steers - 1 1 3 3 3 3 3 2 2 2 Total 12 11 9 11 11 12 13 13 12 17 12 Sales (No.) Steers - Over 36 sonths 13 13 13 14 14 14 7 10 U1 U1 11 Steers - 24-36 - - - - - 10 9 10 12 15 15 Cull Cows 7 7 7 8 8 10 11 U1 11 U1 11 Surplus Heifera - - - - - 3 5 7 9 12 12 Cull Bulls 2 1 - 1 1 1 1 1 1 1 Subtotal 20 22 21 22 23 38 33 39 44 50 50 Purchased Steers - 24 63 81 82 110 99 88 83 83 83 Total 20 46 84 103 105 148 132 127 127 133 133 Purchases (No.) Heifers - 8 2 - - - - - - - - Bulls 1 2 1 - 1 1 1 1 1 1 1 Steers - 25 64 84 85 113 102 91 85 85 85 Total 1 35 67 84 86 114 103 92 86 86 86 .Production Data Effectire Calving Rate- 45 45 50 52 55 60 60 65 65 65 65 Mortality (Adult) - % 5 5 4 4 3 3 3 3 3 3 3 Extraction Rate - % 12 11 10 10 10 15 13 14 15 18 18 Total Output Rate - % 12 11 10 10 10 14 11 11 11 14 14 Stocking Rate - AU's/Ha 1.0 1.2 1.5 1.7 1.8 2.0 2.0 2.0 2.0 2.0 2.0 Carrying Capacity - AUs9/50 ha 150 180 225 255 270 300 300 300 300 300 300 HONDURAS LIVESTOCK DEVELWMNT POJECT Model 2. - Dairy-Steer/Fattening Ranch, 150 Ha Projection of Sales and Operating Expenses Unit Value of Cattle efo ore - ------------------------------------------------ Ranch Year --------------------------------------------------------------- Category Yearears Developsient 1 2 3 4 5 6 7 8 9 10_20 0-5 6-lo Sales T(L) (L (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) Cull Cows 160 170 7 1,120 7 1,120 7 1,120 8 1,280 8 1,280 10 1,600 11 1,870 11 1,870 11 1,870 11 1,B70 11 1,870 Cull Bulls 250 250 2 500 1 250 - 1 250 1 250 1 250 1 250 1 250 1 250 1 250 Surplus Heifers 220 250 - - - - _ 3 660 5 1,250 7 1,750 9 2,250 12 3,000 12 3,000 Steers - 24-36 months 200 200 10 2,000 9 1,800 10 2,000 12 2,400 15 3,000 15 3,000 Steers - 36-48 months 200 200 13 2,600 13 2,600 13 2,600 l4 2,800 14 2,800 14 2,800 7 1,400 10 2,000 11 2,200 11 2,200 11 2,200 Feeder Steers 200 200 24 4,800 63 12,600 81 16,200 82 16,400 110 22,000 99 19,800 88 17,600 83 16,600 83 16,600 83 16,600 Subtotal - - 20 3,720 9,020 16,570 20,280 20,730 29,310 26,370 25,470 25,570 26,970 26,920 Milk Sales 1/ 130 151 70 9,100 70 9,100 80 10,400 85 11,050 87 11,310 89 11,570 90 13,590 90 13,590 90 13,590 90 13,590 90 13,590 Total Sales 12,820 18,120 26,970 31,330 32,040 40,880 39,960 39,060 39,160 40,510 40,510 Operating Expenses (L) Salt and Minerals 2/ 530 640 750 900 950 1,060 1,080 1,080 1,080 1,080 1,080 Animal Health 3/ 850 1,160 1,350 1,550 1,625 1,790 1,820 1,820 1,820 1,820 1,820 Pasture Maintenance 4/ 750 750 750 1,450 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Maintenance, Fencing 5/ and Water 200 200 200 400 400 400 400 400 400 400 400 Building Maintenance 6/ 300 400 400 400 400 400 400 400 400 400 400 Wages Foreman 7/ 2,000 2,400 2,400 2,400 2,500 2,500 2,500 2,600 2,800 2,800 2,800 Wages Stookmen 8/ 3,400 3,600 3,800 4,400 4,500 4,500 4,500 4,500 5,000 5,000 5,000 Fuel Oil and Lubricants - 200 200 200 200 200 200 200 200 200 200 Machinery Maintenance 50 200 200 200 300 300 300 300 300 300 300 Bull Replacement 9/ 200 800 800 800 800 800 800 800 Cmntingencies (acprox. 5%) 320 475 530 500 630 550 500 500 50° 500 5°° Subtotal 8,600 10,025 10,580 12,400 13,800 14,000 14,000 14,100 14,800 14,800 14,800 Purchase of Feeder Steers - 3,250 8,320 10,920 11,050 14,690 13,260 11,830 11,050 11,050 11,050 Total Expenses 8,600 13,275 18,900 23,320 24,850 28,690 27,260 25,930 25,850 25,850 25,850 Net Operating Incoma 4,220 4,845 8,070 8,010 7,190 12,190 12,700 13,130 13,310 14,660 14,660 1/ Milk sales based on production for each cow in the herd of 810 litres per annum, years 0-5, and 945 litres yeara 6-10. Price L 0.16 per litre. 2/ L 3 per head. 3/ L 4.50 per head plus veterinary services. 4/ L 10 per ha. 5/ 4% of value. 6/ 4% of value. 7/ Competent foreman necessary. 8/ Wages range 4 men at L 900 to 5 men at L 1,000 per man per year. i 9/ Figure before developanet represente diffarence between purchase and sales. HONDURAS 3 LIVESTO{X DEV3LOPH3T PROJECT D Model 2. - Development of Dairy-Steer Fattening Ranch, 150 Ha Financial Projection (L'OO0) Before ----------------------------------------- Ranch Year … - Development 1 2 3 4 5 6 7 o 9 10 11-20 1. Cash Inflow Total Sales 12.8 18.1 27.0 31.3 32.0 140.9 40.0 39.1 39.1 40.5 40.5 40.5 Commercial Bank Loan 12.4 6.4 1.2 Total 12.8 30.5 33.4 32.5 32.0 40.9 40.0 39.1 39.1 40.5 40.5 40.5 2. Cash Outflow Rancher' s Investment Contribution 3.1 1.6 .3 Investment of Loan Funds 12.4 6.4 1.2 Operating Expenses 8.6 13.3 18.9 23.3 24.8 28.7 27.3 25.9 25.9 25.9 25.9 25.9 Total 8.6 28.8 26.9 24.8 24.8 28.7 27.3 25.9 25.9 25.9 25.9 3. Cash Balance (1-2) 4.2 1.7 6.5 7.7 7.2 12.2 12.7 13.2 13.2 14.6 14.6 14.6 4. Debt Service Interest on Bank Loan 1.1 1.7 1.8 1.8 1.8 1.5 1.2 .9 .6 .3 - Interest on Working Capital .3 .5 1.1 1.1 1.5 1.3 1.2 1.1 1.1. 1.1 1.1 Loan Amortization - - - - 3.3 3.3 3.3 3.3 3.3 3.5 - 5. Cash Balance after Debt Service (3-4) _ _ 4.2 .3 14.0 4.8 4.3 5.6 6.6 7.5 7.9 9.4 9.Z 13.5 _ 6. Annual Incremental Cash Balance (3.9) ( .2) .6 .1 1.4 2.4 3.3 3.7 5.r 5.6 9.3 7. Annual Incremental Herd Value 2/ 3.8 1.8 1.5 2.4 .3 6.3 1.7 1.2 - - - 8. Total Annual Incremental Balance (6+7) ( 1) 1.6 2.1 2.5 1.7 8.7 5.0 4.9 5.4 5 . 9.3 1/ As compared to rancher's net cash position before development. 2/ As compared Y'-ith before development herd value of L 28,620. Also reflects rising value of cattle of about 20% from years 1-5 to years 6.20. 1 HONDURAS LIVESTOC! DEVELG.IT 'ROJECT Model 3. - Development af Breeding Ranch, 1.500 Ha On-Ranch Investment Cost Projections Average Units Unit Coet Average Cxt luveetmenta by Years per Rnch poer Ranch 2 Total Coet for10 Ranchee Investment Category (No. (L) Units(No.) Cost (L) Units(No.) Cost (L) Units(No.) Cost (L) (UsI$ f000 Pasture Establishment Renavation (Ha) 600 50 30,000 200 10,000 200 10,000 200 10,000 300.0 150.0 Fences New (!1l) 20 500 10,000 10 5,000 5 2,500 5 2,500 100.0 50.0 Repair (KM) 25 150 3,750 10 1,500 10 1,500 5 750 37.5 18.7 Watering Facilities Wells (No.) 6 3,000 18,000 3 9,000 2 6,o00 1 3,000 180.0 90.0 Storage Tanks (No.) 6 800 4,800 3 2,400 2 1,600 1 800 4s8.o 24.o Drinking Troughe (No.) 18 150 2,700 9 1,350 6 900 3 450 27.0 13.5 Pamping Equipment (No.) 3 1,000 3,000 3 3,000 - - - - 30.0 15.0 Farm Structures Corrals and Chutes (No.) .5 3,000 1,500 .5 1,500 - - - - 15.0 7.5 Dipe/Spraye (No.) .33 1,500 500 .3 500 - - - - 5.0 2.5 Silos (trench or bunker) (No.) 5 500 2,500 2 1,000 2 1,000 1 500 25.0 12.5 Farm Machinery Tractors (No.) .5 7,000 3,500 .5 3,500 - - - - 35.0 17.5 Rotary Siasher (No.) .75 2,00C 1,500 .75 1,500 _ _ _ _ 15.0 7.5 Hay Baler (No.) 1 3,500 3,500 - - _ _ 1 3,500 35.0 17.5 Porage Harvester (Ho.) 1 2,000 2,000 1 2,000 _ - - _ 20.0 10.0 Weighbridge (No.) 1 1,500 1,500 - - - - 1 1,500 15.0 7.5 Molasses Feeders (No.) 20 100 2,000 10 1,000 5 500 5 500 20.0 10.0 Tick Control Spray &qitip. (No.) 1 1,000 1,000 1 1,000 10.0 5.0 Breeding Stock Bulls (No.) 23 900 20,700 19 17,100 1 900 3 2,700 207.0 }94 Subtotal - 1 l12,150 _ 61,350 - 24,900 - 26,200 1,124.5 W.2 Contingencies - - 12 ,550 _ 8,650 - 2,100 - 1,800 125.50 62.8 T O T A L _ - 125,000 _ 70,000 - 27,000 - 28,000 1,250.00 625.0 HONDURAS LIVESTOCK DE7VHPMENT PROJECT Model 3. - Development of Breeding Ranch, 1,500 Ha Herd Development ProJections Before ''------- -- --- Ehd of Ranch Year -------------------------------------------- Category Development 1 2 3 4 5 6 7 8 9 10-20 Herd Comiposition (No.) Breeding Cows 550 600 65o 650 650 650 650 650 650 650 650 Bulls 18 30 30 32 32 32 32 32 32 32 32 Calves Weaned 302 302 360 423 455 488 488 488 488 488 488 Heifera - 8 24 montha 146 146 146 174 205 221 238 238 238 238 238 Heifers - 24-36 n 142 142 142 142 170 200 216 233 233 233 233 Steera - 8-24 n 146 146 146 174 205 221 238 238 238 238 238 Steera - 24-36 ' 142 142 142 142 170 200 216 233 233 233 233 Total Animala 1,446 1,508 1,616 1,737 1,887 2,012 2,078 2,112 2,112 2,112 2,112 Total Animal Ulnits (AU's) 1,144 1,206 1,256 1,314 1,432 1,524 1,590 1,624 1>624 1,621 1,624 Mortality (No.) cOws 16 18 20 20 16 16 16 16 16 16 16 Calves Weaned 10 10 10 12 13 13 12 12 12 12 12 Heifera - 8-24 months 4 4 4 4 4 5 5 5 5 5 5 Heifers - 24-36 11 4 4 4 4 4 4 5 5 5 5 5 Steers - 8-24 4 4 4 4 4 5 5 5 5 5 5 Steers - 24-36 » 2 2 2 2 2 2 3 3 3 3 3 Bulla 1 1 1 1 1 1 1 1 1 1 1 Total 41 43 45 47 44 46 47 47 47 47 47_ Sales (No.) Cull Cows 60 60 60 60 60 70 70 70 70 70 70 Cull Bulls 2 6 - 2 2 4 4 4 4 4 surplus Haifera - 24-36 months 62 10 8 58 62 80 109 125 142 11,2 142 Steers - 24-36 months 140 140 140 140 140 168 197 213 231 231 231 Total 264 216 208 258 264 320 380 412 447 447 447 Purclases (Ho.) Bulls 3 19 1 3 3 3 5 5 5 5 5 Production Data Mortality (Adult) - 3 3 3 3 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Effective Calving Rate - % 55 55 60 65 70 75 75 75 75 75 75 Carrying Capacity - AU/Ha .8 .8 .9 .9 1.0 1.1 1.1 1.l 1.1 1.1 1.1 Area of Pasture - Ha 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Total Carrying Capacity - AU's 1,200 1,200 1,350 1,350 1,500 1,650 1,650 1,650 1,650 1,650 1,650 Output Rate - % 18 11U 16 15 14 16 18 20 21 21 21 HONDURAS CD LIVESTOCK DEVELOPMENT PROJECT Model 3. - Development of Breeding Ranch, 1,500 Ha CD' ProJection of Sales and Operating Expenses Unit Value of Cattle 1/ Rsnch Year Years lears Before Categorv °-5 6-20 Development 1 2 3 6 7 8 9 1-20 (No.) (L) (No.) (L) (No.) (L) (No.i (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No.) (L) (No. (L) Sales Cull Caos 140 150 60 8,hO0 60 8,400 60 8,400 60 8,400 60 8,400 70 9,800 70 10,500 70C 10,500 70 10,500 70 10,500 70 10,500 Cull Bulls 200-300 300 2 hOO 6 1,200 2 500 2 600 4 1,200 4 1,200 U 1,200 4 1,200 4 1,200 Surplus Heifera 220-250 260 62 13,61o 10 2,200 8 1,760 58 13,340 62 14,880 80 20,000 109 28,340 125 32,500 142 36,920 142 36,920 142 36,920 Steers 24-36 Dsonths 110-160 180 140 15,400 140 16,800 140 18,200 140 19,600 140 21,200 168 26,880 197 35,460 213 38,340 231 41,580 231 41,580 231 41,580 Total Livestock Sales 37,840 28,600 28,360 41,340 L4,980 57,280 75,500 82,540 90,200 90,200 90,200 Operating Expenses (L) Salt and Minerals 2/ 2,300 2,h40 2,500 2,600 2,850 3,050 3,200 3,250 3,250 3,250 3,250 Animal Health 3/ 4,900 5,100 5,300 5,500 6,000 6,400 6,700 6,800 6,800 6,800 6,800 Pasture Maintenance 4/ 6,300 5,400 6,600 7,800 9,000 9,000 9,000 9,000 9,000 9,000 9,000 Fence and Water Maintenance 5/ 800 500 500 500 600 700 1,000 1,500 2,000 2,500 2,500 Building Maintenance a/ 300 300 300 300 300 400 400 400 500 500 500 Fuel Oil and Grease 500 800 800 1,000 1,oo0 1,000 1,000 1,000 1,000 1,0o0 1,0oo Machinery Maintenance 7/ 600 800 800 1,000 1,100 1,200 1,500 1,500 1,500 1,500 1,500 Wages - Foreman 8/ - 2,400 2,500 2,500 2,600 2,700 2,700 2,800 3,000 3,000 3,200 3,200 Wages - Stochnan 9/ 2,800 2,800 2 800 3,100 3,200 3,600 4,000 4,500 4,5500 4,500 14,500 Bull ReplacementlO/ 1,800 - - - 2,700 2,700 4,500 44,500 1,5D b4,500 4,500 Contingencies (approx. 5Ç) 1,140 1,000 1,100 1,100 1,450 1,450 1,600 1,650 1,650 1,750 1,750 Total Excpenses 23,840 21,600 23,200 25,500 30,900 32,200 35,700 37,100 37,700 38,500 38,500 Net Operating Income 14,000 7,000 5,160 15,840 14,080 25,080 39,800 45,440 52,5oo 51,700 51,700 3/ Price por head lncreased as a result of upgrading of cattle and better management. 6/ Rising to 5% of value of atructures L 10,000. 2/ AJCoat 12_per AI. 7/ Rising to 10% of machinery value. 3/ L4 por AU plus voterinary services. 8/ Well qualified foreman. 4/ L6 por ha - mainly mechanical after initial renovation. 2/ Ranging fran 4 e L 700 to 5 0 L 900 por annum. 2/ Low after renovation frm loan funds increasing to 4% of L 62,500. 10/ Honduran bred bulla O L 900 per head. C ~~~~~~~~~~~~~~~~~~~~~~~~HOND[IRAS LIVESTOCK DEVEWOH4ENT PROJECT Model 3. - Develooment of Breeding Ranch, 1,500 Ha Financial Projectio - (L'OO0) Before ------------------ ---------Banch ea- ------ ---Tear---- -- Development 1 2 3 4 5 6 7 8 9 10 11-20 1. Cash Inflou Total Sales 37.8 28.6 28.4 41.3 45.0 57.3 75.5 82.5 90.2 90.2 90.2 90.2 Commercial B~nk Loan 56.o 21.6 22.4 Total 37.8 84.6 50.0 63.7 45.0 57.3 75.5 82.5 90.2 90.2 90.2 90.2 2. Cash Outflow Rancher's Investment Contribution 14.0 5.4 5.6 Investeent of Loan Funde - 56.0 21.6 22.4 Operating Expenses 23.8 21.6 23.2 25.5 30.9 32.2 35.7 37.1 37.7 38.5 38.5 38.5 Total 23.8 91.6 50.2 53.5 30.9 32.2 35.7 37.1 37.7 38.5 38.5 38.5 3. Cash Balanee (1-2) 14.0 (7.0) ( .2) 10.2 14.1 25.1 39.8 45.4 52.5 51.7 51.7 51.7 4. Debt Service Interest on Bank Loan - 5.0 7.0 9.0 9.0 9.0 9.0 7.2 5.4 3.6 1.8 - Loan Amortization - - - - - 20.0 20.0 20.0 20.0 20.0 5. Cash Balanoe after Debt Service (3-4) l.o (12.0) (7.2) 1.2 5.1 16.1 10.8 1B.2 27.1 28.1 29.9 651.7 6. Annual Incrsmerotal Cash Balance - (26.0) (21.2) (12.8) (8.9) 2.1 (3.2) 4.2 13.1 14.1 15.9 37.7 7. Annual Incrermental Herd Value -- 20.8 13.5 10.0 17.4 15.1 60.1 6.8 - . - - 8. Total Annual Increeental Balaee (6.7) - ( 6.8) ( 7.7) ( 2.8) 8.5 17.2 56.9 11.0 13.1 141< 15.9 37.7 1/ As compared with rancherse net cash position before development. 2/ As compared with before development herd value of L 211,380. Also reflects rising value of cattle of about 20% from years 1-5 to years 6-20. ANNEZ 7 H O N D U R A S LIVESTOCK DEVELOPM3NT PROJECT Project Costa and Foreign Exchange Compo~nt Model 1 Model 2 Model 3 Dairy/rattening Be f Br.gdAn Total US Dollar Foreign Exchange Fattening Ranches (75) Ranches (50) MInche i (10 Cost F4uivalent Component -____________------------- 0 --ó-) --- -------0_ US$ 000 Pasture Improvement New 112.5 175.0 - 287.5 143.8 15 21.6 Renovation 9oo.0 125.0 300.0 1,325.0 662.5 15 99.4 Fences New 187.5 100.0 100.0 387.5 193.8 40 77.5 Reneval 157.5 75.0 37.5 270.0 135.0 40 54.0 Wateríng Facílítias Wells 225.0 180.0 180.0 585.0 292.5 35 102.4 Troughs and Tanks 37.5 50.0 75.0 162.5 81.2 35 2B.4 Engines and Pumps 150.0 - 30.0 180.0 90.0 35 31.5 Dairy - 25.0 - 25.0 12.5 35 4.4 Ranch Structures Corrals and Chates 67.5 50.0 15.0 132.5 66.2 20 13.2 Dips/Spray Races 56.3 20.0 15.0 91.3 45.6 40 18.3 Silo Tranch 75.0 - 25.0 100.0 50.0 20 10.0 Dairy Shed - 25.0 - 25.0 12.5 20 2.5 Houses - 25.0 - 25.0 12.5 20 2.5 Hachinery and Equipment fractors 262.5 - 35.0 297.5 148.8 70 104.1 Forage Equipment 225.0 - 70.0 295.0 147.5 70 103.2 Mi3cellaneous - - 35.0 35.0 17.5 70 12.3 Breeding Stock Heifera 1,575.0 125.0 - 1,700.0 850.0 - - Bulls 1,012.5 150.0 207.0 1,369.5 684.7 30 205.4 Contingencies 506.2 125.0 125.5 756.7 378.4 24 90.8 Total Capital Development 5,550.0 1,250.0 1,250.0 8,050.0 4,025.0 981.5 Working Capital 1/ 1,501.5 5594 2,060.9 1,030.4 - - Total Ranch Development 7,051.5 1,809.4 1,250.0 10,110.9 5,055.4 19 981.5 Technical Services - - 352.5 176.2 60 106.2 Total Project Cost _ 10,463.4 5,231.6 21 1,087.7 1/ Purchase of Feeder Stears. December 16, 1,69 u iHONDURAS LIVESTOCIK DEVELOPMENT PROJECT Technical Services Budget Foreign Extchange Project Years Total Cost Coraponent EKpenditure Items 1 2 3 4 5 Lempiras li 1 quiv. % s$ -------------------------------- (Lempiras>) ------------------------___ Operating Expenses Project Director 1/ 54,000 54,000 54,000 54,000 54,000 270,000 135,000 6/ 75 101,250 Secretary 3,500 3,500 3,500 3,500 3,500 17,500 8,750 - Driver/Meseenger 2,500 2,500 2,500 2,500 2,500 12,500 6,250 - Per Diem Allovances / 4,000 4,000 4,000 4,000 4,000 20,000 10,000 - Office 2/ 500 500 500 500 500 2,500 1,250 - Tranaportatiom 1/ 2,500 2,500 2,500 2,500 2,500 12,500 6,250 30 1,875 Miscellaneous 1,500 1.500 1t°00 1.500 7.500 3 T50 - Subtotal 68,500 68,500 68,500 68,500 68,500 3142,500 171,250 60 103,125 Capital Erpenditures Vehicle 7,000 - - - - 7,000 3,5oo 70 2,450 Office Equipment and Purniture 2,500 - - _ _ 2,500 1,250 50 625 Contingencies 500 - - 500 250 - Subtotal 10,000 - - - - 10,000 5,000 6/ 62 3,075 TOTAL 78,500 68,500 68,500 68,500 68,500 352,500 176,250 60 106,200 ji Internationally recruited; finance provided includes salary, gratuity, international travel, family and housing allowances. 2/ Director approximately 100 days at L 30/day, and driver 100 days at 1 10/day. 2/ Allowances cover office supplies, telephone, etc. Office space vill be provided by Central Bank. .V Estimates of L 1,500 yearly for fuel, repairs and maintenance of vehicle, and L 1,000 for in-country air travel. 5/ Includes adninistrative services of Central Bank. 6/ Financed by IDA Credit. Note: In addition to the above technical and administrative services, it is estimated that two livestock tehicians would be needed beginning Year-1 and two more beginning Year-2. These technicians would be provided by the participating banks. Their costs are not included in total Project cost. ANN1a 9 HONDURAS LIVTQOXW Dl¡VF !LO PROJEXT PhaBiZI of Project Irvestments and IDA Disbursements --_--------P- roject Year- --- Category 1 2 3 4 5 Total RFan>h Investment Ran,-hl Plans Initiated 40 65 30 - - 135 Total Ranch Investments 758 1,45o 1,169 504 14i 4,025 (Us$0ooo) IDA Disbursement (us$'000) Ranch Subloans 1/ 455 870 701 303 86 2,L115 Technical Services 32 27 27 27 27 140 487 897 728 330 113 2,555 1/ ;,er.stitutes 60% of total ranch investments. Deceriber 16, 1969 HONDURAS: LIVESTOCK DEVELOPMENT PROJECT ORGANIZATION CHART PROJECT COMMISSION CENTRAL BANK MINISTRY OF NATURAL RESOURCES MINISTRY OF ECONOMIC AFFAIRS AND FINANCE …___________ NATIONAL PLANNING COUNCIL -_ PARTICIPATING BANKS 1 / NATIONAL AGRARIAN INSTITUTE NATIONAL CATTLEMEN'S ASSOCIATION NATIONAL DEVELOPMENT BANK (OBSERVER) PROJECT DIRECTOR (EXECUTIVE SECRETARY) PARTICIPATING P ROJECT DIRECTOR PARTICIPATING BANKS ~~~~~~~~~~~~~~BANKS TECHNICAL STAFF OF PARTICIPATING BANKS PARTICIPATING RANCHERS 1/ One representative each from: z z Regional Branch Banks, North Coast X "National" Banks, Tegucigalpa i "Foreign" Banks, Tegucigalpa IBRD - 4338(2R) AN¡E: 11 HONDURAS LIVESTOCK DEVELOPMENT PROJECT Duties, Responsibilities and Authorities of the Project Director The Project Director, although seconded to the Central Bank, shall report to the Project Comnission. He shall have the technical responsibility for implementation and execution of the Project, and shall have the following specific duties and responsibilities: (a) advising the Project Commission on major policy decisions in respect of the Project; also would act as Executive Secretary; (b) executing the Project in accordance with poiíoies and prooedures agreed to by the Project Comnission; (c) cooperating with the management of the Central Bank and of the Participating Banks toward accomplishing Project objectives; (d) approving secondment of such technical staff to his office as he considers necessary to carry out Project activities; (e) training of Project staff as may be necessary for £ulfillment of Project objectives. (f) approving or disapproving all ranch development plans prepared and appraised under the Lending Program; (g) providing such supervision and technical assistance as necessary to ensure successful completion of each ranch development plan and loan; (h) advising Participating Banks through the Project Commission of any misuse of the proceeds of a ranch development loan or failure on the part of the borrower to carry out the relevant ranch development plan and recormending remedial action therefor; (i) establishing and maintaining records for sample ranches as needed for Project evaluation; (j) preparing an annual budget for the needs of the Project staff and office to be submitted to the Central Bank; and (k) preparing quarterly and annual Project progress reports for sub- mission to the Project Comnission and Central Bank and for transmittal to IDA. December 16, 1969 tl H O N D U R A S LIVESTOCK DEVELWPMENT PROJZCT Proiected aources and Application of Funds - Central Bank Livestock Account (L' ne)OD o' ATEGR- --------e-ar-----------------------------_-----_-------_-_-_________-___ 1 2 3 1k 5 5 7 d 9 15 11 12 13 114 15 16 Total SOURCE OF FUNDS IDA Credit for: First Loans 910 1,740 1,402 605 173 - - - _ _ - - _ _ _ _ _ 4,830 Technical Services 1/ 64 514 51 514 514 - - - - - _ _ _ _ 280 Interest Receir,ts from P.B.'s. First Loana (5%) !-5 1"' 203 23" 244 235 214 179 136 89 42 10 - Second Loans (5%) - - - - - 7 29 65 109 157 205 237 245 243 242 241 - Repanuent of Principal by P.., First Loans 2/ - - - - 127 422 701 859 949 939 639 194 - _ _ _ 4,830 Second Loans 3/ - - - - 19 517 946 1,222 1,618 2,410 2,376 - Second Loans Account - - - - _ 136 4136 715 874 964 973 1,123 1,057 1,139 1,534 2,326 11,327 (Rollover funds) TOTAL 1.019 1,926 1,659 892 598 800 1.380 1.818 2,068 Z,168 2,376 2,510 2.524 3,000 4,186 4,943 - APPLICATION OF FUNDS First Loans to P.B.'s. 910 1,740 1,402 605 173 - - - - - - - - - - - Second Laona to P.B.'s. - - - - - 136 436 715 874 964 973 1,173 1,107 1,189 1,584 - - Technical Services 4/ 78 68 68 69 69 10 10 10 10 10 10 10 10 10 10 136 - Interst PSYents to Gover=2mnt (1;. 5S) First Loans 40 119 183 210 220 212 193 161 122 eo 38 9 - - - - - Second Loans - - - - - 6 26 58 98 141 184 213 220 219 218 217 - Principal P enta to r,overriment -- - - - - - 148 48 48 48 48 48 288 14, 542 Livestock Account 6/ (9) (1) 6 8 136 436 715 874 964 973 1,123 1,057 1,139 1,534 2,326 4,542 - TOTAL 1,019 1,926 1,659 892 598 800 1,380 1,818 2,068 2.168 2,376 2,510 2,524 3,000 4,186 4,943 _ 1/ Includes salary, international travel, family and housing allowances of Project Director plus CIF cost for transport (vehicles) and office enuipment. 2/ Based on average of 4 years grace plus 6 equal annual payments. (Loans made in Year-3 would haye last orincinal installment maturity in Year-12). 3/ Based or. narrowing repayment terms, as well as grace neriods, as the externsion cf Stage II loauis acproaches Year-i. 4/ Includes tfunds fron IDA Credit plus local costs of Project Director and administrative costs of Central Bank. £/ No.payments during Years 1-10 and 1% per year during Years 1-1, (IDA terms) on L 4.8 million (US$2.4 million). 6/ Central Be.k would recover deficits of ye2rs 1 2nd 2 -n :rqrs 3 and 4 with a small surplus (L 4,9oo). Stage 11 rollover lending w3uld thus begin in years 5-6. t ~~~~~~~~~~~~~~~~~~~~~~H O N D U R A S LIVESTOCK DEVELOPMENT PROJECT Projected Sources and Application of Funda - Participating Banks o' (L'000) > ~~~~~~~~~~~~~~~- -- - - - - - - - - - - - - - - - - - - - - - - - - - - - Y e a r - - - - - - - - - - - - - - - - - - - - - - - - - - - - - CATEGORY 1 2 3 6 7 9 10 11 12 13 14 15 16 SCFRCE OF FUNDS Central Bank - First Loans 910 1,740 1,402 605 173 - - - - - - - - Central Bank - Second Loans - - - - - 136 436 715 874 964 973 1,123 1,057 1,139 1,534 2,326 Interest Receipts First Loana (9%) 109 318 486 559 580 564 514 430 327 210 100 23 - - Second Loans (9%) - - - - - 12 51 115 194 281 368 428 424 437 436 217 Working Capital (10%) 1/ 30 113 207 251 275 297 285 248 223 210 206 206 206 206 206 206 Repayment Principal-31 First Loans - - 170 562 935 1,145 1,265 1,252 853 290 - _ _ _ Second Loans - - - 19 517 946 1,222 1,618 2,410 4,795 Working Capital 299 1.128 2.068 2.504 2.753 2.968 2,853 2.484 2.226 2.095 2.059 2.o59 2.o59 2.059 2.0591 2.059 TOTAL 1.348 3.299 4.163 3.919 3.951 4.539 5.074 5.137 5,109 5.031 5.076 5.075 4.968 5.459 6.645 9,603 APPLICATION OF FUND First Loans 1,213 2,320 1,870 807 230 - - - - - - - - - - - Second Loans - - - - - 136 436 715 874 964 973 1,123 1,057 1,139 1,534 2,326 Working Capital 299 1,128 2,068 2,504 2,753 2,928 2,853 2,484 2,226 2,095 2,059 2,059 2,059 2,059 2,059 2,059 Technical Services and Administrative Costa 3/ 30 93 149 174 181 91 92 94 99 107 114 126 136 143 150 150 Interest Pamnts to CB (5%) First Loans 45 132 203 233 244 235 214 179 136 89 42 10 - - - - Second Loans - - - - - 7 29 65 109 157 205 237 245 243 242 241 Repayment of Principal to CB First Loans - - - - 127 422 701 859 949 939 639 194 _ _ _ _ Second Loans - - - - - 19 517 946 1,222 1,618 2,410 4,795 Sub-total 1,587 3,673 14,290 3,718 3,535 3,819 4,325 4,396 l4,393 4,370 4,549 4,695 4,719 5,202 6,395 9,571 Net Cash Flow (239) (376) (127) 201 416 720 749 741 716 661 527 380 249 257 250 32 TOTAL 1.348 3.299 4.163 3,919 3,951 4,539 5.074 5.137 5,109 5,031 5,076 5,075 4,968 5,459 6.645 9,603 Incremental Net Flow (239) (615) (742) (541) (125) 595 1.344 2,085 2,801 3,462 3,989 4.369 4.618 4,875 5.125 5.157 1/ Nom`nal interest rete C/ but effective cast abmut 12% w}er. interest is paid in advanre, as is the custonary practice. 2/ Linked to repayment ter-s for 'irst ranch lopns and- arr-anin, reiDan:nent terns, as wel' as graze perírds, for second Joans as the rollover pericd approaches year-16. 3/ 2alculated on fo1lcwing estim s: 1% of cutstandiíl- .an vc`ime lincludding working capital) years 1-5; 1.C,% cX :utstanding loan volume years 6-16. HONDURAS ANIJl lb LIVESTOCK DEVEIDPMENT PRDJECT Cattle Population - Supply and Demand Historic Trend and Projections up to 1971 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Extraction from Cattle Slaught.red Cattle Available National Extraction Exporte of live By Export for Year Population Herd Rate cattle Packing Plants Local Consumntion ('000) t ('000) ((o) a of 3) ('000) (% of 3) ('000) of 3) 1960 1,197.6 100 140.4 11.7 34.3 24.4 6.1 V.3 100.0 71.2 1961 1,223.4 102.1 168.3 13.8 47.8 28.4 11.0 6.9 109.5 65.1 1962 1,225.6 102.3 175.5 14.3 43.2 24.6 25.6 14.6 106.7 60.8 1963 1,220.9 101.5 176.5 14.5 43.1 24.4 30.4 17.2 103.1 58.4 1964 1,221.4 102,0 150.8 13.0 33.4 20.9 36.7 23.0 89.7 56.1 1965 1,239.0 103.5 156.2 12.6 24.8 15.9 42.4 27.1 892. 57.0 1966 1,245.6 104.0 158.7 12.7 27.6 17.4 56.6 35.7 74.5 46.9 1967 159.7 32.2 20.2 52.7 33.0 74.8 46. 1968 162.0 32.8 20.2 53.7 33.1 75.5 46.6 1969 161.3 33.5 20.8 54.8 34.0 73.0 45.2 1970 160.4 34.0 21.2 56.4 35.2 70.0 43.6 1971 158.5 34.6 21.8 57.5 36.3 66.4 41.9 Notes 1. Supply projectionsfro1967on arebased on extraction rate of 12%; offective weaning rate 35% and mortality adulta 5%. 2. Live cattle export projections based on 2% annual increase declining to 1.5% in the last 2 years due to build-up of female stock in Guatemala. 3. Meat export projections based on average 2.5% increase annually. Sourcet 1960-66: Central Bank of Honduras, Department of Economic Studies; 1967-71: mission estimates HONDIURAS LIISIDMC,OX DU V5PM7T PROJECT Financial Rate of Return of Ranch Models o. H ----------------------------------------------- Ranch Year -------------------------------------------------------------- Ranch Model 1 2 3 5 6 7 8 9 10 11-19 20 'L'IOO) 1. Beef Breeding/Fatteni-ng Benefits: Incremental Sales 19.9 37.7 h4.9 4o.1 65.6 53.41 56.5 5L.7 54.6 58.5 58.5 11h.71' Costs: Investment Costs h6.7 13.7 13.7 Working Cauital 12.5 11.7 Is.1 (2.9) 9.2 (6.0) (3.4s) (3.h) (1.8) Incremental Operating Costa 17.8 31.6 37.5 35.1 . 45.8 39.0 31.9 32.2 29.7 30.7 30.7 30.7 Total 77.0 77 .0 55.3 Tr5 1 .5 33W T -B- 2 7.9 7 Net Cash Flow (57.1) (19.3) (10.5) 7.6 13.6 20.1 25.0 25.9 26.7 27.8 27.8 111.0 Rate of Return - 18% 2. Dairy-Steer/Fatteníng Benefits: Incremental Sales 5.3 11.2 18.5 19.2 28.1 27.1 26.2 26.3 27.7 27.7 27.7 16.7 Costs: Investment Co5ts 15.5 3.0 1.5 Working Capital 3.3 5.1 2.6 .1 3.6 (1.1) (1.4) ( .8) - - Ineremental Onerating Costs 8.7 10.3 11.7 16.3 20.1 18.7 17.3 17.3 17.3 17.3 17.3 17.3 Total 23.5 23.1 1. -,. 23.7 17.3 15.9 16. 17.3 17.3 17.3 17.3 Net Cash Flow (19.2) ('.7' ( .3) 2P. b.l 9.9 10.3 9.9 10.o 10.4 10.4 29.1 Rate of Return - 21% 3. Beef Breedlng Ranch Benefits: Incremental Sales (Q.2) (3.8) 7.7 19.5 37.7 11.7 52.1 52.L 52.4 52.1 196.1 - Costs: Investnent Costs 70.0 -7.0 ^3.0 Incremental Onerating Costs (2.2) ( .6) 1.7 7.1 8.! 11.9 13.3 13.? 11.7 1L.7 11.7 1L.7 Total 67.E 26.4 27 7T. 11.9 U3I3 I73 1.7 I7 11U.7 Net Cash Flow (77.0) ('5.8) (26.2) .1 11.1 25.' 31.1 38.5 37.7 37.7 37.7 181.4 Ra'e of Ret-cm - 16l 1/ Includes incremental value of herd. a ~~~~~~~~~~~~~~~~~~~~~~H O N D U R A S a LIVESTOCK DEVELOPMENT PROJECT Benefits and Justification Incremental Costs ani Benefits (L '00) -----Yer--_______ 1 2 3 14 5 6 7 8 9 10 11 12 13 14-20 Benefita Incremental Sales 1/ 432 1,596 3,248 4,040 4,880 5,931 6,309 6,181 6,231 6,305 6,447 6,520 6,525 6,532 Incremental Costa Total On-ranch Investments 1,517 2,900 2,337 1,oo8 289 - - - - - - - - - Working Capital 29n o29 940 437 248 215 (115) (369) (258) (131) (36) _ - - Operating Costs 2/ 432 1,555 2,7°4 3,462 3,913 4,213 4,084 3,710 3,474 3,357 3,333 3,346 3,318 3,328 Technical Services 108 181 275 320 344 50 50 50 50 50 35 10 - - Total Cosis 2,356 5,465 6,346 5,227 4,794 4,478 4,019 3,391 3,266 3,276 3,332 3,356 3,318 3,328 Net Flow (1,924) (3,769) (3,098) (1,187) 86 1,453 2,290 2,790 2,965 3,029 3,115 3,164 3,207 3,204 Incremental Revenue for Government 3/ 23 54 77 86 87 92 96 89 85 84 84 85 85 85 Net Flow to Economy (1,901) (3,715) (3,021) (1,101) 173 1,545 2,386 2,879 3,050 3,113 3,199 3,249 3,292 3,289 The economic rate of return over a 20-year period is about 18%. 1/ Increanetal milk production that would be sold is valued at CIF price of L 0.11 per liter (=CIF price imported milk powder converted into. liquid milk). 2/ Subsidy on gasoline (L 0.40/gallon) has been added to operating costs. 3/ Based on slaughter taxes paid to Government (L 2 per animal) and to Municipalities (L 2.20 - 6.0 per animal) plus import duties levied on goads imported for on-ranch development under the Project. NOTE: Costs and benefits continue unchanged after year-14. At the end of year-20, the increase in herd value totaling 8,627 thousand lempiras is taken into consideration for calculating the rate of return. C A / 8 B B E A N £ 4| IS A S D E L A B A H I A I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ R'' AC C 1< I~ ¡ 0 0 0 00 0 -o - 6 CEIA á ¡0 L A IJ e -tSPl R A'i '-> ',g1 t / .--J ' ,._) HONDURAS LIVESTOCK DEVELOPMENT | t -;-\f 6r PROJECT AREAS ~ g c Cet4Jl ...... P 4 C / a'> NC_q_'rI - ---------- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ - 060666/6) ~~~_ _ _ _ _ _ _ _ _____ soko ad,Oo - -b esslo e4o l _ _ _ ¡ r '0406 U.L 0>6'00 00