Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6798 PROJECT COMPLETION REPORT PAKISTAN .PUNJAB LIVESTOCK PROJECT (LOAN 1366T-PAK) June 3, 1987 South Asia Regional Office General Agriculture I Division This document has a restricted distribution and may be used by recipients only in the performance of theit official duties. Its contents may not otherwise be disclosed without World Bank authorization. PAKISTAN PUNJAB LIVESTOCK PROJECT - (LN. 1366T-PAK) PR'.3ECT COMPLETION REPORT List of PrinciRal Acronyms and Abbreviation Used AI Artificial Insemination CP FAO/World Bank Cooperative Programme DSM Dried Skim Milk Powder FAO Food and Agriculture Organization of the United Nations FMD Foot and Mouth Disease GOP Government of Pakistan GOPu Government of Province of Punjab ICB International Competition Bidding LMP Lahore Milk Plant PC.l Planning Commission Form 1 PCC Project Coordinating Committee PCR Project Completion Report PDLD Punjab Livestock, Dairy and Poultry Development Department PLB Punjab Livestock, Dairy and Poultry Development Board PRs Pakistan Rupees SAR Staff Appriasal Report UHT Ultra-High Temperature milk treatment UNDP United Nations Development Programme VLA Village Livestock Association rOR OFFICIL Us ONLY THE WORLD SANK Washington, D.C. 20433 U.S.A Osk* oE Dv.chw-CGesvaI Otatumw hVAMItr June 3, 1987 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report: Pakistan - Punjab Livestock Project (Loan 1366T-PAK) Attached, for information, is a copy of a report entitled "Project Completion Report: Pakistan - Punjab Livestock Project (Loan 1366T-PAK)" prepared by the South Asia Regional Office. Under the modified system for project performance auditing, further evaluation of this project by the Operations Evaluation Department has not been made. Attachment This document has a mtricted distribution and may be used by recipients only in the performace of their offtcW dutie. Its contents may not otherwise be discloed without World bak authoriation. FOR OMCIAL UE ONLY PAKISTAN PUNJAB LIVESTOCK PROJECT - (LN. 1366T-PAK) PROJECT COMPLETION REPORT Table of Contents PEge No. BASIC DATA SHEET....... ............. ............................. ii EVALUATION SUMMARY.***.***...* ..*... *.e.. **..*.**0 ..*.*00.0. iii I. :NTRODUCTION...................,.......................... 1 II. PROJECT FORMULATION.....................oo...,. ,........ 2 Project Orgn2 Identification and Preparationo.......... ............o 2 Project Appraisal and Credit Effectivenesstiveness*o*.. 3 II. IMP* KE. TATION...... ... ..... ...............*.. ........ 4 A. Project Start-up...a r- u ............... .**.*..... 4 B. Changes in Project Dessggn......................... 5 C. Overall Implementation Experience..............o... 5 D. Implementation of Specific Componentso............. 6 Village Livestock Association and Field Service. 7 Milk Collection and Transport***o*o..o........o 8 Education in Livestock Productiono*oo.oon....... 12 Artificial Insemination... 12 Land Use Mapping p p i ng............... e....... 13 E. Consultants and Contr&ctorsoo.oo.o.o.o.o..o.o...... 14 Consultancy Services ................. ......... 14 Contractorsoooooooooo**oo*eoos 14 P. Prujet Cost.s. o o oooo. ......... ...... . . .. . .o . 15 Co Di s b ursemtoo**oo eom e nto*oo,,oos 15 Ho Procurement....o0.o......ooo.oo.ooo... ..o.o..oo.oo 16 IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT..........e*..... 16 Gener elneraloooo*oo*os*o,ooo*,oooooo*oo*eooooo**,oooooo 16 Project Coordination Commmittee.......oooo......o.o.... 16 Implementing Agencies..0.... .. .. .. ..... . * ........ 17 Accounting and Reportingpo.00 r t i ng0..0...... .00... o00 17 Compliance with Covenant..... 00.......... .......0..0. 18 This document has a estricted distibution and may be used by rocipients only in the perfomance of their officia duties. Its contents may not otherwis be dbcosed without Worid Dank authoration. -2- Page No. V. PROJECT IMPACT ...................... 18 Incremental Production....... ..eo.................... 18 Technological Change........................................ 18 Social Impact ............................... 18 VI. FINANCIAL AND ECONOMIC PERFORMANCE .................. o 20 Financial Performanceo.....e.....o.........o............... 20 Economic Performance................................... 22 VII. WORLD BANK PERFORMANCE ................................... 22 Project Design and Appraisal........................... 22 Supe rvis..i on. .... ..........a.................. ................. ........... 22 VIIIo SUMMARY AND CONCLUSIONS ............ .. 23 Lessons Learned ............................ , 24 List of Annexes ANNEX 1 Table 1 - Annual Project Expenditures......................... 25 Table 2 - Comparision between Appraiaal Cost Extimates and Actual Expenditureso............... ............... 26 Table 3 - Disbursement of Loano.............................*o 27 ANNEX 2 Table 1 - Staff Employed by Punjab Livestock Board............ 28 Table 2 - Annual Registration of VLAs........................* 29 Table 3 - Summary of Project Training at PLB Center........... 30 Table 4 - Artificial Insemination of Buffalo and Cattle....... 31 ANNEX 3 Table 1 - Sources of Milk Procurement - Lahore Milk Plant..... 32 Table 2 - Summary of Output of Milk Plant 1984-85 Following Rehabilitation......................... 33 Table 3 - Utilization of UHT Milk Produced in Lahore Milk Plant. ............................... 34 Table 4 - Loans to VLAs....................................... 35 Table 5 - Lahore Milk Plant: Balance Sheet 1975-76 to 1983-84. 36 Table 6 - Lahore Milk Plant: Profit and Loss Account from 1975-76 tp 1984-85..... ......... o ................. 37 Table 7 - Lahore Milk Plant Assumptions for Computing Revenue and Costs...... ............... ........... 38 Table 8 - Lahore Milk Plant: Income and Operating Costs....... 39 Table 9 - Economic Analysis................................... 40 ANNEX 4 - Comments of the Government of Pakistan on the Project Completion Reporto.............o........... 41 MAP No. IBRD12201R2 Major Land Use and Canal Commands PROJECT COHPLETION REPORT PAKISTAN - PUNJAB LIVESTOCK PROJBCT (LN. 1366T-PAR) PREFACE This is the Project Completion Report of the Punjab Livestock Project in Pakistan for which a loan in the amount of US$ 10.0 million was extended to the Government of Pakistan in February 1977. Credit closing occured on December 31, 1985 after three years extension. The final disbursement was made in July 15, 1986 and the undisbursed balance of US$ 1.6 million (16X of the loan amount) was cancelled. The PCR was prepared by the FAO/World Bank Cooperative Programme (FAO/CP) and was reviewed by the General Agriculture I Division of the South Asia Region. The preparation of the PCR is based on the Staff Appraisal Report (No. 1193-PAK) dated January 18, 1977, the President's Report (No. P1860-PAR) dated January 19, 1977, the Project Agreements dated February 18, 1977, correspondence witb the Borrower, internal Bank memoranda on project issues as contained in relevant Bank files as well as interviews with officials both in the Bank and in Pakistan who have been associated with the project. A copy of the draft report was sent to the Borrower on February 12, 1987 for comments, and these comments have been incorporated and are attached as Annex 4. This project has not been subjected to an audit by OED. - _i - PAtISTAN MJAU IVTO PROJE (LN. 1366T-PAX) PROJECT COMPLETION RPORT - RASIC DAtA SHT KeY Proieet Dte, Appraisal Actual as X of Estite Actual Aoraisal Eatimate Project Coats (US$ million) 19.7 10.8 55 Loon Amount (VS million) 10.0 8.4 pj 84 Date of Effectiveness 05/25/77 08/03/77 Dote Board approval 02/01/77 Date Physical Components Completed 05/25/81 01/31/85 Closing Date 12/31/82 12/31/85 Economic Rate of Return (S) 30 9 Institutional Performance adequate inadequate Technical Perfomance adequate fair Stzff Input Identification/Preparation 39.9 89.5 7.1 136.5 Appraial 29.4 29.4 25.0 83.8 Negotiations 5.6 5.6 Supervision - 13.9 § 23.7 15. 18.2 15 A lS5. Total (Staff-weekts) 69.3 118.9 51.6 23.9 36.0 23.7 15.5 18.2 12.5 11.3 280.9 Cumulative 2isbursement IDA Fiscal Years: En FY79 "SO U5K EL8 1. EM EL a5 Appraisal Estimate (U8$ zillion) 1.3 3.9 7.9 10.0 10.0 10.0 10.0 10.0 10.0 Actual (US$ illion) 0 0.1 0.2 0.2 0.2 4.1 5.8 6.8 8.4 Actual as 5 of gat. 0 3 3 2 2 41 58 68 84 m-ission Data Date No. Han-days Specialization k' sl Type of Hiss-ion Dtla (MthtIr) Persons in field Reprgesened StatuserA Problem Identification 05/75 4 100 L,L,A,E - Preparation 07/09/75 4 60 L,L.A,E Appraisal 01102176 4 100 L,L,A,l - - - Supervision . 03/77 3 s0 L,L,E 1 1 - Supervision 11 08177 2 18 ,IR 1 1 Supervision III 03/78 2 19 L,E 1 2 p Supervision IV 07/78 2 36 L'E 2 3 I,F,P Supervision V 02/79 2 60 L,L,P 3 3 M,F,P Supervision VI 08/79 3 33 L,L,F 3 1 N,F?P Supervision VII 03/80 2 18 L,F 3 1 N,F?P supervision VIII 11/80 1 6 L 2 1 P?M Supervision IX 06/81 1 11 L 2 3 P,* Supervision X 02183 1 10 F 2 1 H Supervision XI 06/83 1 4 F 2 1 H Supervision III 12/83 2 16 F,A 2 1 n Supervision XIII 09/84 2 10 E,A 2 2 F Supervision XIV 08/85 2 8 L,A 2 2 P,F IL A - Agriculturist; I - Economist; F o Finncial Analyst; L - Livestock Specialist; P * Animal Products Processing Specialist; R - Land Resource Planner kI 1 - Problm free or minor problem; 2 - moderate probles; 3 * major problme £/ 1 - improving; 2 - stationary; 3 * deteriorating A/ F - financial; 1 - managerial; T - teehnical; P - political Other Proiect Lat Borrover Islamic Republic of Pakistan Fiscal Year July 1 to June 30 ame of Currency Rupee (Pie) Cutreny vebhana. fRates: Appraisal Year 1976/77 US$1.00 a 9.90 Intervening years Average 1976/77 to 1980/81 US$1.00 - 9.90 1981/82 US$1.00 a 10.55 1982/83 U8S1.00 a 12.75 1983/84 S8$1.00 a 13.50 1984/85 VS$1.00 * 15.24 Completion Year (Decaeber 1985) 48$1.00 * 15.90 -iii- PAKISTAN PUNJAB LIVESTOCK PROJECT (LN. 1366T-PAg) PROJECT COMPLETION REPORT EVALUATION SUMMARY I. Introduction 1. The Livestock Sub-sector constitutes about 29Z of value added in agriculture and, contributes about 161 of agricultural export earnings. 2. In support of the Livestock Sub-sector, the Government of Pakistan (GOP) expressed interest in the World Bank's assistance for a project which was to be directed at utilizing the beef potential of the large nunmer of rale buffalo calves which registered high mortality rates due to underfeed- ing. Further preparation of the project also aimed at increasing livestock and agricultural output on about 60,000 farms. II. Objectives 3. The project whch was to be implemented by the Punjab Livestock# D iry and Poultry Development Board (PLB) in five years aimed primarily at improving marketing of meat and milk by offering adequate prices with technical support and assured input supply to encourage increased supply of beef and milk from the existing herd. These were to be achieved by better feeding of livestock, disease control, upgrading of village livestock, provi- sion of greatly improved marketing, credit and extension services, production of vaccine, and construction or improvement of meat and milk processing facilities. The project also proposed to establish about 350 Village Livestock Association (VLA). III. Implementation Experience 4. The project was to cost US$25 M. The central project authority for all field development work was the PLB, while the Punjab Department of Live- stock, Dairy and Poultry Development (PDLD) was responsible for extension, artificial insemination, vaccine production and research and the University of Faisalabad was responsible for improved training in livestock production. 5. Implementation of the project was much slower than anticipated (paras 3.5-3.7). Initial delays were caused by Martial Law Administration, introduced in March 1977 which required review of all actions taken by the previous political regime. Subsequent delays were due to a waning of inter- est in the project by the Government of Punjab (COPu). 6. PLB was beset by problems of frequent changes in leadership of the organization. Under these circumstances, PLB could not provide effective management and coordination that was required for this multi-component -iv- project. This state of affairs had its toll on staff morale who interpreted events as a signal of reduced GOPu commitment, hence uncertainty and resultant delay. 7. There were also no clear relationships between the three agencies involved in the project. The PDLD and the University of Agriculture considered the project as essentially belonging to PLB. The Project Coor- dination Committee (PCC) met only infrequently and was unable to ensure that these two authorities undertook their tasks under the project. Partly because of these problems, the project which became effective on August 3, 1977 was reclassified as a problem project and was subjected to a review by GOP and the World Bank in July 1979. This review resulted in the reduction in the scope and size of the project. Two components - vaccine production and livestock research were excluded and so were other components so that the project was reduced to the development of VLA's and milk processing facilities. The exclusion of the other components resulted in a reduction of project costs and the loan amount by about 40% of the original estimate 8. The formation of associations of village livestock owners was to be a vital feature of the project. It was assumed that half of the 1000 villages in the project area would form VLA's and 70% of small farmers would become members of VLA's. However, this assumption proved over-optimistic since the concept was new to both technical staff and farmers and by the end of the project less than 8000 farmers were members of a total of 150 VIA's which were formed. 9. The PCC had not been able to remove the major bottlenecks during the project's crisis period. It did not also succeed in bringing about continuity in PLB management or integration of the various components and meetings of the PCC were stopped after the inital years. IV. Results 10. Owing to the reduction in VLA's from 500 to 150 of which only about 90 were active, only a minimal incremental increase in production was achieved and this is insignificant on a national or provincial scale. However, within the villages with active VLA's, animal numbers increased by 29% while milk production registered a marked increase (para 3.10). 11. The project has also introduced a small number of VLA farmer families to the concept of selling milk on the basis of butter fat content which system is accepted as beneficial. 12. The facilities and equipment for artificial insemination (AI) provided under the project had not been utilized and the AI component had no significant effect as the Department had already adopted deep frozen semen technology with FAO/UNDP-assistance (paras 3.40-3.45). 13. On a positive note, the project with respect to milk collection an processing has helped PLB to keep pace with dairy development in Punjab. Without this assistance, the already existing milk plant would have had little or no possibility of survival. 14. The estimated increase in saleable milk of about 15,000 liters per day at the current purchase price and shared by 8000 farm families is equiv- alent to an incremental income of about Pakistan Rupees 1,620 per family, per year. 15. The most significant social impact of the project has been to make good quality standardized milk with a long-shelf life availAble throughout major centers in Pakistan. Although the Lahore Milk Plant x ) is not the only participant in this development, it seems that this trend tovards consumption of quality processed milk will continue. 16. Overall, the project has not met its original objectives of improving livestock production and the incomes of a large number of farm families in the project area. However, it has created a nucleus of functioning VLA's which could lay the basis for further development. The project has also strengthened the Al service in Punjab through the provision of buildings and equipment which could be utilized in the future Likewise, it has improved facilities and laboratory equipment to the College of Veterinary Sciences which can increase the training standard of stock assistants in the Province and ass.st provision of extension advise to VLA's. V. Findings and Lessons 17. Important lessons have been learned from the project. Jn terms of project formulation, an important lesson is that particular attention should be paid to limiting the number of components to those strictly necessary for attaining the project's main objectives. The tendency to address a range of problems simultaneously in order to satisfy the aspirations of government officials should be avoided (para 8.7). 18. A critical examination is required at appraisal of the existing and planned commitments, organizational structure and staff capability of the executing agencies' to assess their implementation capacity. A recurring problem that arose in project execution is executing agency delays in deci- sion making and it is unrealistic to expect a successful commercial undertak- ing emerging in a situation where management lacks the autonomy in decision making. However, frequent change in the management of the project and excessive delays in taking decisions may also be signs of wavering commitment to a project and review missions need to identify the underlying causes (para 8.7). 19. A detailed knowledge of the market requirements is necessary prior to identifying the needs of plant and equipment, perhaps through a detailed market survey or study. This should be a prerequisite to the determination of the product mix of the milk plant. 20. Project actions should proceed in the cGrrect sequence. The Bank, through its supervisory activities should have ensured the development of VLA's before the setting up of the LMP. Also, the purchase of tankers should have preceeded the setting up of the chilling centers. -vi- 21. In a project such as this, the purchasing policy of the LMP should allow for the collection of all milk offered by the farmer regardless of quantity of supply. In dealing with a highly perishable product, farmer confidence is of utmost importance to ensure increased and continuous milk supply. Pricing policy, including overall marketing policy needs to be oriented to building and maintenance of farmer confidence (para 8.7). PAKISTAN PUNJAB LIVFSTOCK PROJECT (LN.1366T-PAK) PROJECT COMPLETION REPORT I. INTRODUCTION 1.1 Agriculture is the mainstay of Pakistan's economy. Despite a gradual decline in relative importance over the years, agriculture still accounts for about 30% of GOP and some 60% of the total labour force. Agriculture is also the principal supplier of raw material for industry and the most important source of foreign exchange. In 1982, the sector accounted for about 45% of total exports. Crops and livestock dominate the sector accounting for about 68% and 28% of agricultural GOP respectively. 1.2 The performance of the agricultural sector has varied over the past few decades. Growth rate in the fifties averaged 1.6% per year which was lower than the population growth rate. As the result of increased supply of irrigation water, new policies, use of high yielding varieties and good weather, the agricultural growth rate was raised to an annual average of 3.8% for the period 1960-65 and 6.3% for 1965-70, which was greater than the population growth of 2.8-3.0% per annum. During 1970-75, however, the agricultural sector growth rate declined to an. average of less than 1% per annum, leading to serious economic problems in the country. The poor performance was, among other thlrgs, due to successive years of bad weather and the 1971 civil war. In order to counter this poor performance, the Government of Pakistan (GOP) intensified irrigation development and the supply of inputs, and introduced incentives that encouraged farmers to increase their production. A number of agricultural programmes and projects were undertaken, ranging from purely sub-sectoral projects for irrigation and input supply development, to integrated rural development and agricultural sector support. These efforts succeeded in accelerating agricultural development. The growth of the sector varied between 3.5% and 4% per annum for the period 1976-83. 1.3 In support of the agricultural sector, GOP launched a World Bank- assisted livestock project in August 1977. This project was the first World Bank assistance to the livestock sub-sector in Pakistan. The project aimed at utilising the beef production potential of wale buffalo calves and at increasing livestock and agricultural output on about 60,000 fanms. The project area was confined to Sheikhupura District in Punjab Province. 1.4 As project executio6 was terminating in December 1985, an FAO/World Bank Cooperative Programme (CP) mission visited Pakistan in November/December to assist in the preparation of a project completion report (PCR). That mission produced this PCR which is. based on project documents and reports prepared by GOP, Government of Punjab (GOPu) and the World Bank Ouring project preparation and implementation, on discussions the -2- mission held with Government officials and farmers, and on visits the mission made to the project area. II. PROJECT FORMULATION Project Origln 2.1 In mid-1974, the FAO/World Bank Cooperative Programme carried out a livestock sector survey in Pakistan in which the major development requirements of the sector were identifled. One of these was the expansion of buffalo meat production for export. In the same year, GOP expressed interest in World Bank assistance for a project to utilise the beef potential of the large number of male buffalo calves which were allowed to die of underfeeding as they could not be reared economically. GOP agreed that such a project would require increased beef prices mhich were expected to be achieved by a relaxation of the Government ban on beef exports. Based on this, a project was sought to be prepared for World Bank assistance. Identification and Preparation 2.2 At the request of the GOP, a CP mission visited Pakistan in May/June 1975 to assist in the identification and preparation of a project for strengthening animal health and developing beef production as well as to examine opportunities for milk and mutton production. This mission visited the four provinces and identifled a series of projects which could be prepared for World Bank assistance. Most of the proposed investment was for marketing and processing facilities. Even though broad areas of investment were identified during this mission, it was agreed within the Government that preparing projects for simultaneous implementation in all the provinces should be avoided and that a project in.Punjab should be the first of a series. 2.3 Identification work was therefore accelerated in Punjab where a comprehensive buffalo meat and milk production project in Sheikhupura district was conceived. This was expected to involve about 150,000 families who would benefit from the sale of 3,000 tons carcase weight of finished buffalo calves and 40,000 tons of milk annually. Major investment was to be on slaughter and meat processing facilities for 400 head daily and milk processing facilities for 100 tons milk daily. Total investment was roughly estimated at USS15-20 million. 2.4 This broadly identified project was subjected to further preparation by the Punjab Livestock, baity and Poultry Development Board (PLB), and with the assistance of CP a preparation report was completed in October 1975. The project, to be implemented by the Board in five years, aimed primarily at improving marketing of meat and milk by offering adequate prices with technical support and assured Input supply to encourage increased production of beef and milk from the existing herd. The main elements of the project consisted in better feeding of -livestock, disease control, upgrading of village livestock, provision of greatly improved marketing, credit and extension services to about 90,000 farm families; construction or improvement of meat and milk processing facilities and production of vaccine. In order to deliver services to farmers and to receive produce, the project proposed to establish about 350 Villaae Livestock Associations (VLA). The central project authority for all field -3- development work would be PLB while the Punjab Department of Livestock, Dairy and Poultry Development (POL0) would be responsible for extension, artificial insemination and health services, for vaccine production and research and the University of Faisalabad (Lyallpur) for improved training in livestock production. The project to be implemented over a five-year period was estimated to cost US$25 million. ProJect Appraisal and Credit Effectiveness 2.53 The project was appraised by the World Bank in January/February 1976. As outlined in the Appraisal Report of January 1977, project components comprised: -. a) establishinq and operatina, under the control of PLB. about 500 farmer owned Village Livestock Associations (VLA), which would be the foci for the delivery of governmental and other support services including extension, animal health and artificial insemination. The VLAs would purchase milk from their members for sale to PLB and supply its members with essential inputs. Membership of each VIA would, at project maturity, comprise about 120 families; b) strengthening the PDLO to improve its research and extension activities, foot and mouth disease vaccine production, and artificial insemination (Al) capabilities and thus to provide project participants with efficient support services; c) improving the animal production training caoacity of the University of Faisalabad to ensure the provision of adequate numbers of suitably trained livestock technicians; d) expanding thee existing Lahore milk plant (LMP - which was to be transferred from the Lahore Dairy Board and become a subsidiary of PLB) from a capacity of 25,000 litres/day to 100,000 litres/day to handle the increase in marketed milk expected to be brought about by the project; and the establishment of milk collection and milk chilling centres in Sheikhupura District; e) constructinq a modern export-standard slauahterhouse and meat processing facilitY in Lahore to be owned bY PLB, with a capacity of 400 head of cattle and buffalo per shift. This was intended to replace existing unhygienic facilities, cater for the increased throughput of larger animals expected to be generated by the project, and provide facilities for processing meat and by-products for export and domestic consumption; f) improving some 10,000 acres of PLB managed farm land in order to increase rapidly the production of improved cattle; and g) mapping land use in the project area in order to determine seasonal land use patterns. 2.6 The project was to be implemented by PLB and POLO of the GOPu, and by the University of Agriculture. The PDLD, was to be responsible for provision of livestock extension and artificial insemination services and animal health services including production of foot and mouth disease vaccine. The University of Agriculture was assigned to implement the training component in animal production. The PLB was made responsible for -4- developing VLAs and setting up milk purchase and collecting systems, chilling centres and also for refurbishing the LMP. It was also responsible for management of the farms allocated to it and for liaison with the University authorities for training requirements. 2.7 Although the two Government agencies were both responsible to the Minister of Livestock Development of the Government of Punjab and their responsibilities were well delineated, a Project Coordinating Committee (PCC) was established to coordinate the efforts of the implementing agencies with other departments and agencies and to supervise and monitor the project. Its Chairman was to be appointed by the Chief Minister and members of the committee included representatives of the Departments of Finance, Planning and Development, PDLD, the University of Faisalabad, PLB, Animal Husbandry Commissioner of GOP and jointly the five commercial banks and the Agricultural Developmen, Bank of Pakistan. The PCC was to be assisted by a small secretariat to handle administrative matters. 2.8 As appraised, the project was essentially similar to the preparation proposal with the exception of increased disease control and support services. Project costs, including contingencies were estimated at PRs195 million or US$19.7 million with a foreign exchange component of about 50%. The project was expected to yield an economic rate of return of 30%. A loan of US$10 million was approved and was signed on 17 February, 1977 and the project became effective on 3 August, 1977, with an expected closing date of 31 December, 1982. III. IMPLEMENTATION A. Project Start-up 3.1 The project had a promising early start. The first supervision mission which visited Pakistan in March/April 1977 reported that the project enjoyed strong support from GOP and GOPu and enthusiasm in the executing agencies was high. The PCC was formally constituted and held its first meeting on 26 June 1977 before project effectiveness. Oraft invitations for consultants on the milk plant and slaughterhouse components as well as draft terms of reference for all consultants were prepared and cleared. Until the Government document required for approval by all concerned with the project (PC-1) was finalised, anticipatory approval for expenditures up to March 1979 was given. During the same period, the Lahore milk plant was taken over by PLB as envisaged by the project. 0 3.2 In spite of the promising start however; some setbacks soon became apparent. Two separate PC-ls were prepared for the PLB and the POLD and were submitted to GOPu in June 1977. These were not approved as the GOPu decided that they should be re-submitted as a single PC-1 for the project. After re- submission of the combined PC-1 however, clearance was delayed because of a lengthy debate on the financial viability of the slaughterhouse component and the scope of the VLAs. The PC-i was not cleared until March 1979 with modifications and revisions which resulted in tne deletion of several components (paras 3.3-3.4). -5- B. Changes-in Project Design 3.3 As no material progress was being made in project implementation, the project was reclassified as a problem project and was subjected to a review by GOP and the World Bank in July 1979. This review resulted in the reduction of the scope and size of the project. Two components namely foot and mouth vaccine production and livestock research were excluded from the project as they were expected to be financed by British aid and UNOP respectively. Another two components, development of tenant-operated PLB farm and construction of a slaughterhouse were deleted from the project because these appeared to be no longer viable. PLB was not able to prepare specific development plans for the use of the farms in the training for VLAs and staff in improved livestock production and increased crop production. Based on a feasibility study of the slaughterhouse carried out by consultants and using up-dated costs, the financial and economic viability of the plant was found to be marginal. 3.4 With such changes, the project was reduced to the development of VLAs and milk processing facilities. The exclusion of the four components resulted in the reduction of project costs and the loan amount to about 40X of the original estimate. Because of the delay in implementation and inflation, however, final costs in PRs amounted to 55% of the appraisal estimates (Annex 1, Table 2). C. Overall Implementation Experience. 3.5 Implementation of the project was much slower than anticipated. Delays were caused initially by the Martial Law Administration, introduced in March 1977 which required review of all actions taken during the previous political regime. For instance, consultants which were short-listed in June 1977, had to have their terms of reference cleared by th Martial Law Administration which delayed issuance of invitations. Subsequent delays were due to eroded GOPu interest in the project as appraised. GOPu took a long time to approve the PC-1 and questioned the viability of the slaughterhouse component, although it had been agreed during appraisal and negotiation. 3.6 PLB's implementation capacity proved to be much less than anticipated and there were four changes of Managing Director within the first two years of project effectiveness. Between 1976 and 1985, PLB had nine Managing Directors, an average duration of 1 year. In the prevailing circumstances, the PLB could not provide the management skills and coordination that were required for a successful multi-component project. This unsatisfactory state also seriously affected staff morale who interpreted the events as signals of reduced GOPu commitment and thus uncertainty. An additional factor which contributed to the delay in implementation was the lengthy negotiations taken to recruit consultants. 3.7 The POLO and the University of Agriculture did not operate on schedule as they considered the project as belonging essentially to PLB. The PCC did not meet regulari, and was not forceful in emphasizing the role and duty of these two authorities in the project. -6- 3.8 Because of all these factors and departmental rivalries, the project had to be scaled-down (para 3.3) and the closing date was successively extended three times to 31 December 1983, 1984 and 1985. D. Implementation of Specific Components Village Livestock Associations and Field Service 3.9 The survey of villages, selection of VLAs and their registration and subsequent development was to be implemented by the PLB. The POLO was to be responsible for veterinar-y services, artificial insemination, production of vaccines, livestock production extension, research and training. Successful implementation therefore depended upon very close collaboration between the two principal agencies. 3.10 Establishment of VLAs. The formation of associations of village livestock owners was a vital feature of the project. They were designed to improve methods of livestock production and to integrate more effectively the livestock and crop production activities of some 60,000 small farmers and landless stock owners. To ensure a satisfactory legal framework, the Government of Punjab prepared specific legislation for the registration of VLAs. <1> Some delays were experienced in the preparation and enactment of this law. 3.11 It was originally assumed for project formulation purposes that half the 1,000 villages in the project area would form VLAs and that 70% of the small farmers and stock owners in each VLA village would become members. In practice this assumption proved over-optimistic since the concept was new to both technical staff and livestock owners. Field work commenced in 1978 and by April, only ten VLAs had been identified. Owing to the delay in finalising the legislation, these early VLAs could not be registered until 1979/80. Subsequently, the target for VLA fofmation was reduced to 300 by 30 June, 1984 and the area was extended to three districts - Sheikhupura, Okara, Kasur. Later, the number of associations was further reduced to 150. Additional delay occurred due to the necessity to amend the legislation to include the additional districts. The establishment of VLAs is shown in Annex 2, Table 2. 3.12 Thus, in spite of the initial enthusiasm of the farmers and the staff, the programme was effectively diluted and spread over a larger area with fewer associations. A further adverse factor was the reduced number of farmer beneficiaries. The VLA Ordinance specified fifty members as the minimum for establishing a VLA and thus the large majority of VLAs (88%) were registered with this minimum number-of members (Sheikhupura 97%, Okara 45% and Kasur 62%). Thus project benefit was restricted to about 8,000 families instead of the 60,000 originally assumed. This number of beneficiaries was further reduced because only some 95 of the 150 VLAs registered were actually delivering milk, with milk delivery from about 4,750 families.< 2> Without additional survey work, it was not possible to differentiate numbers of landless and land owners within this number. '1> Punjab Livestock Assocations and Livestock Association Unions (Registration and Control) Ordinance, 1979. Ordinance V of 1979 (25 April). <2> Efforts are, however, underway to recomission some of the donmant VLAs. -7- 3.13 Loans were granted to 101 VLAs to enable them to purchase milk testing equipment and medicines and to assist in the establishment of a milk trade. These loans were made between May 1981 and April 1983, were repayable over five years and carried no Interest. Twentyfour percent of the loans were made in kind as equipment. By October 1985, only 81 VLAs had repaid the loans while 13 VLAs had made no repayment (see Annex 3, Table 4). 3.14 Extension and health services. Historically the Directorate of Extension of the PDLD was concerned with animal health, with maJor emphasis on prophylaxis and treatment. With increased interest in animal production in the early 1970s, a Directorate of Livestock Production Extension and Artificial Insemination was set up in PDLO. With FAO/UNDP assistance, this Directorate concentrated its activities in the- districts of Sahiwal, Sargodha and Gujranwala, i.e. in districts different to the project. The position was further confused by transferring POLD's livestock production extension and AI services to the Directorate General of Extension (Animal Health) between 1 January 1983 and 6 November 1985. 3.15 While it appears that some collaboration existed between the Field Service Organization of PLB and the veterinary hospitals and artificial insemination sub-centres of POLD when they were fortuitously sited close to the VLAs, it was not possible to ensure that every VLA received sufficient attention from extension and animal health workers. The most active and fortunately situated VLAs received adequate support from the extension and health services, but overall the support provided was less than had been envisaged or was required. Noteworthy, is that no progress was made with vaccination against Foot and Mouth Disease. The national production of vaccine has not yet been sufficiently developed to provide enough vaccine for VLA livestock. This was due to failure of negotiations for a grant from a bilateral donor to step up FMD vaccine production. These negotiations are now being revived. 3.16 Traininq of farmers and VLA workers. Efforts were made to provide training for VLA officials and workFers and also for farmers. A training centre was constructed in 1982 on a site in Sheikhupura town close to the project area and became operational in April 1983. Bearing in mind that formation of VLAs commenced In 1978/79 and that peak levels of registration of VLAs occurred in 1981/82, this training centre could have been more effective if inaugurated earlier. Nevertheless, satisfactory syllabuses were developed for training of chairmen and secretaries of VLAs, VLA members and farmers and for village women. Trainees included 60 VLA secretaries (6 months), 14 extension workers (40 days) and in-service-training was provided to about 200 local staff of the POLD, extension workers and spearhead teams. Attempts to provide 15-day courses for farmers were less successful because farmers were reluctant to stay away from their holdings. Nevertheless, some 80 farmers received training; this constitutes about 1% of the 6,400 active VLA members. 3.17 Other syllabuses were developed for dairy technicians and livestock assistants. Some duplicate the National Dairy Training courses held at the University of Agriculture, Faisalabad and the Stock Assistant train lug given by the College of Veterinary Sciences, Lahore. Confusion also existed as to whether training in AI should be restricted to specialists of the Directorate of Animal Production Extension and Artificial Insemination. -8- 3.18 Considerable uncertainty exists among the staff about the future of the school following termination of the World Bank assistance. The first principal has resigned and been replaced and 11 out of 25 posts (44%) chiefly in administrative and supporting grades are vacant (see Annex 2, Table 1). The training school has a continuing and important part to play in ensuring further development of the VLAs and should concentrate on teaching VLA secretaries and participating farmers. Milk Collection and Transport 3.19 Attention was rightly devoted to the problems of collecting small quantities of milk from VLAs and its successful transport to the LMP, and it must be recalled that milk for UHT treatment must be as pure as possible. Owing to the reduction in the numbers of VLAs registered (para 3.12), collection routes were less concentrated and quantities of milk were less than envisaged. 3.20 The VLA concept was patterned on the successful village dairy societies established elsewhere in south Asia. These included paying cash for each delivery (less any dues owing to the VLA) and collection of the milk twice daily. The success of the system depended upon: the goodwill of the farmers; the building and commissioning of the chilling centres; and the distance to the milk plant. 3.21 Orderly and logical implementation of the milk collection system was not achieved, principally because of delays in awarding the contract for rehabilitation of the LMP and in its subsequent completion, and secondly because the consultant services did not include advise on setting up of chilling centres. Initially, formation of spearhead teams and registrations of VLAs was delayed pending enactment of specific new legislation governing these associations. Subsequently, formation of VLAs was hastened forward in 1981/82 before the LMP had been rehabilitated but when the LMP began commercial production in July 1984, the chilling centres were still at the planning stage. 3.22 Nevertheless these difficulties have been tackled and milk is being collected and, satisfactorily transported to the LMP for UNT treatment. The existing system has, however, departed from the original pattern in the following respects: - Milk is not paid for daily on delivery but weekly in arrears. This system appears to be convenient to all concerned and is accepted by producers provided prompt payment 'is made at these weekly intervals. - Milk is also collected from non-members of the VLAs and some VLA officers are thus acting as milk collectors. As an interim measure, there is no objection to this end indeed the benefits outweigh any disadvantages. In the longer-term, however, it is to be hoped that the services provided by the VLAs will attract new membership. - The principle, that all milk offered by the VLAs must be purchased, has been violated by LMP which has from time to time refused to receive milk on one or more days. - Milk is not yet collected twice daily so that only the morning milk can be collected from producers. Once the chilling centres become operational, these problems should be resolved. -9- - Owing to the delay in completion of the chilling centres, milk collected is currently chilled by blocks of water ice, with the additional costs and problems attendant on this method. 3.23 Expansion of Lahore milk plant. The expansion and rehabilitation of Lahore milk plant was completed in 1984. The technical facilities of the plant have been markedly improved and the new processing and pack;;ging machinery has been fitted into the existing building In a satisfactory manner. The addition of a 750 kVA generator was timely and has already proved its worth in maintaining production during the frequent periods of load-shedding that are currently necessary due to scarcity of electrical generation capacity in Lahore. 3.24 An existing effluent treatment plant has also been enhanced to modern standards. 3.25 The refurbished plant has a capacity of 65,000 litres UNT milk in tetrahedron packs and 15,000 litres of pasteurized milk in bulk, in two shifts per day. The plant also has the capacity to produce 2.5 tons of butter per day in 200 gram packs and has a yoghurt production facility for 5,000 litres per day in plastic cartons of 0.5 litre. The butter and yoghurt facilities have been tested and commissioned but were not yet in production due to lack of paper and cartons.<3> It was understood that the consultants employed by PLB did not recommend production of icecream or cheese. 3.26 The UNT treated milk is packed aseptically in either 0.5 1 or 0.25 1 tetrahedron paper packs. Three machines produce 0.5 litre packs and one machine produces 0.25 litre packs. 3.27 Although the objective of expansion and modernisation of the Lahore milk plant has been achieved, there are a number of issues concerning selectior, of equipment which require critical examination. These are: a) Provision has been made for the production of pasteurised milk in bulk. No clear indication could be obtained of why this facility was required. Apparently, bulk pasteurised milk had previously been supplied to one compiny up to 1980. This milk was thought to have been resold to hospitals. This purchaser is understood to have ceased operations and currently there is no known market for bulk pasteurised milk. With the ready availability of reliable UHT milk in aseptic packings on the Lahore market, there is unlikely to be a market in the future for bulk pasteurised milk. On grounds of consumer taste, there may be a market for pasteurised milk in 0.5 or 1 litre packings, but this would require the purchase and fitting of a new carton filling line. The pasteurizing facility may also be used to feed the yoghurt production line. <4> b) Regions which rely on milk production from water buffalo, experience marked seasonal differences in supply volume. In order to ensure continuing goodwill and an outlet for the farmers' milk, collecting centres and plants must be able to purchase all the milk offered by the farmer/producer, even in the season of maximum availability. This situation is conveniently met by production of dried skim milk (DSM) powder and butter oil in the flush season for recombining and toning when milk supplies are scarce. The alternative to this solution is to rely on commercially available or aid supplies of OSM and butter oil for the lean supply season and to refuse purchase of farmers' milk in the flush season. This <3> These are now in production. <4> This is being done now. -10- second alternative appears to have been chosen for the Lahore milk plant, as the equipment for DNS and butter oil was not provided by the project. As a result, VLAs have not been able to sell to LMP all milk they wished to sell. This 'purely' commercial behaviour of the PLB/LMP has undermined farmers' confidence in the milk collection system. This is further reflected in the belief that LMP could use cheaper imported raw materials for reconstruction of milk rather than DSM and butter oil produced from domestically produced milk during flush seasons. c) Attention was drawn to the fact that a "clarifier" had not been included in the plant design, which relied only on the simpler and less effective milk filtration. This problem had been overcome by purchase and fitting of a clarifier with Government funds. The consultants may only have had experience of more sophisticated conditions but in the circumstances of collection from small farmers in rural areas, a clarifier is essential. <5> d) The machine supplied for butter packing was designed to produce only 200 g packs. Furthermore, the machine was supplied without stocks of paper for initial use. It was subsequently found that the type of paper with exact perforations could not be obtained or manufactured locally, with the result that the UMP is now coumitted to importation of paper wrapping for the foreseeable future. The UMP is now endeavouring to repair an old butter packing machine to provide packs of 100 g and 50 g. <6> e) A similar situation pertains to the yoghurt filling machine provided, namely lack of initial 'start-up' supplies of plastic containers and dedication to a single (large) pack of 0.5 litre. This has resulted in considerable delays in utilising the machine and reliance on the market rival firm for supply of the plastic cups. Provision for change to 125 ml cups has not been made althoughthe machine could be adapted with additional expense and expertise. <6> f) Small collection tankers have been imported to collect milk from the VLAs and transport it to the chilling centres. These consist of flat-bed lorry chassis carrying two 2,000 litre insulated bulk tanka. However, no satisfactory provision has been made to fill the tanks and the manual handling of filled churns (c. 45 kg) up a fixed ladder needs to be replaced by a stainless steel pump and pipeline. 3.28 Milk collection at VLAs. The largest proportion of VLAs are situated away from all-weather roads although noticeable improvements of rural roads are currently being implemented. Prior to the project, only about 20% of milk produced would be marketed through a traditional system of collectors and middlemen. 3.29 Most of the VLA members will, over a period, supply some milk but on any one day only 25-50% of members bring milk in their own small containers. VLA members also collect milk from relatives or friends who do not belong to the associations. Thus the VLAs are in the process of marrying into the traditional collector system and this should be encouraged. Only morning milk is collected although plans are underway to collect evening milk as well. <5> The cream separators have subsequently been converted to clarifiers by fitting necessary attachments. <6> Action is underway to rectify these problems. -ll- 3.30 The chairman and/or the secretary supervise the recording of quantity of milk and the butter fat test. Milk is then bulked in 37 kg capacity insulated milk churns and transported to a collection poirit. Pending completion of the chilling centres, milk is collected by the UMP tankers and ice is put into the milk in the traditional way for cooling. Record keeping appeared to be very good and it is perhaps significant that in the VLAs visited, there had been few changes of chairman or secretary. The VLA officers met gave a good impression of dedication to the alms of the VLAs and their members. 3.31 Chilling centres. Only about 95 VLAs actually collect milk and for the purpose of providing extension advice and associated support services, they have been grouped in clusters of 10-12 under the responsibility of an extension worker. These extension-offices also3 act as collecting points for the bulk milk from their cluster of VLAs. Ideally, each of these eight collecting points should have the capacity to chill the bulked milk but with the reduced number of VLAs and quantity of milk, such development was not viable. The only chilling centre existing at the start of the project was later seriously damaged in a storm and required major repairs. 3.32 Consultants hired by the PLB were requested in February, 1984 to review existing proposals and specifications for chilling centres, to advise on selection of contractors, specification of materials and methods of construction; to evaluate tenders received and supervise the construction and installation of equipment for up to four chilling centres. Logistics of milk collection methods were specifically excluded from the consultants' task. 3.33 The consultants concluded that insufficient funds were available (USS500,000) to build four new chilling centres (US$188,000 each). PLB therefore decided that only two new chilling centres would be built and the remaining funds would be used to repair and refurbish the existing damaged chilling centre. Excellent sites were selected and acquired by PLO for the new centres and by early 1986 the LMP will have three centres each with a ca8acity of 10,000 litres. These are expected to cool filtered milk from 40 C to 4 C at a rate of 5,000 litres/hour. Standby generators have been included in the plans. After cooling, the milk will pass into two chilled 5,000 litre capacity insulated storage tanks to await collection by the LMP Insulated bulk tanker lorries of 9,000 litre capacity, for transport to the UMP. The distances of the chilling centres from the LMP are 70, 85 and 110 km. 3.34 The total expected chilling centre capacity of 3 x 10,00 litres will provide less than half the daily intake of chilled milk required for operation of the LMP at full capacity. These three chilling centres should have been comimssioned in June 1984 when the LMP began commercial UNT production. The delay in completing them"has undoubtedly affected adversely the planned development of milk collection and processing. The expenditure on purchase of ice to chill the milk would have been avoided and the investment in 9,000 litre tanker lorries would have been utilised earlier. 3.35 If the milk plant component of the project is to be fully developed and reach higher capacity utilisait1n, evening &ilk will hve to be collected and this will require further investment for wori chilling centres. <7> The proposal by LMP to utilise the large tanker trucks for holding chilled milk can only be regarded as a temporary expedient. <7> Action is being taken to further invest in more chilling centers. -12- Education in Livestock Production 3.36 Implementation of this component was not started until 1983/84. Nevertheless, great efforts have been made to make effective use of the funds available. Benefits will only become apparent from 1986 onwards when the livestock technicians trained under the new curriculum will complete their training. 3.37 The new curriculum, which was implemented from 1984, provides an intensive 12-months training covering animal management, reproduction, feeding, fodder production and conservation, range management, animal health control and elementary surgical procedures. An intensive course of this type requires very careful selection of trainees if maximum benefit is to be attained, but technicians successfully completing such a course will provide a useful and important strengthening of the livestock extension service. Currently. there are 135 trainees and those successful can expect to be employed by POLD which has posts available. 3.38 This component also provided funds for improvement of buildings and purchase of new equipment. Some 60% of the funds for buildings were utilised for erectirng 5 bull pens, a loose housing building and courtyard for cattle, and a small laboratory. These facilities were required to strengthen teaching and research in animal reproduction and artificial insemination. The remaining 40% of the building funds were spent on refurbishing and improvement of facilities in seven sections of the college. Some US$180,000 was spent on laboratcry and veterinary equipment. 3.39 The delay in implementing this component must be related to the repeated changes in Managing Director of the PLB.. If the training of livestock technicians had been implemented sooner, the new trainees could have helped to ensure technical support for the VLAs. Nevertheless, the assistance to the College of Veterinary Sciences has been well utilised and must be regarded as a useful medium-term investment. Artificial Insemination 3.40 Intensification of Al for the buffalo and cattle of the VLA members was an essential component of the project. The Directorate of Animal Production, Extension and Artificial Insemination of POLD had already received assistance via FAO/UNDP during the period 1975/80 with provision of expertise and some US$750,000 of equipment. During this period the use of deep frozen semen in straws was introduced and semen production from indigenous buffalo and cattle lncreased. This Directorate was therefore well prepared to intensify operations. 3.41 The project had initally proposed the setting up of a new semen production unit at Sheikhupura in the project area. To avoid duplication of buildings, equipment and professional staff, it was decided that the project would fund new buildings and equipment on the site of the existing semen production unit at Quadirabad some 120 miles south of Lahore or 150 miles from the project area. Accordingly a new laboratory, with additional equipment, three rows of bull pens each with a capacity of 40 bulls, and staff houses were erected. -13- 3.42 The buildings were completed and handed over in mid-1983. Although the staff housing has been partly ocrupied (1 x 3-room, 6 x 2-room and 15 single room houses) and the 120 bull pens are being utilised, the laboratory and semen processing facilities had not yet been used by November 1985. The non-utilisation of the laboratory was due to the omission of certain essential items from the original Government PC-1 (see para 3.2) and the approved contract. The Department is now in the process of rectifying these deficiencies and the facilities are expected to be used in 1986. 3.43 Provision of Al to the buffalo and cattle owned by the VLA members has not proved as effective as was envisaged in the original project (see Annex 2, Table 4). In fact, no intensification of Al services has taken place within the project area. This was due to the fact that: - the number and density of VLAs (para 3.13) was much less than envisaged; - there was confusion as to who was responsible for the insemination of VLA livestock. A number of VLA secretaries received some related training, but this was Incomplete in respect of Alt, 3.44 The Directorate of Livestock Production, Extension and Artificial Insemination received the new buildings and equipment, without making proper use of the created facilities. Delays and indecisions were partly caused by the transfer of PDLD's livestock production extension and At services to the Directorate General of Extension. <8> 3.45 The investment made by the project in strenghtening Al services has had little impact on the project but can be expected to assist livestock development in the Punjab province in the future. Land Use Mapping 3.46 Except for a delay of about 6 months in the supply of topographical sheets by the Survey Department of Pakistan to World Bank, there were no major constraints in the production and completion of the land use/land cover map at scale 1:100,000 for Sheikhupur district by 1981. However, the Soil Survey of Pakistan remains sceptical of the need for a land use map based on Landsat data in order to assess the development potential of a farming system where small-scale, mixed cropping is predominant. That authority has also found a number of irregularities in the new land-use map, and it appears doubtful whether this map will be useful for agricultural and livestock development. <8> Efforts are now being made to increase the coverage for provision of AI services to farmers in the VLA areas. -14- E. Consultants and Contractors Consultancy Services 3.47 Out, of the 20 man-years of consultancy services provided under the project, some 16 man-years were utilised. The shortfall is due to the exclusion of the foot and mouth disease vaccine production, slaughterhouse and research components for which consultancy services had also been made available. Of the consultancy services utilised by the project, about 63% were for the Lahore milk plant and 32% for the AI centre at Quadirabad, the remainder being for livestock education, training centre and preliminary study of the slaughterhouse. 3.48 The performance of consultants varied widely. According to the PLB, the consultancy provided for planning, designing and supervising the construction of the Lahore milk plant and of the chilling centres has been less satisfactory in that the design of some components and selection of equipment could have been more carefully carried out (para 3.27). With regard to the construction of chilling centres, PLB has expressed its dissatisfaction by pointing out that the consultants have not provided the agreed number of visits for supervision of construction and installation of equipment. 3.49 In addition, the Lahore milk plant was also provided with consultancy services for three resident experts in production, marketing and financial administration. The services provided by these consultants were satisfactory although the marketing expert had to leave before his contract expired for personal reasons (utilised 5 out of 24 man-months) and was not replaced. The performance of the other consultants employed for the AI centre and in the livestock education component were satisfactory. 3.50 The consultancy services provided for the planning, design and supervision of the slaughterhouse component have created serious and still pendirij problems. The contract for the consultancy was signed in April 1979 and after the preliminary design study was prepared, the slaughterhouse component was deleted from the project following the August 1979 review. Government, therefore terminated the contract for this consultancy. As the two parties did not agree on settling payment of the consultancy services, claims and damages of both were put to arbitration. The arbitration decision was not acceptable to the consultants and the case is now still being dealt with in a civil court. Contractors 3.51 The civil works of the project were carried out by local private contractors and the quality of work has been generally satisfactory. However, some water leakage in the walls was observed in several buildings of the Sheikhupura training centre. Delays by contractors were also experienced in the completion of the buildings for the College of Veterinary Science, -Lahore. -15- 3.52 The services of the contractors who provided machinery and equipment for the Lahore milk plant were satisfactory in that they provided what was required of them according to the contract. However, the difficulties mentioned in para 3.27 could have been minimised had the contractors critically looked into the specification and given their comments. F. Project Costs 3.53 The total expenditures on the project are PRs128.4 million (USS10.8 million), compared with the appraisal estimates of PRsl95 million (US$19.7 million). The principal reason for the lower cost is the reduction of the project's scope following the 1979 review (para 3.3). The excluded components accounted for about 60% of the costs estimated at appraisal. Due to delays in implementation and the resulting escalation of costs, however, final project costs were about 66% in PRs terms and 55% in US dollar terms of the appraisal estimates. The latter percentage is lower because of savings made in US$ by the project as the result of the devaluation of the PRs during the last few years. 3.54 Details of annual project expenditures are shown in Annex 1. Table 1 and the comparison between appraisal and actual costs is summarised in Annex 1, Table 2. About 60% of total project costs were absorbed by the Lahore milk plant, which according to appraisal estimates was expected to represent only 22% of total costs. The Increase in costs of the plant is due to the underestimation of costs during appraisal and also due to price escalation as a result of excessive delays in Implementation. Also the VLA development proved to be much more costly (US$9,233 each) than estimated at appraisal (US$800 each) as shown in Annex 1, Table 2. G. Disbursement 3.55 Out of the loan of US$10 million, about US$7.2 million was disbursed up to September 1985. Present estimates are that total disbursement will amount to US$8.4 million after the completion of all the works already committed. Because of the slow implementation and successive modification of the project, disbursement was exceptionally slow. At appraisal, full disbursement was envisaged to take place by Fiscal Year 1981. However, disbursement in that year was only 2% of the appraisal estimate (Annex 1, Table 3). Disbursement lagged so far behind that commitment charges paid up to January 1981 were more than eisbursement, being US$0.3 million and US$0.2 million respectively. Disbursement suddenly shot up to 40% in 1983 when project works on the milk plant started progressing. <9> <9> Final disbursement was US$ 8.348 million. -16- H. Procurement 3.56 Procurement was the responsibility of the implementing agencies for their specific components. Procurement of AI equipment by the PDLD was carried out satisfactorily. The procurement of laboratory equipment under ICB by the College of Veterinary Services, however, experienced difficulties because the contractor failed to provide spare parts and accessories mainly due to misunderstandings by the r*%ntractor of what the accessories entailed. The matter is now being remedied. he PLB has also faced some difficulties in the procurement under ICB in that commissioning of the milk plant was delayed due to late arrival of key plant equipment, including the UHT plant control panel. IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT General 4.1 The overall performance of institutions involved in project implementation was less satisfactory than anticipated. Major problems were created by the over-emphasized reliance for project implementation on PLB. The excessive prominence placed on PLB as an institution outside the line departments, has been resented by line departments and caused some rivalries. It should have been realised from the outset that PLB, as a board created and controlled by GOPu, could not operate efficiently without the collaboration of the line aqencies such as the PDLD, the Department of Planning and Development and the Department of Finance. Although these departments were represented on the Project Coordination Committee, they were not sufficiently involved in the formulation of the project's concept. Support to the project from the main departments was therefore uniform and not strong enough to overcome the project's teething problems. 4.2 The lack of enthusiasm for the project was clearly demonstrated during the processing of the PC-1. Initially, delays were due to procedural reasons but later, questions raised about the viability and scope of some project components were already an indication of disagreement between key project authorities (para 3.2). A further confirmation of this state of affairs was the excessive delay encountered in enacting the new law that established the VLAs; in the appointment of consultants for the milk plant; and in awarding the contract for the plant's construction after the project had been revised. Also, the frequent change of managing directors of the PLB was a symptom of this authority's difficulties in obtaining the essential support from other Government departments. Project Coordination Committee 4.3 The Project Coordination Committee has not been able to remove the major bottlenecks during the project's crisis period. It has also not succeeded in bringing about continuity in PLB management or integration of the various components. The meetings of the PCC were, in fact, stopped in 1981 after seven meetings between June 1977 and January 1981. -17- Implementing Agencies 4.4 PLB. Frequent changes in the management of PLB have resulted in a lack of commitment by incumbents who considered their future uncertain. This was inevitably also reflected in staff morale. In addition, it was not possible when appointing PLB managing staff, to take sufficient account of the incumbent's managerial/commercial capacity. This was particularly serious as PLB, having been established only in 1974, had little management experience and was already responsible for a range of other activities such as slaughterhouse operations, meat marketing, poultry production, development of feed mills and management of farms operated by tenants. All this resulted in less satisfactory performance of PLB in the implementation of this project than had been expected at appraisal. 4.5 Also, the performance of POLD was less than anticipated. Veterinary and production extension support to VLAs was not uniform and remained unreliable; the Al programme had not started at the end of the project. PDL0 has continued its work programes in other parts of the province and not been able to build up the additional services to discharge its responsibilities in the project area in a satisfactory manner. 4.6 The University of Agriculture, College of Veterinary Sciences has not implemented its livestock education component on schedule, apparently due to lack of awareness of the availability of funds. This is a further reflection of the weakness of the PCC. 4.7 Lahore milk plant. The Lahore milk plant, established in 1967 with assistance from UNICEF and operating under the guidance of the Lahore Milk Board, was transferred to PLB. Facilities were modified and expanded under the project, which also provided for the plant to operate as a subsidiary corporation in which an equity participation of the VLAs was sought to be encouraged. The corporation was to be established according to the Company Law of Pakistan, as a largely farmer directed organization, providing the institutional framework for milk collection, processing and marketing. For this purpose, a firm of chartered accountants was engaged to undertake a comprehensive study 'on the subject of *Lahore Milk Plant - Capital Restructuring and Financing into a Dairy Corporation Under the Companies Act". The study has been completed in April 1984. Memorandum and Articles of Association of the new company - Punjab Dairy Corporation Ltd. - Gave also been drawn up. Other formalities to form the new company remain to be done. <10> Accounting and Reporting 4.8 Auditing of PLB accounts was consistently lagging behind schedule. It was reported that the public-auditors lacked staff and experience in handling commercial audits. The July*-1979, World Bank review mission proposed to have auditing of PLB accounts carried out by private chartered accountants. This was not accepted and the problem of delayed submission of annual audited accounts persisted throughout the implementation period. 4.9 PLB was required to produce a combined progress report each quarter. The format of the report was agreed with the World Bank. Hcwever, only three reports have been submitted by PLB to the World Bank and these have not followed the agreed format. <10> The Corporation commenced business on September 1986. -18- Compliance with Covenants 4.10 The main covenants have been complied with, even though delays have been encountered in most cases. PLB has engaged a firm of chartered accountants to help establish the Milk Corporation which Is expected to become operational from January 1986. Audit reports were submitted for all project years except 1985. V. PROJECT IMPACT Incremental Production 5.1 Owing to the reduction of VLAs from 500 to 150 and to only about 95 active VLAs, only minimal incremental increase in production has been achieved and this is insignificant on a national or provincial scale. Nevertheless, within the villages with active VLAs, an increase in animal nutmbers of 29% has been recorded while milk production is estimated to have Increased by about 260 litres per association daily. Some 60% of this is reported as saleable. A part of incremental production has certainly also been brought about by the establishment during the project period of several new private sector milk plants which stimulated the demand for milk. Technological Chanae 5.2 The project has introduced a small number of VLA farmer families to the concept of selling milk on the basis of quality (butter fat) and this has been accepted as beneficial. 5.3 The Al component had no significant effect because the Department had already adopted deep frozen semen technology with FAO/UNDP assistance. Furthermore, the facilities and equipment provided under the Punjab Livestock Project have not yet been utilised.<11> 5.4 With regard to milk collection and processing, the project has enabled the PLB to keep pace with dairy development in Punjab. Without this assistance, the existing milk plant would have had little or no possibility of survival. Social ImPact 5.5 The project was expected to. create some 6,000 man-years of incremental labour per year at the farm level. The restricted number of VLAs with an average membership of 53 (Annex 2, Table 2) places the project between the Year 1 and Year 2 projections of expected increase in production and thus the objective of incremental labour requirement has not been achieved. Results of a survey of 144 VLAs carried out by the Field Service Organization of the UMN in February 1985 suggest that in the project area increases of 7% in livestock nIlbers, 19% in milk production and 26% in saleable milk have taken place since the 1977/78 base year data were collected. In 30 of the 144 VLAs surveyed, the number of animals kept was reduced although production and sale of milk had increased. <11> Now being utilised. -19- 5.6 It is difficult to quantify the effects of the VLA milk collection on farmers' incomes since reliable information on pre-project incomes is lacking. The position is further complicated by the.fact that the system has been superimposed upon a traditional method of sale of milk to collectors. Thus an unknown proportion of the increase in saleable milk could have been diverted from this outlet. Finally, seasonal changes in milk supply and therefore of the collectors' price make estimation more difficult. One beneficial effect of the project as expressed by VLA staff and farmers was the 'guaranteed' market outlet and the power to bargain with the traditional milk collectors. 5.7 Some indication of the effects on milk producers' incomes can be gained from the estimated increase in saleable milk of about 15,000 litres per day, although not all of this increase is sold to the UMP. At the current purchase price based on fat content, this increased production is worth PRs35,500 per day shared between some 8,000 families. This would be equivalent to an average income of about PRs1,620 per member per year. 5.8 Another estimate is provided by the VLA at Bucheke with 50 members which produced aod received the following milk and cash: 1982/83 1983/4 1984/85 1985/86 Litres of milk 422,767 216,963 556,691 392,096 Value: (PRs) 783,918 458,056 1,258,726 802,125 SUSS g 61,483 33,930 81,735 50,448 Per member (USS) 1,230 679 1,635 1,009 (PRs) 15,682 9,167 25,179 16,043 1/ Four months only. -/ AdJusted to official exchange rate. The VLA at Bucheke clearly has been an outstanding and untypical success but the results attained Indicate the potential source of additional income from dairying for smallholders. 5.9 Nevertheless, it must be recalled that at least 55 of the 150 VLAs registered are not working and it is thought that of these 35 will never work satisfactorily due to the distances, cost of transport and competition with other buyers. If the defunct VLAs are subtracted (Annex 2, Table 2), the project is benefitting only 6,178 member families. 5.10 The most significant social impact of the project has been to make good quality standardised milk with a long shelf life available throughout major centres in Pakistan. The LMP is not the only participant in this development but it seems that the trend towards the consumption of quality processed milk will continue. -20- VI. FINANCIAL AND ECONOMIC PERFORMANCE Financial Performance 6.1 The Lahore Milk Plant, operating under the PLB, has incurred persistent net losses in all years except 1981/82 when it made a small net profit of PRs214,000. In the first five years of its operation, sales revenue could not even cover the cost of sales, resulting in gross losses for those years (see Annex 3, Table 6). Main contributory factors have been low capacity utilisation, and high manufacturing costs brought about by excessive employment of factory labour. Net losses have also continued and in line with gross losses, shown a declining trend. The net loss in 1975/76 was PRs4 million, peaking at PRs4.2 million in 1977/78 falling to PRs3.9 million in 1978/79 and declining thereafter sharply to reach PRsO.7 million in 1983/84 following reduction in factory labour and higher capacity utilisation. At the end of 1983/84, accumulated losses amounted to PRs22 million (Annex 3, Table 5). As a result, the net assets have almost been halved from PRs6.6 million in 1975/76 to PRs3.5 million in 1983/84. Unaudited accounts for 1984/85 reveal a net profit of PRs5.1 million. This is expected to improve with the completion of the remodelling of the plant. Operating surpluses (net of depreciation and interest) are projected as follows (see Annex 3, Table 8): 1984/85 PRs 424,000 1985/86 PRs 2.7 million 1986/87 PRs 17.6 n 1987/88 PRs 18.6 n 1988/89 PRs 23.2 a 1989/90 to 2004/2005 PRs 26.3 " 6.2 Due to financial and other difficulties, the milk plant cannot continue to operate within its capital structure and the book value of assets and liabilities. A proposal has therefore been made to reorganise the LMP, which entails the incorporation, under the Companies Act 1913, of a new corporation - Punjab Dairy Corporation Ltd. - to take over the entire assets and liabilities of the LMP and the field service organization component of the PLP based at Sheikhupura. For the purpose of the take-over, the assets and liabilities have been valued by a recognised firm of chartered accountants. The bases of valuation and the assumptions used in the verification of assets and valuation are given in the Accountants' report. 42> The net assets so arrived at 31.1.84.<13> amounted to PRs114.9 million, made up as follows: <12> Report on Lahore Milk Plant - Capital Restructuring and Financing into a Dairy Corporation Under the Companies Act 1913, April 1984 - Taseer Hadi Khalid & Co., Chartered Accountants, Pakistan. <13> Cut-off date for purposes of valuation. -21- PRsI 000 Fixed Assets 28,208 Capital work in progress 72,439 Total Fixed Assets 100,647 Current Assets 26,396 Less current liabilities 11,398 Net Current Assets (working capital) 14,998 Total Assets 115,645 Less deferred liability for gratuity 746 . 8=M =MU Net Assets 114,899 6.3 The new corporation would need to invest a sum of PRsl00 million in fixed assets and PRs14.9 million in net current assets, making a total investment of PRsMU4.M million when it takes over LMP and FS0. The financial profitability of this operation is ascertained by calculating FRR on this investment. Based on the assumptions detailed below, FRR of 15% is expected (see Annex 3, Table 8): i) Life of the project is 20 years; residual value of fixed assets at the end of 20 years at 10% is PRslO million; a fixed amount of PRs5.7 million has been included for replacement investment costs. ii) Working capital for Year 1 (derived from Accountant's report), computed as a percentage of gross revenues at full operation would be 12%. Applying this to revenues of other years, incremental working capital is calculated and recovered in Year 20. Iii) Assumptions on sales and costs are detailed in Annex 3, Table 7. Pre-incorporation and formation expenses have not been included as these figures are not available and the amounts will not be material. iv) Since expansion and remodelling had not been completed by 31.1.84, when valuation was done, capital expenditure in the intervening period is not included in the investment cost of PRs114.9 million. v) As a new public company, Punjab Dairy Corporation Ltd. would consider the investment in assets through take-over as its own initial investment. Revenues and costs arising from this are therefore all incremental and are attributed to this investment. 6.4 It should be emphasized here that the financial result is rather sensitive to changes in the expected sales revenue. Switching values show that a decrease of 9% in the sales revenue of UHT milk would lower the rate of return from 15% to 10%, as would a 10% increase of operating costs. -22- Economic Performance 6.5 An economic re-evaluation has been carried out for the project in which only milk benefits from the projected operations of the milk plant have been attributed to the project. However, the entire project costs incurred since 1977/78 have been set against the above benefits. Financial costs have been adjusted to reflect their economic values by deducting taxes and duties and local costs have been brought to border prices by using a standard conversion factor of 0.8. All costs and benefits are expressed in 1985 constant prices using a deflator based on the consumer price index. <14> 6.6 On the basis of the above, the economic rate of return for the project is estimated at 9% (see Annex 3, Table 9). This is considerably lower than was estimated at appraisal. However, the two estimates are not comparable because the project was significantly changed after the exclusion of several components. VII. WORLD BANK PERFORMANCE Project Desin and Appraisal 7.1 The project concept of assisting livestock farmers by providing an extension service, organizing them into VLAs and ensuring market outlets for the milk and meat produced was sound. It was, however, optimistic to assume that a young and inexperienced institution like PLB would be able to carry out implementation of all components related to VLAs, milk plant and slaughterhouse during a four year project. A more critical examination of PLB should have been made at appraisal in order to assess its implementation capacity and autonomy in decision making. This would have cautioned the appraisal mission from overloading the project with too many components. The prominence of PLB in the project was undesirable in retrospect as this caused resentment by line departments and created departmental rivalries. In the absence of sufficiently unbiased studies, the appraisal mission also arrived at too optimistic conclusions concerning the viability of the slaughterhouse and the export of buffalo meat. It is also not clear why a Landsat survey was recommended for an area which is well surveyed like Sheikhupura district. Supervision 7.2 A total of 14 supervision missions have visited Pakistan during the implementation period. In the first two years after credit effectiveness, the missions tried to bring about a smooth start but they were unable to convince the authorities to approve the PC-1. Their efforts in overcoming initial-difficulties were commendable as was their request for review of the project in 1979 when it became clear that significant changes in project design would be required. The subsequent exclusion of four components was appropriate. This has made the project more manageable. After the review and modification of the project, all supervision missions were geared towards <14> The following deflators have been derived from GOP released statistics on consumer price indices and are: 0.52, 0.56, 0.62, 0.70, 0.76, 0.81, 0.86, 0.93 and 100% for the period 1977/78 to 1985186 respectively. -23- expediting implementation. Lengthy procedures and reduced commntment by GOPu have, however, slowed down project implementation. Reminders and suggestions by the supervision missions did not bring about essential changes. The Bank has actually not taken a forceful position, even when covenants such as need for reporting, submitting accounts and establishing the Milk Corporation were not complied with as agreed at appraisal and project reformulation. The frequency of the supervision missions can be considered adequate except for 1982 when no formal supervision mission was sent. VIII. SUMMARY AND CONCLUSIONS 8.1 The project aimed at introducing new approaches to the production, processing and marketing of meat and milk, ensuring incentives to small farmers in the province of Punjab. It was thought that results would encourage further projects in other provinces. 8.2 The original project consisted of numerous components (para 2.5) and insufficient attention was given to their coordination. PL8, a young institution, had major implementation responsibility not only for commercial undertakings, such as the milk plant and slaughterhouse, but also for non- commercial programmes such as establishing VLAs and training VLA staff. All rather complex project components were envisaged to be planned and executed within four years which was unrealistic and over-ambitious considering that PLB had been set up only three years earlier and become involved in a large development programme including slaughterhouse operations, meat marketing, poultry production, feed milling and management of land reform farms. 8.3 The project commenced at the time of a new Government administration. This affected progress of the project because administrative departments had to deal with changed and new development priorities. Nevertheless, the start in 1977 appeared highly promising. However, initial enthusiasm faded away, the authorities could not agree on initial budgets, and project implementation was seriously delayed. After about two years of inactivity, the project had to be reviewed by GOP, GOPu and the World Bank. This review resulted in the exclusion of four components, foot and mouth disease vaccine production, livestock research, slaughterhouse and development of PLB tenant farms. The core of the project therefore became development of VLAs and milk collection, processing and marketing. 8.4 In spite of the reduced size and scope of the project, implementation did not progress as expected. Much time was taken to appoint consultants and to award contracts for the milk plant. In the meantime, the project had proceeded in establishing VLAs although milk could not be procured from all of them until the milk plant was rehabilitated. 8.5 The project required strong, dynamic and skilled management as well as collaboration and good coordination among the different implementing agencies. However, the management of PLB suffered from frequent changes and coordination among implementing agencies remained weak. The AI programme of PDLD, for instance, was not implemented in the proJect area as PDLD was operating in other districts. Also the Agricultural University, College of Veterinary Sciences remained unaware until late that it had responsibility for the implementation of a component of education in livestock production. -24- 8.6 Overall, the project has not met its original objectives of improving livestock production and the incomes of a large number of farm families in the district of Sheikhupura. However, it has created a nucleus of functioning VLAs which could be the basis for further development. The project has also strengthened the Al service in Punjab through the provision of buildings and equipment which will be useful in future. Likewise, it has provided improved facilities and laboratory equipment to the College of Veterinary Sciences which can increase the training standard of stock assistants in the province and assist provision of extension advice to VLAs. Lessons Learned 8.7 The following are the main lessons that could be learned from the experience of this project: - Particular -.tention should be paid during project formulation to limiting the number of components to those strictly necessary for attaining the project's main objectives, and temptations to address all problems simultaneously in order to satisfy aspirations of Government officials should be resisted. - A critical examination is required at appraisal of the designated executing agencies' existing and planned comuitments, organizational structure, modus operandi and staff capabilities in order to assess their implementation capacity. - It is unrealistic to expect a successful commercial undertaking emerging in a situation where management lacks autonomy in decision making. - Frequent change in the management of the project and excessive delay in taking decisions may be signs of wavering commitment to a project; supervision missions need to resolve the underlying cause in their dialogue with Government. - Establishing the product mix of a milk plant needs to be based on detailed knowlejige of the market requirements. This, in turn, requires a market study or survey. - The Bank, through its supervision activities, should at least be able to make certain that project actions go in the right sequence. Oeveiopment of VLAs before LMP and purchase of tankers before establishment of chilling centres should not have been allowed to happen. - Purchasing policy of a producer-oriented enterprise like LMP should allow for collection of all milk offered by the farmer regardless of quantities in supply. This would build up farmer confidence in the system, so essential an incentive for increased milk production. Pricing policy must, however, be adjusted to take account of cheaper imported raw materials for reconstitution, cost structure of LMP and competitors' prices. Where the resulting decision entails financial losses to LMP, such losses must be made good by the Government. PUNa IVt tOK )EOIC Annual feo tOeS tt _Su.. VLA De.010w0o.n . . . . . . . . . . . . . . . . . . . . (aS 000) ......... . .... ..... . 5fljJrbhi-d Tpm. a.d VLA Mauchinery *nd equipment 127 12S 269 200 Isa 236 - - - 1.122 ,raining 420 538 S5S 543 355 395 120 2.935 working capital VL^* - 40 oO 140 54 156 - - 4b0 Stott *nd overhead costs 223 02 793 797 S51 S60 *42 _ _ 5.114 Sub-tot-l 1Q~~~~~~~ t-232 I-ga I-e t a 2 ^ A6t 1 071 _ _ S24 ±1 Extenslon Sarvica civ wtorkS -- 237 - - - - - - 23? Machinery sed eq..ipment 1s 222 170 tto 40 - - So0 ste r* nd overhead costs - 175 142 1,030 773 1.217 1.303 - - 4.729 ZUIL±ftL*1 152 ~~~ ~~~~~~~~~ml 105 Z 1.22Z 1A, 23L Civtl works - - - 4,5S 5.609 - -- 10.46 Machinery and equipment - - - 4.100 450 - - *.5S5 Conaultancy services - - 115 300 - 37 SIO - - io, Outy and taxes - - - - - - 2.500 - - 2.S00 Sun-total JAR am* d-.ks 0M 3J1I - - LL.47 vi,eatgck EducatiOn Civi works - - - - - - 65 - - 660 Laboratory *uiPa..t - -- - - 200 2.460 300 2.9s0 Conu nltcncy service> - " 150 150 - - - - - 300 Outy and tases - - - - - 500 - - boo Sub-total _ _2 11 _ 1.31 L4 4; 1 Consultancy *orvic-s - ala - - - - - - 12Q MSik Plant Civil works - - - - - 2.743 40 - - 3.693 Machinery and equipment _- - 27*916 15.032 10.223 7.602 2.300 43.S73 Consultancy services - b 6OO 370 10 750 5.605 - - 7.325 FeIows1P--ip - - 700 - - tO Duty and to.** - - - - 3.0O 1.000 - - 4.000 IMZI4IA - ug2 11 I 1.501, 209 20.2I TraAinn Contre Clvii wrks -- 2.000 2.30? 7 ' 4.387 Machinery and equipment - - - 760 GOJ - - - - I.454 Cons..ltncy services 200 - - - 200 Stoft and ovorhb-d costs t3J 143 340 S2U 574 800 330 - - 3.209 Land-at Survey Purchass of imagery and ground 2QQ - _ .l3 - - - _ _12 trutiling ProleSt Coordination Offtic *quipment - *0 - - - - - - - to b Z Staff and ovorh-ad cOsta 37 137 136 17S 141 04 IS - - J29 r Z AMIZDIA1az JAZ ±11 J.Mii i i i Sub-totel~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' 3'>4 TO^IA 1,144 2.*00 5521 7,740 36.103 36,304 26.065 10.602 2.000 126.370 _ *a-.- w*s s*,* asse cme - "ass, * -0CC 050 - ** -* *5S S*-- "s l/ 1694-85 and 196S-80 *Ctivitt110 have VOa Incoueoratad and ceotd la the ev*rett epartment-al 6"udt. PAKISTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAK) Comoarison Bet"oon Anoraisal Coat Estimates and Actual Expenditures Prolect Comoonents Aonraisal Eltimates Actual Exoenditures if (Rs '000) (USS '000) (Rs '000) (uSS 000) VLA development 4,020 400 tS.tSO 1.385 FltU vaccine 20.760 2.100 - - Al service 3.860 390 18.147 1.494 Livestock r-esarch 4.600 460 - - Livestock education 8.300 840 4.430 312 Slaughterhouse 43.170 4.370 S 890 90 Milk plant 28,730 2.910 79.291 6.479 1 PLO farms 10,160 1,030 - - C% PLO training centre 5,920 S90 9.250 6a9 Lendsat survey 1,000 too 373 38 Project coordination - - 839 79 Contingencies, taxes and duties 64,460 6.510 - TOTAL 195-000 19700 128.370 10. .L Average annual exchange rates used are: US$1.00 to PRs9.90 for the period up to 1980/81: PRsO.5SS for 1981f82; PRst2.75 for 1982/83: PRs13.50 for 1963/84t PRs1S.24 for 1984865 and PRs1S.90 for 1985/86. ' PAKISTAN PUNJAB LIVESTOCK PROJECT - (LN 1366T-°AK) Disbursement of Lgan (USS million) Fiscal Vear Aporaisal Estimate Actual Annual Cumulative Annual CumuIative 1978 1.3 1.3 0 0 1979 2.6 3.9 0.1 0.1 So80 4.G 7.9 0.1 0.2 1981 2.1 10.0 0 0.2 1982 - - 0 0.2 1983 3.9 4.1 1984 1.7 6.8 1985 - - 1.0 6.8 Sept 1985 - - 0.4 7.2 June 1986 1.1 8.3 v-tn PAKISTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAK) Staff Emoloved by Puniab Livestock Board Post Field Services Ornanization Post TraininQ School Post In 'ProDosed' In Post Vacant In Pos-t Vacant post Management 3 - Principal 1 Management - 7 Administration 10 17 Administration 6 1 Lecturers 5 - Security mi Cleaning 11 2/ Finance 14 3 Technicians 3 3 Accounts 9 10 Stores 5 S Extension 16 4 Administration 7 3 Engineering 23 31 Procurement 16 43 Spe-r-head teams 30 11 Hostel 2 1 Processing 37 59 1/ Ouality control 9 a Other supporting staff 24 U Other supporting staff 7 4 Marketing 19 24 _ - Transport 17 2i Total 93 33 25 It 167 226 == =5 as1 =5== S Source: Punjab Livestock Board. November 1985. I/ Office boys. guards. gardeners. I, Oistributed into other sections. Z c-rn i )C PAKI STAN PUNJAO LIVESTOCK PROJECT (LH 1366 T-PAK) Annual Raoistration of VLAse Shei kuoura Ohara Kasur Total Year VLA' MemberA's embei s A'Lrs Members VLA's meIQaers It91 2 218 - - - - 2 218 1900 4 210 - - - - 4 210 %D I 191 51 2,608 - - - - 51 2.608 1982 49 2.450 6 35S - - 5S 2.805 - 1983 16 800 12 645 7 407 35 1.852 1984 - - 2 130 1 105 3 235 19g85----- - Total 122 6.286 20 1.130 a 512 150 7.928 Source: Punjab Livestock 0o0rd. m ER NC PAKISTAN PUNJAD LIVESTOCK PROJECT (ALN 1366T-PAK) Sumarv of ProjeCt Training at PLO Contra Trainee Numbers Trafi. _Nmybers Course Duration FrequencyProtaus p td Actal EJJ VLA spearhead 10 woeks per team Two course in year 4 teams each of tS 2 teams ot 17 Teams (includes at inauguration of one and two. initial eaten- team. *iun staff). VLA spesrhead Ono week Twic, per year 3 teams each of 1t 2 teams of 17 Team Refresher Course. Dairy and m-et Ad hoc Twice per year All senior plant processing. s*tff Overseas 2-3 months Ad hoc 12 key PL6 and 3 PLB staff Fl lowships Ministry Staff YL&A VLA Staff a weeks at 4 courses per year 2 staff from each 2 courses of 6 months appointment VLA maximum 30 32 + 26 trainees. trainees per course 240 per year. VLA Staff Ono weak once 4 courses/year Same as above I Refresher Course a year VLA Management 4 days once 4 courses/year 2 to 3 members Committee a year from each VLA por 30 trainees pOr course. Exten-ion Villge Ext-n- One day par 24 times/year 32 VEW Staff one 40 lecturers s1in Workers fortnight, day per week. 20 VEW staff (VEW). Route Extension 10 weeka To supplement VLA spOarhead teams as required. e*xtnsion training as az PAKISTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAM) Artificial Insemination of Buffalo and Cattlg 1978/Ot 1979/80 1980/81 19§1/02 1982/83 19.a384 1984/85 Doses of semen produced 111,482 194.082 212,683 227.700 235,137 313.365 480,001 Inseminations: Punjab 96.144 133.639 173,777 200.046 214.651 243.129 290.876 5* Project Area - 3,210 4,379 4.887 5.874 7,937 n.-. Percentage in project ores 2.4 2.S 2.4 2.7 3.3 Sources: * Directorate of Livestock Production Extension and Artificial Insemination. Lahore. ** Punjab Livestock Board. Ii PAKISTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAK) Sources of Milk PfoLusement - Laliore Milk Plant Average Daily Raw Milk Receipts (litres) Financial Year VLAs 'Private' Total Percent VLA 1980/81 3.925 1.610 5.535 71 1981/82 3.174 3.135 6.309 50 1982/83 5.410 220 5.630 96 1983/84 3,879 239 4,1118 94 1984/85 5.206 9.791 14.997 35 Source% Project Director, Lahore Milk Planc. tJ Z a.z 2 PAKISTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAK) Summary of Outout of Milk Plant 1984-85 Followina Rehabilitation Month Litres of UtIT milk in Tetrabaks Total Litres uutterK8S- 1984 (0.5 I) (0.25 11 July 326.362 - 326.362 303 August 459.186 - 459.186 697 September 538.884 - 538.884 Z 198 October 577,600 - 577.600 1,203 November 592.020 - 592.020 5.130 December 588.190 21.559 609.749 10.048 w 1984 January 592.371 35.743 628.114 tl.O85 February 505.188 33.894 539.082 9.399 March 457.632 66.324 523.956 5.429 April 46t.673 44.381 506.034 6.982 May 563.002 76.540 639.542 1.143 June 76t5.53 62.S42 -829955 - Total 6.429.821 340.863 6.770.484 53.617 Source: Project Directoe. Lahore Milk Plant. o Z r- W PAKI STAN _UtA^e LIVESTQ ! PROJECT tLN 1366 T-PAK) Utilization at UHT Milk Produced in Lahore Milk Plant Sold to No.of Returned by Milk Lost/Wasted Mants Mih sQegssed Distributors Towns _ I I4ut_ _ -I I U ,t94 Litres Ltcr*s Percent Litres Percent Litrnl Pe-cnt t/ July 326.362 240.893 74 2 19.848 8.2 18.371 5.6 Auqust 459.i86 434.311 94 5 32.671 7.5 6.054 1.3 September b38.884 51.982 96 10 38.139 7.4 7.550 1.4 October 577.6C0 618.028 107 11 43.834 7.1 4.973 0.9 J. November 592.020 540.102 91 10 27.342 5.1 6.117 1.0 December 609.749 606.403 99 11 23.637 3.9 6.975 1.1 1985 January b28,115 638.777 102 12 18.638 2.9 15.962 2.5 February 539.082 517.327 96 13 25.322 4.9 4.837 0.9 March 523.956 557.638 106 13 58.082 10.4 7.513 1.4 April 506,034 538.907 106 12 59.740 11.1 9.412 1.9 May 639.542 649,923 102 12 64.494 9.9 14.078 2.2 June 829.955 760.198 92 It 74.858 9.8 10.646 1.3 July 743.139 787.826 106 11 113.803 14.4 8.128 1.1 August 672.181 572,305 8S 12 35.984 6.3 8.861 1 s September 616.455 537.728 87 13 47.100 8.8 10.220 1.7 A Z October 573.196 600.193 105 12 33.396 5.6 12.866 2.2 4 x Source: Project Director. Lahore Mill Plant. I/ Pe.centage of silk procebsed. PAKISTAN !UNJASAL LIVESTOCK PROJECT (LN 1366T-PAK) Loans to VLAs l9al 1982 1983 Total No. of VLAs S a5 11 101 Loans in cash (PRS) 30,000 653,440 62.700 754.140 Repayments (PRs) 6,707 280.260 15.121 317.209 t Percentage repayment 9.S 42.9 24.1 42.1 Loans in kind (PRS) - - 179.950 Loans In kind recovered (PRs) - - 100.648 Perccntag0 repayment - e6 o- z tox WA ANNEX 3 -36- ~~~~~~~Tah le 5 -36- m.n -, J -1 m-a AM ML SU1* F lid Assets - - 2,15,625 11,947,641 1,O38,5 12,,12 11251,9 1 1,404, htl,14 Less hepitcieti*36sLoJ2LO Virttef 9,~ VUC '! ' t1.Eli" 4,217,764 l,24i2 , ,tg 59 3,. *0,l,U5 i,4l6,2l 34,415 ,28 ,24 466,7 EEC Slecis 5 - - - -,54W,62* EEC lick lalante - - - - - 12456,612 jortn 4 Stith 31,311 46,861 347,274 355,127 112,4 319,2 1, 31,252 582,211 Cas Oank 6uliite 3,C41,634 3,697,947 3,173,44 3,557,4 1,169,u 1,351,3a 1219,25 1,42,166 62,7 Trad Dlebutns 1,776,12, 1,M65,4" 2,617,662 2,1767,124 3,1 1 3,54,431 1,175,11 3,676,223 4,63I,278 Advances, Ieei,&Fepset 4 . 116? .1 3 ~9dL.Ia?t U,184,131 7,511,59 4,298,5U 7,5 ,I4 trefit & Lsct .!ALLThL1t6 2il-l *! 6 121 5 TOTtAl 20,717,513 21,94,213 21,159, 36,919,464 36,299, 46,12 019465,34 3,2351,2 11,*l11 EEC 64 ULSilte IECI Aid il MU .o ,b to , Cost. if P 95,69 956,76 954,276 956,2 9,273 95,27 95,27 6,26 954,276 UMICIP Dautiem 2,966,967 4,375,672 4,375,M7 4,361,0 4,366,42L 41,1049,4 ,m,s 4,2,94 1 4,2m,1 Capital oner" 3,05 1,162 - - S - VanU Feod PtoregnuMUM. 15u,934,622 20b,63,150 23,31, 25 ,,33 , 2 2 26, Detrrd Liai1itw - - - - - 261152t 369,411 EEC AW fravided to L - - * _ _ _U,95,476 Geot. of psujab 639,614 m7,371 - - -J - MJZU Acctee Epue 549,151 462,26 6,71 433,615 1136 1,645,66 11,507 121,08 1,84,4 govt. of Panjab - Ctrmt lbaitit, of Lot-etma LIan 2,123,816 2,485,499 2, V2,71 2,U2,67 2,^12,88 2A,62,616 212,! 2 ,6211 2,61,076 scmrity 6 Other Opuits 512,164 596,541 519, 564,q2 59,182 17,575 3,675 %969 12796 tatwest kcrved a Ln 617,411 744,91l 676,421 12,6,931 1,135,44* 1,35,42 1,135,441 1,135,441 1,135*,41 Othe Liabilities 161,965 27,49t 115,22 75,554 612,7 427,47 225,5 16,69 06,1 lcl Oetrdtaf * 2t2 - _ - 3,133,667 4,448,769 4,93484 5,645,932 ,6,N 3,5at iiii4i,4,144i4,703 ir6- &IW,i4 TOTAl 20,76,513 25,44,231 26,616,59 36,969,166 3,11,211 36,175,792 29,105,433 3135,619t 1l,2,I1S SOK:Pnjib Lzvusl.c levelpot |erd. fU N^bUPKIS AN) Ptw3AR l ffT g CM WN. 136 P -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~_ LT-- LA Lahore Oilk-Plant: Profit 24 ; L rm ti L4-85 Particulars IM-76 W6 77 1977f I:-Z_ L?nJ0 ___8t L"J:L2 L-B3 _ 84 Quantities sold against sales (litres) _5 3 209 4.M.Z7L 1 0I754_.27. 7 ;j8 M51J344g __212i%9 _ 304B87 ~~~~~~~~~~~~~~****. Ps*...** **.4* **.. *** .*.,.*... ,. . ........., , . ,,{S) Net Sales ,930,165 7,194,196 6,192,536 6,105,304 7,3535 1I,920,299 11860.157 90,318,595 7,999,101 Less Cast of Sales (Production Cost) 1W3j&3_V__ZP16J7 9,56 ,AVJQ 25Z!L 7 417 75.43; A. CGess Loss/(Profit) (2,23t,224) (92,7806 (t,778,9) (M,68) (127,998) 398,154 1,264,875 556,178 68,718 D. Gi) Less Adninistrative Expenses 517,216 596,116 1,471,955 1,446,430 8,,30 592,6? 612,271 648,508 742t,9 Dii) Selling 4 Distribution Expenses 1,322,61t 1,52,503 853865 1,551,515 1,607,643 678,231 692,392 671,282 804,936 (iii) Financial (Interest) Expenses 129 129A11 12?.!i 29.511 - 7J .L2Q_ 0 Total (i) + (ii) 4 (iii) 1;969t317 2,22,01? 2455,331 3,127,455 2,13,493 1,271,160 1,315,778 1,321,938 1,600,09 ,' Operating Loss/(Profit) a. 4 D. (4,211,541) (2,644,801) (4234,322) (4,099t523) (2,;51$4?1) (813,106) (40,908) (745,760) (1,531,391) Less Niscellane, s Income (1 - -- _ Za9 _ f109?z Net Lessf(Profit) for the Year (4,056,66) (2612,57) (4,208,58) (3,895,426) (2,156t341) (659,20) 213,838 (436,236) (671,564) Add: kcuvulated Less vp to Prior Year 5,212,725 9,304,969 l1,934,149 16,616,392 21,086,M 21,920,912 22,091,713 21,944,"4 21,569N,34 AdjustNents for Prior Year - -15 473J -1 1) A8AL54 _ *kcualated Less Carried to blance 9,314,969 tl,934,649 16,61639 20,3 8629 21,920,912 22,091,713 20,94,974 21,569,034 22,217t,361 Sheet Suij:ig Punjab Livestock Deelspent hard. I PEAKSTAN PUNJAB LIVESTOCK PROJECT (LN 1366T-PAK) Lahore Milk Plant Assumptions for Computing Revenue and Costs 1984185 1985186 1956/87 1987/88 1908/89 i989/9U z'JU4/,1025 Average daily collection (it) 15,000 2/ 25.000 30.000 35.000 45.000 b(.1n1t Annal _Coltlectio (it 000) From VLAs 1.900 2/ 3.625 4.350 6.387 9. 855 14.hill from otlher sources 3.575 2t 5.500 6.600 6.387 6!,#70 3.A'0 Total annual collect ion (365 days) 5.475 4/ 9.125 t.09SO 1Z.715 lb.4i¶ 18 P 1/ An i Product Mix 1300 days) dsteurized milk (it '000) 0 0 0 0 0 '4T mi lk 6.770 2/ 9.000 9.500 10.500 12. MM Is t'i.Il 1f1tter (kg '000) 54 2/2/ 263 I/ 3S6 44S' 653 h5i; Vogl'urt 0 750 1.500 1.500 1.5011 t .'tn Mauufacturinga Losses I Processing losses (%) 2.0 Z2 2.0 1.5 1.5 15t Returned Tetrapaks (%) 8.0 2/ 8.0 8.0 8.0 8.0 t.o )oeratina Costs (PRs/t)_ MAilk collection costs 5/ 0.2 0.16 0.26 0.22 0.17 0.14 Processing and packaging: -UNT milk 1.8490 l.tS99 1.7289 1.7007 1.6752 1.b644 - Butter 3.8566 3.8301 3.8227 3.8112 3.8000 3.7090 - Yoghurt 0.9900 0.9870 0.9870 0.9870 0.9810 ll.'lH70 Distribution 0.2774 0.30 0.30 0.30 0.30 0.30 I Wholesale prices ex-plant; UNT milk - PRs5.00/1t; Butter - PRs4t.00/kg for 1984/85 and PRS5O.OO/kg for 1985/86: Yoghurt - PRslO.00/1. 2/ Actual figures (see Annex 3. Tables 1. 2 and 3). *1 Z _/ Sales of butter limited in second half 1984/85 and first half 1985S86 owing to lack of packing materials. o m 41 Difference between milk rece-ved (Table U and milk processed (Table 2) due to standardisation with EEC milk powder. LA! 2/ PRsS.00/km for 4.000 It tankers and PRsIO.00 for 9.000 It tankers. total daily mileage 600 - 960 km. -39- PAKISTAN ANNEX 3 PUNJAo LIVESTOCK PROJECT (LN 1366T-PAK) Table 8 Lah%re Milk Ptant : Income and Operating Costt (PRs '000) e4 eS et 87 88 89 9(-2002 2003 rs a f9ccuresont ._-__ ..... _ e. lot.al milk poculced (ItitOO) 6n7C 9CO t0800 12*00 16200 18000 16000 18000 Gzoaa EasaSUt ._....._.._... Productios 2! Paattaeti2eJ *5llt * * _ , , _- U5t &ilk 677C 9000 950C 10500 12000 15000 150C 15000 Butter hV 000) 54 263 356 448 653 656 L56 Es6 1oghbrt fkg COO) - 750 1500 1500 1500 1500 1SOC 1600 EZoduce Ftieos UTH *ilx tzic..#00Ol * S Buttet x:ejOOOkg 047 SO 50 50 SO So s5 50 Yog*uct Ezice/3001g 1C 10 10 l0 10 10 10 10 frocur.stot Frics/eOOlt _ 3 3 3 3 3 3 I Pasteutited Bilk CeVeaue - - - - UI silt rtewenu 33e50 45000 47500 f2500 60000 15000 7SOOt 75000 E"tteC reWenue 2'36 131SO 17800 22400 326S0 32800 328tC 32800 loghatt esIQOU - 7500 15000 15000 15000 1S000 150C 15000 c te 3686t 65650 80300 8900 107650 122800 122600 122800 itectsJog less 125) 72f 1313 160t 1798 2,5S3 2056 2856 2458 ress reusne aftager losres 35461 64337 74e04 69102 105491 120384 120348 120344 Opecatlag costs Cisect costs lab Silk putcbess 2031C 27000 32400 37800 48600 54000 S400C 54000 Bilk coilectios es*poses 109! 1460 2845 2810O 2792 2SSS 255 23555 ErOCtStiag 4td t£akagiag 12726 14896 1931; 22844 24125 29004 29004 29004 Ostttbutioa eapoases Isis 2737 3285 3832 °927 5075 5875 5O5 .-- an sen..…~~~~~~~~-…I -; Subtatajl ditect costs 356SC 46093 57804 67286 60408 91031 9103S S1130 CVtGread costs _...._._.._.__. &41inistratiou and otbters 200 300 350 400 400 400 400 400 total opsratiag costs 350C 46393 58194 67686 80806 91434 91434 91434 ___ -------_ ... ..... ^_.__,______,,,__. __ Cpecatiog sutplus/doeilet -190 17044 20500 20416 20649 28910 2891C 28910 Inviestlaat costs ...._.-._..._.__. fas*4 iawestmeat costs 100000 5700 5700 5700 5700 5700 570C -10040 lacc.oeCking ca;ital 21 14900 3!11 1756 1152 2130 618t - -25269 iaestesct costs 11490C 9211 7451 6852 730 7518 570C -3526S lizancial casb flov -11509C 8733 13042 13564 16819 *21392 23210 64179 WMSU4A.5AA 10304Aawl 06"ARVA.W4 nAS.aau 800-aU.3383 U3 SUtTCNING VALUES AT 10X 335 a3aa.333a333333335 PRESENT VALUES SWITCHING VALUES PERCENT UNT milk sales revenue 530972.02 -8.8 Eutter sales eevenue 217028.11 -21.6 Yoghurt sales revenue 107868.74 -43.4 ProGuction tosses (2%) -17117.38 273.3 Total operating costs -642907.33 7.3 Total investment costs -149068.33 31.4 NET PRESENT VALUE At 10% 46775.84 RATE 0f RETURN *15.1 it 0erived, from Accountant's report 2/ cosuted at 12% of incresentel gross revenue. PAW l STANl PUIIJUA LIVESTCK PO.EtT (Li 1366t-PAC) Ecouioc Aalysi (PoS o000 - in constant 1985 prices) ---- ---- --_- ---- --- - -- ---- ---- --- - --- ---- ---- - - ---- --_ - ---- -_- - --_ - - ---- ---- --- ---- ---- - -- --- ---- ---- ---- --- 77 7t 7S so e 82 03 s 8! ef 87 O8 aS *-Zt 2W3 leactits 1I ult ralfs cll-Deu - - - - 3f398 85000 47500 52500 tDOOO 7.O( 75000 ?SOOC PUttct -.jI4et rtrlave - - - - - 2729 13150 17800 22eo- ?i*,50 32t 32100- 32t00 loghbtt sales gesezue - - - - - - 750C 15000 15000 15000 1!~t)C 15000 15000 Rtcductico losses - - - - -783 -1313 -166t -179e -2153 -24"t -2056 -2 Grcss ceveseie - - - - - - - 30344 60337 78e9g 38to2 105097 120w'T 12030% 120300 Costs 2ot* ot1 tatibg CostS t - - - - 38548 46393 !9190 67686 OE2B 9143@ 9106 91030 luct.Iorhing calital T/ - - - - - 16022 3511 t75e 1152 2130 111l _ -2526S lb,c-zt.ert costs 1t 6186 4591 7400 6723 *5S72 36909 25501 10101 2600 5)09 5100 5700 'lUt 5700 -IOQOO total ccctmoic costs 1e67 0591 7405 8723 *5S72 36909 25!41 65411 52504 e6562 70530 CtL78 SIS5; 9vi3" 5516! *et c.sh ties -1to6 -0591 -7400 -8723 -SS572 -36909 -2S356 -27067 11833 13040. 133SB 16819 21392 23210 6o17S SbITCHN64 TrWJts ST ICI SPt&:lSAL SI.2C;96 wCtit'c^lga0 YSTsAM.tts vassesss VALUE sos_"t-wseXs URIT $ats revwens 273,662.00 266,S6.00 0.711 utter sates revenue 111,4S9.00 124,345.00 11.57S Yoburt sates revee SS,350.00 68,240.60 23. 28 Production tostes -8,80.72 0,076.91 -106.2Zt Totat operating costs 331,173.00 31S,216.00 -?.90% incr. working capitat 9,322.73 -3,St3.54 -13E.23! lnvstent costs 100,050.00 9t,169.70 -12.395 101Al IBIl?flS *31t 65.00 466,5!2.00 2.991 s02*1. coslS Ofl,!S2.00 #31,695.00 -2.903 *PT a 105 a -12,1#.7 515 - .6.0 CS a 9.1% 1/ From Annex 3, Table 8. -1 > 2/ Based on total financial Project costs as shown in Annex 1, Table 1. Financial costs have been adjusted to reflect economic values by deducting all duties and taxes and by applying SCF of 0.8 to domestic costs. A GOP deflator has o m been used to express all values in constant t985 prices. * w ANNEX 4 Paue 1 of 4 - 41 - PAKISTAN PUNJAB LIVESTOCK PROJECT (LN. 1366T-PAK) PROJECT COMPLETION REPORT Comments of the Government of Pakistan on the Project Completion Report FAO/World Bank Cooperative mission visited Pakistan during November 1985. The mission reviewed the progress on the project from commencement through completion and prepare the Project Completion Report. On receipt of the Project Completon Report and its review, the Sectionwise comments on the report are summarised as follows: a. First Two Sections describe the introduction history, project formulation concept including componentwise objectives envisaged and duly assessed by the Appraisal Mission, prior to the credit agreement and its effectiveness. b. The 3rd Section of the report described the efforts made on the project implementation, changes in designs of the project and overall progress and experience gained during implementation of the specific components of the re-designed project scope. The contents of the report comprehensively described the progress during implementation including the experience/constraint and impact of the project. However, certain clarifications are being put forward prior to finalize the report. Para 3.12. Efforts are under way for recommissioning of the dormant VLAs and in case no positive response occurs, new VLAs in their place with better location and means of communication will be started. Para 3.13. Recovery of loan has been shown from 18 VLAs instead of existing 81 VLAs. This might be a typing mistake which may be corrected. It may also be pointed out that recovery now stands at 5.62 lacs as against 4.18 lacs both cash as well as in kind loan. Para 3.15. The field work was started in 1978 and the figures provided for animais vaccinated, treated for internal parasite and other diseases are actually a result of functioning of a field staff in the area for a period of seven years. It is added that Spearhead Teams were supposed to remain at each VLA for a period of 3 months for motivation of the farms and provison of treatment, etc. Most of the treatment was provided by these Spearhead Teams during their stay at the VLAs. ANNEX 4 - 42 Page 2 of 4 Inspite of this if figures are calculated on the basis of 7 years and keeping in view the intensive care provided during 3 months stay of the Spearhead Teams at VLAs the figures would not be misleading but within a reasonable range of facts. Para 3.21. Delay in construction of Milk Chilling Centre is clarified to be on the reasons that initially on appointment of the consultant, the services for Chilling Centre were deleted from the scope of the Consultant services which remained hanging fire. All attempts made on different occa- sions proved futile till hiring of the consultant services in 1984. Para 3.25. The production of butter and yoghurt have now started. " ' arrangement for provisioning of one year's stock of the paper and ca- jns for packing of the butter and yoghurt have been made. Para 3.27. a. Presently milk pasteurizing facility is being utilized to feed the yoghurt production line. However, arrangements are being made for filling of the pasteurized milk in packets to supply to the market for which the survey is in progress for launching market campaign for this product. b. The availability of surplus milk during the flush production warrants its conversion into milk powder and butter oil for its re-use during the period of scarce milk supply. However, the equipment for this line was omitted in the plant design by the consultant. The inclusion of such equipments for producing the SMP and butter oil into the remodelled LMP as an additional unit was requested by PLP but could not be accepted by the World Bank. Now plan is being worked out for inclusion of such production line into the LMP to produce domestically the SMP and Butter Oil during flush season. c. Omission of the clarifier in the original plant design has now been overcome through conversion of the existing cream separators into clarifier by fitting additional necessary attachments. d. The arrangements for paper of the desired specification for packing of butter are now being made in addition to the possibility for change in packing size to produce of 100 g and 50 g of butter. e. Based on the experience gained by the parties selling yoghurt in the market, it is stated that 0.5 lit. cups are acceptable in the market. However, the cups for filling up of the yoghurt have been made available and production line is put in operation. f. It is clarified that small milk collection tankers of 2,000 lit. capacity each, fitted on the flat bed lorries, are not the locally fabricated but these are imported alongwith rest of the plant machinery. However, the possibilities for the pump and pipe lines of stainless steel are being made. The milk churns ANNEX 4 43 Page 3 of 4 which are now under use for filling the tanker are not of 45 kg but of 37 kg load each. Para 3.29. Experience of milk collection by the small farmers necessitated the mixing up of the traditional collection system with the system of milk collection through VLAs members. Meanwhile, upon commissioning of the Chilling Centre the arrangements are under way for collection the evening milk as well. Para 3.35. The delay in the construction of the Chilling Centre was of course not by choice and was unavoidable. However, now Chilling Centres are being commissioned, making the way to reduce the expenditure on purchase of ice to chill the milk and also making use of the investment on 9000 lit. milk tankers. Para 3.42. The building constructed and equipment imported to add the semen processing facility at existing A.I. Centre Qadirabad, have now been put to use resulting gradual improvement and increase in the provision of A.I. services in the VLAs areas. Para 3.43. The Directorate of A.I. being clear of their responsibility to provide the A.I. services now making efforts to increase their coverage for provision of A.i. service to the farmers in the VLAs areas. Para 3.50. The pending case of arbitra-ion with the Consultant (Mls. Wernberg of Denmark) now in the Civil Court is being mutually resolved through compromising outside the court. Para 3.55. In text of the para and Annex-I, Table-3, the disbursement up to September 1985 is given as US$ 7.2 million. Now the final disbursement up to the loan closing date, i.e., June 30, 1986 comes to US$ 8.348 million. It may be corrected. Para 4.4. Uncertain future due to the frequent changes in management of PLDB resulted lack of interest by the incumbents which is conjunction with other procedural formalities resulted the low performance in implementation of the Project. Had this factor not prevailing, the experience of PLDB in other range of activities on previous projects would have worked as catalyst in PLDB performance on this project. Para 4.7. The pending work concernin formation of a Dairy Corporation is almost complete which has been incorporated since December 12, 1985. The Corporation has now commenced its business since September 1986. Para 4.8. Auditing of the accounts of PLDB had continuously been carried out by the Directorate of Commercial Audit, Government of Pakistan, as per procedure of the Government. The PLDB has been submitting the audited accounts periodically. Para 4.10. The covenant concerning to the milk corporation has also been complied with as the said Milk Corporation has been incorporated since December 12, 1985, which has commenced its business from September 1, 1986. ANNEX 4 - 44 - 'FPage 4 of 4 Para 5.3. The existing facilities at A.I. Centre Qadirabad have now been put to operation. Through its utilization the coverage for A.I. service to the VLA farmers is being improved gradually and anticipated to create project impact in the area in near future. Para 6.2. Keeping in view the delay in remodelling of LMP and resultant low fund generation position of the Plant, so far the Government has decided that a new Corporation "Punjab Dairy Corporation Limited" will only take over the remodelled IMP with its assets and liabilities while the Field Services Organization component of the PLP would be managed by the L & DD Department Punjab for financing this component on grant basis. IBRD12201 This map has been prepared by rhe Wordl eens Statf exclusivety for the convenience of the readers and is exckusivefy /of the internal use of the Wotrt Bank and the kiternatiri Fmnce Corporation The dJenominations used and the boundaries shown on ths map do not Imply. on the part of The World 8ank and the J:; tnernatonal Fnance Corporaton. SDA DANE SiAH any judgment on the tegal status ot Sii terntory Ow any endorsement or acceolance of ~~~~~~~~~~~~~~~~~~~~~~~if / t f f i > ' {<2 doH~~~~~~~~~~~~~~ . 'K~~~~~~~~~~~~~~~~~~~~~~~~' L...~~~~~~L '-7} PUNJAB PROVINCE L / / MAJOR LAND USE AND CANAL COMMANDS PROJECT AREA ) ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ROUGH aRAZiNo WITH SCAE UNWED LAND I - ~~~~~~~~~~~~~~~EXISTING PERENNIAL INEIGATION *xISTING NON-PERNtNIAL 'SNIGATIOW 5 ~~~~~~~~~~~~~~~DRY cRoppeD LAND I 4 ~~~~~~~~~~~~~GOVERNMENT LIVESOCIC FARM$ RAISYA BMN/ OARD LIVE.OTCK FARMS I MAtN CANALS I I ~~~~~~~~~~~~~~~~~LINK CANALS I RIVERS WITHM EAMSIEESSRoiRs ( ~~~~~~~~~~~MAIN ROADS 9 4-4- RAILWAYS 7 W r PS S i PUNJABMILES PROVINCE ROUNOARIES ,r ' ' 9, 2 9' 190 I/TERNAINDAL CONDARIES (. .-.--.-.-. ~~~~~~~~~~~~~~~KILOMAETERS SIX! ~~~~~~~~~~~~~~~ ~~73X 74H Am